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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: March 26, 1997
QUEEN SAND RESOURCES, INC.
(Exact name of registrant as specified in charter)
Delaware 0-21179 75-2615565
Jurisdiction of Commission File I.R.S. Employer
Incorporation Number Identification
Number
3500 Oak Lawn, Suite 380, LB #31, Dallas, TX 75219-4398
(Address of principal executive offices)
Registrant's telephone number: (214) 521-9959
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 13, 1997 the Company acquired from D&R Petroleum, Inc. and from Mr.
James P. Robertson and Frances L. Robertson of Zachary, Louisiana, one (1) gross
productive well (0.3375 net productive wells) located in Louisiana. The
acquisition comprises 278 gross acres (94 net acres).
INTERCOASTAL #2, ST. MARY'S PARISH, LOUISIANA
The Company has a 23.625% net revenue interest in a single well
producing 14,325 mcf (net) of gas and 375 bbls (net) of oil per month from a
depth of 14,700 feet in the Operculinoids formation.
The purchase price consisted of cash paid at closing of $562,500 and
578,500 shares of restricted common stock of the Company.
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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 Purchase and Sale Agreement dated March 13, 1997 between James P.
Robertson and Frances L. Robertson and the Company.
10.b Purchase and Sale Agreement dated March 13, 1997 between D&R Petroleum,
Inc. and the Company.
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
------------------------------------
Edward J. Munden,
President and Chief Executive Officer
Dated: March 26, 1997
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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 ______ day of March, 1997, by
and between JAMES P. ROBERTSON AND WIFE, FRANCES LEONARD ROBERTSON,
(collectively referred to hereinafter as the "Seller") and QUEEN SAND 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, disposal systems, 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, 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."
Notwithstanding the foregoing, Seller does except and reserve that
certain overriding royalty interest described in Paragraph 19 below.
Notwithstanding the foregoing, Seller does except and reserve the
reversionary interest, which reverts upon Purchaser realizing payout, as
described in Paragraph 20 below.
The Leases, Production, Wells, Equipment, Rights of Way and Permits,
Contracts, Records, and Miscellaneous, referenced in Paragraphs I through VII
above, less the overriding royalty interest set forth in Paragraph 19 below, are
hereinafter sometimes referred to individually and collectively in the singular
as "Property."
WHEREAS, the sale of Seller's interest in the Property 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, and was the subject of that certain letter dated February 14,
1997 from Queen Sand Resources, Inc. to Keith Robertson, David Robertson and
J.P. Robertson. 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) and (b) as follows:
(a) Sixty-two Thousand Five Hundred Dollars ($62,500.00)
payable at Closing;
(b) Sixty-five Thousand (65,000) shares of the common stock of
Queen Sand Resources, Inc., a Delaware corporation ("QSR"), who is 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.
All cash payments to be tendered by Purchaser to Seller, shall be made
by wire transfer or shall be made by certified funds.
3. Closing and Effective Date.
(a) The closing of the sale and purchase of the Property shall
take place on or before March 13, 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
PURCHASE AND SALE AGREEMENT - PAGE 2
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Property shall be effective as of February 1, 1997, 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 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
PURCHASE AND SALE AGREEMENT - PAGE 3
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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 TITLE AS HEREIN SET
FORTH) INCLUDING, WITHOUT LIMITATIONS, THE
PURCHASE AND SALE AGREEMENT - PAGE 4
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IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR
PURPOSE.
(b) Review of Property. Seller acknowledges that Purchaser,
personally or through its authorized agents or representatives, has had
the right to make any and all physical inspections of the Property
which Purchaser desired 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
deemed 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.
(c) Review of the Records. Seller acknowledges that Seller has
provided 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.
(d) 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
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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 Property, and
Seller shall not reserve any recorded or unrecorded executory interest
or rights relating to the Property, except as provided herein.
(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, except as
provided herein.
(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, except as provided herein.
PURCHASE AND SALE AGREEMENT - PAGE 6
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(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
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) 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.
(q) There are no tax partnerships affecting any of the
Property.
(r) 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.
(s) 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.
(t) 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.
(u) 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.
(v) 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 each of the Leases to be conveyed is valid and in full
force and effect.
(w) Seller is being paid not less than the fractional "Net
Revenue Interest" set forth 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" set forth in
Exhibit "A" hereto.
(x) 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.
PURCHASE AND SALE AGREEMENT - PAGE 7
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(y) 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.
(z) All Records and other 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.
(aa) 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.
(bb) 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.
(cc) All information and data provided to Purchaser concerning
the Property is true and correct to the best of Seller's information,
knowledge, and belief;
(dd) Seller James P. 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.
Seller 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
PURCHASE AND SALE AGREEMENT - PAGE 8
<PAGE> 9
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) Seller 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 17
below, be registered under the 1933 Act, or under the laws of any jurisdiction.
Seller, 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.
Notwithstanding anything herein to the contrary, the Property shall be
conveyed hereunder as is, where is, with title warranted by, through, and under
Seller, but not otherwise.
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 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
PURCHASE AND SALE AGREEMENT - PAGE 9
<PAGE> 10
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
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;
PURCHASE AND SALE AGREEMENT - PAGE 10
<PAGE> 11
(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) 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:
Queen Sand Resources, Inc.
James P. Robertson and Suite 380, Lock Box 31
Frances Leonard Robertson 3500 Oak Lawn Avenue
21375 Chaney Road Dallas, Texas 75219-4398
Zachary, Louisiana 70791 Attn.: Edward Munden
Telephone: _____________ Telephone: 214-521-9959
Facsimile: _____________ 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. Without limiting the
foregoing obligation of Seller to timely pay, Purchaser may elect to offset its
obligation under the Notes by any sums which may be due and owing hereunder by
Seller to Purchaser.
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
PURCHASE AND SALE AGREEMENT - PAGE 11
<PAGE> 12
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.
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.
17. Unregistered Securities; Share Restrictions; Certain Registration
Rights.
(a) Seller acknowledges that all shares of common stock of QSR
acquired pursuant to this Agreement, 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
PURCHASE AND SALE AGREEMENT - PAGE 12
<PAGE> 13
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.
(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.
(e) Certain shares of QSR stock are issued under the following
agreements, as consideration under such agreements, and as
consideration for the extension of the closing under such agreements:
(i) Purchase and Sale Agreement dated February 5,
1997, by and between D & R Petroleum, Inc., Black Gold
Production Services, Inc., and David R. Robertson, as Seller,
and Corrida Resources, Inc., as Buyer, covering various oil
and gas rights located in the States of Louisiana,
Mississippi, and Texas; and
(ii) Purchase and Sale Agreement dated February 5,
1997, by and between Robertson's Oil & Gas, Inc., Pelican Oil
Field Services, Inc., and Allen K. Robertson, as Seller, and
Corrida Resources, Inc., as Buyer, covering various oil and
gas rights located in the States of Louisiana, Mississippi,
and Texas.
Such agreements are hereinafter referred to as the "Prior Agreements."
Such shares of QSR received by the seller's under such Prior
Agreements, when sold in compliance with all other restrictions
contained in such agreements, 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.
PURCHASE AND SALE AGREEMENT - PAGE 13
<PAGE> 14
Simultaneous with the execution of this Agreement, Purchaser
is entering a purchase and sale agreement with D & R Petroleum, Inc.,
and David Robertson, by which document Purchaser is to acquire the
rights and interests of such sellers in the Leases, Wells, Equipment
and Contracts. Certain shares of stock of QSR will be issued pursuant
to the terms of such agreement. Such agreement shall hereinafter be
referred to as the "Simultaneous Agreement."
The QSR shares to be issued under this Agreement and under the
Simultaneous Agreement shall be subject to the same restrictions, above
described, governing the shares to be issued under the Prior
Agreements, being that, when sold in compliance of all other
restrictions contained in such agreements, such shares may be sold
through the public market only on the basis of 10,000 shares [inclusive
of all shares issued under the Prior Agreements, the Simultaneous
Agreement, and this Agreement] 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.
18. 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.
19. Overriding Royalty Reservation. 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. Purchaser
shall be entitled to an NRI interest in and to such Leases which is seventy
percent (70%) 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 Leases 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.
20. Reversionary Interest. Upon the occurrence of "payout," as such
term is hereinafter defined, there shall revert and revest in Seller an
undivided one-half (50%) of all of the right, title and interest conveyed to
Purchaser by Seller under and pursuant to the terms of this Agreement. The term
"payout" as used herein shall mean that point in time when the proceeds received
by Purchaser for the revenue share acquired by Purchaser under and pursuant to
this Agreement of all of the oil and gas produced, saved and sold from the
Wells, and from wells which may be hereafter drilled on the Leases, or on lands
pooled with the Leases, equals the sum of the following: (i) the sum of One
Hundred Eighty-one Thousand Two Hundred Fifty Dollars ($181,250), and (ii) all
of the costs and expenses incurred by Purchaser during the payout period for the
drilling, completing, recompleting, equipping, reworking, or plugging and
abandoning, of any wells located on the Leases or on lands pooled therewith,
including any wells used for salt water disposal and wells used for injection
and pressure maintenance, and (iii) all of the costs and expenses incurred by
Purchaser during the payout period for operations conducted on the Wells, or on
any other wells located on the Leases or on lands pooled therewith, and (iv) all
ad valorem, property, production, severance, excise and similar taxes and
assessments based on or measured by Purchaser's ownership of the Property, or
Purchaser's share of Production from the Property or receipt of proceeds
therefrom, which have become due and payable during the payout period, including
any portion which may be prorated to the payout period, and (v) all losses,
damages and expenses sustained by Purchaser arising out of, or resulting from,
PURCHASE AND SALE AGREEMENT - PAGE 14
<PAGE> 15
the ownership of the rights and interests to have been conveyed to Purchaser
under this Agreement, to the extend same are not paid by Seller under the
indemnitee, or other provisions of this Agreement. The interests herein reserved
shall automatically revert and revest into Seller upon the occurrence of payout.
Notwithstanding, to reflect the occurrence of payout of record in the Parish in
which the leased premises are located, upon the occurrence of payout Purchaser
agrees to execute and deliver to Seller an assignment in recordable form which
shall reassign and reconvey to Seller the interests having reverted to Seller
under the terms of this Agreement. The interests which shall have reverted to
Seller under and pursuant to the terms of this Agreement shall be governed by,
and subject to, the terms and provisions of the current operating agreement
covering the Leases and Wells.
21. Preferential Right to Purchase. Should Seller hereafter desire to
sell all or any part of the reversionary interest herein reserved by Seller,
whether before or after the time of reversion, Seller shall promptly give
written notice to the Purchaser, with full information on its proposed
disposition, which shall include the name and address of the prospective
purchaser (who must be ready, willing and able to purchase), the purchase price,
a legal description sufficient to identify the interest and property to be sold,
and all other terms of the offer. Purchaser shall then have an optional prior
right, for a period of thirty (30) days after the notice is delivered, to
purchase for the stated consideration on the same terms and conditions the
interest which the Seller proposes to sell.
22. 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.
23. 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-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.
24. 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;
PURCHASE AND SALE AGREEMENT - PAGE 15
<PAGE> 16
(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;
(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
PURCHASE AND SALE AGREEMENT - PAGE 16
<PAGE> 17
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 ______ day of March, 1997.
WITNESSES: SELLERS:
____________________________ _________________________________________
JAMES P. ROBERTSON
____________________________
____________________________ _________________________________________
FRANCES LEONARD ROBERTSON
____________________________
PURCHASER:
QUEEN SAND RESOURCES, INC.,
____________________________ a Nevada corporation
____________________________ By: _____________________________________
Robert P. Lindsay, Vice President
ACKNOWLEDGMENTS
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the ______ day of March, 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 ______ day of March, 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
PURCHASE AND SALE AGREEMENT - PAGE 17
<PAGE> 18
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the ______ day of March, 1997, before me appeared Robert P.
Lindsay, to me personally known, who, being duly sworn, did say that he is the
Vice President of Queen Sand 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 18
<PAGE> 1
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the ______ day of March, 1997, by
and between D & R PETROLEUM, INC., a Louisiana corporation (hereinafter referred
to as the "Seller") and QUEEN SAND RESOURCES, INC., a Nevada corporation (the
"Purchaser"), (Seller and Purchaser hereinafter individually referred to as
"Party" and collectively as "Parties"). David Robertson joins in this agreement
for purposes of Paragraph 2(b) regarding the receipt of shares of stock,
Paragraph 6(dd), and Paragraph 17.
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, disposal systems, 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, 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> 2
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 does except and reserve that
certain overriding royalty interest described in Paragraph 19 below.
Notwithstanding the foregoing, Seller does except and reserve the
reversionary interest, which reverts upon Purchaser realizing payout, as
described in Paragraph 20 below.
The Leases, Production, Wells, Equipment, Rights of Way and Permits,
Contracts, Records, and Miscellaneous, referenced in Paragraphs I through VII
above, less the overriding royalty interest set forth in Paragraph 19 below, are
hereinafter sometimes referred to individually and collectively in the singular
as "Property."
WHEREAS, the sale of Seller's interest in the Property 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, and was the subject of that certain letter dated February 14,
1997 from Queen Sand Resources, Inc. to Keith Robertson, David Robertson and
J.P. Robertson. 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) and (b) as follows:
(a) Five Hundred Thousand Dollars ($500,000.00) payable at
Closing;
(b) Five Hundred Thirteen Thousand Five Hundred and Thirteen
(513,500) shares of the common stock of Queen Sand Resources, Inc., a
Delaware corporation ("QSR"), who is 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.
All cash payments to be tendered by Purchaser to Seller, shall be made
by wire transfer or shall be made by certified funds.
3. Closing and Effective Date.
(a) The closing of the sale and purchase of the Property shall
take place on or before March 13, 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
PURCHASE AND SALE AGREEMENT - PAGE 2
<PAGE> 3
Property shall be effective as of February 1, 1997, 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 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
PURCHASE AND SALE AGREEMENT - PAGE 3
<PAGE> 4
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 TITLE AS HEREIN SET
FORTH) INCLUDING, WITHOUT LIMITATIONS, THE
PURCHASE AND SALE AGREEMENT - PAGE 4
<PAGE> 5
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR
PURPOSE.
(b) Review of Property. Seller acknowledges that Purchaser,
personally or through its authorized agents or representatives, has had
the right to make any and all physical inspections of the Property
which Purchaser desired 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
deemed 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.
(c) Review of the Records. Seller acknowledges that Seller has
provided 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.
(d) 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
PURCHASE AND SALE AGREEMENT - PAGE 5
<PAGE> 6
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 Property, and
Seller shall not reserve any recorded or unrecorded executory interest
or rights relating to the Property, except as provided herein.
(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, except as
provided herein.
(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, except as provided herein.
PURCHASE AND SALE AGREEMENT - PAGE 6
<PAGE> 7
(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
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) 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.
(q) There are no tax partnerships affecting any of the
Property.
(r) 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.
(s) 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.
(t) 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.
(u) 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.
(v) 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 each of the Leases to be conveyed is valid and in full
force and effect.
(w) Seller is being paid not less than the fractional "Net
Revenue Interest" set forth 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" set forth in
Exhibit "A" hereto.
(x) 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.
PURCHASE AND SALE AGREEMENT - PAGE 7
<PAGE> 8
(y) 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.
(z) All Records and other 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.
(aa) 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.
(bb) 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.
(cc) All information and data provided to Purchaser concerning
the Property is true and correct to the best of Seller's information,
knowledge, and belief;
(dd) 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
PURCHASE AND SALE AGREEMENT - PAGE 8
<PAGE> 9
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 21 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.
Notwithstanding anything herein to the contrary, the Property shall be
conveyed hereunder as is, where is, with title warranted by, through, and under
Seller, but not otherwise.
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 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
PURCHASE AND SALE AGREEMENT - PAGE 9
<PAGE> 10
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
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;
PURCHASE AND SALE AGREEMENT - PAGE 10
<PAGE> 11
(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) 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:
Queen Sand Resources, Inc.
D&R Petroleum, Inc. Suite 380, Lock Box 31
and David Robertson 3500 Oak Lawn Avenue
1310 Jeff Davis Dallas, Texas 75219-4398
Hammond, Louisiana Attn.: Edward Munden
Telephone: 504-345-8001 Telephone: 214-521-9959
Facsimile: 504-542-7546 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. Without limiting the
foregoing obligation of Seller to timely pay, Purchaser may elect to offset its
obligation under the Notes by any sums which may be due and owing hereunder by
Seller to Purchaser.
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
PURCHASE AND SALE AGREEMENT - PAGE 11
<PAGE> 12
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.
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.
17. Unregistered Securities; Share Restrictions; Certain Registration
Rights.
(a) Seller acknowledges that all shares of common stock of QSR
acquired pursuant to this Agreement, 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
PURCHASE AND SALE AGREEMENT - PAGE 12
<PAGE> 13
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.
(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.
(e) Certain shares of QSR stock are issued under the following
agreements, as consideration under such agreements, and as
consideration for the extension of the closing under such agreements:
(i) Purchase and Sale Agreement dated February 5,
1997, by and between D & R Petroleum, Inc., Black Gold
Production Services, Inc., and David R. Robertson, as Seller,
and Corrida Resources, Inc., as Buyer, covering various oil
and gas rights located in the States of Louisiana,
Mississippi, and Texas; and
(ii) Purchase and Sale Agreement dated February 5,
1997, by and between Robertson's Oil & Gas, Inc., Pelican Oil
Field Services, Inc., and Allen K. Robertson, as Seller, and
Corrida Resources, Inc., as Buyer, covering various oil and
gas rights located in the States of Louisiana, Mississippi,
and Texas.
Such agreements are hereinafter referred to as the "Prior Agreements."
Such shares of QSR received by the seller's under such Prior
Agreements, when sold in compliance with all other restrictions
contained in such agreements, 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.
PURCHASE AND SALE AGREEMENT - PAGE 13
<PAGE> 14
Simultaneous with the execution of this Agreement, Purchaser
is entering a purchase and sale agreement with James P Robertson and
Frances Leonard Robertson, by which document Purchaser is to acquire
the rights and interests of such sellers in the Leases, Wells,
Equipment and Contracts. Certain shares of stock of QSR will be issued
pursuant to the terms of such agreement. Such agreement shall
hereinafter be referred to as the "Simultaneous Agreement."
The QSR shares to be issued under this Agreement and under the
Simultaneous Agreement shall be subject to the same restrictions, above
described, governing the shares to be issued under the Prior
Agreements, being that, when sold in compliance of all other
restrictions contained in such agreements, may be sold through the
public market only on the basis of 10,000 shares [inclusive of all
shares issued under the Prior Agreements, the Simultaneous Agreement,
and this Agreement] 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.
18. 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.
19. Overriding Royalty Reservation. 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. Purchaser
shall be entitled to an NRI interest in and to such Leases which is seventy
percent (70%) 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 Leases 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.
20. Reversionary Interest. Upon the occurrence of "payout," as such
term is hereinafter defined, there shall revert and revest in Seller an
undivided one-half (50%) of all of the right, title and interest conveyed to
Purchaser by Seller under and pursuant to the terms of this Agreement. The term
"payout" as used herein shall mean that point in time when the proceeds received
by Purchaser for the revenue share acquired by Purchaser under and pursuant to
this Agreement of all of the oil and gas produced, saved and sold from the
Wells, and from wells which may be hereafter drilled on the Leases, or on lands
pooled with the Leases, equals the sum of the following: (i) the sum of One
Million Four Hundred and Fifty Thousand Dollars ($1,450,000), and (ii) all of
the costs and expenses incurred by Purchaser during the payout period for the
drilling, completing, recompleting, equipping, reworking, or plugging and
abandoning, of any wells located on the Leases or on lands pooled therewith,
including any wells used for salt water disposal and wells used for injection
and pressure maintenance, and (iii) all of the costs and expenses incurred by
Purchaser during the payout period for operations conducted on the Wells, or on
any other wells located on the Leases or on lands pooled therewith, and (iv) all
ad valorem, property, production, severance, excise and similar taxes and
assessments based on or measured by Purchaser's ownership of the Property, or
Purchaser's share of Production from the Property or receipt of proceeds
therefrom, which have become due and payable during the payout period, including
any portion which may be prorated to the payout period, and (v) all losses,
damages and expenses sustained by Purchaser arising out of, or resulting from,
PURCHASE AND SALE AGREEMENT - PAGE 14
<PAGE> 15
the ownership of the rights and interests to have been conveyed to Purchaser
under this Agreement, to the extend same are not paid by Seller under the
indemnitee, or other provisions of this Agreement. The interests herein reserved
shall automatically revert and revest into Seller upon the occurrence of payout.
Notwithstanding, to reflect the occurrence of payout of record in the Parish in
which the leased premises are located, upon the occurrence of payout Purchaser
agrees to execute and deliver to Seller an assignment in recordable form which
shall reassign and reconvey to Seller the interests having reverted to Seller
under the terms of this Agreement. The interests which shall have reverted to
Seller under and pursuant to the terms of this Agreement shall be governed by,
and subject to, the terms and provisions of the current operating agreement
covering the Leases and Wells.
21. Preferential Right to Purchase. Should Seller hereafter desire to
sell all or any part of the reversionary interest herein reserved by Seller,
whether before or after the time of reversion, Seller shall promptly give
written notice to the Purchaser, with full information on its proposed
disposition, which shall include the name and address of the prospective
purchaser (who must be ready, willing and able to purchase), the purchase price,
a legal description sufficient to identify the interest and property to be sold,
and all other terms of the offer. Purchaser shall then have an optional prior
right, for a period of thirty (30) days after the notice is delivered, to
purchase for the stated consideration on the same terms and conditions the
interest which the Seller proposes to sell.
22. 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.
23. 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-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.
24. 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;
PURCHASE AND SALE AGREEMENT - PAGE 15
<PAGE> 16
(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;
(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
PURCHASE AND SALE AGREEMENT - PAGE 16
<PAGE> 17
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 ______ day of March, 1997.
WITNESSES: SELLERS:
D & R PETROLEUM, INC.,
____________________________ a Louisiana corporation
____________________________ By: ____________________________________
David Robertson, President
____________________________ _________________________________________
DAVID ROBERTSON
____________________________
____________________________ _________________________________________
(wife of David Robertson)
____________________________
PURCHASER:
QUEEN SAND RESOURCES, INC.,
____________________________ a Nevada corporation
____________________________ By: ____________________________________
Robert P. Lindsay, Vice President
ACKNOWLEDGMENTS
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the ______ day of March, 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
PURCHASE AND SALE AGREEMENT - PAGE 17
<PAGE> 18
STATE OF LOUISIANA
PARISH OF TANGIPAHOA
On this the ______ day of March, 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 ______ day of March, 1997, before me appeared
_________________________, 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 ______ day of March, 1997, before me appeared Robert P.
Lindsay, to me personally known, who, being duly sworn, did say that he is the
Vice President of Queen Sand 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 18
