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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: February 20, 1997
QUEEN SAND RESOURCES, INC.
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(Exact name of registrant as specified in charter)
Delaware 0-21179 75-2615565
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Jurisdiction of Commission File I.R.S. Employer
Incorporation Number Identification
Number
3500 Oak Lawn, Suite 380, LB #31, Dallas, TX 75219-4398
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(Address of principal executive offices)
Registrant's telephone number: (214) 521-9959
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 5, 1997 the Company, through Corrida Resources, Inc., a Nevada
corporation and a wholly owned subsidiary of Queen Sand Resources, Inc.
(Nevada), acquired from a group of associated companies and family members
related to Mr. David Robertson of Tickfaw, Louisiana and Mr. Keith Robertson of
Baton Rouge, Louisiana 60 gross productive wells (48.4 net productive wells) and
two developmental properties located in Mississippi, Louisiana and Texas (the
"core properties purchase"). The acquisition comprises 6,569 gross acres (5,779
net).
LOUISIANA
ABBEVILLE FIELD, VERMILION PARISH
The Company has a 1.3% net revenue interest in a single well producing
317 bbls (net) of oil per month from a depth of 12,500 feet in the Duhon
formation.
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RAMOS FIELD, ST. MARY PARISH
The Company has a 68.007% net revenue interest in two wells, one of
which is producing at a rate of 364 bbls. (net) of oil per month from a depth of
14,200 feet in the Canerina formation.
WAX LAKE FIELD, ST. MARY PARISH
The Company has net revenue interests of approximately 18.05% and .05%,
respectively, in two wells producing 44 bbls (net) and 3538 mcf (net) of gas per
month from a depth of 14,800 feet in the Rob Sand formation.
MISSISSIPPI
BARBER CREEK FIELD, SCOTT COUNTY
The Company has 75% net revenue interests in four wells producing 2313
bbls (net) of oil per month from a depth of 13,000 feet in the Smackover
formation.
BARBER CREEK EAST, SCOTT COUNTY
The Company has a 75% net revenue interest in one well that is not
currently in production.
EAST FORK FIELD, AMITE COUNTY
The Company has a 75% net revenue interest in one well that is
producing 719 bbls (net) of oil per month from a depth of 11,000 feet in the
Lower Tuscaloosa formation.
SW EAST FORK FIELD, AMITE COUNTY
The Company has net revenue interests ranging from 38.2% to 69.2% in
nine wells of which two are producing a total of 494 bbls (net) of oil per
month. A waterflood has been planned based on engineering reports which estimate
that 500,000 bbls of oil can be recovered for a $300,000 capital investment.
GILLSBURG FIELD, AMITE COUNTY
The Company has net revenue interests of 4.65% and 3.04% respectively
in two wells not currently in production.
EAST NANCY FIELD, CLARKE COUNTY
The Company has net revenue interests ranging from 37.2% to 76.33% in
seven wells producing from depths between 13,500 and 14,500 in the Smackover and
Norphlet formations. The field offers several recompletion and development
drilling opportunities.
STAFFORD SPRINGS FIELD, JASPER COUNTY
The Company has net revenue interests of approximately .0314%, 2.78%
and 77.258% respectively in three wells. One well is currently producing 281
bbls (net) of oil per month from a depth of 13,500 in the Smackover formation.
TALLAHALA CREEK FIELD, SMITH COUNTY
The Company has a net revenue interest of 4.3% in one well producing 24
bbls (net) of oil per month from a depth of 12,000 in the Sligo formation.
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TEXAS
LONGWOOD FIELD, HARRISON COUNTY
The Company has net revenue interests ranging from 75% to 83.6% in
seven wells producing 371 bbls (net) of oil per month from a depth of 2,500 in
the Goodland Lime formation. Additional drilling locations have been located in
the Goodland Lime formation at 2,500 feet.
WASKOM FIELD, HARRISON COUNTY
The Company has an 80% net revenue interest in each of twelve wells
producing 26,849 mcf (net) of gas per month from a depth of 1,900 feet in the
Blossom formation.
The purchase price consisted of cash of $1,900,000, four notes payable
totaling $2,400,000, secured by a lien on the properties, and 659,000 shares of
restricted common stock. Two of these notes, totaling $400,00, bear no interest
and are due not earlier that June 5, 1997 and not later than August 4, 1997. The
remaining two notes are payable not later than February 4, 2000. Such notes bear
no interest for the first two years and 9% for the final year payable in stock
of the Company to be calculated at a value equivalent to 75% of the average
closing bid price of the Company's common stock over the 30 days preceding the
maturity date. These remaining two notes are repayable commencing on the first
anniversary of the notes and semi-annually thereafter, at the option of the
holder and on 60 days written notice, in the amount of $400,000. In the event
that the holder exercises his right to defer payment of the semi-annual
installment, he may, on 120 days written notice, demand payment of not more than
two such installments. Each such semi-annual payment shall be for not more than
one-sixth of the original amount.
These notes are convertible to shares of common stock of the Company,
at the option of the holder, on notice provided 15 days prior to maturity. The
conversion must be for an amount not less than that required to convert to not
less than 100,000 common shares, and at a value equivalent to 75% of the average
closing bid price of the Company's common stock over the 30 days preceding the
notice to convert.
ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements
(a) It is impractical to provide the required financial statements of
the acquired properties at this time. The Company plans to file such information
by amendment within sixty days.
(b) It is impractical to provide the required pro forma financial
information at this time. The Company plans to file such information by
amendment within sixty days.
Exhibits
10.a Robertson Acquisition Agreements.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
QUEEN SAND RESOURCES, INC.
By: /s/ Edward J. Munden
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Edward J. Munden,
President and Chief Executive Officer
Dated: February 20, 1997
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EXHIBIT INDEX
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Item No. Description
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10.a Robertson Acquisition Agreements.
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the 5th day of February, 1997, by
and between PRICE SAYERS, INC., a Louisiana corporation (hereinafter referred to
as the "Seller"), and CORRIDA RESOURCES, INC., a Nevada corporation (the
"Purchaser"), (Seller and Purchaser hereinafter individually referred to as
"Party" and collectively as "Parties").
RECITALS
WHEREAS, Seller desires to sell and convey, and Purchaser desires to
purchase and receive, the following, upon the terms and conditions hereinafter
set forth:
I. The Leases and Units. All of the Seller's right, title, and interest
in and to (i) the oil, gas, and mineral leases and properties and interests
described in Exhibit "A," including but not limited to, leasehold, fee, mineral,
royalty, and overriding royalty interests and payments out of or measured by
Production (hereinafter defined) (said oil, gas, and mineral leases and property
and interests being herein referred to as the "Leases"); (ii) the units, pooled
acreage, spacing, or proration units or other allocation of acreage, and all
rights associated therewith, which are applicable to the Leases and have been
established by, or in accordance with, (a) applicable contractual provisions
regarding unitization, communitization, pooling, spacing, or proration, or (b)
applicable state or federal law;
II. The Production. All of the Seller's right, title, and interest in
and to all oil, gas, casinghead gas, condensate, distillate, and other liquid or
gaseous hydrocarbons and other minerals which are in, under, upon, and produced
from or allocable (or to be produced from or allocable) to the Leases after the
Effective Date (as defined in Paragraph 3(a) hereof) (such hydrocarbons and
minerals being hereinafter referred to as "Production"), including "line fill"
and inventory attributable to the interests described in Exhibit "A," or the
proceeds from the sale of such Production;
III. The Wells and Equipment. All of Seller's right, title, and
interest in and to all personal property of every kind and character located on
the Leases or used in the operation thereof including, without limitation, wells
(whether productive or non-productive, active or inactive) (the "Wells"),
compressors, well equipment, casing, tanks, machinery, gathering lines and
systems, treatment facilities, disposal wells and disposal facilities, pipelines
and other appurtenances, and any other personal property situated thereon,
herein individually and collectively called the "Equipment."
IV. The Rights of Way and Permits. All of Seller's right, title, and
interest in and to all rights, privileges, benefits, permissions, and
authorizations (including, without limitation, permits, licenses, servitudes,
easements, and rights of way) in respect of the use and occupation of the
surface of such Leases, and the subsurface depths under the land and premises
covered by and benefiting such Leases, herein called individually and
collectively "Rights of Way and Permits";
V. The Contracts. All of Seller's right, title, and interest in and to
all of the orders, gas purchase and sale contracts (wherein Seller is a selling
party), crude purchase and sale agreements (wherein Seller is a selling party),
surface leases, farm-in agreements, farmout agreements, bottom hole agreements,
acreage contribution agreements, operating agreements, unit agreements, area of
mutual interest agreements, processing agreements, options, leases of equipment
or facilities, and other contracts, agreements, and rights, which are owned by
Seller, in whole or in part and are (i) appurtenant to the Leases, or (ii) used
or held for use in connection with the ownership or operation of the Leases or
with the Production, treatment on the Leases, sale or disposal of water,
hydrocarbons or associated substances, herein called individually and
collectively the "Contracts";
VI. The Records. All of the files, records and data in the possession
of Seller relating to the items described in subsections (I), (II), (III), (IV),
and (V) above (the "Records"), including, without limitation, lease files, title
records (including abstracts of title, title opinions, and title curative
documents); contracts, correspondence, originals or copies of geological,
geophysical, and
PURCHASE AND SALE AGREEMENT - PAGE 1
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seismic records, data, and information; and originals or copies of production
records, electric logs, core data, pressure data and decline curves and
graphical production curves, and all related matters, to the extent Seller has
the authority to release such Records and to the extent they are reasonably
required by Purchaser to operate the Wells;
VII. Miscellaneous. Exhibit "A" attached hereto sets forth the
undivided interests of Seller in the Leases, and the revenue interests
attributable thereto, as well as the undivided interests of Seller in the
Production, Wells, Equipment, Rights of Way, and Contracts. This Agreement
covers and pertains to all of the right, title, and interest of Seller in the
Leases, the lands covered by the Leases, Production, Wells, Equipment, and
Rights of Way, even if the undivided interests of Seller in any such property or
property rights should be incorrectly or insufficiently described in the Exhibit
"A."
The Leases, Production, Wells, Equipment, Rights of Way and Permits,
Contracts, Records, and Miscellaneous referred to in Paragraphs I through VII
above, are hereinafter sometimes referred to individually and collectively in
the singular as "Property."
Notwithstanding the foregoing, Seller excepts and reserves from the
sale herein any interest which Seller may own, if any, in and to any
presently-created overriding royalty interests, which are of record in the
subject counties, in the Leases described in Exhibit "A" under the heading
"Stafford Springs Field," covering lands located in Jasper County and Clarke
County, Mississippi. Any such overriding royalty interest owned by Seller is not
part of the NRI (see definition below) of Seller set forth in Exhibit "A"
attached hereto for such Leases.
WHEREAS, this Agreement was the subject of, and was contemplated by,
that certain letter of intent dated October 17, 1996, above described, by and
between Purchaser and David Robertson and Keith Robertson, as amended and
supplemented, including amendment and supplement dated December 24, 1996. As to
the interest of Seller in the Property, this Agreement supersedes and replaces
the letter of intent.
NOW, THEREFORE, for and in consideration of the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Seller and Purchaser
hereby agree as follows:
1. Sale and Purchase. Seller agrees to sell and convey to Purchaser,
and Purchaser agrees to purchase and pay for, all of Seller's right, title, and
interest in and to the Property as hereinafter provided.
2. Purchase Price. The "Purchase Price" for the Property shall be the
sum of Four Thousand Five Hundred Dollars ($4,500.00) which shall be paid at
Closing.
All cash payments to be tendered by Purchaser to Seller, either before
or after Closing, shall be made by wire transfer or shall be made by certified
funds.
The Purchase Price shall be subject to adjustment as hereinafter
provided.
3. Closing and Effective Date.
(a) The closing of the sale and purchase of the Property shall
take place on or before February 5, 1997, (the "Closing") at 1310 Jeff
Davis, Hammond, Louisiana 70403, or at such other time, place, or
manner as may be mutually agreeable to the Parties. The sale
PURCHASE AND SALE AGREEMENT - PAGE 2
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of the Property shall be effective as of November 1, 1996, at 7:00 a.m. local
time for each of the particular properties (the "Effective Date").
(b) At the Closing, the Property shall be conveyed and
transferred by Seller to Purchaser by the execution and delivery of an
Assignment and Bill of Sale (the "Assignment") in substantially the
same form and content as the Assignment and Bill of Sale which is
attached hereto as Exhibit "B," and such other instruments of
conveyance as may be reasonably requested by Purchaser. Purchaser shall
be entitled to all of Seller's rights in the Property (including,
without limitation, the rights to all Production and proceeds of
Production) appurtenant and attributable to the Property, and shall be
subject to the duties and obligations attendant with ownership of such
undivided share of the Property for the period from and after the
Effective Date. For the period prior to the Effective Date, Seller
shall be entitled to all of the rights (including, without limitation,
the rights to all Production and proceeds of Production) appurtenant
and attributable to the Property, and shall be subject to the duties
and obligations attendant with ownership of the Property.
4. Adjustments to Purchase Price. The Purchase Price shall be adjusted
(the "Adjusted Purchase Price") at the Closing, by the "Interim Settlement
Statement" (hereinafter defined in this paragraph and in Paragraph 9 below),
and, subsequent to Closing, by the "Final Settlement Statement" (hereinafter
defined in Paragraph 13 below), as follows:
(a) The Purchase Price shall be increased by the following:
(1) the value of all merchantable allowable oil or
other liquid hydrocarbons in storage owned by Seller in the
tanks or above the pipeline connection at the Effective Date,
and not previously sold by Seller, that is credited to the
share of the Property being acquired hereunder, valued at the
contract price thereto, or if none, the actual price received
by Purchaser, less taxes or gravity adjustments deducted by
the purchaser of such oil or other liquid hydrocarbons;
(2) the amount of all reasonable expenditures made in
connection with the ownership, operation, and maintenance of
the share of the Property being acquired hereunder, (including
royalties and rentals) and in accordance with generally
accepted accounting principles and prudent operations,
attributable solely to the period from and after the Effective
Date and which are paid by or on behalf of Seller after the
Effective Date;
(3) an amount equal to all prepaid expenses,
attributable to the ownership, operation, and maintenance of
the share of the Property being acquired hereunder that are
paid by or on behalf of Seller after the Effective Date and
prior to the Closing Date and that are, in accordance with
generally accepted accounting principles, attributable solely
to the period from and after the Effective Date;
(4) any other amount agreed upon by Purchaser and
Seller.
(b) The Purchase Price shall be decreased by the following:
(1) the amount of any proceeds from the sale of
Production attributable to the share of the Property being
acquired hereunder attributable to the period on or after the
Effective Date (net of production, severance, and similar
taxes and assessments measured by or payable out of
production) actually received or accrued by or on behalf of
Seller;
(2) an amount equal to all unpaid ad valorem,
property, production, profit, severance, and similar taxes and
assessments based upon or measured by the ownership of the
share of the Property being acquired hereunder or the
production of oil, gas, or other minerals therefrom or the
receipt of proceeds attributable thereto, which accrue to or
are chargeable against such share of the Property (in
accordance with generally accepted accounting principles) and
which are attributable to the
PURCHASE AND SALE AGREEMENT - PAGE 3
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period prior to the Effective Date, which amount shall, to the
extent not actually assessed, be computed based upon such
taxes and assessments for the immediately-preceding calendar
year, or if such taxes or assessments are assessed on other
than a calendar-year basis, for the tax period last ended;
(3) any amounts received by Seller (whether prior to
or subsequent to the Effective Date) pursuant to
"take-or-pay," advance payment, or similar provisions of any
production sales contract, any gas balancing agreement, or any
other agreement, to the extent any purchaser has the right to
apply any such amounts to Purchaser's share of Production
delivered after the Effective Date;
(4) any reduction in the value of the share of the
Property being acquired hereunder resulting from the existence
of a Defect (herein defined in Section 5(d)) which is not
cured or waived prior to Closing;
(5) any other amount agreed upon by Purchaser and
Seller.
(c) The "Interim Settlement Statement" shall be prepared by
Seller, its agents, or representatives, prior to Closing, which
statement shall set forth the adjustments to the Purchase Price, per
the adjustments set forth in this Paragraph 4, which are or may be
determined at or prior to Closing. Such statement shall be prepared
according to generally accepted accounting principles and shall show
the calculation of all such adjustments. Upon the approval of such
Interim Settlement Statement by Purchaser, the Purchase Price shall be
adjusted according to such statement. Upon Purchaser's request, Seller
shall make available to Purchaser all information relied upon by Seller
for the adjustments requested in order to aid and facilitate
Purchaser's approval of such statement. After Closing, the Purchase
Price may further be adjusted, pursuant to the adjustments set forth in
this paragraph, with the "Final Settlement Statement" in the manner
further described in Paragraph 13 below.
(d) All monies received by either Party hereto which, under
the terms of this Agreement or otherwise, belong to the other Party,
shall be received in trust by the Party receiving such funds, and shall
monthly, upon receipt, be paid over to the other Party. The Parties
agree, in this regard, to cooperate fully and to execute, endorse, and
deliver as expeditiously as practicable such papers, checks, and
documents as are needed promptly to complete the transfer of such
payments;
(e) After the Closing, if an invoice or other evidence of an
obligation relating to the share of the Property acquired by Purchaser
is received which is applicable to periods both prior to and after the
Effective Date, and is partly the obligation of Seller and partly the
obligation of Purchaser, then each Party shall pay its respective
portion of such obligation to the obligee, prorated between the Parties
as of the Effective Date;
(f) At and after the Closing, Purchaser and Seller will
cooperate fully in notifying all applicable third parties (including
the execution by Seller of such transfer orders, letters in lieu,
change of operator, etc., as may be requested by Purchaser) so that
notices, proceeds, and invoices from such third parties may take into
account the fact that Purchaser has acquired the Property as of the
Effective Date;
(g) The parties hereto agree to exercise diligence and good
faith in attempting to resolve any disagreements or disputes which may
arise from the adjustments to the Purchase Price to be made in
accordance with this paragraph.
5. Property Conditions, Title Review, Property Information, and
Casualty Losses.
(a) Property Conditions. THIS SALE OF THE EQUIPMENT AND ALL
OTHER PERSONAL PROPERTY THAT IS A PART OF THE PROPERTY IS MADE ON AN
"AS IS, WHERE IS" BASIS WITH ALL FAULTS AS TO ITS CONDITION, AND SELLER
EXPRESSLY DISCLAIMS ALL WARRANTIES AS TO THE CONDITION OF THE EQUIPMENT
(NOTE, HOWEVER, THERE ARE CERTAIN WARRANTIES AS TO
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TITLE AS HEREIN SET FORTH) INCLUDING, WITHOUT LIMITATIONS, THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY
PARTICULAR PURPOSE. Seller agrees that for a period of time commencing
with the date of the letter of intent dated October 17, 1996, above
described, and continuing until five (5) business days before Closing
(the "Review Period"), Purchaser, personally or through its authorized
agents or representatives, shall have the right to make any and all
physical inspections of the Property which Purchaser may desire to make
or to have made and to make all such other inspections, surveys, tests,
or other studies (including, but not limited to, environmental
assessments and evaluations) as Purchaser deems necessary or desirable.
Upon reasonable notice to Seller, Purchaser, and its authorized agents
and representatives, at Purchaser's sole risk, may enter upon the
Property for the purpose of conducting those inspections, surveys,
tests, and studies. If Purchaser shall determine that the condition of
the Property is not in substantial compliance with any governmental
regulations (including environmental regulations), then upon discovery,
Purchaser must promptly give written notice to Seller of such condition
("Condition"). Upon receipt of such notice, Seller shall have the
option, but not the obligation, to (a) cure or remedy such Condition to
the reasonable satisfaction of Purchaser (if current remediation of
such Condition is required by a governmental agency, Seller agrees that
the Condition shall be remedied in accordance with and to the
satisfaction of the appropriate agency's requirements); or (b) agree
with Purchaser on a reduction to the Purchase Price which reduction
shall reflect Purchaser's anticipated reasonable cost to remedy such
Condition. If the Condition cannot be cured or remedied to Purchaser's
reasonable satisfaction, and if agreement cannot be reached on
reduction to the Purchase Price, then the affected Property may be
excluded by Purchaser from the Property to be acquired by Purchaser
hereunder. In such event , the Purchase Price shall be reduced by the
Allocated Purchase Price (see subparagraph (c) below) for such excluded
Property.
(b) Review of the Records. During the Review Period, and upon
reasonable notice from Purchaser, Seller shall provide Purchaser,
personally or through its authorized agents or representatives, full
access during normal business hours to Seller's office and premises to
review and inspect all Records, including, but not limited to, all
abstracts of title, lease files, unit files, production and marketing
files, title opinions, title files, title records, geologic,
engineering, and other files or information in Seller's possession or
to which it has access which relate to the Property and the status of
Seller's title thereto, and Purchaser, at its expense, shall have the
right to make and retain copies of any of such Records; provided
however, if the transactions contemplated hereby do not close for any
reason, Purchaser shall return any Records and copies thereof to Seller
forthwith. Without limiting the generality of the foregoing, Purchaser
shall also be given access to reserve reports, geological and
geophysical reports (including, but not limited to well records, log
films, proprietary or joint venture seismic data or other seismic data
which Seller is not contractually restricted from disclosing),
contracts (including, but not limited to, gas contracts), operating
agreements, operating statements, and reports.
(c) Notice of Defect. If, during the Review Period, Purchaser
determines that the Property is subject to a "Defect" (as defined
herein in Section 5(d)), the Purchaser must give written notice to
Seller of such Defect, the nature of the Defect, and furnish Seller
Purchaser's basis for the assertion of such Defect. As soon as
practical after such written notice, Seller shall use reasonable
diligence to cure any such Defects. If Seller cannot cure any such
Defects to the reasonable satisfaction of Purchaser, then Seller shall
so notify Purchaser in writing. Thereafter, Seller and Purchaser shall
use a good faith effort to agree on the Purchase Price adjustment for
any such Defect which cannot be cured. Such adjustment shall be
determined in accordance with the following guidelines:
(1) The Purchase Price shall be allocated among the
various Leases in the proportion of the PDP fair market value
of the Leases reported by Netherland Sewell & Associates in
its report dated October 21, 1996, (the "Allocated Purchase
Price").
(2) If the Defect is that Seller's Net Revenue
Interest ("NRI") for any Property is less than the NRI for
such Property as set forth in Exhibit "A," then the
PURCHASE AND SALE AGREEMENT - PAGE 5
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allocated Purchase Price for such Property shall be adjusted
in the same proportion that the actual NRI for such property
bears to the NRI shown in Exhibit "A."
(3) If the Defect is a lien, encumbrance, or other
charge upon the Property which is liquidated in amount, then
the adjustment shall be the sum necessary to be paid to the
obligee to remove the Defect from the Property;
If the Purchase Price adjustment for any such Defect cannot be
determined, and the Seller and Purchaser cannot agree in good faith on the
amount of the adjustment to the Purchase Price, the Purchaser may (a) waive the
Defect and proceed with Closing or (b) exclude the affected Property and reduce
the Purchase Price by the Allocated Purchase Price for such property, or (c)
terminate this Agreement, in which event the Parties shall have no further
rights or obligations under this Agreement.
(d) Definition of Defect. For the purpose of this Agreement, a
"Defect" shall be defined as:
(1) Any material encumbrance, lien, mortgage, breach
of representation or warranty, production payment, pledge,
claim, charge, call on production, default, defect, condition,
unleased mineral interest, preferential right, requirement for
consent to assignment, or lack of title affecting the
Property, or any matter affecting the Property by which
Purchaser reasonably or in good faith believes that Seller's
interest in a Property may become subject to the claims of
third parties;
(2) Seller's NRI in any Property is less than the NRI
for such Property which is set forth in Exhibit "A," or
Seller's gross working interest ("GWI") in any Property is
less than the working interest shown in Exhibit "A," or
Seller's GWI in any Property is greater than the working
interest shown in Exhibit "A" without a corresponding increase
in the NRI in such Property;
(e) Other Property Information. If, based upon Purchaser's
examination of the Records according to Paragraph 5(b) hereof,
Purchaser shall determine that any information, statement, or data
contained in any information, reports, statement, or data furnished to
Purchaser or used in its economic analysis of the Property is not true
or correct in any material respect, upon discovery of any incorrect
information, Purchaser may give written notice to Seller of such
inaccuracy or misstatement. Any such notice must be provided in writing
during the Review Period, or it will be deemed to be waived. Such
notice shall provide a summary of such inaccuracy or misstatement. Upon
receipt of such notice, Seller shall have the option, but not the
obligation, to (a) cure or remedy such inaccuracy or misstatement to
the reasonable satisfaction of Purchaser; or (b) agree with Purchaser
on a reduction to the Purchase Price, which reduction shall reflect
Purchaser's reasonably anticipated cost to remedy such inaccuracy or
misstatement. If the inaccuracy or misstatement cannot be cured or
remedied to Purchaser's reasonable satisfaction, and if agreement
cannot be reached on reduction to the Purchase Price, then the affected
Property shall be excluded from the Property to be acquired by
Purchaser hereunder, and the Purchase Price shall be reduced by the
Allocated Purchase Price for such Property;
(f) Casualty Loss. If, prior to Closing, any Property is
substantially damaged or destroyed by fire or other casualty ("Casualty
Defect"), Seller shall notify Purchaser promptly after Seller learns of
such event. Seller shall have the right, but not the obligation, to
cure any such Casualty Defect by repairing such damage or, in the case
of personal property, fixtures, replacing the Property affected thereby
with equivalent items, no later than the date of Closing. If any
Casualty Defects exist at Closing, Purchaser may proceed to purchase
the Property affected thereby, and the Purchase Price shall be reduced
by the aggregate reduction in the value of such Property on account of
such Casualty Defects, as determined by the mutual agreement of the
Parties, or if the Parties are unable to agree on the reduction of the
Purchase Price, then the affected Property shall be excluded from the
Property to be acquired by Purchaser hereunder, and the Purchase Price
shall be reduced by the Allocated Purchase Price for such Property.
Notwithstanding anything to the contrary
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contained herein, Seller shall be entitled to retain all insurance
proceeds and claims against other Parties in respect of any such
Casualty Defect which occurs prior to closing unless no reduction is
made in the Purchase Price as a result of such Casualty Defect, in
which event Purchaser shall be entitled to the insurance proceeds and
claims against other Parties arising from such Casualty Defect.
6. Seller's Representations and Warranties. Seller represents and
warrants to Purchaser that:
(a) Seller is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Louisiana; (ii)
Seller is duly qualified to transact business in each jurisdiction
where the nature and extent of its business and properties require the
same in order for it to perform its obligations under this Agreement;
(iii) Seller possesses all requisite authority, power, licenses,
permits, and franchises to conduct its business and execute, deliver,
and comply with the terms and provisions of this Agreement and any
other document, instrument, or agreement provided for herein, including
the Assignment, all of which have been duly authorized and approved by
all necessary corporate action and for which no further approval or
consent is required; and (iv) the Parties executing this Agreement as
Shareholders are all of the Shareholders, officers, and directors of
Seller, and by their execution adopt and approve the terms of this
Agreement.
(b) This Agreement has been duly executed and delivered on
behalf of Seller and is binding and enforceable against Seller in
accordance with its terms and at the Closing. All documents and
instruments required hereunder to be executed and delivered by Seller
shall have been duly executed and delivered at Closing, and the
execution, delivery, and performance of this Agreement by Seller and
the consummation of transactions contemplated hereby will not
constitute a breach of, an event of default under, a violation of, or a
conflict with any agreement or other instrument to which Seller is a
party (except to the extent such instrument may be released at the
Closing), nor will the same cause Seller to be in violation of their
Articles of Incorporation or Bylaws, as the case may be, or any
applicable laws or regulations or any order of any court or
governmental agency having jurisdiction.
(c) All ad valorem, property, production, severance, excise,
and similar taxes and assessments based on or measured by the ownership
of the Property or the Production or the receipt of proceeds therefrom,
which have become due and payable prior to the date hereof with respect
to the Property have been properly paid, and Seller's allocable share
of such taxes and assessments which become due and payable prior to the
Closing shall be properly paid by Seller, and all royalties, overriding
royalties, and payments to any third parties which have become due and
payable prior to the date hereof with respect to production from the
Property, have been properly paid, and will be hereafter properly paid
for the period prior to Closing.
(d) Seller has incurred no liability, contingent or otherwise,
for brokers' or finders' fees in respect of this transaction for which
Purchaser shall have any responsibility whatsoever.
(e) Prior to the Closing, Seller will pay or cause to be paid
all of Seller's share of costs and expenses incurred in connection with
the Property, and will comply with all contracts or other agreements
relating to the Property.
(f) To the best of Seller's information and belief, all laws,
regulations, and orders of all governmental agencies having
jurisdiction over the Property have been and shall continue to be
complied with until the Closing.
(g) There are no first rights of refusal, consents,
authorizations, preferential rights, options, or claims of a similar
nature affecting the Property, other than those listed in Exhibit "A,"
said listed consents defined herein as "Consents."
PURCHASE AND SALE AGREEMENT - PAGE 7
<PAGE> 8
(h) Seller shall, upon request, subrogate Purchaser to any
claim which Seller may have against any third party, prior owner,
vendor, or assignor with respect to the share of the Property acquired
by Purchaser, or the title thereto.
(i) There are no "imbalances" which allow any other party to
make up production at any time after the Effective Date, under any
operating agreement, gas balancing agreement and storage agreement, gas
transportation agreement, gas processing or dehydration agreement, or
other similar agreement relating to the Property.
(j) Seller has not directly or indirectly reserved or retained
any recorded or unrecorded interest or rights in any of the Property,
and Seller shall not reserve any recorded or unrecorded executory
interest or rights relating to the Property.
(k) Seller warrants that the Property is free and clear of all
encumbrances, liens, and mortgages, save and except such encumbrances
as may be identified and described in Exhibit "A" attached hereto, and
further save and except liens for taxes not yet due and payable.
(l) Except as may be identified and described in Exhibit "A"
attached hereto, the Property is not subject to any restriction,
reservation, reversionary interest, drilling or development obligation,
or other material obligation or burden on the operation or the
disposition of Production attributable to the Property.
(m) No part of any of the Property is affected by any
prepayment arrangement under any contract for the sale of oil or gas,
or by any production payment or any other arrangement for delivery of
oil or gas produced from any of the Property at some future time
without Purchaser then or thereafter receiving full payment therefor,
and no third party now has or at Closing will have any right to take
makeup gas for which it has already paid. As of the Effective Date,
there are no volumes of makeup gas owing, or accumulated transportation
credits due, to gas purchasers on account of any "take-or-pay" or other
provisions of any contract, and Seller has not produced or sold more
than its pro-rata share of the gas from any Wells included in the
Property.
(n) Except as may be set forth in Exhibit "A" attached hereto,
there are no gas purchase or sale agreements, and no gas gathering or
transportation agreements, affecting the Property that cannot be
terminated upon ninety (90) days' written notice.
(o) Without the prior written consent of Purchaser, Seller (i)
shall not enter into any new agreements or commitments affecting the
Property which extend beyond the Closing, and (ii) will not modify or
terminate any agreements affecting any of the Property, including,
without limitation, any oil and gas leases, unitization or pooling
agreements, operating agreements, pipeline agreements, processing
agreements, and hydrocarbon sales contracts, and (iii) will not further
encumber, sell, mortgage, release, abandon, or otherwise dispose of any
of the Property or any interests therein.
(p) There is not any suit, action, or other proceeding pending
or threatened which affects or relates to the Property, or seeks to
restrain or prohibit Seller from selling or conveying to Purchaser the
share of the Property to be purchased herein. Seller shall promptly
notify Purchaser of any such proceedings which may arise or be
threatened prior to Closing.
(q) There are no operating agreements with third parties
affecting the Property except as may be identified and described in
Exhibit "A" attached hereto.
(r) Seller has no knowledge and has not received any notice of
any claimed default (or any event which, with the giving of notice or
the passage of time, or both, would constitute a default) under (i) the
Leases, (ii) any order, writ, injunction, or decree of any court,
commission, or administrative agency affecting the Property, or (iii)
any other agreement affecting the Property. Seller shall promptly
notify Purchaser of any such notice
PURCHASE AND SALE AGREEMENT - PAGE 8
<PAGE> 9
hereafter received by Seller and the occurrence of any such event of
which Seller becomes aware prior to Closing.
(s) There are no tax partnerships affecting any of the
Property.
(t) To the best of Seller's information and belief, no
Production from any Well on the Property has occurred in excess of that
permitted by law, orders, or regulations.
(u) To the best of Seller's information and belief, there has
been no material injury or damage to any of the Property which has not
been fully repaired, replaced, or rebuilt.
(v) Except for depletion due to continued production, there
has been no substantial and material change in condition of the
Property between the date hereof and Closing.
(w) To the best of Seller's information and belief, all
easements, rights of way, permits, crossing agreements, and surface
rights included in the Property are in full force and effect and are
valid and subsisting, and freely assignable, and all rentals and other
payments due thereunder have been properly and timely paid and all
conditions necessary to keep them in force have been duly performed.
(x) From and after the effective date of its acquisition of
its ownership in the Leases, the Seller has performed all obligations
required to be performed under such Leases, or any other instruments
and agreements relating to the Properties, and is not in default
thereunder, and to the best of Seller's information and belief, each of
the Leases to be conveyed is valid and in full force and effect.
(y) To the best of Seller's knowledge, Seller owns each Lease
and Property in the undivided share reflected by the "Working Interest"
described and set forth in Exhibit "A" for each particular Lease and
Property, and Seller owns for each Lease and Property the share of
Production reflected as "Net Revenue Interest" in Exhibit "A" attached
hereto. Seller is being paid not less than the fractional "net revenue
interest" for each Property in Exhibit "A" hereto, and, for expenses
and costs for each Property, Seller is not paying more than the
fractional interest specified under "Working Interest" for each
Property in Exhibit "A" hereto.
(z) To the best of Seller's information and belief, all
rentals and bonuses have been timely and fully paid and discharged, and
all conditions necessary to keep the Leases in full force have been
performed, and no proceeds from the sale of Production attributable to
the Property are currently being held in suspense by any purchaser
thereof.
(aa) The Seller has not collected any proceeds from the sale
of Production attributable to the Property which are subject to refund,
or if so, that any such refund, if not otherwise accounted for under
this Agreement, shall be the sole responsibility of the Seller.
(bb) Except as listed in Exhibit "A" attached hereto, to the
best of Seller's information and belief, there are no Wells located on
the Property that Seller is obligated by law or contract to plug and
abandon, that Seller will be obligated by law or contract to plug and
abandon at the present time, and with the lapse of time or notice, or
both, because the well is not currently capable of producing production
in commercial quantities, or because the Well is subject to exceptions
to a requirement to plug and abandon issued by a regulatory authority
having jurisdiction over the Property.
(cc) To the best of Seller's information and belief, there are
no presently existing conditions (by existing federal or state statutes
and regulations) affecting the Property, which might give rise to a
cause of action on behalf of any governmental agency or third party,
against either Purchaser or Seller.
PURCHASE AND SALE AGREEMENT - PAGE 9
<PAGE> 10
(dd) All information and data provided to Purchaser by Seller
or its agents concerning the Property is true and correct to the best
of Seller's information, knowledge, and belief.
(ee) Environmental Current Status. To the best of Seller's
knowledge, the Property and Seller are not in violation of or subject
to any existing, pending, or threatened investigation or inquiry by any
governmental authority or to any remedial obligations under any
applicable laws pertaining to health or the environment (such laws as
they now exist or are hereafter enacted and/or amended hereinafter
sometimes collectively called "Applicable Environmental Laws"),
including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, hereinafter
called "CERCLA"), the Resource Conservation and Recovery Act of 1976,
as amended by the Used Oil Recycling Act of 1980, the Solid Waste
Disposal Act Amendments of 1980, and the Hazardous and Solid Waste
Amendments of 1984 (as amended, hereinafter called "RCRA"), the Texas
Water Code and the Texas Solid Waste Disposal Act, and this
representation will continue to be true and correct following
disclosure to the applicable governmental authorities of all relevant
facts, conditions, and circumstances, if any, pertaining to the
Property and Seller. The terms "hazardous substance" and "release" as
used in this Agreement shall have the meanings specified in CERCLA, and
the terms "solid waste" and "disposal" (or "disposed") shall have the
meanings specified in RCRA; provided, in the event either CERCLA or
RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective
date of such amendment and provided further, to the extent that the
laws of the State of Texas establish a meaning for "hazardous
substance," "release," "solid waste," or "disposal" which is broader
than that specified in either CERCLA or RCRA, such broader meaning
shall apply.
7. Purchaser's Representations and Warranties. Purchaser represents and
warrants to Seller that:
(a) Purchaser: (i) is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Texas;
(ii) is duly qualified to transact business in each jurisdiction where
the nature and extent of its business and properties require the same
in order for it to perform its obligations under this Agreement; and
(iii) possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply
with the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, all of which have been
duly authorized and approved by all necessary corporate action and for
which no further approval or consent is required.
(b) The consummation of the transactions contemplated by this
Agreement will not violate, or be in conflict with (i) any agreement or
instrument to which Purchaser is a party; or (ii) any judgment or
decree applicable to Purchaser as a party in interest with respect
thereto.
(c) This Agreement has been duly executed and delivered on
behalf of Purchaser, and at the Closing, all documents and instruments
required hereunder to be executed and delivered by Purchaser (or its
assignees) shall have been duly executed and delivered.
(d) Subject to the conditions herein, Purchaser has or will
have at Closing (i) the financial capability or (ii) commitments from
responsible financial institutions to provide the funds required by
Purchaser, to pay the Purchase Price and consummate the transaction
contemplated hereby within the time period contemplated herein.
(e) Purchaser either has performed, or prior to closing will
perform, whatever inspection of the Property and Seller's title thereto
that Purchaser deems appropriate and knows the condition thereof and is
purchasing the Property as a result of such inspections and not because
of, or in reliance on, any representation or warranty made by Seller
other than those expressly set forth in this Agreement.
PURCHASE AND SALE AGREEMENT - PAGE 10
<PAGE> 11
(f) In the event the Purchase Price is adjusted down at
Closing, based upon any unpaid taxes as set forth in Paragraph 4(b)(2)
hereof (the "Tax Adjustment"), Purchaser agrees to timely make payment
(equivalent to the Tax Adjustment) to such taxing authorities as may be
appropriate.
8. Conditions to Obligations of Purchaser. The obligations of Purchaser
to consummate the transaction provided for herein are subject, at the option of
Purchaser, to the fulfillment on or prior to Closing, of each of the following
conditions:
(a) Representations. The representations and warranties of
Seller herein contained shall be true and correct in all material
respects at Closing as though made on and as of such date (unless
appropriate adjustments or remediation has been made in accordance with
Paragraph 5 hereof).
(b) Performance. Seller shall have performed all obligations,
covenants, and agreements hereunder and shall have complied with all
covenants and conditions contained in this Agreement to be performed or
complied with by it at or prior to the Closing.
(c) Pending Matters. No suit, action, or other proceedings
shall be pending or threatened (a) against Seller before any court or
governmental agency which might result in impairment or loss of value
as to Seller's title to any part of the Property; or (b) which seeks to
restrain, enjoin, or otherwise prohibit the consummation of the
transactions contemplated by this Agreement.
(d) Liability. No liability which affects, in a materially
adverse manner, the Property or Purchaser's ability to receive the
economic benefits therefrom has been or is threatened to be asserted
with respect to the Property.
(e) Defects. No Defects shall be present, which are not cured
by Seller or waived by Purchaser as provided herein.
(f) Records and Access. Seller shall have afforded Purchaser
and its officers, employees, and representatives timely and reasonable
access to the Records as required herein.
9. Seller's Obligations at Closing. At the Closing, Seller shall
deliver to Purchaser the following items; however, item (e) will be delivered as
soon prior to Closing as reasonably practical:
(a) The Assignment, duly executed and acknowledged by Seller;
(b) Duly executed and acknowledged releases of all liens and
burdens on the Property or on Production therefrom or attributable
thereto;
(c) Executed transfer orders (or letters in lieu thereof)
addressed to all purchasers of production from the Property;
(d) Any other executed documents or instruments which may be
reasonably required to consummate the transactions contemplated herein
and to fully vest Purchaser with operations and title to the Property
as contemplated hereby;
(e) The "Interim Settlement Statement," which shall set forth
the Purchase Price and adjustments thereto provided for in this
Agreement which are or may be determined at or prior to the Closing,
which statement shall be delivered to Purchaser as soon as reasonably
practical prior to Closing for Purchaser's review and approval;
(f) All consents required of third parties, who are identified
in Exhibit "A" attached, properly executed and in form approved by
Purchaser; and
PURCHASE AND SALE AGREEMENT - PAGE 11
<PAGE> 12
(g) All releases of current liens of lenders encumbering all
or any part of the Property, properly executed in form acceptable by
Purchaser.
10. Purchaser's Obligations at Closing. At the Closing, Purchaser
shall:
(a) Deliver to Seller the Adjusted Purchase Price, in cash or
other immediately available funds (which shall be subject to a
subsequent accounting between Seller and Purchaser pursuant to this
Agreement) less the Escrow Deposit; and
(b) Execute and deliver any other documents or instruments
which may be required to consummate the transactions contemplated
herein.
11. Notices. All notices, demands, and requests which may be given or
which are required to be given by either Party to the other shall be in writing.
Any notice, demand, or communication required or permitted hereunder shall be
deemed to be delivered on actual receipt or three (3) days after being sent by
overnight courier or Certified U.S. Mail to Seller or Purchaser, whichever
occurs first, respectively, as follows:
SELLER: PURCHASER:
Price Sayers, Inc. Corrida Resources, Inc.
1802 Captain Shreve Drive Suite 380, Lock Box 31
Shreveport, Louisiana 71105 3500 Oak Lawn Avenue
Attn: Charles E. Price, Jr. Dallas, Texas 75219-4398
President Attn.: Edward Munden
Telephone: ______________ President
Facsimile: ______________ Telephone: 214-521-9959
Facsimile: 214-521-9960
or such other address as Purchaser or Seller may, from time to time, designate
pursuant to the terms hereof. A facsimile transmission shall be considered an
original document for purposes of providing notice under this section.
12. Furnishing Data and Information. The Seller also agrees to promptly
cooperate in all reasonable requests by Purchaser in furnishing copies, at
Purchaser's expense, of all Records necessary for Purchaser to conduct its due
diligence under the terms of this Agreement.
13. Post-Closing Adjustments. As soon as practicable after the closing,
and in any event within sixty (60) days after Closing, Seller shall prepare and
deliver to Purchaser, in accordance with this Agreement and generally accepted
accounting principles, a statement (the "Final Settlement Statement") setting
forth each adjustment or payment pursuant to Paragraph 4 hereof that was not
finally determined as of the Closing ("Post-Closing Adjustments") and showing
the calculation of such Post-Closing Adjustments and the aggregate amount
thereof. Within ten (10) business days after receipt of the Final Settlement
Statement, Purchaser shall deliver to Seller a written report containing any
changes that Purchaser proposes be made to the Final Settlement Statement. The
Parties undertake to agree with respect to the amounts of such Post-Closing
Adjustments no later than ninety (90) days after the Closing Date. The date upon
which such agreement is reached or upon which the aggregate amount of the
adjustments are finally established shall be herein called the "Final Settlement
Date." Seller shall pay to Purchaser, or vice versa, as the case may be, within
ten (10) business days after the Final Settlement Date the amount of such
adjustments (as finally established), by means of wire transfer in immediately
available funds or by means of a certified bank check.
14. Failure to Perform/Termination of Agreement. If the Seller should
fail to fully and timely perform any of its obligations hereunder, or should
fail to consummate the sale of the Property, except due to the Purchaser's
default, the Purchaser may, at its option, enforce specific performance of this
Agreement, or terminate this Agreement.
PURCHASE AND SALE AGREEMENT - PAGE 12
<PAGE> 13
15. Indemnification by Seller.
(a) Seller agrees to indemnify and save and hold harmless
Purchaser against and from any loss, damage, or expense sustained by
Purchaser arising out of or resulting from any breach of any of the
representations and warranties made hereunder and not waived by
Purchaser.
(b) Seller agrees to indemnify and save and hold harmless
Purchaser against all claims, liabilities, costs, expenses, windfall
profit taxes, and liability arising out of the ownership or operation
of the Property, and based upon the occurrence of events, the accrual
of obligations or liabilities, or the existence of conditions prior to
the Effective Date.
(c) If any claims for brokerage fees are asserted against
Purchaser in connection with this transaction based upon alleged
commitments made by Seller, Seller shall indemnify Purchaser against
all such claims and reimburse Purchaser for all reasonable expenses
incurred in responding to such claims, including reasonable attorney's
fees.
(d) Notwithstanding anything to the contrary contained herein,
Seller agrees to indemnify and save and hold harmless Purchaser for
Seller's gross negligence or willful misconduct for that period of time
between the Effective Date and Closing.
(e) The provisions of this Paragraph 15 shall survive Closing
for a period of four (4) years from the date of Closing, and Seller
shall not be entitled to assert any right of indemnification hereunder
after such date.
16. Indemnification by Purchaser.
(a) Purchaser agrees to indemnify and save and hold harmless
Seller against and from any loss, damage, or expense sustained by
Seller arising out of or resulting from any breach of any of the
representations and warranties made hereunder and not waived by Seller.
(b) Purchaser shall assume and hereby agrees to pay, honor,
discharge, and perform fully and timely, the obligations and
liabilities directly associated with the Seller's interest in the share
of the Property acquired by Purchaser hereunder, which are attributable
to the period of time from and after the Effective Date.
(c) Purchaser agrees to indemnify and save and hold harmless
Seller against all claims, costs, expenses, windfall profits taxes, and
liabilities arising out of the ownership or operation of the share of
the Property acquired by Purchaser hereunder and based upon the
occurrence of events, the accrual of obligations or liabilities, or the
existence of conditions on and subsequent to the Effective Date (but
not including these costs and expenses incurred with respect to the
purchase of Seller's interest in the Property or the negotiations
leading to such purchase).
(d) If any claims for brokerage fees are asserted against
Seller in connection with this transaction based upon alleged
commitments made by Purchaser, Purchaser shall indemnify Seller against
all such claims and reimburse Seller for all reasonable expenses
incurred in responding to such claims, including reasonable attorney's
fees.
(e) The provisions of this Paragraph 16 shall survive Closing
for a period of four (4) years from the date of Closing, and Purchaser
shall not be entitled to assert any right of indemnification hereunder
after such date.
17. Confidentiality. Prior to Closing, the Seller shall be furnishing
to Purchaser various information relating to Seller and the Property, and
Seller's business activities, assets, finances, costs, revenues, rights,
obligations, liabilities, and strategies. In consideration of the Seller
furnishing this information to Purchaser, Purchaser agrees that prior to Closing
(a) that such
PURCHASE AND SALE AGREEMENT - PAGE 13
<PAGE> 14
information is confidential and/or proprietary to Seller, and such information
shall be entitled to and shall receive treatment as such by Purchaser; (b)
Purchaser shall use its best efforts, and will advise all of its employees,
representatives, agents, and advisors who have access to such information, to
use their best efforts to hold in confidence, not to disclose to others, and not
to use (except in respect of the transaction contemplated by this Agreement) any
such information; and (c) if Closing does not occur, all such information,
unless otherwise specified in writing, shall remain the property of Seller, and
shall be returned to Seller together with any copies made thereof. Prior to
Closing, Purchaser shall provide such information only to its employees,
representatives, agents, and advisors who have need to know such information in
connection with this Agreement.
18. Other Purchase and Sale Agreements. Purchaser has tendered purchase
and sale agreements, on or about the date hereof, to other parties, all of whom
are named in Exhibit "C" attached hereto. Such other agreements may cover the
interest, if any, of such other parties in the Leases and Property covered by
this Agreement, and may cover other oil and gas properties which are not the
subject of this Agreement. Purchase and Seller agree that the Closing under this
Agreement shall be simultaneous with the closings under such other agreements,
and that Closing under this Agreement shall be conditional upon closing
occurring under such other agreements. Seller does not claim any interest in and
to the oil and gas leases and other property which are the subject of such other
purchase and sale agreements, and which are not the subject of this Agreement.
In the event Seller may have any claim or interest in and to the oil and gas
leases and other property which are the subject of such other purchase and sale
agreements, and which are not the subject of this Agreement, then, for the
consideration herein, Seller agrees to sell and convey to Purchaser all of
Seller's interest in and to the oil and gas leases and other property and
interests which are the subject of the other purchase and sale agreements, above
described.
19. Area of Non-Competition. Seller agrees not to compete with
Purchaser in an area which comprises the lands covered by the Leases and an area
which shall extend outward from the boundaries of each of the Leases a distance
of 5,280 feet. In this regard, Seller agrees that Seller, its employees, agents,
servants, or companies controlled by Seller, in common control with Seller, or
with whom Seller is affiliated, shall not acquire, for so long as a Lease is
held in force and effect by its terms, and for a period of three years
thereafter, any oil and gas leases, any mineral interest, royalty interest,
overriding royalty interest, or any farmout agreement, or other agreement
permitting the right to explore for and produce oil and/or gas, which cover any
lands within the restricted area.
20. Miscellaneous.
(a) If any term or provision of this Agreement is held to be
illegal, invalid, or unenforceable, the legality, validity, and
enforceability of the remaining terms and provisions of this Agreement
shall not be affected thereby, and in lieu of each such illegal,
invalid, or unenforceable term or provision, there shall be added
automatically to this Agreement a legal, valid, and enforceable term or
provision as similar as possible to the term or provision declared
illegal, invalid, or unenforceable;
(b) Either Seller or Purchaser shall have the right to waive
any requirement contained in this Agreement, which is intended for the
waiving Party's benefit, but except as otherwise specifically provided
herein, such waiver shall be effective only if in writing and executed
by the Party for whose benefit such requirement is intended; provided
however, that any such waiver shall not be construed as a waiver of any
other benefit accruing to the waiving Party hereunder;
(c) The captions used in connection with this Agreement are
for convenience only and shall not be deemed to expand or limit the
meaning of the language of this Agreement;
(d) Words of any gender used in this Agreement shall be held
and construed to include any other gender, and words in the singular
shall be held to include the plural, unless the context otherwise
requires;
PURCHASE AND SALE AGREEMENT - PAGE 14
<PAGE> 15
(e) Seller agrees that, on or before the Closing, it will not
carry on any negotiations with any third party, for the sale or
transfer of the Property, without the prior written consent of
Purchaser. Thereafter, Seller may negotiate with third parties if this
Agreement has been terminated;
(f) THIS AGREEMENT AND ALL OF THE TRANSACTIONS CONTEMPLATED
HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS;
(g) This Agreement embodies the entire agreement between
Seller and Purchaser with respect to the subject matter hereof and
supersedes all prior agreements, whether written or oral;
(h) Except as otherwise specifically provided herein, this
Agreement may not be amended except by an agreement in writing executed
by both Seller and Purchaser;
(i) This Agreement shall be binding upon and inure to the
benefit of Seller and Purchaser and their respective legal
representatives, successors, and assigns. It is expressly understood
and agreed that Purchaser's rights under this Agreement may not be
assigned prior to Closing. Provided however, any interest acquired
hereunder shall be freely assignable by Purchaser after Closing;
(j) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all
of which shall be deemed to be one and the same instrument;
(k) In addition to the acts and deeds recited herein and
contemplated to be performed, both Seller and Purchaser hereby agree to
perform, execute, and/or deliver at and after Closing any and all such
further reasonable acts, deeds, and assurances as may be reasonably
required to consummate the transactions contemplated by this Agreement;
(l) This Agreement supersedes any and all other agreements,
either oral or in writing, between the Parties hereto with respect to
the subject matter hereof and contains all of the covenants and
agreements between the Parties with respect to said matter. Each Party
to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any
Party, or anyone acting on behalf of any Party, which are not embodied
herein, and that no other agreement, statement, or promise not
contained in this Agreement shall be valid or binding;
(m) In the event of any dispute occurring under this
Agreement, the prevailing Party shall be entitled to be reimbursed by
the other Party for its reasonable and necessary attorney's fees;
(n) Any failure by either Party to insist, or any election by
either Party not to insist, upon strict performance by the other Party
of any of the terms, provisions, or conditions of this Agreement shall
not be deemed to be a waiver of the same or of any other term,
provision, or condition hereof, and either Party may at any time or
times thereafter insist upon strict performance by the other Party of
any and all of such terms, provisions, and conditions. No waiver by
either Party of any right, remedy, power, or privilege hereunder shall
be construed as a waiver of, or operate to impair, any subsequent
right, remedy, power, or privilege nor shall any single or partial
exercise of any such right, remedy, power, or privilege exhaust the
same or preclude other or further exercise thereof.
(o) All covenants, representations, and indemnities set forth
herein shall survive closing, subject to any agreed periods of
limitation as may be set forth herein.
PURCHASE AND SALE AGREEMENT - PAGE 15
<PAGE> 16
EXECUTED as of the 5th day of February, 1997.
WITNESSES: SELLER:
PRICE SAYERS, INC.
___________________________ By: ______________________________
CHARLES E. PRICE, JR., PRESIDENT
___________________________
PURCHASER:
CORRIDA RESOURCES, INC.,
a Nevada corporation
___________________________ By: ______________________________
ROBERT P. LINDSAY, VICE PRESIDENT
___________________________
SHAREHOLDERS:
___________________________ ____________________________________
(Signature)
___________________________ ____________________________________
(Printed Name)
___________________________ ____________________________________
(Signature)
___________________________ ____________________________________
(Printed Name)
ACKNOWLEDGMENTS
STATE OF LOUISIANA
PARISH OF ________________
On this the 5th day of February, 1997, before me appeared CHARLES E.
PRICE, JR., to me personally known, who, being duly sworn, did say that he is
the President of PRICE SAYERS, INC., a Louisiana corporation, and that the
foregoing instrument was signed by him on behalf of such entity, with necessary
authority, and that CHARLES E. PRICE, JR., acknowledged said instrument to be
the free act and deed of such corporation.
_________________________________
Notary Public, State of Louisiana
PURCHASE AND SALE AGREEMENT - PAGE 16
<PAGE> 17
STATE OF LOUISIANA
PARISH OF ________________
On this the 5th day of February, 1997, before me appeared ROBERT P.
LINDSAY, to me personally known, who, being duly sworn, did say that he is the
Vice President of CORRIDA RESOURCES, INC., a Nevada corporation, and that the
foregoing instrument was signed by him on behalf of such entity, with necessary
authority, and that ROBERT P. LINDSAY acknowledged said instrument to be the
free act and deed of such corporation.
_________________________________
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF ________________
On this the 5th day of February, 1997, before me appeared
_____________________________, to me known to be the person described in and who
executed the foregoing instrument, and acknowledged that he/she executed the
same as his/her free act and deed.
_________________________________
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF ________________
On this the 5th day of February, 1997, before me appeared
_____________________________, to me known to be the person described in and who
executed the foregoing instrument, and acknowledged that he/she executed the
same as his/her free act and deed.
_________________________________
Notary Public, State of Louisiana
PURCHASE AND SALE AGREEMENT - PAGE 17
<PAGE> 18
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the 5th day of February, 1997, by
and between I. P. THOMAS, joined herein by his wife, MARY ELLEN THOMAS,
(hereinafter referred to as the "Seller") and CORRIDA RESOURCES, INC., a Nevada
corporation (the "Purchaser"), (Seller and Purchaser hereinafter individually
referred to as "Party" and collectively as "Parties").
RECITALS
WHEREAS, Seller desires to sell and convey, and Purchaser desires to
purchase and receive, the following, upon the terms and conditions hereinafter
set forth:
I. The Leases and Units. All of the Seller's right, title, and interest
in and to (i) the oil, gas, and mineral leases and properties and interests
described in Exhibit "A," including but not limited to, leasehold, fee, mineral,
royalty, and overriding royalty interests and payments out of or measured by
Production (hereinafter defined) (said oil, gas, and mineral leases and property
and interests being herein referred to as the "Leases"); (ii) the units, pooled
acreage, spacing, or proration units or other allocation of acreage, and all
rights associated therewith, which are applicable to the Leases and have been
established by, or in accordance with, (a) applicable contractual provisions
regarding unitization, communitization, pooling, spacing, or proration, or (b)
applicable state or federal law;
II. The Production. All of the Seller's right, title, and interest in
and to all oil, gas, casinghead gas, condensate, distillate, and other liquid or
gaseous hydrocarbons and other minerals which are in, under, upon, and produced
from or allocable (or to be produced from or allocable) to the Leases after the
Effective Date (as defined in Paragraph 3(a) hereof) (such hydrocarbons and
minerals being hereinafter referred to as "Production"), including "line fill"
and inventory attributable to the interests described in Exhibit "A," or the
proceeds from the sale of such Production;
III. The Wells and Equipment. All of Seller's right, title, and
interest in and to all personal property of every kind and character located on
the Leases or used in the operation thereof including, without limitation, wells
(whether productive or non-productive, active or inactive) (the "Wells"),
compressors, well equipment, casing, tanks, machinery, gathering lines and
systems, treatment facilities, disposal wells and disposal facilities, pipelines
and other appurtenances, and any other personal property situated thereon,
herein individually and collectively called the "Equipment";
IV. The Rights of Way and Permits. All of Seller's right, title, and
interest in and to all rights, privileges, benefits, permissions, and
authorizations (including, without limitation, permits, licenses, servitudes,
easements, and rights of way) in respect of the use and occupation of the
surface of such Leases, and the subsurface depths under the land and premises
covered by and benefiting such Leases, herein called individually and
collectively "Rights of Way and Permits";
V. The Contracts. All of Seller's right, title, and interest in and to
all of the orders, gas purchase and sale contracts (wherein Seller is a selling
party), crude purchase and sale agreements (wherein Seller is a selling party),
surface leases, farm-in agreements, farmout agreements, bottom hole agreements,
acreage contribution agreements, operating agreements, unit agreements, area of
mutual interest agreements, processing agreements, options, leases of equipment
or facilities, and other contracts, agreements, and rights, which are owned by
Seller, in whole or in part and are (i) appurtenant to the Leases, or (ii) used
or held for use in connection with the ownership or operation of the Leases or
with the Production, treatment on the Leases, sale or disposal of water,
hydrocarbons or associated substances, herein called individually and
collectively the "Contracts";
VI. The Records. All of the files, records and data in the possession
of Seller relating to the items described in subsections (I), (II), (III), (IV),
and (V) above (the "Records"), including, without limitation, lease files, title
records (including abstracts of title, title opinions, and title curative
documents); contracts, correspondence, originals or copies of geological,
geophysical, and
PURCHASE AND SALE AGREEMENT - PAGE 1
<PAGE> 19
seismic records, data, and information; and originals or copies of production
records, electric logs, core data, pressure data and decline curves and
graphical production curves, and all related matters, to the extent Seller has
the authority to release such Records and to the extent they are reasonably
required by Purchaser to operate the Wells;
VII. Miscellaneous. Exhibit "A" attached hereto sets forth the
undivided interests of Seller in the Leases, and the revenue interests
attributable thereto, as well as the undivided interests of Seller in the
Production, Wells, Equipment, Rights of Way, and Contracts. This Agreement
covers and pertains to all of the right, title, and interest of Seller in the
Leases, the lands covered by the Leases, Production, Wells, Equipment, and
Rights of Way, even if the undivided interests of Seller in any such property or
property rights should be incorrectly or insufficiently described in the Exhibit
"A."
The Leases, Production, Wells, Equipment, Rights of Way and Permits,
Contracts, Records, and Miscellaneous referred to in Paragraphs I through VII
above, are hereinafter sometimes referred to individually and collectively in
the singular as "Property."
WHEREAS, this Agreement was the subject of, and was contemplated by,
that certain letter of intent dated October 17, 1996, by and between Queen Sand
Resources, Inc., and David Robertson and Keith Robertson, as amended and
supplemented, including amendment and supplement dated December 24, 1996. As to
the interest of Seller in the Property, this Agreement supersedes and replaces
the letter of intent.
NOW, THEREFORE, for and in consideration of the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Seller and Purchaser
hereby agree as follows:
1. Sale and Purchase. Seller agrees to sell and convey to Purchaser,
and Purchaser agrees to purchase and pay for, all of Seller's right, title, and
interest in and to the Property as hereinafter provided.
2. Purchase Price. The "Purchase Price" for the Property shall be the
sum of One Thousand Five Hundred Thirty Dollars ($1,530.00), which shall be paid
at Closing.
All cash payments to be tendered by Purchaser to Seller, either before
or after Closing, shall be made by wire transfer or shall be made by certified
funds.
The Purchase Price shall be subject to adjustment as hereinafter
provided.
3. Closing and Effective Date.
(a) The closing of the sale and purchase of the Property shall
take place on or before February 5, 1997, (the "Closing") at 1310 Jeff
Davis, Hammond, Louisiana 70403, or at such other time, place, or
manner as may be mutually agreeable to the Parties. The sale of the
Property shall be effective as of November 1, 1996, at 7:00 a.m. local
time for each of the particular Leases (the "Effective Date").
(b) At the Closing, the Property shall be conveyed and
transferred by Seller to Purchaser by the execution and delivery of an
Assignment and Bill of Sale (the "Assignment") in substantially the
same form and content as the Assignment and Bill of Sale which is
attached hereto as Exhibit "B," and such other instruments of
conveyance as may be reasonably requested by Purchaser. Purchaser shall
be entitled to all of Seller's rights in
PURCHASE AND SALE AGREEMENT - PAGE 2
<PAGE> 20
the Property (including, without limitation, the rights to all
Production and proceeds of Production) appurtenant and attributable to
the Property, and shall be subject to the duties and obligations
attendant with ownership of such undivided share of the Property for
the period from and after the Effective Date. For the period prior to
the Effective Date, Seller shall be entitled to all of the rights
(including, without limitation, the rights to all Production and
proceeds of Production) appurtenant and attributable to the Property,
and shall be subject to the duties and obligations attendant with
ownership of the Property.
4. Adjustments to Purchase Price. The Purchase Price shall be adjusted
(the "Adjusted Purchase Price") at the Closing, by the "Interim Settlement
Statement" (hereinafter defined in this paragraph and in Paragraph 9 below),
and, subsequent to Closing, by the "Final Settlement Statement" (hereinafter
defined in Paragraph 13 below), as follows:
(a) The Purchase Price shall be increased by the
following:
(1) the value of all merchantable allowable oil or
other liquid hydrocarbons in storage owned by Seller in the
tanks or above the pipeline connection at the Effective Date,
and not previously sold by Seller, that is credited to the
share of the Property being acquired hereunder, valued at the
contract price thereto, or if none, the actual price received
by Purchaser, less taxes or gravity adjustments deducted by
the purchaser of such oil or other liquid hydrocarbons;
(2) the amount of all reasonable expenditures made in
connection with the ownership, operation, and maintenance of
the share of the Property being acquired hereunder, (including
royalties and rentals) and in accordance with generally
accepted accounting principles and prudent operations,
attributable solely to the period from and after the Effective
Date and which are paid by or on behalf of Seller after the
Effective Date;
(3) an amount equal to all prepaid expenses,
attributable to the ownership, operation, and maintenance of
the share of the Property being acquired hereunder that are
paid by or on behalf of Seller after the Effective Date and
prior to the Closing Date and that are, in accordance with
generally accepted accounting principles, attributable solely
to the period from and after the Effective Date;
(4) any other amount agreed upon by Purchaser and
Seller.
(b) The Purchase Price shall be decreased by the following:
(1) the amount of any proceeds from the sale of
Production attributable to the share of the Property being
acquired hereunder attributable to the period on or after the
Effective Date (net of production, severance, and similar
taxes and assessments measured by or payable out of
production) actually received or accrued by or on behalf of
Seller;
(2) an amount equal to all unpaid ad valorem,
property, production, profit, severance, and similar taxes and
assessments based upon or measured by the ownership of the
share of the Property being acquired hereunder or the
production of oil, gas, or other minerals therefrom or the
receipt of proceeds attributable thereto, which accrue to or
are chargeable against such share of the Property (in
accordance with generally accepted accounting principles) and
which are attributable to the period prior to the Effective
Date, which amount shall, to the extent not actually assessed,
be computed based upon such taxes and assessments for the
immediately-preceding calendar year, or if such taxes or
assessments are assessed on other than a calendar-year basis,
for the tax period last ended;
(3) any amounts received by Seller (whether prior to
or subsequent to the Effective Date) pursuant to
"take-or-pay," advance payment, or similar provisions of any
production sales contract, any gas balancing agreement, or any
other
PURCHASE AND SALE AGREEMENT - PAGE 3
<PAGE> 21
agreement, to the extent any purchaser has the right to apply
any such amounts to Purchaser's share of Production delivered
after the Effective Date;
(4) any reduction in the value of the share of the
Property being acquired hereunder resulting from the existence
of a Defect (herein defined in Section 5(d)) which is not
cured or waived prior to Closing;
(5) any other amount agreed upon by Purchaser and
Seller.
(c) The "Interim Settlement Statement" shall be prepared by
Seller, its agents, or representatives, prior to Closing, which
statement shall set forth the adjustments to the Purchase Price, per
the adjustments set forth in this Paragraph 4, which are or may be
determined at or prior to Closing. Such statement shall be prepared
according to generally accepted accounting principles and shall show
the calculation of all such adjustments. Upon the approval of such
Interim Settlement Statement by Purchaser, the Purchase Price shall be
adjusted according to such statement. Upon Purchaser's request, Seller
shall make available to Purchaser all information relied upon by Seller
for the adjustments requested in order to aid and facilitate
Purchaser's approval of such statement. After Closing, the Purchase
Price may further be adjusted, pursuant to the adjustments set forth in
this paragraph, with the "Final Settlement Statement" in the manner
further described in Paragraph 13 below.
(d) All monies received by either Party hereto which, under
the terms of this Agreement or otherwise, belong to the other Party,
shall be received in trust by the Party receiving such funds, and shall
monthly, upon receipt, be paid over to the other Party. The Parties
agree, in this regard, to cooperate fully and to execute, endorse, and
deliver as expeditiously as practicable such papers, checks, and
documents as are needed promptly to complete the transfer of such
payments;
(e) After the Closing, if an invoice or other evidence of an
obligation relating to the share of the Property acquired by Purchaser
is received which is applicable to periods both prior to and after the
Effective Date, and is partly the obligation of Seller and partly the
obligation of Purchaser, then each Party shall pay its respective
portion of such obligation to the obligee, prorated between the Parties
as of the Effective Date;
(f) At and after the Closing, Purchaser and Seller will
cooperate fully in notifying all applicable third parties (including
the execution by Seller of such transfer orders, letters in lieu,
change of operator, etc., as may be requested by Purchaser) so that
notices, proceeds, and invoices from such third parties may take into
account the fact that Purchaser has acquired the Property as of the
Effective Date;
(g) The parties hereto agree to exercise diligence and good
faith in attempting to resolve any disagreements or disputes which may
arise from the adjustments to the Purchase Price to be made in
accordance with this paragraph.
5. Property Conditions, Title Review, Property Information, and
Casualty Losses.
(a) Property Conditions. THIS SALE OF THE EQUIPMENT AND ALL
OTHER PERSONAL PROPERTY THAT IS A PART OF THE PROPERTY IS MADE ON AN
"AS IS, WHERE IS" BASIS WITH ALL FAULTS AS TO ITS CONDITION, AND SELLER
EXPRESSLY DISCLAIMS ALL WARRANTIES AS TO THE CONDITION OF THE EQUIPMENT
(NOTE, HOWEVER, THERE ARE CERTAIN WARRANTIES AS TO TITLE AS HEREIN SET
FORTH) INCLUDING, WITHOUT LIMITATIONS, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE. Seller agrees
that for a period of time commencing with the date of the letter of
intent dated October 17, 1996, above described, and continuing until
five (5) business days before Closing (the "Review Period"), Purchaser,
personally or through its authorized agents or representatives, shall
have the right to make any and all physical inspections of the Property
which Purchaser may desire to make or to have made and to make all such
other inspections, surveys, tests, or other studies (including, but not
limited
PURCHASE AND SALE AGREEMENT - PAGE 4
<PAGE> 22
to, environmental assessments and evaluations) as Purchaser deems
necessary or desirable. Upon reasonable notice to Seller, Purchaser,
and its authorized agents and representatives, at Purchaser's sole
risk, may enter upon the Property for the purpose of conducting those
inspections, surveys, tests, and studies. If Purchaser shall determine
that the condition of the Property is not in substantial compliance
with any governmental regulations (including environmental
regulations), then upon discovery, Purchaser must promptly give written
notice to Seller of such condition ("Condition"). Upon receipt of such
notice, Seller shall have the option, but not the obligation, to (a)
cure or remedy such Condition to the reasonable satisfaction of
Purchaser (if current remediation of such Condition is required by a
governmental agency, Seller agrees that the Condition shall be remedied
in accordance with and to the satisfaction of the appropriate agency's
requirements); or (b) agree with Purchaser on a reduction to the
Purchase Price which reduction shall reflect Purchaser's anticipated
reasonable cost to remedy such Condition. If the Condition cannot be
cured or remedied to Purchaser's reasonable satisfaction, and if
agreement cannot be reached on reduction to the Purchase Price, then
the affected Property may be excluded by Purchaser from the Property to
be acquired by Purchaser hereunder. In such event , the Purchase Price
shall be reduced by the Allocated Purchase Price (see subparagraph (c)
below) for such excluded Property.
(b) Review of the Records. During the Review Period, and upon
reasonable notice from Purchaser, Seller shall provide Purchaser,
personally or through its authorized agents or representatives, full
access during normal business hours to Seller's office and premises to
review and inspect all Records, including, but not limited to, all
abstracts of title, lease files, unit files, production and marketing
files, title opinions, title files, title records, geologic,
engineering, and other files or information in Seller's possession or
to which it has access which relate to the Property and the status of
Seller's title thereto, and Purchaser, at its expense, shall have the
right to make and retain copies of any of such Records; provided
however, if the transactions contemplated hereby do not close for any
reason, Purchaser shall return any Records and copies thereof to Seller
forthwith. Without limiting the generality of the foregoing, Purchaser
shall also be given access to reserve reports, geological and
geophysical reports (including, but not limited to well records, log
films, proprietary or joint venture seismic data or other seismic data
which Seller is not contractually restricted from disclosing),
contracts (including, but not limited to, gas contracts), operating
agreements, operating statements, and reports.
(c) Notice of Defect. If, during the Review Period, Purchaser
determines that the Property is subject to a "Defect" (as defined
herein in Section 5(d)), the Purchaser must give written notice to
Seller of such Defect, the nature of the Defect, and furnish Seller
Purchaser's basis for the assertion of such Defect. As soon as
practical after such written notice, Seller shall use reasonable
diligence to cure any such Defects. If Seller cannot cure any such
Defects to the reasonable satisfaction of Purchaser, then Seller shall
so notify Purchaser in writing. Thereafter, Seller and Purchaser shall
use a good faith effort to agree on the Purchase Price adjustment for
any such Defect which cannot be cured. Such adjustment shall be
determined in accordance with the following guidelines:
(1) The Purchase Price shall be allocated among the
various Leases in the proportion of the PDP fair market value
of the Leases reported by Netherland Sewell & Associates in
its report dated October 21, 1996, (the "Allocated Purchase
Price").
(2) If the Defect is that Seller's Net Revenue
Interest ("NRI") for any Property is less than the NRI for
such Property as set forth in Exhibit "A," then the allocated
Purchase Price for such Property shall be adjusted in the same
proportion that the actual NRI for such property bears to the
NRI shown in Exhibit "A."
(3) If the Defect is a lien, encumbrance, or other
charge upon the Property which is liquidated in amount, then
the adjustment shall be the sum necessary to be paid to the
obligee to remove the Defect from the Property;
PURCHASE AND SALE AGREEMENT - PAGE 5
<PAGE> 23
If the Purchase Price adjustment for any such Defect cannot be
determined, and the Seller and Purchaser cannot agree in good faith on
the amount of the adjustment to the Purchase Price, the Purchaser may
(a) waive the Defect and proceed with Closing, or (b) exclude the
affected Property and reduce the Purchase Price by the Allocated
Purchase Price for such property, or (c) terminate this Agreement, in
which event the Parties shall have no further rights or obligations
under this Agreement.
(d) Definition of Defect. For the purpose of this Agreement, a
"Defect" shall be defined as:
(1) Any material encumbrance, lien, mortgage, breach
of representation or warranty, production payment, pledge,
claim, charge, call on production, default, defect, condition,
unleased mineral interest, preferential right, requirement for
consent to assignment, or lack of title affecting the
Property, or any matter affecting the Property by which
Purchaser reasonably or in good faith believes that Seller's
interest in a Property may become subject to the claims of
third parties;
(2) Seller's NRI in any Property is less than the NRI
for such Property which is set forth in Exhibit "A," or
Seller's gross working interest ("GWI") in any Property is
less than the working interest shown in Exhibit "A," or
Seller's GWI in any Property is greater than the working
interest shown in Exhibit "A" without a corresponding increase
in the NRI in such Property;
(e) Other Property Information. If, based upon Purchaser's
examination of the Records according to Paragraph 5(b) hereof,
Purchaser shall determine that any information, statement, or data
contained in any information, reports, statement, or data furnished to
Purchaser or used in its economic analysis of the Property is not true
or correct in any material respect, upon discovery of any incorrect
information, Purchaser may give written notice to Seller of such
inaccuracy or misstatement. Any such notice must be provided in writing
during the Review Period, or it will be deemed to be waived. Such
notice shall provide a summary of such inaccuracy or misstatement. Upon
receipt of such notice, Seller shall have the option, but not the
obligation, to (a) cure or remedy such inaccuracy or misstatement to
the reasonable satisfaction of Purchaser; or (b) agree with Purchaser
on a reduction to the Purchase Price, which reduction shall reflect
Purchaser's reasonably anticipated cost to remedy such inaccuracy or
misstatement. If the inaccuracy or misstatement cannot be cured or
remedied to Purchaser's reasonable satisfaction, and if agreement
cannot be reached on reduction to the Purchase Price, then the affected
Property shall be excluded from the Property to be acquired by
Purchaser hereunder, and the Purchase Price shall be reduced by the
Allocated Purchase Price for such Property;
(f) Casualty Loss. If, prior to Closing, any Property is
substantially damaged or destroyed by fire or other casualty ("Casualty
Defect"), Seller shall notify Purchaser promptly after Seller learns of
such event. Seller shall have the right, but not the obligation, to
cure any such Casualty Defect by repairing such damage or, in the case
of personal property, fixtures, replacing the Property affected thereby
with equivalent items, no later than the date of Closing. If any
Casualty Defects exist at Closing, Purchaser may proceed to purchase
the Property affected thereby, and the Purchase Price shall be reduced
by the aggregate reduction in the value of such Property on account of
such Casualty Defects, as determined by the mutual agreement of the
Parties, or if the Parties are unable to agree on the reduction of the
Purchase Price, then the affected Property shall be excluded from the
Property to be acquired by Purchaser hereunder, and the Purchase Price
shall be reduced by the Allocated Purchase Price for such Property.
Notwithstanding anything to the contrary contained herein, Seller shall
be entitled to retain all insurance proceeds and claims against other
Parties in respect of any such Casualty Defect which occurs prior to
closing unless no reduction is made in the Purchase Price as a result
of such Casualty Defect, in which event Purchaser shall be entitled to
the insurance proceeds and claims against other Parties arising from
such Casualty Defect.
PURCHASE AND SALE AGREEMENT - PAGE 6
<PAGE> 24
6. Seller's Representations and Warranties. Seller represents and
warrants to Purchaser that:
(a) This Agreement has been duly executed and delivered on
behalf of Seller and is binding and enforceable against Seller in
accordance with its terms and at the Closing. All documents and
instruments required hereunder to be executed and delivered by Seller
shall have been duly executed and delivered at Closing, and the
execution, delivery, and performance of this Agreement by Seller and
the consummation of transactions contemplated hereby will not
constitute a breach of, an event of default under, a violation of, or a
conflict with any agreement or other instrument to which Seller is a
party (except to the extent such instrument may be released at the
Closing). Nor will the same cause Seller to be in violation of any
applicable laws or regulations or any order of any court or
governmental agency having jurisdiction.
(b) All ad valorem, property, production, severance, excise,
and similar taxes and assessments based on or measured by the ownership
of the Property or the Production or the receipt of proceeds therefrom,
which have become due and payable prior to the date hereof with respect
to the Property have been properly paid, and Seller's allocable share
of such taxes and assessments which become due and payable prior to the
Closing shall be properly paid by Seller, and all royalties, overriding
royalties, and payments to any third parties which have become due and
payable prior to the date hereof with respect to production from the
Property, have been properly paid, and will be hereafter properly paid
for the period prior to Closing.
(c) Seller has incurred no liability, contingent or otherwise,
for brokers' or finders' fees in respect of this transaction for which
Purchaser shall have any responsibility whatsoever.
(d) Prior to the Closing, Seller will pay or cause to be paid
all of Seller's share of costs and expenses incurred in connection with
the Property, and will comply with all contracts or other agreements
relating to the Property.
(e) To the best of Seller's information and belief, all laws,
regulations, and orders of all governmental agencies having
jurisdiction over the Property have been and shall continue to be
complied with until the Closing.
(f) There are no first rights of refusal, consents,
authorizations, preferential rights, options, or claims of a similar
nature affecting the Property, other than those listed in Exhibit "A,"
said listed consents defined herein as "Consents."
(g) Seller shall, upon request, subrogate Purchaser to any
claim which Seller may have against any third party, prior owner,
vendor, or assignor with respect to the share of the Property acquired
by Purchaser, or the title thereto.
(h) There are no "imbalances" which allow any other party to
make up production at any time after the Effective Date, under any
operating agreement, gas balancing agreement and storage agreement, gas
transportation agreement, gas processing or dehydration agreement, or
other similar agreement relating to the Property.
(i) Seller has not directly or indirectly reserved or retained
any recorded or unrecorded interest or rights in any of the Property,
and Seller shall not reserve any recorded or unrecorded executory
interest or rights relating to the Property.
(j) Seller warrants that the Property is free and clear of all
encumbrances, liens, and mortgages, save and except such encumbrances
as may be identified and described in Exhibit "A" attached hereto, and
further save and except liens for taxes not yet due and payable.
PURCHASE AND SALE AGREEMENT - PAGE 7
<PAGE> 25
(k) Except as may be identified and described in Exhibit "A"
attached hereto, the Property is not subject to any restriction,
reservation, reversionary interest, drilling or development obligation,
or other material obligation or burden on the operation or the
disposition of Production attributable to the Property.
(l) No part of any of the Property is affected by any
prepayment arrangement under any contract for the sale of oil or gas,
or by any production payment or any other arrangement for delivery of
oil or gas produced from any of the Property at some future time
without Purchaser then or thereafter receiving full payment therefor,
and no third party now has or at Closing will have any right to take
makeup gas for which it has already paid. As of the Effective Date,
there are no volumes of makeup gas owing, or accumulated transportation
credits due, to gas purchasers on account of any "take-or-pay" or other
provisions of any contract, and Seller has not produced or sold more
than its pro-rata share of the gas from any Wells included in the
Property.
(m) Except as may be set forth in Exhibit "A" attached hereto,
there are no gas purchase or sale agreements, and no gas gathering or
transportation agreements, affecting the Property that cannot be
terminated upon ninety (90) days' written notice.
(n) Without the prior written consent of Purchaser, Seller (i)
shall not enter into any new agreements or commitments affecting the
Property which extend beyond the Closing, and (ii) will not modify or
terminate any agreements affecting any of the Property, including,
without limitation, any oil and gas leases, unitization or pooling
agreements, operating agreements, pipeline agreements, processing
agreements, and hydrocarbon sales contracts, and (iii) will not further
encumber, sell, mortgage, release, abandon, or otherwise dispose of any
of the Property or any interests therein.
(o) There is not any suit, action, or other proceeding pending
or threatened which affects or relates to the Property, or seeks to
restrain or prohibit Seller from selling or conveying to Purchaser the
share of the Property to be purchased herein. Seller shall promptly
notify Purchaser of any such proceedings which may arise or be
threatened prior to Closing.
(p) There are no operating agreements with third parties
affecting the Property except as may be identified and described in
Exhibit "A" attached hereto.
(q) Seller has no knowledge and has not received any notice of
any claimed default (or any event which, with the giving of notice or
the passage of time, or both, would constitute a default) under (i) the
Leases, (ii) any order, writ, injunction, or decree of any court,
commission, or administrative agency affecting the Property, or (iii)
any other agreement affecting the Property. Seller shall promptly
notify Purchaser of any such notice hereafter received by Seller and
the occurrence of any such event of which Seller becomes aware prior to
Closing.
(r) There are no tax partnerships affecting any of the
Property.
(s) To the best of Seller's information and belief, no
Production from any Well on the Property has occurred in excess of that
permitted by law, orders, or regulations.
(t) To the best of Seller's information and belief, there has
been no material injury or damage to any of the Property which has not
been fully repaired, replaced, or rebuilt.
(u) Except for depletion due to continued production, there
has been no substantial and material change in condition of the
Property between the date hereof and Closing.
(v) To the best of Seller's information and belief, all
easements, rights of way, permits, crossing agreements, and surface
rights included in the Property are in full force and
PURCHASE AND SALE AGREEMENT - PAGE 8
<PAGE> 26
effect and are valid and subsisting, and freely assignable, and all
rentals and other payments due thereunder have been properly and timely
paid and all conditions necessary to keep them in force have been duly
performed.
(w) From and after the effective date of its acquisition of
its ownership in the Leases, the Seller has performed all obligations
required to be performed under such Leases, or any other instruments
and agreements relating to the Properties, and is not in default
thereunder, and to the best of Seller's information and belief, each of
the Leases to be conveyed is valid and in full force and effect.
(x) To the best of Seller's knowledge, Seller owns each Lease
and Property in the undivided share reflected by the "Working Interest"
described and set forth in Exhibit "A" for each particular Lease and
Property, and Seller owns for each Lease and Property the share of
Production reflected as "Net Revenue Interest" in Exhibit "A" attached
hereto. Seller is being paid not less than the fractional "net revenue
interest" for each Property in Exhibit "A" hereto, and, for expenses
and costs for each Property, Seller is not paying more than the
fractional interest specified under "Working Interest" for each
Property in Exhibit "A" hereto.
(y) To the best of Seller's information and belief, all
rentals and bonuses have been timely and fully paid and discharged, and
all conditions necessary to keep the Leases in full force have been
performed, and no proceeds from the sale of Production attributable to
the Property are currently being held in suspense by any purchaser
thereof.
(z) The Seller has not collected any proceeds from the sale of
Production attributable to the Property which are subject to refund, or
if so, that any such refund, if not otherwise accounted for under this
Agreement, shall be the sole responsibility of the Seller.
(aa) Except as listed in Exhibit "A" attached hereto, to the
best of Seller's information and belief, there are no Wells located on
the Property that Seller is obligated by law or contract to plug and
abandon, that Seller will be obligated by law or contract to plug and
abandon at the present time, and with the lapse of time or notice, or
both, because the well is not currently capable of producing production
in commercial quantities, or because the Well is subject to exceptions
to a requirement to plug and abandon issued by a regulatory authority
having jurisdiction over the Property.
(bb) To the best of Seller's information and belief, there are
no presently existing conditions (by existing federal or state statutes
and regulations) affecting the Property, which might give rise to a
cause of action on behalf of any governmental agency or third party,
against either Purchaser or Seller.
(cc) All information and data provided to Purchaser by Seller
or its agents concerning the Property is true and correct to the best
of Seller's information, knowledge, and belief.
(dd) Environmental Current Status. To the best of Seller's
knowledge, the Property and Seller are not in violation of or subject
to any existing, pending, or threatened investigation or inquiry by any
governmental authority or to any remedial obligations under any
applicable laws pertaining to health or the environment (such laws as
they now exist or are hereafter enacted and/or amended hereinafter
sometimes collectively called "Applicable Environmental Laws"),
including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, hereinafter
called "CERCLA"), the Resource Conservation and Recovery Act of 1976,
as amended by the Used Oil Recycling Act of 1980, the Solid Waste
Disposal Act Amendments of 1980, and the Hazardous and Solid Waste
Amendments of 1984 (as amended, hereinafter called "RCRA"), the Texas
Water Code and the Texas Solid Waste Disposal Act, and this
representation will continue to be true and correct following
disclosure to the applicable governmental authorities of all relevant
facts, conditions, and circumstances, if any, pertaining to the
PURCHASE AND SALE AGREEMENT - PAGE 9
<PAGE> 27
Property and Seller. The terms "hazardous substance" and "release" as
used in this Agreement shall have the meanings specified in CERCLA, and
the terms "solid waste" and "disposal" (or "disposed") shall have the
meanings specified in RCRA; provided, in the event either CERCLA or
RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective
date of such amendment and provided further, to the extent that the
laws of the State of Texas establish a meaning for "hazardous
substance," "release," "solid waste," or "disposal" which is broader
than that specified in either CERCLA or RCRA, such broader meaning
shall apply.
7. Purchaser's Representations and Warranties. Purchaser represents and
warrants to Seller that:
(a) Purchaser: (i) is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada;
(ii) is duly qualified to transact business in each jurisdiction where
the nature and extent of its business and properties require the same
in order for it to perform its obligations under this Agreement; and
(iii) possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply
with the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, all of which have been
duly authorized and approved by all necessary corporate action and for
which no further approval or consent is required.
(b) The consummation of the transactions contemplated by this
Agreement will not violate, or be in conflict with (i) any agreement or
instrument to which Purchaser is a party; or (ii) any judgment or
decree applicable to Purchaser as a party in interest with respect
thereto.
(c) This Agreement has been duly executed and delivered on
behalf of Purchaser, and at the Closing, all documents and instruments
required hereunder to be executed and delivered by Purchaser (or its
assignees) shall have been duly executed and delivered.
(d) Subject to the conditions herein, Purchaser has or will
have at Closing (i) the financial capability or (ii) commitments from
responsible financial institutions to provide the funds required by
Purchaser, to pay the Purchase Price and consummate the transaction
contemplated hereby within the time period contemplated herein.
(e) Purchaser either has performed, or prior to closing will
perform, whatever inspection of the Property and Seller's title thereto
that Purchaser deems appropriate and knows the condition thereof and is
purchasing the Property as a result of such inspections and not because
of, or in reliance on, any representation or warranty made by Seller
other than those expressly set forth in this Agreement.
(f) In the event the Purchase Price is adjusted down at
Closing, based upon any unpaid taxes as set forth in Paragraph 4(b)(2)
hereof (the "Tax Adjustment"), Purchaser agrees to timely make payment
(equivalent to the Tax Adjustment) to such taxing authorities as may be
appropriate.
8. Conditions to Obligations of Purchaser. The obligations of Purchaser
to consummate the transaction provided for herein are subject, at the option of
Purchaser, to the fulfillment on or prior to Closing, of each of the following
conditions:
(a) Representations. The representations and warranties of
Seller herein contained shall be true and correct in all material
respects at Closing as though made on and as of such date (unless
appropriate adjustments or remediation has been made in accordance with
Paragraph 5 hereof).
(b) Performance. Seller shall have performed all obligations,
covenants, and agreements hereunder and shall have complied with all
covenants and conditions contained in this Agreement to be performed or
complied with by it at or prior to the Closing.
PURCHASE AND SALE AGREEMENT - PAGE 10
<PAGE> 28
(c) Pending Matters. No suit, action, or other proceedings
shall be pending or threatened (a) against Seller before any court or
governmental agency which might result in impairment or loss of value
as to Seller's title to any part of the Property; or (b) which seeks to
restrain, enjoin, or otherwise prohibit the consummation of the
transactions contemplated by this Agreement.
(d) Liability. No liability which affects, in a materially
adverse manner, the Property or Purchaser's ability to receive the
economic benefits therefrom has been or is threatened to be asserted
with respect to the Property.
(e) Defects. No Defects shall be present, which are not cured
by Seller or waived by Purchaser as provided herein.
(f) Records and Access. Seller shall have afforded Purchaser
and its officers, employees, and representatives timely and reasonable
access to the Records as required herein.
9. Seller's Obligations at Closing. At the Closing, Seller shall
deliver to Purchaser the following items; however, item (e) will be delivered as
soon prior to Closing as reasonably practical:
(a) The Assignment, duly executed and acknowledged by Seller;
(b) Duly executed and acknowledged releases of all liens and
burdens on the Property or on Production therefrom or attributable
thereto;
(c) Executed transfer orders (or letters in lieu thereof)
addressed to all purchasers of production from the Property;
(d) Any other executed documents or instruments which may be
reasonably required to consummate the transactions contemplated herein
and to fully vest Purchaser with operations and title to the Property
as contemplated hereby;
(e) The "Interim Settlement Statement," which shall set forth
the Purchase Price and adjustments thereto provided for in this
Agreement which are or may be determined at or prior to the Closing,
which statement shall be delivered to Purchaser as soon as reasonably
practical prior to Closing for Purchaser's review and approval;
(f) All consents required of third parties, who are identified
in Exhibit "A" attached, properly executed and in form approved by
Purchaser; and
(g) All releases of current liens of lenders encumbering all
or any part of the Property, properly executed in form acceptable by
Purchaser.
10. Purchaser's Obligations at Closing. At the Closing, Purchaser
shall:
(a) Deliver to Seller the Adjusted Purchase Price, in cash or
other immediately available funds (which shall be subject to a
subsequent accounting between Seller and Purchaser pursuant to this
Agreement); and
(b) Execute and deliver any other documents or instruments
which may be required to consummate the transactions contemplated
herein.
11. Notices. All notices, demands, and requests which may be given or
which are required to be given by either Party to the other shall be in writing.
Any notice, demand, or communication required or permitted hereunder shall be
deemed to be delivered on actual receipt or three (3) days after being sent by
overnight courier or Certified U.S. Mail to Seller or Purchaser, whichever
occurs first, respectively, as follows:
PURCHASE AND SALE AGREEMENT - PAGE 11
<PAGE> 29
SELLER: PURCHASER:
I. P. Thomas and Mary Ellen Thomas Corrida Resources, Inc.
366 Silverbell Parkway Suite 380, Lock Box 31
Lafayette, Louisiana 70508-4130 3500 Oak Lawn Avenue
Telephone: ______________ Dallas, Texas 75219-4398
Facsimile: ______________ Attn.: Edward Munden
President
Telephone: 214-521-9959
Facsimile: 214-521-9960
or such other address as Purchaser or Seller may, from time to time, designate
pursuant to the terms hereof. A facsimile transmission shall be considered an
original document for purposes of providing notice under this section.
12. Furnishing Data and Information. The Seller also agrees to promptly
cooperate in all reasonable requests by Purchaser in furnishing copies, at
Purchaser's expense, of all Records necessary for Purchaser to conduct its due
diligence under the terms of this Agreement.
13. Post-Closing Adjustments. As soon as practicable after the closing,
and in any event within sixty (60) days after Closing, Seller shall prepare and
deliver to Purchaser, in accordance with this Agreement and generally accepted
accounting principles, a statement (the "Final Settlement Statement") setting
forth each adjustment or payment pursuant to Paragraph 4 hereof that was not
finally determined as of the Closing ("Post-Closing Adjustments") and showing
the calculation of such Post-Closing Adjustments and the aggregate amount
thereof. Within ten (10) business days after receipt of the Final Settlement
Statement, Purchaser shall deliver to Seller a written report containing any
changes that Purchaser proposes be made to the Final Settlement Statement. The
Parties undertake to agree with respect to the amounts of such Post-Closing
Adjustments no later than ninety (90) days after the Closing Date. The date upon
which such agreement is reached or upon which the aggregate amount of the
adjustments are finally established shall be herein called the "Final Settlement
Date." Seller shall pay to Purchaser, or vice versa, as the case may be, within
ten (10) business days after the Final Settlement Date the amount of such
adjustments (as finally established), by means of wire transfer in immediately
available funds or by means of a certified bank check.
14. Failure to Perform/Termination of Agreement. If the Seller should
fail to fully and timely perform any of its obligations hereunder, or should
fail to consummate the sale of the Property, except due to the Purchaser's
default, the Purchaser may, at its option, enforce specific performance of this
Agreement, or terminate this Agreement.
15. Indemnification by Seller.
(a) Seller agrees to indemnify and save and hold harmless
Purchaser against and from any loss, damage, or expense sustained by
Purchaser arising out of or resulting from any breach of any of the
representations and warranties made hereunder and not waived by
Purchaser.
(b) Seller agrees to indemnify and save and hold harmless
Purchaser against all claims, liabilities, costs, expenses, windfall
profit taxes, and liability arising out of the ownership or operation
of the Property, and based upon the occurrence of events, the accrual
of obligations or liabilities, or the existence of conditions prior to
the Effective Date.
(c) If any claims for brokerage fees are asserted against
Purchaser in connection with this transaction based upon alleged
commitments made by Seller, Seller shall indemnify Purchaser against
all such claims and reimburse Purchaser for all reasonable expenses
incurred in responding to such claims, including reasonable attorney's
fees.
PURCHASE AND SALE AGREEMENT - PAGE 12
<PAGE> 30
(d) Notwithstanding anything to the contrary contained herein,
Seller agrees to indemnify and save and hold harmless Purchaser for
Seller's gross negligence or willful misconduct for that period of time
between the Effective Date and Closing.
(e) The provisions of this Paragraph 15 shall survive Closing
for a period of four (4) years from the date of Closing, and Seller
shall not be entitled to assert any right of indemnification hereunder
after such date.
16. Indemnification by Purchaser.
(a) Purchaser agrees to indemnify and save and hold harmless
Seller against and from any loss, damage, or expense sustained by
Seller arising out of or resulting from any breach of any of the
representations and warranties made hereunder and not waived by Seller.
(b) Purchaser shall assume and hereby agrees to pay, honor,
discharge, and perform fully and timely, the obligations and
liabilities directly associated with the Seller's interest in the share
of the Property acquired by Purchaser hereunder, which are attributable
to the period of time from and after the Effective Date.
(c) Purchaser agrees to indemnify and save and hold harmless
Seller against all claims, costs, expenses, windfall profits taxes, and
liabilities arising out of the ownership or operation of the share of
the Property acquired by Purchaser hereunder and based upon the
occurrence of events, the accrual of obligations or liabilities, or the
existence of conditions on and subsequent to the Effective Date (but
not including these costs and expenses incurred with respect to the
purchase of Seller's interest in the Property or the negotiations
leading to such purchase).
(d) If any claims for brokerage fees are asserted against
Seller in connection with this transaction based upon alleged
commitments made by Purchaser, Purchaser shall indemnify Seller against
all such claims and reimburse Seller for all reasonable expenses
incurred in responding to such claims, including reasonable attorney's
fees.
(e) The provisions of this Paragraph 16 shall survive Closing
for a period of four (4) years from the date of Closing, and Purchaser
shall not be entitled to assert any right of indemnification hereunder
after such date.
17. Confidentiality. Prior to Closing, the Seller shall be furnishing
to Purchaser various information relating to Seller and the Property, and
Seller's business activities, assets, finances, costs, revenues, rights,
obligations, liabilities, and strategies. In consideration of the Seller
furnishing this information to Purchaser, Purchaser agrees that prior to Closing
(a) that such information is confidential and/or proprietary to Seller, and such
information shall be entitled to and shall receive treatment as such by
Purchaser; (b) Purchaser shall use its best efforts, and will advise all of its
employees, representatives, agents, and advisors who have access to such
information, to use their best efforts to hold in confidence, not to disclose to
others, and not to use (except in respect of the transaction contemplated by
this Agreement) any such information; and (c) if Closing does not occur, all
such information, unless otherwise specified in writing, shall remain the
property of Seller, and shall be returned to Seller together with any copies
made thereof. Prior to Closing, Purchaser shall provide such information only to
its employees, representatives, agents, and advisors who have need to know such
information in connection with this Agreement.
18. Other Purchase and Sale Agreements. Purchaser has tendered purchase
and sale agreements, dated on or about the date hereof, to other parties, all of
whom are named in Exhibit "C" attached hereto. Such other agreements may cover
the interest, if any, of such other parties in the Leases and Property covered
by this Agreement, and may cover other oil and gas properties which are not the
subject of this Agreement. Purchase and Seller agree that the Closing under this
Agreement shall be simultaneous with the closings under such other agreements,
and that Closing under this Agreement shall be conditional upon closing
occurring under such other agreements. Seller does not claim any interest in and
to the oil and gas leases and other property which are the
PURCHASE AND SALE AGREEMENT - PAGE 13
<PAGE> 31
subject of such other purchase and sale agreements, and which are not the
subject of this Agreement. In the event Seller may have any claim or interest in
and to the oil and gas leases and other property which are the subject of such
other purchase and sale agreements, and which are not the subject of this
Agreement, then, for the consideration herein, Seller agrees to sell and convey
to Purchaser all of Seller's interest in and to the oil and gas leases and other
property and interests which are the subject of the other purchase and sale
agreements, above described.
19. Area of Non-Competition. Seller agrees not to compete with
Purchaser in an area which comprises the lands covered by the Leases and an area
which shall extend outward from the boundaries of each of the Leases a distance
of 5,280 feet. In this regard, Seller agrees that Seller, its employees, agents,
servants, or companies controlled by Seller, in common control with Seller, or
with whom Seller is affiliated, shall not acquire, for so long as a Lease is
held in force and effect by its terms, and for a period of three years
thereafter, any oil and gas leases, any mineral interest, royalty interest,
overriding royalty interest, or any farmout agreement, or other agreement
permitting the right to explore for and produce oil and/or gas, which cover any
lands within the restricted area.
20. Miscellaneous.
(a) If any term or provision of this Agreement is held to be
illegal, invalid, or unenforceable, the legality, validity, and
enforceability of the remaining terms and provisions of this Agreement
shall not be affected thereby, and in lieu of each such illegal,
invalid, or unenforceable term or provision, there shall be added
automatically to this Agreement a legal, valid, and enforceable term or
provision as similar as possible to the term or provision declared
illegal, invalid, or unenforceable;
(b) Either Seller or Purchaser shall have the right to waive
any requirement contained in this Agreement, which is intended for the
waiving Party's benefit, but except as otherwise specifically provided
herein, such waiver shall be effective only if in writing and executed
by the Party for whose benefit such requirement is intended; provided
however, that any such waiver shall not be construed as a waiver of any
other benefit accruing to the waiving Party hereunder;
(c) The captions used in connection with this Agreement are
for convenience only and shall not be deemed to expand or limit the
meaning of the language of this Agreement;
(d) Words of any gender used in this Agreement shall be held
and construed to include any other gender, and words in the singular
shall be held to include the plural, unless the context otherwise
requires;
(e) Seller agrees that, on or before the Closing, it will not
carry on any negotiations with any third party, for the sale or
transfer of the Property, without the prior written consent of
Purchaser. Thereafter, Seller may negotiate with third parties if this
Agreement has been terminated;
(f) THIS AGREEMENT AND ALL OF THE TRANSACTIONS CONTEMPLATED
HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS;
(g) This Agreement embodies the entire agreement between
Seller and Purchaser with respect to the subject matter hereof and
supersedes all prior agreements, whether written or oral;
(h) Except as otherwise specifically provided herein, this
Agreement may not be amended except by an agreement in writing executed
by both Seller and Purchaser;
(i) This Agreement shall be binding upon and inure to the
benefit of Seller and Purchaser and their respective legal
representatives, successors, and assigns. It is expressly understood
and agreed that Purchaser's rights under this Agreement may not be
assigned
PURCHASE AND SALE AGREEMENT - PAGE 14
<PAGE> 32
prior to Closing. Provided however, any interest acquired hereunder
shall be freely assignable by Purchaser after Closing;
(j) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all
of which shall be deemed to be one and the same instrument;
(k) In addition to the acts and deeds recited herein and
contemplated to be performed, both Seller and Purchaser hereby agree to
perform, execute, and/or deliver at and after Closing any and all such
further reasonable acts, deeds, and assurances as may be reasonably
required to consummate the transactions contemplated by this Agreement;
(l) This Agreement supersedes any and all other agreements,
either oral or in writing, between the Parties hereto with respect to
the subject matter hereof and contains all of the covenants and
agreements between the Parties with respect to said matter. Each Party
to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any
Party, or anyone acting on behalf of any Party, which are not embodied
herein, and that no other agreement, statement, or promise not
contained in this Agreement shall be valid or binding;
(m) In the event of any dispute occurring under this
Agreement, the prevailing Party shall be entitled to be reimbursed by
the other Party for its reasonable and necessary attorney's fees;
(n) Any failure by either Party to insist, or any election by
either Party not to insist, upon strict performance by the other Party
of any of the terms, provisions, or conditions of this Agreement shall
not be deemed to be a waiver of the same or of any other term,
provision, or condition hereof, and either Party may at any time or
times thereafter insist upon strict performance by the other Party of
any and all of such terms, provisions, and conditions. No waiver by
either Party of any right, remedy, power, or privilege hereunder shall
be construed as a waiver of, or operate to impair, any subsequent
right, remedy, power, or privilege nor shall any single or partial
exercise of any such right, remedy, power, or privilege exhaust the
same or preclude other or further exercise thereof.
(o) All covenants, representations, and indemnities set forth
herein shall survive closing, subject to any agreed periods of
limitation as may be set forth herein.
EXECUTED as of the 5th day of February, 1997.
WITNESSES: SELLER:
- ------------------------------------ --------------------------------
I. P. THOMAS
- ------------------------------------
- ------------------------------------ --------------------------------
MARY ELLEN THOMAS
- ------------------------------------
PURCHASE AND SALE AGREEMENT - PAGE 15
<PAGE> 33
PURCHASER:
CORRIDA RESOURCES, INC.,
a Nevada corporation
____________________________________ By:__________________________________
ROBERT P. LINDSAY, VICE PRESIDENT
____________________________________
ACKNOWLEDGMENTS
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared I. P. THOMAS,
to me known to be the person described in and who executed the foregoing
instrument, and acknowledged that he executed the same as his free act and deed.
_________________________________
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared MARY ELLEN
THOMAS, to me known to be the person described in and who executed the foregoing
instrument, and acknowledged that she executed the same as her free act and
deed.
_________________________________
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared ROBERT P.
LINDSAY, to me personally known, who, being duly sworn, did say that he is the
Vice President of CORRIDA RESOURCES, INC., a Nevada corporation, and that the
foregoing instrument was signed by him on behalf of such entity, with necessary
authority, and that ROBERT P. LINDSAY acknowledged said instrument to be the
free act and deed of such corporation.
________________________________
Notary Public, State of Texas
PURCHASE AND SALE AGREEMENT - PAGE 16
<PAGE> 34
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the 5th day of February, 1997, by
and between MILLDALE BAPTIST CHURCH, of Zachary, Louisiana (hereinafter referred
to as the "Seller"), and CORRIDA RESOURCES, INC., a Nevada corporation (the
"Purchaser"), (Seller and Purchaser hereinafter individually referred to as
"Party" and collectively as "Parties").
RECITALS
WHEREAS, Seller desires to sell and convey, and Purchaser desires to
purchase and receive, the following, upon the terms and conditions hereinafter
set forth:
I. The Leases and Units. All of the Seller's right, title, and interest
in and to (i) the oil, gas, and mineral leases and properties and interests
described in Exhibit "A," including but not limited to, leasehold, fee, mineral,
royalty, and overriding royalty interests and payments out of or measured by
Production (hereinafter defined) (said oil, gas, and mineral leases and property
and interests being herein referred to as the "Leases"); (ii) the units, pooled
acreage, spacing, or proration units or other allocation of acreage, and all
rights associated therewith, which are applicable to the Leases and have been
established by, or in accordance with, (a) applicable contractual provisions
regarding unitization, communitization, pooling, spacing, or proration, or (b)
applicable state or federal law;
II. The Production. All of the Seller's right, title, and interest in
and to all oil, gas, casinghead gas, condensate, distillate, and other liquid or
gaseous hydrocarbons and other minerals which are in, under, upon, and produced
from or allocable (or to be produced from or allocable) to the Leases after the
Effective Date (as defined in Paragraph 3(a) hereof) (such hydrocarbons and
minerals being hereinafter referred to as "Production"), including "line fill"
and inventory attributable to the interests described in Exhibit "A," or the
proceeds from the sale of such Production;
III. The Wells and Equipment. All of Seller's right, title, and
interest in and to all personal property of every kind and character located on
the Leases or used in the operation thereof including, without limitation, wells
(whether productive or non-productive, active or inactive) (the "Wells"),
compressors, well equipment, casing, tanks, machinery, gathering lines and
systems, treatment facilities, disposal wells and disposal facilities, pipelines
and other appurtenances, and any other personal property situated thereon,
herein individually and collectively called the "Equipment."
IV. The Rights of Way and Permits. All of Seller's right, title, and
interest in and to all rights, privileges, benefits, permissions, and
authorizations (including, without limitation, permits, licenses, servitudes,
easements, and rights of way) in respect of the use and occupation of the
surface of such Leases, and the subsurface depths under the land and premises
covered by and benefiting such Leases, herein called individually and
collectively "Rights of Way and Permits";
V. The Contracts. All of Seller's right, title, and interest in and to
all of the orders, gas purchase and sale contracts (wherein Seller is a selling
party), crude purchase and sale agreements (wherein Seller is a selling party),
surface leases, farm-in agreements, farmout agreements, bottom hole agreements,
acreage contribution agreements, operating agreements, unit agreements, area of
mutual interest agreements, processing agreements, options, leases of equipment
or facilities, and other contracts, agreements, and rights, which are owned by
Seller, in whole or in part and are (i) appurtenant to the Leases, or (ii) used
or held for use in connection with the ownership or operation of the Leases or
with the Production, treatment on the Leases, sale or disposal of water,
hydrocarbons or associated substances, herein called individually and
collectively the "Contracts";
VI. The Records. All of the files, records and data in the possession
of Seller relating to the items described in subsections (I), (II), (III), (IV),
and (V) above (the "Records"), including, without limitation, lease files, title
records (including abstracts of title, title opinions, and title curative
documents); contracts, correspondence, originals or copies of geological,
geophysical, and
PURCHASE AND SALE AGREEMENT - PAGE 1
<PAGE> 35
seismic records, data, and information; and originals or copies of production
records, electric logs, core data, pressure data and decline curves and
graphical production curves, and all related matters, to the extent Seller has
the authority to release such Records and to the extent they are reasonably
required by Purchaser to operate the Wells;
VII. Miscellaneous. Exhibit "A" attached hereto sets forth the
undivided interests of Seller in the Leases, and the revenue interests
attributable thereto, as well as the undivided interests of Seller in the
Production, Wells, Equipment, Rights of Way, and Contracts. This Agreement
covers and pertains to all of the right, title, and interest of Seller in the
Leases, the lands covered by the Leases, Production, Wells, Equipment, and
Rights of Way, even if the undivided interests of Seller in any such property or
property rights should be incorrectly or insufficiently described in the Exhibit
"A."
The Leases, Production, Wells, Equipment, Rights of Way and Permits,
Contracts, Records, and Miscellaneous referred to in Paragraphs I through VII
above, are hereinafter sometimes referred to individually and collectively in
the singular as "Property."
NOW, THEREFORE, for and in consideration of the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Seller and Purchaser
hereby agree as follows:
1. Sale and Purchase. Seller agrees to sell and convey to Purchaser,
and Purchaser agrees to purchase and pay for, all of Seller's right, title, and
interest in and to the Property as hereinafter provided.
2. Purchase Price. The "Purchase Price" for the Property shall be the
sum of $30,000.00 payable as follows:
(a) The sum of $30,000.00, which shall be paid at Closing.
All cash payments to be tendered by Purchaser to Seller, either before
or after Closing, shall be made by wire transfer or shall be made by certified
funds.
The Purchase Price shall be subject to adjustment as hereinafter
provided.
3. Closing and Effective Date.
(a) The closing of the sale and purchase of the Property shall
take place on or before February 5, 1997, (the "Closing") at a mutually
agreeable location, or at such other time, place, or manner as may be
mutually agreeable to the Parties. The sale of the Property shall be
effective as of November 1, 1996, at 7:00 a.m. local time for each of
the particular properties (the "Effective Date").
(b) At the Closing, the Property shall be conveyed and
transferred by Seller to Purchaser by the execution and delivery of an
Assignment and Bill of Sale (the "Assignment"), and such other
instruments of conveyance as may be reasonably requested by Purchaser.
Purchaser shall be entitled to all of Seller's rights in the Property
(including, without limitation, the rights to all Production and
proceeds of Production) appurtenant and attributable to the Property,
and shall be subject to the duties and obligations attendant with
ownership of such undivided share of the Property for the period from
and after the Effective Date. For the period prior to the Effective
Date, Seller shall be entitled to all of the rights (including, without
limitation, the rights to all Production and proceeds of Production)
appurtenant and attributable to the Property, and shall be subject to
the duties and obligations attendant with ownership of the Property.
4. Adjustments to Purchase Price. The Purchase Price shall be adjusted
(the "Adjusted Purchase Price") at the Closing, by the "Interim Settlement
Statement" (hereinafter defined in this paragraph and in Paragraph 9 below),
and, subsequent to Closing, by the "Final Settlement Statement" (hereinafter
defined in Paragraph 13 below), as follows:
PURCHASE AND SALE AGREEMENT - PAGE 2
<PAGE> 36
(a) The Purchase Price shall be increased by the
following:
(1) the value of all merchantable allowable oil or
other liquid hydrocarbons in storage owned by Seller in the
tanks or above the pipeline connection at the Effective Date,
and not previously sold by Seller, that is credited to the
share of the Property being acquired hereunder, valued at the
contract price thereto, or if none, the actual price received
by Purchaser, less taxes or gravity adjustments deducted by
the purchaser of such oil or other liquid hydrocarbons;
(2) the amount of all reasonable expenditures made in
connection with the ownership, operation, and maintenance of
the share of the Property being acquired hereunder, (including
royalties and rentals) and in accordance with generally
accepted accounting principles and prudent operations,
attributable solely to the period from and after the Effective
Date and which are paid by or on behalf of Seller after the
Effective Date;
(3) an amount equal to all prepaid expenses,
attributable to the ownership, operation, and maintenance of
the share of the Property being acquired hereunder that are
paid by or on behalf of Seller after the Effective Date and
prior to the Closing Date and that are, in accordance with
generally accepted accounting principles, attributable solely
to the period from and after the Effective Date;
(4) any other amount agreed upon by Purchaser and
Seller.
(b) The Purchase Price shall be decreased by the following:
(1) the amount of any proceeds from the sale of
Production attributable to the share of the Property being
acquired hereunder attributable to the period on or after the
Effective Date (net of production, severance, and similar
taxes and assessments measured by or payable out of
production) actually received or accrued by or on behalf of
Seller;
(2) an amount equal to all unpaid ad valorem,
property, production, profit, severance, and similar taxes and
assessments based upon or measured by the ownership of the
share of the Property being acquired hereunder or the
production of oil, gas, or other minerals therefrom or the
receipt of proceeds attributable thereto, which accrue to or
are chargeable against such share of the Property (in
accordance with generally accepted accounting principles) and
which are attributable to the period prior to the Effective
Date, which amount shall, to the extent not actually assessed,
be computed based upon such taxes and assessments for the
immediately- preceding calendar year, or if such taxes or
assessments are assessed on other than a calendar-year basis,
for the tax period last ended;
(3) any amounts received by Seller (whether prior to
or subsequent to the Effective Date) pursuant to
"take-or-pay," advance payment, or similar provisions of any
production sales contract, any gas balancing agreement, or any
other agreement, to the extent any purchaser has the right to
apply any such amounts to Purchaser's share of Production
delivered after the Effective Date;
(4) any reduction in the value of the share of the
Property being acquired hereunder resulting from the existence
of a Defect (herein defined in Section 5(d)) which is not
cured or waived prior to Closing;
(5) any other amount agreed upon by Purchaser and
Seller.
(c) The "Interim Settlement Statement" shall be prepared by
Seller, its agents, or representatives, prior to Closing, which
statement shall set forth the adjustments to the Purchase Price, per
the adjustments set forth in this Paragraph 4, which are or may be
determined at or prior to Closing. Such statement shall be prepared
according to generally
PURCHASE AND SALE AGREEMENT - PAGE 3
<PAGE> 37
accepted accounting principles and shall show the calculation of all
such adjustments. Upon the approval of such Interim Settlement
Statement by Purchaser, the Purchase Price shall be adjusted according
to such statement. Upon Purchaser's request, Seller shall make
available to Purchaser all information relied upon by Seller for the
adjustments requested in order to aid and facilitate Purchaser's
approval of such statement. After Closing, the Purchase Price may
further be adjusted, pursuant to the adjustments set forth in this
paragraph, with the "Final Settlement Statement" in the manner further
described in Paragraph 13 below.
(d) All monies received by either Party hereto which, under
the terms of this Agreement or otherwise, belong to the other Party,
shall be received in trust by the Party receiving such funds, and shall
monthly, upon receipt, be paid over to the other Party. The Parties
agree, in this regard, to cooperate fully and to execute, endorse, and
deliver as expeditiously as practicable such papers, checks, and
documents as are needed promptly to complete the transfer of such
payments;
(e) After the Closing, if an invoice or other evidence of an
obligation relating to the share of the Property acquired by Purchaser
is received which is applicable to periods both prior to and after the
Effective Date, and is partly the obligation of Seller and partly the
obligation of Purchaser, then each Party shall pay its respective
portion of such obligation to the obligee, prorated between the Parties
as of the Effective Date;
(f) At and after the Closing, Purchaser and Seller will
cooperate fully in notifying all applicable third parties (including
the execution by Seller of such transfer orders, letters in lieu,
change of operator, etc., as may be requested by Purchaser) so that
notices, proceeds, and invoices from such third parties may take into
account the fact that Purchaser has acquired the Property as of the
Effective Date;
(g) The parties hereto agree to exercise diligence and good
faith in attempting to resolve any disagreements or disputes which may
arise from the adjustments to the Purchase Price to be made in
accordance with this paragraph.
5. Property Conditions, Title Review, Property Information, and
Casualty Losses.
(a) Property Conditions. THIS SALE OF THE EQUIPMENT AND ALL
OTHER PERSONAL PROPERTY THAT IS A PART OF THE PROPERTY IS MADE ON AN
"AS IS, WHERE IS" BASIS WITH ALL FAULTS AS TO ITS CONDITION, AND SELLER
EXPRESSLY DISCLAIMS ALL WARRANTIES AS TO THE CONDITION OF THE EQUIPMENT
(NOTE, HOWEVER, THERE ARE CERTAIN WARRANTIES AS TO TITLE AS HEREIN SET
FORTH) INCLUDING, WITHOUT LIMITATIONS, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE.
(b) Casualty Loss. If, prior to Closing, any Property is
substantially damaged or destroyed by fire or other casualty ("Casualty
Defect"), Seller shall notify Purchaser promptly after Seller learns of
such event. Seller shall have the right, but not the obligation, to
cure any such Casualty Defect by repairing such damage or, in the case
of personal property, fixtures, replacing the Property affected thereby
with equivalent items, no later than the date of Closing. If any
Casualty Defects exist at Closing, Purchaser may proceed to purchase
the Property affected thereby, and the Purchase Price shall be reduced
by the aggregate reduction in the value of such Property on account of
such Casualty Defects, as determined by the mutual agreement of the
Parties, or if the Parties are unable to agree on the reduction of the
Purchase Price, then the affected Property shall be excluded from the
Property to be acquired by Purchaser hereunder, and the Purchase Price
shall be reduced by the Allocated Purchase Price for such Property.
Notwithstanding anything to the contrary contained herein, Seller shall
be entitled to retain all insurance proceeds and claims against other
Parties in respect of any such Casualty Defect which occurs prior to
closing unless no reduction is made in the Purchase Price as a result
of such Casualty Defect, in which event Purchaser shall be entitled to
the insurance proceeds and claims against other Parties arising from
such Casualty Defect.
PURCHASE AND SALE AGREEMENT - PAGE 4
<PAGE> 38
6. Seller's Representations and Warranties. Seller represents and
warrants to Purchaser that:
(a) Seller is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Louisiana; (ii)
Seller is duly qualified to transact business in each jurisdiction
where the nature and extent of its business and properties require the
same in order for it to perform its obligations under this Agreement;
and (iii) Seller possesses all requisite authority, power, licenses,
permits, and franchises to conduct its business and execute, deliver,
and comply with the terms and provisions of this Agreement and any
other document, instrument, or agreement provided for herein, including
the Assignment, all of which have been duly authorized and approved by
all necessary corporate action and for which no further approval or
consent is required.
(b) This Agreement has been duly executed and delivered on
behalf of Seller and is binding and enforceable against Seller in
accordance with its terms and at the Closing. All documents and
instruments required hereunder to be executed and delivered by Seller
shall have been duly executed and delivered at Closing, and the
execution, delivery, and performance of this Agreement by Seller and
the consummation of transactions contemplated hereby will not
constitute a breach of, an event of default under, a violation of, or a
conflict with any agreement or other instrument to which Seller is a
party (except to the extent such instrument may be released at the
Closing), nor will the same cause Seller to be in violation of their
Articles of Incorporation or Bylaws, as the case may be, or any
applicable laws or regulations or any order of any court or
governmental agency having jurisdiction.
(c) All ad valorem, property, production, severance, excise,
and similar taxes and assessments based on or measured by the ownership
of the Property or the Production or the receipt of proceeds therefrom,
which have become due and payable prior to the date hereof with respect
to the Property have been properly paid, and Seller's allocable share
of such taxes and assessments which become due and payable prior to the
Closing shall be properly paid by Seller, and all royalties, overriding
royalties, and payments to any third parties which have become due and
payable prior to the date hereof with respect to production from the
Property, have been properly paid, and will be hereafter properly paid
for the period prior to Closing.
(d) Seller has incurred no liability, contingent or otherwise,
for brokers' or finders' fees in respect of this transaction for which
Purchaser shall have any responsibility whatsoever.
(e) Prior to the Closing, Seller will pay or cause to be paid
all of Seller's share of costs and expenses incurred in connection with
the Property, and will comply with all contracts or other agreements
relating to the Property.
(f) To the best of Seller's information and belief, all laws,
regulations, and orders of all governmental agencies having
jurisdiction over the Property have been and shall continue to be
complied with until the Closing.
(g) There are no first rights of refusal, consents,
authorizations, preferential rights, options, or claims of a similar
nature affecting the Property, other than those listed in Exhibit "A,"
said listed consents defined herein as "Consents."
(h) Seller shall, upon request, subrogate Purchaser to any
claim which Seller may have against any third party, prior owner,
vendor, or assignor with respect to the share of the Property acquired
by Purchaser, or the title thereto.
(i) There are no "imbalances" which allow any other party to
make up production at any time after the Effective Date, under any
operating agreement, gas balancing agreement and storage agreement, gas
transportation agreement, gas processing or dehydration agreement, or
other similar agreement relating to the Property.
PURCHASE AND SALE AGREEMENT - PAGE 5
<PAGE> 39
(j) Seller has not directly or indirectly reserved or retained
any recorded or unrecorded interest or rights in any of the Property,
and Seller shall not reserve any recorded or unrecorded executory
interest or rights relating to the Property.
(k) Seller warrants that the Property is free and clear of all
encumbrances, liens, and mortgages, save and except such encumbrances
as may be identified and described in Exhibit "A" attached hereto, and
further save and except liens for taxes not yet due and payable.
(l) Except as may be identified and described in Exhibit "A"
attached hereto, the Property is not subject to any restriction,
reservation, reversionary interest, drilling or development obligation,
or other material obligation or burden on the operation or the
disposition of Production attributable to the Property.
(m) No part of any of the Property is affected by any
prepayment arrangement under any contract for the sale of oil or gas,
or by any production payment or any other arrangement for delivery of
oil or gas produced from any of the Property at some future time
without Purchaser then or thereafter receiving full payment therefor,
and no third party now has or at Closing will have any right to take
makeup gas for which it has already paid. As of the Effective Date,
there are no volumes of makeup gas owing, or accumulated transportation
credits due, to gas purchasers on account of any "take-or-pay" or other
provisions of any contract, and Seller has not produced or sold more
than its pro-rata share of the gas from any Wells included in the
Property.
(n) Except as may be set forth in Exhibit "A" attached hereto,
there are no gas purchase or sale agreements, and no gas gathering or
transportation agreements, affecting the Property that cannot be
terminated upon ninety (90) days' written notice.
(o) Without the prior written consent of Purchaser, Seller (i)
shall not enter into any new agreements or commitments affecting the
Property which extend beyond the Closing, and (ii) will not modify or
terminate any agreements affecting any of the Property, including,
without limitation, any oil and gas leases, unitization or pooling
agreements, operating agreements, pipeline agreements, processing
agreements, and hydrocarbon sales contracts, and (iii) will not further
encumber, sell, mortgage, release, abandon, or otherwise dispose of any
of the Property or any interests therein.
(p) There is not any suit, action, or other proceeding pending
or threatened which affects or relates to the Property, or seeks to
restrain or prohibit Seller from selling or conveying to Purchaser the
share of the Property to be purchased herein. Seller shall promptly
notify Purchaser of any such proceedings which may arise or be
threatened prior to Closing.
(q) There are no operating agreements with third parties
affecting the Property except as may be identified and described in
Exhibit "A" attached hereto.
(r) Seller has no knowledge and has not received any notice of
any claimed default (or any event which, with the giving of notice or
the passage of time, or both, would constitute a default) under (i) the
Leases, (ii) any order, writ, injunction, or decree of any court,
commission, or administrative agency affecting the Property, or (iii)
any other agreement affecting the Property. Seller shall promptly
notify Purchaser of any such notice hereafter received by Seller and
the occurrence of any such event of which Seller becomes aware prior to
Closing.
(s) There are no tax partnerships affecting any of the
Property.
(t) To the best of Seller's information and belief, no
Production from any Well on the Property has occurred in excess of that
permitted by law, orders, or regulations.
PURCHASE AND SALE AGREEMENT - PAGE 6
<PAGE> 40
(u) To the best of Seller's information and belief, there has
been no material injury or damage to any of the Property which has not
been fully repaired, replaced, or rebuilt.
(v) Except for depletion due to continued production, there
has been no substantial and material change in condition of the
Property between the date hereof and Closing.
(w) To the best of Seller's information and belief, all
easements, rights of way, permits, crossing agreements, and surface
rights included in the Property are in full force and effect and are
valid and subsisting, and freely assignable, and all rentals and other
payments due thereunder have been properly and timely paid and all
conditions necessary to keep them in force have been duly performed.
(x) From and after the effective date of its acquisition of
its ownership in the Leases, the Seller has performed all obligations
required to be performed under such Leases, or any other instruments
and agreements relating to the Properties, and is not in default
thereunder, and to the best of Seller's information and belief, each of
the Leases to be conveyed is valid and in full force and effect.
(y) To the best of Seller's knowledge, Seller owns each Lease
and Property in the undivided share reflected by the "Working Interest"
described and set forth in Exhibit "A" for each particular Lease and
Property, and Seller owns for each Lease and Property the share of
Production reflected as "Net Revenue Interest" in Exhibit "A" attached
hereto. Seller is being paid not less than the fractional "net revenue
interest" for each Property in Exhibit "A" hereto, and, for expenses
and costs for each Property, Seller is not paying more than the
fractional interest specified under "Working Interest" for each
Property in Exhibit "A" hereto.
(z) To the best of Seller's information and belief, all
rentals and bonuses have been timely and fully paid and discharged, and
all conditions necessary to keep the Leases in full force have been
performed, and no proceeds from the sale of Production attributable to
the Property are currently being held in suspense by any purchaser
thereof.
(aa) The Seller has not collected any proceeds from the sale
of Production attributable to the Property which are subject to refund,
or if so, that any such refund, if not otherwise accounted for under
this Agreement, shall be the sole responsibility of the Seller.
(bb) Except as listed in Exhibit "A" attached hereto, to the
best of Seller's information and belief, there are no Wells located on
the Property that Seller is obligated by law or contract to plug and
abandon, that Seller will be obligated by law or contract to plug and
abandon at the present time, and with the lapse of time or notice, or
both, because the well is not currently capable of producing production
in commercial quantities, or because the Well is subject to exceptions
to a requirement to plug and abandon issued by a regulatory authority
having jurisdiction over the Property.
(cc) To the best of Seller's information and belief, there are
no presently existing conditions (by existing federal or state statutes
and regulations) affecting the Property, which might give rise to a
cause of action on behalf of any governmental agency or third party,
against either Purchaser or Seller.
(dd) All information and data provided to Purchaser by Seller
or its agents concerning the Property is true and correct to the best
of Seller's information, knowledge, and belief.
(ee) Environmental Current Status. To the best of Seller's
knowledge, the Property and Seller are not in violation of or subject
to any existing, pending, or threatened investigation or inquiry by any
governmental authority or to any remedial obligations under any
applicable laws pertaining to health or the environment (such laws as
they now exist or
PURCHASE AND SALE AGREEMENT - PAGE 7
<PAGE> 41
are hereafter enacted and/or amended hereinafter sometimes collectively
called "Applicable Environmental Laws"), including without limitation
the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization
Act of 1986 (as amended, hereinafter called "CERCLA"), the Resource
Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980,
and the Hazardous and Solid Waste Amendments of 1984 (as amended,
hereinafter called "RCRA"), the Texas Water Code and the Texas Solid
Waste Disposal Act, and this representation will continue to be true
and correct following disclosure to the applicable governmental
authorities of all relevant facts, conditions, and circumstances, if
any, pertaining to the Property and Seller. The terms "hazardous
substance" and "release" as used in this Agreement shall have the
meanings specified in CERCLA, and the terms "solid waste" and
"disposal" (or "disposed") shall have the meanings specified in RCRA;
provided, in the event either CERCLA or RCRA is amended so as to
broaden the meaning of any term defined thereby, such broader meaning
shall apply subsequent to the effective date of such amendment and
provided further, to the extent that the laws of the State of Texas
establish a meaning for "hazardous substance," "release," "solid
waste," or "disposal" which is broader than that specified in either
CERCLA or RCRA, such broader meaning shall apply.
7. Purchaser's Representations and Warranties. Purchaser represents and
warrants to Seller that:
(a) Purchaser: (i) is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada
(ii) is duly qualified to transact business in each jurisdiction where
the nature and extent of its business and properties require the same
in order for it to perform its obligations under this Agreement; and
(iii) possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply
with the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, all of which have been
duly authorized and approved by all necessary corporate action and for
which no further approval or consent is required.
(b) The consummation of the transactions contemplated by this
Agreement will not violate, or be in conflict with (i) any agreement or
instrument to which Purchaser is a party; or (ii) any judgment or
decree applicable to Purchaser as a party in interest with respect
thereto.
(c) This Agreement has been duly executed and delivered on
behalf of Purchaser, and at the Closing, all documents and instruments
required hereunder to be executed and delivered by Purchaser (or its
assignees) shall have been duly executed and delivered.
(d) Subject to the conditions herein, Purchaser has or will
have at Closing (i) the financial capability or (ii) commitments from
responsible financial institutions to provide the funds required by
Purchaser, to pay the Purchase Price and consummate the transaction
contemplated hereby within the time period contemplated herein.
(e) Purchaser either has performed, or prior to closing will
perform, whatever inspection of the Property and Seller's title thereto
that Purchaser deems appropriate and knows the condition thereof and is
purchasing the Property as a result of such inspections and not because
of, or in reliance on, any representation or warranty made by Seller
other than those expressly set forth in this Agreement.
(f) In the event the Purchase Price is adjusted down at
Closing, based upon any unpaid taxes as set forth in Paragraph 4(b)(2)
hereof (the "Tax Adjustment"), Purchaser agrees to timely make payment
(equivalent to the Tax Adjustment) to such taxing authorities as may be
appropriate.
PURCHASE AND SALE AGREEMENT - PAGE 8
<PAGE> 42
8. Conditions to Obligations of Purchaser. The obligations of Purchaser
to consummate the transaction provided for herein are subject, at the option of
Purchaser, to the fulfillment on or prior to Closing, of each of the following
conditions:
(a) Representations. The representations and warranties of
Seller herein contained shall be true and correct in all material
respects at Closing as though made on and as of such date (unless
appropriate adjustments or remediation has been made in accordance with
Paragraph 5 hereof).
(b) Performance. Seller shall have performed all obligations,
covenants, and agreements hereunder and shall have complied with all
covenants and conditions contained in this Agreement to be performed or
complied with by it at or prior to the Closing.
(c) Pending Matters. No suit, action, or other proceedings
shall be pending or threatened (a) against Seller before any court or
governmental agency which might result in impairment or loss of value
as to Seller's title to any part of the Property; or (b) which seeks to
restrain, enjoin, or otherwise prohibit the consummation of the
transactions contemplated by this Agreement.
(d) Liability. No liability which affects, in a materially
adverse manner, the Property or Purchaser's ability to receive the
economic benefits therefrom has been or is threatened to be asserted
with respect to the Property.
(e) Defects. No Defects shall be present, which are not cured
by Seller or waived by Purchaser as provided herein.
9. Seller's Obligations at Closing. At the Closing, Seller shall
deliver to Purchaser the following items; however, item (e) will be delivered as
soon prior to Closing as reasonably practical:
(a) The Assignment, duly executed and acknowledged by Seller;
(b) Duly executed and acknowledged releases of all liens and
burdens on the Property or on Production therefrom or attributable
thereto;
(c) Executed transfer orders (or letters in lieu thereof)
addressed to all purchasers of production from the Property;
(d) Any other executed documents or instruments which may be
reasonably required to consummate the transactions contemplated herein
and to fully vest Purchaser with operations and title to the Property
as contemplated hereby;
(e) The "Interim Settlement Statement," which shall set forth
the Purchase Price and adjustments thereto provided for in this
Agreement which are or may be determined at or prior to the Closing,
which statement shall be delivered to Purchaser as soon as reasonably
practical prior to Closing for Purchaser's review and approval;
(f) All consents required of third parties, who, if any, are
identified in Exhibit "A" attached, properly executed and in form
approved by Purchaser; and
(g) All releases of current liens of lenders encumbering all
or any part of the Property, properly executed in form acceptable by
Purchaser.
10. Purchaser's Obligations at Closing. At the Closing, Purchaser
shall:
(a) Deliver to Seller the Adjusted Purchase Price, in cash or
other immediately available funds (which shall be subject to a
subsequent accounting between Seller and Purchaser pursuant to this
Agreement) less the Escrow Deposit; and
PURCHASE AND SALE AGREEMENT - PAGE 9
<PAGE> 43
(b) Execute and deliver any other documents or instruments
which may be required to consummate the transactions contemplated
herein.
11. Notices. All notices, demands, and requests which may be given or
which are required to be given by either Party to the other shall be in writing.
Any notice, demand, or communication required or permitted hereunder shall be
deemed to be delivered on actual receipt or three (3) days after being sent by
overnight courier or Certified U.S. Mail to Seller or Purchaser, whichever
occurs first, respectively, as follows:
SELLER: PURCHASER:
Milldale Baptist Church Corrida Resources, Inc.
________________________ Suite 380, Lock Box 31
Zachary, Louisiana 70791 3500 Oak Lawn Avenue
Dallas, Texas 75219-4398
Attn.: Edward Munden
Telephone: ______________ President
Facsimile: ______________ Telephone: 214-521-9959
Facsimile: 214-521-9960
or such other address as Purchaser or Seller may, from time to time, designate
pursuant to the terms hereof. A facsimile transmission shall be considered an
original document for purposes of providing notice under this section.
12. Furnishing Data and Information. The Seller also agrees to promptly
cooperate in all reasonable requests by Purchaser in furnishing copies, at
Purchaser's expense, of any records, if any, which Seller may have relating to
the Property.
13. Post-Closing Adjustments. As soon as practicable after the closing,
and in any event within sixty (60) days after Closing, Seller shall prepare and
deliver to Purchaser, in accordance with this Agreement and generally accepted
accounting principles, a statement (the "Final Settlement Statement") setting
forth each adjustment or payment pursuant to Paragraph 4 hereof that was not
finally determined as of the Closing ("Post-Closing Adjustments") and showing
the calculation of such Post-Closing Adjustments and the aggregate amount
thereof. Within ten (10) business days after receipt of the Final Settlement
Statement, Purchaser shall deliver to Seller a written report containing any
changes that Purchaser proposes be made to the Final Settlement Statement. The
Parties undertake to agree with respect to the amounts of such Post-Closing
Adjustments no later than ninety (90) days after the Closing Date. The date upon
which such agreement is reached or upon which the aggregate amount of the
adjustments are finally established shall be herein called the "Final Settlement
Date." Seller shall pay to Purchaser, or vice versa, as the case may be, within
ten (10) business days after the Final Settlement Date the amount of such
adjustments (as finally established), by means of wire transfer in immediately
available funds or by means of a certified bank check. In the event Seller owes
monies to Purchaser as a consequence of the Post-Closing Adjustments, Purchaser
shall have the right to offset Purchaser's obligation under the note for any
such monies which are owing to Purchaser by Seller under Paragraph 4 and this
Paragraph 13.
14. Failure to Perform/Termination of Agreement. If the Seller should
fail to fully and timely perform any of its obligations hereunder, or should
fail to consummate the sale of the Property, except due to the Purchaser's
default, the Purchaser may, at its option, enforce specific performance of this
Agreement, or terminate this Agreement.
15. Indemnification by Seller.
(a) Seller agrees to indemnify and save and hold harmless
Purchaser against and from any loss, damage, or expense sustained by
Purchaser arising out of or resulting from any breach of any of the
representations and warranties made hereunder and not waived by
Purchaser.
PURCHASE AND SALE AGREEMENT - PAGE 10
<PAGE> 44
(b) Seller agrees to indemnify and save and hold harmless
Purchaser against all claims, liabilities, costs, expenses, windfall
profit taxes, and liability arising out of the ownership or operation
of the Property, and based upon the occurrence of events, the accrual
of obligations or liabilities, or the existence of conditions prior to
the Effective Date.
(c) If any claims for brokerage fees are asserted against
Purchaser in connection with this transaction based upon alleged
commitments made by Seller, Seller shall indemnify Purchaser against
all such claims and reimburse Purchaser for all reasonable expenses
incurred in responding to such claims, including reasonable attorney's
fees.
(d) Notwithstanding anything to the contrary contained herein,
Seller agrees to indemnify and save and hold harmless Purchaser for
Seller's gross negligence or willful misconduct for that period of time
between the Effective Date and Closing.
(e) The provisions of this Paragraph 15 shall survive Closing
for a period of four (4) years from the date of Closing, and Seller
shall not be entitled to assert any right of indemnification hereunder
after such date.
16. Indemnification by Purchaser.
(a) Purchaser agrees to indemnify and save and hold harmless
Seller against and from any loss, damage, or expense sustained by
Seller arising out of or resulting from any breach of any of the
representations and warranties made hereunder and not waived by Seller.
(b) Purchaser shall assume and hereby agrees to pay, honor,
discharge, and perform fully and timely, the obligations and
liabilities directly associated with the Seller's interest in the share
of the Property acquired by Purchaser hereunder, which are attributable
to the period of time from and after the Effective Date.
(c) Purchaser agrees to indemnify and save and hold harmless
Seller against all claims, costs, expenses, windfall profits taxes, and
liabilities arising out of the ownership or operation of the share of
the Property acquired by Purchaser hereunder and based upon the
occurrence of events, the accrual of obligations or liabilities, or the
existence of conditions on and subsequent to the Effective Date (but
not including these costs and expenses incurred with respect to the
purchase of Seller's interest in the Property or the negotiations
leading to such purchase).
(d) If any claims for brokerage fees are asserted against
Seller in connection with this transaction based upon alleged
commitments made by Purchaser, Purchaser shall indemnify Seller against
all such claims and reimburse Seller for all reasonable expenses
incurred in responding to such claims, including reasonable attorney's
fees.
(e) The provisions of this Paragraph 16 shall survive Closing
for a period of four (4) years from the date of Closing, and Purchaser
shall not be entitled to assert any right of indemnification hereunder
after such date.
17. Miscellaneous.
(a) If any term or provision of this Agreement is held to be
illegal, invalid, or unenforceable, the legality, validity, and
enforceability of the remaining terms and provisions of this Agreement
shall not be affected thereby, and in lieu of each such illegal,
invalid, or unenforceable term or provision, there shall be added
automatically to this Agreement a legal, valid, and enforceable term or
provision as similar as possible to the term or provision declared
illegal, invalid, or unenforceable;
(b) Either Seller or Purchaser shall have the right to waive
any requirement contained in this Agreement, which is intended for the
waiving Party's benefit, but except as otherwise specifically provided
herein, such waiver shall be effective only if in writing
PURCHASE AND SALE AGREEMENT - PAGE 11
<PAGE> 45
and executed by the Party for whose benefit such requirement is
intended; provided however, that any such waiver shall not be construed
as a waiver of any other benefit accruing to the waiving Party
hereunder;
(c) The captions used in connection with this Agreement are
for convenience only and shall not be deemed to expand or limit the
meaning of the language of this Agreement;
(d) Words of any gender used in this Agreement shall be held
and construed to include any other gender, and words in the singular
shall be held to include the plural, unless the context otherwise
requires;
(e) Seller agrees that, on or before the Closing, it will not
carry on any negotiations with any third party, for the sale or
transfer of the Property, without the prior written consent of
Purchaser. Thereafter, Seller may negotiate with third parties if this
Agreement has been terminated;
(f) THIS AGREEMENT AND ALL OF THE TRANSACTIONS CONTEMPLATED
HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS;
(g) This Agreement embodies the entire agreement between
Seller and Purchaser with respect to the subject matter hereof and
supersedes all prior agreements, whether written or oral;
(h) Except as otherwise specifically provided herein, this
Agreement may not be amended except by an agreement in writing executed
by both Seller and Purchaser;
(i) This Agreement shall be binding upon and inure to the
benefit of Seller and Purchaser and their respective legal
representatives, successors, and assigns. It is expressly understood
and agreed that Purchaser's rights under this Agreement may not be
assigned prior to Closing. Provided however, any interest acquired
hereunder shall be freely assignable by Purchaser after Closing;
(j) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all
of which shall be deemed to be one and the same instrument;
(k) In addition to the acts and deeds recited herein and
contemplated to be performed, both Seller and Purchaser hereby agree to
perform, execute, and/or deliver at and after Closing any and all such
further reasonable acts, deeds, and assurances as may be reasonably
required to consummate the transactions contemplated by this Agreement;
(l) This Agreement supersedes any and all other agreements,
either oral or in writing, between the Parties hereto with respect to
the subject matter hereof and contains all of the covenants and
agreements between the Parties with respect to said matter. Each Party
to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any
Party, or anyone acting on behalf of any Party, which are not embodied
herein, and that no other agreement, statement, or promise not
contained in this Agreement shall be valid or binding;
(m) In the event of any dispute occurring under this
Agreement, the prevailing Party shall be entitled to be reimbursed by
the other Party for its reasonable and necessary attorney's fees;
(n) Any failure by either Party to insist, or any election by
either Party not to insist, upon strict performance by the other Party
of any of the terms, provisions, or conditions of this Agreement shall
not be deemed to be a waiver of the same or of any other term,
provision, or condition hereof, and either Party may at any time or
times thereafter
PURCHASE AND SALE AGREEMENT - PAGE 12
<PAGE> 46
insist upon strict performance by the other Party of any and all of
such terms, provisions, and conditions. No waiver by either Party of
any right, remedy, power, or privilege hereunder shall be construed as
a waiver of, or operate to impair, any subsequent right, remedy, power,
or privilege nor shall any single or partial exercise of any such
right, remedy, power, or privilege exhaust the same or preclude other
or further exercise thereof.
(o) All covenants, representations, and indemnities set forth
herein shall survive closing, subject to any agreed periods of
limitation as may be set forth herein.
EXECUTED as of the 5th day of February, 1997.
WITNESSES: SELLER:
MILLDALE BAPTIST CHURCH
____________________________________ By: ______________________________
____________________________________ __________________________________
Printed Name and Title
PURCHASER:
CORRIDA RESOURCES, INC.,
a Nevada corporation
____________________________________ By:______________________________
ROBERT P. LINDSAY, VICE PRESIDENT
____________________________________
ACKNOWLEDGMENTS
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared
_______________________, to me personally known, who, being duly sworn, did say
that he/she is the ____________ of MILLDALE BAPTIST CHURCH, of Zachary,
Louisiana, and that the foregoing instrument was signed by him/her on behalf of
such entity, with necessary authority, and that ________________________
acknowledged said instrument to be the free act and deed of such entity.
_________________________________
Notary Public, State of Louisiana
PURCHASE AND SALE AGREEMENT - PAGE 13
<PAGE> 47
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared ROBERT P.
LINDSAY, to me personally known, who, being duly sworn, did say that he is the
Vice President of CORRIDA RESOURCES, INC., a Nevada corporation, and that the
foregoing instrument was signed by him on behalf of such entity, with necessary
authority, and that ROBERT P. LINDSAY acknowledged said instrument to be the
free act and deed of such corporation.
Notary Public, State of Louisiana
PURCHASE AND SALE AGREEMENT - PAGE 14
<PAGE> 48
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the 5th day of February, 1997, by
and between JAMES P. ROBERTSON, joined herein by his wife, FRANCES LEONARD
ROBERTSON, (hereinafter referred to as the "Seller") and CORRIDA RESOURCES,
INC., a Nevada corporation (the "Purchaser"), (Seller and Purchaser hereinafter
individually referred to as "Party" and collectively as "Parties").
RECITALS
WHEREAS, Seller desires to sell and convey, and Purchaser desires to
purchase and receive, the following, upon the terms and conditions hereinafter
set forth:
I. The Leases and Units. All of the Seller's right, title, and interest
in and to (i) the oil, gas, and mineral leases and properties and interests
described in Exhibit "A," including but not limited to, leasehold, fee, mineral,
royalty, and overriding royalty interests and payments out of or measured by
Production (hereinafter defined) (said oil, gas, and mineral leases and property
and interests being herein referred to as the "Leases"); (ii) the units, pooled
acreage, spacing, or proration units or other allocation of acreage, and all
rights associated therewith, which are applicable to the Leases and have been
established by, or in accordance with, (a) applicable contractual provisions
regarding unitization, communitization, pooling, spacing, or proration, or (b)
applicable state or federal law;
II. The Production. All of the Seller's right, title, and interest in
and to all oil, gas, casinghead gas, condensate, distillate, and other liquid or
gaseous hydrocarbons and other minerals which are in, under, upon, and produced
from or allocable (or to be produced from or allocable) to the Leases after the
Effective Date (as defined in Paragraph 3(a) hereof) (such hydrocarbons and
minerals being hereinafter referred to as "Production"), including "line fill"
and inventory attributable to the interests described in Exhibit "A," or the
proceeds from the sale of such Production;
III. The Wells and Equipment. All of Seller's right, title, and
interest in and to all personal property of every kind and character located on
the Leases or used in the operation thereof including, without limitation, wells
(whether productive or non-productive, active or inactive) (the "Wells"),
compressors, well equipment, casing, tanks, machinery, gathering lines and
systems, treatment facilities, disposal wells and disposal facilities, pipelines
and other appurtenances, and any other personal property situated thereon,
herein individually and collectively called the "Equipment";
IV. The Rights of Way and Permits. All of Seller's right, title, and
interest in and to all rights, privileges, benefits, permissions, and
authorizations (including, without limitation, permits, licenses, servitudes,
easements, and rights of way) in respect of the use and occupation of the
surface of such Leases, and the subsurface depths under the land and premises
covered by and benefiting such Leases, herein called individually and
collectively "Rights of Way and Permits";
V. The Contracts. All of Seller's right, title, and interest in and to
all of the orders, gas purchase and sale contracts (wherein Seller is a selling
party), crude purchase and sale agreements (wherein Seller is a selling party),
surface leases, farm-in agreements, farmout agreements, bottom hole agreements,
acreage contribution agreements, operating agreements, unit agreements, area of
mutual interest agreements, processing agreements, options, leases of equipment
or facilities, and other contracts, agreements, and rights, which are owned by
Seller, in whole or in part and are (i) appurtenant to the Leases, or (ii) used
or held for use in connection with the ownership or operation of the Leases or
with the Production, treatment on the Leases, sale or disposal of water,
hydrocarbons or associated substances, herein called individually and
collectively the "Contracts";
VI. The Records. All of the files, records and data in the possession
of Seller relating to the items described in subsections (I), (II), (III), (IV),
and (V) above (the "Records"), including, without limitation, lease files, title
records (including abstracts of title, title opinions, and title
PURCHASE AND SALE AGREEMENT - PAGE 1
<PAGE> 49
curative documents); contracts, correspondence, originals or copies of
geological, geophysical, and seismic records, data, and information; and
originals or copies of production records, electric logs, core data, pressure
data and decline curves and graphical production curves, and all related
matters, to the extent Seller has the authority to release such Records and to
the extent they are reasonably required by Purchaser to operate the Wells;
VII. Miscellaneous. Exhibit "A" attached hereto sets forth the
undivided interests of Seller in the Leases, and the revenue interests
attributable thereto, as well as the undivided interests of Seller in the
Production, Wells, Equipment, Rights of Way, and Contracts. This Agreement
covers and pertains to all of the right, title, and interest of Seller in the
Leases, the lands covered by the Leases, Production, Wells, Equipment, and
Rights of Way, even if the undivided interests of Seller in any such property or
property rights should be incorrectly or insufficiently described in the Exhibit
"A."
The Leases, Production, Wells, Equipment, Rights of Way and Permits,
Contracts, Records, and Miscellaneous referred to in Paragraphs I through VII
above, are hereinafter sometimes referred to individually and collectively in
the singular as "Property."
WHEREAS, this Agreement was the subject of, and was contemplated by,
that certain letter of intent dated October 17, 1996, by and between Queen Sand
Resources, Inc., and David Robertson and Keith Robertson, as amended and
supplemented, including amendment and supplement dated December 24, 1996. As to
the interest of Seller in the Property, this Agreement supersedes and replaces
the letter of intent.
NOW, THEREFORE, for and in consideration of the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Seller and Purchaser
hereby agree as follows:
1. Sale and Purchase. Seller agrees to sell and convey to Purchaser,
and Purchaser agrees to purchase and pay for, all of Seller's right, title, and
interest in and to the Property as hereinafter provided.
2. Purchase Price. The "Purchase Price" for the Property shall be the
sum of $297,600.00, payable as follows:
(a) The sum of $297,600.00, which shall be paid at Closing.
All cash payments to be tendered by Purchaser to Seller, either before
or after Closing, shall be made by wire transfer or shall be made by certified
funds.
The Purchase Price shall be subject to adjustment as hereinafter
provided.
3. Closing and Effective Date.
(a) The closing of the sale and purchase of the Property shall
take place on or before February 5, 1997, (the "Closing") at 1310 Jeff
Davis, Hammond, Louisiana 70403, or at such other time, place, or
manner as may be mutually agreeable to the Parties. The sale of the
Property shall be effective as of November 1, 1996, at 7:00 a.m. local
time for each of the particular Leases (the "Effective Date").
(b) At the Closing, the Property shall be conveyed and
transferred by Seller to Purchaser by the execution and delivery of an
Assignment and Bill of Sale (the "Assignment") in substantially the
same form and content as the Assignment and Bill of Sale which is
attached hereto as Exhibit "B," and such other instruments of
conveyance as may be reasonably requested by Purchaser. Purchaser shall
be entitled to all of Seller's rights in the Property (including,
without limitation, the rights to all Production and proceeds of
Production) appurtenant and attributable to the Property, and shall be
subject to the duties and obligations attendant with ownership of such
undivided share of the Property for the period from and after the
Effective Date. For the period prior to the Effective Date, Seller
PURCHASE AND SALE AGREEMENT - PAGE 2
<PAGE> 50
shall be entitled to all of the rights (including, without limitation,
the rights to all Production and proceeds of Production) appurtenant
and attributable to the Property, and shall be subject to the duties
and obligations attendant with ownership of the Property.
4. Adjustments to Purchase Price. The Purchase Price shall be adjusted
(the "Adjusted Purchase Price") at the Closing, by the "Interim Settlement
Statement" (hereinafter defined in this paragraph and in Paragraph 9 below),
and, subsequent to Closing, by the "Final Settlement Statement" (hereinafter
defined in Paragraph 13 below), as follows:
(a) The Purchase Price shall be increased by the following:
(1) the value of all merchantable allowable oil or
other liquid hydrocarbons in storage owned by Seller in the
tanks or above the pipeline connection at the Effective Date,
and not previously sold by Seller, that is credited to the
share of the Property being acquired hereunder, valued at the
contract price thereto, or if none, the actual price received
by Purchaser, less taxes or gravity adjustments deducted by
the purchaser of such oil or other liquid hydrocarbons;
(2) the amount of all reasonable expenditures made in
connection with the ownership, operation, and maintenance of
the share of the Property being acquired hereunder, (including
royalties and rentals) and in accordance with generally
accepted accounting principles and prudent operations,
attributable solely to the period from and after the Effective
Date and which are paid by or on behalf of Seller after the
Effective Date;
(3) an amount equal to all prepaid expenses,
attributable to the ownership, operation, and maintenance of
the share of the Property being acquired hereunder that are
paid by or on behalf of Seller after the Effective Date and
prior to the Closing Date and that are, in accordance with
generally accepted accounting principles, attributable solely
to the period from and after the Effective Date;
(4) any other amount agreed upon by Purchaser and
Seller.
(b) The Purchase Price shall be decreased by the following:
(1) the amount of any proceeds from the sale of
Production attributable to the share of the Property being
acquired hereunder attributable to the period on or after the
Effective Date (net of production, severance, and similar
taxes and assessments measured by or payable out of
production) actually received or accrued by or on behalf of
Seller;
(2) an amount equal to all unpaid ad valorem,
property, production, profit, severance, and similar taxes and
assessments based upon or measured by the ownership of the
share of the Property being acquired hereunder or the
production of oil, gas, or other minerals therefrom or the
receipt of proceeds attributable thereto, which accrue to or
are chargeable against such share of the Property (in
accordance with generally accepted accounting principles) and
which are attributable to the period prior to the Effective
Date, which amount shall, to the extent not actually assessed,
be computed based upon such taxes and assessments for the
immediately- preceding calendar year, or if such taxes or
assessments are assessed on other than a calendar-year basis,
for the tax period last ended;
(3) any amounts received by Seller (whether prior to
or subsequent to the Effective Date) pursuant to
"take-or-pay," advance payment, or similar provisions of any
production sales contract, any gas balancing agreement, or any
other agreement, to the extent any purchaser has the right to
apply any such amounts to Purchaser's share of Production
delivered after the Effective Date;
PURCHASE AND SALE AGREEMENT - PAGE 3
<PAGE> 51
(4) any reduction in the value of the share of the
Property being acquired hereunder resulting from the existence
of a Defect (herein defined in Section 5(d)) which is not
cured or waived prior to Closing;
(5) any other amount agreed upon by Purchaser and
Seller.
(c) The "Interim Settlement Statement" shall be prepared by
Seller, its agents, or representatives, prior to Closing, which
statement shall set forth the adjustments to the Purchase Price, per
the adjustments set forth in this Paragraph 4, which are or may be
determined at or prior to Closing. Such statement shall be prepared
according to generally accepted accounting principles and shall show
the calculation of all such adjustments. Upon the approval of such
Interim Settlement Statement by Purchaser, the Purchase Price shall be
adjusted according to such statement. Upon Purchaser's request, Seller
shall make available to Purchaser all information relied upon by Seller
for the adjustments requested in order to aid and facilitate
Purchaser's approval of such statement. After Closing, the Purchase
Price may further be adjusted, pursuant to the adjustments set forth in
this paragraph, with the "Final Settlement Statement" in the manner
further described in Paragraph 13 below.
(d) All monies received by either Party hereto which, under
the terms of this Agreement or otherwise, belong to the other Party,
shall be received in trust by the Party receiving such funds, and shall
monthly, upon receipt, be paid over to the other Party. The Parties
agree, in this regard, to cooperate fully and to execute, endorse, and
deliver as expeditiously as practicable such papers, checks, and
documents as are needed promptly to complete the transfer of such
payments;
(e) After the Closing, if an invoice or other evidence of an
obligation relating to the share of the Property acquired by Purchaser
is received which is applicable to periods both prior to and after the
Effective Date, and is partly the obligation of Seller and partly the
obligation of Purchaser, then each Party shall pay its respective
portion of such obligation to the obligee, prorated between the Parties
as of the Effective Date;
(f) At and after the Closing, Purchaser and Seller will
cooperate fully in notifying all applicable third parties (including
the execution by Seller of such transfer orders, letters in lieu,
change of operator, etc., as may be requested by Purchaser) so that
notices, proceeds, and invoices from such third parties may take into
account the fact that Purchaser has acquired the Property as of the
Effective Date;
(g) The parties hereto agree to exercise diligence and good
faith in attempting to resolve any disagreements or disputes which may
arise from the adjustments to the Purchase Price to be made in
accordance with this paragraph.
5. Property Conditions, Title Review, Property Information, and
Casualty Losses.
(a) Property Conditions. THIS SALE OF THE EQUIPMENT AND ALL
OTHER PERSONAL PROPERTY THAT IS A PART OF THE PROPERTY IS MADE ON AN
"AS IS, WHERE IS" BASIS WITH ALL FAULTS AS TO ITS CONDITION, AND SELLER
EXPRESSLY DISCLAIMS ALL WARRANTIES AS TO THE CONDITION OF THE EQUIPMENT
(NOTE, HOWEVER, THERE ARE CERTAIN WARRANTIES AS TO TITLE AS HEREIN SET
FORTH) INCLUDING, WITHOUT LIMITATIONS, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE. Seller agrees
that for a period of time commencing with the date of the letter of
intent dated October 17, 1996, above described, and continuing until
five (5) business days before Closing (the "Review Period"), Purchaser,
personally or through its authorized agents or representatives, shall
have the right to make any and all physical inspections of the Property
which Purchaser may desire to make or to have made and to make all such
other inspections, surveys, tests, or other studies (including, but not
limited to, environmental assessments and evaluations) as Purchaser
deems necessary or desirable. Upon reasonable notice to Seller,
Purchaser, and its authorized agents and representatives, at
Purchaser's sole risk, may enter upon the Property for the purpose of
conducting those
PURCHASE AND SALE AGREEMENT - PAGE 4
<PAGE> 52
inspections, surveys, tests, and studies. If Purchaser shall determine
that the condition of the Property is not in substantial compliance
with any governmental regulations (including environmental
regulations), then upon discovery, Purchaser must promptly give written
notice to Seller of such condition ("Condition"). Upon receipt of such
notice, Seller shall have the option, but not the obligation, to (a)
cure or remedy such Condition to the reasonable satisfaction of
Purchaser (if current remediation of such Condition is required by a
governmental agency, Seller agrees that the Condition shall be remedied
in accordance with and to the satisfaction of the appropriate agency's
requirements); or (b) agree with Purchaser on a reduction to the
Purchase Price which reduction shall reflect Purchaser's anticipated
reasonable cost to remedy such Condition. If the Condition cannot be
cured or remedied to Purchaser's reasonable satisfaction, and if
agreement cannot be reached on reduction to the Purchase Price, then
the affected Property may be excluded by Purchaser from the Property to
be acquired by Purchaser hereunder. In such event , the Purchase Price
shall be reduced by the Allocated Purchase Price (see subparagraph (c)
below) for such excluded Property.
(b) Review of the Records. During the Review Period, and upon
reasonable notice from Purchaser, Seller shall provide Purchaser,
personally or through its authorized agents or representatives, full
access during normal business hours to Seller's office and premises to
review and inspect all Records, including, but not limited to, all
abstracts of title, lease files, unit files, production and marketing
files, title opinions, title files, title records, geologic,
engineering, and other files or information in Seller's possession or
to which it has access which relate to the Property and the status of
Seller's title thereto, and Purchaser, at its expense, shall have the
right to make and retain copies of any of such Records; provided
however, if the transactions contemplated hereby do not close for any
reason, Purchaser shall return any Records and copies thereof to Seller
forthwith. Without limiting the generality of the foregoing, Purchaser
shall also be given access to reserve reports, geological and
geophysical reports (including, but not limited to well records, log
films, proprietary or joint venture seismic data or other seismic data
which Seller is not contractually restricted from disclosing),
contracts (including, but not limited to, gas contracts), operating
agreements, operating statements, and reports.
(c) Notice of Defect. If, during the Review Period, Purchaser
determines that the Property is subject to a "Defect" (as defined
herein in Section 5(d)), the Purchaser must give written notice to
Seller of such Defect, the nature of the Defect, and furnish Seller
Purchaser's basis for the assertion of such Defect. As soon as
practical after such written notice, Seller shall use reasonable
diligence to cure any such Defects. If Seller cannot cure any such
Defects to the reasonable satisfaction of Purchaser, then Seller shall
so notify Purchaser in writing. Thereafter, Seller and Purchaser shall
use a good faith effort to agree on the Purchase Price adjustment for
any such Defect which cannot be cured. Such adjustment shall be
determined in accordance with the following guidelines:
(1) The Purchase Price shall be allocated among the
various Leases in the proportion of the PDP fair market value
of the Leases reported by Netherland Sewell & Associates in
its report dated October 21, 1996, (the "Allocated Purchase
Price").
(2) If the Defect is that Seller's Net Revenue
Interest ("NRI") for any Property is less than the NRI for
such Property as set forth in Exhibit "A," then the allocated
Purchase Price for such Property shall be adjusted in the same
proportion that the actual NRI for such property bears to the
NRI shown in Exhibit "A."
(3) If the Defect is a lien, encumbrance, or other
charge upon the Property which is liquidated in amount, then
the adjustment shall be the sum necessary to be paid to the
obligee to remove the Defect from the Property;
If the Purchase Price adjustment for any such Defect cannot be
determined, and the Seller and Purchaser cannot agree in good faith on
the amount of the adjustment to the Purchase Price, the Purchaser may
(a) waive the Defect and proceed with Closing, or (b) exclude the
affected Property and reduce the Purchase Price by the Allocated
Purchase Price
PURCHASE AND SALE AGREEMENT - PAGE 5
<PAGE> 53
for such property, or (c) terminate this Agreement, in which event the
Parties shall have no further rights or obligations under this
Agreement.
(d) Definition of Defect. For the purpose of this Agreement, a
"Defect" shall be defined as:
(1) Any material encumbrance, lien, mortgage, breach
of representation or warranty, production payment, pledge,
claim, charge, call on production, default, defect, condition,
unleased mineral interest, preferential right, requirement for
consent to assignment, or lack of title affecting the
Property, or any matter affecting the Property by which
Purchaser reasonably or in good faith believes that Seller's
interest in a Property may become subject to the claims of
third parties;
(2) Seller's NRI in any Property is less than the NRI
for such Property which is set forth in Exhibit "A," or
Seller's gross working interest ("GWI") in any Property is
less than the working interest shown in Exhibit "A," or
Seller's GWI in any Property is greater than the working
interest shown in Exhibit "A" without a corresponding increase
in the NRI in such Property;
(e) Other Property Information. If, based upon Purchaser's
examination of the Records according to Paragraph 5(b) hereof,
Purchaser shall determine that any information, statement, or data
contained in any information, reports, statement, or data furnished to
Purchaser or used in its economic analysis of the Property is not true
or correct in any material respect, upon discovery of any incorrect
information, Purchaser may give written notice to Seller of such
inaccuracy or misstatement. Any such notice must be provided in writing
during the Review Period, or it will be deemed to be waived. Such
notice shall provide a summary of such inaccuracy or misstatement. Upon
receipt of such notice, Seller shall have the option, but not the
obligation, to (a) cure or remedy such inaccuracy or misstatement to
the reasonable satisfaction of Purchaser; or (b) agree with Purchaser
on a reduction to the Purchase Price, which reduction shall reflect
Purchaser's reasonably anticipated cost to remedy such inaccuracy or
misstatement. If the inaccuracy or misstatement cannot be cured or
remedied to Purchaser's reasonable satisfaction, and if agreement
cannot be reached on reduction to the Purchase Price, then the affected
Property shall be excluded from the Property to be acquired by
Purchaser hereunder, and the Purchase Price shall be reduced by the
Allocated Purchase Price for such Property;
(f) Casualty Loss. If, prior to Closing, any Property is
substantially damaged or destroyed by fire or other casualty ("Casualty
Defect"), Seller shall notify Purchaser promptly after Seller learns of
such event. Seller shall have the right, but not the obligation, to
cure any such Casualty Defect by repairing such damage or, in the case
of personal property, fixtures, replacing the Property affected thereby
with equivalent items, no later than the date of Closing. If any
Casualty Defects exist at Closing, Purchaser may proceed to purchase
the Property affected thereby, and the Purchase Price shall be reduced
by the aggregate reduction in the value of such Property on account of
such Casualty Defects, as determined by the mutual agreement of the
Parties, or if the Parties are unable to agree on the reduction of the
Purchase Price, then the affected Property shall be excluded from the
Property to be acquired by Purchaser hereunder, and the Purchase Price
shall be reduced by the Allocated Purchase Price for such Property.
Notwithstanding anything to the contrary contained herein, Seller shall
be entitled to retain all insurance proceeds and claims against other
Parties in respect of any such Casualty Defect which occurs prior to
closing unless no reduction is made in the Purchase Price as a result
of such Casualty Defect, in which event Purchaser shall be entitled to
the insurance proceeds and claims against other Parties arising from
such Casualty Defect.
6. Seller's Representations and Warranties. Seller represents and
warrants to Purchaser that:
(a) This Agreement has been duly executed and delivered on
behalf of Seller and is binding and enforceable against Seller in
accordance with its terms and at the Closing. All
PURCHASE AND SALE AGREEMENT - PAGE 6
<PAGE> 54
documents and instruments required hereunder to be executed and
delivered by Seller shall have been duly executed and delivered at
Closing, and the execution, delivery, and performance of this Agreement
by Seller and the consummation of transactions contemplated hereby will
not constitute a breach of, an event of default under, a violation of,
or a conflict with any agreement or other instrument to which Seller is
a party (except to the extent such instrument may be released at the
Closing). Nor will the same cause Seller to be in violation of any
applicable laws or regulations or any order of any court or
governmental agency having jurisdiction.
(b) All ad valorem, property, production, severance, excise,
and similar taxes and assessments based on or measured by the ownership
of the Property or the Production or the receipt of proceeds therefrom,
which have become due and payable prior to the date hereof with respect
to the Property have been properly paid, and Seller's allocable share
of such taxes and assessments which become due and payable prior to the
Closing shall be properly paid by Seller, and all royalties, overriding
royalties, and payments to any third parties which have become due and
payable prior to the date hereof with respect to production from the
Property, have been properly paid, and will be hereafter properly paid
for the period prior to Closing.
(c) Seller has incurred no liability, contingent or otherwise,
for brokers' or finders' fees in respect of this transaction for which
Purchaser shall have any responsibility whatsoever.
(d) Prior to the Closing, Seller will pay or cause to be paid
all of Seller's share of costs and expenses incurred in connection with
the Property, and will comply with all contracts or other agreements
relating to the Property.
(e) To the best of Seller's information and belief, all laws,
regulations, and orders of all governmental agencies having
jurisdiction over the Property have been and shall continue to be
complied with until the Closing.
(f) There are no first rights of refusal, consents,
authorizations, preferential rights, options, or claims of a similar
nature affecting the Property, other than those listed in Exhibit "A,"
said listed consents defined herein as "Consents."
(g) Seller shall, upon request, subrogate Purchaser to any
claim which Seller may have against any third party, prior owner,
vendor, or assignor with respect to the share of the Property acquired
by Purchaser, or the title thereto.
(h) There are no "imbalances" which allow any other party to
make up production at any time after the Effective Date, under any
operating agreement, gas balancing agreement and storage agreement, gas
transportation agreement, gas processing or dehydration agreement, or
other similar agreement relating to the Property.
(i) Seller has not directly or indirectly reserved or retained
any recorded or unrecorded interest or rights in any of the Property,
and Seller shall not reserve any recorded or unrecorded executory
interest or rights relating to the Property.
(j) Seller warrants that the Property is free and clear of all
encumbrances, liens, and mortgages, save and except such encumbrances
as may be identified and described in Exhibit "A" attached hereto, and
further save and except liens for taxes not yet due and payable.
(k) Except as may be identified and described in Exhibit "A"
attached hereto, the Property is not subject to any restriction,
reservation, reversionary interest, drilling or development obligation,
or other material obligation or burden on the operation or the
disposition of Production attributable to the Property.
PURCHASE AND SALE AGREEMENT - PAGE 7
<PAGE> 55
(l) No part of any of the Property is affected by any
prepayment arrangement under any contract for the sale of oil or gas,
or by any production payment or any other arrangement for delivery of
oil or gas produced from any of the Property at some future time
without Purchaser then or thereafter receiving full payment therefor,
and no third party now has or at Closing will have any right to take
makeup gas for which it has already paid. As of the Effective Date,
there are no volumes of makeup gas owing, or accumulated transportation
credits due, to gas purchasers on account of any "take-or-pay" or other
provisions of any contract, and Seller has not produced or sold more
than its pro-rata share of the gas from any Wells included in the
Property.
(m) Except as may be set forth in Exhibit "A" attached hereto,
there are no gas purchase or sale agreements, and no gas gathering or
transportation agreements, affecting the Property that cannot be
terminated upon ninety (90) days' written notice.
(n) Without the prior written consent of Purchaser, Seller (i)
shall not enter into any new agreements or commitments affecting the
Property which extend beyond the Closing, and (ii) will not modify or
terminate any agreements affecting any of the Property, including,
without limitation, any oil and gas leases, unitization or pooling
agreements, operating agreements, pipeline agreements, processing
agreements, and hydrocarbon sales contracts, and (iii) will not further
encumber, sell, mortgage, release, abandon, or otherwise dispose of any
of the Property or any interests therein.
(o) There is not any suit, action, or other proceeding pending
or threatened which affects or relates to the Property, or seeks to
restrain or prohibit Seller from selling or conveying to Purchaser the
share of the Property to be purchased herein. Seller shall promptly
notify Purchaser of any such proceedings which may arise or be
threatened prior to Closing.
(p) There are no operating agreements with third parties
affecting the Property except as may be identified and described in
Exhibit "A" attached hereto.
(q) Seller has no knowledge and has not received any notice of
any claimed default (or any event which, with the giving of notice or
the passage of time, or both, would constitute a default) under (i) the
Leases, (ii) any order, writ, injunction, or decree of any court,
commission, or administrative agency affecting the Property, or (iii)
any other agreement affecting the Property. Seller shall promptly
notify Purchaser of any such notice hereafter received by Seller and
the occurrence of any such event of which Seller becomes aware prior to
Closing.
(r) There are no tax partnerships affecting any of the
Property.
(s) To the best of Seller's information and belief, no
Production from any Well on the Property has occurred in excess of that
permitted by law, orders, or regulations.
(t) To the best of Seller's information and belief, there has
been no material injury or damage to any of the Property which has not
been fully repaired, replaced, or rebuilt.
(u) Except for depletion due to continued production, there
has been no substantial and material change in condition of the
Property between the date hereof and Closing.
(v) To the best of Seller's information and belief, all
easements, rights of way, permits, crossing agreements, and surface
rights included in the Property are in full force and effect and are
valid and subsisting, and freely assignable, and all rentals and other
payments due thereunder have been properly and timely paid and all
conditions necessary to keep them in force have been duly performed.
PURCHASE AND SALE AGREEMENT - PAGE 8
<PAGE> 56
(w) From and after the effective date of its acquisition of
its ownership in the Leases, the Seller has performed all obligations
required to be performed under such Leases, or any other instruments
and agreements relating to the Properties, and is not in default
thereunder, and to the best of Seller's information and belief, each of
the Leases to be conveyed is valid and in full force and effect.
(x) To the best of Seller's knowledge, Seller owns each Lease
and Property in the undivided share reflected by the "Working Interest"
described and set forth in Exhibit "A" for each particular Lease and
Property, and Seller owns for each Lease and Property the share of
Production reflected as "Net Revenue Interest" in Exhibit "A" attached
hereto. Seller is being paid not less than the fractional "net revenue
interest" for each Property in Exhibit "A" hereto, and, for expenses
and costs for each Property, Seller is not paying more than the
fractional interest specified under "Working Interest" for each
Property in Exhibit "A" hereto.
(y) To the best of Seller's information and belief, all
rentals and bonuses have been timely and fully paid and discharged, and
all conditions necessary to keep the Leases in full force have been
performed, and no proceeds from the sale of Production attributable to
the Property are currently being held in suspense by any purchaser
thereof.
(z) The Seller has not collected any proceeds from the sale of
Production attributable to the Property which are subject to refund, or
if so, that any such refund, if not otherwise accounted for under this
Agreement, shall be the sole responsibility of the Seller.
(aa) Except as listed in Exhibit "A" attached hereto, to the
best of Seller's information and belief, there are no Wells located on
the Property that Seller is obligated by law or contract to plug and
abandon, that Seller will be obligated by law or contract to plug and
abandon at the present time, and with the lapse of time or notice, or
both, because the well is not currently capable of producing production
in commercial quantities, or because the Well is subject to exceptions
to a requirement to plug and abandon issued by a regulatory authority
having jurisdiction over the Property.
(bb) To the best of Seller's information and belief, there are
no presently existing conditions (by existing federal or state statutes
and regulations) affecting the Property, which might give rise to a
cause of action on behalf of any governmental agency or third party,
against either Purchaser or Seller.
(cc) All information and data provided to Purchaser by Seller
or its agents concerning the Property is true and correct to the best
of Seller's information, knowledge, and belief.
(dd) Environmental Current Status. To the best of Seller's
knowledge, the Property and Seller are not in violation of or subject
to any existing, pending, or threatened investigation or inquiry by any
governmental authority or to any remedial obligations under any
applicable laws pertaining to health or the environment (such laws as
they now exist or are hereafter enacted and/or amended hereinafter
sometimes collectively called "Applicable Environmental Laws"),
including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, hereinafter
called "CERCLA"), the Resource Conservation and Recovery Act of 1976,
as amended by the Used Oil Recycling Act of 1980, the Solid Waste
Disposal Act Amendments of 1980, and the Hazardous and Solid Waste
Amendments of 1984 (as amended, hereinafter called "RCRA"), the Texas
Water Code and the Texas Solid Waste Disposal Act, and this
representation will continue to be true and correct following
disclosure to the applicable governmental authorities of all relevant
facts, conditions, and circumstances, if any, pertaining to the
Property and Seller. The terms "hazardous substance" and "release" as
used in this Agreement shall have the meanings specified in CERCLA, and
the terms "solid waste" and "disposal" (or "disposed") shall have the
meanings specified in RCRA; provided, in the event either CERCLA or
RCRA is amended so as to broaden the meaning of any term
PURCHASE AND SALE AGREEMENT - PAGE 9
<PAGE> 57
defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment and provided further, to the extent
that the laws of the State of Texas establish a meaning for "hazardous
substance," "release," "solid waste," or "disposal" which is broader
than that specified in either CERCLA or RCRA, such broader meaning
shall apply.
7. Purchaser's Representations and Warranties. Purchaser represents and
warrants to Seller that:
(a) Purchaser: (i) is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada
(ii) is duly qualified to transact business in each jurisdiction where
the nature and extent of its business and properties require the same
in order for it to perform its obligations under this Agreement; and
(iii) possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply
with the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, all of which have been
duly authorized and approved by all necessary corporate action and for
which no further approval or consent is required.
(b) The consummation of the transactions contemplated by this
Agreement will not violate, or be in conflict with (i) any agreement or
instrument to which Purchaser is a party; or (ii) any judgment or
decree applicable to Purchaser as a party in interest with respect
thereto.
(c) This Agreement has been duly executed and delivered on
behalf of Purchaser, and at the Closing, all documents and instruments
required hereunder to be executed and delivered by Purchaser (or its
assignees) shall have been duly executed and delivered.
(d) Subject to the conditions herein, Purchaser has or will
have at Closing (i) the financial capability or (ii) commitments from
responsible financial institutions to provide the funds required by
Purchaser, to pay the Purchase Price and consummate the transaction
contemplated hereby within the time period contemplated herein.
(e) Purchaser either has performed, or prior to closing will
perform, whatever inspection of the Property and Seller's title thereto
that Purchaser deems appropriate and knows the condition thereof and is
purchasing the Property as a result of such inspections and not because
of, or in reliance on, any representation or warranty made by Seller
other than those expressly set forth in this Agreement.
(f) In the event the Purchase Price is adjusted down at
Closing, based upon any unpaid taxes as set forth in Paragraph 4(b)(2)
hereof (the "Tax Adjustment"), Purchaser agrees to timely make payment
(equivalent to the Tax Adjustment) to such taxing authorities as may be
appropriate.
8. Conditions to Obligations of Purchaser. The obligations of Purchaser
to consummate the transaction provided for herein are subject, at the option of
Purchaser, to the fulfillment on or prior to Closing, of each of the following
conditions:
(a) Representations. The representations and warranties of
Seller herein contained shall be true and correct in all material
respects at Closing as though made on and as of such date (unless
appropriate adjustments or remediation has been made in accordance with
Paragraph 5 hereof).
(b) Performance. Seller shall have performed all obligations,
covenants, and agreements hereunder and shall have complied with all
covenants and conditions contained in this Agreement to be performed or
complied with by it at or prior to the Closing.
(c) Pending Matters. No suit, action, or other proceedings
shall be pending or threatened (a) against Seller before any court or
governmental agency which might result in impairment or loss of value
as to Seller's title to any part of the Property; or (b) which seeks
PURCHASE AND SALE AGREEMENT - PAGE 10
<PAGE> 58
to restrain, enjoin, or otherwise prohibit the consummation of the
transactions contemplated by this Agreement.
(d) Liability. No liability which affects, in a materially
adverse manner, the Property or Purchaser's ability to receive the
economic benefits therefrom has been or is threatened to be asserted
with respect to the Property.
(e) Defects. No Defects shall be present, which are not cured
by Seller or waived by Purchaser as provided herein.
(f) Records and Access. Seller shall have afforded Purchaser
and its officers, employees, and representatives timely and reasonable
access to the Records as required herein.
9. Seller's Obligations at Closing. At the Closing, Seller shall
deliver to Purchaser the following items; however, item (e) will be delivered as
soon prior to Closing as reasonably practical:
(a) The Assignment, duly executed and acknowledged by Seller;
(b) Duly executed and acknowledged releases of all liens and
burdens on the Property or on Production therefrom or attributable
thereto;
(c) Executed transfer orders (or letters in lieu thereof)
addressed to all purchasers of production from the Property;
(d) Any other executed documents or instruments which may be
reasonably required to consummate the transactions contemplated herein
and to fully vest Purchaser with operations and title to the Property
as contemplated hereby;
(e) The "Interim Settlement Statement," which shall set forth
the Purchase Price and adjustments thereto provided for in this
Agreement which are or may be determined at or prior to the Closing,
which statement shall be delivered to Purchaser as soon as reasonably
practical prior to Closing for Purchaser's review and approval;
(f) All consents required of third parties, who are identified
in Exhibit "A" attached, properly executed and in form approved by
Purchaser; and
(g) All releases of current liens of lenders encumbering all
or any part of the Property, properly executed in form acceptable by
Purchaser.
10. Purchaser's Obligations at Closing. At the Closing, Purchaser
shall:
(a) Deliver to Seller the Adjusted Purchase Price, in cash or
other immediately available funds (which shall be subject to a
subsequent accounting between Seller and Purchaser pursuant to this
Agreement); and
(b) Execute and deliver any other documents or instruments
which may be required to consummate the transactions contemplated
herein.
11. Notices. All notices, demands, and requests which may be given or
which are required to be given by either Party to the other shall be in writing.
Any notice, demand, or communication required or permitted hereunder shall be
deemed to be delivered on actual receipt or three (3) days after being sent by
overnight courier or Certified U.S. Mail to Seller or Purchaser, whichever
occurs first, respectively, as follows:
PURCHASE AND SALE AGREEMENT - PAGE 11
<PAGE> 59
SELLER: PURCHASER:
James P. Robertson and Corrida Resources, Inc.
Frances Leonard Robertson Suite 380, Lock Box 31
21375 Chaney Road 3500 Oak Lawn Avenue
Zachary, Louisiana 70791 Dallas, Texas 75219-4398
Telephone: ______________ Attn.: Edward Munden
Facsimile: ______________ President
Telephone: 214-521-9959
Facsimile: 214-521-9960
or such other address as Purchaser or Seller may, from time to time, designate
pursuant to the terms hereof. A facsimile transmission shall be considered an
original document for purposes of providing notice under this section.
12. Furnishing Data and Information. The Seller also agrees to promptly
cooperate in all reasonable requests by Purchaser in furnishing copies, at
Purchaser's expense, of all Records necessary for Purchaser to conduct its due
diligence under the terms of this Agreement.
13. Post-Closing Adjustments. As soon as practicable after the closing,
and in any event within sixty (60) days after Closing, Seller shall prepare and
deliver to Purchaser, in accordance with this Agreement and generally accepted
accounting principles, a statement (the "Final Settlement Statement") setting
forth each adjustment or payment pursuant to Paragraph 4 hereof that was not
finally determined as of the Closing ("Post-Closing Adjustments") and showing
the calculation of such Post-Closing Adjustments and the aggregate amount
thereof. Within ten (10) business days after receipt of the Final Settlement
Statement, Purchaser shall deliver to Seller a written report containing any
changes that Purchaser proposes be made to the Final Settlement Statement. The
Parties undertake to agree with respect to the amounts of such Post-Closing
Adjustments no later than ninety (90) days after the Closing Date. The date upon
which such agreement is reached or upon which the aggregate amount of the
adjustments are finally established shall be herein called the "Final Settlement
Date." Seller shall pay to Purchaser, or vice versa, as the case may be, within
ten (10) business days after the Final Settlement Date the amount of such
adjustments (as finally established), by means of wire transfer in immediately
available funds or by means of a certified bank check. In the event Seller owes
monies to Purchaser as a consequence of the Post-Closing Adjustments, Purchaser
shall have the right to offset Purchaser's obligation under the note for any
such monies which are owing to Purchaser by Seller under Paragraph 4 and this
Paragraph 13.
14. Failure to Perform/Termination of Agreement. If the Seller should
fail to fully and timely perform any of its obligations hereunder, or should
fail to consummate the sale of the Property, except due to the Purchaser's
default, the Purchaser may, at its option, enforce specific performance of this
Agreement, or terminate this Agreement.
15. Indemnification by Seller.
(a) Seller agrees to indemnify and save and hold harmless
Purchaser against and from any loss, damage, or expense sustained by
Purchaser arising out of or resulting from any breach of any of the
representations and warranties made hereunder and not waived by
Purchaser.
(b) Seller agrees to indemnify and save and hold harmless
Purchaser against all claims, liabilities, costs, expenses, windfall
profit taxes, and liability arising out of the ownership or operation
of the Property, and based upon the occurrence of events, the accrual
of obligations or liabilities, or the existence of conditions prior to
the Effective Date.
(c) If any claims for brokerage fees are asserted against
Purchaser in connection with this transaction based upon alleged
commitments made by Seller, Seller shall indemnify Purchaser against
all such claims and reimburse Purchaser for all reasonable expenses
incurred in responding to such claims, including reasonable attorney's
fees.
PURCHASE AND SALE AGREEMENT - PAGE 12
<PAGE> 60
(d) Notwithstanding anything to the contrary contained herein,
Seller agrees to indemnify and save and hold harmless Purchaser for
Seller's gross negligence or willful misconduct for that period of time
between the Effective Date and Closing.
(e) The provisions of this Paragraph 15 shall survive Closing
for a period of four (4) years from the date of Closing, and Seller
shall not be entitled to assert any right of indemnification hereunder
after such date.
16. Indemnification by Purchaser.
(a) Purchaser agrees to indemnify and save and hold harmless
Seller against and from any loss, damage, or expense sustained by
Seller arising out of or resulting from any breach of any of the
representations and warranties made hereunder and not waived by Seller.
(b) Purchaser shall assume and hereby agrees to pay, honor,
discharge, and perform fully and timely, the obligations and
liabilities directly associated with the Seller's interest in the share
of the Property acquired by Purchaser hereunder, which are attributable
to the period of time from and after the Effective Date.
(c) Purchaser agrees to indemnify and save and hold harmless
Seller against all claims, costs, expenses, windfall profits taxes, and
liabilities arising out of the ownership or operation of the share of
the Property acquired by Purchaser hereunder and based upon the
occurrence of events, the accrual of obligations or liabilities, or the
existence of conditions on and subsequent to the Effective Date (but
not including these costs and expenses incurred with respect to the
purchase of Seller's interest in the Property or the negotiations
leading to such purchase).
(d) If any claims for brokerage fees are asserted against
Seller in connection with this transaction based upon alleged
commitments made by Purchaser, Purchaser shall indemnify Seller against
all such claims and reimburse Seller for all reasonable expenses
incurred in responding to such claims, including reasonable attorney's
fees.
(e) The provisions of this Paragraph 16 shall survive Closing
for a period of four (4) years from the date of Closing, and Purchaser
shall not be entitled to assert any right of indemnification hereunder
after such date.
17. Confidentiality. Prior to Closing, the Seller shall be furnishing
to Purchaser various information relating to Seller and the Property, and
Seller's business activities, assets, finances, costs, revenues, rights,
obligations, liabilities, and strategies. In consideration of the Seller
furnishing this information to Purchaser, Purchaser agrees that prior to Closing
(a) that such information is confidential and/or proprietary to Seller, and such
information shall be entitled to and shall receive treatment as such by
Purchaser; (b) Purchaser shall use its best efforts, and will advise all of its
employees, representatives, agents, and advisors who have access to such
information, to use their best efforts to hold in confidence, not to disclose to
others, and not to use (except in respect of the transaction contemplated by
this Agreement) any such information; and (c) if Closing does not occur, all
such information, unless otherwise specified in writing, shall remain the
property of Seller, and shall be returned to Seller together with any copies
made thereof. Prior to Closing, Purchaser shall provide such information only to
its employees, representatives, agents, and advisors who have need to know such
information in connection with this Agreement.
18. Other Purchase and Sale Agreements. Purchaser has tendered purchase
and sale agreements, dated on or about the date hereof, to other parties, all of
whom are named in Exhibit "C" attached hereto. Such other agreements may cover
the interest, if any, of such other parties in the Leases and Property covered
by this Agreement, and may cover other oil and gas properties which are not the
subject of this Agreement. Purchase and Seller agree that the Closing under this
Agreement shall be simultaneous with the closings under such other agreements,
and that Closing under this Agreement shall be conditional upon closing
occurring under such other agreements. Seller does not claim any interest in and
to the oil and gas leases and other property which are the
PURCHASE AND SALE AGREEMENT - PAGE 13
<PAGE> 61
subject of such other purchase and sale agreements, and which are not the
subject of this Agreement. In the event Seller may have any claim or interest in
and to the oil and gas leases and other property which are the subject of such
other purchase and sale agreements, and which are not the subject of this
Agreement, then, for the consideration herein, Seller agrees to sell and convey
to Purchaser all of Seller's interest in and to the oil and gas leases and other
property and interests which are the subject of the other purchase and sale
agreements, above described.
19. Area of Non-Competition. Seller agrees not to compete with
Purchaser in an area which comprises the lands covered by the Leases and an area
which shall extend outward from the boundaries of each of the Leases a distance
of 5,280 feet. In this regard, Seller agrees that Seller, its employees, agents,
servants, or companies controlled by Seller, in common control with Seller, or
with whom Seller is affiliated, shall not acquire, for so long as a Lease is
held in force and effect by its terms, and for a period of three years
thereafter, any oil and gas leases, any mineral interest, royalty interest,
overriding royalty interest, or any farmout agreement, or other agreement
permitting the right to explore for and produce oil and/or gas, which cover any
lands within the restricted area.
20. Miscellaneous.
(a) If any term or provision of this Agreement is held to be
illegal, invalid, or unenforceable, the legality, validity, and
enforceability of the remaining terms and provisions of this Agreement
shall not be affected thereby, and in lieu of each such illegal,
invalid, or unenforceable term or provision, there shall be added
automatically to this Agreement a legal, valid, and enforceable term or
provision as similar as possible to the term or provision declared
illegal, invalid, or unenforceable;
(b) Either Seller or Purchaser shall have the right to waive
any requirement contained in this Agreement, which is intended for the
waiving Party's benefit, but except as otherwise specifically provided
herein, such waiver shall be effective only if in writing and executed
by the Party for whose benefit such requirement is intended; provided
however, that any such waiver shall not be construed as a waiver of any
other benefit accruing to the waiving Party hereunder;
(c) The captions used in connection with this Agreement are
for convenience only and shall not be deemed to expand or limit the
meaning of the language of this Agreement;
(d) Words of any gender used in this Agreement shall be held
and construed to include any other gender, and words in the singular
shall be held to include the plural, unless the context otherwise
requires;
(e) Seller agrees that, on or before the Closing, it will not
carry on any negotiations with any third party, for the sale or
transfer of the Property, without the prior written consent of
Purchaser. Thereafter, Seller may negotiate with third parties if this
Agreement has been terminated;
(f) THIS AGREEMENT AND ALL OF THE TRANSACTIONS CONTEMPLATED
HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS;
(g) This Agreement embodies the entire agreement between
Seller and Purchaser with respect to the subject matter hereof and
supersedes all prior agreements, whether written or oral;
(h) Except as otherwise specifically provided herein, this
Agreement may not be amended except by an agreement in writing executed
by both Seller and Purchaser;
(i) This Agreement shall be binding upon and inure to the
benefit of Seller and Purchaser and their respective legal
representatives, successors, and assigns. It is expressly understood
and agreed that Purchaser's rights under this Agreement may not be
assigned
PURCHASE AND SALE AGREEMENT - PAGE 14
<PAGE> 62
prior to Closing. Provided however, any interest acquired hereunder
shall be freely assignable by Purchaser after Closing;
(j) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all
of which shall be deemed to be one and the same instrument;
(k) In addition to the acts and deeds recited herein and
contemplated to be performed, both Seller and Purchaser hereby agree to
perform, execute, and/or deliver at and after Closing any and all such
further reasonable acts, deeds, and assurances as may be reasonably
required to consummate the transactions contemplated by this Agreement;
(l) This Agreement supersedes any and all other agreements,
either oral or in writing, between the Parties hereto with respect to
the subject matter hereof and contains all of the covenants and
agreements between the Parties with respect to said matter. Each Party
to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any
Party, or anyone acting on behalf of any Party, which are not embodied
herein, and that no other agreement, statement, or promise not
contained in this Agreement shall be valid or binding;
(m) In the event of any dispute occurring under this
Agreement, the prevailing Party shall be entitled to be reimbursed by
the other Party for its reasonable and necessary attorney's fees;
(n) Any failure by either Party to insist, or any election by
either Party not to insist, upon strict performance by the other Party
of any of the terms, provisions, or conditions of this Agreement shall
not be deemed to be a waiver of the same or of any other term,
provision, or condition hereof, and either Party may at any time or
times thereafter insist upon strict performance by the other Party of
any and all of such terms, provisions, and conditions. No waiver by
either Party of any right, remedy, power, or privilege hereunder shall
be construed as a waiver of, or operate to impair, any subsequent
right, remedy, power, or privilege nor shall any single or partial
exercise of any such right, remedy, power, or privilege exhaust the
same or preclude other or further exercise thereof.
(o) All covenants, representations, and indemnities set forth
herein shall survive closing, subject to any agreed periods of
limitation as may be set forth herein.
EXECUTED as of the 5th day of February, 1997.
WITNESSES: SELLER:
____________________________________ ____________________________________
JAMES P. ROBERTSON
____________________________________
____________________________________ ____________________________________
FRANCES LEONARD ROBERTSON
____________________________________
PURCHASE AND SALE AGREEMENT - PAGE 15
<PAGE> 63
PURCHASER:
CORRIDA RESOURCES, INC.,
a Nevada corporation
____________________________________ By: __________________________________
ROBERT P. LINDSAY, VICE PRESIDENT
____________________________________
ACKNOWLEDGMENTS
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared JAMES P.
ROBERTSON, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free act
and deed.
_________________________________
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared FRANCES
LEONARD ROBERTSON, to me known to be the person described in and who executed
the foregoing instrument, and acknowledged that she executed the same as her
free act and deed.
_________________________________
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared ROBERT P.
LINDSAY, to me personally known, who, being duly sworn, did say that he is the
Vice President of CORRIDA RESOURCES, INC., a Nevada corporation, and that the
foregoing instrument was signed by him on behalf of such entity, with necessary
authority, and that ROBERT P. LINDSAY acknowledged said instrument to be the
free act and deed of such corporation.
_________________________________
Notary Public, State of Louisiana
PURCHASE AND SALE AGREEMENT - PAGE 16
<PAGE> 64
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the 5th day of February, 1997, by
and between IVAN D. CARLSON, joined herein by his wife, JACKIE GALIMORE CARLSON,
(hereinafter referred to as the "Seller") and CORRIDA RESOURCES, INC., a Nevada
corporation (the "Purchaser"), (Seller and Purchaser hereinafter individually
referred to as "Party" and collectively as "Parties").
RECITALS
WHEREAS, Seller desires to sell and convey, and Purchaser desires to
purchase and receive, the following, upon the terms and conditions hereinafter
set forth:
I. The Leases and Units. All of the Seller's right, title, and interest
in and to (i) the oil, gas, and mineral leases and properties and interests
described in Exhibit "A," including but not limited to, leasehold, fee, mineral,
royalty, and overriding royalty interests and payments out of or measured by
Production (hereinafter defined) (said oil, gas, and mineral leases and property
and interests being herein referred to as the "Leases"); (ii) the units, pooled
acreage, spacing, or proration units or other allocation of acreage, and all
rights associated therewith, which are applicable to the Leases and have been
established by, or in accordance with, (a) applicable contractual provisions
regarding unitization, communitization, pooling, spacing, or proration, or (b)
applicable state or federal law;
II. The Production. All of the Seller's right, title, and interest in
and to all oil, gas, casinghead gas, condensate, distillate, and other liquid or
gaseous hydrocarbons and other minerals which are in, under, upon, and produced
from or allocable (or to be produced from or allocable) to the Leases after the
Effective Date (as defined in Paragraph 3(a) hereof) (such hydrocarbons and
minerals being hereinafter referred to as "Production"), including "line fill"
and inventory attributable to the interests described in Exhibit "A," or the
proceeds from the sale of such Production;
III. The Wells and Equipment. All of Seller's right, title, and
interest in and to all personal property of every kind and character located on
the Leases or used in the operation thereof including, without limitation, wells
(whether productive or non-productive, active or inactive) (the "Wells"),
compressors, well equipment, casing, tanks, machinery, gathering lines and
systems, treatment facilities, disposal wells and disposal facilities, pipelines
and other appurtenances, and any other personal property situated thereon,
herein individually and collectively called the "Equipment";
IV. The Rights of Way and Permits. All of Seller's right, title, and
interest in and to all rights, privileges, benefits, permissions, and
authorizations (including, without limitation, permits, licenses, servitudes,
easements, and rights of way) in respect of the use and occupation of the
surface of such Leases, and the subsurface depths under the land and premises
covered by and benefiting such Leases, herein called individually and
collectively "Rights of Way and Permits";
V. The Contracts. All of Seller's right, title, and interest in and to
all of the orders, gas purchase and sale contracts (wherein Seller is a selling
party), crude purchase and sale agreements (wherein Seller is a selling party),
surface leases, farm-in agreements, farmout agreements, bottom hole agreements,
acreage contribution agreements, operating agreements, unit agreements, area of
mutual interest agreements, processing agreements, options, leases of equipment
or facilities, and other contracts, agreements, and rights, which are owned by
Seller, in whole or in part and are (i) appurtenant to the Leases, or (ii) used
or held for use in connection with the ownership or operation of the Leases or
with the Production, treatment on the Leases, sale or disposal of water,
hydrocarbons or associated substances, herein called individually and
collectively the "Contracts";
VI. The Records. All of the files, records and data in the possession
of Seller relating to the items described in subsections (I), (II), (III), (IV),
and (V) above (the "Records"), including, without limitation, lease files, title
records (including abstracts of title, title opinions, and title curative
documents); contracts, correspondence, originals or copies of geological,
geophysical, and
PURCHASE AND SALE AGREEMENT - PAGE 1
<PAGE> 65
seismic records, data, and information; and originals or copies of production
records, electric logs, core data, pressure data and decline curves and
graphical production curves, and all related matters, to the extent Seller has
the authority to release such Records and to the extent they are reasonably
required by Purchaser to operate the Wells;
VII. Miscellaneous. Exhibit "A" attached hereto sets forth the
undivided interests of Seller in the Leases, and the revenue interests
attributable thereto, as well as the undivided interests of Seller in the
Production, Wells, Equipment, Rights of Way, and Contracts. This Agreement
covers and pertains to all of the right, title, and interest of Seller in the
Leases, the lands covered by the Leases, Production, Wells, Equipment, and
Rights of Way, even if the undivided interests of Seller in any such property or
property rights should be incorrectly or insufficiently described in the Exhibit
"A."
The Leases, Production, Wells, Equipment, Rights of Way and Permits,
Contracts, Records, and Miscellaneous referred to in Paragraphs I through VII
above, are hereinafter sometimes referred to individually and collectively in
the singular as "Property."
WHEREAS, this Agreement was the subject of, and was contemplated by,
that certain letter of intent dated October 17, 1996, by and between Queen Sand
Resources, Inc., and David Robertson and Keith Robertson, as amended and
supplemented, including amendment and supplement dated December 24, 1996. As to
the interest of Seller in the Property, this Agreement supersedes and replaces
the letter of intent.
NOW, THEREFORE, for and in consideration of the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Seller and Purchaser
hereby agree as follows:
1. Sale and Purchase. Seller agrees to sell and convey to Purchaser,
and Purchaser agrees to purchase and pay for, all of Seller's right, title, and
interest in and to the Property as hereinafter provided.
2. Purchase Price. The "Purchase Price" for the Property shall be the
sum of $327,600.00, payable as follows:
(a) The sum of $327,600.00, which shall be paid at Closing.
All cash payments to be tendered by Purchaser to Seller, either before
or after Closing, shall be made by wire transfer or shall be made by certified
funds.
The Purchase Price shall be subject to adjustment as hereinafter
provided.
3. Closing and Effective Date.
(a) The closing of the sale and purchase of the Property shall
take place on or before February 5, 1997, (the "Closing") at 1310 Jeff
Davis, Hammond, Louisiana 70403, or at such other time, place, or
manner as may be mutually agreeable to the Parties. The sale of the
Property shall be effective as of November 1, 1996, at 7:00 a.m. local
time for each of the particular Leases (the "Effective Date").
(b) At the Closing, the Property shall be conveyed and
transferred by Seller to Purchaser by the execution and delivery of an
Assignment and Bill of Sale (the "Assignment") in substantially the
same form and content as the Assignment and Bill of Sale which is
attached hereto as Exhibit "B," and such other instruments of
conveyance as may be reasonably requested by Purchaser. Purchaser shall
be entitled to all of Seller's rights in the Property (including,
without limitation, the rights to all Production and proceeds of
Production) appurtenant and attributable to the Property, and shall be
subject to the duties and obligations attendant with ownership of such
undivided share of the Property for the period from and after the
Effective Date. For the period prior to the Effective Date, Seller
shall be entitled to all of the rights (including, without limitation,
the rights to all Production
PURCHASE AND SALE AGREEMENT - PAGE 2
<PAGE> 66
and proceeds of Production) appurtenant and attributable to the
Property, and shall be subject to the duties and obligations attendant
with ownership of the Property.
4. Adjustments to Purchase Price. The Purchase Price shall be adjusted
(the "Adjusted Purchase Price") at the Closing, by the "Interim Settlement
Statement" (hereinafter defined in this paragraph and in Paragraph 9 below),
and, subsequent to Closing, by the "Final Settlement Statement" (hereinafter
defined in Paragraph 13 below), as follows:
(a) The Purchase Price shall be increased by the following:
(1) the value of all merchantable allowable oil or
other liquid hydrocarbons in storage owned by Seller in the
tanks or above the pipeline connection at the Effective Date,
and not previously sold by Seller, that is credited to the
share of the Property being acquired hereunder, valued at the
contract price thereto, or if none, the actual price received
by Purchaser, less taxes or gravity adjustments deducted by
the purchaser of such oil or other liquid hydrocarbons;
(2) the amount of all reasonable expenditures made in
connection with the ownership, operation, and maintenance of
the share of the Property being acquired hereunder, (including
royalties and rentals) and in accordance with generally
accepted accounting principles and prudent operations,
attributable solely to the period from and after the Effective
Date and which are paid by or on behalf of Seller after the
Effective Date;
(3) an amount equal to all prepaid expenses,
attributable to the ownership, operation, and maintenance of
the share of the Property being acquired hereunder that are
paid by or on behalf of Seller after the Effective Date and
prior to the Closing Date and that are, in accordance with
generally accepted accounting principles, attributable solely
to the period from and after the Effective Date;
(4) any other amount agreed upon by Purchaser and
Seller.
(b) The Purchase Price shall be decreased by the following:
(1) the amount of any proceeds from the sale of
Production attributable to the share of the Property being
acquired hereunder attributable to the period on or after the
Effective Date (net of production, severance, and similar
taxes and assessments measured by or payable out of
production) actually received or accrued by or on behalf of
Seller;
(2) an amount equal to all unpaid ad valorem,
property, production, profit, severance, and similar taxes and
assessments based upon or measured by the ownership of the
share of the Property being acquired hereunder or the
production of oil, gas, or other minerals therefrom or the
receipt of proceeds attributable thereto, which accrue to or
are chargeable against such share of the Property (in
accordance with generally accepted accounting principles) and
which are attributable to the period prior to the Effective
Date, which amount shall, to the extent not actually assessed,
be computed based upon such taxes and assessments for the
immediately- preceding calendar year, or if such taxes or
assessments are assessed on other than a calendar-year basis,
for the tax period last ended;
(3) any amounts received by Seller (whether prior to
or subsequent to the Effective Date) pursuant to
"take-or-pay," advance payment, or similar provisions of any
production sales contract, any gas balancing agreement, or any
other agreement, to the extent any purchaser has the right to
apply any such amounts to Purchaser's share of Production
delivered after the Effective Date;
PURCHASE AND SALE AGREEMENT - PAGE 3
<PAGE> 67
(4) any reduction in the value of the share of the
Property being acquired hereunder resulting from the existence
of a Defect (herein defined in Section 5(d)) which is not
cured or waived prior to Closing;
(5) any other amount agreed upon by Purchaser and
Seller.
(c) The "Interim Settlement Statement" shall be prepared by
Seller, its agents, or representatives, prior to Closing, which
statement shall set forth the adjustments to the Purchase Price, per
the adjustments set forth in this Paragraph 4, which are or may be
determined at or prior to Closing. Such statement shall be prepared
according to generally accepted accounting principles and shall show
the calculation of all such adjustments. Upon the approval of such
Interim Settlement Statement by Purchaser, the Purchase Price shall be
adjusted according to such statement. Upon Purchaser's request, Seller
shall make available to Purchaser all information relied upon by Seller
for the adjustments requested in order to aid and facilitate
Purchaser's approval of such statement. After Closing, the Purchase
Price may further be adjusted, pursuant to the adjustments set forth in
this paragraph, with the "Final Settlement Statement" in the manner
further described in Paragraph 13 below.
(d) All monies received by either Party hereto which, under
the terms of this Agreement or otherwise, belong to the other Party,
shall be received in trust by the Party receiving such funds, and shall
monthly, upon receipt, be paid over to the other Party. The Parties
agree, in this regard, to cooperate fully and to execute, endorse, and
deliver as expeditiously as practicable such papers, checks, and
documents as are needed promptly to complete the transfer of such
payments;
(e) After the Closing, if an invoice or other evidence of an
obligation relating to the share of the Property acquired by Purchaser
is received which is applicable to periods both prior to and after the
Effective Date, and is partly the obligation of Seller and partly the
obligation of Purchaser, then each Party shall pay its respective
portion of such obligation to the obligee, prorated between the Parties
as of the Effective Date;
(f) At and after the Closing, Purchaser and Seller will
cooperate fully in notifying all applicable third parties (including
the execution by Seller of such transfer orders, letters in lieu,
change of operator, etc., as may be requested by Purchaser) so that
notices, proceeds, and invoices from such third parties may take into
account the fact that Purchaser has acquired the Property as of the
Effective Date;
(g) The parties hereto agree to exercise diligence and good
faith in attempting to resolve any disagreements or disputes which may
arise from the adjustments to the Purchase Price to be made in
accordance with this paragraph.
5. Property Conditions, Title Review, Property Information, and
Casualty Losses.
(a) Property Conditions. THIS SALE OF THE EQUIPMENT AND ALL
OTHER PERSONAL PROPERTY THAT IS A PART OF THE PROPERTY IS MADE ON AN
"AS IS, WHERE IS" BASIS WITH ALL FAULTS AS TO ITS CONDITION, AND SELLER
EXPRESSLY DISCLAIMS ALL WARRANTIES AS TO THE CONDITION OF THE EQUIPMENT
(NOTE, HOWEVER, THERE ARE CERTAIN WARRANTIES AS TO TITLE AS HEREIN SET
FORTH) INCLUDING, WITHOUT LIMITATIONS, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE. Seller agrees
that for a period of time commencing with the date of the letter of
intent dated October 17, 1996, above described, and continuing until
five (5) business days before Closing (the "Review Period"), Purchaser,
personally or through its authorized agents or representatives, shall
have the right to make any and all physical inspections of the Property
which Purchaser may desire to make or to have made and to make all such
other inspections, surveys, tests, or other studies (including, but not
limited to, environmental assessments and evaluations) as Purchaser
deems necessary or desirable. Upon reasonable notice to Seller,
Purchaser, and its authorized agents and representatives, at
Purchaser's sole risk, may enter upon the Property for the purpose of
conducting those
PURCHASE AND SALE AGREEMENT - PAGE 4
<PAGE> 68
inspections, surveys, tests, and studies. If Purchaser shall determine
that the condition of the Property is not in substantial compliance
with any governmental regulations (including environmental
regulations), then upon discovery, Purchaser must promptly give written
notice to Seller of such condition ("Condition"). Upon receipt of such
notice, Seller shall have the option, but not the obligation, to (a)
cure or remedy such Condition to the reasonable satisfaction of
Purchaser (if current remediation of such Condition is required by a
governmental agency, Seller agrees that the Condition shall be remedied
in accordance with and to the satisfaction of the appropriate agency's
requirements); or (b) agree with Purchaser on a reduction to the
Purchase Price which reduction shall reflect Purchaser's anticipated
reasonable cost to remedy such Condition. If the Condition cannot be
cured or remedied to Purchaser's reasonable satisfaction, and if
agreement cannot be reached on reduction to the Purchase Price, then
the affected Property may be excluded by Purchaser from the Property to
be acquired by Purchaser hereunder. In such event , the Purchase Price
shall be reduced by the Allocated Purchase Price (see subparagraph (c)
below) for such excluded Property.
(b) Review of the Records. During the Review Period, and upon
reasonable notice from Purchaser, Seller shall provide Purchaser,
personally or through its authorized agents or representatives, full
access during normal business hours to Seller's office and premises to
review and inspect all Records, including, but not limited to, all
abstracts of title, lease files, unit files, production and marketing
files, title opinions, title files, title records, geologic,
engineering, and other files or information in Seller's possession or
to which it has access which relate to the Property and the status of
Seller's title thereto, and Purchaser, at its expense, shall have the
right to make and retain copies of any of such Records; provided
however, if the transactions contemplated hereby do not close for any
reason, Purchaser shall return any Records and copies thereof to Seller
forthwith. Without limiting the generality of the foregoing, Purchaser
shall also be given access to reserve reports, geological and
geophysical reports (including, but not limited to well records, log
films, proprietary or joint venture seismic data or other seismic data
which Seller is not contractually restricted from disclosing),
contracts (including, but not limited to, gas contracts), operating
agreements, operating statements, and reports.
(c) Notice of Defect. If, during the Review Period, Purchaser
determines that the Property is subject to a "Defect" (as defined
herein in Section 5(d)), the Purchaser must give written notice to
Seller of such Defect, the nature of the Defect, and furnish Seller
Purchaser's basis for the assertion of such Defect. As soon as
practical after such written notice, Seller shall use reasonable
diligence to cure any such Defects. If Seller cannot cure any such
Defects to the reasonable satisfaction of Purchaser, then Seller shall
so notify Purchaser in writing. Thereafter, Seller and Purchaser shall
use a good faith effort to agree on the Purchase Price adjustment for
any such Defect which cannot be cured. Such adjustment shall be
determined in accordance with the following guidelines:
(1) The Purchase Price shall be allocated among the
various Leases in the proportion of the PDP fair market value
of the Leases reported by Netherland Sewell & Associates in
its report dated October 21, 1996, (the "Allocated Purchase
Price").
(2) If the Defect is that Seller's Net Revenue
Interest ("NRI") for any Property is less than the NRI for
such Property as set forth in Exhibit "A," then the allocated
Purchase Price for such Property shall be adjusted in the same
proportion that the actual NRI for such property bears to the
NRI shown in Exhibit "A."
(3) If the Defect is a lien, encumbrance, or other
charge upon the Property which is liquidated in amount, then
the adjustment shall be the sum necessary to be paid to the
obligee to remove the Defect from the Property;
If the Purchase Price adjustment for any such Defect cannot be
determined, and the Seller and Purchaser cannot agree in good faith on
the amount of the adjustment to the Purchase Price, the Purchaser may
(a) waive the Defect and proceed with Closing, or (b) exclude the
affected Property and reduce the Purchase Price by the Allocated
Purchase Price
PURCHASE AND SALE AGREEMENT - PAGE 5
<PAGE> 69
for such property, or (c) terminate this Agreement, in which event the
Parties shall have no further rights or obligations under this
Agreement.
(d) Definition of Defect. For the purpose of this Agreement, a
"Defect" shall be defined as:
(1) Any material encumbrance, lien, mortgage, breach
of representation or warranty, production payment, pledge,
claim, charge, call on production, default, defect, condition,
unleased mineral interest, preferential right, requirement for
consent to assignment, or lack of title affecting the
Property, or any matter affecting the Property by which
Purchaser reasonably or in good faith believes that Seller's
interest in a Property may become subject to the claims of
third parties;
(2) Seller's NRI in any Property is less than the NRI
for such Property which is set forth in Exhibit "A," or
Seller's gross working interest ("GWI") in any Property is
less than the working interest shown in Exhibit "A," or
Seller's GWI in any Property is greater than the working
interest shown in Exhibit "A" without a corresponding increase
in the NRI in such Property;
(e) Other Property Information. If, based upon Purchaser's
examination of the Records according to Paragraph 5(b) hereof,
Purchaser shall determine that any information, statement, or data
contained in any information, reports, statement, or data furnished to
Purchaser or used in its economic analysis of the Property is not true
or correct in any material respect, upon discovery of any incorrect
information, Purchaser may give written notice to Seller of such
inaccuracy or misstatement. Any such notice must be provided in writing
during the Review Period, or it will be deemed to be waived. Such
notice shall provide a summary of such inaccuracy or misstatement. Upon
receipt of such notice, Seller shall have the option, but not the
obligation, to (a) cure or remedy such inaccuracy or misstatement to
the reasonable satisfaction of Purchaser; or (b) agree with Purchaser
on a reduction to the Purchase Price, which reduction shall reflect
Purchaser's reasonably anticipated cost to remedy such inaccuracy or
misstatement. If the inaccuracy or misstatement cannot be cured or
remedied to Purchaser's reasonable satisfaction, and if agreement
cannot be reached on reduction to the Purchase Price, then the affected
Property shall be excluded from the Property to be acquired by
Purchaser hereunder, and the Purchase Price shall be reduced by the
Allocated Purchase Price for such Property;
(f) Casualty Loss. If, prior to Closing, any Property is
substantially damaged or destroyed by fire or other casualty ("Casualty
Defect"), Seller shall notify Purchaser promptly after Seller learns of
such event. Seller shall have the right, but not the obligation, to
cure any such Casualty Defect by repairing such damage or, in the case
of personal property, fixtures, replacing the Property affected thereby
with equivalent items, no later than the date of Closing. If any
Casualty Defects exist at Closing, Purchaser may proceed to purchase
the Property affected thereby, and the Purchase Price shall be reduced
by the aggregate reduction in the value of such Property on account of
such Casualty Defects, as determined by the mutual agreement of the
Parties, or if the Parties are unable to agree on the reduction of the
Purchase Price, then the affected Property shall be excluded from the
Property to be acquired by Purchaser hereunder, and the Purchase Price
shall be reduced by the Allocated Purchase Price for such Property.
Notwithstanding anything to the contrary contained herein, Seller shall
be entitled to retain all insurance proceeds and claims against other
Parties in respect of any such Casualty Defect which occurs prior to
closing unless no reduction is made in the Purchase Price as a result
of such Casualty Defect, in which event Purchaser shall be entitled to
the insurance proceeds and claims against other Parties arising from
such Casualty Defect.
6. Seller's Representations and Warranties. Seller represents and
warrants to Purchaser that:
(a) This Agreement has been duly executed and delivered on
behalf of Seller and is binding and enforceable against Seller in
accordance with its terms and at the Closing. All
PURCHASE AND SALE AGREEMENT - PAGE 6
<PAGE> 70
documents and instruments required hereunder to be executed and
delivered by Seller shall have been duly executed and delivered at
Closing, and the execution, delivery, and performance of this Agreement
by Seller and the consummation of transactions contemplated hereby will
not constitute a breach of, an event of default under, a violation of,
or a conflict with any agreement or other instrument to which Seller is
a party (except to the extent such instrument may be released at the
Closing). Nor will the same cause Seller to be in violation of any
applicable laws or regulations or any order of any court or
governmental agency having jurisdiction.
(b) All ad valorem, property, production, severance, excise,
and similar taxes and assessments based on or measured by the ownership
of the Property or the Production or the receipt of proceeds therefrom,
which have become due and payable prior to the date hereof with respect
to the Property have been properly paid, and Seller's allocable share
of such taxes and assessments which become due and payable prior to the
Closing shall be properly paid by Seller, and all royalties, overriding
royalties, and payments to any third parties which have become due and
payable prior to the date hereof with respect to production from the
Property, have been properly paid, and will be hereafter properly paid
for the period prior to Closing.
(c) Seller has incurred no liability, contingent or otherwise,
for brokers' or finders' fees in respect of this transaction for which
Purchaser shall have any responsibility whatsoever.
(d) Prior to the Closing, Seller will pay or cause to be paid
all of Seller's share of costs and expenses incurred in connection with
the Property, and will comply with all contracts or other agreements
relating to the Property.
(e) To the best of Seller's information and belief, all laws,
regulations, and orders of all governmental agencies having
jurisdiction over the Property have been and shall continue to be
complied with until the Closing.
(f) There are no first rights of refusal, consents,
authorizations, preferential rights, options, or claims of a similar
nature affecting the Property, other than those listed in Exhibit "A,"
said listed consents defined herein as "Consents."
(g) Seller shall, upon request, subrogate Purchaser to any
claim which Seller may have against any third party, prior owner,
vendor, or assignor with respect to the share of the Property acquired
by Purchaser, or the title thereto.
(h) There are no "imbalances" which allow any other party to
make up production at any time after the Effective Date, under any
operating agreement, gas balancing agreement and storage agreement, gas
transportation agreement, gas processing or dehydration agreement, or
other similar agreement relating to the Property.
(i) Seller has not directly or indirectly reserved or retained
any recorded or unrecorded interest or rights in any of the Property,
and Seller shall not reserve any recorded or unrecorded executory
interest or rights relating to the Property.
(j) Seller warrants that the Property is free and clear of all
encumbrances, liens, and mortgages, save and except such encumbrances
as may be identified and described in Exhibit "A" attached hereto, and
further save and except liens for taxes not yet due and payable.
(k) Except as may be identified and described in Exhibit "A"
attached hereto, the Property is not subject to any restriction,
reservation, reversionary interest, drilling or development obligation,
or other material obligation or burden on the operation or the
disposition of Production attributable to the Property.
PURCHASE AND SALE AGREEMENT - PAGE 7
<PAGE> 71
(l) No part of any of the Property is affected by any
prepayment arrangement under any contract for the sale of oil or gas,
or by any production payment or any other arrangement for delivery of
oil or gas produced from any of the Property at some future time
without Purchaser then or thereafter receiving full payment therefor,
and no third party now has or at Closing will have any right to take
makeup gas for which it has already paid. As of the Effective Date,
there are no volumes of makeup gas owing, or accumulated transportation
credits due, to gas purchasers on account of any "take-or-pay" or other
provisions of any contract, and Seller has not produced or sold more
than its pro-rata share of the gas from any Wells included in the
Property.
(m) Except as may be set forth in Exhibit "A" attached hereto,
there are no gas purchase or sale agreements, and no gas gathering or
transportation agreements, affecting the Property that cannot be
terminated upon ninety (90) days' written notice.
(n) Without the prior written consent of Purchaser, Seller (i)
shall not enter into any new agreements or commitments affecting the
Property which extend beyond the Closing, and (ii) will not modify or
terminate any agreements affecting any of the Property, including,
without limitation, any oil and gas leases, unitization or pooling
agreements, operating agreements, pipeline agreements, processing
agreements, and hydrocarbon sales contracts, and (iii) will not further
encumber, sell, mortgage, release, abandon, or otherwise dispose of any
of the Property or any interests therein.
(o) There is not any suit, action, or other proceeding pending
or threatened which affects or relates to the Property, or seeks to
restrain or prohibit Seller from selling or conveying to Purchaser the
share of the Property to be purchased herein. Seller shall promptly
notify Purchaser of any such proceedings which may arise or be
threatened prior to Closing.
(p) There are no operating agreements with third parties
affecting the Property except as may be identified and described in
Exhibit "A" attached hereto.
(q) Seller has no knowledge and has not received any notice of
any claimed default (or any event which, with the giving of notice or
the passage of time, or both, would constitute a default) under (i) the
Leases, (ii) any order, writ, injunction, or decree of any court,
commission, or administrative agency affecting the Property, or (iii)
any other agreement affecting the Property. Seller shall promptly
notify Purchaser of any such notice hereafter received by Seller and
the occurrence of any such event of which Seller becomes aware prior to
Closing.
(r) There are no tax partnerships affecting any of the
Property.
(s) To the best of Seller's information and belief, no
Production from any Well on the Property has occurred in excess of that
permitted by law, orders, or regulations.
(t) To the best of Seller's information and belief, there has
been no material injury or damage to any of the Property which has not
been fully repaired, replaced, or rebuilt.
(u) Except for depletion due to continued production, there
has been no substantial and material change in condition of the
Property between the date hereof and Closing.
(v) To the best of Seller's information and belief, all
easements, rights of way, permits, crossing agreements, and surface
rights included in the Property are in full force and effect and are
valid and subsisting, and freely assignable, and all rentals and other
payments due thereunder have been properly and timely paid and all
conditions necessary to keep them in force have been duly performed.
PURCHASE AND SALE AGREEMENT - PAGE 8
<PAGE> 72
(w) From and after the effective date of its acquisition of
its ownership in the Leases, the Seller has performed all obligations
required to be performed under such Leases, or any other instruments
and agreements relating to the Properties, and is not in default
thereunder, and to the best of Seller's information and belief, each of
the Leases to be conveyed is valid and in full force and effect.
(x) To the best of Seller's knowledge, Seller owns each Lease
and Property in the undivided share reflected by the "Working Interest"
described and set forth in Exhibit "A" for each particular Lease and
Property, and Seller owns for each Lease and Property the share of
Production reflected as "Net Revenue Interest" in Exhibit "A" attached
hereto. Seller is being paid not less than the fractional "net revenue
interest" for each Property in Exhibit "A" hereto, and, for expenses
and costs for each Property, Seller is not paying more than the
fractional interest specified under "Working Interest" for each
Property in Exhibit "A" hereto.
(y) To the best of Seller's information and belief, all
rentals and bonuses have been timely and fully paid and discharged, and
all conditions necessary to keep the Leases in full force have been
performed, and no proceeds from the sale of Production attributable to
the Property are currently being held in suspense by any purchaser
thereof.
(z) The Seller has not collected any proceeds from the sale of
Production attributable to the Property which are subject to refund, or
if so, that any such refund, if not otherwise accounted for under this
Agreement, shall be the sole responsibility of the Seller.
(aa) Except as listed in Exhibit "A" attached hereto, to the
best of Seller's information and belief, there are no Wells located on
the Property that Seller is obligated by law or contract to plug and
abandon, that Seller will be obligated by law or contract to plug and
abandon at the present time, and with the lapse of time or notice, or
both, because the well is not currently capable of producing production
in commercial quantities, or because the Well is subject to exceptions
to a requirement to plug and abandon issued by a regulatory authority
having jurisdiction over the Property.
(bb) To the best of Seller's information and belief, there are
no presently existing conditions (by existing federal or state statutes
and regulations) affecting the Property, which might give rise to a
cause of action on behalf of any governmental agency or third party,
against either Purchaser or Seller.
(cc) All information and data provided to Purchaser by Seller
or its agents concerning the Property is true and correct to the best
of Seller's information, knowledge, and belief.
(dd) Environmental Current Status. To the best of Seller's
knowledge, the Property and Seller are not in violation of or subject
to any existing, pending, or threatened investigation or inquiry by any
governmental authority or to any remedial obligations under any
applicable laws pertaining to health or the environment (such laws as
they now exist or are hereafter enacted and/or amended hereinafter
sometimes collectively called "Applicable Environmental Laws"),
including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, hereinafter
called "CERCLA"), the Resource Conservation and Recovery Act of 1976,
as amended by the Used Oil Recycling Act of 1980, the Solid Waste
Disposal Act Amendments of 1980, and the Hazardous and Solid Waste
Amendments of 1984 (as amended, hereinafter called "RCRA"), the Texas
Water Code and the Texas Solid Waste Disposal Act, and this
representation will continue to be true and correct following
disclosure to the applicable governmental authorities of all relevant
facts, conditions, and circumstances, if any, pertaining to the
Property and Seller. The terms "hazardous substance" and "release" as
used in this Agreement shall have the meanings specified in CERCLA, and
the terms "solid waste" and "disposal" (or "disposed") shall have the
meanings specified in RCRA; provided, in the event either CERCLA or
RCRA is amended so as to broaden the meaning of any term
PURCHASE AND SALE AGREEMENT - PAGE 9
<PAGE> 73
defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment and provided further, to the extent
that the laws of the State of Texas establish a meaning for "hazardous
substance," "release," "solid waste," or "disposal" which is broader
than that specified in either CERCLA or RCRA, such broader meaning
shall apply.
7. Purchaser's Representations and Warranties. Purchaser represents and
warrants to Seller that:
(a) Purchaser: (i) is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Texas;
(ii) is duly qualified to transact business in each jurisdiction where
the nature and extent of its business and properties require the same
in order for it to perform its obligations under this Agreement; and
(iii) possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply
with the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, all of which have been
duly authorized and approved by all necessary corporate action and for
which no further approval or consent is required.
(b) The consummation of the transactions contemplated by this
Agreement will not violate, or be in conflict with (i) any agreement or
instrument to which Purchaser is a party; or (ii) any judgment or
decree applicable to Purchaser as a party in interest with respect
thereto.
(c) This Agreement has been duly executed and delivered on
behalf of Purchaser, and at the Closing, all documents and instruments
required hereunder to be executed and delivered by Purchaser (or its
assignees) shall have been duly executed and delivered.
(d) Subject to the conditions herein, Purchaser has or will
have at Closing (i) the financial capability or (ii) commitments from
responsible financial institutions to provide the funds required by
Purchaser, to pay the Purchase Price and consummate the transaction
contemplated hereby within the time period contemplated herein.
(e) Purchaser either has performed, or prior to closing will
perform, whatever inspection of the Property and Seller's title thereto
that Purchaser deems appropriate and knows the condition thereof and is
purchasing the Property as a result of such inspections and not because
of, or in reliance on, any representation or warranty made by Seller
other than those expressly set forth in this Agreement.
(f) In the event the Purchase Price is adjusted down at
Closing, based upon any unpaid taxes as set forth in Paragraph 4(b)(2)
hereof (the "Tax Adjustment"), Purchaser agrees to timely make payment
(equivalent to the Tax Adjustment) to such taxing authorities as may be
appropriate.
8. Conditions to Obligations of Purchaser. The obligations of Purchaser
to consummate the transaction provided for herein are subject, at the option of
Purchaser, to the fulfillment on or prior to Closing, of each of the following
conditions:
(a) Representations. The representations and warranties of
Seller herein contained shall be true and correct in all material
respects at Closing as though made on and as of such date (unless
appropriate adjustments or remediation has been made in accordance with
Paragraph 5 hereof).
(b) Performance. Seller shall have performed all obligations,
covenants, and agreements hereunder and shall have complied with all
covenants and conditions contained in this Agreement to be performed or
complied with by it at or prior to the Closing.
(c) Pending Matters. No suit, action, or other proceedings
shall be pending or threatened (a) against Seller before any court or
governmental agency which might result in impairment or loss of value
as to Seller's title to any part of the Property; or (b) which seeks
PURCHASE AND SALE AGREEMENT - PAGE 10
<PAGE> 74
to restrain, enjoin, or otherwise prohibit the consummation of the
transactions contemplated by this Agreement.
(d) Liability. No liability which affects, in a materially
adverse manner, the Property or Purchaser's ability to receive the
economic benefits therefrom has been or is threatened to be asserted
with respect to the Property.
(e) Defects. No Defects shall be present, which are not cured
by Seller or waived by Purchaser as provided herein.
(f) Records and Access. Seller shall have afforded Purchaser
and its officers, employees, and representatives timely and reasonable
access to the Records as required herein.
9. Seller's Obligations at Closing. At the Closing, Seller shall
deliver to Purchaser the following items; however, item (e) will be delivered as
soon prior to Closing as reasonably practical:
(a) The Assignment, duly executed and acknowledged by Seller;
(b) Duly executed and acknowledged releases of all liens and
burdens on the Property or on Production therefrom or attributable
thereto;
(c) Executed transfer orders (or letters in lieu thereof)
addressed to all purchasers of production from the Property;
(d) Any other executed documents or instruments which may be
reasonably required to consummate the transactions contemplated herein
and to fully vest Purchaser with operations and title to the Property
as contemplated hereby;
(e) The "Interim Settlement Statement," which shall set forth
the Purchase Price and adjustments thereto provided for in this
Agreement which are or may be determined at or prior to the Closing,
which statement shall be delivered to Purchaser as soon as reasonably
practical prior to Closing for Purchaser's review and approval;
(f) All consents required of third parties, who are identified
in Exhibit "A" attached, properly executed and in form approved by
Purchaser; and
(g) All releases of current liens of lenders encumbering all
or any part of the Property, properly executed in form acceptable by
Purchaser.
10. Purchaser's Obligations at Closing. At the Closing, Purchaser
shall:
(a) Deliver to Seller the Adjusted Purchase Price, in cash or
other immediately available funds (which shall be subject to a
subsequent accounting between Seller and Purchaser pursuant to this
Agreement); and
(b) Execute and deliver any other documents or instruments
which may be required to consummate the transactions contemplated
herein.
11. Notices. All notices, demands, and requests which may be given or
which are required to be given by either Party to the other shall be in writing.
Any notice, demand, or communication required or permitted hereunder shall be
deemed to be delivered on actual receipt or three (3) days after being sent by
overnight courier or Certified U.S. Mail to Seller or Purchaser, whichever
occurs first, respectively, as follows:
PURCHASE AND SALE AGREEMENT - PAGE 11
<PAGE> 75
SELLER: PURCHASER:
Ivan D. Carlson and Corrida Resources, Inc.
Jackie Galimore Carlson Suite 380, Lock Box 31
22595 Tucker Road 3500 Oak Lawn Avenue
Zachary, Louisiana 70791 Dallas, Texas 75219-4398
Telephone: ______________ Attn.: Edward Munden
Facsimile: ______________ President
Telephone: 214-521-9959
Facsimile: 214-521-9960
or such other address as Purchaser or Seller may, from time to time, designate
pursuant to the terms hereof. A facsimile transmission shall be considered an
original document for purposes of providing notice under this section.
12. Furnishing Data and Information. The Seller also agrees to promptly
cooperate in all reasonable requests by Purchaser in furnishing copies, at
Purchaser's expense, of all Records necessary for Purchaser to conduct its due
diligence under the terms of this Agreement.
13. Post-Closing Adjustments. As soon as practicable after the closing,
and in any event within sixty (60) days after Closing, Seller shall prepare and
deliver to Purchaser, in accordance with this Agreement and generally accepted
accounting principles, a statement (the "Final Settlement Statement") setting
forth each adjustment or payment pursuant to Paragraph 4 hereof that was not
finally determined as of the Closing ("Post-Closing Adjustments") and showing
the calculation of such Post-Closing Adjustments and the aggregate amount
thereof. Within ten (10) business days after receipt of the Final Settlement
Statement, Purchaser shall deliver to Seller a written report containing any
changes that Purchaser proposes be made to the Final Settlement Statement. The
Parties undertake to agree with respect to the amounts of such Post-Closing
Adjustments no later than ninety (90) days after the Closing Date. The date upon
which such agreement is reached or upon which the aggregate amount of the
adjustments are finally established shall be herein called the "Final Settlement
Date." Seller shall pay to Purchaser, or vice versa, as the case may be, within
ten (10) business days after the Final Settlement Date the amount of such
adjustments (as finally established), by means of wire transfer in immediately
available funds or by means of a certified bank check. In the event Seller owes
monies to Purchaser as a consequence of the Post-Closing Adjustments, Purchaser
shall have the right to offset Purchaser's obligation under the note for any
such monies which are owing to Purchaser by Seller under Paragraph 4 and this
Paragraph 13.
14. Failure to Perform/Termination of Agreement. If the Seller should
fail to fully and timely perform any of its obligations hereunder, or should
fail to consummate the sale of the Property, except due to the Purchaser's
default, the Purchaser may, at its option, enforce specific performance of this
Agreement, or terminate this Agreement.
15. Indemnification by Seller.
(a) Seller agrees to indemnify and save and hold harmless
Purchaser against and from any loss, damage, or expense sustained by
Purchaser arising out of or resulting from any breach of any of the
representations and warranties made hereunder and not waived by
Purchaser.
(b) Seller agrees to indemnify and save and hold harmless
Purchaser against all claims, liabilities, costs, expenses, windfall
profit taxes, and liability arising out of the ownership or operation
of the Property, and based upon the occurrence of events, the accrual
of obligations or liabilities, or the existence of conditions prior to
the Effective Date.
(c) If any claims for brokerage fees are asserted against
Purchaser in connection with this transaction based upon alleged
commitments made by Seller, Seller shall indemnify Purchaser against
all such claims and reimburse Purchaser for all reasonable expenses
incurred in responding to such claims, including reasonable attorney's
fees.
PURCHASE AND SALE AGREEMENT - PAGE 12
<PAGE> 76
(d) Notwithstanding anything to the contrary contained herein,
Seller agrees to indemnify and save and hold harmless Purchaser for
Seller's gross negligence or willful misconduct for that period of time
between the Effective Date and Closing.
(e) The provisions of this Paragraph 15 shall survive Closing
for a period of four (4) years from the date of Closing, and Seller
shall not be entitled to assert any right of indemnification hereunder
after such date.
16. Indemnification by Purchaser.
(a) Purchaser agrees to indemnify and save and hold harmless
Seller against and from any loss, damage, or expense sustained by
Seller arising out of or resulting from any breach of any of the
representations and warranties made hereunder and not waived by Seller.
(b) Purchaser shall assume and hereby agrees to pay, honor,
discharge, and perform fully and timely, the obligations and
liabilities directly associated with the Seller's interest in the share
of the Property acquired by Purchaser hereunder, which are attributable
to the period of time from and after the Effective Date.
(c) Purchaser agrees to indemnify and save and hold harmless
Seller against all claims, costs, expenses, windfall profits taxes, and
liabilities arising out of the ownership or operation of the share of
the Property acquired by Purchaser hereunder and based upon the
occurrence of events, the accrual of obligations or liabilities, or the
existence of conditions on and subsequent to the Effective Date (but
not including these costs and expenses incurred with respect to the
purchase of Seller's interest in the Property or the negotiations
leading to such purchase).
(d) If any claims for brokerage fees are asserted against
Seller in connection with this transaction based upon alleged
commitments made by Purchaser, Purchaser shall indemnify Seller against
all such claims and reimburse Seller for all reasonable expenses
incurred in responding to such claims, including reasonable attorney's
fees.
(e) The provisions of this Paragraph 16 shall survive Closing
for a period of four (4) years from the date of Closing, and Purchaser
shall not be entitled to assert any right of indemnification hereunder
after such date.
17. Confidentiality. Prior to Closing, the Seller shall be furnishing
to Purchaser various information relating to Seller and the Property, and
Seller's business activities, assets, finances, costs, revenues, rights,
obligations, liabilities, and strategies. In consideration of the Seller
furnishing this information to Purchaser, Purchaser agrees that prior to Closing
(a) that such information is confidential and/or proprietary to Seller, and such
information shall be entitled to and shall receive treatment as such by
Purchaser; (b) Purchaser shall use its best efforts, and will advise all of its
employees, representatives, agents, and advisors who have access to such
information, to use their best efforts to hold in confidence, not to disclose to
others, and not to use (except in respect of the transaction contemplated by
this Agreement) any such information; and (c) if Closing does not occur, all
such information, unless otherwise specified in writing, shall remain the
property of Seller, and shall be returned to Seller together with any copies
made thereof. Prior to Closing, Purchaser shall provide such information only to
its employees, representatives, agents, and advisors who have need to know such
information in connection with this Agreement.
18. Other Purchase and Sale Agreements. Purchaser has tendered purchase
and sale agreements, dated on or about the date hereof, to other parties, all of
whom are named in Exhibit "C" attached hereto. Such other agreements may cover
the interest, if any, of such other parties in the Leases and Property covered
by this Agreement, and may cover other oil and gas properties which are not the
subject of this Agreement. Purchase and Seller agree that the Closing under this
Agreement shall be simultaneous with the closings under such other agreements,
and that Closing under this Agreement shall be conditional upon closing
occurring under such other agreements. Seller does not claim any interest in and
to the oil and gas leases and other property which are the
PURCHASE AND SALE AGREEMENT - PAGE 13
<PAGE> 77
subject of such other purchase and sale agreements, and which are not the
subject of this Agreement. In the event Seller may have any claim or interest in
and to the oil and gas leases and other property which are the subject of such
other purchase and sale agreements, and which are not the subject of this
Agreement, then, for the consideration herein, Seller agrees to sell and convey
to Purchaser all of Seller's interest in and to the oil and gas leases and other
property and interests which are the subject of the other purchase and sale
agreements, above described.
19. Area of Non-Competition. Seller agrees not to compete with
Purchaser in an area which comprises the lands covered by the Leases and an area
which shall extend outward from the boundaries of each of the Leases a distance
of 5,280 feet. In this regard, Seller agrees that Seller, its employees, agents,
servants, or companies controlled by Seller, in common control with Seller, or
with whom Seller is affiliated, shall not acquire, for so long as a Lease is
held in force and effect by its terms, and for a period of three years
thereafter, any oil and gas leases, any mineral interest, royalty interest,
overriding royalty interest, or any farmout agreement, or other agreement
permitting the right to explore for and produce oil and/or gas, which cover any
lands within the restricted area.
20. Miscellaneous.
(a) If any term or provision of this Agreement is held to be
illegal, invalid, or unenforceable, the legality, validity, and
enforceability of the remaining terms and provisions of this Agreement
shall not be affected thereby, and in lieu of each such illegal,
invalid, or unenforceable term or provision, there shall be added
automatically to this Agreement a legal, valid, and enforceable term or
provision as similar as possible to the term or provision declared
illegal, invalid, or unenforceable;
(b) Either Seller or Purchaser shall have the right to waive
any requirement contained in this Agreement, which is intended for the
waiving Party's benefit, but except as otherwise specifically provided
herein, such waiver shall be effective only if in writing and executed
by the Party for whose benefit such requirement is intended; provided
however, that any such waiver shall not be construed as a waiver of any
other benefit accruing to the waiving Party hereunder;
(c) The captions used in connection with this Agreement are
for convenience only and shall not be deemed to expand or limit the
meaning of the language of this Agreement;
(d) Words of any gender used in this Agreement shall be held
and construed to include any other gender, and words in the singular
shall be held to include the plural, unless the context otherwise
requires;
(e) Seller agrees that, on or before the Closing, it will not
carry on any negotiations with any third party, for the sale or
transfer of the Property, without the prior written consent of
Purchaser. Thereafter, Seller may negotiate with third parties if this
Agreement has been terminated;
(f) THIS AGREEMENT AND ALL OF THE TRANSACTIONS CONTEMPLATED
HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS;
(g) This Agreement embodies the entire agreement between
Seller and Purchaser with respect to the subject matter hereof and
supersedes all prior agreements, whether written or oral;
(h) Except as otherwise specifically provided herein, this
Agreement may not be amended except by an agreement in writing executed
by both Seller and Purchaser;
(i) This Agreement shall be binding upon and inure to the
benefit of Seller and Purchaser and their respective legal
representatives, successors, and assigns. It is expressly understood
and agreed that Purchaser's rights under this Agreement may not be
assigned
PURCHASE AND SALE AGREEMENT - PAGE 14
<PAGE> 78
prior to Closing. Provided however, any interest acquired hereunder
shall be freely assignable by Purchaser after Closing;
(j) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all
of which shall be deemed to be one and the same instrument;
(k) In addition to the acts and deeds recited herein and
contemplated to be performed, both Seller and Purchaser hereby agree to
perform, execute, and/or deliver at and after Closing any and all such
further reasonable acts, deeds, and assurances as may be reasonably
required to consummate the transactions contemplated by this Agreement;
(l) This Agreement supersedes any and all other agreements,
either oral or in writing, between the Parties hereto with respect to
the subject matter hereof and contains all of the covenants and
agreements between the Parties with respect to said matter. Each Party
to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any
Party, or anyone acting on behalf of any Party, which are not embodied
herein, and that no other agreement, statement, or promise not
contained in this Agreement shall be valid or binding;
(m) In the event of any dispute occurring under this
Agreement, the prevailing Party shall be entitled to be reimbursed by
the other Party for its reasonable and necessary attorney's fees;
(n) Any failure by either Party to insist, or any election by
either Party not to insist, upon strict performance by the other Party
of any of the terms, provisions, or conditions of this Agreement shall
not be deemed to be a waiver of the same or of any other term,
provision, or condition hereof, and either Party may at any time or
times thereafter insist upon strict performance by the other Party of
any and all of such terms, provisions, and conditions. No waiver by
either Party of any right, remedy, power, or privilege hereunder shall
be construed as a waiver of, or operate to impair, any subsequent
right, remedy, power, or privilege nor shall any single or partial
exercise of any such right, remedy, power, or privilege exhaust the
same or preclude other or further exercise thereof.
(o) All covenants, representations, and indemnities set forth
herein shall survive closing, subject to any agreed periods of
limitation as may be set forth herein.
EXECUTED as of the 5th day of February, 1997.
WITNESSES: SELLER:
____________________________________ ____________________________________
IVAN D. CARLSON
____________________________________
____________________________________ ____________________________________
JACKIE GALIMORE CARLSON
____________________________________
PURCHASE AND SALE AGREEMENT - PAGE 15
<PAGE> 79
PURCHASER:
CORRIDA RESOURCES, INC.,
a Nevada corporation
____________________________________ By:_________________________________
ROBERT P. LINDSAY, VICE PRESIDENT
____________________________________
ACKNOWLEDGMENTS
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared IVAN D.
CARLSON, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free act
and deed.
_________________________________
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared JACKIE
GALIMORE CARLSON, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that she executed the same as her free
act and deed.
_________________________________
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared ROBERT P.
LINDSAY, to me personally known, who, being duly sworn, did say that he is the
Vice President of CORRIDA RESOURCES, INC., a Nevada corporation, and that the
foregoing instrument was signed by him on behalf of such entity, with necessary
authority, and that ROBERT P. LINDSAY acknowledged said instrument to be the
free act and deed of such corporation.
_________________________________
Notary Public, State of Louisiana
PURCHASE AND SALE AGREEMENT - PAGE 16
<PAGE> 80
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the 5th day of February, 1997, by
and between VENTURE INVESTMENTS, INC., a Louisiana corporation (hereinafter
referred to as the "Seller"), and CORRIDA RESOURCES, INC., a Nevada corporation
(the "Purchaser"), (Seller and Purchaser hereinafter individually referred to as
"Party" and collectively as "Parties").
RECITALS
WHEREAS, Seller desires to sell and convey, and Purchaser desires to
purchase and receive, the following, upon the terms and conditions hereinafter
set forth:
I. The Leases and Units. All of the Seller's right, title, and interest in
and to (i) the oil, gas, and mineral leases and properties and interests
described in Exhibit "A," including but not limited to, leasehold, fee, mineral,
royalty, and overriding royalty interests and payments out of or measured by
Production (hereinafter defined) (said oil, gas, and mineral leases and property
and interests being herein referred to as the "Leases"); (ii) the units, pooled
acreage, spacing, or proration units or other allocation of acreage, and all
rights associated therewith, which are applicable to the Leases and have been
established by, or in accordance with, (a) applicable contractual provisions
regarding unitization, communitization, pooling, spacing, or proration, or (b)
applicable state or federal law;
II. The Production. All of the Seller's right, title, and interest in and
to all oil, gas, casinghead gas, condensate, distillate, and other liquid or
gaseous hydrocarbons and other minerals which are in, under, upon, and produced
from or allocable (or to be produced from or allocable) to the Leases after the
Effective Date (as defined in Paragraph 3(a) hereof) (such hydrocarbons and
minerals being hereinafter referred to as "Production"), including "line fill"
and inventory attributable to the interests described in Exhibit "A," or the
proceeds from the sale of such Production;
III. The Wells and Equipment. All of Seller's right, title, and interest
in and to all personal property of every kind and character located on the
Leases or used in the operation thereof including, without limitation, wells
(whether productive or non-productive, active or inactive) (the "Wells"),
compressors, well equipment, casing, tanks, machinery, gathering lines and
systems, treatment facilities, disposal wells and disposal facilities, pipelines
and other appurtenances, and any other personal property situated thereon,
herein individually and collectively called the "Equipment."
IV. The Rights of Way and Permits. All of Seller's right, title, and
interest in and to all rights, privileges, benefits, permissions, and
authorizations (including, without limitation, permits, licenses, servitudes,
easements, and rights of way) in respect of the use and occupation of the
surface of such Leases, and the subsurface depths under the land and premises
covered by and benefiting such Leases, herein called individually and
collectively "Rights of Way and Permits";
V. The Contracts. All of Seller's right, title, and interest in and to all
of the orders, gas purchase and sale contracts (wherein Seller is a selling
party), crude purchase and sale agreements (wherein Seller is a selling party),
surface leases, farm-in agreements, farmout agreements, bottom hole agreements,
acreage contribution agreements, operating agreements, unit agreements, area of
mutual interest agreements, processing agreements, options, leases of equipment
or facilities, and other contracts, agreements, and rights, which are owned by
Seller, in whole or in part and are (i) appurtenant to the Leases, or (ii) used
or held for use in connection with the ownership or operation of the Leases or
with the Production, treatment on the Leases, sale or disposal of water,
hydrocarbons or associated substances, herein called individually and
collectively the "Contracts";
VI. The Records. All of the files, records and data in the possession of
Seller relating to the items described in subsections (I), (II), (III), (IV),
and (V) above (the "Records"), including, without limitation, lease files, title
records (including abstracts of title, title opinions, and title curative
documents); contracts, correspondence, originals or copies of geological,
geophysical, and
PURCHASE AND SALE AGREEMENT - PAGE 1
<PAGE> 81
seismic records, data, and information; and originals or copies of production
records, electric logs, core data, pressure data and decline curves and
graphical production curves, and all related matters, to the extent Seller has
the authority to release such Records and to the extent they are reasonably
required by Purchaser to operate the Wells;
VII. Miscellaneous. Exhibit "A" attached hereto sets forth the undivided
interests of Seller in the Leases, and the revenue interests attributable
thereto, as well as the undivided interests of Seller in the Production, Wells,
Equipment, Rights of Way, and Contracts. This Agreement covers and pertains to
all of the right, title, and interest of Seller in the Leases, the lands covered
by the Leases, Production, Wells, Equipment, and Rights of Way, even if the
undivided interests of Seller in any such property or property rights should be
incorrectly or insufficiently described in the Exhibit "A."
The Leases, Production, Wells, Equipment, Rights of Way and Permits,
Contracts, Records, and Miscellaneous referred to in Paragraphs I through VII
above, are hereinafter sometimes referred to individually and collectively in
the singular as "Property."
Notwithstanding the foregoing, Seller excepts and reserves from the sale
herein any interest which Seller may own, if any, in and to any
presently-created overriding royalty interests, which are of record in the
subject counties, in the Leases described in Exhibit "A" under the heading
"Stafford Springs Field," covering lands located in Jasper County and Clarke
County, Mississippi. Any such overriding royalty interest owned by Seller is not
part of the NRI (see definition below) of Seller set forth in Exhibit "A"
attached hereto for such Leases.
WHEREAS, this Agreement was the subject of, and was contemplated by, that
certain letter of intent dated October 17, 1996, above described, by and between
Purchaser and David Robertson and Keith Robertson, as amended and supplemented,
including amendment and supplement dated December 24, 1996. As to the interest
of Seller in the Property, this Agreement supersedes and replaces the letter of
intent.
NOW, THEREFORE, for and in consideration of the mutual agreements herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Seller and Purchaser
hereby agree as follows:
1. Sale and Purchase. Seller agrees to sell and convey to Purchaser, and
Purchaser agrees to purchase and pay for, all of Seller's right, title, and
interest in and to the Property as hereinafter provided.
2. Purchase Price. The "Purchase Price" for the Property shall be the sum
of $97,388.00, payable as follows:
(a) The sum of $97,388.00, which shall be paid at Closing.
All cash payments to be tendered by Purchaser to Seller, either before or
after Closing, shall be made by wire transfer or shall be made by certified
funds.
The Purchase Price shall be subject to adjustment as hereinafter provided.
3. Closing and Effective Date.
(a) The closing of the sale and purchase of the Property shall take
place on or before February 5, 1997, (the "Closing") at 1310 Jeff Davis,
Hammond, Louisiana 70403, or at such other time, place, or manner as may
be mutually agreeable to the Parties. The sale of the Property shall be
effective as of November 1, 1996, at 7:00 a.m. local time for each of the
particular properties (the "Effective Date").
(b) At the Closing, the Property shall be conveyed and transferred
by Seller to Purchaser by the execution and delivery of an Assignment and
Bill of Sale (the "Assignment") in substantially the same form and content
as the Assignment and Bill of Sale
PURCHASE AND SALE AGREEMENT - PAGE 2
<PAGE> 82
which is attached hereto as Exhibit "B," and such other instruments of
conveyance as may be reasonably requested by Purchaser. Purchaser shall be
entitled to all of Seller's rights in the Property (including, without
limitation, the rights to all Production and proceeds of Production)
appurtenant and attributable to the Property, and shall be subject to the
duties and obligations attendant with ownership of such undivided share of
the Property for the period from and after the Effective Date. For the
period prior to the Effective Date, Seller shall be entitled to all of the
rights (including, without limitation, the rights to all Production and
proceeds of Production) appurtenant and attributable to the Property, and
shall be subject to the duties and obligations attendant with ownership of
the Property.
4. Adjustments to Purchase Price. The Purchase Price shall be adjusted
(the "Adjusted Purchase Price") at the Closing, by the "Interim Settlement
Statement" (hereinafter defined in this paragraph and in Paragraph 9 below),
and, subsequent to Closing, by the "Final Settlement Statement" (hereinafter
defined in Paragraph 13 below), as follows:
(a) The Purchase Price shall be increased by the following:
(1) the value of all merchantable allowable oil or other
liquid hydrocarbons in storage owned by Seller in the tanks or above
the pipeline connection at the Effective Date, and not previously
sold by Seller, that is credited to the share of the Property being
acquired hereunder, valued at the contract price thereto, or if
none, the actual price received by Purchaser, less taxes or gravity
adjustments deducted by the purchaser of such oil or other liquid
hydrocarbons;
(2) the amount of all reasonable expenditures made in
connection with the ownership, operation, and maintenance of the
share of the Property being acquired hereunder, (including royalties
and rentals) and in accordance with generally accepted accounting
principles and prudent operations, attributable solely to the period
from and after the Effective Date and which are paid by or on behalf
of Seller after the Effective Date;
(3) an amount equal to all prepaid expenses, attributable to
the ownership, operation, and maintenance of the share of the
Property being acquired hereunder that are paid by or on behalf of
Seller after the Effective Date and prior to the Closing Date and
that are, in accordance with generally accepted accounting
principles, attributable solely to the period from and after the
Effective Date;
(4) any other amount agreed upon by Purchaser and Seller.
(b) The Purchase Price shall be decreased by the following:
(1) the amount of any proceeds from the sale of Production
attributable to the share of the Property being acquired hereunder
attributable to the period on or after the Effective Date (net of
production, severance, and similar taxes and assessments measured by
or payable out of production) actually received or accrued by or on
behalf of Seller;
(2) an amount equal to all unpaid ad valorem, property,
production, profit, severance, and similar taxes and assessments
based upon or measured by the ownership of the share of the Property
being acquired hereunder or the production of oil, gas, or other
minerals therefrom or the receipt of proceeds attributable thereto,
which accrue to or are chargeable against such share of the Property
(in accordance with generally accepted accounting principles) and
which are attributable to the period prior to the Effective Date,
which amount shall, to the extent not actually assessed, be computed
based upon such taxes and assessments for the immediately-preceding
calendar year, or if such taxes or assessments are assessed on other
than a calendar-year basis, for the tax period last ended;
PURCHASE AND SALE AGREEMENT - PAGE 3
<PAGE> 83
(3) any amounts received by Seller (whether prior to or
subsequent to the Effective Date) pursuant to "take-or-pay," advance
payment, or similar provisions of any production sales contract, any
gas balancing agreement, or any other agreement, to the extent any
purchaser has the right to apply any such amounts to Purchaser's
share of Production delivered after the Effective Date;
(4) any reduction in the value of the share of the Property
being acquired hereunder resulting from the existence of a Defect
(herein defined in Section 5(d)) which is not cured or waived prior
to Closing;
(5) any other amount agreed upon by Purchaser and Seller.
(c) The "Interim Settlement Statement" shall be prepared by Seller,
its agents, or representatives, prior to Closing, which statement shall
set forth the adjustments to the Purchase Price, per the adjustments set
forth in this Paragraph 4, which are or may be determined at or prior to
Closing. Such statement shall be prepared according to generally accepted
accounting principles and shall show the calculation of all such
adjustments. Upon the approval of such Interim Settlement Statement by
Purchaser, the Purchase Price shall be adjusted according to such
statement. Upon Purchaser's request, Seller shall make available to
Purchaser all information relied upon by Seller for the adjustments
requested in order to aid and facilitate Purchaser's approval of such
statement. After Closing, the Purchase Price may further be adjusted,
pursuant to the adjustments set forth in this paragraph, with the "Final
Settlement Statement" in the manner further described in Paragraph 13
below.
(d) All monies received by either Party hereto which, under the
terms of this Agreement or otherwise, belong to the other Party, shall be
received in trust by the Party receiving such funds, and shall monthly,
upon receipt, be paid over to the other Party. The Parties agree, in this
regard, to cooperate fully and to execute, endorse, and deliver as
expeditiously as practicable such papers, checks, and documents as are
needed promptly to complete the transfer of such payments;
(e) After the Closing, if an invoice or other evidence of an
obligation relating to the share of the Property acquired by Purchaser is
received which is applicable to periods both prior to and after the
Effective Date, and is partly the obligation of Seller and partly the
obligation of Purchaser, then each Party shall pay its respective portion
of such obligation to the obligee, prorated between the Parties as of the
Effective Date;
(f) At and after the Closing, Purchaser and Seller will cooperate
fully in notifying all applicable third parties (including the execution
by Seller of such transfer orders, letters in lieu, change of operator,
etc., as may be requested by Purchaser) so that notices, proceeds, and
invoices from such third parties may take into account the fact that
Purchaser has acquired the Property as of the Effective Date;
(g) The parties hereto agree to exercise diligence and good faith in
attempting to resolve any disagreements or disputes which may arise from
the adjustments to the Purchase Price to be made in accordance with this
paragraph.
5. Property Conditions, Title Review, Property Information, and Casualty
Losses.
(a) Property Conditions. THIS SALE OF THE EQUIPMENT AND ALL OTHER
PERSONAL PROPERTY THAT IS A PART OF THE PROPERTY IS MADE ON AN "AS IS,
WHERE IS" BASIS WITH ALL FAULTS AS TO ITS CONDITION, AND SELLER EXPRESSLY
DISCLAIMS ALL WARRANTIES AS TO THE CONDITION OF THE EQUIPMENT (NOTE,
HOWEVER, THERE ARE CERTAIN WARRANTIES AS TO TITLE AS HEREIN SET FORTH)
INCLUDING, WITHOUT LIMITATIONS, THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR ANY PARTICULAR PURPOSE. Seller agrees that for a period of
time commencing with the date of the letter of intent dated October 17,
1996, above described, and continuing until five (5) business days before
Closing (the "Review Period"), Purchaser, personally or through its
PURCHASE AND SALE AGREEMENT - PAGE 4
<PAGE> 84
authorized agents or representatives, shall have the right to make any and
all physical inspections of the Property which Purchaser may desire to
make or to have made and to make all such other inspections, surveys,
tests, or other studies (including, but not limited to, environmental
assessments and evaluations) as Purchaser deems necessary or desirable.
Upon reasonable notice to Seller, Purchaser, and its authorized agents and
representatives, at Purchaser's sole risk, may enter upon the Property for
the purpose of conducting those inspections, surveys, tests, and studies.
If Purchaser shall determine that the condition of the Property is not in
substantial compliance with any governmental regulations (including
environmental regulations), then upon discovery, Purchaser must promptly
give written notice to Seller of such condition ("Condition"). Upon
receipt of such notice, Seller shall have the option, but not the
obligation, to (a) cure or remedy such Condition to the reasonable
satisfaction of Purchaser (if current remediation of such Condition is
required by a governmental agency, Seller agrees that the Condition shall
be remedied in accordance with and to the satisfaction of the appropriate
agency's requirements); or (b) agree with Purchaser on a reduction to the
Purchase Price which reduction shall reflect Purchaser's anticipated
reasonable cost to remedy such Condition. If the Condition cannot be cured
or remedied to Purchaser's reasonable satisfaction, and if agreement
cannot be reached on reduction to the Purchase Price, then the affected
Property may be excluded by Purchaser from the Property to be acquired by
Purchaser hereunder. In such event , the Purchase Price shall be reduced
by the Allocated Purchase Price (see subparagraph (c) below) for such
excluded Property.
(b) Review of the Records. During the Review Period, and upon
reasonable notice from Purchaser, Seller shall provide Purchaser,
personally or through its authorized agents or representatives, full
access during normal business hours to Seller's office and premises to
review and inspect all Records, including, but not limited to, all
abstracts of title, lease files, unit files, production and marketing
files, title opinions, title files, title records, geologic, engineering,
and other files or information in Seller's possession or to which it has
access which relate to the Property and the status of Seller's title
thereto, and Purchaser, at its expense, shall have the right to make and
retain copies of any of such Records; provided however, if the
transactions contemplated hereby do not close for any reason, Purchaser
shall return any Records and copies thereof to Seller forthwith. Without
limiting the generality of the foregoing, Purchaser shall also be given
access to reserve reports, geological and geophysical reports (including,
but not limited to well records, log films, proprietary or joint venture
seismic data or other seismic data which Seller is not contractually
restricted from disclosing), contracts (including, but not limited to, gas
contracts), operating agreements, operating statements, and reports.
(c) Notice of Defect. If, during the Review Period, Purchaser
determines that the Property is subject to a "Defect" (as defined herein
in Section 5(d)), the Purchaser must give written notice to Seller of such
Defect, the nature of the Defect, and furnish Seller Purchaser's basis for
the assertion of such Defect. As soon as practical after such written
notice, Seller shall use reasonable diligence to cure any such Defects. If
Seller cannot cure any such Defects to the reasonable satisfaction of
Purchaser, then Seller shall so notify Purchaser in writing. Thereafter,
Seller and Purchaser shall use a good faith effort to agree on the
Purchase Price adjustment for any such Defect which cannot be cured. Such
adjustment shall be determined in accordance with the following
guidelines:
(1) The Purchase Price shall be allocated among the various
Leases in the proportion of the PDP fair market value of the Leases
reported by Netherland Sewell & Associates in its report dated
October 21, 1996, (the "Allocated Purchase Price").
(2) If the Defect is that Seller's Net Revenue Interest
("NRI") for any Property is less than the NRI for such Property as
set forth in Exhibit "A," then the allocated Purchase Price for such
Property shall be adjusted in the same proportion that the actual
NRI for such property bears to the NRI shown in Exhibit "A."
PURCHASE AND SALE AGREEMENT - PAGE 5
<PAGE> 85
(3) If the Defect is a lien, encumbrance, or other charge upon
the Property which is liquidated in amount, then the adjustment
shall be the sum necessary to be paid to the obligee to remove the
Defect from the Property;
If the Purchase Price adjustment for any such Defect cannot be determined,
and the Seller and Purchaser cannot agree in good faith on the amount of the
adjustment to the Purchase Price, the Purchaser may (a) waive the Defect and
proceed with Closing or (b) exclude the affected Property and reduce the
Purchase Price by the Allocated Purchase Price for such property, or (c)
terminate this Agreement, in which event the Parties shall have no further
rights or obligations under this Agreement.
(d) Definition of Defect. For the purpose of this Agreement, a
"Defect" shall be defined as:
(1) Any material encumbrance, lien, mortgage, breach of
representation or warranty, production payment, pledge, claim,
charge, call on production, default, defect, condition, unleased
mineral interest, preferential right, requirement for consent to
assignment, or lack of title affecting the Property, or any matter
affecting the Property by which Purchaser reasonably or in good
faith believes that Seller's interest in a Property may become
subject to the claims of third parties;
(2) Seller's NRI in any Property is less than the NRI for such
Property which is set forth in Exhibit "A," or Seller's gross
working interest ("GWI") in any Property is less than the working
interest shown in Exhibit "A," or Seller's GWI in any Property is
greater than the working interest shown in Exhibit "A" without a
corresponding increase in the NRI in such Property;
(e) Other Property Information. If, based upon Purchaser's
examination of the Records according to Paragraph 5(b) hereof, Purchaser
shall determine that any information, statement, or data contained in any
information, reports, statement, or data furnished to Purchaser or used in
its economic analysis of the Property is not true or correct in any
material respect, upon discovery of any incorrect information, Purchaser
may give written notice to Seller of such inaccuracy or misstatement. Any
such notice must be provided in writing during the Review Period, or it
will be deemed to be waived. Such notice shall provide a summary of such
inaccuracy or misstatement. Upon receipt of such notice, Seller shall have
the option, but not the obligation, to (a) cure or remedy such inaccuracy
or misstatement to the reasonable satisfaction of Purchaser; or (b) agree
with Purchaser on a reduction to the Purchase Price, which reduction shall
reflect Purchaser's reasonably anticipated cost to remedy such inaccuracy
or misstatement. If the inaccuracy or misstatement cannot be cured or
remedied to Purchaser's reasonable satisfaction, and if agreement cannot
be reached on reduction to the Purchase Price, then the affected Property
shall be excluded from the Property to be acquired by Purchaser hereunder,
and the Purchase Price shall be reduced by the Allocated Purchase Price
for such Property;
(f) Casualty Loss. If, prior to Closing, any Property is
substantially damaged or destroyed by fire or other casualty ("Casualty
Defect"), Seller shall notify Purchaser promptly after Seller learns of
such event. Seller shall have the right, but not the obligation, to cure
any such Casualty Defect by repairing such damage or, in the case of
personal property, fixtures, replacing the Property affected thereby with
equivalent items, no later than the date of Closing. If any Casualty
Defects exist at Closing, Purchaser may proceed to purchase the Property
affected thereby, and the Purchase Price shall be reduced by the aggregate
reduction in the value of such Property on account of such Casualty
Defects, as determined by the mutual agreement of the Parties, or if the
Parties are unable to agree on the reduction of the Purchase Price, then
the affected Property shall be excluded from the Property to be acquired
by Purchaser hereunder, and the Purchase Price shall be reduced by the
Allocated Purchase Price for such Property. Notwithstanding anything to
the contrary contained herein, Seller shall be entitled to retain all
insurance proceeds and claims against other Parties in respect of any such
Casualty Defect which occurs prior to closing unless no reduction is made
in the Purchase Price as a result of such Casualty Defect, in which event
PURCHASE AND SALE AGREEMENT - PAGE 6
<PAGE> 86
Purchaser shall be entitled to the insurance proceeds and claims against
other Parties arising from such Casualty Defect.
6. Seller's Representations and Warranties. Seller represents and warrants
to Purchaser that:
(a) Seller is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Louisiana; (ii) Seller is
duly qualified to transact business in each jurisdiction where the nature
and extent of its business and properties require the same in order for it
to perform its obligations under this Agreement; (iii) Seller possesses
all requisite authority, power, licenses, permits, and franchises to
conduct its business and execute, deliver, and comply with the terms and
provisions of this Agreement and any other document, instrument, or
agreement provided for herein, including the Assignment, all of which have
been duly authorized and approved by all necessary corporate action and
for which no further approval or consent is required; and (iv) the Parties
executing this Agreement as Shareholders are all of the Shareholders,
officers, and directors of Seller, and by their execution adopt and
approve the terms of this Agreement.
(b) This Agreement has been duly executed and delivered on behalf of
Seller and is binding and enforceable against Seller in accordance with
its terms and at the Closing. All documents and instruments required
hereunder to be executed and delivered by Seller shall have been duly
executed and delivered at Closing, and the execution, delivery, and
performance of this Agreement by Seller and the consummation of
transactions contemplated hereby will not constitute a breach of, an event
of default under, a violation of, or a conflict with any agreement or
other instrument to which Seller is a party (except to the extent such
instrument may be released at the Closing), nor will the same cause Seller
to be in violation of their Articles of Incorporation or Bylaws, as the
case may be, or any applicable laws or regulations or any order of any
court or governmental agency having jurisdiction.
(c) All ad valorem, property, production, severance, excise, and
similar taxes and assessments based on or measured by the ownership of the
Property or the Production or the receipt of proceeds therefrom, which
have become due and payable prior to the date hereof with respect to the
Property have been properly paid, and Seller's allocable share of such
taxes and assessments which become due and payable prior to the Closing
shall be properly paid by Seller, and all royalties, overriding royalties,
and payments to any third parties which have become due and payable prior
to the date hereof with respect to production from the Property, have been
properly paid, and will be hereafter properly paid for the period prior to
Closing.
(d) Seller has incurred no liability, contingent or otherwise, for
brokers' or finders' fees in respect of this transaction for which
Purchaser shall have any responsibility whatsoever.
(e) Prior to the Closing, Seller will pay or cause to be paid all of
Seller's share of costs and expenses incurred in connection with the
Property, and will comply with all contracts or other agreements relating
to the Property.
(f) To the best of Seller's information and belief, all laws,
regulations, and orders of all governmental agencies having jurisdiction
over the Property have been and shall continue to be complied with until
the Closing.
(g) There are no first rights of refusal, consents, authorizations,
preferential rights, options, or claims of a similar nature affecting the
Property, other than those listed in Exhibit "A," said listed consents
defined herein as "Consents."
(h) Seller shall, upon request, subrogate Purchaser to any claim
which Seller may have against any third party, prior owner, vendor, or
assignor with respect to the share of the Property acquired by Purchaser,
or the title thereto.
PURCHASE AND SALE AGREEMENT - PAGE 7
<PAGE> 87
(i) There are no "imbalances" which allow any other party to make up
production at any time after the Effective Date, under any operating
agreement, gas balancing agreement and storage agreement, gas
transportation agreement, gas processing or dehydration agreement, or
other similar agreement relating to the Property.
(j) Seller has not directly or indirectly reserved or retained any
recorded or unrecorded interest or rights in any of the Property, and
Seller shall not reserve any recorded or unrecorded executory interest or
rights relating to the Property.
(k) Seller warrants that the Property is free and clear of all
encumbrances, liens, and mortgages, save and except such encumbrances as
may be identified and described in Exhibit "A" attached hereto, and
further save and except liens for taxes not yet due and payable.
(l) Except as may be identified and described in Exhibit "A"
attached hereto, the Property is not subject to any restriction,
reservation, reversionary interest, drilling or development obligation, or
other material obligation or burden on the operation or the disposition of
Production attributable to the Property.
(m) No part of any of the Property is affected by any prepayment
arrangement under any contract for the sale of oil or gas, or by any
production payment or any other arrangement for delivery of oil or gas
produced from any of the Property at some future time without Purchaser
then or thereafter receiving full payment therefor, and no third party now
has or at Closing will have any right to take makeup gas for which it has
already paid. As of the Effective Date, there are no volumes of makeup gas
owing, or accumulated transportation credits due, to gas purchasers on
account of any "take-or-pay" or other provisions of any contract, and
Seller has not produced or sold more than its pro-rata share of the gas
from any Wells included in the Property.
(n) Except as may be set forth in Exhibit "A" attached hereto, there
are no gas purchase or sale agreements, and no gas gathering or
transportation agreements, affecting the Property that cannot be
terminated upon ninety (90) days' written notice.
(o) Without the prior written consent of Purchaser, Seller (i) shall
not enter into any new agreements or commitments affecting the Property
which extend beyond the Closing, and (ii) will not modify or terminate any
agreements affecting any of the Property, including, without limitation,
any oil and gas leases, unitization or pooling agreements, operating
agreements, pipeline agreements, processing agreements, and hydrocarbon
sales contracts, and (iii) will not further encumber, sell, mortgage,
release, abandon, or otherwise dispose of any of the Property or any
interests therein.
(p) There is not any suit, action, or other proceeding pending or
threatened which affects or relates to the Property, or seeks to restrain
or prohibit Seller from selling or conveying to Purchaser the share of the
Property to be purchased herein. Seller shall promptly notify Purchaser of
any such proceedings which may arise or be threatened prior to Closing.
(q) There are no operating agreements with third parties affecting
the Property except as may be identified and described in Exhibit "A"
attached hereto.
(r) Seller has no knowledge and has not received any notice of any
claimed default (or any event which, with the giving of notice or the
passage of time, or both, would constitute a default) under (i) the
Leases, (ii) any order, writ, injunction, or decree of any court,
commission, or administrative agency affecting the Property, or (iii) any
other agreement affecting the Property. Seller shall promptly notify
Purchaser of any such notice hereafter received by Seller and the
occurrence of any such event of which Seller becomes aware prior to
Closing.
(s) There are no tax partnerships affecting any of the Property.
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<PAGE> 88
(t) To the best of Seller's information and belief, no Production
from any Well on the Property has occurred in excess of that permitted by
law, orders, or regulations.
(u) To the best of Seller's information and belief, there has been
no material injury or damage to any of the Property which has not been
fully repaired, replaced, or rebuilt.
(v) Except for depletion due to continued production, there has been
no substantial and material change in condition of the Property between
the date hereof and Closing.
(w) To the best of Seller's information and belief, all easements,
rights of way, permits, crossing agreements, and surface rights included
in the Property are in full force and effect and are valid and subsisting,
and freely assignable, and all rentals and other payments due thereunder
have been properly and timely paid and all conditions necessary to keep
them in force have been duly performed.
(x) From and after the effective date of its acquisition of its
ownership in the Leases, the Seller has performed all obligations required
to be performed under such Leases, or any other instruments and agreements
relating to the Properties, and is not in default thereunder, and to the
best of Seller's information and belief, each of the Leases to be conveyed
is valid and in full force and effect.
(y) To the best of Seller's knowledge, Seller owns each Lease and
Property in the undivided share reflected by the "Working Interest"
described and set forth in Exhibit "A" for each particular Lease and
Property, and Seller owns for each Lease and Property the share of
Production reflected as "Net Revenue Interest" in Exhibit "A" attached
hereto. Seller is being paid not less than the fractional "net revenue
interest" for each Property in Exhibit "A" hereto, and, for expenses and
costs for each Property, Seller is not paying more than the fractional
interest specified under "Working Interest" for each Property in Exhibit
"A" hereto.
(z) To the best of Seller's information and belief, all rentals and
bonuses have been timely and fully paid and discharged, and all conditions
necessary to keep the Leases in full force have been performed, and no
proceeds from the sale of Production attributable to the Property are
currently being held in suspense by any purchaser thereof.
(aa) The Seller has not collected any proceeds from the sale of
Production attributable to the Property which are subject to refund, or if
so, that any such refund, if not otherwise accounted for under this
Agreement, shall be the sole responsibility of the Seller.
(bb) Except as listed in Exhibit "A" attached hereto, to the best of
Seller's information and belief, there are no Wells located on the
Property that Seller is obligated by law or contract to plug and abandon,
that Seller will be obligated by law or contract to plug and abandon at
the present time, and with the lapse of time or notice, or both, because
the well is not currently capable of producing production in commercial
quantities, or because the Well is subject to exceptions to a requirement
to plug and abandon issued by a regulatory authority having jurisdiction
over the Property.
(cc) To the best of Seller's information and belief, there are no
presently existing conditions (by existing federal or state statutes and
regulations) affecting the Property, which might give rise to a cause of
action on behalf of any governmental agency or third party, against either
Purchaser or Seller.
(dd) All information and data provided to Purchaser by Seller or its
agents concerning the Property is true and correct to the best of Seller's
information, knowledge, and belief.
PURCHASE AND SALE AGREEMENT - PAGE 9
<PAGE> 89
(ee) Environmental Current Status. To the best of Seller's
knowledge, the Property and Seller are not in violation of or subject to
any existing, pending, or threatened investigation or inquiry by any
governmental authority or to any remedial obligations under any applicable
laws pertaining to health or the environment (such laws as they now exist
or are hereafter enacted and/or amended hereinafter sometimes collectively
called "Applicable Environmental Laws"), including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of
1986 (as amended, hereinafter called "CERCLA"), the Resource Conservation
and Recovery Act of 1976, as amended by the Used Oil Recycling Act of
1980, the Solid Waste Disposal Act Amendments of 1980, and the Hazardous
and Solid Waste Amendments of 1984 (as amended, hereinafter called
"RCRA"), the Texas Water Code and the Texas Solid Waste Disposal Act, and
this representation will continue to be true and correct following
disclosure to the applicable governmental authorities of all relevant
facts, conditions, and circumstances, if any, pertaining to the Property
and Seller. The terms "hazardous substance" and "release" as used in this
Agreement shall have the meanings specified in CERCLA, and the terms
"solid waste" and "disposal" (or "disposed") shall have the meanings
specified in RCRA; provided, in the event either CERCLA or RCRA is amended
so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment and
provided further, to the extent that the laws of the State of Texas
establish a meaning for "hazardous substance," "release," "solid waste,"
or "disposal" which is broader than that specified in either CERCLA or
RCRA, such broader meaning shall apply.
7. Purchaser's Representations and Warranties. Purchaser represents and
warrants to Seller that:
(a) Purchaser: (i) is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada (ii)
is duly qualified to transact business in each jurisdiction where the
nature and extent of its business and properties require the same in order
for it to perform its obligations under this Agreement; and (iii)
possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply with
the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, all of which have been duly
authorized and approved by all necessary corporate action and for which no
further approval or consent is required.
(b) The consummation of the transactions contemplated by this
Agreement will not violate, or be in conflict with (i) any agreement or
instrument to which Purchaser is a party; or (ii) any judgment or decree
applicable to Purchaser as a party in interest with respect thereto.
(c) This Agreement has been duly executed and delivered on behalf of
Purchaser, and at the Closing, all documents and instruments required
hereunder to be executed and delivered by Purchaser (or its assignees)
shall have been duly executed and delivered.
(d) Subject to the conditions herein, Purchaser has or will have at
Closing (i) the financial capability or (ii) commitments from responsible
financial institutions to provide the funds required by Purchaser, to pay
the Purchase Price and consummate the transaction contemplated hereby
within the time period contemplated herein.
(e) Purchaser either has performed, or prior to closing will
perform, whatever inspection of the Property and Seller's title thereto
that Purchaser deems appropriate and knows the condition thereof and is
purchasing the Property as a result of such inspections and not because
of, or in reliance on, any representation or warranty made by Seller other
than those expressly set forth in this Agreement.
(f) In the event the Purchase Price is adjusted down at Closing,
based upon any unpaid taxes as set forth in Paragraph 4(b)(2) hereof (the
"Tax Adjustment"), Purchaser
PURCHASE AND SALE AGREEMENT - PAGE 10
<PAGE> 90
agrees to timely make payment (equivalent to the Tax Adjustment) to such
taxing authorities as may be appropriate.
8. Conditions to Obligations of Purchaser. The obligations of Purchaser to
consummate the transaction provided for herein are subject, at the option of
Purchaser, to the fulfillment on or prior to Closing, of each of the following
conditions:
(a) Representations. The representations and warranties of Seller
herein contained shall be true and correct in all material respects at
Closing as though made on and as of such date (unless appropriate
adjustments or remediation has been made in accordance with Paragraph 5
hereof).
(b) Performance. Seller shall have performed all obligations,
covenants, and agreements hereunder and shall have complied with all
covenants and conditions contained in this Agreement to be performed or
complied with by it at or prior to the Closing.
(c) Pending Matters. No suit, action, or other proceedings shall be
pending or threatened (a) against Seller before any court or governmental
agency which might result in impairment or loss of value as to Seller's
title to any part of the Property; or (b) which seeks to restrain, enjoin,
or otherwise prohibit the consummation of the transactions contemplated by
this Agreement.
(d) Liability. No liability which affects, in a materially adverse
manner, the Property or Purchaser's ability to receive the economic
benefits therefrom has been or is threatened to be asserted with respect
to the Property.
(e) Defects. No Defects shall be present, which are not cured by
Seller or waived by Purchaser as provided herein.
(f) Records and Access. Seller shall have afforded Purchaser and its
officers, employees, and representatives timely and reasonable access to
the Records as required herein.
9. Seller's Obligations at Closing. At the Closing, Seller shall deliver
to Purchaser the following items; however, item (e) will be delivered as soon
prior to Closing as reasonably practical:
(a) The Assignment, duly executed and acknowledged by Seller;
(b) Duly executed and acknowledged releases of all liens and burdens
on the Property or on Production therefrom or attributable thereto;
(c) Executed transfer orders (or letters in lieu thereof) addressed
to all purchasers of production from the Property;
(d) Any other executed documents or instruments which may be
reasonably required to consummate the transactions contemplated herein and
to fully vest Purchaser with operations and title to the Property as
contemplated hereby;
(e) The "Interim Settlement Statement," which shall set forth the
Purchase Price and adjustments thereto provided for in this Agreement
which are or may be determined at or prior to the Closing, which statement
shall be delivered to Purchaser as soon as reasonably practical prior to
Closing for Purchaser's review and approval;
(f) All consents required of third parties, who are identified in
Exhibit "A" attached, properly executed and in form approved by Purchaser;
and
(g) All releases of current liens of lenders encumbering all or any
part of the Property, properly executed in form acceptable by Purchaser.
PURCHASE AND SALE AGREEMENT - PAGE 11
<PAGE> 91
10. Purchaser's Obligations at Closing. At the Closing, Purchaser shall:
(a) Deliver to Seller the Adjusted Purchase Price, in cash or other
immediately available funds (which shall be subject to a subsequent
accounting between Seller and Purchaser pursuant to this Agreement) less
the Escrow Deposit; and
(b) Execute and deliver any other documents or instruments which may
be required to consummate the transactions contemplated herein.
11. Notices. All notices, demands, and requests which may be given or
which are required to be given by either Party to the other shall be in writing.
Any notice, demand, or communication required or permitted hereunder shall be
deemed to be delivered on actual receipt or three (3) days after being sent by
overnight courier or Certified U.S. Mail to Seller or Purchaser, whichever
occurs first, respectively, as follows:
SELLER: PURCHASER:
Price Sayers, Inc. Corrida Resources, Inc.
1802 Captain Shreve Drive Suite 380, Lock Box 31
Shreveport, Louisiana 71105 3500 Oak Lawn Avenue
Attn: Charles E. Price, Jr. Dallas, Texas 75219-4398
President Attn.:Edward Munden
Telephone: ______________ President
Facsimile: ______________ Telephone: 214-521-9959
Facsimile: 214-521-9960
or such other address as Purchaser or Seller may, from time to time, designate
pursuant to the terms hereof. A facsimile transmission shall be considered an
original document for purposes of providing notice under this section.
12. Furnishing Data and Information. The Seller also agrees to promptly
cooperate in all reasonable requests by Purchaser in furnishing copies, at
Purchaser's expense, of all Records necessary for Purchaser to conduct its due
diligence under the terms of this Agreement.
13. Post-Closing Adjustments. As soon as practicable after the closing,
and in any event within sixty (60) days after Closing, Seller shall prepare and
deliver to Purchaser, in accordance with this Agreement and generally accepted
accounting principles, a statement (the "Final Settlement Statement") setting
forth each adjustment or payment pursuant to Paragraph 4 hereof that was not
finally determined as of the Closing ("Post-Closing Adjustments") and showing
the calculation of such Post-Closing Adjustments and the aggregate amount
thereof. Within ten (10) business days after receipt of the Final Settlement
Statement, Purchaser shall deliver to Seller a written report containing any
changes that Purchaser proposes be made to the Final Settlement Statement. The
Parties undertake to agree with respect to the amounts of such Post-Closing
Adjustments no later than ninety (90) days after the Closing Date. The date upon
which such agreement is reached or upon which the aggregate amount of the
adjustments are finally established shall be herein called the "Final Settlement
Date." Seller shall pay to Purchaser, or vice versa, as the case may be, within
ten (10) business days after the Final Settlement Date the amount of such
adjustments (as finally established), by means of wire transfer in immediately
available funds or by means of a certified bank check. In the event Seller owes
monies to Purchaser as a consequence of the Post-Closing Adjustments, Purchaser
shall have the right to offset Purchaser's obligation under the note for any
such monies which are owing to Purchaser by Seller under Paragraph 4 and this
Paragraph 13.
14. Failure to Perform/Termination of Agreement. If the Seller should fail
to fully and timely perform any of its obligations hereunder, or should fail to
consummate the sale of the Property, except due to the Purchaser's default, the
Purchaser may, at its option, enforce specific performance of this Agreement, or
terminate this Agreement.
PURCHASE AND SALE AGREEMENT - PAGE 12
<PAGE> 92
15. Indemnification by Seller.
(a) Seller agrees to indemnify and save and hold harmless Purchaser
against and from any loss, damage, or expense sustained by Purchaser
arising out of or resulting from any breach of any of the representations
and warranties made hereunder and not waived by Purchaser.
(b) Seller agrees to indemnify and save and hold harmless Purchaser
against all claims, liabilities, costs, expenses, windfall profit taxes,
and liability arising out of the ownership or operation of the Property,
and based upon the occurrence of events, the accrual of obligations or
liabilities, or the existence of conditions prior to the Effective Date.
(c) If any claims for brokerage fees are asserted against Purchaser
in connection with this transaction based upon alleged commitments made by
Seller, Seller shall indemnify Purchaser against all such claims and
reimburse Purchaser for all reasonable expenses incurred in responding to
such claims, including reasonable attorney's fees.
(d) Notwithstanding anything to the contrary contained herein,
Seller agrees to indemnify and save and hold harmless Purchaser for
Seller's gross negligence or willful misconduct for that period of time
between the Effective Date and Closing.
(e) The provisions of this Paragraph 15 shall survive Closing for a
period of four (4) years from the date of Closing, and Seller shall not be
entitled to assert any right of indemnification hereunder after such date.
16. Indemnification by Purchaser.
(a) Purchaser agrees to indemnify and save and hold harmless Seller
against and from any loss, damage, or expense sustained by Seller arising
out of or resulting from any breach of any of the representations and
warranties made hereunder and not waived by Seller.
(b) Purchaser shall assume and hereby agrees to pay, honor,
discharge, and perform fully and timely, the obligations and liabilities
directly associated with the Seller's interest in the share of the
Property acquired by Purchaser hereunder, which are attributable to the
period of time from and after the Effective Date.
(c) Purchaser agrees to indemnify and save and hold harmless Seller
against all claims, costs, expenses, windfall profits taxes, and
liabilities arising out of the ownership or operation of the share of the
Property acquired by Purchaser hereunder and based upon the occurrence of
events, the accrual of obligations or liabilities, or the existence of
conditions on and subsequent to the Effective Date (but not including
these costs and expenses incurred with respect to the purchase of Seller's
interest in the Property or the negotiations leading to such purchase).
(d) If any claims for brokerage fees are asserted against Seller in
connection with this transaction based upon alleged commitments made by
Purchaser, Purchaser shall indemnify Seller against all such claims and
reimburse Seller for all reasonable expenses incurred in responding to
such claims, including reasonable attorney's fees.
(e) The provisions of this Paragraph 16 shall survive Closing for a
period of four (4) years from the date of Closing, and Purchaser shall not
be entitled to assert any right of indemnification hereunder after such
date.
17. Confidentiality. Prior to Closing, the Seller shall be furnishing to
Purchaser various information relating to Seller and the Property, and Seller's
business activities, assets, finances, costs, revenues, rights, obligations,
liabilities, and strategies. In consideration of the Seller furnishing this
information to Purchaser, Purchaser agrees that prior to Closing (a) that such
information is confidential and/or proprietary to Seller, and such information
shall be entitled to and
PURCHASE AND SALE AGREEMENT - PAGE 13
<PAGE> 93
shall receive treatment as such by Purchaser; (b) Purchaser shall use its best
efforts, and will advise all of its employees, representatives, agents, and
advisors who have access to such information, to use their best efforts to hold
in confidence, not to disclose to others, and not to use (except in respect of
the transaction contemplated by this Agreement) any such information; and (c) if
Closing does not occur, all such information, unless otherwise specified in
writing, shall remain the property of Seller, and shall be returned to Seller
together with any copies made thereof. Prior to Closing, Purchaser shall provide
such information only to its employees, representatives, agents, and advisors
who have need to know such information in connection with this Agreement.
18. Other Purchase and Sale Agreements. Purchaser has tendered purchase
and sale agreements, on or about the date hereof, to other parties, all of whom
are named in Exhibit "C" attached hereto. Such other agreements may cover the
interest, if any, of such other parties in the Leases and Property covered by
this Agreement, and may cover other oil and gas properties which are not the
subject of this Agreement. Purchase and Seller agree that the Closing under this
Agreement shall be simultaneous with the closings under such other agreements,
and that Closing under this Agreement shall be conditional upon closing
occurring under such other agreements. Seller does not claim any interest in and
to the oil and gas leases and other property which are the subject of such other
purchase and sale agreements, and which are not the subject of this Agreement.
In the event Seller may have any claim or interest in and to the oil and gas
leases and other property which are the subject of such other purchase and sale
agreements, and which are not the subject of this Agreement, then, for the
consideration herein, Seller agrees to sell and convey to Purchaser all of
Seller's interest in and to the oil and gas leases and other property and
interests which are the subject of the other purchase and sale agreements, above
described.
19. Area of Non-Competition. Seller agrees not to compete with Purchaser
in an area which comprises the lands covered by the Leases and an area which
shall extend outward from the boundaries of each of the Leases a distance of
5,280 feet. In this regard, Seller agrees that Seller, its employees, agents,
servants, or companies controlled by Seller, in common control with Seller, or
with whom Seller is affiliated, shall not acquire, for so long as a Lease is
held in force and effect by its terms, and for a period of three years
thereafter, any oil and gas leases, any mineral interest, royalty interest,
overriding royalty interest, or any farmout agreement, or other agreement
permitting the right to explore for and produce oil and/or gas, which cover any
lands within the restricted area.
20. Miscellaneous.
(a) If any term or provision of this Agreement is held to be
illegal, invalid, or unenforceable, the legality, validity, and
enforceability of the remaining terms and provisions of this Agreement
shall not be affected thereby, and in lieu of each such illegal, invalid,
or unenforceable term or provision, there shall be added automatically to
this Agreement a legal, valid, and enforceable term or provision as
similar as possible to the term or provision declared illegal, invalid, or
unenforceable;
(b) Either Seller or Purchaser shall have the right to waive any
requirement contained in this Agreement, which is intended for the waiving
Party's benefit, but except as otherwise specifically provided herein,
such waiver shall be effective only if in writing and executed by the
Party for whose benefit such requirement is intended; provided however,
that any such waiver shall not be construed as a waiver of any other
benefit accruing to the waiving Party hereunder;
(c) The captions used in connection with this Agreement are for
convenience only and shall not be deemed to expand or limit the meaning of
the language of this Agreement;
(d) Words of any gender used in this Agreement shall be held and
construed to include any other gender, and words in the singular shall be
held to include the plural, unless the context otherwise requires;
(e) Seller agrees that, on or before the Closing, it will not carry
on any negotiations with any third party, for the sale or transfer of the
Property, without the prior
PURCHASE AND SALE AGREEMENT - PAGE 14
<PAGE> 94
written consent of Purchaser. Thereafter, Seller may negotiate with third
parties if this Agreement has been terminated;
(f) THIS AGREEMENT AND ALL OF THE TRANSACTIONS CONTEMPLATED HEREIN
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS;
(g) This Agreement embodies the entire agreement between Seller and
Purchaser with respect to the subject matter hereof and supersedes all
prior agreements, whether written or oral;
(h) Except as otherwise specifically provided herein, this Agreement
may not be amended except by an agreement in writing executed by both
Seller and Purchaser;
(i) This Agreement shall be binding upon and inure to the benefit of
Seller and Purchaser and their respective legal representatives,
successors, and assigns. It is expressly understood and agreed that
Purchaser's rights under this Agreement may not be assigned prior to
Closing. Provided however, any interest acquired hereunder shall be freely
assignable by Purchaser after Closing;
(j) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of which shall be
deemed to be one and the same instrument;
(k) In addition to the acts and deeds recited herein and
contemplated to be performed, both Seller and Purchaser hereby agree to
perform, execute, and/or deliver at and after Closing any and all such
further reasonable acts, deeds, and assurances as may be reasonably
required to consummate the transactions contemplated by this Agreement;
(l) This Agreement supersedes any and all other agreements, either
oral or in writing, between the Parties hereto with respect to the subject
matter hereof and contains all of the covenants and agreements between the
Parties with respect to said matter. Each Party to this Agreement
acknowledges that no representations, inducements, promises, or
agreements, orally or otherwise, have been made by any Party, or anyone
acting on behalf of any Party, which are not embodied herein, and that no
other agreement, statement, or promise not contained in this Agreement
shall be valid or binding;
(m) In the event of any dispute occurring under this Agreement, the
prevailing Party shall be entitled to be reimbursed by the other Party for
its reasonable and necessary attorney's fees;
(n) Any failure by either Party to insist, or any election by either
Party not to insist, upon strict performance by the other Party of any of
the terms, provisions, or conditions of this Agreement shall not be deemed
to be a waiver of the same or of any other term, provision, or condition
hereof, and either Party may at any time or times thereafter insist upon
strict performance by the other Party of any and all of such terms,
provisions, and conditions. No waiver by either Party of any right,
remedy, power, or privilege hereunder shall be construed as a waiver of,
or operate to impair, any subsequent right, remedy, power, or privilege
nor shall any single or partial exercise of any such right, remedy, power,
or privilege exhaust the same or preclude other or further exercise
thereof.
(o) All covenants, representations, and indemnities set forth herein
shall survive closing, subject to any agreed periods of limitation as may
be set forth herein.
PURCHASE AND SALE AGREEMENT - PAGE 15
<PAGE> 95
EXECUTED as of the 5th day of February, 1997.
WITNESSES: SELLER:
VENTURE INVESTMENTS, INC.
____________________________________ By: ______________________________
LOUIS P. ROBERTSON, PRESIDENT
____________________________________
PURCHASER:
CORRIDA RESOURCES, INC.,
a Nevada corporation
____________________________________ By: ______________________________
ROBERT P. LINDSAY, VICE PRESIDENT
____________________________________
SHAREHOLDERS:
____________________________________ ____________________________________
(Signature)
____________________________________ ____________________________________
(Printed Name)
____________________________________ ____________________________________
(Signature)
____________________________________ ____________________________________
(Printed Name)
ACKNOWLEDGMENTS
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared LOUIS P.
ROBERTSON, to me personally known, who, being duly sworn, did say that he is the
President of VENTURE INVESTMENTS, INC., a Louisiana corporation, and that the
foregoing instrument was signed by him on behalf of such entity, with necessary
authority, and that LOUIS P. ROBERTSON, acknowledged said instrument to be the
free act and deed of such corporation.
_________________________________________
Notary Public, State of Louisiana
PURCHASE AND SALE AGREEMENT - PAGE 16
<PAGE> 96
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared ROBERT P.
LINDSAY, to me personally known, who, being duly sworn, did say that he is the
Vice President of CORRIDA RESOURCES, INC., a Nevada corporation, and that the
foregoing instrument was signed by him on behalf of such entity, with necessary
authority, and that ROBERT P. LINDSAY acknowledged said instrument to be the
free act and deed of such corporation.
_________________________________________
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared Louis P.
Robertson, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that he/she executed the same as his/her
free act and deed.
_________________________________________
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF ________________
On this the ______ day of February, 1997, before me appeared
_____________________________, to me known to be the person described in and who
executed the foregoing instrument, and acknowledged that he/she executed the
same as his/her free act and deed.
__________________________________________
Notary Public, State of Texas
PURCHASE AND SALE AGREEMENT - PAGE 17
<PAGE> 97
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the 5th day of February, 1997, by
and between MELVIN ADAMS, joined herein by his wife, NELLIE A. ADAMS,
(hereinafter referred to as the "Seller") and CORRIDA RESOURCES, INC., a Nevada
corporation (the "Purchaser"), (Seller and Purchaser hereinafter individually
referred to as "Party" and collectively as "Parties").
RECITALS
WHEREAS, Seller desires to sell and convey, and Purchaser desires to
purchase and receive, the following, upon the terms and conditions hereinafter
set forth:
I. The Leases and Units. All of the Seller's right, title, and interest in
and to (i) the oil, gas, and mineral leases and properties and interests
described in Exhibit "A," including but not limited to, leasehold, fee, mineral,
royalty, and overriding royalty interests and payments out of or measured by
Production (hereinafter defined) (said oil, gas, and mineral leases and property
and interests being herein referred to as the "Leases"); (ii) the units, pooled
acreage, spacing, or proration units or other allocation of acreage, and all
rights associated therewith, which are applicable to the Leases and have been
established by, or in accordance with, (a) applicable contractual provisions
regarding unitization, communitization, pooling, spacing, or proration, or (b)
applicable state or federal law;
II. The Production. All of the Seller's right, title, and interest in and
to all oil, gas, casinghead gas, condensate, distillate, and other liquid or
gaseous hydrocarbons and other minerals which are in, under, upon, and produced
from or allocable (or to be produced from or allocable) to the Leases after the
Effective Date (as defined in Paragraph 3(a) hereof) (such hydrocarbons and
minerals being hereinafter referred to as "Production"), including "line fill"
and inventory attributable to the interests described in Exhibit "A," or the
proceeds from the sale of such Production;
III. The Wells and Equipment. All of Seller's right, title, and interest
in and to all personal property of every kind and character located on the
Leases or used in the operation thereof including, without limitation, wells
(whether productive or non-productive, active or inactive) (the "Wells"),
compressors, well equipment, casing, tanks, machinery, gathering lines and
systems, treatment facilities, disposal wells and disposal facilities, pipelines
and other appurtenances, and any other personal property situated thereon,
herein individually and collectively called the "Equipment";
IV. The Rights of Way and Permits. All of Seller's right, title, and
interest in and to all rights, privileges, benefits, permissions, and
authorizations (including, without limitation, permits, licenses, servitudes,
easements, and rights of way) in respect of the use and occupation of the
surface of such Leases, and the subsurface depths under the land and premises
covered by and benefiting such Leases, herein called individually and
collectively "Rights of Way and Permits";
V. The Contracts. All of Seller's right, title, and interest in and to all
of the orders, gas purchase and sale contracts (wherein Seller is a selling
party), crude purchase and sale agreements (wherein Seller is a selling party),
surface leases, farm-in agreements, farmout agreements, bottom hole agreements,
acreage contribution agreements, operating agreements, unit agreements, area of
mutual interest agreements, processing agreements, options, leases of equipment
or facilities, and other contracts, agreements, and rights, which are owned by
Seller, in whole or in part and are (i) appurtenant to the Leases, or (ii) used
or held for use in connection with the ownership or operation of the Leases or
with the Production, treatment on the Leases, sale or disposal of water,
hydrocarbons or associated substances, herein called individually and
collectively the "Contracts";
VI. The Records. All of the files, records and data in the possession of
Seller relating to the items described in subsections (I), (II), (III), (IV),
and (V) above (the "Records"), including, without limitation, lease files, title
records (including abstracts of title, title opinions, and title curative
documents); contracts, correspondence, originals or copies of geological,
geophysical, and
PURCHASE AND SALE AGREEMENT - PAGE 1
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seismic records, data, and information; and originals or copies of production
records, electric logs, core data, pressure data and decline curves and
graphical production curves, and all related matters, to the extent Seller has
the authority to release such Records and to the extent they are reasonably
required by Purchaser to operate the Wells;
VII. Miscellaneous. Exhibit "A" attached hereto sets forth the undivided
interests of Seller in the Leases, and the revenue interests attributable
thereto, as well as the undivided interests of Seller in the Production, Wells,
Equipment, Rights of Way, and Contracts. This Agreement covers and pertains to
all of the right, title, and interest of Seller in the Leases, the lands covered
by the Leases, Production, Wells, Equipment, and Rights of Way, even if the
undivided interests of Seller in any such property or property rights should be
incorrectly or insufficiently described in the Exhibit "A."
The Leases, Production, Wells, Equipment, Rights of Way and Permits,
Contracts, Records, and Miscellaneous referred to in Paragraphs I through VII
above, are hereinafter sometimes referred to individually and collectively in
the singular as "Property."
WHEREAS, this Agreement was the subject of, and was contemplated by, that
certain letter of intent dated October 17, 1996, by and between Queen Sand
Resources, Inc., and David Robertson and Keith Robertson, as amended and
supplemented, including amendment and supplement dated December 24, 1996. As to
the interest of Seller in the Property, this Agreement supersedes and replaces
the letter of intent.
NOW, THEREFORE, for and in consideration of the mutual agreements herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Seller and Purchaser
hereby agree as follows:
1. Sale and Purchase. Seller agrees to sell and convey to Purchaser, and
Purchaser agrees to purchase and pay for, all of Seller's right, title, and
interest in and to the Property as hereinafter provided.
2. Purchase Price. The "Purchase Price" for the Property shall be the sum
of $32,614.00, payable as follows:
(a) The sum of $32,614.00, which shall be paid at Closing.
All cash payments to be tendered by Purchaser to Seller, either before or
after Closing, shall be made by wire transfer or shall be made by certified
funds.
The Purchase Price shall be subject to adjustment as hereinafter provided.
3. Closing and Effective Date.
(a) The closing of the sale and purchase of the Property shall take
place on or before February 5, 1997, (the "Closing") at 1310 Jeff Davis,
Hammond, Louisiana 70403, or at such other time, place, or manner as may
be mutually agreeable to the Parties. The sale of the Property shall be
effective as of November 1, 1996, at 7:00 a.m. local time for each of the
particular Leases (the "Effective Date").
(b) At the Closing, the Property shall be conveyed and transferred
by Seller to Purchaser by the execution and delivery of an Assignment and
Bill of Sale (the "Assignment") in substantially the same form and content
as the Assignment and Bill of Sale which is attached hereto as Exhibit
"B," and such other instruments of conveyance as may be reasonably
requested by Purchaser. Purchaser shall be entitled to all of Seller's
rights in the Property (including, without limitation, the rights to all
Production and proceeds of Production) appurtenant and attributable to the
Property, and shall be subject to the duties and obligations attendant
with ownership of such undivided share of the Property for the period from
and after the Effective Date. For the period prior to the Effective Date,
Seller shall be entitled to all of the rights (including, without
limitation, the rights to all Production
PURCHASE AND SALE AGREEMENT - PAGE 2
<PAGE> 99
and proceeds of Production) appurtenant and attributable to the Property,
and shall be subject to the duties and obligations attendant with
ownership of the Property.
4. Adjustments to Purchase Price. The Purchase Price shall be adjusted
(the "Adjusted Purchase Price") at the Closing, by the "Interim Settlement
Statement" (hereinafter defined in this paragraph and in Paragraph 9 below),
and, subsequent to Closing, by the "Final Settlement Statement" (hereinafter
defined in Paragraph 13 below), as follows:
(a) The Purchase Price shall be increased by the following:
(1) the value of all merchantable allowable oil or other
liquid hydrocarbons in storage owned by Seller in the tanks or above
the pipeline connection at the Effective Date, and not previously
sold by Seller, that is credited to the share of the Property being
acquired hereunder, valued at the contract price thereto, or if
none, the actual price received by Purchaser, less taxes or gravity
adjustments deducted by the purchaser of such oil or other liquid
hydrocarbons;
(2) the amount of all reasonable expenditures made in
connection with the ownership, operation, and maintenance of the
share of the Property being acquired hereunder, (including royalties
and rentals) and in accordance with generally accepted accounting
principles and prudent operations, attributable solely to the period
from and after the Effective Date and which are paid by or on behalf
of Seller after the Effective Date;
(3) an amount equal to all prepaid expenses, attributable to
the ownership, operation, and maintenance of the share of the
Property being acquired hereunder that are paid by or on behalf of
Seller after the Effective Date and prior to the Closing Date and
that are, in accordance with generally accepted accounting
principles, attributable solely to the period from and after the
Effective Date;
(4) any other amount agreed upon by Purchaser and Seller.
(b) The Purchase Price shall be decreased by the following:
(1) the amount of any proceeds from the sale of Production
attributable to the share of the Property being acquired hereunder
attributable to the period on or after the Effective Date (net of
production, severance, and similar taxes and assessments measured by
or payable out of production) actually received or accrued by or on
behalf of Seller;
(2) an amount equal to all unpaid ad valorem, property,
production, profit, severance, and similar taxes and assessments
based upon or measured by the ownership of the share of the Property
being acquired hereunder or the production of oil, gas, or other
minerals therefrom or the receipt of proceeds attributable thereto,
which accrue to or are chargeable against such share of the Property
(in accordance with generally accepted accounting principles) and
which are attributable to the period prior to the Effective Date,
which amount shall, to the extent not actually assessed, be computed
based upon such taxes and assessments for the immediately-preceding
calendar year, or if such taxes or assessments are assessed on other
than a calendar-year basis, for the tax period last ended;
(3) any amounts received by Seller (whether prior to or
subsequent to the Effective Date) pursuant to "take-or-pay," advance
payment, or similar provisions of any production sales contract, any
gas balancing agreement, or any other agreement, to the extent any
purchaser has the right to apply any such amounts to Purchaser's
share of Production delivered after the Effective Date;
PURCHASE AND SALE AGREEMENT - PAGE 3
<PAGE> 100
(4) any reduction in the value of the share of the Property
being acquired hereunder resulting from the existence of a Defect
(herein defined in Section 5(d)) which is not cured or waived prior
to Closing;
(5) any other amount agreed upon by Purchaser and Seller.
(c) The "Interim Settlement Statement" shall be prepared by Seller,
its agents, or representatives, prior to Closing, which statement shall
set forth the adjustments to the Purchase Price, per the adjustments set
forth in this Paragraph 4, which are or may be determined at or prior to
Closing. Such statement shall be prepared according to generally accepted
accounting principles and shall show the calculation of all such
adjustments. Upon the approval of such Interim Settlement Statement by
Purchaser, the Purchase Price shall be adjusted according to such
statement. Upon Purchaser's request, Seller shall make available to
Purchaser all information relied upon by Seller for the adjustments
requested in order to aid and facilitate Purchaser's approval of such
statement. After Closing, the Purchase Price may further be adjusted,
pursuant to the adjustments set forth in this paragraph, with the "Final
Settlement Statement" in the manner further described in Paragraph 13
below.
(d) All monies received by either Party hereto which, under the
terms of this Agreement or otherwise, belong to the other Party, shall be
received in trust by the Party receiving such funds, and shall monthly,
upon receipt, be paid over to the other Party. The Parties agree, in this
regard, to cooperate fully and to execute, endorse, and deliver as
expeditiously as practicable such papers, checks, and documents as are
needed promptly to complete the transfer of such payments;
(e) After the Closing, if an invoice or other evidence of an
obligation relating to the share of the Property acquired by Purchaser is
received which is applicable to periods both prior to and after the
Effective Date, and is partly the obligation of Seller and partly the
obligation of Purchaser, then each Party shall pay its respective portion
of such obligation to the obligee, prorated between the Parties as of the
Effective Date;
(f) At and after the Closing, Purchaser and Seller will cooperate
fully in notifying all applicable third parties (including the execution
by Seller of such transfer orders, letters in lieu, change of operator,
etc., as may be requested by Purchaser) so that notices, proceeds, and
invoices from such third parties may take into account the fact that
Purchaser has acquired the Property as of the Effective Date;
(g) The parties hereto agree to exercise diligence and good faith in
attempting to resolve any disagreements or disputes which may arise from
the adjustments to the Purchase Price to be made in accordance with this
paragraph.
5. Property Conditions, Title Review, Property Information, and Casualty
Losses.
(a) Property Conditions. THIS SALE OF THE EQUIPMENT AND ALL OTHER
PERSONAL PROPERTY THAT IS A PART OF THE PROPERTY IS MADE ON AN "AS IS,
WHERE IS" BASIS WITH ALL FAULTS AS TO ITS CONDITION, AND SELLER EXPRESSLY
DISCLAIMS ALL WARRANTIES AS TO THE CONDITION OF THE EQUIPMENT (NOTE,
HOWEVER, THERE ARE CERTAIN WARRANTIES AS TO TITLE AS HEREIN SET FORTH)
INCLUDING, WITHOUT LIMITATIONS, THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR ANY PARTICULAR PURPOSE. Seller agrees that for a period of
time commencing with the date of the letter of intent dated October 17,
1996, above described, and continuing until five (5) business days before
Closing (the "Review Period"), Purchaser, personally or through its
authorized agents or representatives, shall have the right to make any
and all physical inspections of the Property which Purchaser may desire
to make or to have made and to make all such other inspections, surveys,
tests, or other studies (including, but not limited to, environmental
assessments and evaluations) as Purchaser deems necessary or desirable.
Upon reasonable notice to Seller, Purchaser, and its authorized agents
and representatives, at Purchaser's sole risk, may enter upon the
Property for the purpose of conducting those
PURCHASE AND SALE AGREEMENT - PAGE 4
<PAGE> 101
inspections, surveys, tests, and studies. If Purchaser shall determine
that the condition of the Property is not in substantial compliance with
any governmental regulations (including environmental regulations), then
upon discovery, Purchaser must promptly give written notice to Seller of
such condition ("Condition"). Upon receipt of such notice, Seller shall
have the option, but not the obligation, to (a) cure or remedy such
Condition to the reasonable satisfaction of Purchaser (if current
remediation of such Condition is required by a governmental agency, Seller
agrees that the Condition shall be remedied in accordance with and to the
satisfaction of the appropriate agency's requirements); or (b) agree with
Purchaser on a reduction to the Purchase Price which reduction shall
reflect Purchaser's anticipated reasonable cost to remedy such Condition.
If the Condition cannot be cured or remedied to Purchaser's reasonable
satisfaction, and if agreement cannot be reached on reduction to the
Purchase Price, then the affected Property may be excluded by Purchaser
from the Property to be acquired by Purchaser hereunder. In such event ,
the Purchase Price shall be reduced by the Allocated Purchase Price (see
subparagraph (c) below) for such excluded Property.
(b) Review of the Records. During the Review Period, and upon
reasonable notice from Purchaser, Seller shall provide Purchaser,
personally or through its authorized agents or representatives, full
access during normal business hours to Seller's office and premises to
review and inspect all Records, including, but not limited to, all
abstracts of title, lease files, unit files, production and marketing
files, title opinions, title files, title records, geologic, engineering,
and other files or information in Seller's possession or to which it has
access which relate to the Property and the status of Seller's title
thereto, and Purchaser, at its expense, shall have the right to make and
retain copies of any of such Records; provided however, if the
transactions contemplated hereby do not close for any reason, Purchaser
shall return any Records and copies thereof to Seller forthwith. Without
limiting the generality of the foregoing, Purchaser shall also be given
access to reserve reports, geological and geophysical reports (including,
but not limited to well records, log films, proprietary or joint venture
seismic data or other seismic data which Seller is not contractually
restricted from disclosing), contracts (including, but not limited to, gas
contracts), operating agreements, operating statements, and reports.
(c) Notice of Defect. If, during the Review Period, Purchaser
determines that the Property is subject to a "Defect" (as defined herein
in Section 5(d)), the Purchaser must give written notice to Seller of such
Defect, the nature of the Defect, and furnish Seller Purchaser's basis for
the assertion of such Defect. As soon as practical after such written
notice, Seller shall use reasonable diligence to cure any such Defects. If
Seller cannot cure any such Defects to the reasonable satisfaction of
Purchaser, then Seller shall so notify Purchaser in writing. Thereafter,
Seller and Purchaser shall use a good faith effort to agree on the
Purchase Price adjustment for any such Defect which cannot be cured. Such
adjustment shall be determined in accordance with the following
guidelines:
(1) The Purchase Price shall be allocated among the various
Leases in the proportion of the PDP fair market value of the Leases
reported by Netherland Sewell & Associates in its report dated
October 21, 1996, (the "Allocated Purchase Price").
(2) If the Defect is that Seller's Net Revenue Interest
("NRI") for any Property is less than the NRI for such Property as
set forth in Exhibit "A," then the allocated Purchase Price for such
Property shall be adjusted in the same proportion that the actual
NRI for such property bears to the NRI shown in Exhibit "A."
(3) If the Defect is a lien, encumbrance, or other charge upon
the Property which is liquidated in amount, then the adjustment
shall be the sum necessary to be paid to the obligee to remove the
Defect from the Property;
If the Purchase Price adjustment for any such Defect cannot be
determined, and the Seller and Purchaser cannot agree in good faith on the
amount of the adjustment to the Purchase Price, the Purchaser may (a)
waive the Defect and proceed with Closing, or (b) exclude the affected
Property and reduce the Purchase Price by the Allocated Purchase Price
PURCHASE AND SALE AGREEMENT - PAGE 5
<PAGE> 102
for such property, or (c) terminate this Agreement, in which event the
Parties shall have no further rights or obligations under this Agreement.
(d) Definition of Defect. For the purpose of this Agreement, a
"Defect" shall be defined as:
(1) Any material encumbrance, lien, mortgage, breach of
representation or warranty, production payment, pledge, claim,
charge, call on production, default, defect, condition, unleased
mineral interest, preferential right, requirement for consent to
assignment, or lack of title affecting the Property, or any matter
affecting the Property by which Purchaser reasonably or in good
faith believes that Seller's interest in a Property may become
subject to the claims of third parties;
(2) Seller's NRI in any Property is less than the NRI for such
Property which is set forth in Exhibit "A," or Seller's gross
working interest ("GWI") in any Property is less than the working
interest shown in Exhibit "A," or Seller's GWI in any Property is
greater than the working interest shown in Exhibit "A" without a
corresponding increase in the NRI in such Property;
(e) Other Property Information. If, based upon Purchaser's
examination of the Records according to Paragraph 5(b) hereof, Purchaser
shall determine that any information, statement, or data contained in any
information, reports, statement, or data furnished to Purchaser or used in
its economic analysis of the Property is not true or correct in any
material respect, upon discovery of any incorrect information, Purchaser
may give written notice to Seller of such inaccuracy or misstatement. Any
such notice must be provided in writing during the Review Period, or it
will be deemed to be waived. Such notice shall provide a summary of such
inaccuracy or misstatement. Upon receipt of such notice, Seller shall have
the option, but not the obligation, to (a) cure or remedy such inaccuracy
or misstatement to the reasonable satisfaction of Purchaser; or (b) agree
with Purchaser on a reduction to the Purchase Price, which reduction shall
reflect Purchaser's reasonably anticipated cost to remedy such inaccuracy
or misstatement. If the inaccuracy or misstatement cannot be cured or
remedied to Purchaser's reasonable satisfaction, and if agreement cannot
be reached on reduction to the Purchase Price, then the affected Property
shall be excluded from the Property to be acquired by Purchaser hereunder,
and the Purchase Price shall be reduced by the Allocated Purchase Price
for such Property;
(f) Casualty Loss. If, prior to Closing, any Property is
substantially damaged or destroyed by fire or other casualty ("Casualty
Defect"), Seller shall notify Purchaser promptly after Seller learns of
such event. Seller shall have the right, but not the obligation, to cure
any such Casualty Defect by repairing such damage or, in the case of
personal property, fixtures, replacing the Property affected thereby with
equivalent items, no later than the date of Closing. If any Casualty
Defects exist at Closing, Purchaser may proceed to purchase the Property
affected thereby, and the Purchase Price shall be reduced by the aggregate
reduction in the value of such Property on account of such Casualty
Defects, as determined by the mutual agreement of the Parties, or if the
Parties are unable to agree on the reduction of the Purchase Price, then
the affected Property shall be excluded from the Property to be acquired
by Purchaser hereunder, and the Purchase Price shall be reduced by the
Allocated Purchase Price for such Property. Notwithstanding anything to
the contrary contained herein, Seller shall be entitled to retain all
insurance proceeds and claims against other Parties in respect of any such
Casualty Defect which occurs prior to closing unless no reduction is made
in the Purchase Price as a result of such Casualty Defect, in which event
Purchaser shall be entitled to the insurance proceeds and claims against
other Parties arising from such Casualty Defect.
6. Seller's Representations and Warranties. Seller represents and warrants
to Purchaser that:
(a) This Agreement has been duly executed and delivered on behalf of
Seller and is binding and enforceable against Seller in accordance with
its terms and at the Closing. All
PURCHASE AND SALE AGREEMENT - PAGE 6
<PAGE> 103
documents and instruments required hereunder to be executed and delivered
by Seller shall have been duly executed and delivered at Closing, and the
execution, delivery, and performance of this Agreement by Seller and the
consummation of transactions contemplated hereby will not constitute a
breach of, an event of default under, a violation of, or a conflict with
any agreement or other instrument to which Seller is a party (except to
the extent such instrument may be released at the Closing). Nor will the
same cause Seller to be in violation of any applicable laws or regulations
or any order of any court or governmental agency having jurisdiction.
(b) All ad valorem, property, production, severance, excise, and
similar taxes and assessments based on or measured by the ownership of the
Property or the Production or the receipt of proceeds therefrom, which
have become due and payable prior to the date hereof with respect to the
Property have been properly paid, and Seller's allocable share of such
taxes and assessments which become due and payable prior to the Closing
shall be properly paid by Seller, and all royalties, overriding royalties,
and payments to any third parties which have become due and payable prior
to the date hereof with respect to production from the Property, have been
properly paid, and will be hereafter properly paid for the period prior to
Closing.
(c) Seller has incurred no liability, contingent or otherwise, for
brokers' or finders' fees in respect of this transaction for which
Purchaser shall have any responsibility whatsoever.
(d) Prior to the Closing, Seller will pay or cause to be paid all of
Seller's share of costs and expenses incurred in connection with the
Property, and will comply with all contracts or other agreements relating
to the Property.
(e) To the best of Seller's information and belief, all laws,
regulations, and orders of all governmental agencies having jurisdiction
over the Property have been and shall continue to be complied with until
the Closing.
(f) There are no first rights of refusal, consents, authorizations,
preferential rights, options, or claims of a similar nature affecting the
Property, other than those listed in Exhibit "A," said listed consents
defined herein as "Consents."
(g) Seller shall, upon request, subrogate Purchaser to any claim
which Seller may have against any third party, prior owner, vendor, or
assignor with respect to the share of the Property acquired by Purchaser,
or the title thereto.
(h) There are no "imbalances" which allow any other party to make up
production at any time after the Effective Date, under any operating
agreement, gas balancing agreement and storage agreement, gas
transportation agreement, gas processing or dehydration agreement, or
other similar agreement relating to the Property.
(i) Seller has not directly or indirectly reserved or retained any
recorded or unrecorded interest or rights in any of the Property, and
Seller shall not reserve any recorded or unrecorded executory interest or
rights relating to the Property.
(j) Seller warrants that the Property is free and clear of all
encumbrances, liens, and mortgages, save and except such encumbrances as
may be identified and described in Exhibit "A" attached hereto, and
further save and except liens for taxes not yet due and payable.
(k) Except as may be identified and described in Exhibit "A"
attached hereto, the Property is not subject to any restriction,
reservation, reversionary interest, drilling or development obligation, or
other material obligation or burden on the operation or the disposition of
Production attributable to the Property.
PURCHASE AND SALE AGREEMENT - PAGE 7
<PAGE> 104
(l) No part of any of the Property is affected by any prepayment
arrangement under any contract for the sale of oil or gas, or by any
production payment or any other arrangement for delivery of oil or gas
produced from any of the Property at some future time without Purchaser
then or thereafter receiving full payment therefor, and no third party now
has or at Closing will have any right to take makeup gas for which it has
already paid. As of the Effective Date, there are no volumes of makeup gas
owing, or accumulated transportation credits due, to gas purchasers on
account of any "take-or-pay" or other provisions of any contract, and
Seller has not produced or sold more than its pro-rata share of the gas
from any Wells included in the Property.
(m) Except as may be set forth in Exhibit "A" attached hereto, there
are no gas purchase or sale agreements, and no gas gathering or
transportation agreements, affecting the Property that cannot be
terminated upon ninety (90) days' written notice.
(n) Without the prior written consent of Purchaser, Seller (i) shall
not enter into any new agreements or commitments affecting the Property
which extend beyond the Closing, and (ii) will not modify or terminate any
agreements affecting any of the Property, including, without limitation,
any oil and gas leases, unitization or pooling agreements, operating
agreements, pipeline agreements, processing agreements, and hydrocarbon
sales contracts, and (iii) will not further encumber, sell, mortgage,
release, abandon, or otherwise dispose of any of the Property or any
interests therein.
(o) There is not any suit, action, or other proceeding pending or
threatened which affects or relates to the Property, or seeks to restrain
or prohibit Seller from selling or conveying to Purchaser the share of the
Property to be purchased herein. Seller shall promptly notify Purchaser of
any such proceedings which may arise or be threatened prior to Closing.
(p) There are no operating agreements with third parties affecting
the Property except as may be identified and described in Exhibit "A"
attached hereto.
(q) Seller has no knowledge and has not received any notice of any
claimed default (or any event which, with the giving of notice or the
passage of time, or both, would constitute a default) under (i) the
Leases, (ii) any order, writ, injunction, or decree of any court,
commission, or administrative agency affecting the Property, or (iii) any
other agreement affecting the Property. Seller shall promptly notify
Purchaser of any such notice hereafter received by Seller and the
occurrence of any such event of which Seller becomes aware prior to
Closing.
(r) There are no tax partnerships affecting any of the Property.
(s) To the best of Seller's information and belief, no Production
from any Well on the Property has occurred in excess of that permitted by
law, orders, or regulations.
(t) To the best of Seller's information and belief, there has been
no material injury or damage to any of the Property which has not been
fully repaired, replaced, or rebuilt.
(u) Except for depletion due to continued production, there has been
no substantial and material change in condition of the Property between
the date hereof and Closing.
(v) To the best of Seller's information and belief, all easements,
rights of way, permits, crossing agreements, and surface rights included
in the Property are in full force and effect and are valid and subsisting,
and freely assignable, and all rentals and other payments due thereunder
have been properly and timely paid and all conditions necessary to keep
them in force have been duly performed.
PURCHASE AND SALE AGREEMENT - PAGE 8
<PAGE> 105
(w) From and after the effective date of its acquisition of its
ownership in the Leases, the Seller has performed all obligations required
to be performed under such Leases, or any other instruments and agreements
relating to the Properties, and is not in default thereunder, and to the
best of Seller's information and belief, each of the Leases to be conveyed
is valid and in full force and effect.
(x) To the best of Seller's knowledge, Seller owns each Lease and
Property in the undivided share reflected by the "Working Interest"
described and set forth in Exhibit "A" for each particular Lease and
Property, and Seller owns for each Lease and Property the share of
Production reflected as "Net Revenue Interest" in Exhibit "A" attached
hereto. Seller is being paid not less than the fractional "net revenue
interest" for each Property in Exhibit "A" hereto, and, for expenses and
costs for each Property, Seller is not paying more than the fractional
interest specified under "Working Interest" for each Property in Exhibit
"A" hereto.
(y) To the best of Seller's information and belief, all rentals and
bonuses have been timely and fully paid and discharged, and all conditions
necessary to keep the Leases in full force have been performed, and no
proceeds from the sale of Production attributable to the Property are
currently being held in suspense by any purchaser thereof.
(z) The Seller has not collected any proceeds from the sale of
Production attributable to the Property which are subject to refund, or if
so, that any such refund, if not otherwise accounted for under this
Agreement, shall be the sole responsibility of the Seller.
(aa) Except as listed in Exhibit "A" attached hereto, to the best of
Seller's information and belief, there are no Wells located on the
Property that Seller is obligated by law or contract to plug and abandon,
that Seller will be obligated by law or contract to plug and abandon at
the present time, and with the lapse of time or notice, or both, because
the well is not currently capable of producing production in commercial
quantities, or because the Well is subject to exceptions to a requirement
to plug and abandon issued by a regulatory authority having jurisdiction
over the Property.
(bb) To the best of Seller's information and belief, there are no
presently existing conditions (by existing federal or state statutes and
regulations) affecting the Property, which might give rise to a cause of
action on behalf of any governmental agency or third party, against either
Purchaser or Seller.
(cc) All information and data provided to Purchaser by Seller or its
agents concerning the Property is true and correct to the best of Seller's
information, knowledge, and belief.
(dd) Environmental Current Status. To the best of Seller's
knowledge, the Property and Seller are not in violation of or subject to
any existing, pending, or threatened investigation or inquiry by any
governmental authority or to any remedial obligations under any applicable
laws pertaining to health or the environment (such laws as they now exist
or are hereafter enacted and/or amended hereinafter sometimes collectively
called "Applicable Environmental Laws"), including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of
1986 (as amended, hereinafter called "CERCLA"), the Resource Conservation
and Recovery Act of 1976, as amended by the Used Oil Recycling Act of
1980, the Solid Waste Disposal Act Amendments of 1980, and the Hazardous
and Solid Waste Amendments of 1984 (as amended, hereinafter called
"RCRA"), the Texas Water Code and the Texas Solid Waste Disposal Act, and
this representation will continue to be true and correct following
disclosure to the applicable governmental authorities of all relevant
facts, conditions, and circumstances, if any, pertaining to the Property
and Seller. The terms "hazardous substance" and "release" as used in this
Agreement shall have the meanings specified in CERCLA, and the terms
"solid waste" and "disposal" (or "disposed") shall have the meanings
specified in RCRA; provided, in the event either CERCLA or RCRA is amended
so as to broaden the meaning of any term
PURCHASE AND SALE AGREEMENT - PAGE 9
<PAGE> 106
defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment and provided further, to the extent that
the laws of the State of Texas establish a meaning for "hazardous
substance," "release," "solid waste," or "disposal" which is broader than
that specified in either CERCLA or RCRA, such broader meaning shall apply.
7. Purchaser's Representations and Warranties. Purchaser represents and
warrants to Seller that:
(a) Purchaser: (i) is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Texas; (ii)
is duly qualified to transact business in each jurisdiction where the
nature and extent of its business and properties require the same in order
for it to perform its obligations under this Agreement; and (iii)
possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply with
the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, all of which have been duly
authorized and approved by all necessary corporate action and for which no
further approval or consent is required.
(b) The consummation of the transactions contemplated by this
Agreement will not violate, or be in conflict with (i) any agreement or
instrument to which Purchaser is a party; or (ii) any judgment or decree
applicable to Purchaser as a party in interest with respect thereto.
(c) This Agreement has been duly executed and delivered on behalf of
Purchaser, and at the Closing, all documents and instruments required
hereunder to be executed and delivered by Purchaser (or its assignees)
shall have been duly executed and delivered.
(d) Subject to the conditions herein, Purchaser has or will have at
Closing (i) the financial capability or (ii) commitments from responsible
financial institutions to provide the funds required by Purchaser, to pay
the Purchase Price and consummate the transaction contemplated hereby
within the time period contemplated herein.
(e) Purchaser either has performed, or prior to closing will
perform, whatever inspection of the Property and Seller's title thereto
that Purchaser deems appropriate and knows the condition thereof and is
purchasing the Property as a result of such inspections and not because
of, or in reliance on, any representation or warranty made by Seller other
than those expressly set forth in this Agreement.
(f) In the event the Purchase Price is adjusted down at Closing,
based upon any unpaid taxes as set forth in Paragraph 4(b)(2) hereof (the
"Tax Adjustment"), Purchaser agrees to timely make payment (equivalent to
the Tax Adjustment) to such taxing authorities as may be appropriate.
8. Conditions to Obligations of Purchaser. The obligations of Purchaser to
consummate the transaction provided for herein are subject, at the option of
Purchaser, to the fulfillment on or prior to Closing, of each of the following
conditions:
(a) Representations. The representations and warranties of Seller
herein contained shall be true and correct in all material respects at
Closing as though made on and as of such date (unless appropriate
adjustments or remediation has been made in accordance with Paragraph 5
hereof).
(b) Performance. Seller shall have performed all obligations,
covenants, and agreements hereunder and shall have complied with all
covenants and conditions contained in this Agreement to be performed or
complied with by it at or prior to the Closing.
(c) Pending Matters. No suit, action, or other proceedings shall be
pending or threatened (a) against Seller before any court or governmental
agency which might result in impairment or loss of value as to Seller's
title to any part of the Property; or (b) which seeks
PURCHASE AND SALE AGREEMENT - PAGE 10
<PAGE> 107
to restrain, enjoin, or otherwise prohibit the consummation of the
transactions contemplated by this Agreement.
(d) Liability. No liability which affects, in a materially adverse
manner, the Property or Purchaser's ability to receive the economic
benefits therefrom has been or is threatened to be asserted with respect
to the Property.
(e) Defects. No Defects shall be present, which are not cured by
Seller or waived by Purchaser as provided herein.
(f) Records and Access. Seller shall have afforded Purchaser and its
officers, employees, and representatives timely and reasonable access to
the Records as required herein.
9. Seller's Obligations at Closing. At the Closing, Seller shall deliver
to Purchaser the following items; however, item (e) will be delivered as soon
prior to Closing as reasonably practical:
(a) The Assignment, duly executed and acknowledged by Seller;
(b) Duly executed and acknowledged releases of all liens and burdens
on the Property or on Production therefrom or attributable thereto;
(c) Executed transfer orders (or letters in lieu thereof) addressed
to all purchasers of production from the Property;
(d) Any other executed documents or instruments which may be
reasonably required to consummate the transactions contemplated herein and
to fully vest Purchaser with operations and title to the Property as
contemplated hereby;
(e) The "Interim Settlement Statement," which shall set forth the
Purchase Price and adjustments thereto provided for in this Agreement
which are or may be determined at or prior to the Closing, which statement
shall be delivered to Purchaser as soon as reasonably practical prior to
Closing for Purchaser's review and approval;
(f) All consents required of third parties, who are identified in
Exhibit "A" attached, properly executed and in form approved by Purchaser;
and
(g) All releases of current liens of lenders encumbering all or any
part of the Property, properly executed in form acceptable by Purchaser.
10. Purchaser's Obligations at Closing. At the Closing, Purchaser shall:
(a) Deliver to Seller the Adjusted Purchase Price, in cash or other
immediately available funds (which shall be subject to a subsequent
accounting between Seller and Purchaser pursuant to this Agreement); and
(b) Execute and deliver any other documents or instruments which may
be required to consummate the transactions contemplated herein.
11. Notices. All notices, demands, and requests which may be given or
which are required to be given by either Party to the other shall be in writing.
Any notice, demand, or communication required or permitted hereunder shall be
deemed to be delivered on actual receipt or three (3) days after being sent by
overnight courier or Certified U.S. Mail to Seller or Purchaser, whichever
occurs first, respectively, as follows:
PURCHASE AND SALE AGREEMENT - PAGE 11
<PAGE> 108
SELLER: PURCHASER:
Melvin Adams and Corrida Resources, Inc.
Nellie A. Adams Suite 380, Lock Box 31
40253 Macedonia Road 3500 Oak Lawn Avenue
Hammond, Louisiana 70403 Dallas, Texas 75219-4398
Telephone: ______________ Attn.:Edward Munden
Facsimile: ______________ President
Telephone: 214-521-9959
Facsimile: 214-521-9960
or such other address as Purchaser or Seller may, from time to time, designate
pursuant to the terms hereof. A facsimile transmission shall be considered an
original document for purposes of providing notice under this section.
12. Furnishing Data and Information. The Seller also agrees to promptly
cooperate in all reasonable requests by Purchaser in furnishing copies, at
Purchaser's expense, of all Records necessary for Purchaser to conduct its due
diligence under the terms of this Agreement.
13. Post-Closing Adjustments. As soon as practicable after the closing,
and in any event within sixty (60) days after Closing, Seller shall prepare and
deliver to Purchaser, in accordance with this Agreement and generally accepted
accounting principles, a statement (the "Final Settlement Statement") setting
forth each adjustment or payment pursuant to Paragraph 4 hereof that was not
finally determined as of the Closing ("Post-Closing Adjustments") and showing
the calculation of such Post-Closing Adjustments and the aggregate amount
thereof. Within ten (10) business days after receipt of the Final Settlement
Statement, Purchaser shall deliver to Seller a written report containing any
changes that Purchaser proposes be made to the Final Settlement Statement. The
Parties undertake to agree with respect to the amounts of such Post-Closing
Adjustments no later than ninety (90) days after the Closing Date. The date upon
which such agreement is reached or upon which the aggregate amount of the
adjustments are finally established shall be herein called the "Final Settlement
Date." Seller shall pay to Purchaser, or vice versa, as the case may be, within
ten (10) business days after the Final Settlement Date the amount of such
adjustments (as finally established), by means of wire transfer in immediately
available funds or by means of a certified bank check. In the event Seller owes
monies to Purchaser as a consequence of the Post-Closing Adjustments, Purchaser
shall have the right to offset Purchaser's obligation under the note for any
such monies which are owing to Purchaser by Seller under Paragraph 4 and this
Paragraph 13.
14. Failure to Perform/Termination of Agreement. If the Seller should fail
to fully and timely perform any of its obligations hereunder, or should fail to
consummate the sale of the Property, except due to the Purchaser's default, the
Purchaser may, at its option, enforce specific performance of this Agreement, or
terminate this Agreement.
15. Indemnification by Seller.
(a) Seller agrees to indemnify and save and hold harmless Purchaser
against and from any loss, damage, or expense sustained by Purchaser
arising out of or resulting from any breach of any of the representations
and warranties made hereunder and not waived by Purchaser.
(b) Seller agrees to indemnify and save and hold harmless Purchaser
against all claims, liabilities, costs, expenses, windfall profit taxes,
and liability arising out of the ownership or operation of the Property,
and based upon the occurrence of events, the accrual of obligations or
liabilities, or the existence of conditions prior to the Effective Date.
(c) If any claims for brokerage fees are asserted against Purchaser
in connection with this transaction based upon alleged commitments made by
Seller, Seller shall indemnify Purchaser against all such claims and
reimburse Purchaser for all reasonable expenses incurred in responding to
such claims, including reasonable attorney's fees.
PURCHASE AND SALE AGREEMENT - PAGE 12
<PAGE> 109
(d) Notwithstanding anything to the contrary contained herein,
Seller agrees to indemnify and save and hold harmless Purchaser for
Seller's gross negligence or willful misconduct for that period of time
between the Effective Date and Closing.
(e) The provisions of this Paragraph 15 shall survive Closing for a
period of four (4) years from the date of Closing, and Seller shall not be
entitled to assert any right of indemnification hereunder after such date.
16. Indemnification by Purchaser.
(a) Purchaser agrees to indemnify and save and hold harmless Seller
against and from any loss, damage, or expense sustained by Seller arising
out of or resulting from any breach of any of the representations and
warranties made hereunder and not waived by Seller.
(b) Purchaser shall assume and hereby agrees to pay, honor,
discharge, and perform fully and timely, the obligations and liabilities
directly associated with the Seller's interest in the share of the
Property acquired by Purchaser hereunder, which are attributable to the
period of time from and after the Effective Date.
(c) Purchaser agrees to indemnify and save and hold harmless Seller
against all claims, costs, expenses, windfall profits taxes, and
liabilities arising out of the ownership or operation of the share of the
Property acquired by Purchaser hereunder and based upon the occurrence of
events, the accrual of obligations or liabilities, or the existence of
conditions on and subsequent to the Effective Date (but not including
these costs and expenses incurred with respect to the purchase of Seller's
interest in the Property or the negotiations leading to such purchase).
(d) If any claims for brokerage fees are asserted against Seller in
connection with this transaction based upon alleged commitments made by
Purchaser, Purchaser shall indemnify Seller against all such claims and
reimburse Seller for all reasonable expenses incurred in responding to
such claims, including reasonable attorney's fees.
(e) The provisions of this Paragraph 16 shall survive Closing for a
period of four (4) years from the date of Closing, and Purchaser shall not
be entitled to assert any right of indemnification hereunder after such
date.
17. Confidentiality. Prior to Closing, the Seller shall be furnishing to
Purchaser various information relating to Seller and the Property, and Seller's
business activities, assets, finances, costs, revenues, rights, obligations,
liabilities, and strategies. In consideration of the Seller furnishing this
information to Purchaser, Purchaser agrees that prior to Closing (a) that such
information is confidential and/or proprietary to Seller, and such information
shall be entitled to and shall receive treatment as such by Purchaser; (b)
Purchaser shall use its best efforts, and will advise all of its employees,
representatives, agents, and advisors who have access to such information, to
use their best efforts to hold in confidence, not to disclose to others, and not
to use (except in respect of the transaction contemplated by this Agreement) any
such information; and (c) if Closing does not occur, all such information,
unless otherwise specified in writing, shall remain the property of Seller, and
shall be returned to Seller together with any copies made thereof. Prior to
Closing, Purchaser shall provide such information only to its employees,
representatives, agents, and advisors who have need to know such information in
connection with this Agreement.
18. Other Purchase and Sale Agreements. Purchaser has tendered purchase
and sale agreements, dated on or about the date hereof, to other parties, all of
whom are named in Exhibit "C" attached hereto. Such other agreements may cover
the interest, if any, of such other parties in the Leases and Property covered
by this Agreement, and may cover other oil and gas properties which are not the
subject of this Agreement. Purchase and Seller agree that the Closing under this
Agreement shall be simultaneous with the closings under such other agreements,
and that Closing under this Agreement shall be conditional upon closing
occurring under such other agreements. Seller does not claim any interest in and
to the oil and gas leases and other property which are the
PURCHASE AND SALE AGREEMENT - PAGE 13
<PAGE> 110
subject of such other purchase and sale agreements, and which are not the
subject of this Agreement. In the event Seller may have any claim or interest in
and to the oil and gas leases and other property which are the subject of such
other purchase and sale agreements, and which are not the subject of this
Agreement, then, for the consideration herein, Seller agrees to sell and convey
to Purchaser all of Seller's interest in and to the oil and gas leases and other
property and interests which are the subject of the other purchase and sale
agreements, above described.
19. Area of Non-Competition. Seller agrees not to compete with Purchaser
in an area which comprises the lands covered by the Leases and an area which
shall extend outward from the boundaries of each of the Leases a distance of
5,280 feet. In this regard, Seller agrees that Seller, its employees, agents,
servants, or companies controlled by Seller, in common control with Seller, or
with whom Seller is affiliated, shall not acquire, for so long as a Lease is
held in force and effect by its terms, and for a period of three years
thereafter, any oil and gas leases, any mineral interest, royalty interest,
overriding royalty interest, or any farmout agreement, or other agreement
permitting the right to explore for and produce oil and/or gas, which cover any
lands within the restricted area.
20. Miscellaneous.
(a) If any term or provision of this Agreement is held to be
illegal, invalid, or unenforceable, the legality, validity, and
enforceability of the remaining terms and provisions of this Agreement
shall not be affected thereby, and in lieu of each such illegal, invalid,
or unenforceable term or provision, there shall be added automatically to
this Agreement a legal, valid, and enforceable term or provision as
similar as possible to the term or provision declared illegal, invalid, or
unenforceable;
(b) Either Seller or Purchaser shall have the right to waive any
requirement contained in this Agreement, which is intended for the waiving
Party's benefit, but except as otherwise specifically provided herein,
such waiver shall be effective only if in writing and executed by the
Party for whose benefit such requirement is intended; provided however,
that any such waiver shall not be construed as a waiver of any other
benefit accruing to the waiving Party hereunder;
(c) The captions used in connection with this Agreement are for
convenience only and shall not be deemed to expand or limit the meaning of
the language of this Agreement;
(d) Words of any gender used in this Agreement shall be held and
construed to include any other gender, and words in the singular shall be
held to include the plural, unless the context otherwise requires;
(e) Seller agrees that, on or before the Closing, it will not carry
on any negotiations with any third party, for the sale or transfer of the
Property, without the prior written consent of Purchaser. Thereafter,
Seller may negotiate with third parties if this Agreement has been
terminated;
(f) THIS AGREEMENT AND ALL OF THE TRANSACTIONS CONTEMPLATED HEREIN
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS;
(g) This Agreement embodies the entire agreement between Seller and
Purchaser with respect to the subject matter hereof and supersedes all
prior agreements, whether written or oral;
(h) Except as otherwise specifically provided herein, this Agreement
may not be amended except by an agreement in writing executed by both
Seller and Purchaser;
(i) This Agreement shall be binding upon and inure to the benefit of
Seller and Purchaser and their respective legal representatives,
successors, and assigns. It is expressly understood and agreed that
Purchaser's rights under this Agreement may not be assigned
PURCHASE AND SALE AGREEMENT - PAGE 14
<PAGE> 111
prior to Closing. Provided however, any interest acquired hereunder shall
be freely assignable by Purchaser after Closing;
(j) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of which shall be
deemed to be one and the same instrument;
(k) In addition to the acts and deeds recited herein and
contemplated to be performed, both Seller and Purchaser hereby agree to
perform, execute, and/or deliver at and after Closing any and all such
further reasonable acts, deeds, and assurances as may be reasonably
required to consummate the transactions contemplated by this Agreement;
(l) This Agreement supersedes any and all other agreements, either
oral or in writing, between the Parties hereto with respect to the subject
matter hereof and contains all of the covenants and agreements between the
Parties with respect to said matter. Each Party to this Agreement
acknowledges that no representations, inducements, promises, or
agreements, orally or otherwise, have been made by any Party, or anyone
acting on behalf of any Party, which are not embodied herein, and that no
other agreement, statement, or promise not contained in this Agreement
shall be valid or binding;
(m) In the event of any dispute occurring under this Agreement, the
prevailing Party shall be entitled to be reimbursed by the other Party for
its reasonable and necessary attorney's fees;
(n) Any failure by either Party to insist, or any election by either
Party not to insist, upon strict performance by the other Party of any of
the terms, provisions, or conditions of this Agreement shall not be deemed
to be a waiver of the same or of any other term, provision, or condition
hereof, and either Party may at any time or times thereafter insist upon
strict performance by the other Party of any and all of such terms,
provisions, and conditions. No waiver by either Party of any right,
remedy, power, or privilege hereunder shall be construed as a waiver of,
or operate to impair, any subsequent right, remedy, power, or privilege
nor shall any single or partial exercise of any such right, remedy, power,
or privilege exhaust the same or preclude other or further exercise
thereof.
(o) All covenants, representations, and indemnities set forth herein
shall survive closing, subject to any agreed periods of limitation as may
be set forth herein.
EXECUTED as of the 5th day of February, 1997.
WITNESSES: SELLER:
____________________________________ ______________________________________
MELVIN ADAMS
____________________________________
____________________________________ ______________________________________
NELLIE A. ADAMS
____________________________________
PURCHASE AND SALE AGREEMENT - PAGE 15
<PAGE> 112
PURCHASER:
CORRIDA RESOURCES, INC.,
a Nevada corporation
____________________________________ By: ______________________________
ROBERT P. LINDSAY, VICE PRESIDENT
____________________________________
ACKNOWLEDGMENTS
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared MELVIN ADAMS, to
me known to be the person described in and who executed the foregoing
instrument, and acknowledged that he executed the same as his free act and deed.
____________________________________
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared NELLIE A. ADAMS,
to me known to be the person described in and who executed the foregoing
instrument, and acknowledged that she executed the same as her free act and
deed.
____________________________________
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared ROBERT P.
LINDSAY, to me personally known, who, being duly sworn, did say that he is the
Vice President of CORRIDA RESOURCES, INC., a Nevada corporation, and that the
foregoing instrument was signed by him on behalf of such entity, with necessary
authority, and that ROBERT P. LINDSAY acknowledged said instrument to be the
free act and deed of such corporation.
____________________________________
Notary Public, State of Louisiana
PURCHASE AND SALE AGREEMENT - PAGE 16
<PAGE> 113
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the 5th day of February, 1997, by
and between CAPITAL ENERGY, INC., a Louisiana corporation (hereinafter referred
to as the "Seller"), and CORRIDA RESOURCES, INC., a Nevada corporation (the
"Purchaser"), (Seller and Purchaser hereinafter individually referred to as
"Party" and collectively as "Parties").
RECITALS
WHEREAS, Seller desires to sell and convey, and Purchaser desires to
purchase and receive, the following, upon the terms and conditions hereinafter
set forth:
I. The Leases and Units. All of the Seller's right, title, and interest in
and to (i) the oil, gas, and mineral leases and properties and interests
described in Exhibit "A," including but not limited to, leasehold, fee, mineral,
royalty, and overriding royalty interests and payments out of or measured by
Production (hereinafter defined) (said oil, gas, and mineral leases and property
and interests being herein referred to as the "Leases"); (ii) the units, pooled
acreage, spacing, or proration units or other allocation of acreage, and all
rights associated therewith, which are applicable to the Leases and have been
established by, or in accordance with, (a) applicable contractual provisions
regarding unitization, communitization, pooling, spacing, or proration, or (b)
applicable state or federal law;
II. The Production. All of the Seller's right, title, and interest in and
to all oil, gas, casinghead gas, condensate, distillate, and other liquid or
gaseous hydrocarbons and other minerals which are in, under, upon, and produced
from or allocable (or to be produced from or allocable) to the Leases after the
Effective Date (as defined in Paragraph 3(a) hereof) (such hydrocarbons and
minerals being hereinafter referred to as "Production"), including "line fill"
and inventory attributable to the interests described in Exhibit "A," or the
proceeds from the sale of such Production;
III. The Wells and Equipment. All of Seller's right, title, and interest
in and to all personal property of every kind and character located on the
Leases or used in the operation thereof including, without limitation, wells
(whether productive or non-productive, active or inactive) (the "Wells"),
compressors, well equipment, casing, tanks, machinery, gathering lines and
systems, treatment facilities, disposal wells and disposal facilities, pipelines
and other appurtenances, and any other personal property situated thereon,
herein individually and collectively called the "Equipment."
IV. The Rights of Way and Permits. All of Seller's right, title, and
interest in and to all rights, privileges, benefits, permissions, and
authorizations (including, without limitation, permits, licenses, servitudes,
easements, and rights of way) in respect of the use and occupation of the
surface of such Leases, and the subsurface depths under the land and premises
covered by and benefiting such Leases, herein called individually and
collectively "Rights of Way and Permits";
V. The Contracts. All of Seller's right, title, and interest in and to all
of the orders, gas purchase and sale contracts (wherein Seller is a selling
party), crude purchase and sale agreements (wherein Seller is a selling party),
surface leases, farm-in agreements, farmout agreements, bottom hole agreements,
acreage contribution agreements, operating agreements, unit agreements, area of
mutual interest agreements, processing agreements, options, leases of equipment
or facilities, and other contracts, agreements, and rights, which are owned by
Seller, in whole or in part and are (i) appurtenant to the Leases, or (ii) used
or held for use in connection with the ownership or operation of the Leases or
with the Production, treatment on the Leases, sale or disposal of water,
hydrocarbons or associated substances, herein called individually and
collectively the "Contracts";
VI. The Records. All of the files, records and data in the possession of
Seller relating to the items described in subsections (I), (II), (III), (IV),
and (V) above (the "Records"), including, without limitation, lease files, title
records (including abstracts of title, title opinions, and title curative
documents); contracts, correspondence, originals or copies of geological,
geophysical, and
PURCHASE AND SALE AGREEMENT - PAGE 1
<PAGE> 114
seismic records, data, and information; and originals or copies of production
records, electric logs, core data, pressure data and decline curves and
graphical production curves, and all related matters, to the extent Seller has
the authority to release such Records and to the extent they are reasonably
required by Purchaser to operate the Wells;
VII. Miscellaneous. Exhibit "A" attached hereto sets forth the undivided
interests of Seller in the Leases, and the revenue interests attributable
thereto, as well as the undivided interests of Seller in the Production, Wells,
Equipment, Rights of Way, and Contracts. This Agreement covers and pertains to
all of the right, title, and interest of Seller in the Leases, the lands covered
by the Leases, Production, Wells, Equipment, and Rights of Way, even if the
undivided interests of Seller in any such property or property rights should be
incorrectly or insufficiently described in the Exhibit "A."
The Leases, Production, Wells, Equipment, Rights of Way and Permits,
Contracts, Records, and Miscellaneous referred to in Paragraphs I through VII
above, are hereinafter sometimes referred to individually and collectively in
the singular as "Property."
Notwithstanding the foregoing, Seller excepts and reserves from the sale
herein any interest which Seller may own, if any, in and to any
presently-created overriding royalty interests, which are of record in the
subject counties, in the Leases described in Exhibit "A" under the heading
"Stafford Springs Field," covering lands located in Jasper County and Clarke
County, Mississippi. Any such overriding royalty interest owned by Seller is not
part of the NRI (see definition below) of Seller set forth in Exhibit "A"
attached hereto for such Leases.
WHEREAS, this Agreement was the subject of, and was contemplated by, that
certain letter of intent dated October 17, 1996, above described, by and between
Purchaser and David Robertson and Keith Robertson, as amended and supplemented,
including amendment and supplement dated December 24, 1996. As to the interest
of Seller in the Property, this Agreement supersedes and replaces the letter of
intent.
NOW, THEREFORE, for and in consideration of the mutual agreements herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Seller and Purchaser
hereby agree as follows:
1. Sale and Purchase. Seller agrees to sell and convey to Purchaser, and
Purchaser agrees to purchase and pay for, all of Seller's right, title, and
interest in and to the Property as hereinafter provided.
2. Purchase Price. The "Purchase Price" for the Property shall be the sum
of $162,829.00, payable as follows:
(a) The sum of $162,829.00, which shall be paid at Closing.
All cash payments to be tendered by Purchaser to Seller, either before or
after Closing, shall be made by wire transfer or shall be made by certified
funds.
The Purchase Price shall be subject to adjustment as hereinafter provided.
3. Closing and Effective Date.
(a) The closing of the sale and purchase of the Property shall take
place on or before February 5, 1997, (the "Closing") at 1310 Jeff Davis,
Hammond, Louisiana 70403, or at such other time, place, or manner as may
be mutually agreeable to the Parties. The sale of the Property shall be
effective as of November 1, 1996, at 7:00 a.m. local time for each of the
particular properties (the "Effective Date").
(b) At the Closing, the Property shall be conveyed and transferred
by Seller to Purchaser by the execution and delivery of an Assignment and
Bill of Sale (the "Assignment") in substantially the same form and content
as the Assignment and Bill of Sale
PURCHASE AND SALE AGREEMENT - PAGE 2
<PAGE> 115
which is attached hereto as Exhibit "B," and such other instruments of
conveyance as may be reasonably requested by Purchaser. Purchaser shall be
entitled to all of Seller's rights in the Property (including, without
limitation, the rights to all Production and proceeds of Production)
appurtenant and attributable to the Property, and shall be subject to the
duties and obligations attendant with ownership of such undivided share of
the Property for the period from and after the Effective Date. For the
period prior to the Effective Date, Seller shall be entitled to all of the
rights (including, without limitation, the rights to all Production and
proceeds of Production) appurtenant and attributable to the Property, and
shall be subject to the duties and obligations attendant with ownership of
the Property.
4. Adjustments to Purchase Price. The Purchase Price shall be adjusted
(the "Adjusted Purchase Price") at the Closing, by the "Interim Settlement
Statement" (hereinafter defined in this paragraph and in Paragraph 9 below),
and, subsequent to Closing, by the "Final Settlement Statement" (hereinafter
defined in Paragraph 13 below), as follows:
(a) The Purchase Price shall be increased by the following:
(1) the value of all merchantable allowable oil or other
liquid hydrocarbons in storage owned by Seller in the tanks or above
the pipeline connection at the Effective Date, and not previously
sold by Seller, that is credited to the share of the Property being
acquired hereunder, valued at the contract price thereto, or if
none, the actual price received by Purchaser, less taxes or gravity
adjustments deducted by the purchaser of such oil or other liquid
hydrocarbons;
(2) the amount of all reasonable expenditures made in
connection with the ownership, operation, and maintenance of the
share of the Property being acquired hereunder, (including royalties
and rentals) and in accordance with generally accepted accounting
principles and prudent operations, attributable solely to the period
from and after the Effective Date and which are paid by or on behalf
of Seller after the Effective Date;
(3) an amount equal to all prepaid expenses, attributable to
the ownership, operation, and maintenance of the share of the
Property being acquired hereunder that are paid by or on behalf of
Seller after the Effective Date and prior to the Closing Date and
that are, in accordance with generally accepted accounting
principles, attributable solely to the period from and after the
Effective Date;
(4) any other amount agreed upon by Purchaser and Seller.
(b) The Purchase Price shall be decreased by the following:
(1) the amount of any proceeds from the sale of Production
attributable to the share of the Property being acquired hereunder
attributable to the period on or after the Effective Date (net of
production, severance, and similar taxes and assessments measured by
or payable out of production) actually received or accrued by or on
behalf of Seller;
(2) an amount equal to all unpaid ad valorem, property,
production, profit, severance, and similar taxes and assessments
based upon or measured by the ownership of the share of the Property
being acquired hereunder or the production of oil, gas, or other
minerals therefrom or the receipt of proceeds attributable thereto,
which accrue to or are chargeable against such share of the Property
(in accordance with generally accepted accounting principles) and
which are attributable to the period prior to the Effective Date,
which amount shall, to the extent not actually assessed, be computed
based upon such taxes and assessments for the immediately-preceding
calendar year, or if such taxes or assessments are assessed on other
than a calendar-year basis, for the tax period last ended;
PURCHASE AND SALE AGREEMENT - PAGE 3
<PAGE> 116
(3) any amounts received by Seller (whether prior to or
subsequent to the Effective Date) pursuant to "take-or-pay," advance
payment, or similar provisions of any production sales contract, any
gas balancing agreement, or any other agreement, to the extent any
purchaser has the right to apply any such amounts to Purchaser's
share of Production delivered after the Effective Date;
(4) any reduction in the value of the share of the Property
being acquired hereunder resulting from the existence of a Defect
(herein defined in Section 5(d)) which is not cured or waived prior
to Closing;
(5) any other amount agreed upon by Purchaser and Seller.
(c) The "Interim Settlement Statement" shall be prepared by Seller,
its agents, or representatives, prior to Closing, which statement shall
set forth the adjustments to the Purchase Price, per the adjustments set
forth in this Paragraph 4, which are or may be determined at or prior to
Closing. Such statement shall be prepared according to generally accepted
accounting principles and shall show the calculation of all such
adjustments. Upon the approval of such Interim Settlement Statement by
Purchaser, the Purchase Price shall be adjusted according to such
statement. Upon Purchaser's request, Seller shall make available to
Purchaser all information relied upon by Seller for the adjustments
requested in order to aid and facilitate Purchaser's approval of such
statement. After Closing, the Purchase Price may further be adjusted,
pursuant to the adjustments set forth in this paragraph, with the "Final
Settlement Statement" in the manner further described in Paragraph 13
below.
(d) All monies received by either Party hereto which, under the
terms of this Agreement or otherwise, belong to the other Party, shall be
received in trust by the Party receiving such funds, and shall monthly,
upon receipt, be paid over to the other Party. The Parties agree, in this
regard, to cooperate fully and to execute, endorse, and deliver as
expeditiously as practicable such papers, checks, and documents as are
needed promptly to complete the transfer of such payments;
(e) After the Closing, if an invoice or other evidence of an
obligation relating to the share of the Property acquired by Purchaser is
received which is applicable to periods both prior to and after the
Effective Date, and is partly the obligation of Seller and partly the
obligation of Purchaser, then each Party shall pay its respective portion
of such obligation to the obligee, prorated between the Parties as of the
Effective Date;
(f) At and after the Closing, Purchaser and Seller will cooperate
fully in notifying all applicable third parties (including the execution
by Seller of such transfer orders, letters in lieu, change of operator,
etc., as may be requested by Purchaser) so that notices, proceeds, and
invoices from such third parties may take into account the fact that
Purchaser has acquired the Property as of the Effective Date;
(g) The parties hereto agree to exercise diligence and good faith in
attempting to resolve any disagreements or disputes which may arise from
the adjustments to the Purchase Price to be made in accordance with this
paragraph.
5. Property Conditions, Title Review, Property Information, and Casualty
Losses.
(a) Property Conditions. THIS SALE OF THE EQUIPMENT AND ALL OTHER
PERSONAL PROPERTY THAT IS A PART OF THE PROPERTY IS MADE ON AN "AS IS,
WHERE IS" BASIS WITH ALL FAULTS AS TO ITS CONDITION, AND SELLER EXPRESSLY
DISCLAIMS ALL WARRANTIES AS TO THE CONDITION OF THE EQUIPMENT (NOTE,
HOWEVER, THERE ARE CERTAIN WARRANTIES AS TO TITLE AS HEREIN SET FORTH)
INCLUDING, WITHOUT LIMITATIONS, THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR ANY PARTICULAR PURPOSE. Seller agrees that for a period of
time commencing with the date
of the letter of intent dated October 17, 1996, above described, and
continuing until five (5) business days before Closing (the "Review
Period"), Purchaser, personally or through its
PURCHASE AND SALE AGREEMENT - PAGE 4
<PAGE> 117
authorized agents or representatives, shall have the right to make any and
all physical inspections of the Property which Purchaser may desire to
make or to have made and to make all such other inspections, surveys,
tests, or other studies (including, but not limited to, environmental
assessments and evaluations) as Purchaser deems necessary or desirable.
Upon reasonable notice to Seller, Purchaser, and its authorized agents and
representatives, at Purchaser's sole risk, may enter upon the Property for
the purpose of conducting those inspections, surveys, tests, and studies.
If Purchaser shall determine that the condition of the Property is not in
substantial compliance with any governmental regulations (including
environmental regulations), then upon discovery, Purchaser must promptly
give written notice to Seller of such condition ("Condition"). Upon
receipt of such notice, Seller shall have the option, but not the
obligation, to (a) cure or remedy such Condition to the reasonable
satisfaction of Purchaser (if current remediation of such Condition is
required by a governmental agency, Seller agrees that the Condition shall
be remedied in accordance with and to the satisfaction of the appropriate
agency's requirements); or (b) agree with Purchaser on a reduction to the
Purchase Price which reduction shall reflect Purchaser's anticipated
reasonable cost to remedy such Condition. If the Condition cannot be cured
or remedied to Purchaser's reasonable satisfaction, and if agreement
cannot be reached on reduction to the Purchase Price, then the affected
Property may be excluded by Purchaser from the Property to be acquired by
Purchaser hereunder. In such event , the Purchase Price shall be reduced
by the Allocated Purchase Price (see subparagraph (c) below) for such
excluded Property.
(b) Review of the Records. During the Review Period, and upon
reasonable notice from Purchaser, Seller shall provide Purchaser,
personally or through its authorized agents or representatives, full
access during normal business hours to Seller's office and premises to
review and inspect all Records, including, but not limited to, all
abstracts of title, lease files, unit files, production and marketing
files, title opinions, title files, title records, geologic, engineering,
and other files or information in Seller's possession or to which it has
access which relate to the Property and the status of Seller's title
thereto, and Purchaser, at its expense, shall have the right to make and
retain copies of any of such Records; provided however, if the
transactions contemplated hereby do not close for any reason, Purchaser
shall return any Records and copies thereof to Seller forthwith. Without
limiting the generality of the foregoing, Purchaser shall also be given
access to reserve reports, geological and geophysical reports (including,
but not limited to well records, log films, proprietary or joint venture
seismic data or other seismic data which Seller is not contractually
restricted from disclosing), contracts (including, but not limited to, gas
contracts), operating agreements, operating statements, and reports.
(c) Notice of Defect. If, during the Review Period, Purchaser
determines that the Property is subject to a "Defect" (as defined herein
in Section 5(d)), the Purchaser must give written notice to Seller of such
Defect, the nature of the Defect, and furnish Seller Purchaser's basis for
the assertion of such Defect. As soon as practical after such written
notice, Seller shall use reasonable diligence to cure any such Defects. If
Seller cannot cure any such Defects to the reasonable satisfaction of
Purchaser, then Seller shall so notify Purchaser in writing. Thereafter,
Seller and Purchaser shall use a good faith effort to agree on the
Purchase Price adjustment for any such Defect which cannot be cured. Such
adjustment shall be determined in accordance with the following
guidelines:
(1) The Purchase Price shall be allocated among the various
Leases in the proportion of the PDP fair market value of the Leases
reported by Netherland Sewell & Associates in its report dated
October 21, 1996, (the "Allocated Purchase Price").
(2) If the Defect is that Seller's Net Revenue Interest
("NRI") for any Property is less than the NRI for such Property as
set forth in Exhibit "A," then the allocated Purchase Price for such
Property shall be adjusted in the same proportion that the actual
NRI for such property bears to the NRI shown in Exhibit "A."
PURCHASE AND SALE AGREEMENT - PAGE 5
<PAGE> 118
(3) If the Defect is a lien, encumbrance, or other charge upon
the Property which is liquidated in amount, then the adjustment
shall be the sum necessary to be paid to the obligee to remove the
Defect from the Property;
If the Purchase Price adjustment for any such Defect cannot be determined,
and the Seller and Purchaser cannot agree in good faith on the amount of the
adjustment to the Purchase Price, the Purchaser may (a) waive the Defect and
proceed with Closing or (b) exclude the affected Property and reduce the
Purchase Price by the Allocated Purchase Price for such property, or (c)
terminate this Agreement, in which event the Parties shall have no further
rights or obligations under this Agreement.
(d) Definition of Defect. For the purpose of this Agreement, a
"Defect" shall be defined as:
(1) Any material encumbrance, lien, mortgage, breach of
representation or warranty, production payment, pledge, claim,
charge, call on production, default, defect, condition, unleased
mineral interest, preferential right, requirement for consent to
assignment, or lack of title affecting the Property, or any matter
affecting the Property by which Purchaser reasonably or in good
faith believes that Seller's interest in a Property may become
subject to the claims of third parties;
(2) Seller's NRI in any Property is less than the NRI for such
Property which is set forth in Exhibit "A," or Seller's gross
working interest ("GWI") in any Property is less than the working
interest shown in Exhibit "A," or Seller's GWI in any Property is
greater than the working interest shown in Exhibit "A" without a
corresponding increase in the NRI in such Property;
(e) Other Property Information. If, based upon Purchaser's
examination of the Records according to Paragraph 5(b) hereof, Purchaser
shall determine that any information, statement, or data contained in any
information, reports, statement, or data furnished to Purchaser or used in
its economic analysis of the Property is not true or correct in any
material respect, upon discovery of any incorrect information, Purchaser
may give written notice to Seller of such inaccuracy or misstatement. Any
such notice must be provided in writing during the Review Period, or it
will be deemed to be waived. Such notice shall provide a summary of such
inaccuracy or misstatement. Upon receipt of such notice, Seller shall have
the option, but not the obligation, to (a) cure or remedy such inaccuracy
or misstatement to the reasonable satisfaction of Purchaser; or (b) agree
with Purchaser on a reduction to the Purchase Price, which reduction shall
reflect Purchaser's reasonably anticipated cost to remedy such inaccuracy
or misstatement. If the inaccuracy or misstatement cannot be cured or
remedied to Purchaser's reasonable satisfaction, and if agreement cannot
be reached on reduction to the Purchase Price, then the affected Property
shall be excluded from the Property to be acquired by Purchaser hereunder,
and the Purchase Price shall be reduced by the Allocated Purchase Price
for such Property;
(f) Casualty Loss. If, prior to Closing, any Property is
substantially damaged or destroyed by fire or other casualty ("Casualty
Defect"), Seller shall notify Purchaser promptly after Seller learns of
such event. Seller shall have the right, but not the obligation, to cure
any such Casualty Defect by repairing such damage or, in the case of
personal property, fixtures, replacing the Property affected thereby with
equivalent items, no later than the date of Closing. If any Casualty
Defects exist at Closing, Purchaser may proceed to purchase the Property
affected thereby, and the Purchase Price shall be reduced by the aggregate
reduction in the value of such Property on account of such Casualty
Defects, as determined by the mutual agreement of the Parties, or if the
Parties are unable to agree on the reduction of the Purchase Price, then
the affected Property shall be excluded from the Property to be acquired
by Purchaser hereunder, and the Purchase Price shall be reduced by the
Allocated Purchase Price for such Property. Notwithstanding anything to
the contrary contained herein, Seller shall be entitled to retain all
insurance proceeds and claims against other Parties in respect of any such
Casualty Defect which occurs prior to closing unless no reduction is made
in the Purchase Price as a result of such Casualty Defect, in which event
PURCHASE AND SALE AGREEMENT - PAGE 6
<PAGE> 119
Purchaser shall be entitled to the insurance proceeds and claims against
other Parties arising from such Casualty Defect.
6. Seller's Representations and Warranties. Seller represents and warrants
to Purchaser that:
(a) Seller is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Louisiana; (ii) Seller is
duly qualified to transact business in each jurisdiction where the nature
and extent of its business and properties require the same in order for it
to perform its obligations under this Agreement; (iii) Seller possesses
all requisite authority, power, licenses, permits, and franchises to
conduct its business and execute, deliver, and comply with the terms and
provisions of this Agreement and any other document, instrument, or
agreement provided for herein, including the Assignment, all of which have
been duly authorized and approved by all necessary corporate action and
for which no further approval or consent is required; and (iv) David
Robertson, Johnny Robertson, Milland Robertson, Dillard Robertson, Tommy
Dale Robertson, and Myrtis C. Robertson are all of the Shareholders of
Seller, and have adopted and approved the sale and conveyance hereunder.
(b) This Agreement has been duly executed and delivered on behalf of
Seller and is binding and enforceable against Seller in accordance with
its terms and at the Closing. All documents and instruments required
hereunder to be executed and delivered by Seller shall have been duly
executed and delivered at Closing, and the execution, delivery, and
performance of this Agreement by Seller and the consummation of
transactions contemplated hereby will not constitute a breach of, an event
of default under, a violation of, or a conflict with any agreement or
other instrument to which Seller is a party (except to the extent such
instrument may be released at the Closing), nor will the same cause Seller
to be in violation of their Articles of Incorporation or Bylaws, as the
case may be, or any applicable laws or regulations or any order of any
court or governmental agency having jurisdiction.
(c) All ad valorem, property, production, severance, excise, and
similar taxes and assessments based on or measured by the ownership of the
Property or the Production or the receipt of proceeds therefrom, which
have become due and payable prior to the date hereof with respect to the
Property have been properly paid, and Seller's allocable share of such
taxes and assessments which become due and payable prior to the Closing
shall be properly paid by Seller, and all royalties, overriding royalties,
and payments to any third parties which have become due and payable prior
to the date hereof with respect to production from the Property, have been
properly paid, and will be hereafter properly paid for the period prior to
Closing.
(d) Seller has incurred no liability, contingent or otherwise, for
brokers' or finders' fees in respect of this transaction for which
Purchaser shall have any responsibility whatsoever.
(e) Prior to the Closing, Seller will pay or cause to be paid all of
Seller's share of costs and expenses incurred in connection with the
Property, and will comply with all contracts or other agreements relating
to the Property.
(f) To the best of Seller's information and belief, all laws,
regulations, and orders of all governmental agencies having jurisdiction
over the Property have been and shall continue to be complied with until
the Closing.
(g) There are no first rights of refusal, consents, authorizations,
preferential rights, options, or claims of a similar nature affecting the
Property, other than those listed in Exhibit "A," said listed consents
defined herein as "Consents."
(h) Seller shall, upon request, subrogate Purchaser to any claim
which Seller may have against any third party, prior owner, vendor, or
assignor with respect to the share of the Property acquired by Purchaser,
or the title thereto.
PURCHASE AND SALE AGREEMENT - PAGE 7
<PAGE> 120
(i) There are no "imbalances" which allow any other party to make up
production at any time after the Effective Date, under any operating
agreement, gas balancing agreement and storage agreement, gas
transportation agreement, gas processing or dehydration agreement, or
other similar agreement relating to the Property.
(j) Seller has not directly or indirectly reserved or retained any
recorded or unrecorded interest or rights in any of the Property, and
Seller shall not reserve any recorded or unrecorded executory interest or
rights relating to the Property.
(k) Seller warrants that the Property is free and clear of all
encumbrances, liens, and mortgages, save and except such encumbrances as
may be identified and described in Exhibit "A" attached hereto, and
further save and except liens for taxes not yet due and payable.
(l) Except as may be identified and described in Exhibit "A"
attached hereto, the Property is not subject to any restriction,
reservation, reversionary interest, drilling or development obligation, or
other material obligation or burden on the operation or the disposition of
Production attributable to the Property.
(m) No part of any of the Property is affected by any prepayment
arrangement under any contract for the sale of oil or gas, or by any
production payment or any other arrangement for delivery of oil or gas
produced from any of the Property at some future time without Purchaser
then or thereafter receiving full payment therefor, and no third party now
has or at Closing will have any right to take makeup gas for which it has
already paid. As of the Effective Date, there are no volumes of makeup gas
owing, or accumulated transportation credits due, to gas purchasers on
account of any "take-or-pay" or other provisions of any contract, and
Seller has not produced or sold more than its pro-rata share of the gas
from any Wells included in the Property.
(n) Except as may be set forth in Exhibit "A" attached hereto, there
are no gas purchase or sale agreements, and no gas gathering or
transportation agreements, affecting the Property that cannot be
terminated upon ninety (90) days' written notice.
(o) Without the prior written consent of Purchaser, Seller (i) shall
not enter into any new agreements or commitments affecting the Property
which extend beyond the Closing, and (ii) will not modify or terminate any
agreements affecting any of the Property, including, without limitation,
any oil and gas leases, unitization or pooling agreements, operating
agreements, pipeline agreements, processing agreements, and hydrocarbon
sales contracts, and (iii) will not further encumber, sell, mortgage,
release, abandon, or otherwise dispose of any of the Property or any
interests therein.
(p) There is not any suit, action, or other proceeding pending or
threatened which affects or relates to the Property, or seeks to restrain
or prohibit Seller from selling or conveying to Purchaser the share of the
Property to be purchased herein. Seller shall promptly notify Purchaser of
any such proceedings which may arise or be threatened prior to Closing.
(q) There are no operating agreements with third parties affecting
the Property except as may be identified and described in Exhibit "A"
attached hereto.
(r) Seller has no knowledge and has not received any notice of any
claimed default (or any event which, with the giving of notice or the
passage of time, or both, would constitute a default) under (i) the
Leases, (ii) any order, writ, injunction, or decree of any court,
commission, or administrative agency affecting the Property, or (iii) any
other agreement affecting the Property. Seller shall promptly notify
Purchaser of any such notice hereafter received by Seller and the
occurrence of any such event of which Seller becomes aware prior to
Closing.
(s) There are no tax partnerships affecting any of the Property.
PURCHASE AND SALE AGREEMENT - PAGE 8
<PAGE> 121
(t) To the best of Seller's information and belief, no Production
from any Well on the Property has occurred in excess of that permitted by
law, orders, or regulations.
(u) To the best of Seller's information and belief, there has been
no material injury or damage to any of the Property which has not been
fully repaired, replaced, or rebuilt.
(v) Except for depletion due to continued production, there has been
no substantial and material change in condition of the Property between
the date hereof and Closing.
(w) To the best of Seller's information and belief, all easements,
rights of way, permits, crossing agreements, and surface rights included
in the Property are in full force and effect and are valid and subsisting,
and freely assignable, and all rentals and other payments due thereunder
have been properly and timely paid and all conditions necessary to keep
them in force have been duly performed.
(x) From and after the effective date of its acquisition of its
ownership in the Leases, the Seller has performed all obligations required
to be performed under such Leases, or any other instruments and agreements
relating to the Properties, and is not in default thereunder, and to the
best of Seller's information and belief, each of the Leases to be conveyed
is valid and in full force and effect.
(y) To the best of Seller's knowledge, Seller owns each Lease and
Property in the undivided share reflected by the "Working Interest"
described and set forth in Exhibit "A" for each particular Lease and
Property, and Seller owns for each Lease and Property the share of
Production reflected as "Net Revenue Interest" in Exhibit "A" attached
hereto. Seller is being paid not less than the fractional "net revenue
interest" for each Property in Exhibit "A" hereto, and, for expenses and
costs for each Property, Seller is not paying more than the fractional
interest specified under "Working Interest" for each Property in Exhibit
"A" hereto.
(z) To the best of Seller's information and belief, all rentals and
bonuses have been timely and fully paid and discharged, and all conditions
necessary to keep the Leases in full force have been performed, and no
proceeds from the sale of Production attributable to the Property are
currently being held in suspense by any purchaser thereof.
(aa) The Seller has not collected any proceeds from the sale of
Production attributable to the Property which are subject to refund, or if
so, that any such refund, if not otherwise accounted for under this
Agreement, shall be the sole responsibility of the Seller.
(bb) Except as listed in Exhibit "A" attached hereto, to the best of
Seller's information and belief, there are no Wells located on the
Property that Seller is obligated by law or contract to plug and abandon,
that Seller will be obligated by law or contract to plug and abandon at
the present time, and with the lapse of time or notice, or both, because
the well is not currently capable of producing production in commercial
quantities, or because the Well is subject to exceptions to a requirement
to plug and abandon issued by a regulatory authority having jurisdiction
over the Property.
(cc) To the best of Seller's information and belief, there are no
presently existing conditions (by existing federal or state statutes and
regulations) affecting the Property, which might give rise to a cause of
action on behalf of any governmental agency or third party, against either
Purchaser or Seller.
(dd) All information and data provided to Purchaser by Seller or its
agents concerning the Property is true and correct to the best of Seller's
information, knowledge, and belief.
PURCHASE AND SALE AGREEMENT - PAGE 9
<PAGE> 122
(ee) Environmental Current Status. To the best of Seller's
knowledge, the Property and Seller are not in violation of or subject to
any existing, pending, or threatened investigation or inquiry by any
governmental authority or to any remedial obligations under any applicable
laws pertaining to health or the environment (such laws as they now exist
or are hereafter enacted and/or amended hereinafter sometimes collectively
called "Applicable Environmental Laws"), including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of
1986 (as amended, hereinafter called "CERCLA"), the Resource Conservation
and Recovery Act of 1976, as amended by the Used Oil Recycling Act of
1980, the Solid Waste Disposal Act Amendments of 1980, and the Hazardous
and Solid Waste Amendments of 1984 (as amended, hereinafter called
"RCRA"), the Texas Water Code and the Texas Solid Waste Disposal Act, and
this representation will continue to be true and correct following
disclosure to the applicable governmental authorities of all relevant
facts, conditions, and circumstances, if any, pertaining to the Property
and Seller. The terms "hazardous substance" and "release" as used in this
Agreement shall have the meanings specified in CERCLA, and the terms
"solid waste" and "disposal" (or "disposed") shall have the meanings
specified in RCRA; provided, in the event either CERCLA or RCRA is amended
so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment and
provided further, to the extent that the laws of the State of Texas
establish a meaning for "hazardous substance," "release," "solid waste,"
or "disposal" which is broader than that specified in either CERCLA or
RCRA, such broader meaning shall apply.
7. Purchaser's Representations and Warranties. Purchaser represents and
warrants to Seller that:
(a) Purchaser: (i) is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Texas; (ii)
is duly qualified to transact business in each jurisdiction where the
nature and extent of its business and properties require the same in order
for it to perform its obligations under this Agreement; and (iii)
possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply with
the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, all of which have been duly
authorized and approved by all necessary corporate action and for which no
further approval or consent is required.
(b) The consummation of the transactions contemplated by this
Agreement will not violate, or be in conflict with (i) any agreement or
instrument to which Purchaser is a party; or (ii) any judgment or decree
applicable to Purchaser as a party in interest with respect thereto.
(c) This Agreement has been duly executed and delivered on behalf of
Purchaser, and at the Closing, all documents and instruments required
hereunder to be executed and delivered by Purchaser (or its assignees)
shall have been duly executed and delivered.
(d) Subject to the conditions herein, Purchaser has or will have at
Closing (i) the financial capability or (ii) commitments from responsible
financial institutions to provide the funds required by Purchaser, to pay
the Purchase Price and consummate the transaction contemplated hereby
within the time period contemplated herein.
(e) Purchaser either has performed, or prior to closing will
perform, whatever inspection of the Property and Seller's title thereto
that Purchaser deems appropriate and knows the condition thereof and is
purchasing the Property as a result of such inspections and not because
of, or in reliance on, any representation or warranty made by Seller other
than those expressly set forth in this Agreement.
(f) In the event the Purchase Price is adjusted down at Closing,
based upon any unpaid taxes as set forth in Paragraph 4(b)(2) hereof (the
"Tax Adjustment"), Purchaser
PURCHASE AND SALE AGREEMENT - PAGE 10
<PAGE> 123
agrees to timely make payment (equivalent to the Tax Adjustment) to such
taxing authorities as may be appropriate.
8. Conditions to Obligations of Purchaser. The obligations of Purchaser to
consummate the transaction provided for herein are subject, at the option of
Purchaser, to the fulfillment on or prior to Closing, of each of the following
conditions:
(a) Representations. The representations and warranties of Seller
herein contained shall be true and correct in all material respects at
Closing as though made on and as of such date (unless appropriate
adjustments or remediation has been made in accordance with Paragraph 5
hereof).
(b) Performance. Seller shall have performed all obligations,
covenants, and agreements hereunder and shall have complied with all
covenants and conditions contained in this Agreement to be performed or
complied with by it at or prior to the Closing.
(c) Pending Matters. No suit, action, or other proceedings shall be
pending or threatened (a) against Seller before any court or governmental
agency which might result in impairment or loss of value as to Seller's
title to any part of the Property; or (b) which seeks to restrain, enjoin,
or otherwise prohibit the consummation of the transactions contemplated by
this Agreement.
(d) Liability. No liability which affects, in a materially adverse
manner, the Property or Purchaser's ability to receive the economic
benefits therefrom has been or is threatened to be asserted with respect
to the Property.
(e) Defects. No Defects shall be present, which are not cured by
Seller or waived by Purchaser as provided herein.
(f) Records and Access. Seller shall have afforded Purchaser and its
officers, employees, and representatives timely and reasonable access to
the Records as required herein.
9. Seller's Obligations at Closing. At the Closing, Seller shall deliver
to Purchaser the following items; however, item (e) will be delivered as soon
prior to Closing as reasonably practical:
(a) The Assignment, duly executed and acknowledged by Seller;
(b) Duly executed and acknowledged releases of all liens and burdens
on the Property or on Production therefrom or attributable thereto;
(c) Executed transfer orders (or letters in lieu thereof) addressed
to all purchasers of production from the Property;
(d) Any other executed documents or instruments which may be
reasonably required to consummate the transactions contemplated herein and
to fully vest Purchaser with operations and title to the Property as
contemplated hereby;
(e) The "Interim Settlement Statement," which shall set forth the
Purchase Price and adjustments thereto provided for in this Agreement
which are or may be determined at or prior to the Closing, which statement
shall be delivered to Purchaser as soon as reasonably practical prior to
Closing for Purchaser's review and approval;
(f) All consents required of third parties, who are identified in
Exhibit "A" attached, properly executed and in form approved by Purchaser;
and
(g) All releases of current liens of lenders encumbering all or any
part of the Property, properly executed in form acceptable by Purchaser.
PURCHASE AND SALE AGREEMENT - PAGE 11
<PAGE> 124
10. Purchaser's Obligations at Closing. At the Closing, Purchaser shall:
(a) Deliver to Seller the Adjusted Purchase Price, in cash or other
immediately available funds (which shall be subject to a subsequent
accounting between Seller and Purchaser pursuant to this Agreement) less
the Escrow Deposit; and
(b) Execute and deliver any other documents or instruments which may
be required to consummate the transactions contemplated herein.
11. Notices. All notices, demands, and requests which may be given or
which are required to be given by either Party to the other shall be in writing.
Any notice, demand, or communication required or permitted hereunder shall be
deemed to be delivered on actual receipt or three (3) days after being sent by
overnight courier or Certified U.S. Mail to Seller or Purchaser, whichever
occurs first, respectively, as follows:
SELLER: PURCHASER:
Capital Energy, Inc. Corrida Resources, Inc.
12369 A Robertson Road Suite 380, Lock Box 31
Tickfaw, Louisiana 71466 3500 Oak Lawn Avenue
Attn: Myrtis C. Robertson Dallas, Texas 75219-4398
President Attn.:Edward Munden
Telephone: ______________ President
Facsimile: ______________ Telephone: 214-521-9959
Facsimile: 214-521-9960
or such other address as Purchaser or Seller may, from time to time, designate
pursuant to the terms hereof. A facsimile transmission shall be considered an
original document for purposes of providing notice under this section.
12. Furnishing Data and Information. The Seller also agrees to promptly
cooperate in all reasonable requests by Purchaser in furnishing copies, at
Purchaser's expense, of all Records necessary for Purchaser to conduct its due
diligence under the terms of this Agreement.
13. Post-Closing Adjustments. As soon as practicable after the closing,
and in any event within sixty (60) days after Closing, Seller shall prepare and
deliver to Purchaser, in accordance with this Agreement and generally accepted
accounting principles, a statement (the "Final Settlement Statement") setting
forth each adjustment or payment pursuant to Paragraph 4 hereof that was not
finally determined as of the Closing ("Post-Closing Adjustments") and showing
the calculation of such Post-Closing Adjustments and the aggregate amount
thereof. Within ten (10) business days after receipt of the Final Settlement
Statement, Purchaser shall deliver to Seller a written report containing any
changes that Purchaser proposes be made to the Final Settlement Statement. The
Parties undertake to agree with respect to the amounts of such Post-Closing
Adjustments no later than ninety (90) days after the Closing Date. The date upon
which such agreement is reached or upon which the aggregate amount of the
adjustments are finally established shall be herein called the "Final Settlement
Date." Seller shall pay to Purchaser, or vice versa, as the case may be, within
ten (10) business days after the Final Settlement Date the amount of such
adjustments (as finally established), by means of wire transfer in immediately
available funds or by means of a certified bank check. In the event Seller owes
monies to Purchaser as a consequence of the Post-Closing Adjustments, Purchaser
shall have the right to offset Purchaser's obligation under the note for any
such monies which are owing to Purchaser by Seller under Paragraph 4 and this
Paragraph 13.
14. Failure to Perform/Termination of Agreement. If the Seller should fail
to fully and timely perform any of its obligations hereunder, or should fail to
consummate the sale of the Property, except due to the Purchaser's default, the
Purchaser may, at its option, enforce specific performance of this Agreement, or
terminate this Agreement.
PURCHASE AND SALE AGREEMENT - PAGE 12
<PAGE> 125
15. Indemnification by Seller.
(a) Seller agrees to indemnify and save and hold harmless Purchaser
against and from any loss, damage, or expense sustained by Purchaser
arising out of or resulting from any breach of any of the representations
and warranties made hereunder and not waived by Purchaser.
(b) Seller agrees to indemnify and save and hold harmless Purchaser
against all claims, liabilities, costs, expenses, windfall profit taxes,
and liability arising out of the ownership or operation of the Property,
and based upon the occurrence of events, the accrual of obligations or
liabilities, or the existence of conditions prior to the Effective Date.
(c) If any claims for brokerage fees are asserted against Purchaser
in connection with this transaction based upon alleged commitments made by
Seller, Seller shall indemnify Purchaser against all such claims and
reimburse Purchaser for all reasonable expenses incurred in responding to
such claims, including reasonable attorney's fees.
(d) Notwithstanding anything to the contrary contained herein,
Seller agrees to indemnify and save and hold harmless Purchaser for
Seller's gross negligence or willful misconduct for that period of time
between the Effective Date and Closing.
(e) The provisions of this Paragraph 15 shall survive Closing for a
period of four (4) years from the date of Closing, and Seller shall not be
entitled to assert any right of indemnification hereunder after such date.
16. Indemnification by Purchaser.
(a) Purchaser agrees to indemnify and save and hold harmless Seller
against and from any loss, damage, or expense sustained by Seller arising
out of or resulting from any breach of any of the representations and
warranties made hereunder and not waived by Seller.
(b) Purchaser shall assume and hereby agrees to pay, honor,
discharge, and perform fully and timely, the obligations and liabilities
directly associated with the Seller's interest in the share of the
Property acquired by Purchaser hereunder, which are attributable to the
period of time from and after the Effective Date.
(c) Purchaser agrees to indemnify and save and hold harmless Seller
against all claims, costs, expenses, windfall profits taxes, and
liabilities arising out of the ownership or operation of the share of the
Property acquired by Purchaser hereunder and based upon the occurrence of
events, the accrual of obligations or liabilities, or the existence of
conditions on and subsequent to the Effective Date (but not including
these costs and expenses incurred with respect to the purchase of Seller's
interest in the Property or the negotiations leading to such purchase).
(d) If any claims for brokerage fees are asserted against Seller in
connection with this transaction based upon alleged commitments made by
Purchaser, Purchaser shall indemnify Seller against all such claims and
reimburse Seller for all reasonable expenses incurred in responding to
such claims, including reasonable attorney's fees.
(e) The provisions of this Paragraph 16 shall survive Closing for a
period of four (4) years from the date of Closing, and Purchaser shall not
be entitled to assert any right of indemnification hereunder after such
date.
17. Confidentiality. Prior to Closing, the Seller shall be furnishing to
Purchaser various information relating to Seller and the Property, and Seller's
business activities, assets, finances, costs, revenues, rights, obligations,
liabilities, and strategies. In consideration of the Seller furnishing this
information to Purchaser, Purchaser agrees that prior to Closing (a) that such
information is confidential and/or proprietary to Seller, and such information
shall be entitled to and
PURCHASE AND SALE AGREEMENT - PAGE 13
<PAGE> 126
shall receive treatment as such by Purchaser; (b) Purchaser shall use its best
efforts, and will advise all of its employees, representatives, agents, and
advisors who have access to such information, to use their best efforts to hold
in confidence, not to disclose to others, and not to use (except in respect of
the transaction contemplated by this Agreement) any such information; and (c) if
Closing does not occur, all such information, unless otherwise specified in
writing, shall remain the property of Seller, and shall be returned to Seller
together with any copies made thereof. Prior to Closing, Purchaser shall provide
such information only to its employees, representatives, agents, and advisors
who have need to know such information in connection with this Agreement.
18. Other Purchase and Sale Agreements. Purchaser has tendered purchase
and sale agreements, on or about the date hereof, to other parties, all of whom
are named in Exhibit "C" attached hereto. Such other agreements may cover the
interest, if any, of such other parties in the Leases and Property covered by
this Agreement, and may cover other oil and gas properties which are not the
subject of this Agreement. Purchase and Seller agree that the Closing under this
Agreement shall be simultaneous with the closings under such other agreements,
and that Closing under this Agreement shall be conditional upon closing
occurring under such other agreements. Seller does not claim any interest in and
to the oil and gas leases and other property which are the subject of such other
purchase and sale agreements, and which are not the subject of this Agreement.
In the event Seller may have any claim or interest in and to the oil and gas
leases and other property which are the subject of such other purchase and sale
agreements, and which are not the subject of this Agreement, then, for the
consideration herein, Seller agrees to sell and convey to Purchaser all of
Seller's interest in and to the oil and gas leases and other property and
interests which are the subject of the other purchase and sale agreements, above
described.
19. Area of Non-Competition. Seller agrees not to compete with Purchaser
in an area which comprises the lands covered by the Leases and an area which
shall extend outward from the boundaries of each of the Leases a distance of
5,280 feet. In this regard, Seller agrees that Seller, its employees, agents,
servants, or companies controlled by Seller, in common control with Seller, or
with whom Seller is affiliated, shall not acquire, for so long as a Lease is
held in force and effect by its terms, and for a period of three years
thereafter, any oil and gas leases, any mineral interest, royalty interest,
overriding royalty interest, or any farmout agreement, or other agreement
permitting the right to explore for and produce oil and/or gas, which cover any
lands within the restricted area.
20. Miscellaneous.
(a) If any term or provision of this Agreement is held to be
illegal, invalid, or unenforceable, the legality, validity, and
enforceability of the remaining terms and provisions of this Agreement
shall not be affected thereby, and in lieu of each such illegal, invalid,
or unenforceable term or provision, there shall be added automatically to
this Agreement a legal, valid, and enforceable term or provision as
similar as possible to the term or provision declared illegal, invalid, or
unenforceable;
(b) Either Seller or Purchaser shall have the right to waive any
requirement contained in this Agreement, which is intended for the waiving
Party's benefit, but except as otherwise specifically provided herein,
such waiver shall be effective only if in writing and executed by the
Party for whose benefit such requirement is intended; provided however,
that any such waiver shall not be construed as a waiver of any other
benefit accruing to the waiving Party hereunder;
(c) The captions used in connection with this Agreement are for
convenience only and shall not be deemed to expand or limit the meaning of
the language of this Agreement;
(d) Words of any gender used in this Agreement shall be held and
construed to include any other gender, and words in the singular shall be
held to include the plural, unless the context otherwise requires;
(e) Seller agrees that, on or before the Closing, it will not carry
on any negotiations with any third party, for the sale or transfer of the
Property, without the prior
PURCHASE AND SALE AGREEMENT - PAGE 14
<PAGE> 127
written consent of Purchaser. Thereafter, Seller may negotiate with third
parties if this Agreement has been terminated;
(f) THIS AGREEMENT AND ALL OF THE TRANSACTIONS CONTEMPLATED HEREIN
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS;
(g) This Agreement embodies the entire agreement between Seller and
Purchaser with respect to the subject matter hereof and supersedes all
prior agreements, whether written or oral;
(h) Except as otherwise specifically provided herein, this Agreement
may not be amended except by an agreement in writing executed by both
Seller and Purchaser;
(i) This Agreement shall be binding upon and inure to the benefit of
Seller and Purchaser and their respective legal representatives,
successors, and assigns. It is expressly understood and agreed that
Purchaser's rights under this Agreement may not be assigned prior to
Closing. Provided however, any interest acquired hereunder shall be freely
assignable by Purchaser after Closing;
(j) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of which shall be
deemed to be one and the same instrument;
(k) In addition to the acts and deeds recited herein and
contemplated to be performed, both Seller and Purchaser hereby agree to
perform, execute, and/or deliver at and after Closing any and all such
further reasonable acts, deeds, and assurances as may be reasonably
required to consummate the transactions contemplated by this Agreement;
(l) This Agreement supersedes any and all other agreements, either
oral or in writing, between the Parties hereto with respect to the subject
matter hereof and contains all of the covenants and agreements between the
Parties with respect to said matter. Each Party to this Agreement
acknowledges that no representations, inducements, promises, or
agreements, orally or otherwise, have been made by any Party, or anyone
acting on behalf of any Party, which are not embodied herein, and that no
other agreement, statement, or promise not contained in this Agreement
shall be valid or binding;
(m) In the event of any dispute occurring under this Agreement, the
prevailing Party shall be entitled to be reimbursed by the other Party for
its reasonable and necessary attorney's fees;
(n) Any failure by either Party to insist, or any election by either
Party not to insist, upon strict performance by the other Party of any of
the terms, provisions, or conditions of this Agreement shall not be deemed
to be a waiver of the same or of any other term, provision, or condition
hereof, and either Party may at any time or times thereafter insist upon
strict performance by the other Party of any and all of such terms,
provisions, and conditions. No waiver by either Party of any right,
remedy, power, or privilege hereunder shall be construed as a waiver of,
or operate to impair, any subsequent right, remedy, power, or privilege
nor shall any single or partial exercise of any such right, remedy, power,
or privilege exhaust the same or preclude other or further exercise
thereof.
(o) All covenants, representations, and indemnities set forth herein
shall survive closing, subject to any agreed periods of limitation as may
be set forth herein.
PURCHASE AND SALE AGREEMENT - PAGE 15
<PAGE> 128
EXECUTED as of the 5th day of February, 1997.
WITNESSES: SELLER:
CAPITAL ENERGY, INC.
____________________________________ By: ______________________________
MYRTIS C. ROBERTSON, PRESIDENT
____________________________________
PURCHASER:
CORRIDA RESOURCES, INC.,
a Nevada corporation
____________________________________ By: ______________________________
ROBERT P. LINDSAY, VICE PRESIDENT
____________________________________
ACKNOWLEDGMENTS
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared MYRTIS C.
ROBERTSON, to me personally known, who, being duly sworn, did say that she is
the President of CAPITAL ENERGY, INC., a Louisiana corporation, and that the
foregoing instrument was signed by her on behalf of such entity, with necessary
authority, and that MYRTIS C. ROBERTSON acknowledged said instrument to be the
free act and deed of such corporation.
____________________________________________
Notary Public, State of Texas
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared ROBERT P.
LINDSAY, to me personally known, who, being duly sworn, did say that he is the
Vice President of CORRIDA RESOURCES, INC., a Nevada corporation, and that the
foregoing instrument was signed by him on behalf of such entity, with necessary
authority, and that ROBERT P. LINDSAY acknowledged said instrument to be the
free act and deed of such corporation.
____________________________________________
Notary Public, State of Louisiana
PURCHASE AND SALE AGREEMENT - PAGE 16
<PAGE> 129
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the 5th day of February, 1997, by
and between ALBERT N. ROBERTSON, joined herein by his wife, PATRICIA TATE
ROBERTSON, (hereinafter referred to as the "Seller") and CORRIDA RESOURCES,
INC., a Nevada corporation (the "Purchaser"), (Seller and Purchaser hereinafter
individually referred to as "Party" and collectively as "Parties").
RECITALS
WHEREAS, Seller desires to sell and convey, and Purchaser desires to
purchase and receive, the following, upon the terms and conditions hereinafter
set forth:
I. The Leases and Units. All of the Seller's right, title, and interest
in and to (i) the oil, gas, and mineral leases and properties and interests
described in Exhibit "A," including but not limited to, leasehold, fee, mineral,
royalty, and overriding royalty interests and payments out of or measured by
Production (hereinafter defined) (said oil, gas, and mineral leases and property
and interests being herein referred to as the "Leases"); (ii) the units, pooled
acreage, spacing, or proration units or other allocation of acreage, and all
rights associated therewith, which are applicable to the Leases and have been
established by, or in accordance with, (a) applicable contractual provisions
regarding unitization, communitization, pooling, spacing, or proration, or (b)
applicable state or federal law;
II. The Production. All of the Seller's right, title, and interest in
and to all oil, gas, casinghead gas, condensate, distillate, and other liquid or
gaseous hydrocarbons and other minerals which are in, under, upon, and produced
from or allocable (or to be produced from or allocable) to the Leases after the
Effective Date (as defined in Paragraph 3(a) hereof) (such hydrocarbons and
minerals being hereinafter referred to as "Production"), including "line fill"
and inventory attributable to the interests described in Exhibit "A," or the
proceeds from the sale of such Production;
III. The Wells and Equipment. All of Seller's right, title, and
interest in and to all personal property of every kind and character located on
the Leases or used in the operation thereof including, without limitation, wells
(whether productive or non-productive, active or inactive) (the "Wells"),
compressors, well equipment, casing, tanks, machinery, gathering lines and
systems, treatment facilities, disposal wells and disposal facilities, pipelines
and other appurtenances, and any other personal property situated thereon,
herein individually and collectively called the "Equipment";
IV. The Rights of Way and Permits. All of Seller's right, title, and
interest in and to all rights, privileges, benefits, permissions, and
authorizations (including, without limitation, permits, licenses, servitudes,
easements, and rights of way) in respect of the use and occupation of the
surface of such Leases, and the subsurface depths under the land and premises
covered by and benefiting such Leases, herein called individually and
collectively "Rights of Way and Permits";
V. The Contracts. All of Seller's right, title, and interest in and to
all of the orders, gas purchase and sale contracts (wherein Seller is a selling
party), crude purchase and sale agreements (wherein Seller is a selling party),
surface leases, farm-in agreements, farmout agreements, bottom hole agreements,
acreage contribution agreements, operating agreements, unit agreements, area of
mutual interest agreements, processing agreements, options, leases of equipment
or facilities, and other contracts, agreements, and rights, which are owned by
Seller, in whole or in part and are (i) appurtenant to the Leases, or (ii) used
or held for use in connection with the ownership or operation of the Leases or
with the Production, treatment on the Leases, sale or disposal of water,
hydrocarbons or associated substances, herein called individually and
collectively the "Contracts";
VI. The Records. All of the files, records and data in the possession
of Seller relating to the items described in subsections (I), (II), (III), (IV),
and (V) above (the "Records"), including, without limitation, lease files, title
records (including abstracts of title, title opinions, and title curative
documents); contracts, correspondence, originals or copies of geological,
geophysical, and
PURCHASE AND SALE AGREEMENT - PAGE 1
<PAGE> 130
seismic records, data, and information; and originals or copies of production
records, electric logs, core data, pressure data and decline curves and
graphical production curves, and all related matters, to the extent Seller has
the authority to release such Records and to the extent they are reasonably
required by Purchaser to operate the Wells;
VII. Miscellaneous. Exhibit "A" attached hereto sets forth the
undivided interests of Seller in the Leases, and the revenue interests
attributable thereto, as well as the undivided interests of Seller in the
Production, Wells, Equipment, Rights of Way, and Contracts. This Agreement
covers and pertains to all of the right, title, and interest of Seller in the
Leases, the lands covered by the Leases, Production, Wells, Equipment, and
Rights of Way, even if the undivided interests of Seller in any such property or
property rights should be incorrectly or insufficiently described in the Exhibit
"A."
The Leases, Production, Wells, Equipment, Rights of Way and Permits,
Contracts, Records, and Miscellaneous referred to in Paragraphs I through VII
above, are hereinafter sometimes referred to individually and collectively in
the singular as "Property."
WHEREAS, this Agreement was the subject of, and was contemplated by,
that certain letter of intent dated October 17, 1996, by and between Queen Sand
Resources, Inc., and David Robertson and Keith Robertson, as amended and
supplemented, including amendment and supplement dated December 24, 1996. As to
the interest of Seller in the Property, this Agreement supersedes and replaces
the letter of intent.
NOW, THEREFORE, for and in consideration of the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Seller and Purchaser
hereby agree as follows:
1. Sale and Purchase. Seller agrees to sell and convey to Purchaser,
and Purchaser agrees to purchase and pay for, all of Seller's right, title, and
interest in and to the Property as hereinafter provided.
2. Purchase Price. The "Purchase Price" for the Property shall be the
sum of $10,573.00, payable as follows:
(a) The sum of $10,573.00, which shall be paid at Closing.
All cash payments to be tendered by Purchaser to Seller, either before
or after Closing, shall be made by wire transfer or shall be made by certified
funds.
The Purchase Price shall be subject to adjustment as hereinafter
provided.
3. Closing and Effective Date.
(a) The closing of the sale and purchase of the Property shall
take place on or before February 5, 1997, (the "Closing") at 1310 Jeff
Davis, Hammond, Louisiana 70403, or at such other time, place, or
manner as may be mutually agreeable to the Parties. The sale of the
Property shall be effective as of November 1, 1996, at 7:00 a.m. local
time for each of the particular Leases (the "Effective Date").
(b) At the Closing, the Property shall be conveyed and
transferred by Seller to Purchaser by the execution and delivery of an
Assignment and Bill of Sale (the "Assignment") in substantially the
same form and content as the Assignment and Bill of Sale which is
attached hereto as Exhibit "B," and such other instruments of
conveyance as may be reasonably requested by Purchaser. Purchaser shall
be entitled to all of Seller's rights in the Property (including,
without limitation, the rights to all Production and proceeds of
Production) appurtenant and attributable to the Property, and shall be
subject to the duties and obligations attendant with ownership of such
undivided share of the Property for the period from and after the
Effective Date. For the period prior to the Effective Date, Seller
shall be entitled to all of the rights (including, without limitation,
the rights to all Production
PURCHASE AND SALE AGREEMENT - PAGE 2
<PAGE> 131
and proceeds of Production) appurtenant and attributable to the
Property, and shall be subject to the duties and obligations attendant
with ownership of the Property.
4. Adjustments to Purchase Price. The Purchase Price shall be adjusted
(the "Adjusted Purchase Price") at the Closing, by the "Interim Settlement
Statement" (hereinafter defined in this paragraph and in Paragraph 9 below),
and, subsequent to Closing, by the "Final Settlement Statement" (hereinafter
defined in Paragraph 13 below), as follows:
(a) The Purchase Price shall be increased by the following:
(1) the value of all merchantable allowable oil or
other liquid hydrocarbons in storage owned by Seller in the
tanks or above the pipeline connection at the Effective Date,
and not previously sold by Seller, that is credited to the
share of the Property being acquired hereunder, valued at the
contract price thereto, or if none, the actual price received
by Purchaser, less taxes or gravity adjustments deducted by
the purchaser of such oil or other liquid hydrocarbons;
(2) the amount of all reasonable expenditures made in
connection with the ownership, operation, and maintenance of
the share of the Property being acquired hereunder, (including
royalties and rentals) and in accordance with generally
accepted accounting principles and prudent operations,
attributable solely to the period from and after the Effective
Date and which are paid by or on behalf of Seller after the
Effective Date;
(3) an amount equal to all prepaid expenses,
attributable to the ownership, operation, and maintenance of
the share of the Property being acquired hereunder that are
paid by or on behalf of Seller after the Effective Date and
prior to the Closing Date and that are, in accordance with
generally accepted accounting principles, attributable solely
to the period from and after the Effective Date;
(4) any other amount agreed upon by Purchaser and
Seller.
(b) The Purchase Price shall be decreased by the following:
(1) the amount of any proceeds from the sale of
Production attributable to the share of the Property being
acquired hereunder attributable to the period on or after the
Effective Date (net of production, severance, and similar
taxes and assessments measured by or payable out of
production) actually received or accrued by or on behalf of
Seller;
(2) an amount equal to all unpaid ad valorem,
property, production, profit, severance, and similar taxes and
assessments based upon or measured by the ownership of the
share of the Property being acquired hereunder or the
production of oil, gas, or other minerals therefrom or the
receipt of proceeds attributable thereto, which accrue to or
are chargeable against such share of the Property (in
accordance with generally accepted accounting principles) and
which are attributable to the period prior to the Effective
Date, which amount shall, to the extent not actually assessed,
be computed based upon such taxes and assessments for the
immediately- preceding calendar year, or if such taxes or
assessments are assessed on other than a calendar-year basis,
for the tax period last ended;
(3) any amounts received by Seller (whether prior to
or subsequent to the Effective Date) pursuant to
"take-or-pay," advance payment, or similar provisions of any
production sales contract, any gas balancing agreement, or any
other agreement, to the extent any purchaser has the right to
apply any such amounts to Purchaser's share of Production
delivered after the Effective Date;
PURCHASE AND SALE AGREEMENT - PAGE 3
<PAGE> 132
(4) any reduction in the value of the share of the
Property being acquired hereunder resulting from the existence
of a Defect (herein defined in Section 5(d)) which is not
cured or waived prior to Closing;
(5) any other amount agreed upon by Purchaser and
Seller.
(c) The "Interim Settlement Statement" shall be prepared by
Seller, its agents, or representatives, prior to Closing, which
statement shall set forth the adjustments to the Purchase Price, per
the adjustments set forth in this Paragraph 4, which are or may be
determined at or prior to Closing. Such statement shall be prepared
according to generally accepted accounting principles and shall show
the calculation of all such adjustments. Upon the approval of such
Interim Settlement Statement by Purchaser, the Purchase Price shall be
adjusted according to such statement. Upon Purchaser's request, Seller
shall make available to Purchaser all information relied upon by Seller
for the adjustments requested in order to aid and facilitate
Purchaser's approval of such statement. After Closing, the Purchase
Price may further be adjusted, pursuant to the adjustments set forth in
this paragraph, with the "Final Settlement Statement" in the manner
further described in Paragraph 13 below.
(d) All monies received by either Party hereto which, under
the terms of this Agreement or otherwise, belong to the other Party,
shall be received in trust by the Party receiving such funds, and shall
monthly, upon receipt, be paid over to the other Party. The Parties
agree, in this regard, to cooperate fully and to execute, endorse, and
deliver as expeditiously as practicable such papers, checks, and
documents as are needed promptly to complete the transfer of such
payments;
(e) After the Closing, if an invoice or other evidence of an
obligation relating to the share of the Property acquired by Purchaser
is received which is applicable to periods both prior to and after the
Effective Date, and is partly the obligation of Seller and partly the
obligation of Purchaser, then each Party shall pay its respective
portion of such obligation to the obligee, prorated between the Parties
as of the Effective Date;
(f) At and after the Closing, Purchaser and Seller will
cooperate fully in notifying all applicable third parties (including
the execution by Seller of such transfer orders, letters in lieu,
change of operator, etc., as may be requested by Purchaser) so that
notices, proceeds, and invoices from such third parties may take into
account the fact that Purchaser has acquired the Property as of the
Effective Date;
(g) The parties hereto agree to exercise diligence and good
faith in attempting to resolve any disagreements or disputes which may
arise from the adjustments to the Purchase Price to be made in
accordance with this paragraph.
5. Property Conditions, Title Review, Property Information, and
Casualty Losses.
(a) Property Conditions. THIS SALE OF THE EQUIPMENT AND ALL
OTHER PERSONAL PROPERTY THAT IS A PART OF THE PROPERTY IS MADE ON AN
"AS IS, WHERE IS" BASIS WITH ALL FAULTS AS TO ITS CONDITION, AND SELLER
EXPRESSLY DISCLAIMS ALL WARRANTIES AS TO THE CONDITION OF THE EQUIPMENT
(NOTE, HOWEVER, THERE ARE CERTAIN WARRANTIES AS TO TITLE AS HEREIN SET
FORTH) INCLUDING, WITHOUT LIMITATIONS, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE. Seller agrees
that for a period of time commencing with the date of the letter of
intent dated October 17, 1996, above described, and continuing until
five (5) business days before Closing (the "Review Period"), Purchaser,
personally or through its authorized agents or representatives, shall
have the right to make any and all physical inspections of the Property
which Purchaser may desire to make or to have made and to make all such
other inspections, surveys, tests, or other studies (including, but not
limited to, environmental assessments and evaluations) as Purchaser
deems necessary or desirable. Upon reasonable notice to Seller,
Purchaser, and its authorized agents and representatives, at
Purchaser's sole risk, may enter upon the Property for the purpose of
conducting those
PURCHASE AND SALE AGREEMENT - PAGE 4
<PAGE> 133
inspections, surveys, tests, and studies. If Purchaser shall determine
that the condition of the Property is not in substantial compliance
with any governmental regulations (including environmental
regulations), then upon discovery, Purchaser must promptly give written
notice to Seller of such condition ("Condition"). Upon receipt of such
notice, Seller shall have the option, but not the obligation, to (a)
cure or remedy such Condition to the reasonable satisfaction of
Purchaser (if current remediation of such Condition is required by a
governmental agency, Seller agrees that the Condition shall be remedied
in accordance with and to the satisfaction of the appropriate agency's
requirements); or (b) agree with Purchaser on a reduction to the
Purchase Price which reduction shall reflect Purchaser's anticipated
reasonable cost to remedy such Condition. If the Condition cannot be
cured or remedied to Purchaser's reasonable satisfaction, and if
agreement cannot be reached on reduction to the Purchase Price, then
the affected Property may be excluded by Purchaser from the Property to
be acquired by Purchaser hereunder. In such event , the Purchase Price
shall be reduced by the Allocated Purchase Price (see subparagraph (c)
below) for such excluded Property.
(b) Review of the Records. During the Review Period, and upon
reasonable notice from Purchaser, Seller shall provide Purchaser,
personally or through its authorized agents or representatives, full
access during normal business hours to Seller's office and premises to
review and inspect all Records, including, but not limited to, all
abstracts of title, lease files, unit files, production and marketing
files, title opinions, title files, title records, geologic,
engineering, and other files or information in Seller's possession or
to which it has access which relate to the Property and the status of
Seller's title thereto, and Purchaser, at its expense, shall have the
right to make and retain copies of any of such Records; provided
however, if the transactions contemplated hereby do not close for any
reason, Purchaser shall return any Records and copies thereof to Seller
forthwith. Without limiting the generality of the foregoing, Purchaser
shall also be given access to reserve reports, geological and
geophysical reports (including, but not limited to well records, log
films, proprietary or joint venture seismic data or other seismic data
which Seller is not contractually restricted from disclosing),
contracts (including, but not limited to, gas contracts), operating
agreements, operating statements, and reports.
(c) Notice of Defect. If, during the Review Period, Purchaser
determines that the Property is subject to a "Defect" (as defined
herein in Section 5(d)), the Purchaser must give written notice to
Seller of such Defect, the nature of the Defect, and furnish Seller
Purchaser's basis for the assertion of such Defect. As soon as
practical after such written notice, Seller shall use reasonable
diligence to cure any such Defects. If Seller cannot cure any such
Defects to the reasonable satisfaction of Purchaser, then Seller shall
so notify Purchaser in writing. Thereafter, Seller and Purchaser shall
use a good faith effort to agree on the Purchase Price adjustment for
any such Defect which cannot be cured. Such adjustment shall be
determined in accordance with the following guidelines:
(1) The Purchase Price shall be allocated among the
various Leases in the proportion of the PDP fair market value
of the Leases reported by Netherland Sewell & Associates in
its report dated October 21, 1996, (the "Allocated Purchase
Price").
(2) If the Defect is that Seller's Net Revenue
Interest ("NRI") for any Property is less than the NRI for
such Property as set forth in Exhibit "A," then the allocated
Purchase Price for such Property shall be adjusted in the same
proportion that the actual NRI for such property bears to the
NRI shown in Exhibit "A."
(3) If the Defect is a lien, encumbrance, or other
charge upon the Property which is liquidated in amount, then
the adjustment shall be the sum necessary to be paid to the
obligee to remove the Defect from the Property;
If the Purchase Price adjustment for any such Defect cannot be
determined, and the Seller and Purchaser cannot agree in good faith on
the amount of the adjustment to the Purchase Price, the Purchaser may
(a) waive the Defect and proceed with Closing, or (b) exclude the
affected Property and reduce the Purchase Price by the Allocated
Purchase Price
PURCHASE AND SALE AGREEMENT - PAGE 5
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for such property, or (c) terminate this Agreement, in which event the
Parties shall have no further rights or obligations under this
Agreement.
(d) Definition of Defect. For the purpose of this Agreement, a
"Defect" shall be defined as:
(1) Any material encumbrance, lien, mortgage, breach
of representation or warranty, production payment, pledge,
claim, charge, call on production, default, defect, condition,
unleased mineral interest, preferential right, requirement for
consent to assignment, or lack of title affecting the
Property, or any matter affecting the Property by which
Purchaser reasonably or in good faith believes that Seller's
interest in a Property may become subject to the claims of
third parties;
(2) Seller's NRI in any Property is less than the NRI
for such Property which is set forth in Exhibit "A," or
Seller's gross working interest ("GWI") in any Property is
less than the working interest shown in Exhibit "A," or
Seller's GWI in any Property is greater than the working
interest shown in Exhibit "A" without a corresponding increase
in the NRI in such Property;
(e) Other Property Information. If, based upon Purchaser's
examination of the Records according to Paragraph 5(b) hereof,
Purchaser shall determine that any information, statement, or data
contained in any information, reports, statement, or data furnished to
Purchaser or used in its economic analysis of the Property is not true
or correct in any material respect, upon discovery of any incorrect
information, Purchaser may give written notice to Seller of such
inaccuracy or misstatement. Any such notice must be provided in writing
during the Review Period, or it will be deemed to be waived. Such
notice shall provide a summary of such inaccuracy or misstatement. Upon
receipt of such notice, Seller shall have the option, but not the
obligation, to (a) cure or remedy such inaccuracy or misstatement to
the reasonable satisfaction of Purchaser; or (b) agree with Purchaser
on a reduction to the Purchase Price, which reduction shall reflect
Purchaser's reasonably anticipated cost to remedy such inaccuracy or
misstatement. If the inaccuracy or misstatement cannot be cured or
remedied to Purchaser's reasonable satisfaction, and if agreement
cannot be reached on reduction to the Purchase Price, then the affected
Property shall be excluded from the Property to be acquired by
Purchaser hereunder, and the Purchase Price shall be reduced by the
Allocated Purchase Price for such Property;
(f) Casualty Loss. If, prior to Closing, any Property is
substantially damaged or destroyed by fire or other casualty ("Casualty
Defect"), Seller shall notify Purchaser promptly after Seller learns of
such event. Seller shall have the right, but not the obligation, to
cure any such Casualty Defect by repairing such damage or, in the case
of personal property, fixtures, replacing the Property affected thereby
with equivalent items, no later than the date of Closing. If any
Casualty Defects exist at Closing, Purchaser may proceed to purchase
the Property affected thereby, and the Purchase Price shall be reduced
by the aggregate reduction in the value of such Property on account of
such Casualty Defects, as determined by the mutual agreement of the
Parties, or if the Parties are unable to agree on the reduction of the
Purchase Price, then the affected Property shall be excluded from the
Property to be acquired by Purchaser hereunder, and the Purchase Price
shall be reduced by the Allocated Purchase Price for such Property.
Notwithstanding anything to the contrary contained herein, Seller shall
be entitled to retain all insurance proceeds and claims against other
Parties in respect of any such Casualty Defect which occurs prior to
closing unless no reduction is made in the Purchase Price as a result
of such Casualty Defect, in which event Purchaser shall be entitled to
the insurance proceeds and claims against other Parties arising from
such Casualty Defect.
6. Seller's Representations and Warranties. Seller represents and
warrants to Purchaser that:
(a) This Agreement has been duly executed and delivered on
behalf of Seller and is binding and enforceable against Seller in
accordance with its terms and at the Closing. All
PURCHASE AND SALE AGREEMENT - PAGE 6
<PAGE> 135
documents and instruments required hereunder to be executed and
delivered by Seller shall have been duly executed and delivered at
Closing, and the execution, delivery, and performance of this Agreement
by Seller and the consummation of transactions contemplated hereby will
not constitute a breach of, an event of default under, a violation of,
or a conflict with any agreement or other instrument to which Seller is
a party (except to the extent such instrument may be released at the
Closing). Nor will the same cause Seller to be in violation of any
applicable laws or regulations or any order of any court or
governmental agency having jurisdiction.
(b) All ad valorem, property, production, severance, excise,
and similar taxes and assessments based on or measured by the ownership
of the Property or the Production or the receipt of proceeds therefrom,
which have become due and payable prior to the date hereof with respect
to the Property have been properly paid, and Seller's allocable share
of such taxes and assessments which become due and payable prior to the
Closing shall be properly paid by Seller, and all royalties, overriding
royalties, and payments to any third parties which have become due and
payable prior to the date hereof with respect to production from the
Property, have been properly paid, and will be hereafter properly paid
for the period prior to Closing.
(c) Seller has incurred no liability, contingent or otherwise,
for brokers' or finders' fees in respect of this transaction for which
Purchaser shall have any responsibility whatsoever.
(d) Prior to the Closing, Seller will pay or cause to be paid
all of Seller's share of costs and expenses incurred in connection with
the Property, and will comply with all contracts or other agreements
relating to the Property.
(e) To the best of Seller's information and belief, all laws,
regulations, and orders of all governmental agencies having
jurisdiction over the Property have been and shall continue to be
complied with until the Closing.
(f) There are no first rights of refusal, consents,
authorizations, preferential rights, options, or claims of a similar
nature affecting the Property, other than those listed in Exhibit "A,"
said listed consents defined herein as "Consents."
(g) Seller shall, upon request, subrogate Purchaser to any
claim which Seller may have against any third party, prior owner,
vendor, or assignor with respect to the share of the Property acquired
by Purchaser, or the title thereto.
(h) There are no "imbalances" which allow any other party to
make up production at any time after the Effective Date, under any
operating agreement, gas balancing agreement and storage agreement, gas
transportation agreement, gas processing or dehydration agreement, or
other similar agreement relating to the Property.
(i) Seller has not directly or indirectly reserved or retained
any recorded or unrecorded interest or rights in any of the Property,
and Seller shall not reserve any recorded or unrecorded executory
interest or rights relating to the Property.
(j) Seller warrants that the Property is free and clear of all
encumbrances, liens, and mortgages, save and except such encumbrances
as may be identified and described in Exhibit "A" attached hereto, and
further save and except liens for taxes not yet due and payable.
(k) Except as may be identified and described in Exhibit "A"
attached hereto, the Property is not subject to any restriction,
reservation, reversionary interest, drilling or development obligation,
or other material obligation or burden on the operation or the
disposition of Production attributable to the Property.
PURCHASE AND SALE AGREEMENT - PAGE 7
<PAGE> 136
(l) No part of any of the Property is affected by any
prepayment arrangement under any contract for the sale of oil or gas,
or by any production payment or any other arrangement for delivery of
oil or gas produced from any of the Property at some future time
without Purchaser then or thereafter receiving full payment therefor,
and no third party now has or at Closing will have any right to take
makeup gas for which it has already paid. As of the Effective Date,
there are no volumes of makeup gas owing, or accumulated transportation
credits due, to gas purchasers on account of any "take-or-pay" or other
provisions of any contract, and Seller has not produced or sold more
than its pro-rata share of the gas from any Wells included in the
Property.
(m) Except as may be set forth in Exhibit "A" attached hereto,
there are no gas purchase or sale agreements, and no gas gathering or
transportation agreements, affecting the Property that cannot be
terminated upon ninety (90) days' written notice.
(n) Without the prior written consent of Purchaser, Seller (i)
shall not enter into any new agreements or commitments affecting the
Property which extend beyond the Closing, and (ii) will not modify or
terminate any agreements affecting any of the Property, including,
without limitation, any oil and gas leases, unitization or pooling
agreements, operating agreements, pipeline agreements, processing
agreements, and hydrocarbon sales contracts, and (iii) will not further
encumber, sell, mortgage, release, abandon, or otherwise dispose of any
of the Property or any interests therein.
(o) There is not any suit, action, or other proceeding pending
or threatened which affects or relates to the Property, or seeks to
restrain or prohibit Seller from selling or conveying to Purchaser the
share of the Property to be purchased herein. Seller shall promptly
notify Purchaser of any such proceedings which may arise or be
threatened prior to Closing.
(p) There are no operating agreements with third parties
affecting the Property except as may be identified and described in
Exhibit "A" attached hereto.
(q) Seller has no knowledge and has not received any notice of
any claimed default (or any event which, with the giving of notice or
the passage of time, or both, would constitute a default) under (i) the
Leases, (ii) any order, writ, injunction, or decree of any court,
commission, or administrative agency affecting the Property, or (iii)
any other agreement affecting the Property. Seller shall promptly
notify Purchaser of any such notice hereafter received by Seller and
the occurrence of any such event of which Seller becomes aware prior to
Closing.
(r) There are no tax partnerships affecting any of the
Property.
(s) To the best of Seller's information and belief, no
Production from any Well on the Property has occurred in excess of that
permitted by law, orders, or regulations.
(t) To the best of Seller's information and belief, there has
been no material injury or damage to any of the Property which has not
been fully repaired, replaced, or rebuilt.
(u) Except for depletion due to continued production, there
has been no substantial and material change in condition of the
Property between the date hereof and Closing.
(v) To the best of Seller's information and belief, all
easements, rights of way, permits, crossing agreements, and surface
rights included in the Property are in full force and effect and are
valid and subsisting, and freely assignable, and all rentals and other
payments due thereunder have been properly and timely paid and all
conditions necessary to keep them in force have been duly performed.
PURCHASE AND SALE AGREEMENT - PAGE 8
<PAGE> 137
(w) From and after the effective date of its acquisition of
its ownership in the Leases, the Seller has performed all obligations
required to be performed under such Leases, or any other instruments
and agreements relating to the Properties, and is not in default
thereunder, and to the best of Seller's information and belief, each of
the Leases to be conveyed is valid and in full force and effect.
(x) To the best of Seller's knowledge, Seller owns each Lease
and Property in the undivided share reflected by the "Working Interest"
described and set forth in Exhibit "A" for each particular Lease and
Property, and Seller owns for each Lease and Property the share of
Production reflected as "Net Revenue Interest" in Exhibit "A" attached
hereto. Seller is being paid not less than the fractional "net revenue
interest" for each Property in Exhibit "A" hereto, and, for expenses
and costs for each Property, Seller is not paying more than the
fractional interest specified under "Working Interest" for each
Property in Exhibit "A" hereto.
(y) To the best of Seller's information and belief, all
rentals and bonuses have been timely and fully paid and discharged, and
all conditions necessary to keep the Leases in full force have been
performed, and no proceeds from the sale of Production attributable to
the Property are currently being held in suspense by any purchaser
thereof.
(z) The Seller has not collected any proceeds from the sale of
Production attributable to the Property which are subject to refund, or
if so, that any such refund, if not otherwise accounted for under this
Agreement, shall be the sole responsibility of the Seller.
(aa) Except as listed in Exhibit "A" attached hereto, to the
best of Seller's information and belief, there are no Wells located on
the Property that Seller is obligated by law or contract to plug and
abandon, that Seller will be obligated by law or contract to plug and
abandon at the present time, and with the lapse of time or notice, or
both, because the well is not currently capable of producing production
in commercial quantities, or because the Well is subject to exceptions
to a requirement to plug and abandon issued by a regulatory authority
having jurisdiction over the Property.
(bb) To the best of Seller's information and belief, there are
no presently existing conditions (by existing federal or state statutes
and regulations) affecting the Property, which might give rise to a
cause of action on behalf of any governmental agency or third party,
against either Purchaser or Seller.
(cc) All information and data provided to Purchaser by Seller
or its agents concerning the Property is true and correct to the best
of Seller's information, knowledge, and belief.
(dd) Environmental Current Status. To the best of Seller's
knowledge, the Property and Seller are not in violation of or subject
to any existing, pending, or threatened investigation or inquiry by any
governmental authority or to any remedial obligations under any
applicable laws pertaining to health or the environment (such laws as
they now exist or are hereafter enacted and/or amended hereinafter
sometimes collectively called "Applicable Environmental Laws"),
including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, hereinafter
called "CERCLA"), the Resource Conservation and Recovery Act of 1976,
as amended by the Used Oil Recycling Act of 1980, the Solid Waste
Disposal Act Amendments of 1980, and the Hazardous and Solid Waste
Amendments of 1984 (as amended, hereinafter called "RCRA"), the Texas
Water Code and the Texas Solid Waste Disposal Act, and this
representation will continue to be true and correct following
disclosure to the applicable governmental authorities of all relevant
facts, conditions, and circumstances, if any, pertaining to the
Property and Seller. The terms "hazardous substance" and "release" as
used in this Agreement shall have the meanings specified in CERCLA, and
the terms "solid waste" and "disposal" (or "disposed") shall have the
meanings specified in RCRA; provided, in the event either CERCLA or
RCRA is amended so as to broaden the meaning of any term
PURCHASE AND SALE AGREEMENT - PAGE 9
<PAGE> 138
defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment and provided further, to the extent
that the laws of the State of Texas establish a meaning for "hazardous
substance," "release," "solid waste," or "disposal" which is broader
than that specified in either CERCLA or RCRA, such broader meaning
shall apply.
7. Purchaser's Representations and Warranties. Purchaser represents and
warrants to Seller that:
(a) Purchaser: (i) is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada;
(ii) is duly qualified to transact business in each jurisdiction where
the nature and extent of its business and properties require the same
in order for it to perform its obligations under this Agreement; and
(iii) possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply
with the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, all of which have been
duly authorized and approved by all necessary corporate action and for
which no further approval or consent is required.
(b) The consummation of the transactions contemplated by this
Agreement will not violate, or be in conflict with (i) any agreement or
instrument to which Purchaser is a party; or (ii) any judgment or
decree applicable to Purchaser as a party in interest with respect
thereto.
(c) This Agreement has been duly executed and delivered on
behalf of Purchaser, and at the Closing, all documents and instruments
required hereunder to be executed and delivered by Purchaser (or its
assignees) shall have been duly executed and delivered.
(d) Subject to the conditions herein, Purchaser has or will
have at Closing (i) the financial capability or (ii) commitments from
responsible financial institutions to provide the funds required by
Purchaser, to pay the Purchase Price and consummate the transaction
contemplated hereby within the time period contemplated herein.
(e) Purchaser either has performed, or prior to closing will
perform, whatever inspection of the Property and Seller's title thereto
that Purchaser deems appropriate and knows the condition thereof and is
purchasing the Property as a result of such inspections and not because
of, or in reliance on, any representation or warranty made by Seller
other than those expressly set forth in this Agreement.
(f) In the event the Purchase Price is adjusted down at
Closing, based upon any unpaid taxes as set forth in Paragraph 4(b)(2)
hereof (the "Tax Adjustment"), Purchaser agrees to timely make payment
(equivalent to the Tax Adjustment) to such taxing authorities as may be
appropriate.
8. Conditions to Obligations of Purchaser. The obligations of Purchaser
to consummate the transaction provided for herein are subject, at the option of
Purchaser, to the fulfillment on or prior to Closing, of each of the following
conditions:
(a) Representations. The representations and warranties of
Seller herein contained shall be true and correct in all material
respects at Closing as though made on and as of such date (unless
appropriate adjustments or remediation has been made in accordance with
Paragraph 5 hereof).
(b) Performance. Seller shall have performed all obligations,
covenants, and agreements hereunder and shall have complied with all
covenants and conditions contained in this Agreement to be performed or
complied with by it at or prior to the Closing.
(c) Pending Matters. No suit, action, or other proceedings
shall be pending or threatened (a) against Seller before any court or
governmental agency which might result in impairment or loss of value
as to Seller's title to any part of the Property; or (b) which seeks
PURCHASE AND SALE AGREEMENT - PAGE 10
<PAGE> 139
to restrain, enjoin, or otherwise prohibit the consummation of the
transactions contemplated by this Agreement.
(d) Liability. No liability which affects, in a materially
adverse manner, the Property or Purchaser's ability to receive the
economic benefits therefrom has been or is threatened to be asserted
with respect to the Property.
(e) Defects. No Defects shall be present, which are not cured
by Seller or waived by Purchaser as provided herein.
(f) Records and Access. Seller shall have afforded Purchaser
and its officers, employees, and representatives timely and reasonable
access to the Records as required herein.
9. Seller's Obligations at Closing. At the Closing, Seller shall
deliver to Purchaser the following items; however, item (e) will be delivered as
soon prior to Closing as reasonably practical:
(a) The Assignment, duly executed and acknowledged by Seller;
(b) Duly executed and acknowledged releases of all liens and
burdens on the Property or on Production therefrom or attributable
thereto;
(c) Executed transfer orders (or letters in lieu thereof)
addressed to all purchasers of production from the Property;
(d) Any other executed documents or instruments which may be
reasonably required to consummate the transactions contemplated herein
and to fully vest Purchaser with operations and title to the Property
as contemplated hereby;
(e) The "Interim Settlement Statement," which shall set forth
the Purchase Price and adjustments thereto provided for in this
Agreement which are or may be determined at or prior to the Closing,
which statement shall be delivered to Purchaser as soon as reasonably
practical prior to Closing for Purchaser's review and approval;
(f) All consents required of third parties, who are identified
in Exhibit "A" attached, properly executed and in form approved by
Purchaser; and
(g) All releases of current liens of lenders encumbering all
or any part of the Property, properly executed in form acceptable by
Purchaser.
10. Purchaser's Obligations at Closing. At the Closing, Purchaser
shall:
(a) Deliver to Seller the Adjusted Purchase Price, in cash or
other immediately available funds (which shall be subject to a
subsequent accounting between Seller and Purchaser pursuant to this
Agreement); and
(b) Execute and deliver any other documents or instruments
which may be required to consummate the transactions contemplated
herein.
11. Notices. All notices, demands, and requests which may be given or
which are required to be given by either Party to the other shall be in writing.
Any notice, demand, or communication required or permitted hereunder shall be
deemed to be delivered on actual receipt or three (3) days after being sent by
overnight courier or Certified U.S. Mail to Seller or Purchaser, whichever
occurs first, respectively, as follows:
PURCHASE AND SALE AGREEMENT - PAGE 11
<PAGE> 140
SELLER: PURCHASER:
Albert N. Robertson and Corrida Resources, Inc.
Patricia Tate Robertson Suite 380, Lock Box 31
48337 Stafford Road 3500 Oak Lawn Avenue
Tickfaw, Louisiana 70466 Dallas, Texas 75219-4398
Telephone: ______________ Attn.: Edward Munden
Facsimile: ______________ President
Telephone: 214-521-9959
Facsimile: 214-521-9960
or such other address as Purchaser or Seller may, from time to time, designate
pursuant to the terms hereof. A facsimile transmission shall be considered an
original document for purposes of providing notice under this section.
12. Furnishing Data and Information. The Seller also agrees to promptly
cooperate in all reasonable requests by Purchaser in furnishing copies, at
Purchaser's expense, of all Records necessary for Purchaser to conduct its due
diligence under the terms of this Agreement.
13. Post-Closing Adjustments. As soon as practicable after the closing,
and in any event within sixty (60) days after Closing, Seller shall prepare and
deliver to Purchaser, in accordance with this Agreement and generally accepted
accounting principles, a statement (the "Final Settlement Statement") setting
forth each adjustment or payment pursuant to Paragraph 4 hereof that was not
finally determined as of the Closing ("Post-Closing Adjustments") and showing
the calculation of such Post-Closing Adjustments and the aggregate amount
thereof. Within ten (10) business days after receipt of the Final Settlement
Statement, Purchaser shall deliver to Seller a written report containing any
changes that Purchaser proposes be made to the Final Settlement Statement. The
Parties undertake to agree with respect to the amounts of such Post-Closing
Adjustments no later than ninety (90) days after the Closing Date. The date upon
which such agreement is reached or upon which the aggregate amount of the
adjustments are finally established shall be herein called the "Final Settlement
Date." Seller shall pay to Purchaser, or vice versa, as the case may be, within
ten (10) business days after the Final Settlement Date the amount of such
adjustments (as finally established), by means of wire transfer in immediately
available funds or by means of a certified bank check. In the event Seller owes
monies to Purchaser as a consequence of the Post-Closing Adjustments, Purchaser
shall have the right to offset Purchaser's obligation under the note for any
such monies which are owing to Purchaser by Seller under Paragraph 4 and this
Paragraph 13.
14. Failure to Perform/Termination of Agreement. If the Seller should
fail to fully and timely perform any of its obligations hereunder, or should
fail to consummate the sale of the Property, except due to the Purchaser's
default, the Purchaser may, at its option, enforce specific performance of this
Agreement, or terminate this Agreement.
15. Indemnification by Seller.
(a) Seller agrees to indemnify and save and hold harmless
Purchaser against and from any loss, damage, or expense sustained by
Purchaser arising out of or resulting from any breach of any of the
representations and warranties made hereunder and not waived by
Purchaser.
(b) Seller agrees to indemnify and save and hold harmless
Purchaser against all claims, liabilities, costs, expenses, windfall
profit taxes, and liability arising out of the ownership or operation
of the Property, and based upon the occurrence of events, the accrual
of obligations or liabilities, or the existence of conditions prior to
the Effective Date.
(c) If any claims for brokerage fees are asserted against
Purchaser in connection with this transaction based upon alleged
commitments made by Seller, Seller shall indemnify Purchaser against
all such claims and reimburse Purchaser for all reasonable expenses
incurred in responding to such claims, including reasonable attorney's
fees.
PURCHASE AND SALE AGREEMENT - PAGE 12
<PAGE> 141
(d) Notwithstanding anything to the contrary contained herein,
Seller agrees to indemnify and save and hold harmless Purchaser for
Seller's gross negligence or willful misconduct for that period of time
between the Effective Date and Closing.
(e) The provisions of this Paragraph 15 shall survive Closing
for a period of four (4) years from the date of Closing, and Seller
shall not be entitled to assert any right of indemnification hereunder
after such date.
16. Indemnification by Purchaser.
(a) Purchaser agrees to indemnify and save and hold harmless
Seller against and from any loss, damage, or expense sustained by
Seller arising out of or resulting from any breach of any of the
representations and warranties made hereunder and not waived by Seller.
(b) Purchaser shall assume and hereby agrees to pay, honor,
discharge, and perform fully and timely, the obligations and
liabilities directly associated with the Seller's interest in the share
of the Property acquired by Purchaser hereunder, which are attributable
to the period of time from and after the Effective Date.
(c) Purchaser agrees to indemnify and save and hold harmless
Seller against all claims, costs, expenses, windfall profits taxes, and
liabilities arising out of the ownership or operation of the share of
the Property acquired by Purchaser hereunder and based upon the
occurrence of events, the accrual of obligations or liabilities, or the
existence of conditions on and subsequent to the Effective Date (but
not including these costs and expenses incurred with respect to the
purchase of Seller's interest in the Property or the negotiations
leading to such purchase).
(d) If any claims for brokerage fees are asserted against
Seller in connection with this transaction based upon alleged
commitments made by Purchaser, Purchaser shall indemnify Seller against
all such claims and reimburse Seller for all reasonable expenses
incurred in responding to such claims, including reasonable attorney's
fees.
(e) The provisions of this Paragraph 16 shall survive Closing
for a period of four (4) years from the date of Closing, and Purchaser
shall not be entitled to assert any right of indemnification hereunder
after such date.
17. Confidentiality. Prior to Closing, the Seller shall be furnishing
to Purchaser various information relating to Seller and the Property, and
Seller's business activities, assets, finances, costs, revenues, rights,
obligations, liabilities, and strategies. In consideration of the Seller
furnishing this information to Purchaser, Purchaser agrees that prior to Closing
(a) that such information is confidential and/or proprietary to Seller, and such
information shall be entitled to and shall receive treatment as such by
Purchaser; (b) Purchaser shall use its best efforts, and will advise all of its
employees, representatives, agents, and advisors who have access to such
information, to use their best efforts to hold in confidence, not to disclose to
others, and not to use (except in respect of the transaction contemplated by
this Agreement) any such information; and (c) if Closing does not occur, all
such information, unless otherwise specified in writing, shall remain the
property of Seller, and shall be returned to Seller together with any copies
made thereof. Prior to Closing, Purchaser shall provide such information only to
its employees, representatives, agents, and advisors who have need to know such
information in connection with this Agreement.
18. Other Purchase and Sale Agreements. Purchaser has tendered purchase
and sale agreements, dated on or about the date hereof, to other parties, all of
whom are named in Exhibit "C" attached hereto. Such other agreements may cover
the interest, if any, of such other parties in the Leases and Property covered
by this Agreement, and may cover other oil and gas properties which are not the
subject of this Agreement. Purchase and Seller agree that the Closing under this
Agreement shall be simultaneous with the closings under such other agreements,
and that Closing under this Agreement shall be conditional upon closing
occurring under such other agreements.
PURCHASE AND SALE AGREEMENT - PAGE 13
<PAGE> 142
Seller does not claim any interest in and to the oil and gas leases and other
property which are the subject of such other purchase and sale agreements, and
which are not the subject of this Agreement.
19. Area of Non-Competition. Seller agrees not to compete with
Purchaser in an area which comprises the lands covered by the Leases and an area
which shall extend outward from the boundaries of each of the Leases a distance
of 5,280 feet. In this regard, Seller agrees that Seller, its employees, agents,
servants, or companies controlled by Seller, in common control with Seller, or
with whom Seller is affiliated, shall not acquire, for so long as a Lease is
held in force and effect by its terms, and for a period of three years
thereafter, any oil and gas leases, any mineral interest, royalty interest,
overriding royalty interest, or any farmout agreement, or other agreement
permitting the right to explore for and produce oil and/or gas, which cover any
lands within the restricted area.
20. Miscellaneous.
(a) If any term or provision of this Agreement is held to be
illegal, invalid, or unenforceable, the legality, validity, and
enforceability of the remaining terms and provisions of this Agreement
shall not be affected thereby, and in lieu of each such illegal,
invalid, or unenforceable term or provision, there shall be added
automatically to this Agreement a legal, valid, and enforceable term or
provision as similar as possible to the term or provision declared
illegal, invalid, or unenforceable;
(b) Either Seller or Purchaser shall have the right to waive
any requirement contained in this Agreement, which is intended for the
waiving Party's benefit, but except as otherwise specifically provided
herein, such waiver shall be effective only if in writing and executed
by the Party for whose benefit such requirement is intended; provided
however, that any such waiver shall not be construed as a waiver of any
other benefit accruing to the waiving Party hereunder;
(c) The captions used in connection with this Agreement are
for convenience only and shall not be deemed to expand or limit the
meaning of the language of this Agreement;
(d) Words of any gender used in this Agreement shall be held
and construed to include any other gender, and words in the singular
shall be held to include the plural, unless the context otherwise
requires;
(e) Seller agrees that, on or before the Closing, it will not
carry on any negotiations with any third party, for the sale or
transfer of the Property, without the prior written consent of
Purchaser. Thereafter, Seller may negotiate with third parties if this
Agreement has been terminated;
(f) THIS AGREEMENT AND ALL OF THE TRANSACTIONS CONTEMPLATED
HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS;
(g) This Agreement embodies the entire agreement between
Seller and Purchaser with respect to the subject matter hereof and
supersedes all prior agreements, whether written or oral;
(h) Except as otherwise specifically provided herein, this
Agreement may not be amended except by an agreement in writing executed
by both Seller and Purchaser;
(i) This Agreement shall be binding upon and inure to the
benefit of Seller and Purchaser and their respective legal
representatives, successors, and assigns. It is expressly understood
and agreed that Purchaser's rights under this Agreement may not be
assigned prior to Closing. Provided however, any interest acquired
hereunder shall be freely assignable by Purchaser after Closing;
PURCHASE AND SALE AGREEMENT - PAGE 14
<PAGE> 143
(j) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all
of which shall be deemed to be one and the same instrument;
(k) In addition to the acts and deeds recited herein and
contemplated to be performed, both Seller and Purchaser hereby agree to
perform, execute, and/or deliver at and after Closing any and all such
further reasonable acts, deeds, and assurances as may be reasonably
required to consummate the transactions contemplated by this Agreement;
(l) This Agreement supersedes any and all other agreements,
either oral or in writing, between the Parties hereto with respect to
the subject matter hereof and contains all of the covenants and
agreements between the Parties with respect to said matter. Each Party
to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any
Party, or anyone acting on behalf of any Party, which are not embodied
herein, and that no other agreement, statement, or promise not
contained in this Agreement shall be valid or binding;
(m) In the event of any dispute occurring under this
Agreement, the prevailing Party shall be entitled to be reimbursed by
the other Party for its reasonable and necessary attorney's fees;
(n) Any failure by either Party to insist, or any election by
either Party not to insist, upon strict performance by the other Party
of any of the terms, provisions, or conditions of this Agreement shall
not be deemed to be a waiver of the same or of any other term,
provision, or condition hereof, and either Party may at any time or
times thereafter insist upon strict performance by the other Party of
any and all of such terms, provisions, and conditions. No waiver by
either Party of any right, remedy, power, or privilege hereunder shall
be construed as a waiver of, or operate to impair, any subsequent
right, remedy, power, or privilege nor shall any single or partial
exercise of any such right, remedy, power, or privilege exhaust the
same or preclude other or further exercise thereof.
(o) All covenants, representations, and indemnities set forth
herein shall survive closing, subject to any agreed periods of
limitation as may be set forth herein.
EXECUTED as of the 5th day of February, 1997.
WITNESSES: SELLER:
- ------------------------------------ ------------------------------------
ALBERT N. ROBERTSON
- ------------------------------------
- ------------------------------------ ------------------------------------
PATRICIA TATE ROBERTSON
- ------------------------------------
PURCHASE AND SALE AGREEMENT - PAGE 15
<PAGE> 144
PURCHASER:
CORRIDA RESOURCES, INC.,
a Nevada corporation
- ------------------------------------ By:
---------------------------------
ROBERT P. LINDSAY, VICE PRESIDENT
- ------------------------------------
ACKNOWLEDGMENTS
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared ALBERT N.
ROBERTSON, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free act
and deed.
-----------------------------------
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared PATRICIA TATE
ROBERTSON, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that she executed the same as her free
act and deed.
-----------------------------------
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared ROBERT P.
LINDSAY, to me personally known, who, being duly sworn, did say that he is the
Vice President of CORRIDA RESOURCES, INC., a Nevada corporation, and that the
foregoing instrument was signed by him on behalf of such entity, with necessary
authority, and that ROBERT P. LINDSAY acknowledged said instrument to be the
free act and deed of such corporation.
-----------------------------------
Notary Public, State of Louisiana
PURCHASE AND SALE AGREEMENT - PAGE 16
<PAGE> 145
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the 5th day of February, 1997, by
and between ROBERTSON'S OIL & GAS, INC., a Louisiana corporation (hereinafter
sometimes called "ROG") and PELICAN OIL FIELD SERVICES, INC., a Louisiana
corporation (who is hereinafter sometimes called "Pelican") and ALLEN K.
ROBERTSON, dealing herein with his separate property (all of whom are
hereinafter collectively referred to as the "Seller") and CORRIDA RESOURCES,
INC., a Nevada corporation (the "Purchaser"), (Seller and Purchaser hereinafter
individually referred to as "Party" and collectively as "Parties").
RECITALS
WHEREAS, Seller desires to sell and convey, and Purchaser desires to
purchase and receive, the following, upon the terms and conditions hereinafter
set forth:
I. The Leases and Units. Subject to the reservations and exceptions set
forth in Paragraphs 24, 25 and 26 below, all of the Seller's right, title, and
interest in and to (i) the oil, gas, and mineral leases and properties and
interests described in Exhibit "A," including but not limited to, leasehold,
fee, mineral, royalty, and overriding royalty interests and payments out of or
measured by Production (hereinafter defined) (said oil, gas, and mineral leases
and property and interests being herein referred to as the "Leases"); (ii) the
units, pooled acreage, spacing, or proration units or other allocation of
acreage, and all rights associated therewith, which are applicable to the Leases
and have been established by, or in accordance with, (a) applicable contractual
provisions regarding unitization, communitization, pooling, spacing, or
proration, or (b) applicable state or federal law;
II. The Production. All of the Seller's right, title, and interest in
and to all oil, gas, casinghead gas, condensate, distillate, and other liquid or
gaseous hydrocarbons and other minerals which are in, under, upon, and produced
from or allocable (or to be produced from or allocable) to the Leases after the
Effective Date (as defined in Paragraph 3(a) hereof) (such hydrocarbons and
minerals being hereinafter referred to as "Production"), including "line fill"
and inventory attributable to the interests described in Exhibit "A," or the
proceeds from the sale of such Production;
III. The Wells and Equipment. All of Seller's right, title, and
interest in and to all personal property of every kind and character located on
the Leases or used in the operation thereof including, without limitation, wells
(whether productive or non-productive, active or inactive) (the "Wells"),
compressors, well equipment, casing, tanks, machinery, gathering lines and
systems, treatment facilities, disposal wells, disposal systems, pipelines and
other appurtenances, and any other personal property situated thereon, herein
individually and collectively called the "Equipment." The Equipment includes,
but is not limited to, those items listed in Exhibit "B";
IV. The Rights of Way and Permits. All of Seller's right, title, and
interest in and to all rights, privileges, benefits, permissions, and
authorizations (including, without limitation, permits, licenses, servitudes,
easements, and rights of way) in respect of the use and occupation of the
surface of such Leases, and the subsurface depths under the land and premises
covered by and benefiting such Leases, herein called individually and
collectively "Rights of Way and Permits";
V. The Contracts. All of Seller's right, title, and interest in and to
all of the orders, gas purchase and sale contracts (wherein Seller is a selling
party), crude purchase and sale agreements (wherein Seller is a selling party),
surface leases, farm-in agreements, farmout agreements, bottom hole agreements,
acreage contribution agreements, operating agreements, unit agreements, area of
mutual interest agreements, processing agreements, options, leases of equipment
or facilities, and other contracts, agreements, and rights, which are owned by
Seller, in whole or in part and are (I) appurtenant to the Leases, or (ii) used
or held for use in connection with the ownership or operation of the Leases or
with the Production, treatment on the Leases, sale or disposal of water,
hydrocarbons or associated substances, herein called individually and
collectively the "Contracts";
PURCHASE AND SALE AGREEMENT - PAGE 1
<PAGE> 146
VI. The Records. All of the files, records and data in the possession
of Seller relating to the items described in subsections (I), (II), (III), (IV),
and (V) above (the "Records"), including, without limitation, lease files, title
records (including abstracts of title, title opinions, and title curative
documents); contracts, correspondence, originals or copies of geological,
geophysical, and seismic records, data, and information; and originals or copies
of production records, electric logs, core data, pressure data and decline
curves and graphical production curves, and all related matters, to the extent
Seller has the authority to release such Records and to the extent they are
reasonably required by Purchaser to operate the Wells;
VII. Miscellaneous. Exhibit "A" attached hereto sets forth the
undivided interests of Seller in the Leases, and the revenue interests
attributable thereto, as well as the undivided interests of Seller in the
Production, Wells, Equipment, Rights of Way, and Contracts. This Agreement
covers and pertains to all of the right, title, and interest of Seller in the
Leases, the lands covered by the Leases, Production, Wells, Equipment, and
Rights of Way, even if the undivided interests of Seller in any such property or
property rights should be incorrectly or insufficiently described in the Exhibit
"A."
Less and except the reservations set forth in Paragraphs 24, 25 and 26
below, the Leases, Production, Wells, Equipment, Rights of Way and Permits,
Contracts, Records, and Miscellaneous, referenced in Paragraphs I through VII
above, are hereinafter sometimes referred to individually and collectively in
the singular as "Property."
WHEREAS, this Agreement was the subject of, and was contemplated by,
that certain letter of intent dated October 17, 1996, by and between Queen Sand
Resources, Inc., and David Robertson and Allen K. Robertson, as amended and
supplemented, including amendment and supplement dated December 24, 1996. As to
the interest of Seller in and to the Property, this Agreement supersedes and
replaces the letter of intent.
NOW, THEREFORE, for and in consideration of the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Seller and Purchaser
hereby agree as follows:
1. Sale and Purchase. Seller agrees to sell and convey to Purchaser,
and Purchaser agrees to purchase and pay for, all of Seller's right, title, and
interest in and to the Property as hereinafter provided.
2. Purchase Price. The "Purchase Price" payable by Seller for the
Property shall be subparagraphs (a) through (d) as follows:
(a) $397,656.00, payable at Closing;
(b) 189,720 shares of the common stock of Queen Sand
Resources, Inc., a Delaware corporation ("QSR"), who is the parent
corporation of Queen Sand Resources, Inc., a Nevada corporation, who is
in turn the parent corporation of Purchaser (the "QSR Shares"), which
shares are to be issued at Closing to Allen K. Robertson. At Closing
Purchaser shall cause to be delivered to Seller an instruction letter
from QSR to its transfer agent which authorizes the issuance of the QSR
Shares to Allen K. Robertson.
(c) A promissory note (the "First Note") in the principal sum
of $375,000.00, payable by Purchaser to Seller, the principal of which
note, unless and to the extent earlier paid upon the installment
demands of Seller, as hereinafter provided in Paragraph 17 below, or
unless and to the extent converted into common shares of QSR, as
hereinafter provided in Paragraph 18 below, shall be paid in three
years from the date of Closing under this Agreement. The note shall
bear no interest during the first two years of the note, and shall bear
interest thereafter, as also provided in Paragraph 17 below. The note
shall be in the form attached hereto as Exhibit "C-1."
(d) A promissory note (the "Second Note") in the principal sum
of $75,000.00, payable by Purchaser to Seller, the principal of which
note, unless and to the extent earlier paid upon the demand of Seller,
shall be paid in one hundred and eighty days (180) from the
PURCHASE AND SALE AGREEMENT - PAGE 2
<PAGE> 147
date of Closing under this Agreement. The note shall bear no interest.
The note shall permit Seller to demand payment, after notice, after
ninety days from date of Closing. The note shall be in the form
attached hereto as Exhibit "C-2."
All cash payments to be tendered by Purchaser to Seller, either before
or after Closing, shall be made by wire transfer or shall be made by certified
funds.
The cash of subparagraph 2(a) above of $275,000, and the promissory
note of subparagraph 2(d) above, will be paid to Pelican in consideration for
its interest in the Leases described in Exhibit "A" under the headings "East
Fork Field."
The Purchase Price shall be subject to adjustment as hereinafter
provided.
3. Closing and Effective Date.
(a) The closing of the sale and purchase of the Property shall
take place on or before February 5, 1997, (the "Closing") at 1310 Jeff
Davis, Hammond, Louisiana, or at such other time, place, or manner as
may be mutually agreeable to the Parties. The sale of the Property
shall be effective as of November 1, 1996, at 7:00 a.m. local time for
each of the particular Leases (the "Effective Date").
(b) At the Closing, the Property shall be conveyed and
transferred by Seller to Purchaser by the execution and delivery of an
Assignment and Bill of Sale (the "Assignment") in substantially the
same form and content as the Assignment and Bill of Sale which is
attached hereto as Exhibit "D," and such other instruments of
conveyance as may be reasonably requested by Purchaser. Purchaser shall
be entitled to all of Seller's rights in the Property (including,
without limitation, the rights to all Production and proceeds of
Production) appurtenant and attributable to the Property, and shall be
subject to the duties and obligations attendant with ownership of such
undivided share of the Property for the period from and after the
Effective Date. For the period prior to the Effective Date, Seller
shall be entitled to all of the rights (including, without limitation,
the rights to all Production and proceeds of Production) appurtenant
and attributable to the Property, and shall be subject to the duties
and obligations attendant with ownership of the Property.
4. Adjustments to Purchase Price. The Purchase Price shall be adjusted
(the "Adjusted Purchase Price") at the Closing, by the "Interim Settlement
Statement" (hereinafter defined in this paragraph and in Paragraph 9 below),
and, subsequent to Closing, by the "Final Settlement Statement" (hereinafter
defined in Paragraph 13 below), as follows:
(a) The Purchase Price shall be increased by the following:
(1) the value of all merchantable allowable oil or
other liquid hydrocarbons in storage owned by Seller in the
tanks or above the pipeline connection at the Effective Date,
and not previously sold by Seller, that is credited to the
share of the Property being acquired hereunder, valued at the
contract price thereto, or if none, the actual price received
by Purchaser, less taxes or gravity adjustments deducted by
the purchaser of such oil or other liquid hydrocarbons;
(2) the amount of all reasonable expenditures made in
connection with the ownership, operation, and maintenance of
the share of the Property being acquired hereunder, (including
royalties and rentals) and in accordance with generally
accepted accounting principles and prudent operations,
attributable solely to the period from and after the Effective
Date and which are paid by or on behalf of Seller after the
Effective Date;
(3) an amount equal to all prepaid expenses,
attributable to the ownership, operation, and maintenance of
the share of the Property being acquired hereunder that are
paid by or on behalf of Seller after the Effective Date and
prior to the Closing Date and that are, in accordance with
generally accepted accounting principles, attributable solely
to the period from and after the Effective Date;
PURCHASE AND SALE AGREEMENT - PAGE 3
<PAGE> 148
(4) any other amount agreed upon by Purchaser and
Seller.
(b) The Purchase Price shall be decreased by the following:
(1) the amount of any proceeds from the sale of
Production attributable to the share of the Property being
acquired hereunder attributable to the period on or after the
Effective Date (net of production, severance, and similar
taxes and assessments measured by or payable out of
production) actually received or accrued by or on behalf of
Seller;
(2) an amount equal to all unpaid ad valorem,
property, production, profit, severance, and similar taxes and
assessments based upon or measured by the ownership of the
share of the Property being acquired hereunder or the
production of oil, gas, or other minerals therefrom or the
receipt of proceeds attributable thereto, which accrue to or
are chargeable against such share of the Property (in
accordance with generally accepted accounting principles) and
which are attributable to the period prior to the Effective
Date, which amount shall, to the extent not actually assessed,
be computed based upon such taxes and assessments for the
immediately- preceding calendar year, or if such taxes or
assessments are assessed on other than a calendar-year basis,
for the tax period last ended;
(3) any amounts received by Seller (whether prior to
or subsequent to the Effective Date) pursuant to
"take-or-pay," advance payment, or similar provisions of any
production sales contract, any gas balancing agreement, or any
other agreement, to the extent any purchaser has the right to
apply any such amounts to Purchaser's share of Production
delivered after the Effective Date;
(4) any reduction in the value of the share of the
Property being acquired hereunder resulting from the existence
of a Defect (herein defined in Section 5(d)) which is not
cured or waived prior to Closing;
(5) any other amount agreed upon by Purchaser and
Seller.
(c) The "Interim Settlement Statement" shall be prepared by
Seller, its agents, or representatives, prior to Closing, which
statement shall set forth the adjustments to the Purchase Price, per
the adjustments set forth in this Paragraph 4, which are or may be
determined at or prior to Closing. Such statement shall be prepared
according to generally accepted accounting principles and shall show
the calculation of all such adjustments. Upon the approval of such
Interim Settlement Statement by Purchaser, the Purchase Price shall be
adjusted according to such statement. Upon Purchaser's request, Seller
shall make available to Purchaser all information relied upon by Seller
for the adjustments requested in order to aid and facilitate
Purchaser's approval of such statement. After Closing, the Purchase
Price may further be adjusted, pursuant to the adjustments set forth in
this paragraph, with the "Final Settlement Statement" in the manner
further described in Paragraph 13 below.
(d) All monies received by either Party hereto which, under
the terms of this Agreement or otherwise, belong to the other Party,
shall be received in trust by the Party receiving such funds, and shall
monthly, upon receipt, be paid over to the other Party. The Parties
agree, in this regard, to cooperate fully and to execute, endorse, and
deliver as expeditiously as practicable such papers, checks, and
documents as are needed promptly to complete the transfer of such
payments;
(e) After the Closing, if an invoice or other evidence of an
obligation relating to the share of the Property acquired by Purchaser
is received which is applicable to periods both prior to and after the
Effective Date, and is partly the obligation of Seller and partly the
obligation of Purchaser, then each Party shall pay its respective
portion of such obligation to the obligee, prorated between the Parties
as of the Effective Date;
(f) At and after the Closing, Purchaser and Seller will
cooperate fully in notifying all applicable third parties (including
the execution by Seller of such transfer orders, letters
PURCHASE AND SALE AGREEMENT - PAGE 4
<PAGE> 149
in lieu, change of operator, etc., as may be requested by Purchaser) so
that notices, proceeds, and invoices from such third parties may take
into account the fact that Purchaser has acquired the Property as of
the Effective Date;
(g) The parties hereto agree to exercise diligence and good
faith in attempting to resolve any disagreements or disputes which may
arise from the adjustments to the Purchase Price to be made in
accordance with this paragraph.
5. Property Conditions, Title Review, Property Information, and
Casualty Losses.
(a) Property Conditions. THIS SALE OF THE EQUIPMENT AND ALL
OTHER PERSONAL PROPERTY THAT IS A PART OF THE PROPERTY IS MADE ON AN
"AS IS, WHERE IS" BASIS WITH ALL FAULTS AS TO ITS CONDITION, AND SELLER
EXPRESSLY DISCLAIMS ALL WARRANTIES AS TO THE CONDITION OF THE EQUIPMENT
(NOTE, HOWEVER, THERE ARE CERTAIN WARRANTIES AS TO TITLE AS HEREIN SET
FORTH) INCLUDING, WITHOUT LIMITATIONS, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE. Seller agrees
that for a period of time commencing with the date of the letter of
intent dated October 17, 1996, above described, and continuing until
five (5) business days before Closing (the "Review Period"), Purchaser,
personally or through its authorized agents or representatives, shall
have the right to make any and all physical inspections of the Property
which Purchaser may desire to make or to have made and to make all such
other inspections, surveys, tests, or other studies (including, but not
limited to, environmental assessments and evaluations) as Purchaser
deems necessary or desirable. Upon reasonable notice to Seller,
Purchaser, and its authorized agents and representatives, at
Purchaser's sole risk, may enter upon the Property for the purpose of
conducting those inspections, surveys, tests, and studies. If Purchaser
shall determine that the condition of the Property is not in
substantial compliance with any governmental regulations (including
environmental regulations), then upon discovery, Purchaser must
promptly give written notice to Seller of such condition ("Condition").
Upon receipt of such notice, Seller shall have the option, but not the
obligation, to (a) cure or remedy such Condition to the reasonable
satisfaction of Purchaser (if current remediation of such Condition is
required by a governmental agency, Seller agrees that the Condition
shall be remedied in accordance with and to the satisfaction of the
appropriate agency's requirements); or (b) agree with Purchaser on a
reduction to the Purchase Price which reduction shall reflect
Purchaser's anticipated reasonable cost to remedy such Condition. If
the Condition cannot be cured or remedied to Purchaser's reasonable
satisfaction, and if agreement cannot be reached on reduction to the
Purchase Price, then the affected Property may be excluded by Purchaser
from the Property to be acquired by Purchaser hereunder. In such event
, the Purchase Price shall be reduced by the Allocated Purchase Price
(see subparagraph (c) below) for such excluded property.
(b) Review of the Records. During the Review Period, and upon
reasonable notice from Purchaser, Seller shall provide Purchaser,
personally or through its authorized agents or representatives, full
access during normal business hours to Seller's office and premises to
review and inspect all Records, including, but not limited to, all
abstracts of title, lease files, unit files, production and marketing
files, title opinions, title files, title records, geologic,
engineering, and other files or information in Seller's possession or
to which it has access which relate to the Property, and the status of
Seller's title thereto, and Purchaser, at its expense, shall have the
right to make and retain copies of any of such Records; provided
however, if the transactions contemplated hereby do not close for any
reason, Purchaser shall return any Records and copies thereof to Seller
forthwith. Without limiting the generality of the foregoing, Purchaser
shall also be given access to reserve reports, geological and
geophysical reports (including, but not limited to well records, log
films, proprietary or joint venture seismic data or other seismic data
which Seller is not contractually restricted from disclosing),
contracts (including, but not limited to, gas contracts), operating
agreements, operating statements, and reports.
(c) Notice of Defect. If, during the Review Period, Purchaser
determines that the Property is subject to a "Defect" (as defined
herein in Section 5(d)), the Purchaser must give
PURCHASE AND SALE AGREEMENT - PAGE 5
<PAGE> 150
written notice to Seller of such Defect, the nature of the Defect, and
furnish Seller Purchaser's basis for the assertion of such Defect. As
soon as practical after such written notice, Seller shall use
reasonable diligence to cure any such Defects. If Seller cannot cure
any such Defects to the reasonable satisfaction of Purchaser, then
Seller shall so notify Purchaser in writing. Thereafter, Seller and
Purchaser shall use a good faith effort to agree on the Purchase Price
adjustment for any such Defect which cannot be cured. Such adjustment
shall be determined in accordance with the following guidelines:
(1) The Purchase Price shall be allocated among the
various Leases in the proportion of the PDP fair market value
of the Leases reported by Netherland Sewell & Associates in
its report dated October 21, 1996, (the "Allocated Purchase
Price").
(2) If the Defect is that Seller's Net Revenue
Interest ("NRI") for any Property is less than the NRI for
such Property as set forth in Exhibit "A," then the allocated
Purchase Price for such Property shall be adjusted in the same
proportion that the actual NRI for such property bears to the
NRI shown in Exhibit "A."
(3) If the Defect is a lien, encumbrance, or other
charge upon the Property which is liquidated in amount, then
the adjustment shall be the sum necessary to be paid to the
obligee to remove the Defect from the Property.
If the Purchase Price adjustment for any such Defect cannot be
determined, and the Seller and Purchaser cannot agree in good faith on the
amount of the adjustment to the Purchase Price, the Purchaser may (a) waive the
Defect and proceed with Closing, or (b) exclude the affected Property and reduce
the Purchase Price by the Allocated Purchase Price for such property, or (c)
terminate this Agreement, in which event the Parties shall have no further
rights or obligations under this Agreement.
(d) Definition of Defect. For the purpose of this Agreement, a
"Defect" shall be defined as:
(1) Any material encumbrance, lien, mortgage, breach
of representation or warranty, production payment, pledge,
claim, charge, call on production, default, defect, condition,
unleased mineral interest, preferential right, requirement for
consent to assignment, or lack of title affecting the
Property, or any matter affecting the Property by which
Purchaser reasonably or in good faith believes that Seller's
interest in a Property may become subject to the claims of
third parties; and
(2) Seller's NRI in any Property is less than the NRI
for such Property which is set forth in Exhibit "A," or
Seller's gross working interest ("WI") in any Property is less
than the working interest shown in Exhibit "A," or Seller's WI
in any Property is greater than the working interest shown in
Exhibit "A" without a corresponding increase in the NRI in
such Property.
(e) Other Property Information. If, based upon Purchaser's
examination of the Records according to Paragraph 5(b) hereof,
Purchaser shall determine that any information, statement, or data
contained in any information, reports, statement, or data furnished to
Purchaser or used in its economic analysis of the Property is not true
or correct in any material respect, upon discovery of any incorrect
information, Purchaser may give written notice to Seller of such
inaccuracy or misstatement. Any such notice must be provided in writing
during the Review Period, or it will be deemed to be waived. Such
notice shall provide a summary of such inaccuracy or misstatement. Upon
receipt of such notice, Seller shall have the option, but not the
obligation, to (a) cure or remedy such inaccuracy or misstatement to
the reasonable satisfaction of Purchaser; or (b) agree with Purchaser
on a reduction to the Purchase Price, which reduction shall reflect
Purchaser's reasonably anticipated cost to remedy such inaccuracy or
misstatement. If the inaccuracy or misstatement cannot be cured or
remedied to Purchaser's reasonable satisfaction, and if agreement
cannot be reached on reduction to the Purchase Price, then the affected
Property shall be excluded from the purchase to be acquired by
Purchaser hereunder, and the Purchase Price shall be reduced by the
Allocated Purchase Price for the particular property.
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(f) Casualty Loss. If, prior to Closing, any Property is
substantially damaged or destroyed by fire or other casualty ("Casualty
Defect"), Seller shall notify Purchaser promptly after Seller learns of
such event. Seller shall have the right, but not the obligation, to
cure, or cause to be cured, any such Casualty Defect by repairing such
damage or, in the case of personal property, fixtures, replacing the
Property affected thereby with equivalent items, no later than the date
of Closing. If any Casualty Defects exist at Closing, Purchaser may
proceed to purchase the property affected thereby, and the Purchase
Price shall be reduced by the aggregate reduction in the value of such
property on account of such Casualty Defects, as determined by the
mutual agreement of the Parties, or if the Parties are unable to agree
on the reduction of the Purchase Price, then the affected property
shall be excluded from the Property to be acquired by Purchaser
hereunder, and the Purchase Price shall be reduced by the Allocated
Purchase Price for such Property. Notwithstanding anything to the
contrary contained herein, Seller shall be entitled to retain all
insurance proceeds and claims against other Parties in respect of any
such Casualty Defect which occurs prior to closing unless no reduction
is made in the Purchase Price as a result of such Casualty Defect, in
which event Purchaser shall be entitled to the insurance proceeds and
claims against other Parties arising from such Casualty Defect.
6. Seller's Representations and Warranties. Seller represents and
warrants to Purchaser that:
(a) This Agreement has been duly executed and delivered on
behalf of Seller and is binding and enforceable against Seller in
accordance with its terms and at the Closing. All documents and
instruments required hereunder to be executed and delivered by Seller
shall have been duly executed and delivered at Closing, and the
execution, delivery, and performance of this Agreement by Seller and
the consummation of transactions contemplated hereby will not
constitute a breach of, an event of default under, a violation of, or a
conflict with any agreement or other instrument to which Seller is a
party (except to the extent such instrument may be released at the
Closing). Nor will the same cause Seller to be in violation of any
applicable laws or regulations or any order of any court or
governmental agency having jurisdiction.
(b) All ad valorem, property, production, severance, excise,
and similar taxes and assessments based on or measured by the ownership
of the Property, or the Production or the receipt of proceeds
therefrom, which have become due and payable prior to the date hereof
with respect to the Property have been properly paid, and Seller's
allocable share of such taxes and assessments on the Property which
become due and payable prior to the Closing shall be properly paid by
Seller, and all royalties, overriding royalties, and payments to any
third parties which have become due and payable prior to the date
hereof with respect to production from the Property, have been properly
paid, and will be hereafter properly paid for the period prior to
Closing.
(c) Seller has incurred no liability, contingent or otherwise,
for brokers' or finders' fees in respect of this transaction for which
Purchaser shall have any responsibility whatsoever.
(d) Prior to the Closing, Seller will pay or cause to be paid
all of Seller's share of costs and expenses incurred in connection with
the Property, and will comply with all contracts or other agreements
relating to the Property.
(e) To the best of Seller's information and belief, all laws,
regulations, and orders of all governmental agencies having
jurisdiction over the Property have been and shall continue to be
complied with until the Closing.
(f) There are no first rights of refusal, consents,
authorizations, preferential rights, options, or claims of a similar
nature affecting the Property, other than those listed in Exhibit "A,"
said listed consents defined herein as "Consents."
PURCHASE AND SALE AGREEMENT - PAGE 7
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(g) Seller shall, upon request, subrogate Purchaser to any
claim which Seller may have against any third party, prior owner,
vendor, or assignor with respect to the share of the Property acquired
by Purchaser, or the title thereto.
(h) There are no "imbalances" which allow any other party to
make up production at any time after the Effective Date, under any
operating agreement, gas balancing agreement and storage agreement, gas
transportation agreement, gas processing or dehydration agreement, or
other similar agreement relating to the Property.
(i) Seller has not directly or indirectly reserved or retained
any recorded or unrecorded interest or rights in any Property, and
Seller shall not reserve any recorded or unrecorded executory interest
or rights relating to the Property.
(j) Seller warrants that the Property is free and clear of all
encumbrances, liens, and mortgages, save and except such encumbrances
as may be identified and described in Exhibit "A" attached hereto, and
further save and except liens for taxes not yet due and payable.
(k) Except as may be identified and described in Exhibit "A"
attached hereto, the Property is not subject to any restriction,
reservation, reversionary interest, drilling or development obligation,
or other material obligation or burden on the operation or the
disposition of Production attributable to such properties.
(l) No part of any of the Property is affected by any
prepayment arrangement under any contract for the sale of oil or gas,
or by any production payment or any other arrangement for delivery of
oil or gas produced from any of the Property at some future time
without Purchaser then or thereafter receiving full payment therefor,
and no third party now has or at Closing will have any right to take
makeup gas for which it has already paid. As of the Effective Date,
there are no volumes of makeup gas owing, or accumulated transportation
credits due, to gas purchasers on account of any "take-or-pay" or other
provisions of any contract, and Seller has not produced or sold more
than its pro-rata share of the gas from any Wells included in the
Property.
(m) Except as may be set forth in Exhibit "A" attached hereto,
there are no restriction, reservation, reversionary interest, drilling
or development obligation, or other material obligation, affecting the
Property that cannot be terminated upon ninety (90) days' written
notice.
(n) Without the prior written consent of Purchaser, Seller (i)
shall not enter into any new agreements or commitments affecting the
Property which extend beyond the Closing, and (ii) will not modify or
terminate any agreements affecting any of the Property, including,
without limitation, any oil and gas leases, unitization or pooling
agreements, operating agreements, pipeline agreements, processing
agreements, and hydrocarbon sales contracts, and (iii) will not further
encumber, sell, mortgage, release, abandon, or otherwise dispose of any
of the Property or any interests therein.
(o) There is not any suit, action, or other proceeding pending
or threatened which affects or relates to the Property, or seeks to
restrain or prohibit Seller from selling or conveying to Purchaser the
share of the Property to be purchased herein. Seller shall promptly
notify Purchaser of any such proceedings which may arise or be
threatened prior to Closing.
(p) There are no operating agreements with third parties
affecting the Property except as may be identified and described in
Exhibit "A" attached hereto.
(q) Seller has no knowledge and has not received any notice of
any claimed default (or any event which, with the giving of notice or
the passage of time, or both, would constitute a default) under (i) the
Leases, or (ii) any order, writ, injunction, or decree of any court,
commission, or administrative agency affecting the Property, or (iii)
any other agreement affecting the Property. Seller shall promptly
notify Purchaser of any such notice
PURCHASE AND SALE AGREEMENT - PAGE 8
<PAGE> 153
hereafter received by Seller and the occurrence of any such event of
which Seller becomes aware prior to Closing.
(r) There are no tax partnerships affecting any of the
Property.
(s) To the best of Seller's information and belief, no
Production from any Well on the Property has occurred in excess of that
permitted by law, orders, or regulations.
(t) To the best of Seller's information and belief, there has
been no material injury or damage to any of the Property which has not
been fully repaired, replaced, or rebuilt.
(u) Except for depletion due to continued production, there
has been no substantial and material change in condition of the
Property between the date hereof and Closing.
(v) To the best of Seller's information and belief, all
easements, rights of way, permits, crossing agreements, and surface
rights included in the Property are in full force and effect and are
valid and subsisting, and freely assignable, and all rentals and other
payments due thereunder have been properly and timely paid and all
conditions necessary to keep them in force have been duly performed.
(w) From and after the effective date of its acquisition of
its ownership in the Leases, the Seller has performed all obligations
required to be performed under such Leases, or any other instruments
and agreements relating to the Properties, and is not in default
thereunder, and to the best of Seller's information and belief, each of
the Leases to be conveyed is valid and in full force and effect.
(x) To the best of Seller's knowledge, Seller owns each Lease
and Property in the undivided share reflected by the "Working Interest"
described and set forth in Exhibit "A" for each particular Lease and
Property, and Seller owns for each Lease and Property the share of
Production reflected as "Net Revenue Interest" in Exhibit "A" attached
hereto. Seller is being paid not less than the fractional "net revenue
interest" for each Property in Exhibit "A" hereto, and, for expenses
and costs for each Property, Seller is not paying more than the
fractional interest specified under "Working Interest" for each
Property in Exhibit "A" hereto.
(y) To the best of Seller's information and belief, all
rentals and bonuses have been timely and fully paid and discharged, and
all conditions necessary to keep the Leases in full force have been
performed, and no proceeds from the sale of Production attributable to
the Property are currently being held in suspense by any purchaser
thereof.
(z) The Seller has not collected any proceeds from the sale of
Production attributable to the Property which are subject to refund, or
if so, that any such refund, if not otherwise accounted for under this
Agreement, shall be the sole responsibility of the Seller. Sellers do
disclose that, in a separate account in the name of Hawkeye Drilling
Company, there are undistributed royalty monies for production having
occurred in the Waskom Field Leases covering lands located in Harrison
County, Texas.
(aa) Except as listed in Exhibit "A" attached hereto, to the
best of Seller's information and belief, there are no Wells located on
the Property that are shut-in and/or unplugged which are not presently
producing, or which are not presently being utilized in disposal or
injection operations.
(bb) To the best of Seller's information and belief, there are
no presently existing conditions (by existing federal or state statutes
and regulations) affecting the Property, which might give rise to a
cause of action on behalf of any governmental agency or third party,
against either Purchaser or Seller.
PURCHASE AND SALE AGREEMENT - PAGE 9
<PAGE> 154
(cc) All information and data provided to Purchaser by Seller
or its agents concerning the Property is true and correct to the best
of Seller's information, knowledge, and belief.
(dd) Environmental Current Status. To the best of Seller's
knowledge, the Property, and Seller are not in violation of or subject
to any existing, pending, or threatened investigation or inquiry by any
governmental authority or to any remedial obligations under any
applicable laws pertaining to health or the environment (such laws as
they now exist or are hereafter enacted and/or amended hereinafter
sometimes collectively called "Applicable Environmental Laws"),
including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, hereinafter
called "CERCLA"), the Resource Conservation and Recovery Act of 1976,
as amended by the Used Oil Recycling Act of 1980, the Solid Waste
Disposal Act Amendments of 1980, and the Hazardous and Solid Waste
Amendments of 1984 (as amended, hereinafter called "RCRA"), the Texas
Water Code and the Texas Solid Waste Disposal Act, and this
representation will continue to be true and correct following
disclosure to the applicable governmental authorities of all relevant
facts, conditions, and circumstances, if any, pertaining to the
Property, and Seller. The terms "hazardous substance" and "release" as
used in this Agreement shall have the meanings specified in CERCLA, and
the terms "solid waste" and "disposal" (or "disposed") shall have the
meanings specified in RCRA; provided, in the event either CERCLA or
RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective
date of such amendment and provided further, to the extent that the
laws of the State of Texas establish a meaning for "hazardous
substance," "release," "solid waste," or "disposal" which is broader
than that specified in either CERCLA or RCRA, such broader meaning
shall apply.
(ee) Pelican is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Louisiana; (ii) Pelican is duly qualified to transact business in each
jurisdiction where the nature and extent of its business and properties
require the same in order for it to perform its obligations under this
Agreement; (iii) Pelican possesses all requisite authority, power,
licenses, permits, and franchises to conduct its business and execute,
deliver, and comply with the terms and provisions of this Agreement and
any other document, instrument, or agreement provided for herein,
including the Assignment, all of which have been duly authorized and
approved by all necessary corporate action and for which no further
approval or consent is required; and (iv) Allen K. Robertson is the
sole shareholder of Pelican, and he owns said stock as his separate
property.
(ff) ROG is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Louisiana; (ii) ROG
is duly qualified to transact business in each jurisdiction where the
nature and extent of its business and properties require the same in
order for it to perform its obligations under this Agreement; (iii) ROG
possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply
with the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, including the Assignment,
all of which have been duly authorized and approved by all necessary
corporate action and for which no further approval or consent is
required; and (iv) Allen K. Robertson is the sole shareholder, and he
owns said stock as his separate property.
(gg) All information and data provided to Purchaser concerning
the Property is true and correct to the best of Seller's information,
knowledge, and belief;
(hh) Allen K. Robertson warrants and represents that he is
(1) a natural person whose individual net worth, or
joint net worth with his spouse which at this time exceeds
$1,000,000.00; or
(2) a natural person who had an individual income in
excess of $200,000.00 in each of the two most recent years or
joint income with his spouse in
PURCHASE AND SALE AGREEMENT - PAGE 10
<PAGE> 155
excess of $300,000.00 in each of those years and has a
reasonable expectation of reaching the same income level in
the current year.
Allen K. Robertson represents and agrees that (i) his acquisition of
QSR Shares will not be made with a view toward the "distribution" of such
shares, as defined in the securities Act of 1933, as amended (the "1933 Act");
(ii) such shares may not be transferred or hypothecated unless, in the opinion
of counsel to the corporation, such transfer or hypothecation would be in
compliance with the registration provisions of the 1933 Act or pursuant to an
exemption therefrom; and (iii) Allen K. Robertson agrees to sign an agreement to
such effect at the time of Closing and agrees that the certificate for the
shares so acquired may be inscribed with a legend to ensure compliance with the
1933 Act. Allen K. Robertson understands that the shares will not, subject to
Paragraph 22 below, be registered under the 1933 Act, or under the laws of any
jurisdiction. Allen K. Robertson, himself, or through his advisers, is
sophisticated and experienced in financial business and investment matters, and
as a result, the Seller is in a position to evaluate the merits and risks of an
investment in Queen Sand Resources, Inc., a Delaware corporation.
7. Purchasers Representations and Warranties. Purchaser represents and
warrants to Seller that:
(a) Purchaser: (i) is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada;
(ii) is duly qualified to transact business in each jurisdiction where
the nature and extent of its business and properties require the same
in order for it to perform its obligations under this Agreement; and
(iii) possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply
with the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, all of which have been
duly authorized and approved by all necessary corporate action and for
which no further approval or consent is required.
(b) The consummation of the transactions contemplated by this
Agreement will not violate, or be in conflict with (i) any agreement or
instrument to which Purchaser is a party; or (ii) any judgment or
decree applicable to Purchaser as a party in interest with respect
thereto.
(c) This Agreement has been duly executed and delivered on
behalf of Purchaser, and at the Closing, all documents and instruments
required hereunder to be executed and delivered by Purchaser (or its
assignees) shall have been duly executed and delivered.
(d) Subject to the conditions herein, Purchaser has or will
have at Closing (i) the financial capability or (ii) commitments from
responsible financial institutions to provide the funds required by
Purchaser, to pay the Purchase Price and consummate the transaction
contemplated hereby within the time period contemplated herein.
(e) Purchaser either has performed, or prior to closing will
perform, whatever inspection of the Property and Seller's title thereto
that Purchaser deems appropriate and knows the condition thereof and is
purchasing the Property as a result of such inspections and not because
of, or in reliance on, any representation or warranty made by Seller
other than those expressly set forth in this Agreement.
(f) In the event the Purchase Price is adjusted down at
Closing, based upon any unpaid taxes as set forth in Paragraph 4(b)(2)
hereof (the "Tax Adjustment"), Purchaser agrees to timely make payment
(equivalent to the Tax Adjustment) to such taxing authorities as may be
appropriate.
8. Conditions to Obligations of Purchaser. The obligations of Purchaser
to consummate the transaction provided for herein are subject, at the option of
Purchaser, to the fulfillment on or prior to Closing, of each of the following
conditions:
(a) Representations. The representations and warranties of
Seller herein contained shall be true and correct in all material
respects at Closing as though made on and
PURCHASE AND SALE AGREEMENT - PAGE 11
<PAGE> 156
as of such date (unless appropriate adjustments or remediation has been
made in accordance with Paragraph 5 hereof).
(b) Performance. Seller shall have performed all obligations,
covenants, and agreements hereunder and shall have complied with all
covenants and conditions contained in this Agreement to be performed or
complied with by it at or prior to the Closing.
(c) Pending Matters. No suit, action, or other proceedings
shall be pending or threatened (a) against Seller before any court or
governmental agency which might result in impairment or loss of value
as to Seller's title to any part of the Property; or (b) which seeks to
restrain, enjoin, or otherwise prohibit the consummation of the
transactions contemplated by this Agreement.
(d) Liability. No liability which affects, in a materially
adverse manner, the Property or Purchaser's ability to receive the
economic benefits therefrom has been or is threatened to be asserted
with respect to the Property.
(e) Defects. No Defects shall be present, which are not cured
by Seller or waived by Purchaser as provided herein.
(f) Records and Access. Seller shall have afforded Purchaser
and its officers, employees, and representatives timely and reasonable
access to the Records as required herein.
9. Seller's Obligations at Closing. At the Closing, Seller shall
deliver to Purchaser the following items; however, item (e) will be delivered as
soon prior to Closing as reasonably practical:
(a) The Assignment, duly executed and acknowledged by Seller;
(b) Duly executed and acknowledged releases of all liens and
burdens on the Property or on Production therefrom or attributable
thereto;
(c) Executed transfer orders (or letters in lieu thereof)
addressed to all purchasers of production from the Property;
(d) Any other executed documents or instruments which may be
reasonably required to consummate the transactions contemplated herein
and to fully vest Purchaser with operations and title to the Property
as contemplated hereby;
(e) The "Interim Settlement Statement," which shall set forth
the Purchase Price and adjustments thereto provided for in this
Agreement which are or may be determined at or prior to the Closing,
which statement shall be delivered to Purchaser as soon as reasonably
practical prior to Closing for Purchaser's review and approval;
(f) All consents required of third parties, who are identified
in Exhibit "A" attached, properly executed and in form approved by
Purchaser;
(g) All releases of current liens of lenders encumbering all
or any part of the Property, properly executed in form acceptable by
Purchaser;
(h) Deliver to Purchaser a counterpart copy of the
Subscription Agreement, executed by Seller and/or the party receiving
the QSR Shares, covering the QSR Shares; and
(i) Deliver to Purchaser the forms, properly executed by
Sellers, required by the regulatory agencies of the respective states
in which are located the leased premises of the Leases, necessary to
effect the transfer of operations of the Operated Properties (as
defined in Paragraph 23 below) from ROG to Northland Operating Company.
In the manner set forth in Paragraph 23(c) below, such forms relating
to Leases covering lands in the State of Mississippi shall not be
dated; and
PURCHASE AND SALE AGREEMENT - PAGE 12
<PAGE> 157
10. Purchaser's Obligations at Closing. At the Closing, Purchaser
shall:
(a) Deliver to Seller the Adjusted Purchase Price, in cash or
other immediately available funds (which shall be subject to a
subsequent accounting between Seller and Purchaser pursuant to this
Agreement).
(b) Deliver to Allen K. Robertson a counterpart copy of the
Subscription Agreement, executed by Queen Sand Resources, Inc. covering
the QSR Shares, along with the instruction letter to the transfer
agent, Continental Stock Transfer & Trust Co., authorizing and
directing the delivery of the QSR Shares to Allen K. Robertson;
(c) Deliver to Seller the fully executed promissory note
described in Paragraph 2(c) above;
(d) Deliver to Seller fully executed Mortgages, Financing
Statements and Security Agreements described in Paragraph 21 below;
(e) Deliver to Seller a fully executed Limited Guaranty and
Security Agreement described in Paragraph 21 below, and deliver the
stock of Purchaser in the manner provided in such agreement;
(f) Execute and deliver any other documents or instruments
which may be required to consummate the transactions contemplated
herein.
11. Notices. All notices, demands, and requests which may be given or
which are required to be given by either Party to the other shall be in writing.
Any notice, demand, or communication required or permitted hereunder shall be
deemed to be delivered on actual receipt or three (3) days after being sent by
overnight courier or Certified U.S. Mail to Seller or Purchaser, whichever
occurs first, respectively, as follows:
SELLER: PURCHASER:
Robertson's Oil & Gas, Inc., Corrida Resources, Inc.
Pelican Oil Field Services, Inc., Suite 380, Lock Box 31
and Allen K. Robertson 3500 Oak Lawn Avenue
1310 Jeff Davis Dallas, Texas 75219-4398
Hammond, Louisiana Attn.: Edward Munden
Telephone: 504-345-8001 President
Facsimile: 504-542-7546 Telephone: 214-521-9959
Facsimile: 214-521-9960
or such other address as Purchaser or Seller may, from time to time, designate
pursuant to the terms hereof. A facsimile transmission shall be considered an
original document for purposes of providing notice under this section.
12. Furnishing Data and Information. The Seller also agrees to promptly
cooperate in all reasonable requests by Purchaser in furnishing copies, at
Purchaser's expense, of all Records necessary for Purchaser to conduct its due
diligence under the terms of this Agreement.
13. Post-Closing Adjustments. As soon as practicable after the closing,
and in any event within sixty (60) days after Closing, Seller shall prepare and
deliver to Purchaser, in accordance with this Agreement and generally accepted
accounting principles, a statement (the "Final Settlement Statement") setting
forth each adjustment or payment pursuant to Paragraph 4 hereof that was not
finally determined as of the Closing ("Post-Closing Adjustments") and showing
the calculation of such Post-Closing Adjustments and the aggregate amount
thereof. Within ten (10) business days after receipt of the Final Settlement
Statement, Purchaser shall deliver to Seller a written report containing any
changes that Purchaser proposes be made to the Final Settlement Statement. The
Parties undertake to agree with respect to the amounts of such Post-Closing
Adjustments no later than ninety (90) days after the Closing Date. The date upon
which such agreement is reached or upon which the aggregate amount of the
adjustments are finally established shall be herein called
PURCHASE AND SALE AGREEMENT - PAGE 13
<PAGE> 158
the "Final Settlement Date." Seller shall pay to Purchaser, or vice versa, as
the case may be, within ten (10) business days after the Final Settlement Date
the amount of such adjustments (as finally established), by means of wire
transfer in immediately available funds or by means of a certified bank check.
Without limiting the foregoing obligation of Seller to timely pay, Purchaser
shall have the right to offset its obligation under the Notes by any sums which
may be due and owing by Seller to Purchaser under Paragraph 4 and this Paragraph
13.
14. Failure to Perform/Termination of Agreement. If the Seller should
fail to fully and timely perform any of its obligations hereunder, or should
fail to consummate the sale of the Property, except due to the Purchaser's
default, the Purchaser may, at its option, enforce specific performance of this
Agreement, or terminate this Agreement.
15. Indemnification by Seller.
(a) Seller agrees to indemnify and save and hold harmless
Purchaser against and from any loss, damage, or expense sustained by
Purchaser arising out of or resulting from any breach of any of the
representations and warranties made hereunder and not waived by
Purchaser.
(b) Seller agrees to indemnify and save and hold harmless
Purchaser against all claims, liabilities, costs, expenses, taxes, and
liability arising out of the ownership or operation of the Property,
and based upon the occurrence of events, the accrual of obligations or
liabilities, or the existence of conditions prior to the Effective
Date.
(c) If any claims for brokerage fees are asserted against
Purchaser in connection with this transaction based upon alleged
commitments made by Seller, Seller shall indemnify Purchaser against
all such claims and reimburse Purchaser for all reasonable expenses
incurred in responding to such claims, including reasonable attorney's
fees.
(d) Notwithstanding anything to the contrary contained herein,
Seller agrees to indemnify and save and hold harmless Purchaser for
Seller's gross negligence or willful misconduct for that period of time
between the Effective Date and Closing.
(e) The provisions of subparagraph (a) through (e) above of
this Paragraph 15 shall survive Closing for a period of four (4) years
from the date of Closing, and Purchaser shall not be entitled to assert
any right of indemnification hereunder after such date.
16. Indemnification by Purchaser.
(a) Purchaser agrees to indemnify and save and hold harmless
Seller against and from any loss, damage, or expense sustained by
Seller arising out of or resulting from any breach of any of the
representations and warranties made hereunder and not waived by Seller.
(b) Purchaser shall assume and hereby agrees to pay, honor,
discharge, and perform fully and timely, the obligations and
liabilities directly associated with the Seller's interest in the share
of the Property acquired by Purchaser hereunder, which are attributable
to the period of time from and after the Effective Date.
(c) Purchaser agrees to indemnify and save and hold harmless
Seller against all claims, costs, expenses, windfall profits taxes, and
liabilities arising out of the ownership or operation of the share of
the Property acquired by Purchaser hereunder and based upon the
occurrence of events, the accrual of obligations or liabilities, or the
existence of conditions on and subsequent to the Effective Date (but
not including these costs and expenses incurred with respect to the
purchase of Seller's interest in the Property or the negotiations
leading to such purchase).
(d) If any claims for brokerage fees are asserted against
Seller in connection with this transaction based upon alleged
commitments made by Purchaser, Purchaser shall
PURCHASE AND SALE AGREEMENT - PAGE 14
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indemnify Seller against all such claims and reimburse Seller for all
reasonable expenses incurred in responding to such claims, including
reasonable attorney's fees.
(e) The provisions of this Paragraph 16 shall survive Closing
for a period of four (4) years from the date of Closing, and Purchaser
shall not be entitled to assert any right of indemnification hereunder
after such date.
17. Principal on First Note; Right to Demand Installments of Principal.
(a) The First Note shall not bear interest for the first two
years of the Note.
(b) Interest on the First Note for the third year of the First
Note is payable in shares of common stock of QSR and shall be paid on
maturity date of the Note. Such number of shares of QSR common stock to
be delivered at maturity date of the First Note shall be determined as
follows:
(1) multiplying the principal outstanding on the
First Note during the third year of the First Note at a rate
of nine percent (9%) per annum; and
(2) dividing such product by the conversion rate per
share which shall be equal to seventy-five percent of the
average closing bid price per share, as reported by NASDAQ,
for the thirty day period immediately preceding maturity date;
and
(3) any fractional share shall be rounded up to a
full share.
(c) Every six month period commencing one hundred and eighty
days following date of Closing the Seller may demand payment of
one-fifth (1/5th) of the principal of the First Note. Any such demand
shall be in writing. Payment shall be made at the later of (i) the end
of such sixth month period, or (ii) on the sixtieth day after
Purchaser's receipt of Seller's written notice. If during any six month
period Seller does not elect to demand an installment payment of
principal, then the right to demand an installment payment of principal
for such period shall be carried forward for one six month period only.
In this regard, Seller may demand in a future six month period the
installment payment which Seller could have demanded in the immediately
prior six month period; provided, however, (i) Seller shall deliver to
Purchaser one hundred and twenty days written demand for payment in
connection with any installment demand relating to a prior six month
period, and (ii) payment by Purchaser of the installment of principal
relating to such prior six month period shall be made at the time
payment is to be made by Purchaser of an installment of principal for
the then current six month period.
(d) All shares of QSR stock to be issued under the terms of
the First Note are to be issued to Allen K. Robertson.
18. Conversion of the First Note into Shares of QSR.
(a) One year and one day from Date of Closing, Seller can
convert all or any portion of the First Note into shares of common
stock of QSR. Each such conversion shall not less than one hundred
thousand (100,000) shares of QSR. Each such conversion shall occur on
the fifteen days written notice delivered to Purchaser by Seller. The
basis of conversion shall be at the price determined by multiplying
seventy-five percent times the average closing bid price, reported by
NASDAQ, for the thirty days immediately preceding the fifteenth day
following Purchaser's receipt of the conversion notice. Any fractional
share shall be rounded up to a full share.
(b) Any principal of the First Note which may be converted to
shares of QSR shall nevertheless be considered as outstanding for
purposes of determining the shares of QSR which are to be delivered as
interest, pursuant to subparagraph (a) immediately above. The Seller is
therefore to receive the full third year interest on any converted
principal, notwithstanding when Seller exercises his conversion
election. In the event of any
PURCHASE AND SALE AGREEMENT - PAGE 15
<PAGE> 160
conversion of principal, the interest in QSR shares on such converted
principal shall be paid on paid on maturity date.
19. Other Purchase and Sale Agreements. Purchaser has tendered purchase
and sale agreements, dated on or about the date hereof, to other parties, all of
whom are named in Exhibit "E" attached hereto (the "Other Purchase and Sale
Agreements"). Such other agreements may cover the interest, if any, of such
other parties in and to some or all of the Leases and Property covered by this
Agreement, and may cover other oil and gas properties which are not the subject
of this Agreement. Purchaser and Seller agree that the Closing under this
Agreement shall be simultaneous with the closings under the Other Purchase and
Sale Agreement, and that Closing under this Agreement shall be conditional upon
closing occurring under such other agreements. In the event Seller may have any
claim or interest in and to the property rights and interests which are the
subject of such other purchase and sale agreements, and which are not the
subject of this Agreement, then, for the consideration herein, Seller agrees to
sell and convey to Purchaser all of Seller's interest in and to the such
property rights and interests which are the subject of the Other Purchase and
Sale Agreements, above described.
20. Security for the Notes.
(a) The Note shall be secured by mortgages, financing
statement and security agreement, which are compatible with the laws of
the state in which are located the secured premises, containing terms
mutually agreed upon by Seller and Purchaser, covering (i) all property
rights and interests acquired by Purchaser under this Agreement, and
(ii) all property and interests acquired by Purchaser under the Other
Purchase and Sale Agreements, and (iii) all other property rights and
interests owned by Purchaser. Such property rights and interests shall
not be encumbered by any other lien holders. At closing Purchaser shall
execute and deliver to Seller all such mortgages, financing statements
and security agreements.
(b) By a limited non-recourse guaranty, the Notes shall be
guaranteed by QSR to the extent and only to the extent of a security
interest granted by QSR to Seller in and to all of the stock of
Purchaser, all of which stock is owned by QSR. At closing QSR shall
execute a Limited Nonrecourse Guaranty and Security Agreement,
containing mutually agreeable terms, covering and pertaining to the
security interest granted by QSR in all of the issued and outstanding
stock of Purchaser, and QSR shall deliver all of the issued and
outstanding stock of Purchaser to the Custodian pursuant to terms of
such agreement. Save and except for the pledge of all of the issued and
outstanding stock of Purchaser, the guaranty of QSR shall be without
recourse to QSR. Specifically, the Seller shall have no recourse
against QSR, other than the security interest in the stock of
Purchaser, for any of the indebtedness under the Note.
21. Unregistered Securities; Share Restrictions; Certain Registration
Rights.
(a) Seller acknowledges that all shares of common stock of QSR
acquired pursuant to this Agreement, or acquired upon conversion of all
or any portion of the First Note, or acquired as interest on the Note,
except as further provided in this paragraph, will not be registered
under the Securities Act of 1933 as amended (the "Securities Act") or
qualified under applicable state securities law and that the
transferability thereof is restricted by the registration provisions of
the Securities Act as well as such state laws. Based upon the
representation and agreements being made by it herein, such shares will
be issued under this Agreement, and on conversions under the Note,
pursuant to an exemption from such registration provided by Section
4(2) of the Securities Act and applicable state securities law
qualification exemptions. The Seller represents that it is, and shall,
acquire such shares for its own account, for investment purposes only,
and not with a view to resale or other distribution thereof, nor with
the intention of selling, transferring, or otherwise disposing of all
or any part of such securities for any particular event or
circumstance, except selling, transferring, or disposing of them upon
full compliance with all applicable provisions of the Securities Act,
the Securities and Exchange Act of 1934 as amended, the Rules and
Regulations promulgated by the United States Securities and Exchange
Commission thereunder, and any applicable state securities laws. The
Seller further understands and
PURCHASE AND SALE AGREEMENT - PAGE 16
<PAGE> 161
agrees that (i) the securities may be sold only if they are
subsequently registered under the Securities Act and qualified under
any applicable state securities laws or, in the opinion of counsel
acceptable to the Purchaser, an exemption from such registration and
qualification is available; (ii) except as otherwise provided for
herein, the Purchaser will be under no obligation to register or
qualify the said shares or effect compliance with any exemption from
such registration or qualification; and (iii) any routine sales of
securities made in reliance upon Rule 144 promulgated by the Commission
can be made only in the amounts set forth in and pursuant to the other
terms and conditions of that Rule.
(b) The Seller agrees that each certificate representing any
shares of QSR acquired by Seller under this Agreement, and under the
Note, will bear on its face a legend in substantially the following
form:
These securities have not been registered under the
Securities Act of 1933 or qualified under any state securities
laws. They may not be sold or transferred in the absence of an
effective registration statement under that Act or
qualification under applicable state securities laws without
an opinion of counsel satisfactory to the Company that such
registration and qualification are not required.
(c) Upon the request of Purchaser, at Closing, a Subscription
Agreement shall be executed in counterpart copy by QSR and Allen K.
Robertson, being the party receiving the QSR Shares. Further, prior to
the delivery of by QSR shares, as a consequence of interest on the
Note, or as a consequence of the conversion of the Note, a Subscription
Agreement shall be executed in counterpart copy by Seller and QSR.
(d) On a best efforts basis, Purchaser will cause Queen Sand
Resources, Inc., to proceed with the actual preparation and filing,
within one hundred eighty (180) days of the date of Closing, of a
registration statement under the Securities and Exchange Act of 1933 as
amended in connection with the proposed offer and sale of any of its
securities, and to cause all of the QSR Shares issued pursuant to this
Agreement to be included in such registration statement, and to attempt
to have the QSR Shares to be so registered, all to the extent requisite
to permit the sale or other disposition by Purchaser of the QSR Shares.
All expenses relating to such registration allocable to the QSR Shares
issued pursuant to this Agreement will be borne by Purchaser. In the
event prior to the attempt to so register securities QSR has delivered
to Seller shares of QSR as a consequence of conversion or conversions
of all or any part of the Note, or as interest on the Note, then such
additional shares shall be included in the attempted registration.
(e) Upon the purchase and closing under the Other Purchase and
Sale Agreements, which are described in Paragraph 20 above, some of the
other sellers under such other agreements may receive, as part of the
consideration to them under their respective agreements, shares of the
common stock of QSR. All shares of QSR to be received by Seller under
this Agreement, including shares which may be received by conversion of
the Note and which may be received as interest on the Note, and all
shares which may be received by the sellers under the Other Purchase
and Sale Agreements, and as a consequence of conversion or interest
under any promissory notes delivered under the Other Purchase and Sale
Agreements, when sold in compliance with all other restrictions herein
contained, or when sold under any future registration of said shares,
may be sold through the public market only on the basis of 10,000
shares in the aggregate being sold within every ninety-day period. Any
sales through the public market of any such shares of QSR which exceed
10,000 shares within a ninety day period shall be deemed void. QSR
shall have full right and authority to refuse any requested transfer of
the certificates of such shares, to the extent the transfers exceed
10,000 shares within a particular ninety day period. The first ninety
day period will commence upon the first day that any of said shares
become free trading in the public market.
At closing under their respective agreements, Seller and the various
other sellers who receive shares of the common stock of QSR shall execute
counterpart copies of a stock restriction agreement, which document shall recite
the restriction on transfers contained in this paragraph. Such
PURCHASE AND SALE AGREEMENT - PAGE 17
<PAGE> 162
separate stock restriction agreement will thereupon supersede and replace the
restrictions contained in this paragraph, and the similar restrictions contained
in the Other Purchase and Sale Agreements..
22. Operations. The properties described in the attached Exhibit "A"
under the headings"East Fork Field," and "SW East Fork Field" are operated by
ROG. All of such properties are hereinafter referred to as the "Operated
Properties". Regarding operations, the Parties agree as follows:
(a) Effective upon Closing ROG shall resign as operator of any
of the oil and gas properties acquired by Purchaser which are located
in the states of Texas and Louisiana which are operated by such
resigning company. At Closing there shall be delivered to Purchaser,
duly executed by ROG the appropriate forms required by applicable state
regulatory authority, which shall be effective to transfer operations
of such properties to Northland Operating Company, who is Purchaser's
designated operator.
(b) ROG shall continue to operate the Operated Properties for
a period not greater than one hundred and eighty days, until Purchaser
should elect to cancel and terminate such operations by ROG, which
election to terminate is a matter in the sole and absolute discretion
of Purchaser. It is the intention of the parties that Purchaser shall
not cancel and terminate the operations of ROG of such Operated
Properties until such time that Northland Operating Company has become
authorized to conduct business in the state of Mississippi, and has
been approved as an operator in the State of Mississippi by the
governing regulatory authority. Any such election by Purchaser to
cancel and terminate the operations of ROG shall be deemed a
resignation by ROG of its operations. During the period of time that
ROG continues to operate the Operated Properties located in the State
of Mississippi, ROG shall received as compensation the fees payable to
the Operator under the current operation agreements covering the
particular properties.
(c) At Closing there shall be delivered to Purchaser a form of
the regulatory authority in the State of Mississippi governing oil and
gas operations for each of the Operated Properties located in the State
of Mississippi, duly executed by ROG for the transfer of operations.
The transferee operator shall not be completed in such forms, and the
date of transfer of operations shall not be completed in such forms. By
its signatures hereto, ROG and Seller hereby irrevocably appoint Robert
P. Lindsay, or any other individual designated of Purchaser, as the
agent and attorney in-fact for ROG (i) to complete such forms with the
transferee operator, and to date of the transfer of operations, upon
Purchaser's election to cancel and terminate the operations of ROG for
a particular property, (ii) to properly file said form with the
appropriate offices of the regulatory authority governing oil and gas
operations in the State of Mississippi, and (iii) to cast the ballot of
Seller and ROG in the selection of a successor operator hereafter of
any of the Operated Properties, in the event of any election hereafter
of a successor operator of a particular Operated Property occurs under
and pursuant to the terms of any operating agreements which may cover
the particular Operated Property.
(d) Seller and ROG and Purchaser do hereby agree to execute
all such documents as may be reasonable and necessary to effect the
transfer of operations to Northland Operating Company, or to such other
operator selected by Purchaser. In particular, Seller shall notify any
third party non-operating joint owners of the resignation of ROG, and
with reasonable diligence and in good faith, shall assist Purchaser in
acquiring the consents of any such owners to the selection of
Purchaser's designated operator as the successor operator of the
Operated Properties.
(e) It is understood and agreed that the ability of Purchaser
to select an operator of its choice is a very material consideration to
Purchaser in this Agreement, and the Seller shall take no action to
thwart or hinder Purchaser in its attempt to designate an operator of
its choice as the operator of any of the properties. Seller agrees to
cast its ballot for the operator of Purchaser's choice in the event of
any elections hereafter of the operator on any of the properties,
including both the Operated Properties, and any other properties, and
shall otherwise assist Purchaser in its efforts to have the properties
operated by an operator of
PURCHASE AND SALE AGREEMENT - PAGE 18
<PAGE> 163
Purchaser's choice. Seller shall not seek the operations of any
property without the express written consent of Purchaser.
(f) To the extent ROG is in possession of any of the Records
at the time of its termination as operator, such company shall promptly
deliver all such Records to Purchaser.
23. Reservation of Overriding Royalty Interests. Hawkeye Drilling
Company, a Louisiana corporation authorized to conduct business in Texas
("Hawkeye"), is the owner of that certain Farmout Agreement dated December 1,
l994, from Seagull Mid-South, Inc., as farmor, to Hawkeye Drilling Company, as
farmee, covering certain leases and lands located in the Waskom Field in
Harrison County, Texas, which lands are depicted in Exhibit "F" attached hereto
and made a part hereof, which farmout agreement was amended by that certain
amendment dated May 15, l995, by and between Seagull Mid-South, Inc. and Hawkeye
Drilling Company. Such farmout agreement is often referred to by the Parties as
the "Seagull Farmout #2." Prior to the date hereof, Seagull Mid-South, Inc. has
given its approval and consent to the assignment of the Seagull Farmout #2 to
Queen Sand Resources, Inc., a Nevada corporation. By Purchase and Sale Agreement
of even date herewith between Hawkeye, as assignor, and Queen Sand Resources,
Inc., a Nevada corporation, as assignee, Hawkeye shall convey to Queen Sand
Resources, Inc. all of its rights in and to the Seagull Farmout #2. Queen Sand
Resources, Inc., a Nevada corporation, shall take title to said farmout rights
under the covenant and agreement to cause, or attempt to cause, Seagull
Mid-South, Inc. to consent and approve the assignment and conveyance of such
farmout rights to Purchaser. If Queen Sand Resources, Inc., a Nevada
corporation, is unsuccessful in causing such contract rights to be assigned to
Purchaser , then Queen Sand Resources, Inc. shall hold said contract rights
subject to the obligations set forth in this Agreement. The parties do hereby
agree that Seller shall be entitled to, and Purchaser agrees to grant and convey
to Seller, an overriding royalty interest equal to two and one-half percent (2
1/2) of all of the oil and gas produced, marketed and sold under and by virtue
of any leasehold rights which may hereafter be earned under said farmout
agreement. If the leases covered by the farmout agreement cover less than the
entire and undivided mineral interest in the leased premises described therein,
then the overriding royalty interest in any such particular lease shall be
proportionately reduced to the actual interest in the mineral estate covered by
such lease.
24. Reservation of Working Interest. By assignment of even date
herewith between Hawkeye, as assignor, and Queen Sand Resources, Inc., as
assignee, Hawkeye shall convey to Queen Sand Resources, Inc. the farmout rights
under the Seagull Farmout #2. Such farmout agreement, and the conveyance
occurring of such farmout agreement is described above in Paragraph 24(b). The
parties do hereby agree that ROG shall have the right to participate in any
operations conducted under such agreement to the extent of an undivided 12.5%.
If any leasehold rights are earned under such farmout agreement by virtue of
operations in which ROG participated, ROG shall be entitled to an undivided
12.5% of such rights. In this regard, promptly upon Purchaser receiving a
conveyance of any such leasehold rights from the farmor, Purchaser shall
promptly deliver an assignment in recordable form delivering to ROG its
undivided 12.5% of such leasehold rights. It understood that in the conduct of
operations to be conducted on the Seagull Farmout #2, or on the lands described
in this Paragraph 25(b), the rights and obligations of ROG and Purchaser shall
be governed by the terms and provisions of that certain operating agreement
attached hereto as Exhibit "G," naming Northland Operating Company as operator,
and naming ROG and Purchaser and non- operators. Any assignments to be delivered
by Purchaser to ROG of rights earned under the farmout agreement shall be made
specifically subject to this operating agreement. From and after one year from
the date of Closing either of the parties hereto may exercise the reciprocal
purchase rights, as set forth in paragraph 27 below, as to the rights and
interest of the other party in the Seagull Farmout Agreement #2, and as to any
leasehold rights earned under such agreement.
25. Reservation of Interest in Waterflood Operations.
(a) It is the belief of Seller that, subsequent to the primary
production from the Lower Tuscaloosa formation from the Leases
described in Exhibit "A" attached hereto identified under the heading
"SW East Fork Field," covering lands in Amite County, Mississippi,
waterflood operations should be attempted for secondary recovery from
such formation under such Leases. For purposes of this Section 25, such
leases shall hereinafter be called the "Waterflood Leases." Purchaser
agrees that within eighteen months from the
PURCHASE AND SALE AGREEMENT - PAGE 19
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date of Closing Purchaser shall cause the Operator to submit to ROG a
proposal for waterflood operations on the Waterflood Leases, along with
a proposed waterflood unit agreement and waterflood operating
agreement, with Purchaser's designee as Operator. If ROG approves the
waterflood proposal, and the proposed unit agreement and unit operating
agreement, whether as initially proposed or as thereafter modified as a
consequence of further negotiations, then, ROG may notify Purchaser and
Operator of its approval, and shall execute such documents and deliver
them to Purchaser and Operator. Upon such execution and delivery ROG
shall be deemed a participant in the waterflood operations, to the
extent of an undivided twelve and one-half percent of the interest in
the Waterflood Leases conveyed to Purchaser, pursuant to the terms of
this Agreement and the terms of the Other Purchase and Sale
Agreements.. In this regard Seller shall then immediately bear, under
and according to the unit operating agreement, its proportional share
of the costs and expense which may be incurred from and after the date
of ROG's execution of such agreements in connection with the creation
[including all engineering, land and legal costs associated with the
creation of the unit plan], implementation and conduct of the
waterflood operations. Seller shall begin to share in production from
the Waterflood Leases at 7:00 a.m., local time, on the first day of the
month following the date of Seller's execution and delivery to
Purchaser of such documents. If ROG fails to execute and deliver such
documents to Purchaser within thirty (30) days of ROG's receipt of such
documents, ROG shall be deemed to have elected not to participate in
the waterflood operations. If ROG elects not to participate in the
waterflood operations, ROG shall have no further interest in the
Waterflood Leases.
(b) In the event of ROG's election to participate in the
waterflood operations, Purchaser shall deliver to ROG, to be effective
at 7:00 a.m., local time, of the first day of the month following the
month in which ROG executed and delivered to Buyer the documents
referenced in subparagraph (a) above, an assignment conveying an
undivided twelve and one-half percent of the interest in the Waterflood
Leases acquired by Purchaser under this Agreement, and under the Other
Purchase and Sale Agreements, insofar and only insofar as the Leases
cover the Lower Tuscaloosa formation. Such assignment shall include an
undivided twenty-five percent of the Property acquired by Purchaser
under this Agreement insofar and only insofar as such Property covers,
applies to, or is attributable to the Waterflood Leases, and insofar as
the Property covers, applies to, or is used in connection with
operations in the Lower Tuscaloosa formation. Such assignment shall be
subject to the waterflood unit agreement and the waterflood unit
operating agreement.
(c) In the event ROG elects to participate in the waterflood
operations pursuant to this Section, then either Party hereto, Seller
or Purchaser, may exercise the reciprocal purchase rights set forth in
Paragraph 27 below.
26. Reciprocal Purchase Rights.
(a) For purposes of this Section, the term "Transfer Interest"
shall mean:
(1) For the Smackover and Norphet formations in the
East Nancy Leases covering lands in the East Nancy Field,
which are described in Paragraph 25(a) above, then, in the
case of Purchaser, the term "Transfer Interest" shall mean all
interest in the Shut-in Wells, and in the East Nancy Leases on
which such wells are located, or to the extent pooled with
such wells, as to such formations only, acquired by Purchaser
from Seller under this Agreement, and, in the case of Seller,
the term "Transfer Interest" shall mean all interest in such
Shut-in Wells and Leases, as to such formations, which is
reserved to ROG under this Agreement.
(2) For the contract rights in the Seagull Farmout
Agreement #2, and any leasehold rights earned under such
farmout agreement, then, in the case of Purchaser, the term
"Transfer Interest" shall mean an undivided thirty-seven and
one-half percent (37.5%) of the contract rights under such
farmout agreement, and an undivided thirty-seven and one-half
percent (37.5%) of any of the leasehold rights earned under
such farmout agreement, and, in the case of Seller, shall mean
all
PURCHASE AND SALE AGREEMENT - PAGE 20
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interest to which ROG is entitled under Paragraph 25(b) above
in and to such farmout agreement and any of the lands earned
under such farmout agreement.
(3) For the Waterflood Leases, as to Purchaser, the
term "Transfer Interest" shall mean an undivided one-half of
all interest in the Waterflood Leases acquired by Purchaser
under this Agreement, and under the Other Purchase and Sale
Agreements, and all of the Property acquired by Purchaser
under this Agreement and under the Other Purchase and Sale
Agreements, which cover, apply to, or are attributable to the
Waterflood Leases, but insofar and only insofar as the
Waterflood Leases cover the Lower Tuscaloosa formation, and
insofar and only insofar as the Property is used in connection
with the Lower Tuscaloosa formation, and, in the case of
Seller, being all of ROG's right to own and participate, to
the extent of an undivided twelve and one-half percent of the
interests conveyed under this Agreement and under the Other
Purchase and Sale Agreements, in the waterflood operations in
the Waterflood Leases (which rights to participate are set
forth in Paragraph 25 above).
(b) If a Party has the right to invoke the provisions of this
Section, then, the Party shall give the other Party written notice to
invoke the provisions of this Section. The party giving such notice
shall for purposes of this Section be called "A," and the party
receiving such notice shall for purposes of this paragraph be called
"B." The notice shall state that A wishes to purchase the particular
Transfer Interest of B, and to apply the provisions of this Section of
this Agreement. Such written notice from A shall also express (i) a
proposed purchase price for the particular Transfer Interest of B, and
(ii) a dollar figure, which is the basis of the proposed purchase price
to B, for each one percent of the leasehold interest in the Leases
which comprise the Transfer Interest (hereinafter called the "Specified
Value"). A's notice shall be accompanied by a letter or other written
statement signed by a bank confirming that A has deposited with such
bank the sum of the purchase price to B, and that such sum so deposited
shall be held and applied pursuant to the provisions of this Section.
(c) Within sixty days from its receipt of such notice from A,
B shall give written notice to A electing either (i) to purchase A's
particular Transfer Interest in the same Leases which are the subject
of A's proposal (A hereby agreeing to sell its Transfer Interest to B
in such event pursuant to the provisions of this Section), or (ii) sell
its particular Transfer Interest to A pursuant to the provisions of
this Section. In the event B elects to purchase the particular Transfer
Interest from A, the purchase price payable to A shall be computed by
multiplying the Specified Value times A's Transfer Interest. If B shall
give notice to A to purchase A's particular Transfer Interest, then
such notice, to be effective, shall be accompanied by a letter or other
statement signed by a bank confirming that B has deposited the purchase
price which shall be held and applied under this Section, and thereupon
the deposit made by A pursuant to this Section shall be returned to A
by the bank with which A has deposited such monies. If B shall not
effectively give either of the above described notices within twenty
days after receipt of notice from A, then B shall be deemed to have
elected to sell its particular Transfer Interest to A for the purchase
price offered by A.
(d) The closing on the purchase shall take place on or before
the first business day following fifteen days following the expiration
of the twenty day period set forth above for giving notice of an
election by B, on which date the selling Party shall convey, transfer
and assign to the purchasing party, by assignment and bill of sale, and
such other instruments of transfer as shall be reasonably requested by
the purchasing Party, the selling Party's particular Transfer Interest,
and shall, to the extent requested by the purchasing Party, cooperate
to effect a smooth and efficient continuation of the operations of the
Leases.
(e) On the closing date the purchasing Party shall pay the
purchase price to the selling Party. The purchase price shall be paid
in a lump sum at the closing in cash, certified funds, or wire transfer
of immediately available funds.
(f) The sale shall be effective as of the date of closing. In
connection with such purchase, the purchasing Party shall assume all
obligations relating to the particular Transfer Interest, from and
after the date of closing, and shall indemnify the selling Party from
and
PURCHASE AND SALE AGREEMENT - PAGE 21
<PAGE> 166
against all obligations and liabilities from and after such date
arising from, relating to, or attributable to the Transfer Interest.
The particular Transfer Interest shall be free and clear of any and all
conveyances, liens and encumbrances from the date hereof, save and
except such matters having been agreed to by the Parties, such as, for
example, operating agreements and gas purchase agreements.
(g) The closing shall occur at such place as shall be
designated by the purchasing Party by notice to the selling Party at
least ten (10) days prior to the closing date.
(h) If the purchasing Party shall fail to complete the
purchase within the time and in the manner required by this Section,
then (i) the deposit made by such Party with the bank shall be
forfeited by the purchasing Party and shall be paid over by such
institution to the selling Party, and (ii) the selling Party may then
elect (a) to become the purchasing Party and to purchase the other
Party's Transfer Interest at the purchase price provided for herein,
said election to be made within fifteen days after the initial
purchasing Party's failure to timely and/or properly close, with the
closing to take place within ten (10) days thereafter, or (b) to cancel
the notice invoking the provisions of this Section, regardless of who
originally gave the notice, in which event the Party failing to
complete the purchase shall have no further right thereafter to invoke
the provisions of this Section for any reason whatsoever.
(i) The provisions of this Section may only be exercised on a
"field" basis. Therefore, to exercise the rights under this Section in
the Waterflood Leases, the purchasing Party shall purchase all of the
Transfer Interest of the selling Party in all of the Waterflood Leases,
as to the Lower Tuscaloosa formation. To exercise the rights under this
Section as to the Smackover and Norphet formations in the Shut-in Wells
in the East Nancy Leases described in Paragraph 25(a) above, the
purchasing Party shall purchase all of the Transfer Interest of the
selling Party in all of such wells and Leases, as to such formations.
In like manner, any exercise of the rights under this Section as to the
Waskom Field, as described in Paragraph 25(b) above, shall apply to the
Transfer Interest of Seller and Purchaser in the entire Seagull Farmout
#2 and in any rights earned under such agreement.
27. Confidentiality. Prior to Closing, the Seller shall be furnishing
to Purchaser various information relating to Seller and the Property, and
Seller's business activities, assets, finances, costs, revenues, rights,
obligations, liabilities, and strategies. In consideration of the Seller
furnishing this information to Purchaser, Purchaser agrees that prior to Closing
(a) that such information is confidential and/or proprietary to Seller, and such
information shall be entitled to and shall receive treatment as such by
Purchaser; (b) Purchaser shall use its best efforts, and will advise all of its
employees, representatives, agents, and advisors who have access to such
information, to use their best efforts to hold in confidence, not to disclose to
others, and not to use (except in respect of the transaction contemplated by
this Agreement) any such information; and (c) if Closing does not occur, all
such information, unless otherwise specified in writing, shall remain the
property of Seller, and shall be returned to Seller together with any copies
made thereof. Prior to Closing, Purchaser shall provide such information only to
its employees, representatives, agents, and advisors who have need to know such
information in connection with this Agreement.
28. Area of Non-Competition. Seller agrees not to compete with
Purchaser in an area which shall be the leasehold premises of the Leases. In
this regard, Seller agrees that Seller, its employees, agents, servants, or
companies controlled by Seller, in common control with Seller, or with whom
Seller is affiliated, shall not acquire, for so long as a Lease is held in force
and effect by its terms, and for a period of three years thereafter, any oil and
gas leases, any mineral interest, royalty interest, overriding royalty interest,
or any farmout agreement, or other agreement permitting the right to explore for
and produce oil and/or gas, which cover any lands within the restricted area.
29. Area of Mutual Interest. The Parties agree that an area which shall
extend outward from the boundaries of each of the Leases for a distance of 5,280
feet shall be an area of mutual interest between the Parties for a period of
seven years from the date of Closing under this Agreement. If any Party should
hereafter during the period of mutual interest acquire any oil and gas leases,
any mineral interest, royalty interest, overriding royalty interest, or any
farmout agreement, or other agreement permitting the right to explore for and
produce oil and/or gas, covering any lands within the area of mutual interest,
then the acquiring Party shall notify the non-
PURCHASE AND SALE AGREEMENT - PAGE 22
<PAGE> 167
acquiring Party, and shall deliver to the non-acquiring Party (i) copies of the
documents by which the acquiring Party acquired the particular interest, and
copies of all title information in the possession or control of the acquiring
party relating to the particular interest, and (ii) copies of checks or other
documents evidencing the actual costs to third parties incurred by the acquiring
Party in its acquisition of the particular interest. For a period of thirty days
following the receipt of such information the non-acquiring Party shall have the
option to acquire an undivided fifty percent (50%) of the particular interest
for which the non-acquiring Party has received notice. If the non-acquiring
Party shall timely give such notice, closing shall thereafter occur within ten
days in the office of the acquiring Party, or at such other location to which
the Parties may mutually agreed. At closing the acquiring Party shall deliver to
the non-acquiring Party an assignment, deed or other appropriate conveyance,
properly executed in recordable form, conveying an undivided one-half of the
particular interest, and the non-acquiring Party shall deliver to the acquiring
Party one-half of the actual costs to third parties incurred by the acquiring
Party in the acquisition of the particular interest. The failure of the
non-acquiring Party to respond within the thirty day period shall be deemed an
election by the non-acquiring Party not to acquire any share of the particular
interest having been acquired by the acquiring Party.
30. Miscellaneous.
(a) If any term or provision of this Agreement is held to be
illegal, invalid, or unenforceable, the legality, validity, and
enforceability of the remaining terms and provisions of this Agreement
shall not be affected thereby, and in lieu of each such illegal,
invalid, or unenforceable term or provision, there shall be added
automatically to this Agreement a legal, valid, and enforceable term or
provision as similar as possible to the term or provision declared
illegal, invalid, or unenforceable;
(b) Either Seller or Purchaser shall have the right to waive
any requirement contained in this Agreement, which is intended for the
waiving Party's benefit, but except as otherwise specifically provided
herein, such waiver shall be effective only if in writing and executed
by the Party for whose benefit such requirement is intended; provided
however, that any such waiver shall not be construed as a waiver of any
other benefit accruing to the waiving Party hereunder;
(c) The captions used in connection with this Agreement are
for convenience only and shall not be deemed to expand or limit the
meaning of the language of this Agreement;
(d) Words of any gender used in this Agreement shall be held
and construed to include any other gender, and words in the singular
shall be held to include the plural, unless the context otherwise
requires;
(e) Seller agrees that, on or before the Closing, it will not
carry on any negotiations with any third party, for the sale or
transfer of the Property, without the prior written consent of
Purchaser. Thereafter, Seller may negotiate with third parties if this
Agreement has been terminated;
(f) THIS AGREEMENT AND ALL OF THE TRANSACTIONS CONTEMPLATED
HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS;
(g) This Agreement embodies the entire agreement between
Seller and Purchaser with respect to the subject matter hereof and
supersedes all prior agreements, whether written or oral;
(h) Except as otherwise specifically provided herein, this
Agreement may not be amended except by an agreement in writing executed
by both Seller and Purchaser;
(i) This Agreement shall be binding upon and inure to the
benefit of Seller and Purchaser and their respective legal
representatives, successors, and assigns. It is expressly understood
and agreed that Purchaser's rights under this Agreement may not be
assigned
PURCHASE AND SALE AGREEMENT - PAGE 23
<PAGE> 168
prior to Closing. Provided however, any interest acquired hereunder
shall be freely assignable by Purchaser after Closing;
(j) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all
of which shall be deemed to be one and the same instrument;
(k) In addition to the acts and deeds recited herein and
contemplated to be performed, both Seller and Purchaser hereby agree to
perform, execute, and/or deliver at and after Closing any and all such
further reasonable acts, deeds, and assurances as may be reasonably
required to consummate the transactions contemplated by this Agreement;
(l) This Agreement supersedes any and all other agreements,
either oral or in writing, between the Parties hereto with respect to
the subject matter hereof and contains all of the covenants and
agreements between the Parties with respect to said matter. Each Party
to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any
Party, or anyone acting on behalf of any Party, which are not embodied
herein, and that no other agreement, statement, or promise not
contained in this Agreement shall be valid or binding;
(m) In the event of any dispute occurring under this
Agreement, the prevailing Party shall be entitled to be reimbursed by
the other Party for its reasonable and necessary attorney's fees;
(n) Any failure by either Party to insist, or any election by
either Party not to insist, upon strict performance by the other Party
of any of the terms, provisions, or conditions of this Agreement shall
not be deemed to be a waiver of the same or of any other term,
provision, or condition hereof, and either Party may at any time or
times thereafter insist upon strict performance by the other Party of
any and all of such terms, provisions, and conditions. No waiver by
either Party of any right, remedy, power, or privilege hereunder shall
be construed as a waiver of, or operate to impair, any subsequent
right, remedy, power, or privilege nor shall any single or partial
exercise of any such right, remedy, power, or privilege exhaust the
same or preclude other or further exercise thereof.
(o) All covenants, representations, and indemnities set forth
herein shall survive closing, subject to any agreed periods of
limitation as may be set forth herein.
EXECUTED as of the 5th day of February, 1997.
WITNESSES: SELLERS:
ROBERTSON'S OIL & GAS, INC.,
a Louisiana corporation
- ------------------------------------ By:
--------------------------------
ALLEN K. ROBERTSON, PRESIDENT
- ------------------------------------
PELICAN OIL FIELD SERVICES, INC.,
a Louisiana corporation
- ------------------------------------ By:
--------------------------------
ALLEN K. ROBERTSON, PRESIDENT
- ------------------------------------
PURCHASE AND SALE AGREEMENT - PAGE 24
<PAGE> 169
- ------------------------------------- -----------------------------------
ALLEN K. ROBERTSON
- -------------------------------------
PURCHASER:
CORRIDA RESOURCES, INC.,
a Nevada corporation
- ------------------------------------ By:
--------------------------------
ROBERT P. LINDSAY, VICE PRESIDENT
- ------------------------------------
ACKNOWLEDGMENTS
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared ALLEN K.
ROBERTSON, to me personally known, who, being duly sworn, did say that he is the
President of ROBERTSON'S OIL & GAS, INC., a Louisiana corporation, and that the
foregoing instrument was signed by him on behalf of such entity, with necessary
authority, and that ALLEN K. ROBERTSON acknowledged said instrument to be the
free act and deed of such corporation.
-----------------------------------
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared ALLEN K.
ROBERTSON, to me personally known, who, being duly sworn, did say that he is the
President of PELICAN OIL FIELD SERVICES, INC., a Louisiana corporation, and that
the foregoing instrument was signed by him on behalf of such entity, with
necessary authority, and that ALLEN K. ROBERTSON acknowledged said instrument to
be the free act and deed of such corporation.
-----------------------------------
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared ALLEN K.
ROBERTSON, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free act
and deed.
-----------------------------------
Notary Public, State of Louisiana
PURCHASE AND SALE AGREEMENT - PAGE 25
<PAGE> 170
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared ROBERT P.
LINDSAY, to me personally known, who, being duly sworn, did say that he is the
Vice President of CORRIDA RESOURCES, INC., a Nevada corporation, and that the
foregoing instrument was signed by him on behalf of such entity, with necessary
authority, and that ROBERT P. LINDSAY acknowledged said instrument to be the
free act and deed of such corporation.
-----------------------------------
Notary Public, State of Louisiana
PURCHASE AND SALE AGREEMENT - PAGE 26
<PAGE> 171
SCHEDULE OF EXHIBITS
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit "A" Recital I, Page 1 Description of the Lease
Recital VII, Page 2 Description of WI and NRI
Par. 6(f), Page 8 First rights of refusal, consents, authorizations, preferentials
rights, options
Par. 6(j), Page 8 Encumbrances, liens, mortgages
Par. 6(k), Page 8 Restriction, reservation, reversionary interest, drilling or
development obligation, or other material obligation
Par. 6(m), Page 8 Restriction, reservation, reversionary interest, drilling or
development obligation
Par. 6(p), Page 8 Existing Operating Agreements
Par. 6(aa), Page 9 Wells obligated to be plugged and abandoned by law or by
contract
Exhibit "B" Recital III, Page 2 Description of Equipment
Exhibit "C-1" Par. 2(c), Page 3 Form of Promissory Note
Exhibit "C-2" Par. 2(d), Par.3 Form of Promissory Note
Exhibit "D" Par. 3(b), Page 3 Form of Assignment and Bill of Sale
Exhibit "E" Par. 19, Page 16 Schedule of other sellers under other Purchase and Sale
Agreements
Exhibit "F" Par. 24, Page 19 Plat of lands covered by Seagull Farmout #2
Exhibit "G" Par. 25, Page 20 Operating Agreement governing Seller and Purchaser as to
joint operations in the East Nancy Field and the Waskom
Field
</TABLE>
PURCHASE AND SALE AGREEMENT - PAGE 27
<PAGE> 172
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the 5th day of February, 1997, by
and between LOUIS P. ROBERTSON, joined herein by his wife, VIRGINIA YOUNG
ROBERTSON, (hereinafter referred to as the "Seller") and CORRIDA RESOURCES,
INC., a Nevada corporation (the "Purchaser"), (Seller and Purchaser hereinafter
individually referred to as "Party" and collectively as "Parties").
RECITALS
WHEREAS, Seller desires to sell and convey, and Purchaser desires to
purchase and receive, the following, upon the terms and conditions hereinafter
set forth:
I. The Leases and Units. All of the Seller's right, title, and interest in
and to (i) the oil, gas, and mineral leases and properties and interests
described in Exhibit "A," including but not limited to, leasehold, fee, mineral,
royalty, and overriding royalty interests and payments out of or measured by
Production (hereinafter defined) (said oil, gas, and mineral leases and property
and interests being herein referred to as the "Leases"); (ii) the units, pooled
acreage, spacing, or proration units or other allocation of acreage, and all
rights associated therewith, which are applicable to the Leases and have been
established by, or in accordance with, (a) applicable contractual provisions
regarding unitization, communitization, pooling, spacing, or proration, or (b)
applicable state or federal law;
II. The Production. All of the Seller's right, title, and interest in and
to all oil, gas, casinghead gas, condensate, distillate, and other liquid or
gaseous hydrocarbons and other minerals which are in, under, upon, and produced
from or allocable (or to be produced from or allocable) to the Leases after the
Effective Date (as defined in Paragraph 3(a) hereof) (such hydrocarbons and
minerals being hereinafter referred to as "Production"), including "line fill"
and inventory attributable to the interests described in Exhibit "A," or the
proceeds from the sale of such Production;
III. The Wells and Equipment. All of Seller's right, title, and interest
in and to all personal property of every kind and character located on the
Leases or used in the operation thereof including, without limitation, wells
(whether productive or non-productive, active or inactive) (the "Wells"),
compressors, well equipment, casing, tanks, machinery, gathering lines and
systems, treatment facilities, disposal wells and disposal facilities, pipelines
and other appurtenances, and any other personal property situated thereon,
herein individually and collectively called the "Equipment";
IV. The Rights of Way and Permits. All of Seller's right, title, and
interest in and to all rights, privileges, benefits, permissions, and
authorizations (including, without limitation, permits, licenses, servitudes,
easements, and rights of way) in respect of the use and occupation of the
surface of such Leases, and the subsurface depths under the land and premises
covered by and benefiting such Leases, herein called individually and
collectively "Rights of Way and Permits";
V. The Contracts. All of Seller's right, title, and interest in and to all
of the orders, gas purchase and sale contracts (wherein Seller is a selling
party), crude purchase and sale agreements (wherein Seller is a selling party),
surface leases, farm-in agreements, farmout agreements, bottom hole agreements,
acreage contribution agreements, operating agreements, unit agreements, area of
mutual interest agreements, processing agreements, options, leases of equipment
or facilities, and other contracts, agreements, and rights, which are owned by
Seller, in whole or in part and are (i) appurtenant to the Leases, or (ii) used
or held for use in connection with the ownership or operation of the Leases or
with the Production, treatment on the Leases, sale or disposal of water,
hydrocarbons or associated substances, herein called individually and
collectively the "Contracts";
VI. The Records. All of the files, records and data in the possession of
Seller relating to the items described in subsections (I), (II), (III), (IV),
and (V) above (the "Records"), including, without limitation, lease files, title
records (including abstracts of title, title opinions, and title
PURCHASE AND SALE AGREEMENT - PAGE 1
<PAGE> 173
curative documents); contracts, correspondence, originals or copies of
geological, geophysical, and seismic records, data, and information; and
originals or copies of production records, electric logs, core data, pressure
data and decline curves and graphical production curves, and all related
matters, to the extent Seller has the authority to release such Records and to
the extent they are reasonably required by Purchaser to operate the Wells;
VII. Miscellaneous. Exhibit "A" attached hereto sets forth the undivided
interests of Seller in the Leases, and the revenue interests attributable
thereto, as well as the undivided interests of Seller in the Production, Wells,
Equipment, Rights of Way, and Contracts. This Agreement covers and pertains to
all of the right, title, and interest of Seller in the Leases, the lands covered
by the Leases, Production, Wells, Equipment, and Rights of Way, even if the
undivided interests of Seller in any such property or property rights should be
incorrectly or insufficiently described in the Exhibit "A."
The Leases, Production, Wells, Equipment, Rights of Way and Permits,
Contracts, Records, and Miscellaneous referred to in Paragraphs I through VII
above, are hereinafter sometimes referred to individually and collectively in
the singular as "Property."
Notwithstanding the foregoing, Seller excepts and reserves from the sale
herein any interest which Seller may own, if any, in and to any
presently-created overriding royalty interests, which are of record in the
subject counties, in the Leases described in Exhibit "A" under the heading
"Stafford Springs Field," covering lands located in Jasper County and Clarke
County, Mississippi. Any such overriding royalty interest owned by Seller is not
part of the NRI (see definition below) of Seller set forth in Exhibit "A"
attached hereto for such Leases.
WHEREAS, this Agreement was the subject of, and was contemplated by, that
certain letter of intent dated October 17, 1996, by and between Queen Sand
Resources, Inc., and David Robertson and Keith Robertson, as amended and
supplemented, including amendment and supplement dated December 24, 1996. As to
the interest of Seller in the Property, this Agreement supersedes and replaces
the letter of intent.
NOW, THEREFORE, for and in consideration of the mutual agreements herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Seller and Purchaser
hereby agree as follows:
1. Sale and Purchase. Seller agrees to sell and convey to Purchaser, and
Purchaser agrees to purchase and pay for, all of Seller's right, title, and
interest in and to the Property as hereinafter provided.
2. Purchase Price. The "Purchase Price" for the Property shall be the sum
of $18,757.00, payable as follows:
(a) The sum of $18,757.00, which shall be paid at Closing.
All cash payments to be tendered by Purchaser to Seller, either before or
after Closing, shall be made by wire transfer or shall be made by certified
funds.
The Purchase Price shall be subject to adjustment as hereinafter provided.
3. Closing and Effective Date.
(a) The closing of the sale and purchase of the Property shall take
place on or before February 5, 1997, (the "Closing") at 1310 Jeff Davis,
Hammond, Louisiana 70403, or at such other time, place, or manner as may
be mutually agreeable to the Parties. The sale of the Property shall be
effective as of November 1, 1996, at 7:00 a.m. local time for each of the
particular Leases (the "Effective Date").
(b) At the Closing, the Property shall be conveyed and transferred
by Seller to Purchaser by the execution and delivery of an Assignment and
Bill of Sale (the
PURCHASE AND SALE AGREEMENT - PAGE 2
<PAGE> 174
"Assignment") in substantially the same form and content as the Assignment
and Bill of Sale which is attached hereto as Exhibit "B," and such other
instruments of conveyance as may be reasonably requested by Purchaser.
Purchaser shall be entitled to all of Seller's rights in the Property
(including, without limitation, the rights to all Production and proceeds
of Production) appurtenant and attributable to the Property, and shall be
subject to the duties and obligations attendant with ownership of such
undivided share of the Property for the period from and after the
Effective Date. For the period prior to the Effective Date, Seller shall
be entitled to all of the rights (including, without limitation, the
rights to all Production and proceeds of Production) appurtenant and
attributable to the Property, and shall be subject to the duties and
obligations attendant with ownership of the Property.
4. Adjustments to Purchase Price. The Purchase Price shall be adjusted
(the "Adjusted Purchase Price") at the Closing, by the "Interim Settlement
Statement" (hereinafter defined in this paragraph and in Paragraph 9 below),
and, subsequent to Closing, by the "Final Settlement Statement" (hereinafter
defined in Paragraph 13 below), as follows:
(a) The Purchase Price shall be increased by the following:
(1) the value of all merchantable allowable oil or other
liquid hydrocarbons in storage owned by Seller in the tanks or above
the pipeline connection at the Effective Date, and not previously
sold by Seller, that is credited to the share of the Property being
acquired hereunder, valued at the contract price thereto, or if
none, the actual price received by Purchaser, less taxes or gravity
adjustments deducted by the purchaser of such oil or other liquid
hydrocarbons;
(2) the amount of all reasonable expenditures made in
connection with the ownership, operation, and maintenance of the
share of the Property being acquired hereunder, (including royalties
and rentals) and in accordance with generally accepted accounting
principles and prudent operations, attributable solely to the period
from and after the Effective Date and which are paid by or on behalf
of Seller after the Effective Date;
(3) an amount equal to all prepaid expenses, attributable to
the ownership, operation, and maintenance of the share of the
Property being acquired hereunder that are paid by or on behalf of
Seller after the Effective Date and prior to the Closing Date and
that are, in accordance with generally accepted accounting
principles, attributable solely to the period from and after the
Effective Date;
(4) any other amount agreed upon by Purchaser and Seller.
(b) The Purchase Price shall be decreased by the following:
(1) the amount of any proceeds from the sale of Production
attributable to the share of the Property being acquired hereunder
attributable to the period on or after the Effective Date (net of
production, severance, and similar taxes and assessments measured by
or payable out of production) actually received or accrued by or on
behalf of Seller;
(2) an amount equal to all unpaid ad valorem, property,
production, profit, severance, and similar taxes and assessments
based upon or measured by the ownership of the share of the Property
being acquired hereunder or the production of oil, gas, or other
minerals therefrom or the receipt of proceeds attributable thereto,
which accrue to or are chargeable against such share of the Property
(in accordance with generally accepted accounting principles) and
which are attributable to the period prior to the Effective Date,
which amount shall, to the extent not actually assessed, be computed
based upon such taxes and assessments for the immediately-preceding
calendar year, or if such taxes or assessments are assessed on other
than a calendar-year basis, for the tax period last ended;
PURCHASE AND SALE AGREEMENT - PAGE 3
<PAGE> 175
(3) any amounts received by Seller (whether prior to or
subsequent to the Effective Date) pursuant to "take-or-pay," advance
payment, or similar provisions of any production sales contract, any
gas balancing agreement, or any other agreement, to the extent any
purchaser has the right to apply any such amounts to Purchaser's
share of Production delivered after the Effective Date;
(4) any reduction in the value of the share of the Property
being acquired hereunder resulting from the existence of a Defect
(herein defined in Section 5(d)) which is not cured or waived prior
to Closing;
(5) any other amount agreed upon by Purchaser and Seller.
(c) The "Interim Settlement Statement" shall be prepared by Seller,
its agents, or representatives, prior to Closing, which statement shall
set forth the adjustments to the Purchase Price, per the adjustments set
forth in this Paragraph 4, which are or may be determined at or prior to
Closing. Such statement shall be prepared according to generally accepted
accounting principles and shall show the calculation of all such
adjustments. Upon the approval of such Interim Settlement Statement by
Purchaser, the Purchase Price shall be adjusted according to such
statement. Upon Purchaser's request, Seller shall make available to
Purchaser all information relied upon by Seller for the adjustments
requested in order to aid and facilitate Purchaser's approval of such
statement. After Closing, the Purchase Price may further be adjusted,
pursuant to the adjustments set forth in this paragraph, with the "Final
Settlement Statement" in the manner further described in Paragraph 13
below.
(d) All monies received by either Party hereto which, under the
terms of this Agreement or otherwise, belong to the other Party, shall be
received in trust by the Party receiving such funds, and shall monthly,
upon receipt, be paid over to the other Party. The Parties agree, in this
regard, to cooperate fully and to execute, endorse, and deliver as
expeditiously as practicable such papers, checks, and documents as are
needed promptly to complete the transfer of such payments;
(e) After the Closing, if an invoice or other evidence of an
obligation relating to the share of the Property acquired by Purchaser is
received which is applicable to periods both prior to and after the
Effective Date, and is partly the obligation of Seller and partly the
obligation of Purchaser, then each Party shall pay its respective portion
of such obligation to the obligee, prorated between the Parties as of the
Effective Date;
(f) At and after the Closing, Purchaser and Seller will cooperate
fully in notifying all applicable third parties (including the execution
by Seller of such transfer orders, letters in lieu, change of operator,
etc., as may be requested by Purchaser) so that notices, proceeds, and
invoices from such third parties may take into account the fact that
Purchaser has acquired the Property as of the Effective Date;
(g) The parties hereto agree to exercise diligence and good faith in
attempting to resolve any disagreements or disputes which may arise from
the adjustments to the Purchase Price to be made in accordance with this
paragraph.
5. Property Conditions, Title Review, Property Information, and Casualty
Losses.
(a) Property Conditions. THIS SALE OF THE EQUIPMENT AND ALL OTHER
PERSONAL PROPERTY THAT IS A PART OF THE PROPERTY IS MADE ON AN "AS IS,
WHERE IS" BASIS WITH ALL FAULTS AS TO ITS CONDITION, AND SELLER EXPRESSLY
DISCLAIMS ALL WARRANTIES AS TO THE CONDITION OF THE EQUIPMENT (NOTE,
HOWEVER, THERE ARE CERTAIN WARRANTIES AS TO TITLE AS HEREIN SET FORTH)
INCLUDING, WITHOUT LIMITATIONS, THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR ANY PARTICULAR PURPOSE. Seller agrees that for a period of
time commencing with the date of the letter of intent dated October 17,
1996, above described, and continuing until five (5) business days before
Closing (the "Review Period"), Purchaser, personally or through its
PURCHASE AND SALE AGREEMENT - PAGE 4
<PAGE> 176
authorized agents or representatives, shall have the right to make any and
all physical inspections of the Property which Purchaser may desire to
make or to have made and to make all such other inspections, surveys,
tests, or other studies (including, but not limited to, environmental
assessments and evaluations) as Purchaser deems necessary or desirable.
Upon reasonable notice to Seller, Purchaser, and its authorized agents and
representatives, at Purchaser's sole risk, may enter upon the Property for
the purpose of conducting those inspections, surveys, tests, and studies.
If Purchaser shall determine that the condition of the Property is not in
substantial compliance with any governmental regulations (including
environmental regulations), then upon discovery, Purchaser must promptly
give written notice to Seller of such condition ("Condition"). Upon
receipt of such notice, Seller shall have the option, but not the
obligation, to (a) cure or remedy such Condition to the reasonable
satisfaction of Purchaser (if current remediation of such Condition is
required by a governmental agency, Seller agrees that the Condition shall
be remedied in accordance with and to the satisfaction of the appropriate
agency's requirements); or (b) agree with Purchaser on a reduction to the
Purchase Price which reduction shall reflect Purchaser's anticipated
reasonable cost to remedy such Condition. If the Condition cannot be cured
or remedied to Purchaser's reasonable satisfaction, and if agreement
cannot be reached on reduction to the Purchase Price, then the affected
Property may be excluded by Purchaser from the Property to be acquired by
Purchaser hereunder. In such event, the Purchase Price shall be reduced
by the Allocated Purchase Price (see subparagraph (c) below) for such
excluded Property.
(b) Review of the Records. During the Review Period, and upon
reasonable notice from Purchaser, Seller shall provide Purchaser,
personally or through its authorized agents or representatives, full
access during normal business hours to Seller's office and premises to
review and inspect all Records, including, but not limited to, all
abstracts of title, lease files, unit files, production and marketing
files, title opinions, title files, title records, geologic, engineering,
and other files or information in Seller's possession or to which it has
access which relate to the Property and the status of Seller's title
thereto, and Purchaser, at its expense, shall have the right to make and
retain copies of any of such Records; provided however, if the
transactions contemplated hereby do not close for any reason, Purchaser
shall return any Records and copies thereof to Seller forthwith. Without
limiting the generality of the foregoing, Purchaser shall also be given
access to reserve reports, geological and geophysical reports (including,
but not limited to well records, log films, proprietary or joint venture
seismic data or other seismic data which Seller is not contractually
restricted from disclosing), contracts (including, but not limited to, gas
contracts), operating agreements, operating statements, and reports.
(c) Notice of Defect. If, during the Review Period, Purchaser
determines that the Property is subject to a "Defect" (as defined herein
in Section 5(d)), the Purchaser must give written notice to Seller of such
Defect, the nature of the Defect, and furnish Seller Purchaser's basis for
the assertion of such Defect. As soon as practical after such written
notice, Seller shall use reasonable diligence to cure any such Defects. If
Seller cannot cure any such Defects to the reasonable satisfaction of
Purchaser, then Seller shall so notify Purchaser in writing. Thereafter,
Seller and Purchaser shall use a good faith effort to agree on the
Purchase Price adjustment for any such Defect which cannot be cured. Such
adjustment shall be determined in accordance with the following
guidelines:
(1) The Purchase Price shall be allocated among the various
Leases in the proportion of the PDP fair market value of the Leases
reported by Netherland Sewell & Associates in its report dated
October 21, 1996, (the "Allocated Purchase Price").
(2) If the Defect is that Seller's Net Revenue Interest
("NRI") for any Property is less than the NRI for such Property as
set forth in Exhibit "A," then the allocated Purchase Price for such
Property shall be adjusted in the same proportion that the actual
NRI for such property bears to the NRI shown in Exhibit "A."
PURCHASE AND SALE AGREEMENT - PAGE 5
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(3) If the Defect is a lien, encumbrance, or other charge upon
the Property which is liquidated in amount, then the adjustment
shall be the sum necessary to be paid to the obligee to remove the
Defect from the Property;
If the Purchase Price adjustment for any such Defect cannot be
determined, and the Seller and Purchaser cannot agree in good faith on the
amount of the adjustment to the Purchase Price, the Purchaser may (a)
waive the Defect and proceed with Closing, or (b) exclude the affected
Property and reduce the Purchase Price by the Allocated Purchase Price for
such property, or (c) terminate this Agreement, in which event the Parties
shall have no further rights or obligations under this Agreement.
(d) Definition of Defect. For the purpose of this Agreement, a
"Defect" shall be defined as:
(1) Any material encumbrance, lien, mortgage, breach of
representation or warranty, production payment, pledge, claim,
charge, call on production, default, defect, condition, unleased
mineral interest, preferential right, requirement for consent to
assignment, or lack of title affecting the Property, or any matter
affecting the Property by which Purchaser reasonably or in good
faith believes that Seller's interest in a Property may become
subject to the claims of third parties;
(2) Seller's NRI in any Property is less than the NRI for such
Property which is set forth in Exhibit "A," or Seller's gross
working interest ("GWI") in any Property is less than the working
interest shown in Exhibit "A," or Seller's GWI in any Property is
greater than the working interest shown in Exhibit "A" without a
corresponding increase in the NRI in such Property;
(e) Other Property Information. If, based upon Purchaser's
examination of the Records according to Paragraph 5(b) hereof, Purchaser
shall determine that any information, statement, or data contained in any
information, reports, statement, or data furnished to Purchaser or used in
its economic analysis of the Property is not true or correct in any
material respect, upon discovery of any incorrect information, Purchaser
may give written notice to Seller of such inaccuracy or misstatement. Any
such notice must be provided in writing during the Review Period, or it
will be deemed to be waived. Such notice shall provide a summary of such
inaccuracy or misstatement. Upon receipt of such notice, Seller shall have
the option, but not the obligation, to (a) cure or remedy such inaccuracy
or misstatement to the reasonable satisfaction of Purchaser; or (b) agree
with Purchaser on a reduction to the Purchase Price, which reduction shall
reflect Purchaser's reasonably anticipated cost to remedy such inaccuracy
or misstatement. If the inaccuracy or misstatement cannot be cured or
remedied to Purchaser's reasonable satisfaction, and if agreement cannot
be reached on reduction to the Purchase Price, then the affected Property
shall be excluded from the Property to be acquired by Purchaser hereunder,
and the Purchase Price shall be reduced by the Allocated Purchase Price
for such Property;
(f) Casualty Loss. If, prior to Closing, any Property is
substantially damaged or destroyed by fire or other casualty ("Casualty
Defect"), Seller shall notify Purchaser promptly after Seller learns of
such event. Seller shall have the right, but not the obligation, to cure
any such Casualty Defect by repairing such damage or, in the case of
personal property, fixtures, replacing the Property affected thereby with
equivalent items, no later than the date of Closing. If any Casualty
Defects exist at Closing, Purchaser may proceed to purchase the Property
affected thereby, and the Purchase Price shall be reduced by the aggregate
reduction in the value of such Property on account of such Casualty
Defects, as determined by the mutual agreement of the Parties, or if the
Parties are unable to agree on the reduction of the Purchase Price, then
the affected Property shall be excluded from the Property to be acquired
by Purchaser hereunder, and the Purchase Price shall be reduced by the
Allocated Purchase Price for such Property. Notwithstanding anything to
the contrary contained herein, Seller shall be entitled to retain all
insurance proceeds and claims against other Parties in respect of any such
Casualty Defect which occurs prior to closing unless no reduction is made
in the Purchase Price as a result of such Casualty Defect, in which event
PURCHASE AND SALE AGREEMENT - PAGE 6
<PAGE> 178
Purchaser shall be entitled to the insurance proceeds and claims against
other Parties arising from such Casualty Defect.
6. Seller's Representations and Warranties. Seller represents and warrants
to Purchaser that:
(a) This Agreement has been duly executed and delivered on behalf of
Seller and is binding and enforceable against Seller in accordance with
its terms and at the Closing. All documents and instruments required
hereunder to be executed and delivered by Seller shall have been duly
executed and delivered at Closing, and the execution, delivery, and
performance of this Agreement by Seller and the consummation of
transactions contemplated hereby will not constitute a breach of, an event
of default under, a violation of, or a conflict with any agreement or
other instrument to which Seller is a party (except to the extent such
instrument may be released at the Closing). Nor will the same cause Seller
to be in violation of any applicable laws or regulations or any order of
any court or governmental agency having jurisdiction.
(b) All ad valorem, property, production, severance, excise, and
similar taxes and assessments based on or measured by the ownership of the
Property or the Production or the receipt of proceeds therefrom, which
have become due and payable prior to the date hereof with respect to the
Property have been properly paid, and Seller's allocable share of such
taxes and assessments which become due and payable prior to the Closing
shall be properly paid by Seller, and all royalties, overriding royalties,
and payments to any third parties which have become due and payable prior
to the date hereof with respect to production from the Property, have been
properly paid, and will be hereafter properly paid for the period prior to
Closing.
(c) Seller has incurred no liability, contingent or otherwise, for
brokers' or finders' fees in respect of this transaction for which
Purchaser shall have any responsibility whatsoever.
(d) Prior to the Closing, Seller will pay or cause to be paid all of
Seller's share of costs and expenses incurred in connection with the
Property, and will comply with all contracts or other agreements relating
to the Property.
(e) To the best of Seller's information and belief, all laws,
regulations, and orders of all governmental agencies having jurisdiction
over the Property have been and shall continue to be complied with until
the Closing.
(f) There are no first rights of refusal, consents, authorizations,
preferential rights, options, or claims of a similar nature affecting the
Property, other than those listed in Exhibit "A," said listed consents
defined herein as "Consents."
(g) Seller shall, upon request, subrogate Purchaser to any claim
which Seller may have against any third party, prior owner, vendor, or
assignor with respect to the share of the Property acquired by Purchaser,
or the title thereto.
(h) There are no "imbalances" which allow any other party to make up
production at any time after the Effective Date, under any operating
agreement, gas balancing agreement and storage agreement, gas
transportation agreement, gas processing or dehydration agreement, or
other similar agreement relating to the Property.
(i) Seller has not directly or indirectly reserved or retained any
recorded or unrecorded interest or rights in any of the Property, and
Seller shall not reserve any recorded or unrecorded executory interest or
rights relating to the Property.
(j) Seller warrants that the Property is free and clear of all
encumbrances, liens, and mortgages, save and except such encumbrances as
may be identified and described in
PURCHASE AND SALE AGREEMENT - PAGE 7
<PAGE> 179
Exhibit "A" attached hereto, and further save and except liens for taxes
not yet due and payable.
(k) Except as may be identified and described in Exhibit "A"
attached hereto, the Property is not subject to any restriction,
reservation, reversionary interest, drilling or development obligation, or
other material obligation or burden on the operation or the disposition of
Production attributable to the Property.
(l) No part of any of the Property is affected by any prepayment
arrangement under any contract for the sale of oil or gas, or by any
production payment or any other arrangement for delivery of oil or gas
produced from any of the Property at some future time without Purchaser
then or thereafter receiving full payment therefor, and no third party now
has or at Closing will have any right to take makeup gas for which it has
already paid. As of the Effective Date, there are no volumes of makeup gas
owing, or accumulated transportation credits due, to gas purchasers on
account of any "take-or-pay" or other provisions of any contract, and
Seller has not produced or sold more than its pro-rata share of the gas
from any Wells included in the Property.
(m) Except as may be set forth in Exhibit "A" attached hereto, there
are no gas purchase or sale agreements, and no gas gathering or
transportation agreements, affecting the Property that cannot be
terminated upon ninety (90) days' written notice.
(n) Without the prior written consent of Purchaser, Seller (i) shall
not enter into any new agreements or commitments affecting the Property
which extend beyond the Closing, and (ii) will not modify or terminate any
agreements affecting any of the Property, including, without limitation,
any oil and gas leases, unitization or pooling agreements, operating
agreements, pipeline agreements, processing agreements, and hydrocarbon
sales contracts, and (iii) will not further encumber, sell, mortgage,
release, abandon, or otherwise dispose of any of the Property or any
interests therein.
(o) There is not any suit, action, or other proceeding pending or
threatened which affects or relates to the Property, or seeks to restrain
or prohibit Seller from selling or conveying to Purchaser the share of the
Property to be purchased herein. Seller shall promptly notify Purchaser of
any such proceedings which may arise or be threatened prior to Closing.
(p) There are no operating agreements with third parties affecting
the Property except as may be identified and described in Exhibit "A"
attached hereto.
(q) Seller has no knowledge and has not received any notice of any
claimed default (or any event which, with the giving of notice or the
passage of time, or both, would constitute a default) under (i) the
Leases, (ii) any order, writ, injunction, or decree of any court,
commission, or administrative agency affecting the Property, or (iii) any
other agreement affecting the Property. Seller shall promptly notify
Purchaser of any such notice hereafter received by Seller and the
occurrence of any such event of which Seller becomes aware prior to
Closing.
(r) There are no tax partnerships affecting any of the Property.
(s) To the best of Seller's information and belief, no Production
from any Well on the Property has occurred in excess of that permitted by
law, orders, or regulations.
(t) To the best of Seller's information and belief, there has been
no material injury or damage to any of the Property which has not been
fully repaired, replaced, or rebuilt.
(u) Except for depletion due to continued production, there has been
no substantial and material change in condition of the Property between
the date hereof and Closing.
PURCHASE AND SALE AGREEMENT - PAGE 8
<PAGE> 180
(v) To the best of Seller's information and belief, all easements,
rights of way, permits, crossing agreements, and surface rights included
in the Property are in full force and effect and are valid and subsisting,
and freely assignable, and all rentals and other payments due thereunder
have been properly and timely paid and all conditions necessary to keep
them in force have been duly performed.
(w) From and after the effective date of its acquisition of its
ownership in the Leases, the Seller has performed all obligations required
to be performed under such Leases, or any other instruments and agreements
relating to the Properties, and is not in default thereunder, and to the
best of Seller's information and belief, each of the Leases to be conveyed
is valid and in full force and effect.
(x) To the best of Seller's knowledge, Seller owns each Lease and
Property in the undivided share reflected by the "Working Interest"
described and set forth in Exhibit "A" for each particular Lease and
Property, and Seller owns for each Lease and Property the share of
Production reflected as "Net Revenue Interest" in Exhibit "A" attached
hereto. Seller is being paid not less than the fractional "net revenue
interest" for each Property in Exhibit "A" hereto, and, for expenses and
costs for each Property, Seller is not paying more than the fractional
interest specified under "Working Interest" for each Property in Exhibit
"A" hereto.
(y) To the best of Seller's information and belief, all rentals and
bonuses have been timely and fully paid and discharged, and all conditions
necessary to keep the Leases in full force have been performed, and no
proceeds from the sale of Production attributable to the Property are
currently being held in suspense by any purchaser thereof.
(z) The Seller has not collected any proceeds from the sale of
Production attributable to the Property which are subject to refund, or if
so, that any such refund, if not otherwise accounted for under this
Agreement, shall be the sole responsibility of the Seller.
(aa) Except as listed in Exhibit "A" attached hereto, to the best of
Seller's information and belief, there are no Wells located on the
Property that Seller is obligated by law or contract to plug and abandon,
that Seller will be obligated by law or contract to plug and abandon at
the present time, and with the lapse of time or notice, or both, because
the well is not currently capable of producing production in commercial
quantities, or because the Well is subject to exceptions to a requirement
to plug and abandon issued by a regulatory authority having jurisdiction
over the Property.
(bb) To the best of Seller's information and belief, there are no
presently existing conditions (by existing federal or state statutes and
regulations) affecting the Property, which might give rise to a cause of
action on behalf of any governmental agency or third party, against either
Purchaser or Seller.
(cc) All information and data provided to Purchaser by Seller or its
agents concerning the Property is true and correct to the best of Seller's
information, knowledge, and belief.
(dd) Environmental Current Status. To the best of Seller's
knowledge, the Property and Seller are not in violation of or subject to
any existing, pending, or threatened investigation or inquiry by any
governmental authority or to any remedial obligations under any applicable
laws pertaining to health or the environment (such laws as they now exist
or are hereafter enacted and/or amended hereinafter sometimes collectively
called "Applicable Environmental Laws"), including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of
1986 (as amended, hereinafter called "CERCLA"), the Resource Conservation
and Recovery Act of 1976, as amended by the Used Oil Recycling Act of
1980, the Solid Waste Disposal Act Amendments of 1980, and the Hazardous
and Solid Waste Amendments of 1984 (as amended, hereinafter called
"RCRA"), the Texas Water Code and the Texas Solid Waste Disposal Act, and
this representation will
PURCHASE AND SALE AGREEMENT - PAGE 9
<PAGE> 181
continue to be true and correct following disclosure to the applicable
governmental authorities of all relevant facts, conditions, and
circumstances, if any, pertaining to the Property and Seller. The terms
"hazardous substance" and "release" as used in this Agreement shall have
the meanings specified in CERCLA, and the terms "solid waste" and
"disposal" (or "disposed") shall have the meanings specified in RCRA;
provided, in the event either CERCLA or RCRA is amended so as to broaden
the meaning of any term defined thereby, such broader meaning shall apply
subsequent to the effective date of such amendment and provided further,
to the extent that the laws of the State of Texas establish a meaning for
"hazardous substance," "release," "solid waste," or "disposal" which is
broader than that specified in either CERCLA or RCRA, such broader meaning
shall apply.
7. Purchaser's Representations and Warranties. Purchaser represents and
warrants to Seller that:
(a) Purchaser: (i) is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Texas; (ii)
is duly qualified to transact business in each jurisdiction where the
nature and extent of its business and properties require the same in order
for it to perform its obligations under this Agreement; and (iii)
possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply with
the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, all of which have been duly
authorized and approved by all necessary corporate action and for which no
further approval or consent is required.
(b) The consummation of the transactions contemplated by this
Agreement will not violate, or be in conflict with (i) any agreement or
instrument to which Purchaser is a party; or (ii) any judgment or decree
applicable to Purchaser as a party in interest with respect thereto.
(c) This Agreement has been duly executed and delivered on behalf of
Purchaser, and at the Closing, all documents and instruments required
hereunder to be executed and delivered by Purchaser (or its assignees)
shall have been duly executed and delivered.
(d) Subject to the conditions herein, Purchaser has or will have at
Closing (i) the financial capability or (ii) commitments from responsible
financial institutions to provide the funds required by Purchaser, to pay
the Purchase Price and consummate the transaction contemplated hereby
within the time period contemplated herein.
(e) Purchaser either has performed, or prior to closing will
perform, whatever inspection of the Property and Seller's title thereto
that Purchaser deems appropriate and knows the condition thereof and is
purchasing the Property as a result of such inspections and not because
of, or in reliance on, any representation or warranty made by Seller other
than those expressly set forth in this Agreement.
(f) In the event the Purchase Price is adjusted down at Closing,
based upon any unpaid taxes as set forth in Paragraph 4(b)(2) hereof (the
"Tax Adjustment"), Purchaser agrees to timely make payment (equivalent to
the Tax Adjustment) to such taxing authorities as may be appropriate.
8. Conditions to Obligations of Purchaser. The obligations of Purchaser to
consummate the transaction provided for herein are subject, at the option of
Purchaser, to the fulfillment on or prior to Closing, of each of the following
conditions:
(a) Representations. The representations and warranties of Seller
herein contained shall be true and correct in all material respects at
Closing as though made on and as of such date (unless appropriate
adjustments or remediation has been made in accordance with Paragraph 5
hereof).
PURCHASE AND SALE AGREEMENT - PAGE 10
<PAGE> 182
(b) Performance. Seller shall have performed all obligations,
covenants, and agreements hereunder and shall have complied with all
covenants and conditions contained in this Agreement to be performed or
complied with by it at or prior to the Closing.
(c) Pending Matters. No suit, action, or other proceedings shall be
pending or threatened (a) against Seller before any court or governmental
agency which might result in impairment or loss of value as to Seller's
title to any part of the Property; or (b) which seeks to restrain, enjoin,
or otherwise prohibit the consummation of the transactions contemplated by
this Agreement.
(d) Liability. No liability which affects, in a materially adverse
manner, the Property or Purchaser's ability to receive the economic
benefits therefrom has been or is threatened to be asserted with respect
to the Property.
(e) Defects. No Defects shall be present, which are not cured by
Seller or waived by Purchaser as provided herein.
(f) Records and Access. Seller shall have afforded Purchaser and its
officers, employees, and representatives timely and reasonable access to
the Records as required herein.
9. Seller's Obligations at Closing. At the Closing, Seller shall deliver
to Purchaser the following items; however, item (e) will be delivered as soon
prior to Closing as reasonably practical:
(a) The Assignment, duly executed and acknowledged by Seller;
(b) Duly executed and acknowledged releases of all liens and burdens
on the Property or on Production therefrom or attributable thereto;
(c) Executed transfer orders (or letters in lieu thereof) addressed
to all purchasers of production from the Property;
(d) Any other executed documents or instruments which may be
reasonably required to consummate the transactions contemplated herein and
to fully vest Purchaser with operations and title to the Property as
contemplated hereby;
(e) The "Interim Settlement Statement," which shall set forth the
Purchase Price and adjustments thereto provided for in this Agreement
which are or may be determined at or prior to the Closing, which statement
shall be delivered to Purchaser as soon as reasonably practical prior to
Closing for Purchaser's review and approval;
(f) All consents required of third parties, who are identified in
Exhibit "A" attached, properly executed and in form approved by Purchaser;
and
(g) All releases of current liens of lenders encumbering all or any
part of the Property, properly executed in form acceptable by Purchaser.
10. Purchaser's Obligations at Closing. At the Closing, Purchaser shall:
(a) Deliver to Seller the Adjusted Purchase Price, in cash or other
immediately available funds (which shall be subject to a subsequent
accounting between Seller and Purchaser pursuant to this Agreement); and
(b) Execute and deliver any other documents or instruments which may
be required to consummate the transactions contemplated herein.
11. Notices. All notices, demands, and requests which may be given or
which are required to be given by either Party to the other shall be in writing.
Any notice, demand, or communication required or permitted hereunder shall be
deemed to be delivered on actual receipt
PURCHASE AND SALE AGREEMENT - PAGE 11
<PAGE> 183
or three (3) days after being sent by overnight courier or Certified U.S. Mail
to Seller or Purchaser, whichever occurs first, respectively, as follows:
SELLER: PURCHASER:
Louis P. Robertson and Corrida Resources, Inc.
Virginia Young Robertson Suite 380, Lock Box 31
12370 A Robertson Road 3500 Oak Lawn Avenue
Tickfaw, Louisiana 70466 Dallas, Texas 75219-4398
Telephone: ______________ Attn.: Edward Munden
Facsimile: ______________ President
Telephone: 214-521-9959
Facsimile: 214-521-9960
or such other address as Purchaser or Seller may, from time to time, designate
pursuant to the terms hereof. A facsimile transmission shall be considered an
original document for purposes of providing notice under this section.
12. Furnishing Data and Information. The Seller also agrees to promptly
cooperate in all reasonable requests by Purchaser in furnishing copies, at
Purchaser's expense, of all Records necessary for Purchaser to conduct its due
diligence under the terms of this Agreement.
13. Post-Closing Adjustments. As soon as practicable after the closing,
and in any event within sixty (60) days after Closing, Seller shall prepare and
deliver to Purchaser, in accordance with this Agreement and generally accepted
accounting principles, a statement (the "Final Settlement Statement") setting
forth each adjustment or payment pursuant to Paragraph 4 hereof that was not
finally determined as of the Closing ("Post-Closing Adjustments") and showing
the calculation of such Post-Closing Adjustments and the aggregate amount
thereof. Within ten (10) business days after receipt of the Final Settlement
Statement, Purchaser shall deliver to Seller a written report containing any
changes that Purchaser proposes be made to the Final Settlement Statement. The
Parties undertake to agree with respect to the amounts of such Post-Closing
Adjustments no later than ninety (90) days after the Closing Date. The date upon
which such agreement is reached or upon which the aggregate amount of the
adjustments are finally established shall be herein called the "Final Settlement
Date." Seller shall pay to Purchaser, or vice versa, as the case may be, within
ten (10) business days after the Final Settlement Date the amount of such
adjustments (as finally established), by means of wire transfer in immediately
available funds or by means of a certified bank check. In the event Seller owes
monies to Purchaser as a consequence of the Post-Closing Adjustments, Purchaser
shall have the right to offset Purchaser's obligation under the note for any
such monies which are owing to Purchaser by Seller under Paragraph 4 and this
Paragraph 13.
14. Failure to Perform/Termination of Agreement. If the Seller should fail
to fully and timely perform any of its obligations hereunder, or should fail to
consummate the sale of the Property, except due to the Purchaser's default, the
Purchaser may, at its option, enforce specific performance of this Agreement, or
terminate this Agreement.
15. Indemnification by Seller.
(a) Seller agrees to indemnify and save and hold harmless Purchaser
against and from any loss, damage, or expense sustained by Purchaser
arising out of or resulting from any breach of any of the representations
and warranties made hereunder and not waived by Purchaser.
(b) Seller agrees to indemnify and save and hold harmless Purchaser
against all claims, liabilities, costs, expenses, windfall profit taxes,
and liability arising out of the ownership or operation of the Property,
and based upon the occurrence of events, the accrual of obligations or
liabilities, or the existence of conditions prior to the Effective Date.
(c) If any claims for brokerage fees are asserted against Purchaser
in connection with this transaction based upon alleged commitments made by
Seller, Seller shall indemnify
PURCHASE AND SALE AGREEMENT - PAGE 12
<PAGE> 184
Purchaser against all such claims and reimburse Purchaser for all
reasonable expenses incurred in responding to such claims, including
reasonable attorney's fees.
(d) Notwithstanding anything to the contrary contained herein,
Seller agrees to indemnify and save and hold harmless Purchaser for
Seller's gross negligence or willful misconduct for that period of time
between the Effective Date and Closing.
(e) The provisions of this Paragraph 15 shall survive Closing for a
period of four (4) years from the date of Closing, and Seller shall not be
entitled to assert any right of indemnification hereunder after such date.
16. Indemnification by Purchaser.
(a) Purchaser agrees to indemnify and save and hold harmless Seller
against and from any loss, damage, or expense sustained by Seller arising
out of or resulting from any breach of any of the representations and
warranties made hereunder and not waived by Seller.
(b) Purchaser shall assume and hereby agrees to pay, honor,
discharge, and perform fully and timely, the obligations and liabilities
directly associated with the Seller's interest in the share of the
Property acquired by Purchaser hereunder, which are attributable to the
period of time from and after the Effective Date.
(c) Purchaser agrees to indemnify and save and hold harmless Seller
against all claims, costs, expenses, windfall profits taxes, and
liabilities arising out of the ownership or operation of the share of the
Property acquired by Purchaser hereunder and based upon the occurrence of
events, the accrual of obligations or liabilities, or the existence of
conditions on and subsequent to the Effective Date (but not including
these costs and expenses incurred with respect to the purchase of Seller's
interest in the Property or the negotiations leading to such purchase).
(d) If any claims for brokerage fees are asserted against Seller in
connection with this transaction based upon alleged commitments made by
Purchaser, Purchaser shall indemnify Seller against all such claims and
reimburse Seller for all reasonable expenses incurred in responding to
such claims, including reasonable attorney's fees.
(e) The provisions of this Paragraph 16 shall survive Closing for a
period of four (4) years from the date of Closing, and Purchaser shall not
be entitled to assert any right of indemnification hereunder after such
date.
17. Confidentiality. Prior to Closing, the Seller shall be furnishing to
Purchaser various information relating to Seller and the Property, and Seller's
business activities, assets, finances, costs, revenues, rights, obligations,
liabilities, and strategies. In consideration of the Seller furnishing this
information to Purchaser, Purchaser agrees that prior to Closing (a) that such
information is confidential and/or proprietary to Seller, and such information
shall be entitled to and shall receive treatment as such by Purchaser; (b)
Purchaser shall use its best efforts, and will advise all of its employees,
representatives, agents, and advisors who have access to such information, to
use their best efforts to hold in confidence, not to disclose to others, and not
to use (except in respect of the transaction contemplated by this Agreement) any
such information; and (c) if Closing does not occur, all such information,
unless otherwise specified in writing, shall remain the property of Seller, and
shall be returned to Seller together with any copies made thereof. Prior to
Closing, Purchaser shall provide such information only to its employees,
representatives, agents, and advisors who have need to know such information in
connection with this Agreement.
18. Other Purchase and Sale Agreements. Purchaser has tendered purchase
and sale agreements, dated on or about the date hereof, to other parties, all of
whom are named in Exhibit "C" attached hereto. Such other agreements may cover
the interest, if any, of such other parties in the Leases and Property covered
by this Agreement, and may cover other oil and gas properties which are not the
subject of this Agreement. Purchase and Seller agree that the Closing under this
PURCHASE AND SALE AGREEMENT - PAGE 13
<PAGE> 185
Agreement shall be simultaneous with the closings under such other agreements,
and that Closing under this Agreement shall be conditional upon closing
occurring under such other agreements. Seller does not claim any interest in and
to the oil and gas leases and other property which are the subject of such other
purchase and sale agreements, and which are not the subject of this Agreement.
In the event Seller may have any claim or interest in and to the oil and gas
leases and other property which are the subject of such other purchase and sale
agreements, and which are not the subject of this Agreement, then, for the
consideration herein, Seller agrees to sell and convey to Purchaser all of
Seller's interest in and to the oil and gas leases and other property and
interests which are the subject of the other purchase and sale agreements, above
described.
19. Area of Non-Competition. Seller agrees not to compete with Purchaser
in an area which comprises the lands covered by the Leases and an area which
shall extend outward from the boundaries of each of the Leases a distance of
5,280 feet. In this regard, Seller agrees that Seller, its employees, agents,
servants, or companies controlled by Seller, in common control with Seller, or
with whom Seller is affiliated, shall not acquire, for so long as a Lease is
held in force and effect by its terms, and for a period of three years
thereafter, any oil and gas leases, any mineral interest, royalty interest,
overriding royalty interest, or any farmout agreement, or other agreement
permitting the right to explore for and produce oil and/or gas, which cover any
lands within the restricted area.
20. Miscellaneous.
(a) If any term or provision of this Agreement is held to be
illegal, invalid, or unenforceable, the legality, validity, and
enforceability of the remaining terms and provisions of this Agreement
shall not be affected thereby, and in lieu of each such illegal, invalid,
or unenforceable term or provision, there shall be added automatically to
this Agreement a legal, valid, and enforceable term or provision as
similar as possible to the term or provision declared illegal, invalid, or
unenforceable;
(b) Either Seller or Purchaser shall have the right to waive any
requirement contained in this Agreement, which is intended for the waiving
Party's benefit, but except as otherwise specifically provided herein,
such waiver shall be effective only if in writing and executed by the
Party for whose benefit such requirement is intended; provided however,
that any such waiver shall not be construed as a waiver of any other
benefit accruing to the waiving Party hereunder;
(c) The captions used in connection with this Agreement are for
convenience only and shall not be deemed to expand or limit the meaning of
the language of this Agreement;
(d) Words of any gender used in this Agreement shall be held and
construed to include any other gender, and words in the singular shall be
held to include the plural, unless the context otherwise requires;
(e) Seller agrees that, on or before the Closing, it will not carry
on any negotiations with any third party, for the sale or transfer of the
Property, without the prior written consent of Purchaser. Thereafter,
Seller may negotiate with third parties if this Agreement has been
terminated;
(f) THIS AGREEMENT AND ALL OF THE TRANSACTIONS CONTEMPLATED HEREIN
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS;
(g) This Agreement embodies the entire agreement between Seller and
Purchaser with respect to the subject matter hereof and supersedes all
prior agreements, whether written or oral;
(h) Except as otherwise specifically provided herein, this Agreement
may not be amended except by an agreement in writing executed by both
Seller and Purchaser;
PURCHASE AND SALE AGREEMENT - PAGE 14
<PAGE> 186
(i) This Agreement shall be binding upon and inure to the benefit of
Seller and Purchaser and their respective legal representatives,
successors, and assigns. It is expressly understood and agreed that
Purchaser's rights under this Agreement may not be assigned prior to
Closing. Provided however, any interest acquired hereunder shall be freely
assignable by Purchaser after Closing;
(j) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of which shall be
deemed to be one and the same instrument;
(k) In addition to the acts and deeds recited herein and
contemplated to be performed, both Seller and Purchaser hereby agree to
perform, execute, and/or deliver at and after Closing any and all such
further reasonable acts, deeds, and assurances as may be reasonably
required to consummate the transactions contemplated by this Agreement;
(l) This Agreement supersedes any and all other agreements, either
oral or in writing, between the Parties hereto with respect to the subject
matter hereof and contains all of the covenants and agreements between the
Parties with respect to said matter. Each Party to this Agreement
acknowledges that no representations, inducements, promises, or
agreements, orally or otherwise, have been made by any Party, or anyone
acting on behalf of any Party, which are not embodied herein, and that no
other agreement, statement, or promise not contained in this Agreement
shall be valid or binding;
(m) In the event of any dispute occurring under this Agreement, the
prevailing Party shall be entitled to be reimbursed by the other Party for
its reasonable and necessary attorney's fees;
(n) Any failure by either Party to insist, or any election by either
Party not to insist, upon strict performance by the other Party of any of
the terms, provisions, or conditions of this Agreement shall not be deemed
to be a waiver of the same or of any other term, provision, or condition
hereof, and either Party may at any time or times thereafter insist upon
strict performance by the other Party of any and all of such terms,
provisions, and conditions. No waiver by either Party of any right,
remedy, power, or privilege hereunder shall be construed as a waiver of,
or operate to impair, any subsequent right, remedy, power, or privilege
nor shall any single or partial exercise of any such right, remedy, power,
or privilege exhaust the same or preclude other or further exercise
thereof.
(o) All covenants, representations, and indemnities set forth herein
shall survive closing, subject to any agreed periods of limitation as may
be set forth herein.
EXECUTED as of the 5th day of February, 1997.
WITNESSES: SELLER:
____________________________________ ___________________________________
LOUIS P. ROBERTSON
____________________________________
____________________________________ ___________________________________
VIRGINIA YOUNG ROBERTSON
____________________________________
PURCHASE AND SALE AGREEMENT - PAGE 15
<PAGE> 187
PURCHASER:
CORRIDA RESOURCES, INC.,
a Nevada corporation
____________________________________ By: _________________________________
ROBERT P. LINDSAY, VICE PRESIDENT
____________________________________
ACKNOWLEDGMENTS
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared LOUIS P.
ROBERTSON, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free act
and deed.
____________________________________________
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared VIRGINIA YOUNG
ROBERTSON, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that she executed the same as her free
act and deed.
____________________________________________
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared ROBERT P.
LINDSAY, to me personally known, who, being duly sworn, did say that he is the
Vice President of CORRIDA RESOURCES, INC., a Nevada corporation, and that the
foregoing instrument was signed by him on behalf of such entity, with necessary
authority, and that ROBERT P. LINDSAY acknowledged said instrument to be the
free act and deed of such corporation.
____________________________________________
Notary Public, State of Louisiana
PURCHASE AND SALE AGREEMENT - PAGE 16
<PAGE> 188
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the 5th day of February, 1997, by
and between PERCY J. ROBERTSON, joined herein by his wife, DOROTHY KIRBY
ROBERTSON, (hereinafter referred to as the "Seller") and CORRIDA RESOURCES,
INC., a Nevada corporation (the "Purchaser"), (Seller and Purchaser hereinafter
individually referred to as "Party" and collectively as "Parties").
RECITALS
WHEREAS, Seller desires to sell and convey, and Purchaser desires to
purchase and receive, the following, upon the terms and conditions hereinafter
set forth:
I. The Leases and Units. All of the Seller's right, title, and interest in
and to (i) the oil, gas, and mineral leases and properties and interests
described in Exhibit "A," including but not limited to, leasehold, fee, mineral,
royalty, and overriding royalty interests and payments out of or measured by
Production (hereinafter defined) (said oil, gas, and mineral leases and property
and interests being herein referred to as the "Leases"); (ii) the units, pooled
acreage, spacing, or proration units or other allocation of acreage, and all
rights associated therewith, which are applicable to the Leases and have been
established by, or in accordance with, (a) applicable contractual provisions
regarding unitization, communitization, pooling, spacing, or proration, or (b)
applicable state or federal law;
II. The Production. All of the Seller's right, title, and interest in and
to all oil, gas, casinghead gas, condensate, distillate, and other liquid or
gaseous hydrocarbons and other minerals which are in, under, upon, and produced
from or allocable (or to be produced from or allocable) to the Leases after the
Effective Date (as defined in Paragraph 3(a) hereof) (such hydrocarbons and
minerals being hereinafter referred to as "Production"), including "line fill"
and inventory attributable to the interests described in Exhibit "A," or the
proceeds from the sale of such Production;
III. The Wells and Equipment. All of Seller's right, title, and interest
in and to all personal property of every kind and character located on the
Leases or used in the operation thereof including, without limitation, wells
(whether productive or non-productive, active or inactive) (the "Wells"),
compressors, well equipment, casing, tanks, machinery, gathering lines and
systems, treatment facilities, disposal wells and disposal facilities, pipelines
and other appurtenances, and any other personal property situated thereon,
herein individually and collectively called the "Equipment";
IV. The Rights of Way and Permits. All of Seller's right, title, and
interest in and to all rights, privileges, benefits, permissions, and
authorizations (including, without limitation, permits, licenses, servitudes,
easements, and rights of way) in respect of the use and occupation of the
surface of such Leases, and the subsurface depths under the land and premises
covered by and benefiting such Leases, herein called individually and
collectively "Rights of Way and Permits";
V. The Contracts. All of Seller's right, title, and interest in and to all
of the orders, gas purchase and sale contracts (wherein Seller is a selling
party), crude purchase and sale agreements (wherein Seller is a selling party),
surface leases, farm-in agreements, farmout agreements, bottom hole agreements,
acreage contribution agreements, operating agreements, unit agreements, area of
mutual interest agreements, processing agreements, options, leases of equipment
or facilities, and other contracts, agreements, and rights, which are owned by
Seller, in whole or in part and are (i) appurtenant to the Leases, or (ii) used
or held for use in connection with the ownership or operation of the Leases or
with the Production, treatment on the Leases, sale or disposal of water,
hydrocarbons or associated substances, herein called individually and
collectively the "Contracts";
VI. The Records. All of the files, records and data in the possession
of Seller relating to the items described in subsections (I), (II), (III), (IV),
and (V) above (the "Records"), including, without limitation, lease files, title
records (including abstracts of title, title opinions, and title
PURCHASE AND SALE AGREEMENT - PAGE 1
<PAGE> 189
curative documents); contracts, correspondence, originals or copies of
geological, geophysical, and seismic records, data, and information; and
originals or copies of production records, electric logs, core data, pressure
data and decline curves and graphical production curves, and all related
matters, to the extent Seller has the authority to release such Records and to
the extent they are reasonably required by Purchaser to operate the Wells;
VII. Miscellaneous. Exhibit "A" attached hereto sets forth the undivided
interests of Seller in the Leases, and the revenue interests attributable
thereto, as well as the undivided interests of Seller in the Production, Wells,
Equipment, Rights of Way, and Contracts. This Agreement covers and pertains to
all of the right, title, and interest of Seller in the Leases, the lands covered
by the Leases, Production, Wells, Equipment, and Rights of Way, even if the
undivided interests of Seller in any such property or property rights should be
incorrectly or insufficiently described in the Exhibit "A."
The Leases, Production, Wells, Equipment, Rights of Way and Permits,
Contracts, Records, and Miscellaneous referred to in Paragraphs I through VII
above, are hereinafter sometimes referred to individually and collectively in
the singular as "Property."
Notwithstanding the foregoing, Seller excepts and reserves from the sale
herein any interest which Seller may own, if any, in and to any
presently-created overriding royalty interests, which are of record in the
subject counties, in the Leases described in Exhibit "A" under the heading
"Stafford Springs Field," covering lands located in Jasper County and Clarke
County, Mississippi. Any such overriding royalty interest owned by Seller is not
part of the NRI (see definition below) of Seller set forth in Exhibit "A"
attached hereto for such Leases.
WHEREAS, this Agreement was the subject of, and was contemplated by, that
certain letter of intent dated October 17, 1996, by and between Queen Sand
Resources, Inc., and David Robertson and Keith Robertson, as amended and
supplemented, including amendment and supplement dated December 24, 1996. As to
the interest of Seller in the Property, this Agreement supersedes and replaces
the letter of intent.
NOW, THEREFORE, for and in consideration of the mutual agreements herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Seller and Purchaser
hereby agree as follows:
1. Sale and Purchase. Seller agrees to sell and convey to Purchaser, and
Purchaser agrees to purchase and pay for, all of Seller's right, title, and
interest in and to the Property as hereinafter provided.
2. Purchase Price. The "Purchase Price" for the Property shall be the sum
of $12,121.00, payable as follows:
(a) The sum of $12,121.00, which shall be paid at Closing.
All cash payments to be tendered by Purchaser to Seller, either before or
after Closing, shall be made by wire transfer or shall be made by certified
funds.
The Purchase Price shall be subject to adjustment as hereinafter provided.
3. Closing and Effective Date.
(a) The closing of the sale and purchase of the Property shall take
place on or before February 5, 1997, (the "Closing") at 1310 Jeff Davis,
Hammond, Louisiana 70403, or at such other time, place, or manner as may
be mutually agreeable to the Parties. The sale of the Property shall be
effective as of November 1, 1996, at 7:00 a.m. local time for each of the
particular Leases (the "Effective Date").
(b) At the Closing, the Property shall be conveyed and transferred
by Seller to Purchaser by the execution and delivery of an Assignment and
Bill of Sale (the
PURCHASE AND SALE AGREEMENT - PAGE 2
<PAGE> 190
"Assignment") in substantially the same form and content as the Assignment
and Bill of Sale which is attached hereto as Exhibit "B," and such other
instruments of conveyance as may be reasonably requested by Purchaser.
Purchaser shall be entitled to all of Seller's rights in the Property
(including, without limitation, the rights to all Production and proceeds
of Production) appurtenant and attributable to the Property, and shall be
subject to the duties and obligations attendant with ownership of such
undivided share of the Property for the period from and after the
Effective Date. For the period prior to the Effective Date, Seller shall
be entitled to all of the rights (including, without limitation, the
rights to all Production and proceeds of Production) appurtenant and
attributable to the Property, and shall be subject to the duties and
obligations attendant with ownership of the Property.
4. Adjustments to Purchase Price. The Purchase Price shall be adjusted
(the "Adjusted Purchase Price") at the Closing, by the "Interim Settlement
Statement" (hereinafter defined in this paragraph and in Paragraph 9 below),
and, subsequent to Closing, by the "Final Settlement Statement" (hereinafter
defined in Paragraph 13 below), as follows:
(a) The Purchase Price shall be increased by the following:
(1) the value of all merchantable allowable oil or other
liquid hydrocarbons in storage owned by Seller in the tanks or above
the pipeline connection at the Effective Date, and not previously
sold by Seller, that is credited to the share of the Property being
acquired hereunder, valued at the contract price thereto, or if
none, the actual price received by Purchaser, less taxes or gravity
adjustments deducted by the purchaser of such oil or other liquid
hydrocarbons;
(2) the amount of all reasonable expenditures made in
connection with the ownership, operation, and maintenance of the
share of the Property being acquired hereunder, (including royalties
and rentals) and in accordance with generally accepted accounting
principles and prudent operations, attributable solely to the period
from and after the Effective Date and which are paid by or on behalf
of Seller after the Effective Date;
(3) an amount equal to all prepaid expenses, attributable to
the ownership, operation, and maintenance of the share of the
Property being acquired hereunder that are paid by or on behalf of
Seller after the Effective Date and prior to the Closing Date and
that are, in accordance with generally accepted accounting
principles, attributable solely to the period from and after the
Effective Date;
(4) any other amount agreed upon by Purchaser and Seller.
(b) The Purchase Price shall be decreased by the following:
(1) the amount of any proceeds from the sale of Production
attributable to the share of the Property being acquired hereunder
attributable to the period on or after the Effective Date (net of
production, severance, and similar taxes and assessments measured by
or payable out of production) actually received or accrued by or on
behalf of Seller;
(2) an amount equal to all unpaid ad valorem, property,
production, profit, severance, and similar taxes and assessments
based upon or measured by the ownership of the share of the Property
being acquired hereunder or the production of oil, gas, or other
minerals therefrom or the receipt of proceeds attributable thereto,
which accrue to or are chargeable against such share of the Property
(in accordance with generally accepted accounting principles) and
which are attributable to the period prior to the Effective Date,
which amount shall, to the extent not actually assessed, be computed
based upon such taxes and assessments for the immediately- preceding
calendar year, or if such taxes or assessments are assessed on other
than a calendar-year basis, for the tax period last ended;
PURCHASE AND SALE AGREEMENT - PAGE 3
<PAGE> 191
(3) any amounts received by Seller (whether prior to or
subsequent to the Effective Date) pursuant to "take-or-pay," advance
payment, or similar provisions of any production sales contract, any
gas balancing agreement, or any other agreement, to the extent any
purchaser has the right to apply any such amounts to Purchaser's
share of Production delivered after the Effective Date;
(4) any reduction in the value of the share of the Property
being acquired hereunder resulting from the existence of a Defect
(herein defined in Section 5(d)) which is not cured or waived prior
to Closing;
(5) any other amount agreed upon by Purchaser and Seller.
(c) The "Interim Settlement Statement" shall be prepared by Seller,
its agents, or representatives, prior to Closing, which statement shall
set forth the adjustments to the Purchase Price, per the adjustments set
forth in this Paragraph 4, which are or may be determined at or prior to
Closing. Such statement shall be prepared according to generally accepted
accounting principles and shall show the calculation of all such
adjustments. Upon the approval of such Interim Settlement Statement by
Purchaser, the Purchase Price shall be adjusted according to such
statement. Upon Purchaser's request, Seller shall make available to
Purchaser all information relied upon by Seller for the adjustments
requested in order to aid and facilitate Purchaser's approval of such
statement. After Closing, the Purchase Price may further be adjusted,
pursuant to the adjustments set forth in this paragraph, with the "Final
Settlement Statement" in the manner further described in Paragraph 13
below.
(d) All monies received by either Party hereto which, under the
terms of this Agreement or otherwise, belong to the other Party, shall be
received in trust by the Party receiving such funds, and shall monthly,
upon receipt, be paid over to the other Party. The Parties agree, in this
regard, to cooperate fully and to execute, endorse, and deliver as
expeditiously as practicable such papers, checks, and documents as are
needed promptly to complete the transfer of such payments;
(e) After the Closing, if an invoice or other evidence of an
obligation relating to the share of the Property acquired by Purchaser is
received which is applicable to periods both prior to and after the
Effective Date, and is partly the obligation of Seller and partly the
obligation of Purchaser, then each Party shall pay its respective portion
of such obligation to the obligee, prorated between the Parties as of the
Effective Date;
(f) At and after the Closing, Purchaser and Seller will cooperate
fully in notifying all applicable third parties (including the execution
by Seller of such transfer orders, letters in lieu, change of operator,
etc., as may be requested by Purchaser) so that notices, proceeds, and
invoices from such third parties may take into account the fact that
Purchaser has acquired the Property as of the Effective Date;
(g) The parties hereto agree to exercise diligence and good faith in
attempting to resolve any disagreements or disputes which may arise from
the adjustments to the Purchase Price to be made in accordance with this
paragraph.
5. Property Conditions, Title Review, Property Information, and Casualty
Losses.
(a) Property Conditions. THIS SALE OF THE EQUIPMENT AND ALL OTHER
PERSONAL PROPERTY THAT IS A PART OF THE PROPERTY IS MADE ON AN "AS IS,
WHERE IS" BASIS WITH ALL FAULTS AS TO ITS CONDITION, AND SELLER EXPRESSLY
DISCLAIMS ALL WARRANTIES AS TO THE CONDITION OF THE EQUIPMENT (NOTE,
HOWEVER, THERE ARE CERTAIN WARRANTIES AS TO TITLE AS HEREIN SET FORTH)
INCLUDING, WITHOUT LIMITATIONS, THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR ANY PARTICULAR PURPOSE. Seller agrees that for a period of
time commencing with the date of the letter of intent dated October 17,
1996, above described, and continuing until five (5) business days
before Closing (the "Review Period"), Purchaser, personally or through
its
PURCHASE AND SALE AGREEMENT - PAGE 4
<PAGE> 192
authorized agents or representatives, shall have the right to make any and
all physical inspections of the Property which Purchaser may desire to
make or to have made and to make all such other inspections, surveys,
tests, or other studies (including, but not limited to, environmental
assessments and evaluations) as Purchaser deems necessary or desirable.
Upon reasonable notice to Seller, Purchaser, and its authorized agents and
representatives, at Purchaser's sole risk, may enter upon the Property for
the purpose of conducting those inspections, surveys, tests, and studies.
If Purchaser shall determine that the condition of the Property is not in
substantial compliance with any governmental regulations (including
environmental regulations), then upon discovery, Purchaser must promptly
give written notice to Seller of such condition ("Condition"). Upon
receipt of such notice, Seller shall have the option, but not the
obligation, to (a) cure or remedy such Condition to the reasonable
satisfaction of Purchaser (if current remediation of such Condition is
required by a governmental agency, Seller agrees that the Condition shall
be remedied in accordance with and to the satisfaction of the appropriate
agency's requirements); or (b) agree with Purchaser on a reduction to the
Purchase Price which reduction shall reflect Purchaser's anticipated
reasonable cost to remedy such Condition. If the Condition cannot be cured
or remedied to Purchaser's reasonable satisfaction, and if agreement
cannot be reached on reduction to the Purchase Price, then the affected
Property may be excluded by Purchaser from the Property to be acquired by
Purchaser hereunder. In such event , the Purchase Price shall be reduced
by the Allocated Purchase Price (see subparagraph (c) below) for such
excluded Property.
(b) Review of the Records. During the Review Period, and upon
reasonable notice from Purchaser, Seller shall provide Purchaser,
personally or through its authorized agents or representatives, full
access during normal business hours to Seller's office and premises to
review and inspect all Records, including, but not limited to, all
abstracts of title, lease files, unit files, production and marketing
files, title opinions, title files, title records, geologic, engineering,
and other files or information in Seller's possession or to which it has
access which relate to the Property and the status of Seller's title
thereto, and Purchaser, at its expense, shall have the right to make and
retain copies of any of such Records; provided however, if the
transactions contemplated hereby do not close for any reason, Purchaser
shall return any Records and copies thereof to Seller forthwith. Without
limiting the generality of the foregoing, Purchaser shall also be given
access to reserve reports, geological and geophysical reports (including,
but not limited to well records, log films, proprietary or joint venture
seismic data or other seismic data which Seller is not contractually
restricted from disclosing), contracts (including, but not limited to, gas
contracts), operating agreements, operating statements, and reports.
(c) Notice of Defect. If, during the Review Period, Purchaser
determines that the Property is subject to a "Defect" (as defined herein
in Section 5(d)), the Purchaser must give written notice to Seller of such
Defect, the nature of the Defect, and furnish Seller Purchaser's basis for
the assertion of such Defect. As soon as practical after such written
notice, Seller shall use reasonable diligence to cure any such Defects. If
Seller cannot cure any such Defects to the reasonable satisfaction of
Purchaser, then Seller shall so notify Purchaser in writing. Thereafter,
Seller and Purchaser shall use a good faith effort to agree on the
Purchase Price adjustment for any such Defect which cannot be cured. Such
adjustment shall be determined in accordance with the following
guidelines:
(1) The Purchase Price shall be allocated among the various
Leases in the proportion of the PDP fair market value of the Leases
reported by Netherland Sewell & Associates in its report dated
October 21, 1996, (the "Allocated Purchase Price").
(2) If the Defect is that Seller's Net Revenue Interest
("NRI") for any Property is less than the NRI for such Property as
set forth in Exhibit "A," then the allocated Purchase Price for such
Property shall be adjusted in the same proportion that the actual
NRI for such property bears to the NRI shown in Exhibit "A."
PURCHASE AND SALE AGREEMENT - PAGE 5
<PAGE> 193
(3) If the Defect is a lien, encumbrance, or other charge upon
the Property which is liquidated in amount, then the adjustment
shall be the sum necessary to be paid to the obligee to remove the
Defect from the Property;
If the Purchase Price adjustment for any such Defect cannot be
determined, and the Seller and Purchaser cannot agree in good faith on the
amount of the adjustment to the Purchase Price, the Purchaser may (a)
waive the Defect and proceed with Closing, or (b) exclude the affected
Property and reduce the Purchase Price by the Allocated Purchase Price for
such property, or (c) terminate this Agreement, in which event the Parties
shall have no further rights or obligations under this Agreement.
(d) Definition of Defect. For the purpose of this Agreement, a
"Defect" shall be defined as:
(1) Any material encumbrance, lien, mortgage, breach of
representation or warranty, production payment, pledge, claim,
charge, call on production, default, defect, condition, unleased
mineral interest, preferential right, requirement for consent to
assignment, or lack of title affecting the Property, or any matter
affecting the Property by which Purchaser reasonably or in good
faith believes that Seller's interest in a Property may become
subject to the claims of third parties;
(2) Seller's NRI in any Property is less than the NRI for such
Property which is set forth in Exhibit "A," or Seller's gross
working interest ("GWI") in any Property is less than the working
interest shown in Exhibit "A," or Seller's GWI in any Property is
greater than the working interest shown in Exhibit "A" without a
corresponding increase in the NRI in such Property;
(e) Other Property Information. If, based upon Purchaser's
examination of the Records according to Paragraph 5(b) hereof, Purchaser
shall determine that any information, statement, or data contained in any
information, reports, statement, or data furnished to Purchaser or used in
its economic analysis of the Property is not true or correct in any
material respect, upon discovery of any incorrect information, Purchaser
may give written notice to Seller of such inaccuracy or misstatement. Any
such notice must be provided in writing during the Review Period, or it
will be deemed to be waived. Such notice shall provide a summary of such
inaccuracy or misstatement. Upon receipt of such notice, Seller shall have
the option, but not the obligation, to (a) cure or remedy such inaccuracy
or misstatement to the reasonable satisfaction of Purchaser; or (b) agree
with Purchaser on a reduction to the Purchase Price, which reduction shall
reflect Purchaser's reasonably anticipated cost to remedy such inaccuracy
or misstatement. If the inaccuracy or misstatement cannot be cured or
remedied to Purchaser's reasonable satisfaction, and if agreement cannot
be reached on reduction to the Purchase Price, then the affected Property
shall be excluded from the Property to be acquired by Purchaser hereunder,
and the Purchase Price shall be reduced by the Allocated Purchase Price
for such Property;
(f) Casualty Loss. If, prior to Closing, any Property is
substantially damaged or destroyed by fire or other casualty ("Casualty
Defect"), Seller shall notify Purchaser promptly after Seller learns of
such event. Seller shall have the right, but not the obligation, to cure
any such Casualty Defect by repairing such damage or, in the case of
personal property, fixtures, replacing the Property affected thereby with
equivalent items, no later than the date of Closing. If any Casualty
Defects exist at Closing, Purchaser may proceed to purchase the Property
affected thereby, and the Purchase Price shall be reduced by the aggregate
reduction in the value of such Property on account of such Casualty
Defects, as determined by the mutual agreement of the Parties, or if the
Parties are unable to agree on the reduction of the Purchase Price, then
the affected Property shall be excluded from the Property to be acquired
by Purchaser hereunder, and the Purchase Price shall be reduced by the
Allocated Purchase Price for such Property. Notwithstanding anything to
the contrary contained herein, Seller shall be entitled to retain all
insurance proceeds and claims against other Parties in respect of any such
Casualty Defect which occurs prior to closing unless no reduction is made
in the Purchase Price as a result of such Casualty Defect, in which event
PURCHASE AND SALE AGREEMENT - PAGE 6
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Purchaser shall be entitled to the insurance proceeds and claims against
other Parties arising from such Casualty Defect.
6. Seller's Representations and Warranties. Seller represents and
warrants to Purchaser that:
(a) This Agreement has been duly executed and delivered on behalf of
Seller and is binding and enforceable against Seller in accordance with
its terms and at the Closing. All documents and instruments required
hereunder to be executed and delivered by Seller shall have been duly
executed and delivered at Closing, and the execution, delivery, and
performance of this Agreement by Seller and the consummation of
transactions contemplated hereby will not constitute a breach of, an event
of default under, a violation of, or a conflict with any agreement or
other instrument to which Seller is a party (except to the extent such
instrument may be released at the Closing). Nor will the same cause Seller
to be in violation of any applicable laws or regulations or any order of
any court or governmental agency having jurisdiction.
(b) All ad valorem, property, production, severance, excise, and
similar taxes and assessments based on or measured by the ownership of the
Property or the Production or the receipt of proceeds therefrom, which
have become due and payable prior to the date hereof with respect to the
Property have been properly paid, and Seller's allocable share of such
taxes and assessments which become due and payable prior to the Closing
shall be properly paid by Seller, and all royalties, overriding royalties,
and payments to any third parties which have become due and payable prior
to the date hereof with respect to production from the Property, have been
properly paid, and will be hereafter properly paid for the period prior to
Closing.
(c) Seller has incurred no liability, contingent or otherwise, for
brokers' or finders' fees in respect of this transaction for which
Purchaser shall have any responsibility whatsoever.
(d) Prior to the Closing, Seller will pay or cause to be paid all of
Seller's share of costs and expenses incurred in connection with the
Property, and will comply with all contracts or other agreements relating
to the Property.
(e) To the best of Seller's information and belief, all laws,
regulations, and orders of all governmental agencies having jurisdiction
over the Property have been and shall continue to be complied with until
the Closing.
(f) There are no first rights of refusal, consents, authorizations,
preferential rights, options, or claims of a similar nature affecting the
Property, other than those listed in Exhibit "A," said listed consents
defined herein as "Consents."
(g) Seller shall, upon request, subrogate Purchaser to any claim
which Seller may have against any third party, prior owner, vendor, or
assignor with respect to the share of the Property acquired by Purchaser,
or the title thereto.
(h) There are no "imbalances" which allow any other party to make up
production at any time after the Effective Date, under any operating
agreement, gas balancing agreement and storage agreement, gas
transportation agreement, gas processing or dehydration agreement, or
other similar agreement relating to the Property.
(i) Seller has not directly or indirectly reserved or retained any
recorded or unrecorded interest or rights in any of the Property, and
Seller shall not reserve any recorded or unrecorded executory interest or
rights relating to the Property.
(j) Seller warrants that the Property is free and clear of all
encumbrances, liens, and mortgages, save and except such encumbrances as
may be identified and described in
PURCHASE AND SALE AGREEMENT - PAGE 7
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Exhibit "A" attached hereto, and further save and except liens for taxes
not yet due and payable.
(k) Except as may be identified and described in Exhibit "A"
attached hereto, the Property is not subject to any restriction,
reservation, reversionary interest, drilling or development obligation, or
other material obligation or burden on the operation or the disposition of
Production attributable to the Property.
(l) No part of any of the Property is affected by any prepayment
arrangement under any contract for the sale of oil or gas, or by any
production payment or any other arrangement for delivery of oil or gas
produced from any of the Property at some future time without Purchaser
then or thereafter receiving full payment therefor, and no third party now
has or at Closing will have any right to take makeup gas for which it has
already paid. As of the Effective Date, there are no volumes of makeup gas
owing, or accumulated transportation credits due, to gas purchasers on
account of any "take-or-pay" or other provisions of any contract, and
Seller has not produced or sold more than its pro-rata share of the gas
from any Wells included in the Property.
(m) Except as may be set forth in Exhibit "A" attached hereto, there
are no gas purchase or sale agreements, and no gas gathering or
transportation agreements, affecting the Property that cannot be
terminated upon ninety (90) days' written notice.
(n) Without the prior written consent of Purchaser, Seller (i) shall
not enter into any new agreements or commitments affecting the Property
which extend beyond the Closing, and (ii) will not modify or terminate any
agreements affecting any of the Property, including, without limitation,
any oil and gas leases, unitization or pooling agreements, operating
agreements, pipeline agreements, processing agreements, and hydrocarbon
sales contracts, and (iii) will not further encumber, sell, mortgage,
release, abandon, or otherwise dispose of any of the Property or any
interests therein.
(o) There is not any suit, action, or other proceeding pending or
threatened which affects or relates to the Property, or seeks to restrain
or prohibit Seller from selling or conveying to Purchaser the share of the
Property to be purchased herein. Seller shall promptly notify Purchaser of
any such proceedings which may arise or be threatened prior to Closing.
(p) There are no operating agreements with third parties affecting
the Property except as may be identified and described in Exhibit "A"
attached hereto.
(q) Seller has no knowledge and has not received any notice of any
claimed default (or any event which, with the giving of notice or the
passage of time, or both, would constitute a default) under (i) the
Leases, (ii) any order, writ, injunction, or decree of any court,
commission, or administrative agency affecting the Property, or (iii) any
other agreement affecting the Property. Seller shall promptly notify
Purchaser of any such notice hereafter received by Seller and the
occurrence of any such event of which Seller becomes aware prior to
Closing.
(r) There are no tax partnerships affecting any of the Property.
(s) To the best of Seller's information and belief, no Production
from any Well on the Property has occurred in excess of that permitted by
law, orders, or regulations.
(t) To the best of Seller's information and belief, there has been
no material injury or damage to any of the Property which has not been
fully repaired, replaced, or rebuilt.
(u) Except for depletion due to continued production, there has been
no substantial and material change in condition of the Property between
the date hereof and Closing.
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(v) To the best of Seller's information and belief, all easements,
rights of way, permits, crossing agreements, and surface rights included
in the Property are in full force and effect and are valid and subsisting,
and freely assignable, and all rentals and other payments due thereunder
have been properly and timely paid and all conditions necessary to keep
them in force have been duly performed.
(w) From and after the effective date of its acquisition of its
ownership in the Leases, the Seller has performed all obligations required
to be performed under such Leases, or any other instruments and agreements
relating to the Properties, and is not in default thereunder, and to the
best of Seller's information and belief, each of the Leases to be conveyed
is valid and in full force and effect.
(x) To the best of Seller's knowledge, Seller owns each Lease and
Property in the undivided share reflected by the "Working Interest"
described and set forth in Exhibit "A" for each particular Lease and
Property, and Seller owns for each Lease and Property the share of
Production reflected as "Net Revenue Interest" in Exhibit "A" attached
hereto. Seller is being paid not less than the fractional "net revenue
interest" for each Property in Exhibit "A" hereto, and, for expenses and
costs for each Property, Seller is not paying more than the fractional
interest specified under "Working Interest" for each Property in Exhibit
"A" hereto.
(y) To the best of Seller's information and belief, all rentals and
bonuses have been timely and fully paid and discharged, and all conditions
necessary to keep the Leases in full force have been performed, and no
proceeds from the sale of Production attributable to the Property are
currently being held in suspense by any purchaser thereof.
(z) The Seller has not collected any proceeds from the sale of
Production attributable to the Property which are subject to refund, or if
so, that any such refund, if not otherwise accounted for under this
Agreement, shall be the sole responsibility of the Seller.
(aa) Except as listed in Exhibit "A" attached hereto, to the best of
Seller's information and belief, there are no Wells located on the
Property that Seller is obligated by law or contract to plug and abandon,
that Seller will be obligated by law or contract to plug and abandon at
the present time, and with the lapse of time or notice, or both, because
the well is not currently capable of producing production in commercial
quantities, or because the Well is subject to exceptions to a requirement
to plug and abandon issued by a regulatory authority having jurisdiction
over the Property.
(bb) To the best of Seller's information and belief, there are no
presently existing conditions (by existing federal or state statutes and
regulations) affecting the Property, which might give rise to a cause of
action on behalf of any governmental agency or third party, against either
Purchaser or Seller.
(cc) All information and data provided to Purchaser by Seller or its
agents concerning the Property is true and correct to the best of Seller's
information, knowledge, and belief.
(dd) Environmental Current Status. To the best of Seller's
knowledge, the Property and Seller are not in violation of or subject to
any existing, pending, or threatened investigation or inquiry by any
governmental authority or to any remedial obligations under any applicable
laws pertaining to health or the environment (such laws as they now exist
or are hereafter enacted and/or amended hereinafter sometimes collectively
called "Applicable Environmental Laws"), including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of
1986 (as amended, hereinafter called "CERCLA"), the Resource Conservation
and Recovery Act of 1976, as amended by the Used Oil Recycling Act of
1980, the Solid Waste Disposal Act Amendments of 1980, and the Hazardous
and Solid Waste Amendments of 1984 (as amended, hereinafter called
"RCRA"), the Texas Water Code and the Texas Solid Waste Disposal Act, and
this representation will
PURCHASE AND SALE AGREEMENT - PAGE 9
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continue to be true and correct following disclosure to the applicable
governmental authorities of all relevant facts, conditions, and
circumstances, if any, pertaining to the Property and Seller. The terms
"hazardous substance" and "release" as used in this Agreement shall have
the meanings specified in CERCLA, and the terms "solid waste" and
"disposal" (or "disposed") shall have the meanings specified in RCRA;
provided, in the event either CERCLA or RCRA is amended so as to broaden
the meaning of any term defined thereby, such broader meaning shall apply
subsequent to the effective date of such amendment and provided further,
to the extent that the laws of the State of Texas establish a meaning for
"hazardous substance," "release," "solid waste," or "disposal" which is
broader than that specified in either CERCLA or RCRA, such broader meaning
shall apply.
7. Purchaser's Representations and Warranties. Purchaser represents and
warrants to Seller that:
(a) Purchaser: (i) is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada (ii)
is duly qualified to transact business in each jurisdiction where the
nature and extent of its business and properties require the same in order
for it to perform its obligations under this Agreement; and (iii)
possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply with
the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, all of which have been duly
authorized and approved by all necessary corporate action and for which no
further approval or consent is required.
(b) The consummation of the transactions contemplated by this
Agreement will not violate, or be in conflict with (i) any agreement or
instrument to which Purchaser is a party; or (ii) any judgment or decree
applicable to Purchaser as a party in interest with respect thereto.
(c) This Agreement has been duly executed and delivered on behalf of
Purchaser, and at the Closing, all documents and instruments required
hereunder to be executed and delivered by Purchaser (or its assignees)
shall have been duly executed and delivered.
(d) Subject to the conditions herein, Purchaser has or will have at
Closing (i) the financial capability or (ii) commitments from responsible
financial institutions to provide the funds required by Purchaser, to pay
the Purchase Price and consummate the transaction contemplated hereby
within the time period contemplated herein.
(e) Purchaser either has performed, or prior to closing will
perform, whatever inspection of the Property and Seller's title thereto
that Purchaser deems appropriate and knows the condition thereof and is
purchasing the Property as a result of such inspections and not because
of, or in reliance on, any representation or warranty made by Seller other
than those expressly set forth in this Agreement.
(f) In the event the Purchase Price is adjusted down at Closing,
based upon any unpaid taxes as set forth in Paragraph 4(b)(2) hereof (the
"Tax Adjustment"), Purchaser agrees to timely make payment (equivalent to
the Tax Adjustment) to such taxing authorities as may be appropriate.
8. Conditions to Obligations of Purchaser. The obligations of Purchaser to
consummate the transaction provided for herein are subject, at the option of
Purchaser, to the fulfillment on or prior to Closing, of each of the following
conditions:
(a) Representations. The representations and warranties of Seller
herein contained shall be true and correct in all material respects at
Closing as though made on and as of such date (unless appropriate
adjustments or remediation has been made in accordance with Paragraph 5
hereof).
PURCHASE AND SALE AGREEMENT - PAGE 10
<PAGE> 198
(b) Performance. Seller shall have performed all obligations,
covenants, and agreements hereunder and shall have complied with all
covenants and conditions contained in this Agreement to be performed or
complied with by it at or prior to the Closing.
(c) Pending Matters. No suit, action, or other proceedings shall be
pending or threatened (a) against Seller before any court or governmental
agency which might result in impairment or loss of value as to Seller's
title to any part of the Property; or (b) which seeks to restrain, enjoin,
or otherwise prohibit the consummation of the transactions contemplated by
this Agreement.
(d) Liability. No liability which affects, in a materially adverse
manner, the Property or Purchaser's ability to receive the economic
benefits therefrom has been or is threatened to be asserted with respect
to the Property.
(e) Defects. No Defects shall be present, which are not cured by
Seller or waived by Purchaser as provided herein.
(f) Records and Access. Seller shall have afforded Purchaser and its
officers, employees, and representatives timely and reasonable access to
the Records as required herein.
9. Seller's Obligations at Closing. At the Closing, Seller shall deliver
to Purchaser the following items; however, item (e) will be delivered as soon
prior to Closing as reasonably practical:
(a) The Assignment, duly executed and acknowledged by Seller;
(b) Duly executed and acknowledged releases of all liens and
burdens on the Property or on Production therefrom or attributable
thereto;
(c) Executed transfer orders (or letters in lieu thereof)
addressed to all purchasers of production from the Property;
(d) Any other executed documents or instruments which may be
reasonably required to consummate the transactions contemplated herein and
to fully vest Purchaser with operations and title to the Property as
contemplated hereby;
(e) The "Interim Settlement Statement," which shall set forth the
Purchase Price and adjustments thereto provided for in this Agreement
which are or may be determined at or prior to the Closing, which statement
shall be delivered to Purchaser as soon as reasonably practical prior to
Closing for Purchaser's review and approval;
(f) All consents required of third parties, who are identified in
Exhibit "A" attached, properly executed and in form approved by Purchaser;
and
(g) All releases of current liens of lenders encumbering all or any
part of the Property, properly executed in form acceptable by Purchaser.
10. Purchaser's Obligations at Closing. At the Closing, Purchaser
shall:
(a) Deliver to Seller the Adjusted Purchase Price, in cash or other
immediately available funds (which shall be subject to a subsequent
accounting between Seller and Purchaser pursuant to this Agreement); and
(b) Execute and deliver any other documents or instruments which may
be required to consummate the transactions contemplated herein.
11. Notices. All notices, demands, and requests which may be given or
which are required to be given by either Party to the other shall be in writing.
Any notice, demand, or communication required or permitted hereunder shall be
deemed to be delivered on actual receipt
PURCHASE AND SALE AGREEMENT - PAGE 11
<PAGE> 199
or three (3) days after being sent by overnight courier or Certified U.S. Mail
to Seller or Purchaser, whichever occurs first, respectively, as follows:
SELLER: PURCHASER:
Percy J. Robertson and Corrida Resources, Inc.
Dorothy Kirby Robertson Suite 380, Lock Box 31
P.O. 65081 3500 Oak Lawn Avenue
Baton Rouge, Louisiana 70896 Dallas, Texas 75219-4398
Telephone: ______________ Attn.:Edward Munden
Facsimile: ______________ President
Telephone: 214-521-9959
Facsimile: 214-521-9960
or such other address as Purchaser or Seller may, from time to time, designate
pursuant to the terms hereof. A facsimile transmission shall be considered an
original document for purposes of providing notice under this section.
12. Furnishing Data and Information. The Seller also agrees to promptly
cooperate in all reasonable requests by Purchaser in furnishing copies, at
Purchaser's expense, of all Records necessary for Purchaser to conduct its due
diligence under the terms of this Agreement.
13. Post-Closing Adjustments. As soon as practicable after the closing,
and in any event within sixty (60) days after Closing, Seller shall prepare and
deliver to Purchaser, in accordance with this Agreement and generally accepted
accounting principles, a statement (the "Final Settlement Statement") setting
forth each adjustment or payment pursuant to Paragraph 4 hereof that was not
finally determined as of the Closing ("Post-Closing Adjustments") and showing
the calculation of such Post-Closing Adjustments and the aggregate amount
thereof. Within ten (10) business days after receipt of the Final Settlement
Statement, Purchaser shall deliver to Seller a written report containing any
changes that Purchaser proposes be made to the Final Settlement Statement. The
Parties undertake to agree with respect to the amounts of such Post-Closing
Adjustments no later than ninety (90) days after the Closing Date. The date upon
which such agreement is reached or upon which the aggregate amount of the
adjustments are finally established shall be herein called the "Final Settlement
Date." Seller shall pay to Purchaser, or vice versa, as the case may be, within
ten (10) business days after the Final Settlement Date the amount of such
adjustments (as finally established), by means of wire transfer in immediately
available funds or by means of a certified bank check. In the event Seller owes
monies to Purchaser as a consequence of the Post-Closing Adjustments, Purchaser
shall have the right to offset Purchaser's obligation under the note for any
such monies which are owing to Purchaser by Seller under Paragraph 4 and this
Paragraph 13.
14. Failure to Perform/Termination of Agreement. If the Seller should fail
to fully and timely perform any of its obligations hereunder, or should fail to
consummate the sale of the Property, except due to the Purchaser's default, the
Purchaser may, at its option, enforce specific performance of this Agreement, or
terminate this Agreement.
15. Indemnification by Seller.
(a) Seller agrees to indemnify and save and hold harmless Purchaser
against and from any loss, damage, or expense sustained by Purchaser
arising out of or resulting from any breach of any of the representations
and warranties made hereunder and not waived by Purchaser.
(b) Seller agrees to indemnify and save and hold harmless Purchaser
against all claims, liabilities, costs, expenses, windfall profit taxes,
and liability arising out of the ownership or operation of the Property,
and based upon the occurrence of events, the accrual of obligations or
liabilities, or the existence of conditions prior to the Effective Date.
(c) If any claims for brokerage fees are asserted against Purchaser
in connection with this transaction based upon alleged commitments made by
Seller, Seller shall indemnify
PURCHASE AND SALE AGREEMENT - PAGE 12
<PAGE> 200
Purchaser against all such claims and reimburse Purchaser for all
reasonable expenses incurred in responding to such claims, including
reasonable attorney's fees.
(d) Notwithstanding anything to the contrary contained herein,
Seller agrees to indemnify and save and hold harmless Purchaser for
Seller's gross negligence or willful misconduct for that period of time
between the Effective Date and Closing.
(e) The provisions of this Paragraph 15 shall survive Closing for a
period of four (4) years from the date of Closing, and Seller shall not be
entitled to assert any right of indemnification hereunder after such date.
16. Indemnification by Purchaser.
(a) Purchaser agrees to indemnify and save and hold harmless Seller
against and from any loss, damage, or expense sustained by Seller arising
out of or resulting from any breach of any of the representations and
warranties made hereunder and not waived by Seller.
(b) Purchaser shall assume and hereby agrees to pay, honor,
discharge, and perform fully and timely, the obligations and liabilities
directly associated with the Seller's interest in the share of the
Property acquired by Purchaser hereunder, which are attributable to the
period of time from and after the Effective Date.
(c) Purchaser agrees to indemnify and save and hold harmless Seller
against all claims, costs, expenses, windfall profits taxes, and
liabilities arising out of the ownership or operation of the share of the
Property acquired by Purchaser hereunder and based upon the occurrence of
events, the accrual of obligations or liabilities, or the existence of
conditions on and subsequent to the Effective Date (but not including
these costs and expenses incurred with respect to the purchase of Seller's
interest in the Property or the negotiations leading to such purchase).
(d) If any claims for brokerage fees are asserted against Seller in
connection with this transaction based upon alleged commitments made by
Purchaser, Purchaser shall indemnify Seller against all such claims and
reimburse Seller for all reasonable expenses incurred in responding to
such claims, including reasonable attorney's fees.
(e) The provisions of this Paragraph 16 shall survive Closing for a
period of four (4) years from the date of Closing, and Purchaser shall not
be entitled to assert any right of indemnification hereunder after such
date.
17. Confidentiality. Prior to Closing, the Seller shall be furnishing to
Purchaser various information relating to Seller and the Property, and Seller's
business activities, assets, finances, costs, revenues, rights, obligations,
liabilities, and strategies. In consideration of the Seller furnishing this
information to Purchaser, Purchaser agrees that prior to Closing (a) that such
information is confidential and/or proprietary to Seller, and such information
shall be entitled to and shall receive treatment as such by Purchaser; (b)
Purchaser shall use its best efforts, and will advise all of its employees,
representatives, agents, and advisors who have access to such information, to
use their best efforts to hold in confidence, not to disclose to others, and not
to use (except in respect of the transaction contemplated by this Agreement) any
such information; and (c) if Closing does not occur, all such information,
unless otherwise specified in writing, shall remain the property of Seller, and
shall be returned to Seller together with any copies made thereof. Prior to
Closing, Purchaser shall provide such information only to its employees,
representatives, agents, and advisors who have need to know such information in
connection with this Agreement.
18. Other Purchase and Sale Agreements. Purchaser has tendered purchase
and sale agreements, dated on or about the date hereof, to other parties, all of
whom are named in Exhibit "C" attached hereto. Such other agreements may cover
the interest, if any, of such other parties in the Leases and Property covered
by this Agreement, and may cover other oil and gas properties which are not the
subject of this Agreement. Purchase and Seller agree that the Closing under this
PURCHASE AND SALE AGREEMENT - PAGE 13
<PAGE> 201
Agreement shall be simultaneous with the closings under such other agreements,
and that Closing under this Agreement shall be conditional upon closing
occurring under such other agreements. Seller does not claim any interest in and
to the oil and gas leases and other property which are the subject of such other
purchase and sale agreements, and which are not the subject of this Agreement.
In the event Seller may have any claim or interest in and to the oil and gas
leases and other property which are the subject of such other purchase and sale
agreements, and which are not the subject of this Agreement, then, for the
consideration herein, Seller agrees to sell and convey to Purchaser all of
Seller's interest in and to the oil and gas leases and other property and
interests which are the subject of the other purchase and sale agreements, above
described.
19. Area of Non-Competition. Seller agrees not to compete with Purchaser
in an area which comprises the lands covered by the Leases and an area which
shall extend outward from the boundaries of each of the Leases a distance of
5,280 feet. In this regard, Seller agrees that Seller, its employees, agents,
servants, or companies controlled by Seller, in common control with Seller, or
with whom Seller is affiliated, shall not acquire, for so long as a Lease is
held in force and effect by its terms, and for a period of three years
thereafter, any oil and gas leases, any mineral interest, royalty interest,
overriding royalty interest, or any farmout agreement, or other agreement
permitting the right to explore for and produce oil and/or gas, which cover any
lands within the restricted area.
20. Miscellaneous.
(a) If any term or provision of this Agreement is held to be
illegal, invalid, or unenforceable, the legality, validity, and
enforceability of the remaining terms and provisions of this Agreement
shall not be affected thereby, and in lieu of each such illegal, invalid,
or unenforceable term or provision, there shall be added automatically to
this Agreement a legal, valid, and enforceable term or provision as
similar as possible to the term or provision declared illegal, invalid, or
unenforceable;
(b) Either Seller or Purchaser shall have the right to waive any
requirement contained in this Agreement, which is intended for the waiving
Party's benefit, but except as otherwise specifically provided herein,
such waiver shall be effective only if in writing and executed by the
Party for whose benefit such requirement is intended; provided however,
that any such waiver shall not be construed as a waiver of any other
benefit accruing to the waiving Party hereunder;
(c) The captions used in connection with this Agreement are for
convenience only and shall not be deemed to expand or limit the meaning of
the language of this Agreement;
(d) Words of any gender used in this Agreement shall be held and
construed to include any other gender, and words in the singular shall be
held to include the plural, unless the context otherwise requires;
(e) Seller agrees that, on or before the Closing, it will not carry
on any negotiations with any third party, for the sale or transfer of the
Property, without the prior written consent of Purchaser. Thereafter,
Seller may negotiate with third parties if this Agreement has been
terminated;
(f) THIS AGREEMENT AND ALL OF THE TRANSACTIONS CONTEMPLATED HEREIN
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS;
(g) This Agreement embodies the entire agreement between Seller and
Purchaser with respect to the subject matter hereof and supersedes all
prior agreements, whether written or oral;
(h) Except as otherwise specifically provided herein, this Agreement
may not be amended except by an agreement in writing executed by both
Seller and Purchaser;
PURCHASE AND SALE AGREEMENT - PAGE 14
<PAGE> 202
(i) This Agreement shall be binding upon and inure to the benefit of
Seller and Purchaser and their respective legal representatives,
successors, and assigns. It is expressly understood and agreed that
Purchaser's rights under this Agreement may not be assigned prior to
Closing. Provided however, any interest acquired hereunder shall be freely
assignable by Purchaser after Closing;
(j) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of which shall be
deemed to be one and the same instrument;
(k) In addition to the acts and deeds recited herein and
contemplated to be performed, both Seller and Purchaser hereby agree to
perform, execute, and/or deliver at and after Closing any and all such
further reasonable acts, deeds, and assurances as may be reasonably
required to consummate the transactions contemplated by this Agreement;
(l) This Agreement supersedes any and all other agreements, either
oral or in writing, between the Parties hereto with respect to the subject
matter hereof and contains all of the covenants and agreements between the
Parties with respect to said matter. Each Party to this Agreement
acknowledges that no representations, inducements, promises, or
agreements, orally or otherwise, have been made by any Party, or anyone
acting on behalf of any Party, which are not embodied herein, and that no
other agreement, statement, or promise not contained in this Agreement
shall be valid or binding;
(m) In the event of any dispute occurring under this Agreement, the
prevailing Party shall be entitled to be reimbursed by the other Party for
its reasonable and necessary attorney's fees;
(n) Any failure by either Party to insist, or any election by either
Party not to insist, upon strict performance by the other Party of any of
the terms, provisions, or conditions of this Agreement shall not be deemed
to be a waiver of the same or of any other term, provision, or condition
hereof, and either Party may at any time or times thereafter insist upon
strict performance by the other Party of any and all of such terms,
provisions, and conditions. No waiver by either Party of any right,
remedy, power, or privilege hereunder shall be construed as a waiver of,
or operate to impair, any subsequent right, remedy, power, or privilege
nor shall any single or partial exercise of any such right, remedy, power,
or privilege exhaust the same or preclude other or further exercise
thereof.
(o) All covenants, representations, and indemnities set forth herein
shall survive closing, subject to any agreed periods of limitation as may
be set forth herein.
EXECUTED as of the 5th day of February, 1997.
WITNESSES: SELLER:
- --------------------------- ----------------------------------------
PERCY J. ROBERTSON
- ---------------------------
- --------------------------- ----------------------------------------
DOROTHY KIRBY ROBERTSON
- ---------------------------
PURCHASE AND SALE AGREEMENT - PAGE 15
<PAGE> 203
PURCHASER:
CORRIDA RESOURCES, INC.,
a Nevada corporation
By:
- ------------------------------------ ------------------------------
ROBERT P. LINDSAY, VICE PRESIDENT
- ------------------------------------
ACKNOWLEDGMENTS
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared PERCY J.
ROBERTSON, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free act
and deed.
------------------------------------------
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared DOROTHY KIRBY
ROBERTSON, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that she executed the same as her free
act and deed.
------------------------------------------
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared ROBERT P.
LINDSAY, to me personally known, who, being duly sworn, did say that he is the
Vice President of CORRIDA RESOURCES, INC., a Nevada corporation, and that the
foregoing instrument was signed by him on behalf of such entity, with necessary
authority, and that ROBERT P. LINDSAY acknowledged said instrument to be the
free act and deed of such corporation.
------------------------------------------
Notary Public, State of Louisiana
PURCHASE AND SALE AGREEMENT - PAGE 16
<PAGE> 204
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the 5th day of February, 1997, by
and between D & R PETROLEUM, INC., a Louisiana corporation (hereinafter
sometimes called "D&R") and BLACK GOLD PRODUCTION SERVICES, INC., a Louisiana
corporation (who is hereinafter sometimes called "BGPS") and DAVID ROBERTSON
(all of whom are hereinafter collectively referred to as the "Seller") and
CORRIDA RESOURCES, INC., a Nevada corporation (the "Purchaser"), (Seller and
Purchaser hereinafter individually referred to as "Party" and collectively as
"Parties").
RECITALS
WHEREAS, Seller desires to sell and convey, and Purchaser desires to
purchase and receive, the following, upon the terms and conditions hereinafter
set forth:
I. The Leases and Units. Subject to the reservations and exceptions set
forth in Paragraphs 24, 25 and 26 below, all of the Seller's right, title, and
interest in and to (i) the oil, gas, and mineral leases and properties and
interests described in Exhibit "A," including but not limited to, leasehold,
fee, mineral, royalty, and overriding royalty interests and payments out of or
measured by Production (hereinafter defined) (said oil, gas, and mineral leases
and property and interests being herein referred to as the "Leases"); (ii) the
units, pooled acreage, spacing, or proration units or other allocation of
acreage, and all rights associated therewith, which are applicable to the Leases
and have been established by, or in accordance with, (a) applicable contractual
provisions regarding unitization, communitization, pooling, spacing, or
proration, or (b) applicable state or federal law;
II. The Production. All of the Seller's right, title, and interest in
and to all oil, gas, casinghead gas, condensate, distillate, and other liquid or
gaseous hydrocarbons and other minerals which are in, under, upon, and produced
from or allocable (or to be produced from or allocable) to the Leases after the
Effective Date (as defined in Paragraph 3(a) hereof) (such hydrocarbons and
minerals being hereinafter referred to as "Production"), including "line fill"
and inventory attributable to the interests described in Exhibit "A," or the
proceeds from the sale of such Production;
III. The Wells and Equipment. All of Seller's right, title, and interest
in and to all personal property of every kind and character located on the
Leases or used in the operation thereof including, without limitation, wells
(whether productive or non-productive, active or inactive) (the "Wells"),
compressors, well equipment, casing, tanks, machinery, gathering lines and
systems, treatment facilities, disposal wells, disposal systems, pipelines and
other appurtenances, and any other personal property situated thereon, herein
individually and collectively called the "Equipment." The Equipment includes,
but is not limited to, those items listed in Exhibit "B";
IV. The Rights of Way and Permits. All of Seller's right, title, and
interest in and to all rights, privileges, benefits, permissions, and
authorizations (including, without limitation, permits, licenses, servitudes,
easements, and rights of way) in respect of the use and occupation of the
surface of such Leases, and the subsurface depths under the land and premises
covered by and benefiting such Leases, herein called individually and
collectively "Rights of Way and Permits";
V. The Contracts. All of Seller's right, title, and interest in and to
all of the orders, gas purchase and sale contracts (wherein Seller is a selling
party), crude purchase and sale agreements (wherein Seller is a selling party),
surface leases, farm-in agreements, farmout agreements, bottom hole agreements,
acreage contribution agreements, operating agreements, unit agreements, area of
mutual interest agreements, processing agreements, options, leases of equipment
or facilities, and other contracts, agreements, and rights, which are owned by
Seller, in whole or in part and are (I) appurtenant to the Leases, or (ii) used
or held for use in connection with the ownership or operation of the Leases or
with the Production, treatment on the Leases, sale or disposal of water,
hydrocarbons or associated substances, herein called individually and
collectively the "Contracts";
PURCHASE AND SALE AGREEMENT - PAGE 1
<PAGE> 205
VI. The Records. All of the files, records and data in the possession of
Seller relating to the items described in subsections (I), (II), (III), (IV),
and (V) above (the "Records"), including, without limitation, lease files, title
records (including abstracts of title, title opinions, and title curative
documents); contracts, correspondence, originals or copies of geological,
geophysical, and seismic records, data, and information; and originals or copies
of production records, electric logs, core data, pressure data and decline
curves and graphical production curves, and all related matters, to the extent
Seller has the authority to release such Records and to the extent they are
reasonably required by Purchaser to operate the Wells;
VII. Miscellaneous. Exhibit "A" attached hereto sets forth the undivided
interests of Seller in the Leases, and the revenue interests attributable
thereto, as well as the undivided interests of Seller in the Production, Wells,
Equipment, Rights of Way, and Contracts. This Agreement covers and pertains to
all of the right, title, and interest of Seller in the Leases, the lands covered
by the Leases, Production, Wells, Equipment, and Rights of Way, even if the
undivided interests of Seller in any such property or property rights should be
incorrectly or insufficiently described in the Exhibit "A."
Notwithstanding the foregoing, Seller excepts and reserves from the sale
herein any interest which Seller may own, if any, in and to any
presently-created overriding royalty interests, which are of record in the
subject counties, in and to the Leases described in Exhibit "A" under the
heading "Stafford Springs Field," covering lands located in Jasper County and
Clarke County, Mississippi. Any such overriding royalty interest owned by Seller
is not part of the NRI (see definition below) of Seller set forth in Exhibit "A"
attached hereto for said Leases.
Less and except the reservations set forth in Paragraphs 24, 25 and 26
below, the Leases, Production, Wells, Equipment, Rights of Way and Permits,
Contracts, Records, and Miscellaneous, referenced in Paragraphs I through VII
above, are hereinafter sometimes referred to individually and collectively in
the singular as "Property."
WHEREAS, this Agreement was the subject of, and was contemplated by,
that certain letter of intent dated October 17, 1996, by and between Queen Sand
Resources, Inc., and David Robertson and Keith Robertson, as amended and
supplemented, including amendment and supplement dated December 24, 1996. As to
the interest of Seller in and to the Property, this Agreement supersedes and
replaces the letter of intent.
NOW, THEREFORE, for and in consideration of the mutual agreements herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Seller and Purchaser
hereby agree as follows:
1. Sale and Purchase. Seller agrees to sell and convey to Purchaser, and
Purchaser agrees to purchase and pay for, all of Seller's right, title, and
interest in and to the Property as hereinafter provided.
2. Purchase Price. The "Purchase Price" payable by Seller for the
Property shall be subparagraphs (a) through (d) as follows:
(a) $506,161.00 payable at Closing;
(b) 319,280 shares of the common stock of Queen Sand Resources,
Inc., a Delaware corporation ("QSR"), who is the parent corporation of
Queen Sand Resources, Inc., a Nevada corporation, who is in turn the
parent corporation of Purchaser (the "QSR Shares"), which shares are to
be issued at Closing to David Robertson. At Closing Purchaser shall
cause to be delivered to Seller an instruction letter from QSR to its
transfer agent which authorizes the issuance of the QSR Shares to David
Robertson.
(c) A promissory note (the "First Note") in the principal sum of
$1,625,000.00, payable by Purchaser to Seller, the principal of which
note, unless and to the extent earlier paid upon the installment demands
of Seller, as hereinafter provided in Paragraph 18 below, or unless and
to the extent converted into common shares of QSR, as hereinafter
provided in Paragraph 19 below, shall be paid in three years from the
date of Closing under this
PURCHASE AND SALE AGREEMENT - PAGE 2
<PAGE> 206
Agreement. The note shall bear no interest during the first two years of
the note, and shall bear interest thereafter, as also provided in
Paragraph 18 below. The note shall be in the form attached hereto as
Exhibit "C-1."
(d) A promissory note (the "Second Note") in the principal sum of
$325,000.00, payable by Purchaser to Seller, the principal of which
note, unless and to the extent earlier paid upon the demand of Seller,
shall be paid in one hundred and eighty days (180) from the date of
Closing under this Agreement. The note shall bear no interest. The note
shall permit Seller to demand payment, after notice, after ninety days
from date of Closing. The note shall be in the form attached hereto as
Exhibit "C-2."
All cash payments to be tendered by Purchaser to Seller, either before
or after Closing, shall be made by wire transfer or shall be made by certified
funds.
The cash of subparagraph 2(a) above of the sum of $506,161.00, and the
promissory note of subparagraph 2(d) above, will be paid to BGPS in
consideration of its interest in the Leases described in Exhibit "A" under the
headings "East Nancy Field," "Barbara Creek Field," and "East Barbara Creek
Field."
The Purchase Price shall be subject to adjustment as hereinafter
provided.
3. Closing and Effective Date.
(a) The closing of the sale and purchase of the Property shall
take place on or before February 5, 1997, (the "Closing") at 1310 Jeff
Davis, Hammond, Louisiana, or at such other time, place, or manner as
may be mutually agreeable to the Parties. The sale of the Property shall
be effective as of November 1, 1996, at 7:00 a.m. local time for each of
the particular Leases (the "Effective Date").
(b) At the Closing, the Property shall be conveyed and
transferred by Seller to Purchaser by the execution and delivery of an
Assignment and Bill of Sale (the "Assignment") in substantially the same
form and content as the Assignment and Bill of Sale which is attached
hereto as Exhibit "D," and such other instruments of conveyance as may
be reasonably requested by Purchaser. Purchaser shall be entitled to all
of Seller's rights in the Property (including, without limitation, the
rights to all Production and proceeds of Production) appurtenant and
attributable to the Property, and shall be subject to the duties and
obligations attendant with ownership of such undivided share of the
Property for the period from and after the Effective Date. For the
period prior to the Effective Date, Seller shall be entitled to all of
the rights (including, without limitation, the rights to all Production
and proceeds of Production) appurtenant and attributable to the
Property, and shall be subject to the duties and obligations attendant
with ownership of the Property.
4. Adjustments to Purchase Price. The Purchase Price shall be adjusted
(the "Adjusted Purchase Price") at the Closing, by the "Interim Settlement
Statement" (hereinafter defined in this paragraph and in Paragraph 9 below),
and, subsequent to Closing, by the "Final Settlement Statement" (hereinafter
defined in Paragraph 14 below), as follows:
(a) The Purchase Price shall be increased by the following:
(1) the value of all merchantable allowable oil or other
liquid hydrocarbons in storage owned by Seller in the tanks or
above the pipeline connection at the Effective Date, and not
previously sold by Seller, that is credited to the share of the
Property being acquired hereunder, valued at the contract price
thereto, or if none, the actual price received by Purchaser, less
taxes or gravity adjustments deducted by the purchaser of such
oil or other liquid hydrocarbons;
(2) the amount of all reasonable expenditures made in
connection with the ownership, operation, and maintenance of the
share of the Property being acquired hereunder, (including
royalties and rentals) and in accordance with generally accepted
accounting principles and prudent operations, attributable solely
PURCHASE AND SALE AGREEMENT - PAGE 3
<PAGE> 207
to the period from and after the Effective Date and which are
paid by or on behalf of Seller after the Effective Date;
(3) an amount equal to all prepaid expenses, attributable
to the ownership, operation, and maintenance of the share of the
Property being acquired hereunder that are paid by or on behalf
of Seller after the Effective Date and prior to the Closing Date
and that are, in accordance with generally accepted accounting
principles, attributable solely to the period from and after the
Effective Date;
(4) any other amount agreed upon by Purchaser and Seller.
(b) The Purchase Price shall be decreased by the following:
(1) the amount of any proceeds from the sale of Production
attributable to the share of the Property being acquired
hereunder attributable to the period on or after the Effective
Date (net of production, severance, and similar taxes and
assessments measured by or payable out of production) actually
received or accrued by or on behalf of Seller;
(2) an amount equal to all unpaid ad valorem, property,
production, profit, severance, and similar taxes and assessments
based upon or measured by the ownership of the share of the
Property being acquired hereunder or the production of oil, gas,
or other minerals therefrom or the receipt of proceeds
attributable thereto, which accrue to or are chargeable against
such share of the Property (in accordance with generally accepted
accounting principles) and which are attributable to the period
prior to the Effective Date, which amount shall, to the extent
not actually assessed, be computed based upon such taxes and
assessments for the immediately-preceding calendar year, or if
such taxes or assessments are assessed on other than a
calendar-year basis, for the tax period last ended;
(3) any amounts received by Seller (whether prior to or
subsequent to the Effective Date) pursuant to "take-or-pay,"
advance payment, or similar provisions of any production sales
contract, any gas balancing agreement, or any other agreement, to
the extent any purchaser has the right to apply any such amounts
to Purchaser's share of Production delivered after the Effective
Date;
(4) any reduction in the value of the share of the
Property being acquired hereunder resulting from the existence of
a Defect (herein defined in Section 5(d)) which is not cured or
waived prior to Closing;
(5) any other amount agreed upon by Purchaser and Seller.
(c) The "Interim Settlement Statement" shall be prepared by
Seller, its agents, or representatives, prior to Closing, which
statement shall set forth the adjustments to the Purchase Price, per the
adjustments set forth in this Paragraph 4, which are or may be
determined at or prior to Closing. Such statement shall be prepared
according to generally accepted accounting principles and shall show the
calculation of all such adjustments. Upon the approval of such Interim
Settlement Statement by Purchaser, the Purchase Price shall be adjusted
according to such statement. Upon Purchaser's request, Seller shall make
available to Purchaser all information relied upon by Seller for the
adjustments requested in order to aid and facilitate Purchaser's
approval of such statement. After Closing, the Purchase Price may
further be adjusted, pursuant to the adjustments set forth in this
paragraph, with the "Final Settlement Statement" in the manner further
described in Paragraph 14 below.
(d) All monies received by either Party hereto which, under the
terms of this Agreement or otherwise, belong to the other Party, shall
be received in trust by the Party receiving such funds, and shall
monthly, upon receipt, be paid over to the other Party. The Parties
agree, in this regard, to cooperate fully and to execute, endorse, and
deliver as expeditiously as practicable such papers, checks, and
documents as are needed promptly to complete the transfer of such
payments;
PURCHASE AND SALE AGREEMENT - PAGE 4
<PAGE> 208
(e) After the Closing, if an invoice or other evidence of an
obligation relating to the share of the Property acquired by Purchaser
is received which is applicable to periods both prior to and after the
Effective Date, and is partly the obligation of Seller and partly the
obligation of Purchaser, then each Party shall pay its respective
portion of such obligation to the obligee, prorated between the Parties
as of the Effective Date;
(f) At and after the Closing, Purchaser and Seller will cooperate
fully in notifying all applicable third parties (including the execution
by Seller of such transfer orders, letters in lieu, change of operator,
etc., as may be requested by Purchaser) so that notices, proceeds, and
invoices from such third parties may take into account the fact that
Purchaser has acquired the Property as of the Effective Date;
(g) The parties hereto agree to exercise diligence and good faith
in attempting to resolve any disagreements or disputes which may arise
from the adjustments to the Purchase Price to be made in accordance with
this paragraph.
5. Property Conditions, Title Review, Property Information, and Casualty
Losses.
(a) Property Conditions. THIS SALE OF THE EQUIPMENT AND ALL OTHER
PERSONAL PROPERTY THAT IS A PART OF THE PROPERTY IS MADE ON AN "AS IS,
WHERE IS" BASIS WITH ALL FAULTS AS TO ITS CONDITION, AND SELLER
EXPRESSLY DISCLAIMS ALL WARRANTIES AS TO THE CONDITION OF THE EQUIPMENT
(NOTE, HOWEVER, THERE ARE CERTAIN WARRANTIES AS TO TITLE AS HEREIN SET
FORTH) INCLUDING, WITHOUT LIMITATIONS, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE. Seller agrees
that for a period of time commencing with the date
of the letter of intent dated October 17, 1996, above described, and
continuing until five (5) business days before Closing (the "Review
Period"), Purchaser, personally or through its authorized agents or
representatives, shall have the right to make any and all physical
inspections of the Property which Purchaser may desire to make or to
have made and to make all such other inspections, surveys, tests, or
other studies (including, but not limited to, environmental assessments
and evaluations) as Purchaser deems necessary or desirable. Upon
reasonable notice to Seller, Purchaser, and its authorized agents and
representatives, at Purchaser's sole risk, may enter upon the Property
for the purpose of conducting those inspections, surveys, tests, and
studies. If Purchaser shall determine that the condition of the Property
is not in substantial compliance with any governmental regulations
(including environmental regulations), then upon discovery, Purchaser
must promptly give written notice to Seller of such condition
("Condition"). Upon receipt of such notice, Seller shall have the
option, but not the obligation, to (a) cure or remedy such Condition to
the reasonable satisfaction of Purchaser (if current remediation of such
Condition is required by a governmental agency, Seller agrees that the
Condition shall be remedied in accordance with and to the satisfaction
of the appropriate agency's requirements); or (b) agree with Purchaser
on a reduction to the Purchase Price which reduction shall reflect
Purchaser's anticipated reasonable cost to remedy such Condition. If the
Condition cannot be cured or remedied to Purchaser's reasonable
satisfaction, and if agreement cannot be reached on reduction to the
Purchase Price, then the affected Property may be excluded by Purchaser
from the Property to be acquired by Purchaser hereunder. In such event ,
the Purchase Price shall be reduced by the Allocated Purchase Price (see
subparagraph (c) below) for such excluded property.
(b) Review of the Records. During the Review Period, and upon
reasonable notice from Purchaser, Seller shall provide Purchaser,
personally or through its authorized agents or representatives, full
access during normal business hours to Seller's office and premises to
review and inspect all Records, including, but not limited to, all
abstracts of title, lease files, unit files, production and marketing
files, title opinions, title files, title records, geologic,
engineering, and other files or information in Seller's possession or to
which it has access which relate to the Property, and the status of
Seller's title thereto, and Purchaser, at its expense, shall have the
right to make and retain copies of any of such Records; provided
however, if the transactions contemplated hereby do not close for any
reason, Purchaser shall return any Records and copies thereof to Seller
forthwith. Without limiting the generality
PURCHASE AND SALE AGREEMENT - PAGE 5
<PAGE> 209
of the foregoing, Purchaser shall also be given access to reserve
reports, geological and geophysical reports (including, but not limited
to well records, log films, proprietary or joint venture seismic data or
other seismic data which Seller is not contractually restricted from
disclosing), contracts (including, but not limited to, gas contracts),
operating agreements, operating statements, and reports.
(c) Notice of Defect. If, during the Review Period, Purchaser
determines that the Property is subject to a "Defect" (as defined herein
in Section 5(d)), the Purchaser must give written notice to Seller of
such Defect, the nature of the Defect, and furnish Seller Purchaser's
basis for the assertion of such Defect. As soon as practical after such
written notice, Seller shall use reasonable diligence to cure any such
Defects. If Seller cannot cure any such Defects to the reasonable
satisfaction of Purchaser, then Seller shall so notify Purchaser in
writing. Thereafter, Seller and Purchaser shall use a good faith effort
to agree on the Purchase Price adjustment for any such Defect which
cannot be cured. Such adjustment shall be determined in accordance with
the following guidelines:
(1) The Purchase Price shall be allocated among the
various Leases in the proportion of the PDP fair market value of
the Leases reported by Netherland Sewell & Associates in its
report dated October 21, 1996, (the "Allocated Purchase Price").
(2) If the Defect is that Seller's Net Revenue Interest
("NRI") for any Property is less than the NRI for such Property
as set forth in Exhibit "A," then the allocated Purchase Price
for such Property shall be adjusted in the same proportion that
the actual NRI for such property bears to the NRI shown in
Exhibit "A."
(3) If the Defect is a lien, encumbrance, or other charge
upon the Property which is liquidated in amount, then the
adjustment shall be the sum necessary to be paid to the obligee
to remove the Defect from the Property.
If the Purchase Price adjustment for any such Defect cannot be
determined, and the Seller and Purchaser cannot agree in good faith on the
amount of the adjustment to the Purchase Price, the Purchaser may (a) waive the
Defect and proceed with Closing, or (b) exclude the affected Property and reduce
the Purchase Price by the Allocated Purchase Price for such property, or (c)
terminate this Agreement, in which event Seller shall cause to be delivered to
Purchaser the Escrow Deposit (hereinafter defined), plus interest accrued
thereon, and in which event the Parties shall have no further rights or
obligations under this Agreement.
(d) Definition of Defect. For the purpose of this Agreement, a
"Defect" shall be defined as:
(1) Any material encumbrance, lien, mortgage, breach of
representation or warranty, production payment, pledge, claim,
charge, call on production, default, defect, condition, unleased
mineral interest, preferential right, requirement for consent to
assignment, or lack of title affecting the Property, or any
matter affecting the Property by which Purchaser reasonably or in
good faith believes that Seller's interest in a Property may
become subject to the claims of third parties; and
(2) Seller's NRI in any Property is less than the NRI for
such Property which is set forth in Exhibit "A," or Seller's
gross working interest ("WI") in any Property is less than the
working interest shown in Exhibit "A," or Seller's WI in any
Property is greater than the working interest shown in Exhibit
"A" without a corresponding increase in the NRI in such Property.
(e) Other Property Information. If, based upon Purchaser's
examination of the Records according to Paragraph 5(b) hereof, Purchaser
shall determine that any information, statement, or data contained in
any information, reports, statement, or data furnished to Purchaser or
used in its economic analysis of the Property is not true or correct in
any material respect, upon discovery of any incorrect information,
Purchaser may give written notice to Seller of such inaccuracy or
misstatement. Any such notice must be provided in writing during the
Review Period, or it will be deemed to be waived. Such notice shall
PURCHASE AND SALE AGREEMENT - PAGE 6
<PAGE> 210
provide a summary of such inaccuracy or misstatement. Upon receipt of
such notice, Seller shall have the option, but not the obligation, to
(a) cure or remedy such inaccuracy or misstatement to the reasonable
satisfaction of Purchaser; or (b) agree with Purchaser on a reduction to
the Purchase Price, which reduction shall reflect Purchaser's reasonably
anticipated cost to remedy such inaccuracy or misstatement. If the
inaccuracy or misstatement cannot be cured or remedied to Purchaser's
reasonable satisfaction, and if agreement cannot be reached on reduction
to the Purchase Price, then the affected Property shall be excluded from
the purchase to be acquired by Purchaser hereunder, and the Purchase
Price shall be reduced by the Allocated Purchase Price for the
particular property.
(f) Casualty Loss. If, prior to Closing, any Property is
substantially damaged or destroyed by fire or other casualty ("Casualty
Defect"), Seller shall notify Purchaser promptly after Seller learns of
such event. Seller shall have the right, but not the obligation, to
cure, or cause to be cured, any such Casualty Defect by repairing such
damage or, in the case of personal property, fixtures, replacing the
Property affected thereby with equivalent items, no later than the date
of Closing. If any Casualty Defects exist at Closing, Purchaser may
proceed to purchase the property affected thereby, and the Purchase
Price shall be reduced by the aggregate reduction in the value of such
property on account of such Casualty Defects, as determined by the
mutual agreement of the Parties, or if the Parties are unable to agree
on the reduction of the Purchase Price, then the affected property shall
be excluded from the Property to be acquired by Purchaser hereunder, and
the Purchase Price shall be reduced by the Allocated Purchase Price for
such Property. Notwithstanding anything to the contrary contained
herein, Seller shall be entitled to retain all insurance proceeds and
claims against other Parties in respect of any such Casualty Defect
which occurs prior to closing unless no reduction is made in the
Purchase Price as a result of such Casualty Defect, in which event
Purchaser shall be entitled to the insurance proceeds and claims against
other Parties arising from such Casualty Defect.
6. Seller's Representations and Warranties. Seller represents and
warrants to Purchaser that:
(a) This Agreement has been duly executed and delivered on behalf
of Seller and is binding and enforceable against Seller in accordance
with its terms and at the Closing. All documents and instruments
required hereunder to be executed and delivered by Seller shall have
been duly executed and delivered at Closing, and the execution,
delivery, and performance of this Agreement by Seller and the
consummation of transactions contemplated hereby will not constitute a
breach of, an event of default under, a violation of, or a conflict with
any agreement or other instrument to which Seller is a party (except to
the extent such instrument may be released at the Closing). Nor will the
same cause Seller to be in violation of any applicable laws or
regulations or any order of any court or governmental agency having
jurisdiction.
(b) All ad valorem, property, production, severance, excise, and
similar taxes and assessments based on or measured by the ownership of
the Property, or the Production or the receipt of proceeds therefrom,
which have become due and payable prior to the date hereof with respect
to the Property have been properly paid, and Seller's allocable share of
such taxes and assessments on the Property which become due and payable
prior to the Closing shall be properly paid by Seller, and all
royalties, overriding royalties, and payments to any third parties which
have become due and payable prior to the date hereof with respect to
production from the Property, have been properly paid, and will be
hereafter properly paid for the period prior to Closing.
(c) Seller has incurred no liability, contingent or otherwise,
for brokers' or finders' fees in respect of this transaction for which
Purchaser shall have any responsibility whatsoever.
(d) Prior to the Closing, Seller will pay or cause to be paid all
of Seller's share of costs and expenses incurred in connection with the
Property, and will comply with all contracts or other agreements
relating to the Property.
PURCHASE AND SALE AGREEMENT - PAGE 7
<PAGE> 211
(e) To the best of Seller's information and belief, all laws,
regulations, and orders of all governmental agencies having jurisdiction
over the Property have been and shall continue to be complied with until
the Closing.
(f) There are no first rights of refusal, consents,
authorizations, preferential rights, options, or claims of a similar
nature affecting the Property, other than those listed in Exhibit "A,"
said listed consents defined herein as "Consents."
(g) Seller shall, upon request, subrogate Purchaser to any claim
which Seller may have against any third party, prior owner, vendor, or
assignor with respect to the share of the Property acquired by
Purchaser, or the title thereto.
(h) There are no "imbalances" which allow any other party to make
up production at any time after the Effective Date, under any operating
agreement, gas balancing agreement and storage agreement, gas
transportation agreement, gas processing or dehydration agreement, or
other similar agreement relating to the Property.
(i) Seller has not directly or indirectly reserved or retained
any recorded or unrecorded interest or rights in any Property, and
Seller shall not reserve any recorded or unrecorded executory interest
or rights relating to the Property.
(j) Seller warrants that the Property is free and clear of all
encumbrances, liens, and mortgages, save and except such encumbrances as
may be identified and described in Exhibit "A" attached hereto, and
further save and except liens for taxes not yet due and payable.
(k) Except as may be identified and described in Exhibit "A"
attached hereto, the Property is not subject to any restriction,
reservation, reversionary interest, drilling or development obligation,
or other material obligation or burden on the operation or the
disposition of Production attributable to such properties.
(l) No part of any of the Property is affected by any prepayment
arrangement under any contract for the sale of oil or gas, or by any
production payment or any other arrangement for delivery of oil or gas
produced from any of the Property at some future time without Purchaser
then or thereafter receiving full payment therefor, and no third party
now has or at Closing will have any right to take makeup gas for which
it has already paid. As of the Effective Date, there are no volumes of
makeup gas owing, or accumulated transportation credits due, to gas
purchasers on account of any "take-or-pay" or other provisions of any
contract, and Seller has not produced or sold more than its pro-rata
share of the gas from any Wells included in the Property.
(m) Except as may be set forth in Exhibit "A" attached hereto,
there are no restriction, reservation, reversionary interest, drilling
or development obligation, or other material obligation, affecting the
Property that cannot be terminated upon ninety (90) days' written
notice.
(n) Without the prior written consent of Purchaser, Seller (i)
shall not enter into any new agreements or commitments affecting the
Property which extend beyond the Closing, and (ii) will not modify or
terminate any agreements affecting any of the Property, including,
without limitation, any oil and gas leases, unitization or pooling
agreements, operating agreements, pipeline agreements, processing
agreements, and hydrocarbon sales contracts, and (iii) will not further
encumber, sell, mortgage, release, abandon, or otherwise dispose of any
of the Property or any interests therein.
(o) There is not any suit, action, or other proceeding pending or
threatened which affects or relates to the Property, or seeks to
restrain or prohibit Seller from selling or conveying to Purchaser the
share of the Property to be purchased herein. Seller shall promptly
notify Purchaser of any such proceedings which may arise or be
threatened prior to Closing.
PURCHASE AND SALE AGREEMENT - PAGE 8
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(p) There are no operating agreements with third parties
affecting the Property except as may be identified and described in
Exhibit "A" attached hereto.
(q) Seller has no knowledge and has not received any notice of
any claimed default (or any event which, with the giving of notice or
the passage of time, or both, would constitute a default) under (i) the
Leases, or (ii) any order, writ, injunction, or decree of any court,
commission, or administrative agency affecting the Property, or (iii)
any other agreement affecting the Property. Seller shall promptly notify
Purchaser of any such notice hereafter received by Seller and the
occurrence of any such event of which Seller becomes aware prior to
Closing.
(r) There are no tax partnerships affecting any of the Property.
(s) To the best of Seller's information and belief, no Production
from any Well on the Property has occurred in excess of that permitted
by law, orders, or regulations.
(t) To the best of Seller's information and belief, there has
been no material injury or damage to any of the Property which has not
been fully repaired, replaced, or rebuilt.
(u) Except for depletion due to continued production, there has
been no substantial and material change in condition of the Property
between the date hereof and Closing.
(v) To the best of Seller's information and belief, all
easements, rights of way, permits, crossing agreements, and surface
rights included in the Property are in full force and effect and are
valid and subsisting, and freely assignable, and all rentals and other
payments due thereunder have been properly and timely paid and all
conditions necessary to keep them in force have been duly performed.
(w) From and after the effective date of its acquisition of its
ownership in the Leases, the Seller has performed all obligations
required to be performed under such Leases, or any other instruments and
agreements relating to the Properties, and is not in default thereunder,
and to the best of Seller's information and belief, each of the Leases
to be conveyed is valid and in full force and effect.
(x) To the best of Seller's knowledge, Seller owns each Lease and
Property in the undivided share reflected by the "Working Interest"
described and set forth in Exhibit "A" for each particular Lease and
Property, and Seller owns for each Lease and Property the share of
Production reflected as "Net Revenue Interest" in Exhibit "A" attached
hereto. Seller is being paid not less than the fractional "net revenue
interest" for each Property in Exhibit "A" hereto, and, for expenses and
costs for each Property, Seller is not paying more than the fractional
interest specified under "Working Interest" for each Property in Exhibit
"A" hereto.
(y) To the best of Seller's information and belief, all rentals
and bonuses have been timely and fully paid and discharged, and all
conditions necessary to keep the Leases in full force have been
performed, and no proceeds from the sale of Production attributable to
the Property are currently being held in suspense by any purchaser
thereof.
(z) The Seller has not collected any proceeds from the sale of
Production attributable to the Property which are subject to refund, or
if so, that any such refund, if not otherwise accounted for under this
Agreement, shall be the sole responsibility of the Seller. Sellers do
disclose that, in a separate account in the name of Hawkeye Drilling
Company, there are undistributed royalty monies for production having
occurred in the Waskom Field Leases covering lands located in Harrison
County, Texas.
(aa) Except as listed in Exhibit "A" attached hereto, to the best
of Seller's information and belief, there are no Wells located on the
Property that are shut-in and/or
PURCHASE AND SALE AGREEMENT - PAGE 9
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unplugged which are not presently producing, or which are not presently
being utilized in disposal or injection operations.
(bb) To the best of Seller's information and belief, there are no
presently existing conditions (by existing federal or state statutes and
regulations) affecting the Property, which might give rise to a cause of
action on behalf of any governmental agency or third party, against
either Purchaser or Seller.
(cc) All information and data provided to Purchaser by Seller or
its agents concerning the Property is true and correct to the best of
Seller's information, knowledge, and belief.
(dd) Environmental Current Status. To the best of Seller's
knowledge, the Property, and Seller are not in violation of or subject
to any existing, pending, or threatened investigation or inquiry by any
governmental authority or to any remedial obligations under any
applicable laws pertaining to health or the environment (such laws as
they now exist or are hereafter enacted and/or amended hereinafter
sometimes collectively called "Applicable Environmental Laws"),
including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, hereinafter
called "CERCLA"), the Resource Conservation and Recovery Act of 1976, as
amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal
Act Amendments of 1980, and the Hazardous and Solid Waste Amendments of
1984 (as amended, hereinafter called "RCRA"), the Texas Water Code and
the Texas Solid Waste Disposal Act, and this representation will
continue to be true and correct following disclosure to the applicable
governmental authorities of all relevant facts, conditions, and
circumstances, if any, pertaining to the Property, and Seller. The terms
"hazardous substance" and "release" as used in this Agreement shall have
the meanings specified in CERCLA, and the terms "solid waste" and
"disposal" (or "disposed") shall have the meanings specified in RCRA;
provided, in the event either CERCLA or RCRA is amended so as to broaden
the meaning of any term defined thereby, such broader meaning shall
apply subsequent to the effective date of such amendment and provided
further, to the extent that the laws of the State of Texas establish a
meaning for "hazardous substance," "release," "solid waste," or
"disposal" which is broader than that specified in either CERCLA or
RCRA, such broader meaning shall apply.
(ee) BGPS is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Louisiana; (ii) BGPS is
duly qualified to transact business in each jurisdiction where the
nature and extent of its business and properties require the same in
order for it to perform its obligations under this Agreement; (iii) BGPS
possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply with
the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, including the Assignment,
all of which have been duly authorized and approved by all necessary
corporate action and for which no further approval or consent is
required; and (iv) David Robertson and his wife are all of the
shareholders, officers, and directors of BGPS, and by their execution
hereof adopt and approve the terms of this Agreement.
(ff) D&R is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Louisiana; (ii) D&R is
duly qualified to transact business in each jurisdiction where the
nature and extent of its business and properties require the same in
order for it to perform its obligations under this Agreement; (iii) D&R
possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply with
the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, including the Assignment,
all of which have been duly authorized and approved by all necessary
corporate action and for which no further approval or consent is
required; and (iv) David Robertson and his wife are all of the
shareholders, officers, and directors of D&R and by their execution
hereof adopt and approve the terms of this Agreement.
PURCHASE AND SALE AGREEMENT - PAGE 10
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(gg) All information and data provided to Purchaser concerning
the Property is true and correct to the best of Seller's information,
knowledge, and belief;
(hh) David Robertson warrants and represents that he is
(1) a natural person whose individual net worth, or joint
net worth with his spouse which at this time exceeds
$1,000,000.00; or
(2) a natural person who had an individual income in
excess of $200,000.00 in each of the two most recent years or
joint income with his spouse in excess of $300,000.00 in each of
those years and has a reasonable expectation of reaching the same
income level in the current year.
David Robertson represents and agrees that (i) his acquisition of QSR
Shares will not be made with a view toward the "distribution" of such shares, as
defined in the securities Act of 1933, as amended (the "1933 Act"); (ii) such
shares may not be transferred or hypothecated unless, in the opinion of counsel
to the corporation, such transfer or hypothecation would be in compliance with
the registration provisions of the 1933 Act or pursuant to an exemption
therefrom; and (iii) David Robertson agrees to sign an agreement to such effect
at the time of Closing and agrees that the certificate for the shares so
acquired may be inscribed with a legend to ensure compliance with the 1933 Act.
David Robertson understands that the shares will not, subject to Paragraph 22
below, be registered under the 1933 Act, or under the laws of any jurisdiction.
David Robertson, himself, or through his advisers, is sophisticated and
experienced in financial business and investment matters, and as a result, the
Seller is in a position to evaluate the merits and risks of an investment in
Queen Sand Resources, Inc., a Delaware corporation.
7. Purchasers Representations and Warranties. Purchaser represents and
warrants to Seller that:
(a) Purchaser: (i) is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada;
(ii) is duly qualified to transact business in each jurisdiction where
the nature and extent of its business and properties require the same in
order for it to perform its obligations under this Agreement; and (iii)
possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply with
the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, all of which have been
duly authorized and approved by all necessary corporate action and for
which no further approval or consent is required.
(b) The consummation of the transactions contemplated by this
Agreement will not violate, or be in conflict with (i) any agreement or
instrument to which Purchaser is a party; or (ii) any judgment or decree
applicable to Purchaser as a party in interest with respect thereto.
(c) This Agreement has been duly executed and delivered on behalf
of Purchaser, and at the Closing, all documents and instruments required
hereunder to be executed and delivered by Purchaser (or its assignees)
shall have been duly executed and delivered.
(d) Subject to the conditions herein, Purchaser has or will have
at Closing (i) the financial capability or (ii) commitments from
responsible financial institutions to provide the funds required by
Purchaser, to pay the Purchase Price and consummate the transaction
contemplated hereby within the time period contemplated herein.
(e) Purchaser either has performed, or prior to closing will
perform, whatever inspection of the Property and Seller's title thereto
that Purchaser deems appropriate and knows the condition thereof and is
purchasing the Property as a result of such inspections and not because
of, or in reliance on, any representation or warranty made by Seller
other than those expressly set forth in this Agreement.
PURCHASE AND SALE AGREEMENT - PAGE 11
<PAGE> 215
(f) In the event the Purchase Price is adjusted down at Closing,
based upon any unpaid taxes as set forth in Paragraph 4(b)(2) hereof
(the "Tax Adjustment"), Purchaser agrees to timely make payment
(equivalent to the Tax Adjustment) to such taxing authorities as may be
appropriate.
8. Conditions to Obligations of Purchaser. The obligations of Purchaser
to consummate the transaction provided for herein are subject, at the option of
Purchaser, to the fulfillment on or prior to Closing, of each of the following
conditions:
(a) Representations. The representations and warranties of Seller
herein contained shall be true and correct in all material respects at
Closing as though made on and as of such date (unless appropriate
adjustments or remediation has been made in accordance with Paragraph 5
hereof).
(b) Performance. Seller shall have performed all obligations,
covenants, and agreements hereunder and shall have complied with all
covenants and conditions contained in this Agreement to be performed or
complied with by it at or prior to the Closing.
(c) Pending Matters. No suit, action, or other proceedings shall
be pending or threatened (a) against Seller before any court or
governmental agency which might result in impairment or loss of value as
to Seller's title to any part of the Property; or (b) which seeks to
restrain, enjoin, or otherwise prohibit the consummation of the
transactions contemplated by this Agreement.
(d) Liability. No liability which affects, in a materially
adverse manner, the Property or Purchaser's ability to receive the
economic benefits therefrom has been or is threatened to be asserted
with respect to the Property.
(e) Defects. No Defects shall be present, which are not cured by
Seller or waived by Purchaser as provided herein.
(f) Records and Access. Seller shall have afforded Purchaser and
its officers, employees, and representatives timely and reasonable
access to the Records as required herein.
9. Seller's Obligations at Closing. At the Closing, Seller shall deliver
to Purchaser the following items; however, item (e) will be delivered as soon
prior to Closing as reasonably practical:
(a) The Assignment, duly executed and acknowledged by Seller;
(b) Duly executed and acknowledged releases of all liens and
burdens on the Property or on Production therefrom or attributable
thereto;
(c) Executed transfer orders (or letters in lieu thereof)
addressed to all purchasers of production from the Property;
(d) Any other executed documents or instruments which may be
reasonably required to consummate the transactions contemplated herein
and to fully vest Purchaser with operations and title to the Property as
contemplated hereby;
(e) The "Interim Settlement Statement," which shall set forth the
Purchase Price and adjustments thereto provided for in this Agreement
which are or may be determined at or prior to the Closing, which
statement shall be delivered to Purchaser as soon as reasonably
practical prior to Closing for Purchaser's review and approval;
(f) All consents required of third parties, who are identified in
Exhibit "A" attached, properly executed and in form approved by
Purchaser;
(g) All releases of current liens of lenders encumbering all or
any part of the Property, properly executed in form acceptable by
Purchaser;
PURCHASE AND SALE AGREEMENT - PAGE 12
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(h) Deliver to Purchaser a counterpart copy of the Subscription
Agreement, executed by Seller and/or the party receiving the QSR Shares,
covering the QSR Shares; and
(i) Deliver to Purchaser the forms, properly executed by Sellers,
required by the regulatory agencies of the respective states in which
are located the leased premises of the Leases, necessary to effect the
transfer of operations of the Operated Properties (as defined in
Paragraph 23 below) from BGPS to Northland Operating Company. In the
manner set forth in Paragraph 23(c) below, such forms relating to Leases
covering lands in the State of Mississippi shall not be dated; and
(j) Deliver to Seller the agreement between Northland Operating,
Inc. and BGPS, fully executed by BGPS, regarding field services and
field supervision to be provided by BGPS, described in Paragraph 23(f)
below.
(k) Delver to Seller the Escrow Deposity by certified funds.
10. Purchaser's Obligations at Closing. At the Closing, Purchaser shall:
(a) Deliver to Seller the Adjusted Purchase Price, in cash or
other immediately available funds (which shall be subject to a
subsequent accounting between Seller and Purchaser pursuant to this
Agreement) less the Escrow Deposit;
(b) Deliver to David Robertson a counterpart copy of the
Subscription Agreement, executed by Queen Sand Resources, Inc. covering
the QSR Shares, along with the instruction letter to the transfer agent,
Continental Stock Transfer & Trust Co., authorizing and directing the
delivery of the QSR Shares to David Robertson;
(c) Deliver to Seller the fully executed promissory note
described in Paragraph 2(c) above;
(d) Deliver to Seller fully executed Mortgages, Financing
Statements and Security Agreements described in Paragraph 21 below;
(e) Deliver to Seller a fully executed Limited Guaranty and
Security Agreement described in Paragraph 21 below, and deliver the
stock of Purchaser in the manner provided in such agreement;
(f) Deliver to Seller the agreement between Northland Operating
Company and BGPS, fully executed by Northland Operating Company,
regarding field services and field supervision to be provided by BGPS,
described in Paragraph 23(f) below.
(g) Execute and deliver any other documents or instruments which
may be required to consummate the transactions contemplated herein.
11. Escrow Deposit. An escrow deposit has been made by Purchaser To
David Robertson under the letter of intent in the sum of Forty three Thousand
Dollars ($43,000.00). Such sum is the Escrow Deposit under this Agreement.
12. Notices. All notices, demands, and requests which may be given or
which are required to be given by either Party to the other shall be in writing.
Any notice, demand, or communication required or permitted hereunder shall be
deemed to be delivered on actual receipt or three (3) days after being sent by
overnight courier or Certified U.S. Mail to Seller or Purchaser, whichever
occurs first, respectively, as follows:
SELLER: PURCHASER:
D & R Petroleum, Inc., Corrida Resources, Inc.
Black Gold Production Services, Inc., Suite 380, Lock Box 31
and David Robertson 3500 Oak Lawn Avenue
1310 Jeff Davis Dallas, Texas 75219-4398
PURCHASE AND SALE AGREEMENT - PAGE 13
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Hammond, Louisiana Attn.: Edward Munden
Telephone: 504-345-8001 President
Facsimile: 504-542-7546 Telephone: 214-521-9959
Facsimile: 214-521-9960
or such other address as Purchaser or Seller may, from time to time, designate
pursuant to the terms hereof. A facsimile transmission shall be considered an
original document for purposes of providing notice under this section.
13. Furnishing Data and Information. The Seller also agrees to promptly
cooperate in all reasonable requests by Purchaser in furnishing copies, at
Purchaser's expense, of all Records necessary for Purchaser to conduct its due
diligence under the terms of this Agreement.
14. Post-Closing Adjustments. As soon as practicable after the closing,
and in any event within sixty (60) days after Closing, Seller shall prepare and
deliver to Purchaser, in accordance with this Agreement and generally accepted
accounting principles, a statement (the "Final Settlement Statement") setting
forth each adjustment or payment pursuant to Paragraph 4 hereof that was not
finally determined as of the Closing ("Post-Closing Adjustments") and showing
the calculation of such Post-Closing Adjustments and the aggregate amount
thereof. Within ten (10) business days after receipt of the Final Settlement
Statement, Purchaser shall deliver to Seller a written report containing any
changes that Purchaser proposes be made to the Final Settlement Statement. The
Parties undertake to agree with respect to the amounts of such Post-Closing
Adjustments no later than ninety (90) days after the Closing Date. The date upon
which such agreement is reached or upon which the aggregate amount of the
adjustments are finally established shall be herein called the "Final Settlement
Date." Seller shall pay to Purchaser, or vice versa, as the case may be, within
ten (10) business days after the Final Settlement Date the amount of such
adjustments (as finally established), by means of wire transfer in immediately
available funds or by means of a certified bank check. Without limiting the
foregoing obligation of Seller to timely pay, Purchaser shall have the right to
offset its obligation under the Notes by any sums which may be due and owing by
Seller to Purchaser under Paragraph 4 and this Paragraph 14.
15. Failure to Perform/Termination of Agreement. If the Seller should
fail to fully and timely perform any of its obligations hereunder, or should
fail to consummate the sale of the Property, except due to the Purchaser's
default, the Purchaser may, at its option, enforce specific performance of this
Agreement, or terminate this Agreement, in which latter event the Purchaser
shall be entitled to an immediate return of the Escrow Deposit (plus accrued
interest). If Purchaser should fail to fully and timely perform any of its
obligations hereunder, and fail to consummate the purchase of the Property,
except due to the Seller's default or other provisions in this Agreement that
permit Purchaser to terminate this Agreement, the Seller shall have the right to
receive the entire amount of the Escrow Deposit (plus accrued interest), such
sum being agreed to by the Parties as liquidated damages for the failure of the
Purchaser to perform its obligations hereunder. In such case, Seller agrees to
accept and receive the Escrow Deposit payment as its sole remedy hereunder. The
Parties agree that in the event of a default by the Purchaser, the actual
damages sustained by Seller would be difficult of definite ascertainment because
of the uncertainties of the oil and gas industry and the fluctuations of
property values between the date of this Agreement and the date upon which a
breach of this Agreement occurs by the Purchaser. If Purchaser elects to
terminate this Agreement according to the provisions hereof that permit
Purchaser to terminate this Agreement, the Escrow Deposit (plus accrued
interest) shall be returned to Purchaser.
16. Indemnification by Seller.
(a) Seller agrees to indemnify and save and hold harmless
Purchaser against and from any loss, damage, or expense sustained by
Purchaser arising out of or resulting from any breach of any of the
representations and warranties made hereunder and not waived by
Purchaser.
(b) Seller agrees to indemnify and save and hold harmless
Purchaser against all claims, liabilities, costs, expenses, taxes, and
liability arising out of the ownership or operation of the Property, and
based upon the occurrence of events, the accrual of obligations or
liabilities, or the existence of conditions prior to the Effective Date.
PURCHASE AND SALE AGREEMENT - PAGE 14
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(c) If any claims for brokerage fees are asserted against
Purchaser in connection with this transaction based upon alleged
commitments made by Seller, Seller shall indemnify Purchaser against all
such claims and reimburse Purchaser for all reasonable expenses incurred
in responding to such claims, including reasonable attorney's fees.
(d) Notwithstanding anything to the contrary contained herein,
Seller agrees to indemnify and save and hold harmless Purchaser for
Seller's gross negligence or willful misconduct for that period of time
between the Effective Date and Closing.
(e) The provisions of subparagraph (a) through (e) above of this
Paragraph 16 shall survive Closing for a period of four (4) years from
the date of Closing, and Purchaser shall not be entitled to assert any
right of indemnification hereunder after such date.
17. Indemnification by Purchaser.
(a) Purchaser agrees to indemnify and save and hold harmless
Seller against and from any loss, damage, or expense sustained by Seller
arising out of or resulting from any breach of any of the
representations and warranties made hereunder and not waived by Seller.
(b) Purchaser shall assume and hereby agrees to pay, honor,
discharge, and perform fully and timely, the obligations and liabilities
directly associated with the Seller's interest in the share of the
Property acquired by Purchaser hereunder, which are attributable to the
period of time from and after the Effective Date.
(c) Purchaser agrees to indemnify and save and hold harmless
Seller against all claims, costs, expenses, windfall profits taxes, and
liabilities arising out of the ownership or operation of the share of
the Property acquired by Purchaser hereunder and based upon the
occurrence of events, the accrual of obligations or liabilities, or the
existence of conditions on and subsequent to the Effective Date (but not
including these costs and expenses incurred with respect to the purchase
of Seller's interest in the Property or the negotiations leading to such
purchase).
(d) If any claims for brokerage fees are asserted against Seller
in connection with this transaction based upon alleged commitments made
by Purchaser, Purchaser shall indemnify Seller against all such claims
and reimburse Seller for all reasonable expenses incurred in responding
to such claims, including reasonable attorney's fees.
(e) The provisions of this Paragraph 17 shall survive Closing for
a period of four (4) years from the date of Closing, and Purchaser shall
not be entitled to assert any right of indemnification hereunder after
such date.
18. Principal on First Note; Right to Demand Installments of Principal.
(a) The First Note shall not bear interest for the first two
years of the Note.
(b) Interest on the First Note for the third year of the First
Note is payable in shares of common stock of QSR and shall be paid on
maturity date of the Note. Such number of shares of QSR common stock to
be delivered at maturity date of the First Note shall be determined as
follows:
(1) multiplying the principal outstanding on the First
Note during the third year of the First Note at a rate of nine
percent (9%) per annum; and
(2) dividing such product by the conversion rate per share
which shall be equal to seventy-five percent of the average
closing bid price per share, as reported by NASDAQ, for the
thirty day period immediately preceding maturity date; and
(3) any fractional share shall be rounded up to a full
share.
PURCHASE AND SALE AGREEMENT - PAGE 15
<PAGE> 219
(c) Every six month period commencing one hundred and eighty days
following date of Closing the Seller may demand payment of one-fifth
(1/5th) of the principal of the First Note. Any such demand shall be in
writing. Payment shall be made at the later of (i) the end of such sixth
month period, or (ii) on the sixtieth day after Purchaser's receipt of
Seller's written notice. If during any six month period Seller does not
elect to demand an installment payment of principal, then the right to
demand an installment payment of principal for such period shall be
carried forward for one six month period only. In this regard, Seller
may demand in a future six month period the installment payment which
Seller could have demanded in the immediately prior six month period;
provided, however, (i) Seller shall deliver to Purchaser one hundred and
twenty days written demand for payment in connection with any
installment demand relating to a prior six month period, and (ii)
payment by Purchaser of the installment of principal relating to such
prior six month period shall be made at the time payment is to be made
by Purchaser of an installment of principal for the then current six
month period.
(d) All shares of QSR stock to be issued under the terms of the
First Note are to be issued to David Robertson.
19. Conversion of the First Note into Shares of QSR.
(a) One year and one day from the date of Closing, Seller can
convert all or any portion of the First Note into shares of common stock
of QSR. Each such conversion shall not less than one hundred thousand
(100,000) shares of QSR. Each such conversion shall occur on the fifteen
days written notice delivered to Purchaser by Seller. The basis of
conversion shall be at the price determined by multiplying seventy-five
percent times the average closing bid price, reported by NASDAQ, for the
thirty days immediately preceding the fifteenth day following
Purchaser's receipt of the conversion notice. Any fractional share shall
be rounded up to a full share.
(b) Any principal of the First Note which may be converted to
shares of QSR shall nevertheless be considered as outstanding for
purposes of determining the shares of QSR which are to be delivered as
interest, pursuant to subparagraph (a) immediately above. The Seller is
therefore to receive the full third year interest on any converted
principal, notwithstanding when Seller exercises his conversion
election. In the event of any conversion of principal, the interest in
QSR shares on such converted principal shall be paid on paid on maturity
date.
20. Other Purchase and Sale Agreements. Purchaser has tendered purchase
and sale agreements, dated on or about the date hereof, to other parties, all of
whom are named in Exhibit "E" attached hereto (the "Other Purchase and Sale
Agreements"). Such other agreements may cover the interest, if any, of such
other parties in and to some or all of the Leases and Property covered by this
Agreement, and may cover other oil and gas properties which are not the subject
of this Agreement. Purchaser and Seller agree that the Closing under this
Agreement shall be simultaneous with the closings under the Other Purchase and
Sale Agreement, and that Closing under this Agreement shall be conditional upon
closing occurring under such other agreements. In the event Seller may have any
claim or interest in and to the property rights and interests which are the
subject of such other purchase and sale agreements, and which are not the
subject of this Agreement, then, for the consideration herein, Seller agrees to
sell and convey to Purchaser all of Seller's interest in and to the such
property rights and interests which are the subject of the Other Purchase and
Sale Agreements, above described.
21. Security for the Notes.
(a) The Note shall be secured by mortgages, financing statement
and security agreement, which are compatible with the laws of the state
in which are located the secured premises, containing terms mutually
agreed upon by Seller and Purchaser, covering (i) all property rights
and interests acquired by Purchaser under this Agreement, and (ii) all
property and interests acquired by Purchaser under the Other Purchase
and Sale Agreements, and (iii) all other property rights and interests
owned by Purchaser. Such property rights and interests shall not be
encumbered by any other lien holders. At closing Purchaser shall
PURCHASE AND SALE AGREEMENT - PAGE 16
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execute and deliver to Seller all such mortgages, financing statements
and security agreements.
(b) By a limited non-recourse guaranty, the Notes shall be
guaranteed by QSR to the extent and only to the extent of a security
interest granted by QSR to Seller in and to all of the stock of
Purchaser, all of which stock is owned by QSR. At closing QSR shall
execute a Limited Nonrecourse Guaranty and Security Agreement,
containing mutually agreeable terms, covering and pertaining to the
security interest granted by QSR in all of the issued and outstanding
stock of Purchaser, and QSR shall deliver all of the issued and
outstanding stock of Purchaser to the Custodian pursuant to terms of
such agreement. Save and except for the pledge of all of the issued and
outstanding stock of Purchaser, the guaranty of QSR shall be without
recourse to QSR. Specifically, the Seller shall have no recourse against
QSR, other than the security interest in the stock of Purchaser, for any
of the indebtedness under the Note.
22. Unregistered Securities; Share Restrictions; Certain Registration
Rights.
(a) Seller acknowledges that all shares of common stock of QSR
acquired pursuant to this Agreement, or acquired upon conversion of all
or any portion of the First Note, or acquired as interest on the Note,
except as further provided in this paragraph, will not be registered
under the Securities Act of 1933 as amended (the "Securities Act") or
qualified under applicable state securities law and that the
transferability thereof is restricted by the registration provisions of
the Securities Act as well as such state laws. Based upon the
representation and agreements being made by it herein, such shares will
be issued under this Agreement, and on conversions under the Note,
pursuant to an exemption from such registration provided by Section 4(2)
of the Securities Act and applicable state securities law qualification
exemptions. The Seller represents that it is, and shall, acquire such
shares for its own account, for investment purposes only, and not with a
view to resale or other distribution thereof, nor with the intention of
selling, transferring, or otherwise disposing of all or any part of such
securities for any particular event or circumstance, except selling,
transferring, or disposing of them upon full compliance with all
applicable provisions of the Securities Act, the Securities and Exchange
Act of 1934 as amended, the Rules and Regulations promulgated by the
United States Securities and Exchange Commission thereunder, and any
applicable state securities laws. The Seller further understands and
agrees that (i) the securities may be sold only if they are subsequently
registered under the Securities Act and qualified under any applicable
state securities laws or, in the opinion of counsel acceptable to the
Purchaser, an exemption from such registration and qualification is
available; (ii) except as otherwise provided for herein, the Purchaser
will be under no obligation to register or qualify the said shares or
effect compliance with any exemption from such registration or
qualification; and (iii) any routine sales of securities made in
reliance upon Rule 144 promulgated by the Commission can be made only in
the amounts set forth in and pursuant to the other terms and conditions
of that Rule.
(b) The Seller agrees that each certificate representing any
shares of QSR acquired by Seller under this Agreement, and under the
Note, will bear on its face a legend in substantially the following
form:
These securities have not been registered under the
Securities Act of 1933 or qualified under any state securities
laws. They may not be sold or transferred in the absence of an
effective registration statement under that Act or qualification
under applicable state securities laws without an opinion of
counsel satisfactory to the Company that such registration and
qualification are not required.
(c) Upon the request of Purchaser, at Closing, a Subscription
Agreement shall be executed in counterpart copy by QSR and David
Robertson, being the party receiving the QSR Shares. Further, prior to
the delivery of by QSR shares, as a consequence of interest on the Note,
or as a consequence of the conversion of the Note, a Subscription
Agreement shall be executed in counterpart copy by Seller and QSR.
PURCHASE AND SALE AGREEMENT - PAGE 17
<PAGE> 221
(d) On a best efforts basis, Purchaser will cause Queen Sand
Resources, Inc., to proceed with the actual preparation and filing,
within one hundred eighty (180) days of the date of Closing, of a
registration statement under the Securities and Exchange Act of 1933 as
amended in connection with the proposed offer and sale of any of its
securities, and to cause all of the QSR Shares issued pursuant to this
Agreement to be included in such registration statement, and to attempt
to have the QSR Shares to be so registered, all to the extent requisite
to permit the sale or other disposition by Purchaser of the QSR Shares.
All expenses relating to such registration allocable to the QSR Shares
issued pursuant to this Agreement will be borne by Purchaser. In the
event prior to the attempt to so register securities QSR has delivered
to Seller shares of QSR as a consequence of conversion or conversions of
all or any part of the Note, or as interest on the Note, then such
additional shares shall be included in the attempted registration.
(e) Upon the purchase and closing under the Other Purchase and
Sale Agreements, which are described in Paragraph 20 above, some of the
other sellers under such other agreements may receive, as part of the
consideration to them under their respective agreements, shares of the
common stock of QSR. All shares of QSR to be received by Seller under
this Agreement, including shares which may be received by conversion of
the Note and which may be received as interest on the Note, and all
shares which may be received by the sellers under the Other Purchase and
Sale Agreements, and as a consequence of conversion or interest under
any promissory notes delivered under the Other Purchase and Sale
Agreements, when sold in compliance with all other restrictions herein
contained, or when sold under any future registration of said shares,
may be sold through the public market only on the basis of 10,000 shares
in the aggregate being sold within every ninety-day period. Any sales
through the public market of any such shares of QSR which exceed 10,000
shares within a ninety day period shall be deemed void. QSR shall have
full right and authority to refuse any requested transfer of the
certificates of such shares, to the extent the transfers exceed 10,000
shares within a particular ninety day period. The first ninety day
period will commence upon the first day that any of said shares become
free trading in the public market.
At closing under their respective agreements, Seller and the various
other sellers who receive shares of the common stock of QSR shall execute
counterpart copies of a stock restriction agreement, which document shall recite
the restriction on transfers contained in this paragraph. Such separate stock
restriction agreement will thereupon supersede and replace the restrictions
contained in this paragraph, and the similar restrictions contained in the Other
Purchase and Sale Agreements..
23. Operations. The properties described in the attached Exhibit "A"
under the headings"Barber Creek Field," and "East Nancy Field" are operated by
BGPS. The properties described in the attached Exhibit "A" under the headings
"Ramos Field," "Wax Lake Field," and "Stafford Springs Field [Travis #3]" are
operated by Black Gold Production Company, Inc., a Louisiana corporation (which
is hereinafter referred to "BGPC"). All of such properties are hereinafter
referred to as the "Operated Properties". Regarding operations, the Parties
agree as follows:
(a) Effective upon Closing BGPS and BGPC shall resign as operator
of any of the oil and gas properties acquired by Purchaser which are
located in the states of Texas and Louisiana which are operated by such
resigning company. At Closing there shall be delivered to Purchaser,
duly executed by BGPS and BGPC, the appropriate forms required by
applicable state regulatory authority, which shall be effective to
transfer operations of such properties to Northland Operating Company,
who is Purchaser's designated operator.
(b) BGPS and BGPC shall continue to operate the Operated
Properties presently operated by each of them located in the state of
Mississippi for a period not greater than one hundred and eighty days,
until Purchaser should elect to cancel and terminate such operations by
BGPS, which election to terminate is a matter in the sole and absolute
discretion of Purchaser. It is the intention of the parties that
Purchaser shall not cancel and terminate the operations of BGPS and BGPC
of such Operated Properties until such time that Northland Operating
Company has become authorized to conduct business in the state of
Mississippi, and has approved as an operator in the state of Mississippi
by the governing regulatory
PURCHASE AND SALE AGREEMENT - PAGE 18
<PAGE> 222
authority. Any such election by Purchaser to cancel and terminate the
operations of BGPS and BGPC shall be deemed a resignation by BGPS and
BGPC of its operations. During the period of time that BGPS and BGPC
continue to operate the Operated Properties located in the State of
Mississippi, BGPS, or BGPC, as the case may be, shall received as
compensation the fees payable to the Operator under the current
operation agreements covering the particular properties.
(c) At Closing there shall be delivered to Purchaser a form of
the regulatory authority in the State of Mississippi governing oil and
gas operations for each of the Operated Properties located in the State
of Mississippi, duly executed by BGPS and BGPC, as the case may be, for
the transfer of operations. The transferee operator shall not be
completed in such forms, and the date of transfer of operations shall
not be completed in such forms. By their signatures hereto, BGPS and
BGPC, as the case may be, and Seller hereby irrevocably appoint Robert
P. Lindsay, or any other individual designated of Purchaser, as the
agent and attorney in-fact for BGPS and BGPC (i) to complete such forms
with the transferee operator, and to date of the transfer of operations,
upon Purchaser's election to cancel and terminate the operations of
BGPS, or BGPC, as the case may be, for a particular property, (ii) to
properly file said form with the appropriate offices of the regulatory
authority governing oil and gas operations in the State of Mississippi,
and (iii) to cast the ballot of Seller, BGPS and BGPC in the selection
of a successor operator hereafter of any of the Operated Properties, in
the event of any election hereafter of a successor operator of a
particular Operated Property occurs under and pursuant to the terms of
any operating agreements which may cover the particular Operated
Property.
(d) Seller and BGPC and Purchaser do hereby agree to execute all
such documents as may be reasonable and necessary to effect the transfer
of operations to Northland Operating Company, or to such other operator
selected by Purchaser. In particular, Seller shall notify any third
party non-operating joint owners of the resignation of BGPS, or BGPC, as
the case may be, and with reasonable diligence and in good faith, shall
assist Purchaser in acquiring the consents of any such owners to the
selection of Purchaser's designated operator as the successor operator
of the Operated Properties.
(e) It is understood and agreed that the ability of Purchaser to
select an operator of its choice is a very material consideration to
Purchaser in this Agreement, and the Seller shall take no action to
thwart or hinder Purchaser in its attempt to designate an operator of
its choice as the operator of any of the properties. Seller agrees to
cast its ballot for the operator of Purchaser's choice in the event of
any elections hereafter of the operator on any of the properties,
including both the Operated Properties, and any other properties, and
shall otherwise assist Purchaser in its efforts to have the properties
operated by an operator of Purchaser's choice. Seller shall not seek the
operations of any property without the express written consent of
Purchaser.
(f) To the extent BGPS, or BGPC, is in possession of any of the
Records at the time of its termination as operator, such company shall
promptly deliver all such Records to Purchaser.
(g) It is the intention of Purchaser and Seller that Northland
Operating Company and BGPS shall enter into an agreement whereby,
pursuant to the terms and provisions of any such agreement, BGPS shall
provide to Northland Operating Company the field supervision and field
services which may be necessary for the operations to be conducted by
Northland Operating Company of the Operated Properties.
(h) To reflect its agreement to be bound by the obligations set
forth in this Section of this Agreement, BGPC joins in the execution of
this Agreement.
24. Reservation of Overriding Royalty Interests.
(a) Barbara Creek Field and East Barbara Creek Field. Seller
reserves and excepts from the purchase and sale contemplated by this
Agreement, as an overriding royalty interest, certain of Seller's
revenue share in and to the Leases described under the headings
PURCHASE AND SALE AGREEMENT - PAGE 19
<PAGE> 223
"Barbara Creek Field" and "East Barbara Creek Field" in Exhibit "A"
attached hereto, which Leases cover lands located in Scott County,
Mississippi. Purchaser shall be entitled to an NRI interest in and to
such Leases which is the higher of (i) the NRI for each such particular
Lease as set forth in Exhibit "A" attached hereto, or (ii) seventy-five
percent (75%) times the leasehold interest in and to each such Leases
acquired by Purchaser from Seller under this Agreement. Any revenue
share in and to each such Lease owned by Seller in excess of the revenue
share to which Purchaser is entitled under this Agreement is reserved by
Seller as an overriding royalty interest. The terms of such overriding
royalty interest are set forth in Exhibit "D" attached hereto.
(b) Waskom Field. Hawkeye Drilling Company, a Louisiana
corporation authorized to conduct business in Texas ("Hawkeye"), is the
owner of that certain Farmout Agreement dated December 1, l994, from
Seagull Mid-South, Inc., as farmor, to Hawkeye Drilling Company, as
farmee, covering certain leases and lands located in the Waskom Field in
Harrison County, Texas, which lands are depicted in Exhibit "F" attached
hereto and made a part hereof, which farmout agreement was amended by
that certain amendment dated May 15, l995, by and between Seagull
Mid-South, Inc. and Hawkeye Drilling Company. Such farmout agreement is
often referred to by the Parties as the "Seagull Farmout #2." Prior to
the date hereof, Seagull Mid-South, Inc. has given its approval and
consent to the assignment of the Seagull Farmout #2 to Queen Sand
Resources, Inc., a Nevada corporation. By Purchase and Sale Agreement of
even date herewith between Hawkeye, as assignor, and Queen Sand
Resources, Inc., a Nevada corporation, as assignee, Hawkeye shall convey
to Queen Sand Resources, Inc. all of its rights in and to the Seagull
Farmout #2. Queen Sand Resources, Inc., a Nevada corporation, shall take
title to said farmout rights under the covenant and agreement to cause,
or attempt to cause, Seagull Mid-South, Inc. to consent and approve the
assignment and conveyance of such farmout rights to Purchaser. If Queen
Sand Resources, Inc., a Nevada corporation, is unsuccessful in causing
such contract rights to be assigned to Purchaser , then Queen Sand
Resources, Inc. shall hold said contract rights subject to the
obligations set forth in this Agreement. The parties do hereby agree
that Seller shall be entitled to, and Purchaser agrees to grant and
convey to Seller, an overriding royalty interest equal to two and
one-half percent (2 1/2) of all of the oil and gas produced, marketed
and sold under and by virtue of any leasehold rights which may hereafter
be earned under said farmout agreement. Said overriding royalty interest
shall be subject to the same terms as applicable the to the overriding
royalty reservation by Seller from the Barbara Creek Field and East
Barbara Creek Field, as set forth in Exhibit "D" attached hereto. In
this regard, if the leases covered by the farmout agreement cover less
than the entire and undivided mineral interest in the leased premises
described therein, then the overriding royalty interest in any such
particular lease shall be proportionately reduced to the actual interest
in the mineral estate covered by such lease.
25. Reservation of Working Interest.
(a) East Nancy Field. There is located on the Leases described
under the heading "East Nancy Field" in Exhibit "A," which leases cover
lands located in Clarke County, Mississippi (the "East Nancy Leases"),
the Jessie Allen 17-14 Well No. 1 S/N, which well is presently
producing. There are numerous wells located on the East Nancy Leases
which are shut-in and not producing and which are identified in Exhibit
"A" attached hereto (the "Shut-in Wells"). Seller reserves no interest
in the Jessie Allen 17-14 Well No. 1 S/N. Under this Agreement Purchaser
acquires the entire interest of Seller in the Shut-in Wells. In the
event and only in the event Purchaser should elect after Closing to
attempt a recompletion or rework of any of the Shut-in Wells, to attempt
to produce oil and/or gas from the Norphet or Smackover formations, BGPS
reserves and excepts from the purchase and sale contemplated by this
Agreement the right to participate in any such reworks or recompletions
in the Norphet or Smackover formations, to the extent of an undivided
twenty-five percent (25%) of the leasehold interest presently owned by
Seller in and to the East Nancy Leases upon which the particular well is
located. In the event BGPS elects to participate in any such operation,
and, if the particular operation is successful in establishing
production in paying quantities, and if BGPS pays its share of the costs
of such operation, then Purchaser shall deliver to Seller an assignment
which reconveys to Seller an undivided twenty-five percent (25%) in the
leasehold interest conveyed to Purchaser under this
PURCHASE AND SALE AGREEMENT - PAGE 20
<PAGE> 224
Agreement in the East Nancy Leases, but (i) insofar and only insofar as
such Leases cover all of the lands lying within the outer boundaries of
any voluntary pooled unit which has been declared for such well, or, in
the absence of any such pooled unit, the proration unit having been
declared for such well by the Operator with the applicable regulatory
authority, or, in the absence of any such designation of a proration
unit, then an area of land designated by the Operator which encompasses
such well which shall be of sufficient size to permit the production of
such well at a maximum allowable from the Norphet and/or Smackover
formations under the applicable regulatory authority in the state of
Mississippi, and (ii) insofar and only insofar as such Leases cover the
Smackover and Norphet formations. As between Seller and Purchaser, any
operations conducted hereafter on the Shut-in Wells in the Smackover and
Norphet formations shall be subject to the terms and provisions of the
operating agreement attached hereto as Exhibit "G" and made apart
hereof, naming Northland Operating Company, as Operator, and Seller and
Purchaser as non-operators. One year from the date of Closing either of
the Parties may exercise the reciprocal purchase rights, as set forth in
paragraph 27 below, as to the Smackover and Norphet formations for the
Shut-in Wells. Any exercise of the reciprocal purchase rights shall
include all of the Shut-in Wells, and all of the East Nancy Leases but
(i) insofar and only insofar as such Leases cover all of the lands lying
within the outer boundaries of any voluntary pooled unit which has been
declared for such well, or, in the absence of any such pooled unit, the
proration unit having been declared for such well by the Operator with
the applicable regulatory authority, or, in the absence of any such
designation of a proration unit, then an area of land designated by the
Operator which encompasses such well which shall be of sufficient size
to permit the production of such well at a maximum allowable from the
Norphet and/or Smackover formations under the applicable regulatory
authority in the state of Mississippi, and (ii) insofar and only insofar
as such Leases cover the Smackover and Norphet formations. It is
acknowledged and understood that Seller reserves no interest in the
Jessie Allen 17-14 Well No. 1 S/N, and the reciprocal purchase rights do
not apply to such well, and the East Nancy Leases upon which such well
is located, or to the extent pooled with such well. If BGPS fails or
refuses to participate in a proposed recompletion or rework in a
particular well, as herein provided, BGPS shall have no further right to
participate in further reworks or recompletions in the particular well.
(b) Waskom Field. By assignment of even date herewith between
Hawkeye, as assignor, and Queen Sand Resources, Inc., as assignee,
Hawkeye shall convey to Queen Sand Resources, Inc. the farmout rights
under the Seagull Farmout #2. Such farmout agreement, and the conveyance
occurring of such farmout agreement is described above in Paragraph
24(b). The parties do hereby agree that BGPS shall have the right to
participate in any operations conducted under such agreement to the
extent of an undivided 12.5%. If any leasehold rights are earned under
such farmout agreement by virtue of operations in which BGPS
participated, BGPS shall be entitled to an undivided 12.5% of such
rights. In this regard, promptly upon Purchaser receiving a conveyance
of any such leasehold rights from the farmor, Purchaser shall promptly
deliver an assignment in recordable form delivering to BGPS its
undivided 12.5% of such leasehold rights. It understood that in the
conduct of operations to be conducted on the Seagull Farmout #2, or on
the lands described in this Paragraph 25(b), the rights and obligations
of BGPS and Purchaser shall be governed by the terms and provisions of
that certain operating agreement attached hereto as Exhibit "G," naming
Northland Operating Company as operator, and naming BGPS and Purchaser
and non-operators. Any assignments to be delivered by Purchaser to BGPS
of rights earned under the farmout agreement shall be made specifically
subject to this operating agreement. From and after one year from the
date of Closing either of the parties hereto may exercise the reciprocal
purchase rights, as set forth in paragraph 27 below, as to the rights
and interest of the other party in the Seagull Farmout Agreement #2, and
as to any leasehold rights earned under such agreement.
26. Reservation of Interest in Waterflood Operations.
(a) It is the belief of Seller that, subsequent to the primary
production from the Lower Tuscaloosa formation from the Leases described
in Exhibit "A" attached hereto identified under the heading "SW East
Fork Field," covering lands in Amite County, Mississippi, waterflood
operations should be attempted for secondary recovery from such
PURCHASE AND SALE AGREEMENT - PAGE 21
<PAGE> 225
formation under such Leases. For purposes of this Section 26, such
leases shall hereinafter be called the "Waterflood Leases." Purchaser
agrees that within eighteen months from the date of Closing Purchaser
shall cause the Operator to submit to BGPS a proposal for waterflood
operations on the Waterflood Leases, along with a proposed waterflood
unit agreement and waterflood operating agreement, with Purchaser's
designee as Operator. If BGPS approves the waterflood proposal, and the
proposed unit agreement and unit operating agreement, whether as
initially proposed or as thereafter modified as a consequence of further
negotiations, then, BGPS may notify Purchaser and Operator of its
approval, and shall execute such documents and deliver them to Purchaser
and Operator. Upon such execution and delivery BGPS shall be deemed a
participant in the waterflood operations, to the extent of an undivided
twelve and one-half percent of the interest in the Waterflood Leases
conveyed to Purchaser, pursuant to the terms of this Agreement and the
terms of the Other Purchase and Sale Agreements.. In this regard Seller
shall then immediately bear, under and according to the unit operating
agreement, its proportional share of the costs and expense which may be
incurred from and after the date of BGPS's execution of such agreements
in connection with the creation [including all engineering, land and
legal costs associated with the creation of the unit plan],
implementation and conduct of the waterflood operations. Seller shall
begin to share in production from the Waterflood Leases at 7:00 a.m.,
local time, on the first day of the month following the date of Seller's
execution and delivery to Purchaser of such documents. If BGPS fails to
execute and deliver such documents to Purchaser within thirty (30) days
of BGPS's receipt of such documents, BGPS shall be deemed to have
elected not to participate in the waterflood operations. If BGPS elects
not to participate in the waterflood operations, BGPS shall have no
further interest in the Waterflood Leases.
(b) In the event of BGPS's election to participate in the
waterflood operations, Purchaser shall deliver to BGPS, to be effective
at 7:00 a.m., local time, of the first day of the month following the
month in which BGPS executed and delivered to Buyer the documents
referenced in subparagraph (a) above, an assignment conveying an
undivided twelve and one-half percent of the interest in the Waterflood
Leases acquired by Purchaser under this Agreement, and under the Other
Purchase and Sale Agreements, insofar and only insofar as the Leases
cover the Lower Tuscaloosa formation. Such assignment shall include an
undivided twenty-five percent of the Property acquired by Purchaser
under this Agreement insofar and only insofar as such Property covers,
applies to, or is attributable to the Waterflood Leases, and insofar as
the Property covers, applies to, or is used in connection with
operations in the Lower Tuscaloosa formation. Such assignment shall be
subject to the waterflood unit agreement and the waterflood unit
operating agreement.
(c) In the event BGPS elects to participate in the waterflood
operations pursuant to this Section , then either Party hereto, Seller
or Purchaser, may exercise the reciprocal purchase rights set forth in
Paragraph 27 below.
27. Reciprocal Purchase Rights.
(a) For purposes of this Section , the term "Transfer Interest"
shall mean:
(1) For the Smackover and Norphet formations in the East
Nancy Leases covering lands in the East Nancy Field, which are
described in Paragraph 25(a) above, then, in the case of
Purchaser, the term "Transfer Interest" shall mean all interest
in the Shut-in Wells, and in the East Nancy Leases on which such
wells are located, or to the extent pooled with such wells, as to
such formations only, acquired by Purchaser from Seller under
this Agreement, and, in the case of Seller, the term "Transfer
Interest" shall mean all interest in such Shut-in Wells and
Leases, as to such formations, which is reserved to BGPS under
this Agreement.
(2) For the contract rights in the Seagull Farmout
Agreement #2, and any leasehold rights earned under such farmout
agreement, then, in the case of Purchaser, the term "Transfer
Interest" shall mean an undivided thirty-seven and one-half
percent (37.5%) of the contract rights under such farmout
agreement, and an undivided thirty-seven and one-half percent
(37.5%) of any of the leasehold rights
PURCHASE AND SALE AGREEMENT - PAGE 22
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earned under such farmout agreement, and, in the case of Seller,
shall mean all interest to which BGPS is entitled under Paragraph
25(b) above in and to such farmout agreement and any of the lands
earned under such farmout agreement.
(3) For the Waterflood Leases, as to Purchaser, the term
"Transfer Interest" shall mean an undivided one-half of all
interest in the Waterflood Leases acquired by Purchaser under
this Agreement, and under the Other Purchase and Sale Agreements,
and all of the Property acquired by Purchaser under this
Agreement and under the Other Purchase and Sale Agreements, which
cover, apply to, or are attributable to the Waterflood Leases,
but insofar and only insofar as the Waterflood Leases cover the
Lower Tuscaloosa formation, and insofar and only insofar as the
Property is used in connection with the Lower Tuscaloosa
formation, and, in the case of Seller, being all of BGPS's right
to own and participate, to the extent of an undivided twelve and
one-half percent of the interests conveyed under this Agreement
and under the Other Purchase and Sale Agreements, in the
waterflood operations in the Waterflood Leases (which rights to
participate are set forth in Paragraph 26 above).
(b) If a Party has the right to invoke the provisions of this
Section , then, the Party shall give the other Party written notice to
invoke the provisions of this Section . The party giving such notice
shall for purposes of this Section be called "A," and the party
receiving such notice shall for purposes of this paragraph be called
"B." The notice shall state that A wishes to purchase the particular
Transfer Interest of B, and to apply the provisions of this Section of
this Agreement. Such written notice from A shall also express (i) a
proposed purchase price for the particular Transfer Interest of B, and
(ii) a dollar figure, which is the basis of the proposed purchase price
to B, for each one percent of the leasehold interest in the Leases which
comprise the Transfer Interest (hereinafter called the "Specified
Value"). A's notice shall be accompanied by a letter or other written
statement signed by a bank confirming that A has deposited with such
bank the sum of the purchase price to B, and that such sum so deposited
shall be held and applied pursuant to the provisions of this Section .
(c) Within sixty days from its receipt of such notice from A, B
shall give written notice to A electing either (i) to purchase A's
particular Transfer Interest in the same Leases which are the subject of
A's proposal (A hereby agreeing to sell its Transfer Interest to B in
such event pursuant to the provisions of this Section ), or (ii) sell
its particular Transfer Interest to A pursuant to the provisions of this
Section . In the event B elects to purchase the particular Transfer
Interest from A, the purchase price payable to A shall be computed by
multiplying the Specified Value times A's Transfer Interest. If B shall
give notice to A to purchase A's particular Transfer Interest, then such
notice, to be effective, shall be accompanied by a letter or other
statement signed by a bank confirming that B has deposited the purchase
price which shall be held and applied under this Section , and thereupon
the deposit made by A pursuant to this Section shall be returned to A by
the bank with which A has deposited such monies. If B shall not
effectively give either of the above described notices within twenty
days after receipt of notice from A, then B shall be deemed to have
elected to sell its particular Transfer Interest to A for the purchase
price offered by A.
(d) The closing on the purchase shall take place on or before the
first business day following fifteen days following the expiration of
the twenty day period set forth above for giving notice of an election
by B, on which date the selling Party shall convey, transfer and assign
to the purchasing party, by assignment and bill of sale, and such other
instruments of transfer as shall be reasonably requested by the
purchasing Party, the selling Party's particular Transfer Interest, and
shall, to the extent requested by the purchasing Party, cooperate to
effect a smooth and efficient continuation of the operations of the
Leases.
(e) On the closing date the purchasing Party shall pay the
purchase price to the selling Party. The purchase price shall be paid in
a lump sum at the closing in cash, certified funds, or wire transfer of
immediately available funds.
(f) The sale shall be effective as of the date of closing. In
connection with such purchase, the purchasing Party shall assume all
obligations relating to the particular Transfer
PURCHASE AND SALE AGREEMENT - PAGE 23
<PAGE> 227
Interest, from and after the date of closing, and shall indemnify the
selling Party from and against all obligations and liabilities from and
after such date arising from, relating to, or attributable to the
Transfer Interest. The particular Transfer Interest shall be free and
clear of any and all conveyances, liens and encumbrances from the date
hereof, save and except such matters having been agreed to by the
Parties, such as, for example, operating agreements and gas purchase
agreements.
(g) The closing shall occur at such place as shall be designated
by the purchasing Party by notice to the selling Party at least ten (10)
days prior to the closing date.
(h) If the purchasing Party shall fail to complete the purchase
within the time and in the manner required by this Section , then (i)
the deposit made by such Party with the bank shall be forfeited by the
purchasing Party and shall be paid over by such institution to the
selling Party, and (ii) the selling Party may then elect (a) to become
the purchasing Party and to purchase the other Party's Transfer Interest
at the purchase price provided for herein, said election to be made
within fifteen days after the initial purchasing Party's failure to
timely and/or properly close, with the closing to take place within ten
(10) days thereafter, or (b) to cancel the notice invoking the
provisions of this Section , regardless of who originally gave the
notice, in which event the Party failing to complete the purchase shall
have no further right thereafter to invoke the provisions of this
Section for any reason whatsoever.
(i) The provisions of this Section may only be exercised on a
"field" basis. Therefore, to exercise the rights under this Section in
the Waterflood Leases, the purchasing Party shall purchase all of the
Transfer Interest of the selling Party in all of the Waterflood Leases,
as to the Lower Tuscaloosa formation. To exercise the rights under this
Section as to the Smackover and Norphet formations in the Shut-in Wells
in the East Nancy Leases described in Paragraph 25(a) above, the
purchasing Party shall purchase all of the Transfer Interest of the
selling Party in all of such wells and Leases, as to such formations. In
like manner, any exercise of the rights under this Section as to the
Waskom Field, as described in Paragraph 25(b) above, shall apply to the
Transfer Interest of Seller and Purchaser in the entire Seagull Farmout
#2 and in any rights earned under such agreement.
28. Confidentiality. Prior to Closing, the Seller shall be furnishing to
Purchaser various information relating to Seller and the Property, and Seller's
business activities, assets, finances, costs, revenues, rights, obligations,
liabilities, and strategies. In consideration of the Seller furnishing this
information to Purchaser, Purchaser agrees that prior to Closing (a) that such
information is confidential and/or proprietary to Seller, and such information
shall be entitled to and shall receive treatment as such by Purchaser; (b)
Purchaser shall use its best efforts, and will advise all of its employees,
representatives, agents, and advisors who have access to such information, to
use their best efforts to hold in confidence, not to disclose to others, and not
to use (except in respect of the transaction contemplated by this Agreement) any
such information; and (c) if Closing does not occur, all such information,
unless otherwise specified in writing, shall remain the property of Seller, and
shall be returned to Seller together with any copies made thereof. Prior to
Closing, Purchaser shall provide such information only to its employees,
representatives, agents, and advisors who have need to know such information in
connection with this Agreement.
29. Area of Non-Competition. Seller agrees not to compete with Purchaser
in an area which shall be the leasehold premises of the Leases. In this regard,
Seller agrees that Seller, its employees, agents, servants, or companies
controlled by Seller, in common control with Seller, or with whom Seller is
affiliated, shall not acquire, for so long as a Lease is held in force and
effect by its terms, and for a period of three years thereafter, any oil and gas
leases, any mineral interest, royalty interest, overriding royalty interest, or
any farmout agreement, or other agreement permitting the right to explore for
and produce oil and/or gas, which cover any lands within the restricted area.
30. Area of Mutual Interest. The Parties agree that an area which shall
extend outward from the boundaries of each of the Leases for a distance of 5,280
feet shall be an area of mutual interest between the Parties for a period of
seven years from the date of Closing under this Agreement. If any Party should
hereafter during the period of mutual interest acquire any oil and gas leases,
any mineral interest, royalty interest, overriding royalty interest, or any
farmout agreement, or other agreement permitting the right to explore for and
produce oil and/or gas,
PURCHASE AND SALE AGREEMENT - PAGE 24
<PAGE> 228
covering any lands within the area of mutual interest, then the acquiring Party
shall notify the non-acquiring Party, and shall deliver to the non-acquiring
Party (i) copies of the documents by which the acquiring Party acquired the
particular interest, and copies of all title information in the possession or
control of the acquiring party relating to the particular interest, and (ii)
copies of checks or other documents evidencing the actual costs to third parties
incurred by the acquiring Party in its acquisition of the particular interest.
For a period of thirty days following the receipt of such information the
non-acquiring Party shall have the option to acquire an undivided fifty percent
(50%) of the particular interest for which the non-acquiring Party has received
notice. If the non-acquiring Party shall timely give such notice, closing shall
thereafter occur within ten days in the office of the acquiring Party, or at
such other location to which the Parties may mutually agreed. At closing the
acquiring Party shall deliver to the non-acquiring Party an assignment, deed or
other appropriate conveyance, properly executed in recordable form, conveying an
undivided one-half of the particular interest, and the non-acquiring Party shall
deliver to the acquiring Party one-half of the actual costs to third parties
incurred by the acquiring Party in the acquisition of the particular interest.
The failure of the non-acquiring Party to respond within the thirty day period
shall be deemed an election by the non-acquiring Party not to acquire any share
of the particular interest having been acquired by the acquiring Party.
31. Miscellaneous.
(a) If any term or provision of this Agreement is held to be
illegal, invalid, or unenforceable, the legality, validity, and
enforceability of the remaining terms and provisions of this Agreement
shall not be affected thereby, and in lieu of each such illegal,
invalid, or unenforceable term or provision, there shall be added
automatically to this Agreement a legal, valid, and enforceable term or
provision as similar as possible to the term or provision declared
illegal, invalid, or unenforceable;
(b) Either Seller or Purchaser shall have the right to waive any
requirement contained in this Agreement, which is intended for the
waiving Party's benefit, but except as otherwise specifically provided
herein, such waiver shall be effective only if in writing and executed
by the Party for whose benefit such requirement is intended; provided
however, that any such waiver shall not be construed as a waiver of any
other benefit accruing to the waiving Party hereunder;
(c) The captions used in connection with this Agreement are for
convenience only and shall not be deemed to expand or limit the meaning
of the language of this Agreement;
(d) Words of any gender used in this Agreement shall be held and
construed to include any other gender, and words in the singular shall
be held to include the plural, unless the context otherwise requires;
(e) Seller agrees that, on or before the Closing, it will not
carry on any negotiations with any third party, for the sale or transfer
of the Property, without the prior written consent of Purchaser.
Thereafter, Seller may negotiate with third parties if this Agreement
has been terminated;
(f) THIS AGREEMENT AND ALL OF THE TRANSACTIONS CONTEMPLATED
HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS;
(g) This Agreement embodies the entire agreement between Seller
and Purchaser with respect to the subject matter hereof and supersedes
all prior agreements, whether written or oral;
(h) Except as otherwise specifically provided herein, this
Agreement may not be amended except by an agreement in writing executed
by both Seller and Purchaser;
(i) This Agreement shall be binding upon and inure to the benefit
of Seller and Purchaser and their respective legal representatives,
successors, and assigns. It is expressly
PURCHASE AND SALE AGREEMENT - PAGE 25
<PAGE> 229
understood and agreed that Purchaser's rights under this Agreement may
not be assigned prior to Closing. Provided however, any interest
acquired hereunder shall be freely assignable by Purchaser after
Closing;
(j) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of which shall
be deemed to be one and the same instrument;
(k) In addition to the acts and deeds recited herein and
contemplated to be performed, both Seller and Purchaser hereby agree to
perform, execute, and/or deliver at and after Closing any and all such
further reasonable acts, deeds, and assurances as may be reasonably
required to consummate the transactions contemplated by this Agreement;
(l) This Agreement supersedes any and all other agreements,
either oral or in writing, between the Parties hereto with respect to
the subject matter hereof and contains all of the covenants and
agreements between the Parties with respect to said matter. Each Party
to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any
Party, or anyone acting on behalf of any Party, which are not embodied
herein, and that no other agreement, statement, or promise not contained
in this Agreement shall be valid or binding;
(m) In the event of any dispute occurring under this Agreement,
the prevailing Party shall be entitled to be reimbursed by the other
Party for its reasonable and necessary attorney's fees;
(n) Any failure by either Party to insist, or any election by
either Party not to insist, upon strict performance by the other Party
of any of the terms, provisions, or conditions of this Agreement shall
not be deemed to be a waiver of the same or of any other term,
provision, or condition hereof, and either Party may at any time or
times thereafter insist upon strict performance by the other Party of
any and all of such terms, provisions, and conditions. No waiver by
either Party of any right, remedy, power, or privilege hereunder shall
be construed as a waiver of, or operate to impair, any subsequent right,
remedy, power, or privilege nor shall any single or partial exercise of
any such right, remedy, power, or privilege exhaust the same or preclude
other or further exercise thereof.
(o) All covenants, representations, and indemnities set forth
herein shall survive closing, subject to any agreed periods of
limitation as may be set forth herein.
EXECUTED as of the 5th day of February, 1997.
WITNESSES: SELLERS:
D & R PETROLEUM, INC.,
a Louisiana corporation
____________________________________ By: ______________________________
DAVID ROBERTSON, PRESIDENT
____________________________________
BLACK GOLD PRODUCTION SERVICES,
INC., a Louisiana corporation
____________________________________ By: ______________________________
DAVID ROBERTSON, PRESIDENT
____________________________________
PURCHASE AND SALE AGREEMENT - PAGE 26
<PAGE> 230
____________________________________ _____________________________________
DAVID ROBERTSON
____________________________________
____________________________________ _____________________________________
RHODA ROBERTSON
____________________________________
PURCHASER:
CORRIDA RESOURCES, INC.,
a Nevada corporation
____________________________________ By: ______________________________
ROBERT P. LINDSAY, VICE PRESIDENT
____________________________________
ACKNOWLEDGMENTS
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared DAVID
ROBERTSON, to me personally known, who, being duly sworn, did say that he is the
President of D & R PETROLEUM, INC., a Louisiana corporation, and that the
foregoing instrument was signed by him on behalf of such entity, with necessary
authority, and that DAVID ROBERTSON acknowledged said instrument to be the free
act and deed of such corporation.
____________________________________
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared DAVID
ROBERTSON, to me personally known, who, being duly sworn, did say that he is the
President of BLACK GOLD PRODUCTION SERVICES, INC., a Louisiana corporation, and
that the foregoing instrument was signed by him on behalf of such entity, with
necessary authority, and that DAVID ROBERTSON acknowledged said instrument to be
the free act and deed of such corporation.
____________________________________
Notary Public, State of Louisiana
PURCHASE AND SALE AGREEMENT - PAGE 27
<PAGE> 231
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared DAVID
ROBERTSON, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free act
and deed.
____________________________________
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared RHODA
ROBERTSON to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that she executed the same as her free
act and deed.
____________________________________
Notary Public, State of Louisiana
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the 5th day of February, 1997, before me appeared ROBERT P.
LINDSAY, to me personally known, who, being duly sworn, did say that he is the
Vice President of CORRIDA RESOURCES, INC., a Nevada corporation, and that the
foregoing instrument was signed by him on behalf of such entity, with necessary
authority, and that ROBERT P. LINDSAY acknowledged said instrument to be the
free act and deed of such corporation.
____________________________________
Notary Public, State of Louisiana
PURCHASE AND SALE AGREEMENT - PAGE 28
<PAGE> 232
SCHEDULE OF EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit "A" Recital I, Page 1 Description of the Lease
Recital VII, Page 2 Description of WI and NRI
Par. 6(f), Page 7 First rights of refusal, consents, authorizations, preferentials
rights, options
Par. 6(j), Page 8 Encumbrances, liens, mortgages
Par. 6(k), Page 8 Restriction, reservation, reversionary interest, drilling or
development obligation, or other material obligation
Par. 6(m), Page 8 Restriction, reservation, reversionary interest, drilling or
development obligation
Par. 6(p), Page 9 Existing Operating Agreements
Par. 6(aa), Page 10 Wells obligated to be plugged and abandoned by law or by
contract
Exhibit "B" Recital III, Page 2 Description of Equipment
Exhibit "C" Par. 2(c), Page 3 Form of Promissory Note
Exhibit "C-2" Par. 2(d), Page 3 Form of Promissory Note
Exhibit "D" Par. 3(b), Page 3 Form of Assignment and Bill of Sale
Exhibit "E" Par. 20, Page 16 Schedule of other sellers under other Purchase and Sale
Agreements
Exhibit "F" Par. 24(b), Page 20 Plat of lands covered by Seagull Farmout #2
Exhibit "G" Par. 25, Page 21 Operating Agreement governing Seller and Purchaser as to
joint operations in the East Nancy Field and the Waskom
Field
</TABLE>
PURCHASE AND SALE AGREEMENT - PAGE 29
