Attached files
Exhibit 10.79
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
RICOCHET ENERGY, INC., ET AL
AS SELLERS
AND
BARON ENERGY, INC.
AS BUYER
INDEX
PAGE
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ARTICLE 1. DEFINITIONS........................................................1
ARTICLE 2. SALE AND PURCHASE.................................................6
ARTICLE 3. PURCHASE PRICE.....................................................6
3.1 Purchase Price....................................................6
3.2 Earnest Money Deposit.............................................7
3.3 Allocation........................................................7
3.4 Preferential Rights...............................................7
3.5 Consents..........................................................7
ARTICLE 4. REVIEW BY BUYER....................................................8
4.1 Review of Records.................................................8
4.2 Alleged Adverse Matters...........................................8
4.3 Adjustment of Purchase Price for Title Defects....................8
4.4 Waiver............................................................9
ARTICLE 5. INSPECTION OF PROPERTIES..........................................10
ARTICLE 6. ACCOUNTING.......................................................10
6.1 Revenues, Expenses and Capital Expenditures......................10
6.2 Taxes............................................................10
6.3 Obligations and Credits..........................................10
6.4 Gas Imbalances...................................................11
6.5 Miscellaneous Accounting.........................................11
6.6 Final Accounting Settlement......................................11
6.7 Post-Final Accounting Settlement.................................11
6.8 Audit Rights.....................................................11
ARTICLE 7. CASUALTY AND CONDEMNATION........................................12
ARTICLE 8. INDEMNITIES.......................................................12
8.1 Sellers' Indemnity Obligations (excluding Environmental Claims)..12
8.2 Buyer's Indemnity Obligations (excluding Environmental Claims)...13
8.3 Environmental Claims.............................................13
8.4 Asbestos and NORM................................................13
8.5 Notice and Cooperation...........................................14
8.6 Defense of Claims................................................14
8.7 Waiver of Certain Damages........................................14
8.8. Limitation on Indemnities........................................14
8.9. Sole Remedy......................................................15
ARTICLE 9. WARRANTIES AND DISCLAIMERS.......................................15
9.1 Special Warranty of Title........................................15
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9.2 Disclaimer - Representations and Warranties......................15
9.3 Disclaimer - Statements and Information..........................15
ARTICLE 10. SELLERS' REPRESENTATIONS AND WARRANTIES.........................16
10.1 Organization and Good Standing...................................16
10.2 Corporate Authority; Authorization of Agreement..................16
10.3 No Violations....................................................16
10.4 Absence of Certain Changes.......................................16
10.5 Operating Costs..................................................17
10.6 Litigation and Other Disputes....................................17
10.7 Bankruptcy.......................................................17
10.8 Material Contracts...............................................17
10.9 Consents and Preferential Rights.................................17
10.10 Compliance with Law and Permits..................................17
10.11 Environmental Compliance.........................................18
10.12 Status of Contracts..............................................18
10.13 Production Burdens, Taxes, Expenses and Revenues.................18
10.14 Production Sales Matters.........................................18
10.15 Capital Commitments..............................................19
10.16 Limitation on Representations....................................19
10.17 Brokers..........................................................19
ARTICLE 11. BUYER'S REPRESENTATIONS AND WARRANTIES...........................19
11.1 Organization and Good Standing...................................19
11.2 Corporate Authority; Authorization of Agreement..................19
11.3 No Violations....................................................19
11.4 SEC Disclosure...................................................20
11.5 Independent Evaluation...........................................20
11.6 Buyer's Reliance.................................................20
11.7 Qualified Leaseholder............................................20
11.8 Brokers...........................................................20
ARTICLE 12. ADDITIONAL AGREEMENTS............................................20
12.1 Covenants of Sellers.............................................20
12.2 Notice of Loss...................................................21
12.3 Subsequent Operations............................................21
12.4 Buyer's Assumption of Obligations................................21
12.5 Records..........................................................21
ARTICLE 13. DISPUTE RESOLUTION...............................................21
13.1 Independent Expert................................................21
13.2 Rules and Procedure...............................................22
ARTICLE 14. CONDITIONS PRECEDENT TO CLOSING..................................22
14.1 Conditions Precedent to Sellers' Obligation to Close.............22
14.2 Conditions Precedent to Buyer's Obligation to Close..............23
ARTICLE 15. TERMINATION......................................................23
15.1 Grounds for Termination..........................................23
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15.2 Effect of Termination............................................24
15.3 Dispute over Right to Terminate..................................24
15.4 Return of Documents..............................................24
15.5 Confidentiality..................................................24
ARTICLE 16. THE CLOSING......................................................24
16.1. Preliminary Closing Statement....................................24
16.2 Obligations of Sellers at Closing................................25
16.3 Obligations of Buyer at Closing..................................25
16.4 Site of Closing..................................................26
16.5 Adjustments to Purchase Price at the Closing.....................26
ARTICLE 17. MISCELLANEOUS....................................................27
17.1 Notices..........................................................27
17.2 Conveyance Costs.................................................27
17.3 Brokers' Fees....................................................27
17.4 Further Assurances...............................................28
17.5 Survival of Representations and Warranties.......................28
17.6 Amendments and Severability......................................28
17.7 Successors and Assigns...........................................28
17.8 Headings.........................................................28
17.9 Governing Law....................................................28
17.10 No Partnership Created...........................................28
17.11 Public Announcements.............................................29
17.12 No Third Party Beneficiaries.....................................29
17.13 Deceptive Trade Practices........................................29
17.14 Tax Deferred Exchange Election...................................29
17.15 Not to be Construed Against Drafter..............................29
17.16 Entire Agreement.................................................29
17.17 Conspicuousness of Provisions....................................29
17.18 Execution in Counterparts........................................29
17.19 Affiliated Entity as Buyer and/or Operator.......................30
EXHIBITS
EXHIBIT A - DESCRIPTION OF PROPERTIES
EXHIBIT B - NONE
EXHIBIT C - ASSIGNMENT AND BILL OF SALE
EXHIBIT D - CERTIFICATE
EXHIBIT E - NON-FOREIGN AFFIDAVIT
EXHIBIT F - LIST OF CONTRACTS
EXHIBIT G - LITIGATION AND CLAIMS
EXHIBIT H - ALLOCATION OF PURCHASE PRICE
EXHIBIT I - GAS IMBALANCES
EXHIBIT J - APPROVALS AND PREFERENTIAL RIGHTS
EXHIBIT K - VIOLATIONS OF LAWS
EXHIBIT L - PRODUCTION SALES MATTERS
EXHIBIT M - CAPITAL COMMITMENTS
EXHIBIT N - AFFILIATED ENTITY FORM OF ASSIGNMENT
ADDENDUM I - IDENTIFICATION OF RICOCHET PARTIES
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is dated May 29, 2014
(the "Effective Date") by and between RICOCHET ENERGY, INC., a Texas
corporation, with an office at 16111 Via Shavano, San Antonio, Texas 78249
("Ricochet"), for itself and as limited agent for all of the parties listed in
Addendum I (Ricochet, together with the parties in said Addendum I being
hereinafter referred to as the "Ricochet Parties"), VAQUILLAS ENERGY EAST
PEARSALL, LTD., LLP, a Texas limited partnership, and VAQUILLAS ENERGY RE-ENTRY
LTD., LLP, a Texas limited partnership, (collectively "Vaquillas"), JOB ENERGY
PARTNERS II, LTD., a Texas limited partnership, LORD'S ENERGY, LTD., a Texas
limited partnership, HUBBERD-SMITH ENERGY INVESTMENTS, LTD., a Texas limited
partnership, NETTLESHIP ENERGY INVESTMENTS, LTD., a Texas limited partnership,
LAREDO GATEWAY ENERGY, LTD., a Texas limited partnership, and BORDEN JENKINS, an
individual (collectively called "Sellers") and BARON ENERGY, INC., a Nevada
corporation, with an office at 300 S.C.M. Allen Parkway, Suite 400, San Marcos,
Texas 78666 (hereinafter referred to as "Buyer"), and is based on the following
premises:
WHEREAS, Sellers desire to sell, assign and convey to Buyer and Buyer
desires to purchase and accept certain oil and gas properties and related
interests; and
WHEREAS, the parties have reached agreement regarding such sale and
purchase.
NOW, THEREFORE, for valuable consideration and the mutual covenants and
agreements herein contained, Sellers and Buyer agree as follows:
ARTICLE 1. DEFINITIONS
1. Definitions: In this Agreement, capitalized terms have the meanings
provided in this Article 1, unless expressly provided otherwise in other
Articles. All defined terms include both the singular and the plural. All
references to Articles or Sections refer to Articles or Sections in this
Agreement, and all references to Exhibits refer to the Exhibits attached to this
Agreement. The Exhibits which are attached hereto are incorporated in and made a
part of this Agreement.
"Accounting Referee" has the meaning set forth in Section 6.8.
"Affiliate" means and includes any entity that, directly or indirectly,
through one or more intermediaries, controls or is controlled by or is under
common control with the entity specified.
"Alleged Adverse Matters" has the meaning set forth in Section 4.2.
"Alleged Title Defect" means a Title Defect (as hereinafter defined) which
is asserted by Buyer in accordance with Section 4.3.
"Assignment and Bill of Sale" means a document in the form of Exhibit C.
"Assumed Obligations" has the meaning set forth in Section 12.4.
"Business Day" means a Day (as hereinafter defined) excluding Saturdays,
Sundays and U.S. legal holidays.
"Casualty Loss" means any loss, damage or reduction in value resulting from
mechanical failure or defects, catastrophic occurrences, acts of God and any
other losses which are not the result of normal wear and tear or of natural
reservoir changes.
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"Certificate" means a document in the form of Exhibit D.
"Claim" means any and all claims, demands, suits, causes of action,
investigations, administrative proceedings, other legal proceedings, losses,
damages, liabilities, judgments, assessments, settlements, fines, notices of
violation, penalties, interest, obligations, responsibilities and
costs(including reasonable attorneys' fees and costs of litigation) of any kind
or character(whether or not asserted prior to the date hereof, and whether known
or unknown, fixed or unfixed, conditional or unconditional, based on negligence,
strict liability or otherwise, choate or inchoate, liquidated or unliquidated,
secured or unsecured, accrued, absolute, contingent or otherwise) which are
brought by or owed to a Third Party (as hereinafter defined).
"Close" or "Closing" means the consummation of the transfer of title to the
Properties to Buyer, including execution and delivery of all documents provided
herein.
"Closing Date" means 60 days after the Effective Date or such other date as
may be mutually agreed upon by the parties or on which Closing occurs in
accordance with the terms of this Agreement.
"Day" means a calendar day consisting of twenty-four (24) hours from
midnight to midnight.
"Defensible Title" means, as to the Leases, such title held by Sellers
that, subject to and except for the Permitted Encumbrances (as hereinafter
defined):
(a) Entitles Sellers to own and receive payment of revenues for not less
than the "Net Revenue Interests" set forth on Exhibit A of all oil, gas and
associated liquid and gaseous hydrocarbons produced, saved and marketed from the
Leases;
(b) Obligates Sellers to bear costs and expenses relating to the ownership,
operation, maintenance and repair of the wells and facilities located on or
attributable to the Leases in an amount not greater than the "Working Interests"
set forth on Exhibit A, unless there is a corresponding proportionate increase
in the Net Revenue Interests; and
(c) Is free and clear of all liens, encumbrances, burdens and defects
(except mortgages or liens that will be fully released at or prior to the
Closing) that a reasonable and prudent person engaged in the business of
ownership, development and operation of oil and gas properties with knowledge of
all applicable facts and circumstances and the understanding of their legal
significance would not be willing to accept with respect to portions of the
Leases affected thereby.
"Earnest Money Deposit" has the meaning set forth in Section 3.2.
"Effective Time" means the first day of the month in which Closing occurs
at 12:01 a.m., local time where the Properties are located.
"Environmental Claims" means all Claims for pollution or environmental
damages of any kind, including without limitation, those relating to:
(a)remediation and/or clean-up thereof, (b) damage to and/or loss of any
property or resource, and/or (c) injury or death of any person(s) whomsoever,
including without limitation Claims relating to breach of Environmental Laws,
common law causes of action such as negligence, gross negligence, strict
liability, nuisance or trespass, or fault imposed by statute, rule, regulation
or otherwise(but specifically excluding any Claims relating to asbestos or NORM
(as hereinafter defined), which are covered by Section 8.4 hereof), and
including all costs associated with remediation and clean up, and fines and
penalties associated with any of the foregoing.
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"Environmental Laws" means all laws, statutes, ordinances, permits, orders,
judgments, rules or regulations which are promulgated, issued or enacted by a
governmental entity having appropriate jurisdiction that, (a) relate to the
prevention of pollution or environmental damage, (b) the remediation of
pollution or environmental damage, or (c) the protection of the environment
generally; including without limitation, the Clean Air Act, as amended, the
Clean Water Act, as amended, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Federal Water Pollution
Control Act, as amended, the Resource Conservation and Recovery Act of 1976, as
amended, the Safe Drinking Water Act, as amended, the Toxic Substance and
Control Act, as amended, the Superfund Amendments and Reauthorization Act
of1986, as amended, the Hazardous and the Solid Waste Amendments Act of 1984, as
amended, and the Oil Pollution Act of 1990, as amended.
"Excluded Assets" means the following properties, interests and rights
(contractual or otherwise), that are expressly retained by Sellers:
(a) all rights and causes of action arising, occurring or existing in favor
of Sellers to the extent attributable to the period prior to the Effective Time
or arising out of the ownership of, operation of or production from the
Properties prior to the Effective Time;
(b) all Hydrocarbons produced from or attributable to the Leases with
respect to all periods prior to the Effective Time, together with all proceeds
from the sale of such Hydrocarbons;
(c) all claims of Sellers for refunds of or loss carry forwards with
respect to (i) ad valorem, severance, production or any other taxes attributable
to any period prior to the Effective Time, (ii) income or franchise taxes, or
(iii) any taxes attributable to the other Excluded Assets, and such other
refunds, and rights thereto, for amounts paid in connection with the Properties
and attributable to the period prior to the Effective Time;
(d) all other proceeds, income, royalties or revenues (and any security or
other deposits made) attributable to (i) the Properties for any period prior to
the Effective Time, or (ii) any other Excluded Assets;
(e) all of Sellers' motor vehicles, personal computers and associated
peripherals and all radio, telephone and other communication equipment;
(f) all of Sellers' proprietary computer software, technology, patents,
trade secrets, copyrights, names, trademarks, logos and other intellectual
property;
(g) except to the extent included within the definition of the Records, all
of Sellers' rights and interests in geological and geophysical data,
specifically including all seismic licenses and permits of Sellers;
(h) all documents and instruments of Sellers that may be protected by an
attorney-client privilege;
(i) data and other information that cannot be disclosed or assigned to
Buyer as a result of confidentiality or similar arrangements under agreements
with persons unaffiliated with any Seller;
(j) all rights, interests and obligations under that certain Prospect
Generation and Exploration Agreement dated December 17, 2003, between Vaquillas
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Energy, Ltd. and Ricochet Energy, Inc., as amended, and the Prospect Generation
and Exploration Agreement dated May 25, 2013, between JOB Energy Partners II,
Ltd. and Ricochet Energy, Inc., as amended;
(k) any assets excluded from the transactions contemplated by this
Agreement pursuant to Sections 3.4, 3.5 and 4.3, if any; and
(l) all general corporate, partnership, income tax and financial records of
Sellers.
"Final Accounting Settlement" has the meaning set forth in Section 6.6.
"Final Settlement Date" has the meaning set forth in Section 6.6.
"Hydrocarbons" has the meaning given to such term in the definition of
Properties.
"Laws" means any and all applicable laws, statutes, ordinances, permits,
decrees, orders, judgments, rules or regulations (including without limitation
Environmental Laws) which are promulgated, issued or enacted by a governmental
entity having appropriate jurisdiction.
"Leases" has the meaning given to such term in the definition of
Properties.
"Material Contracts" means those contracts listed on Exhibit F.
"Non-Foreign Affidavit" means a document in the form of Exhibit E.
"NORM" means naturally occurring radioactive materials.
"Permitted Encumbrances" means:
(a) Royalties, overriding royalties, production payments, reversionary
interests, convertible interests, net profits interests, division orders and
similar burdens encumbering the Properties as of the Effective Time to the
extent the net cumulative effect of such burdens do not operate to (i)reduce the
net revenue interests of the Properties to less than the net revenue interests
set forth on Exhibit A or (ii) cause an increase in the working interest in any
Property from that shown on Exhibit A without a proportionate increase in the
net revenue interest for such Property;
(b) Preferential purchase rights and required consents to assignment and
similar contractual provisions encumbering the Properties with respect to which,
prior to Closing, (i) waivers or consents are obtained from the appropriate
parties, or (ii) notices have been given for the transaction contemplated hereby
and the appropriate time period for asserting such rights have expired without
an exercise of such rights;
(c) Preferential purchase rights encumbering the Properties which are
exercised by a Third Party, if the affected Properties are withdrawn from this
sale transaction and handled in accordance with Section 3.4;
(d) All rights to consent by, required notices to, filings with, or other
actions by governmental entities in connection with the sale or conveyance of
the Properties, if the same are customarily obtained subsequent to the transfer
of title;
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(e) Rights reserved to or vested in any governmental entity having
appropriate jurisdiction to control or regulate the Properties in any manner
whatsoever, and all Laws of any such governmental entity;
(f) Easements, rights-of-way, servitudes, surface leases, sub-surface
leases, pipelines, platforms, facilities, utility lines, telephone lines, power
lines, and structures on, over and through the Properties, to the extent such
rights, interests or structures do not materially interfere with the operation
of the Properties;
(g) Liens for taxes or assessments not yet due or not yet delinquent or, if
delinquent, that are being contested by Sellers in good faith in the normal
course of business;
(h) Liens of operators relating to obligations not yet due or not yet
delinquent;
(i) The Material Contracts; and
(j) Alleged Adverse Matters and Title Defects which Buyer has waived under
Section 4.4.
"Properties" means the following properties (real, personal or mixed) and
rights (contractual or otherwise), other than the Excluded Assets:
(a) All of Sellers' right, title and interest in, to and under or derived
from the oil and gas leasehold interests, record title interests, operating
rights interests, fee interests, mineral interests and overriding royalty
interests described on Exhibit A (collectively, the "Leases");
(b) All of Sellers' right, title and interest in and to, or derived from,
all of the presently existing and valid unitization and pooling agreements and
units (including all units formed by voluntary agreement and those formed under
the rules, regulations, orders or other official acts of any governmental entity
having appropriate jurisdiction) to the extent they relate to any of the
interests which are expressly described on Exhibit A;
(c) All of Sellers' right, title and interest in and to all oil, gas and
associated liquid and gaseous hydrocarbons (collectively, the "Hydrocarbons")
produced from or attributable to Sellers' interest in the Leases and
attributable to the period from and after the Effective Time;
(d) All of Sellers' right, title and interest in and to, or derived from,
all of the presently existing and valid oil sales contracts, casing head gas
sales contracts, gas sales contracts, processing contracts, gathering contracts,
transportation contracts, easements, rights-of-way, servitudes, surface leases
and other contracts (including the Material Contracts), to the extent the same
are assignable and relate to any of the interests which are expressly described
on Exhibit A;
(e) All of Sellers' right, title and interest in and to all personal
property and improvements (collectively, the "Equipment"), including without
limitation, wells (whether producing, plugged and abandoned, shut-in, injection,
disposal or water supply), tanks, boilers, platforms, buildings, fixtures,
machinery, equipment, pipelines, utility lines, power lines, telephone lines,
telegraph lines and other appurtenances located on, in, under and about the
Leases, to the extent the same are situated upon and used or held for use by
Sellers solely in connection with the ownership, operation, maintenance and
repair of the interests which are expressly described on Exhibit A, subject to
the reservations stated below;
(f) All of Sellers' Records to the extent the same are assignable and
relate to any of the interests which are expressly described on Exhibit A;
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(g) All franchises, licenses, permits, approvals, consents, certificates
and other authorizations and other rights granted by governmental authorities
and all certificates of convenience or necessity, immunities, privileges, grants
and other rights that relate to the Properties or the ownership or operation of
any thereof, to the extent the same are assignable (the "Permits"); and
(h) All (i) accounts, instruments and general intangibles (as such terms
are defined in the Uniform Commercial Code of Texas) attributable to the
Properties with respect to any period of time on or after the Effective Time,
and (ii) liens and security interests in favor of Sellers, whether choate or
inchoate, under any law, rule or regulation or under any of the Material
Contracts (a) arising from the ownership, operation or sale or other disposition
of Hydrocarbons on or after the Effective Time of any of the Properties or (b)
arising in favor of Sellers whether by contract or statute as the operator or
non-operator of certain of the Properties.
"Purchase Price" has the meaning set forth in Section 3.1.
"Records" means all of Sellers' books, records and files related to the
Properties, including all (i) abstracts, title opinions, title reports,
environmental site assessments, environmental compliance reports, lease and land
files, surveys, analyses, compilations, correspondence, filings with and reports
to regulatory agencies and other documents and instruments to the extent same
relate to the Properties, (ii) computer databases that are owned by or licensed
to Sellers to the extent same relate to the Properties, (iii) geophysical and
geological information (to the extent same may be assigned or transferred
without restriction, or without the consent of or payment to any third party),
and all engineering, exploration, production and other technical data, magnetic
field recordings, digital processing tapes, field prints, summaries, reports and
maps, whether written or in electronically reproducible form, that are in the
possession of Sellers and relate to the Properties and (iv) all other books,
records, files and magnetic tapes containing title or other information that are
in the possession of Sellers and relate to the Properties (the "Data"), but
specifically excluding (i) previous offers and economic analyses associated with
the acquisition, sale or exchange of the Properties, (ii) interpretive
information, (iii) personnel information, (iv) corporate, legal, financial and
tax information, (v) information covered by a non-disclosure obligation,
(vi)information covered by a legal privilege and (vii) any other information
that Sellers do not have the right to assign to Buyer.
"Title Adjustment" has the meaning set forth in Section 4.3.
"Title/Casualty Basket Amount" means the sum of U.S. $50,000.
"Title Defect" means any lien, encumbrance, encroachment or defect
associated with Sellers' title to the Properties (excluding Permitted
Encumbrances) that would cause Sellers not to have Defensible Title.
"Third Party" means any person or entity, governmental or otherwise, other
than Sellers and Buyer.
ARTICLE 2. SALE AND PURCHASE
On the Closing Date, effective as of the Effective Time, and upon the terms
and conditions herein set forth, Sellers agree to sell and assign the Properties
to Buyer and Buyer agrees to buy and accept the Properties.
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ARTICLE 3. PURCHASE PRICE
3.1 Purchase Price. Subject to adjustments as set forth herein, the total
purchase price for the Properties shall be Seven Million Nine Hundred
Thirty-Nine Thousand Two Hundred Ninety-Three Dollars (US $7,939,293.00) (the
"Purchase Price"), payable in full at Closing in immediately available funds.
3.2 Earnest Money Deposit. Upon the execution of this Agreement, Buyer
shall pay to Sellers, in care of Ricochet, a deposit in the amount of
Eighty-Five Thousand Dollars (US$85,000.00) (the "Earnest Money Deposit"). If
Closing occurs, the Purchase Price shall be credited by the amount of the
Earnest Money Deposit. If Closing does not occur, the Earnest Money Deposit
shall be refunded to Buyer, unless (a) Closing does not occur because of Buyer's
failure or refusal to Close in breach of this Agreement or (b) because the
conditions precedent to Sellers' obligation to Close provided in Section 14.1
are unmet at the time set for Closing, in which case Sellers shall retain the
Earnest Money Deposit as liquidated damages and not as a penalty. If, however,
in the case of either (a) or (b) above, any conditions precedent to Buyer's
obligation to Close provided in Section 14.2 are unmet at the time set for
Closing, Sellers shall not be entitled to retain the Earnest Money Deposit as
hereinabove provided. In the event that Closing occurs after July 31, 2014,
through no fault of Sellers, interest shall be payable on the Purchase Price
from July 31, 2014 through and including the Closing Date at the rate of ten
percent (10%) per annum.
3.3 Allocation. Attached hereto as Exhibit H is Buyer's good faith
allocation of the Purchase Price which Sellers approve for purposes of
allocating the Purchase Price among the Properties, and which shall be used in
providing any required preferential purchase right notifications.
3.4 Preferential Rights. If any of the Properties are burdened with
preferential purchase rights, the assignment of the Properties subject to such
preferential rights shall be conditioned upon Sellers obtaining the necessary
waiver or expiration of such right, and this Agreement shall not constitute an
assignment or attempted assignment thereof without such waiver or expiration. If
the time for exercising any preferential purchase right has not expired and the
holder thereof has not waived the same prior to the Closing Date, the Property
affected by such preferential right shall be conveyed to Buyer at Closing,
subject to the preferential right and without any reduction in the Purchase
Price. If the holder of the preferential right elects to purchase the Property
affected by the preferential right after Closing, Buyer shall be obligated to
convey such Property to the holder of such preferential right and Buyer shall be
entitled to the proceeds resulting therefrom. If, prior to Closing, a holder of
a preferential purchase right notifies Sellers that it intends to exercise its
rights with respect to any of the Properties to which its preferential purchase
right applies, the Properties covered by said preferential purchase right shall
be excluded from the Properties to be conveyed to Buyer, and the Purchase Price
shall be reduced by the value allocated to said Properties by Buyer in
accordance with Section 3.3. If the holder of the preferential purchase right
fails to consummate the purchase of the Properties, Sellers shall promptly
notify Buyer in writing. Within five (5) Business Days after Buyer's receipt of
such notice or the Closing Date, whichever is later, Sellers shall sell to
Buyer, and Buyer shall purchase from Sellers, such Properties under the terms of
this Agreement for a price equal to the aforesaid value allocated to such
Properties. Notwithstanding the foregoing, Buyer shall have no obligation to
purchase such Properties if Buyer is not notified in writing of the preferential
purchase right holder's failure to consummate the purchase of such Properties
within sixty (60) Days following Closing.
3.5 Consents. If any of the oil, gas or mineral leases which are part of
the Properties require the consent of a Third Party to assign Sellers' interest
therein, the assignment of such lease(s) subject to consent requirements shall
be conditioned upon Sellers obtaining such consent prior to Closing (except for
(i) any consents to assignment that cannot be unreasonably withheld, or words of
similar effect, and for which the third party has not objected to the transfer
or affirmatively stated that the consent to assignment will not be forthcoming;
and (ii) consents from governmental bodies customarily obtained after
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assignment, which shall not be required to be obtained prior to Closing). With
respect to any leasehold interest for which consent is not obtained prior to
Closing, such interest shall not be conveyed to Buyer at Closing and the
Purchase Price shall be reduced to account for exclusion of the affected
Property. If Sellers obtain the required consent(s) within sixty (60) days
following Closing, Sellers shall sell and Buyer shall purchase the interest(s)
affected thereby under the terms of this Agreement for a price equal to the
Purchase Price adjustment made therefore at Closing. There shall be no
obligations of sale or purchase of the affected interest(s) in the Properties
following sixty (60) days after the Closing Date.
ARTICLE 4. REVIEW BY BUYER
4.1 Review of Records. Until 5:00 p.m. local time, fifty (50) days
following the Effective Date (the "EXAMINATION PERIOD"), Sellers shall make
available to Buyer Records in Sellers' possession relating to the Properties.
Buyer shall be entitled to review said Records and shall have a right to request
a reasonable number of copies of such Records, at Buyer's expense. All
information made available to Buyer during the Examination Period, whether
disclosed pursuant to this Article 4 or any other provision of this Agreement,
shall be maintained confidential by Buyer as provided by the terms of the
Confidentiality Agreement dated December 12, 2013, between Ricochet and Buyer
(the "CONFIDENTIALITY AGREEMENT"). Buyer shall also take commercially reasonable
steps in order to ensure that Buyer's employees, consultants and agents comply
with the provisions of the Confidentiality Agreement.
4.2 Alleged Adverse Matters. If, as a result of Buyer's due diligence
review and inspection of Sellers' Records, Buyer discovers provisions of any
contract(s) (including the Material Contracts) which would (as to each such
contractual or other matter discovered) have a material adverse effect on the
value or operation of the Properties or any portion thereof (collectively, the
"ALLEGED ADVERSE MATTERS"), then as soon as reasonably practicable after Buyer's
review of the applicable Records, but in no event later than ten (10) Business
Days prior to the Closing Date, Buyer shall notify Ricochet, on behalf of
Sellers, in writing of any such Alleged Adverse Matters. For purposes hereof
"material" means (i) as to each Alleged Adverse Matter a value or effect net to
Sellers' interest in the Properties greater than Twenty Thousand Dollars (US
$20,000) and (ii) as to all Alleged Adverse Matters a value or effect net to
Sellers' interest in the Properties greater than One Hundred Thousand Dollars
(US $100,000) in the aggregate. Buyer's notice of Alleged Adverse Matters shall
include a description and full explanation of each such matter being claimed and
a value which Buyer in good faith attributes to such matter. Sellers may
undertake to satisfy some, all or none of Buyer's Alleged Adverse Matters at
Sellers' sole cost and expense. Buyer and Sellers shall meet at least three (3)
Business Days prior to the Closing Date in an attempt to mutually agree on a
proposed resolution with respect to any Alleged Adverse Matters which remain
uncured. For all Alleged Adverse Matters which are established by agreement of
the parties or pursuant to the arbitration procedures established herein and not
otherwise resolved by Sellers prior to Closing, there shall be a reduction in
the Purchase Price equal to the amount or value thereof, as agreed by the
parties or decided by arbitration, and an adjustment therefor shall be made in
the preliminary Closing statement or in the Final Accounting Statement, as
appropriate. If the parties cannot reach resolution of Alleged Adverse Matters
within the time period specified above, Closing shall not be delayed, postponed
or canceled, but either party has the right, exercisable within sixty (60) days
after the Closing Date, to refer the same to arbitration in accordance with
Article 13. Subject to the terms of Article 13, the decision of the arbitrators
regarding such dispute over Alleged Adverse Matters shall be final as between
the parties.
4.3 Adjustment of Purchase Price for Title Defects. As soon as reasonably
practicable after the Examination Period in Section 4.1, but in no event later
than ten (10) Business Days prior to the Closing Date, Buyer shall notify
Ricochet, on behalf of Sellers, in writing of any Properties which are subject
to Alleged Title Defects and/or whose net revenue interest and/or working
interest is/are less than or greater than that amount specified on Exhibit A
(collectively, the "Title Adjustments"). Sellers also shall promptly notify
Buyer in writing of any such instances of which Sellers become aware. Notice of
Title Defects or Title Adjustments shall include a description and full
8
explanation of each Title Defect and Title Adjustment being claimed and a value
which Buyer in good faith attributes to each. With respect to Alleged Title
Defects, Sellers may undertake to satisfy some, all or none of those raised by
Buyer, at Sellers' sole cost and expense. Buyer and Sellers shall meet at least
three (3) Business Days prior to the Closing Date in an attempt to mutually
agree on a resolution with respect to any Alleged Title Defects or Title
Adjustments which by such time have not been agreed between the parties in
writing. It is recognized that good faith differences of opinion may exist
between Buyer and Sellers in connection with Alleged Title Defects or Title
Adjustments, including without limitation, disputes as to (i) whether or not the
alleged defect constitutes a Title Defect within the meaning of this
Agreement,(ii) whether or not the magnitude of such defect is great enough that
Buyer is contractually entitled to assert such Title Defect, (iii) whether or
not the Title Defect was properly and timely asserted by Buyer pursuant to this
Article, and (iv) the appropriate upward or downward adjustment, if any, to be
made to the Purchase Price on account of such Title Defect. In determining
whether a portion of a Property contains a Title Defect, it is the intent of the
parties to include, when possible, only that portion of the Property adversely
affected. If the value properly allocated to a Title Defect cannot be determined
directly from Exhibit H because the Title Defect is included within, but does
not totally comprise the Property to which the allocated value relates, Sellers
and Buyer shall attempt to proportionately reduce the allocated value on Exhibit
H. Closing shall not be delayed, postponed or canceled because a resolution of a
Title Defect or Title Adjustment is not agreed prior to the Closing Date, except
to the extent that the Alleged Title Defect being asserted is failure of
Sellers' title in whole or in part to any portion(s) of the Properties (a
"Material Defect"). To the extent that any portion(s) of the Properties are
alleged to be affected by a Material Defect which remains on the scheduled
Closing Date uncured or otherwise unresolved by the parties, such affected
portion(s) of the Properties shall be excluded from the Properties conveyed to
Buyer at Closing and the Purchase Price shall be reduced accordingly. If the
parties cannot mutually agree on a Purchase Price adjustment for a Material
Defect, Buyer shall have the right to (i) proceed to Closing and accept the
Property with the Material Defect with no Purchase Price adjustment or (ii)
terminate this Agreement as to the Property affected by the Material Defect and
receive a Purchase Price adjustment for such Property as set forth on Exhibit H
or, where applicable, the proportionate allocated value. If any difference of
opinion regarding an Alleged Title Defect (excluding any Material Defect) or
Title Adjustment or value of the Title Defect (excluding any Material Defect) or
Title Adjustment (collectively, the "Title Defect Dispute") is not resolved by
mutual agreement of Buyer and Sellers prior to the Closing Date, then either
party has the right, exercisable within sixty (60) days after the Closing Date,
to refer the same to arbitration in accordance with Article 13, but using one
(1)mutually agreeable arbitrator who is an attorney licensed in the state in
which the Properties are located and who has at least fifteen (15) years oil and
gas title experience in such state. Subject to the terms of Article 13, the
decision of the arbitrator regarding Title Defect Dispute(s) shall be final as
between the parties.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IN NO EVENT SHALL EITHER
PARTY HAVE ANY OBLIGATIONS HEREUNDER WITH RESPECT TO ANY TITLE DEFECTS OR TITLE
ADJUSTMENTS EXCEPT TO THE EXTENT THAT (I) EACH SUCH TITLE DEFECT OR TITLE
ADJUSTMENT EXCEEDS TEN THOUSAND DOLLARS ($10,000) AND (II) ALL SUCH TITLE
DEFECTS AND TITLE ADJUSTMENTS, TOGETHER WITH THE VALUE OF ALL CASUALTY LOSSES
AND/OR TAKINGS UNDER ARTICLE 7, EXCEED IN THE AGGREGATE THE TITLE/CASUALTY
BASKET AMOUNT, AND EACH PARTY HEREBY WAIVES ALL UPWARD OR DOWNWARD ADJUSTMENTS
TO THE PURCHASE PRICE FOR TITLE DEFECTS AND/OR TITLE ADJUSTMENTS THE INDIVIDUAL
VALUE OF WHICH IS $10,000 OR LESS AND THE CUMULATIVE VALUE OF WHICH, TOGETHER
WITH THE VALUE OF ALL CASUALTY LOSSES AND/OR TAKINGS UNDER ARTICLE 7, IS LESS
THAN THE TITLE/CASUALTY BASKET AMOUNT.
4.4 WAIVER. EXCEPT FOR CLAIMS BUYER ASSERTS UNDER SELLERS' SPECIALWARRANTY
OF TITLE DESCRIBED IN SECTION 9.1 AND CLAIMS ASSERTED UNDER ARTICLE 8, ALL
ALLEGED ADVERSE MATTERS, ALLEGED TITLE DEFECTS AND TITLE ADJUSTMENTS WHICH ARE
9
NOT RAISED BY BUYER WITHIN THE TIME PERIODS PROVIDED IN SECTIONS 4.2 AND 4.3 OR
WHICH ARE RAISED AND NOT THEREAFTER SUBMITTED TO ARBITRATION IN ACCORDANCE WITH
SUCH SECTIONS SHALL BE DEEMED WAIVED BY BUYER FOR ALL PURPOSES AND SHALL
CONSTITUTE PERMITTED ENCUMBRANCES, AND BUYERSHALL HAVE NO RIGHT TO SEEK AN
ADJUSTMENT TO THE PURCHASE PRICE, MAKE A CLAIM AGAINST SELLERS OR SEEK
INDEMNIFICATION FROM SELLERS ON ACCOUNT OF THE SAME. ALL UPWARD TITLE
ADJUSTMENTS WHICH ARE NOT RAISED BY SELLERS WITHIN THE TIME PERIOD PROVIDED IN
SECTION 4.3 OR WHICH ARE RAISED AND NOT THEREAFTER SUBMITTED TO ARBITRATION IN
ACCORDANCE WITH SUCH SECTION SHALL BE DEEMED WAIVED BY SELLERS FOR ALL PURPOSES,
AND SELLERS SHALL HAVE NO RIGHT TO SEEK AN ADJUSTMENT TO THE PURCHASE PRICE,
MAKE A CLAIM AGAINST BUYER OR SEEK INDEMNIFICATION FROM BUYER ON ACCOUNT OF THE
SAME.
ARTICLE 5. INSPECTION OF PROPERTIES
Prior to entering into this Agreement, Ricochet, on behalf of Sellers, has
allowed Buyer access to the Properties for the purpose of conducting a physical
and environmental inspection thereof, and Buyer represents that it is satisfied
with the condition of the Properties.
ARTICLE 6. ACCOUNTING
6.1 Revenues, Expenses and Capital Expenditures. All Hydrocarbons produced
prior to the Effective Time (irrespective of whether payment for the same has
been made or received) which are attributable to the Properties shall belong to
Sellers, and all such Hydrocarbons produced from and after the Effective Time
shall belong to Buyer. Sellers shall be entitled to all revenues and related
accounts receivable attributable to the ownership or operation of the
Properties, and shall be responsible for all costs and expenses and related
accounts payable attributable to the ownership or operation of the Properties,
to the extent they relate to the time prior to the Effective Time. Buyer shall
be entitled to all revenues and related accounts receivable attributable to the
ownership or operation of the Properties, and shall be responsible for all costs
and expenses and related accounts payable attributable to the ownership or
operation of the Properties, to the extent they relate to the time from and
after the Effective Time. The actual amounts or values associated with the above
shall be accounted for in the Preliminary Closing Statement, if possible, or in
the Final Accounting Settlement. Buyer shall assume Sellers' suspense funds
associated with the acquired Properties as of the Effective Time, and these
funds shall be accounted for in the Final Accounting Settlement.
6.2 Taxes. All taxes and assessments, including without limitation, excise,
ad valorem, property, production and severance taxes and any other federal,
state and local taxes and assessments attributable to the ownership or operation
of the Properties prior to the Effective Time shall remain Sellers'
responsibility, and all deductions, credits and refunds pertaining to the
aforementioned taxes and assessments, no matter when received, shall belong to
Sellers. All taxes and assessments, including without limitation, excise, ad
valorem, property, production and severance taxes and any other federal, state
and local taxes and assessments attributable to the ownership or operation of
the Properties after the Effective Time shall be Buyer's responsibility, and all
deductions, credits and refunds pertaining to the aforementioned taxes and
assessments, no matter when received, shall belong to Buyer. The actual amounts
or values associated with the above, if any, shall be accounted for in the Final
Accounting Settlement. The parties agree that the transaction contemplated
herein is an occasional sale of assets by Sellers in which Sellers do not trade
in the ordinary course of its business. Accordingly, the parties will take
commercially reasonable actions to establish the occasional sale exemption from
any sales tax associated with the transaction contemplated herein.
Notwithstanding the foregoing, Buyer shall be solely responsible for all
transfer, sales, use or similar taxes resulting from or associated with the
transaction contemplated under this Agreement.
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6.3 Obligations and Credits. Any and all prepaid insurance premiums,
utility charges, taxes, rentals and any other prepays, to the extent applicable
to periods of time after the Effective Time and to the extent attributable to
the Properties shall be reimbursed to Sellers by Buyer; and accrued payables
applicable to periods of time prior to the Effective Time, if any, and
attributable to the Properties shall be the responsibility of Sellers. The
actual amounts or values associated with the above shall be accounted for in the
Final Accounting Settlement.
6.4 Gas Imbalances. Sellers' estimate of the aggregate gas imbalance as of
the Effective Time for all the Properties (cumulative working interests), is set
forth for each of the Properties on Exhibit I. On or before three (3) Business
Days prior to the Closing Date, Sellers shall provide Buyer with a revised gas
imbalance schedule for all the Properties as of the Effective Time if there is
any change from that set forth in Exhibit I. There shall be a Purchase Price
adjustment at Closing for the volumetric difference in the estimated and revised
imbalance calculated on Sellers' net revenue interest at a price of [$4.00] per
mcf. To the extent that there is any difference between Sellers' actual
aggregate gas imbalance as of the Effective Time and the imbalance position
settled at Closing, then an adjustment shall be made at the [$4.00] per net mcf
rate in the Final Accounting Settlement. There shall be no further gas imbalance
adjustments after the Final Settlement Date. In the event of a Title Defect
affecting all or a portion of the Properties, the aggregate gas imbalance shown
above shall be adjusted to take into account the affected Property. Any Purchase
Price adjustments for gas imbalances shall be made only on those Properties
purchased by Buyer.
6.5 Miscellaneous Accounting.
6.5.1 A Preliminary Closing Statement will be prepared for Closing, as
provided in Section 16.1.
6.5.2 In addition to the items set forth in Sections 6.1 and 6.2, any other
amounts due between Buyer and Sellers related to the ownership or operation of
the Properties shall be accounted for in the Final Accounting Settlement.
6.6 Final Accounting Settlement. As soon as reasonably practicable, but in
no event later than ninety (90) Days after Closing, Sellers shall deliver to
Buyer a post-Closing statement setting forth a detailed final calculation of all
post-Closing adjustments applicable to the period between the Effective Time and
the Closing Date ("Final Accounting Settlement"). As soon as reasonably
practicable, but in no event later than thirty (30) Days after Buyer receives
the post-Closing statement, Buyer shall deliver to Sellers a written report
containing any changes Buyer proposes to be made to such statement. As soon as
reasonably practicable, but in no event later than thirty (30) days after
Sellers receive Buyer's proposed changes to the post-Closing statement, the
parties shall meet and undertake to agree on the post-Closing adjustments. If
the parties fail to agree on the post-Closing adjustments, resolution shall be
handled in accordance with Section 6.8. The date upon which all amounts
associated with the Final Accounting Settlement are agreed to by the parties,
whether by decision of the Accounting Referee or otherwise, shall be herein
called the "Final Settlement Date". Any amounts owed by either party to the
other as a result of such post-Closing adjustments shall be paid within five (5)
Business Days after the Final Settlement Date. The adjustments to the Purchase
Price under this Article 6 and the payments under this Section 6.6 shall not be
limited by or applied against the deductible amounts set forth in Article
8hereof.
6.7 Post-Final Accounting Settlement. Any revenues received or costs and
expenses paid by Buyer after the Final Accounting Settlement which are
attributable to the ownership or operation of the Properties prior to the
Effective Time shall be billed to or reimbursed to Sellers, as appropriate. Any
revenues received or costs and expenses paid by Sellers after the Final
Accounting Settlement which are attributable to the ownership or operation of
the Properties after the Effective Time shall be billed to or reimbursed to
Buyer, as appropriate.
11
6.8 Audit Rights. In order to verify the information provided by the
parties under this Article 6, Buyer and Sellers shall each have the right to
conduct, at such party's sole expense, an audit of the other party's records
relating thereto for a period of six (6) months after the Closing Date.
OBJECTIONS OR EXCEPTIONS WHICH ARE NOT RAISED WITHIN SUCH SIX MONTH AUDIT
PERIODSHALL BE CONCLUSIVELY DEEMED TO BE WAIVED BY THE PARTIES FOR ALL PURPOSES,
ANDNEITHER PARTY SHALL HAVE THE RIGHT TO MAKE A CLAIM AGAINST THE OTHER PARTY
ORSEEK INDEMNIFICATION OR REIMBURSEMENT FROM THE OTHER PARTY ASSOCIATED WITH
THESAME. If within fifteen (15) Days after receiving the results of a party's
audit conducted in accordance with this Article, the parties still cannot reach
agreement, the disputed items shall be resolved by submitting the same to a firm
of independent accountants mutually acceptable to the parties (the "Accounting
Referee"). The Accounting Referee shall be instructed to resolve the accounting
dispute(s) within thirty (30) Days after having the relevant materials submitted
to it for review. The decision of the Accounting Referee shall be binding and
non-appealable by the parties. The fees and expenses associated with the
Accounting Referee shall be borne equally by Buyer and Sellers.
ARTICLE 7. CASUALTY AND CONDEMNATION
If a substantial part of the Properties shall be (a) destroyed prior to
Closing by a Casualty Loss, or (b) taken in condemnation or if proceedings for
such purposes shall be pending (collectively referred to as a "Taking"); then
either Buyer or Sellers may terminate this Agreement prior to the Closing. For
the purpose of this Article 7, the term "substantial" shall be defined as ten
percent (10%) of the unadjusted Purchase Price. If either party terminates this
Agreement in accordance with this Section, neither party shall have any further
obligations, except as provided in this Article and in Section 15.2.1.
If neither party terminates this Agreement, this Agreement shall remain in
full force and effect, and Sellers and Buyer shall attempt to agree on a
reduction in the Purchase Price, reflecting the reduction in the value of the
Properties affected by the Casualty Loss and/or Taking. If the parties cannot
agree on a reduction, the Sellers' good faith calculation shall be used for
purposes of Closing. Notwithstanding anything herein to the contrary, in no
event shall either party have any obligations hereunder with respect to any
Casualty Loss and/or Taking except to the extent that the value of all such
Casualty Losses and/or Takings, together with the amount of all Title Defects
and/or Title Adjustments allowed under Section 4.3, exceed in the aggregate the
Title/Casualty Basket Amount, and Buyer hereby waives all downward adjustments
to the Purchase Price for all Casualty Losses and/or Takings the cumulative
value of which (together with the amount of all Title Defects and/or Title
Adjustments allowed under Section 4.3) is less than the Title/Casualty Basket
Amount. Unless otherwise agreed by the parties, Sellers shall retain any and all
sums paid to Sellers, unpaid awards, insurance proceeds and other payments
associated with or attributable to Casualty Losses and/or Takings.
If there is a dispute over the value of any Casualty Loss and/or Taking,
Buyer may submit the matter to arbitration in accordance with Article 13 within
ninety (90) Days after Closing, or if a party terminates this Agreement under
this provision and the other party disputes the party's right to terminate
hereunder, the disputing party may submit the matter to arbitration in
accordance with Article 13 within sixty (60) Days after the date which had been
scheduled for Closing. IF BUYER DISPUTES THE PURCHASE PRICE ADJUSTMENT FOR ANY
CASUALTY LOSS AND/OR TAKING OR A PARTY DISPUTES TERMINATION, AND BUYER OR THE
DISPUTING PARTY, AS APPLICABLE, DOES NOT INITIATE AN ARBITRATION PROCEEDING TO
RESOLVE THE MATTER WITHIN THE APPLICABLE TIME PERIODS SPECIFIED IN THE FOREGOING
SENTENCE, SUCH PARTY IN EITHER CASE SHALL BE DEEMEDTO HAVE WAIVED ITS RIGHTS
WITH RESPECT TO SUCH DISPUTE.
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ARTICLE 8. INDEMNITIES
8.1 SELLERS' INDEMNITY OBLIGATIONS (EXCLUDING ENVIRONMENTAL CLAIMS). EXCEPT
FOR ENVIRONMENTAL CLAIMS WHICH SHALL BE HANDLED IN ACCORDANCE WITH SECTION 8.3,
PROVIDED THAT THE CLOSING OCCURS, SELLERS SHALL RELEASE BUYER AND BUYER'S
AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS AND EMPLOYEES (COLLECTIVELY,
THE "BUYER GROUP") FROM AND SHALL FULLY PROTECT, INDEMNIFY, AND DEFEND BUYER
GROUP FROM AND AGAINST ANY AND ALL CLAIMS AND ANY AND ALL OCCURRENCES AND
CONDITIONS WHICH WOULD CONSTITUTE CLAIMS BUT WHICH ARE ASSERTED BY SELLERS,
RELATING TO, ARISING OUT OF, OR CONNECTED WITH (I) THE BREACH BY SELLERS OF THE
REPRESENTATIONS CONTAINED IN ARTICLE 10 HEREOF, (II) THE MATTERS SET FORTH ON
EXHIBIT G AND (III) SELLERS'OWNERSHIP OR OPERATION OF THE PROPERTIES PRIOR TO
THE EFFECTIVE TIME, REGARDLESS OF ANY NEGLIGENCE OF ACT OR OMISSION BY BUYER
GROUP; PROVIDED, HOWEVER, THAT, EXCEPT WITH RESPECT TO THE MATTERS DESCRIBED ON
EXHIBIT G, PROPER NOTICE UNDER SECTION 8.5 SHALL HAVE BEEN SUBMITTED TO SELLERS
WITHIN NINE (9) MONTHS AFTER THE CLOSING DATE, AND FURTHER PROVIDED THAT BUYER
SHALL BEAR SOLE RESPONSIBILITY FOR THE COSTS ASSOCIATED WITH ALL SUCH CLAIMS (IN
AGGREGATE) UP TO EIGHTY FIVE THOUSAND DOLLARS (US $85,000). WITH RESPECT TO THE
MATTERS DESCRIBED ON EXHIBIT G, THERE SHALL BE NO TIME LIMIT FOR BUYER TO ASSERT
A CLAIM FOR INDEMNITY AND BUYER SHALL NOT BEAR RESPONSIBILITY FOR ANY OF THE
COSTS ASSOCIATED WITH SUCH MATTERS.
8.2 BUYER'S INDEMNITY OBLIGATIONS (EXCLUDING ENVIRONMENTAL CLAIMS). EXCEPT
FOR ENVIRONMENTAL CLAIMS WHICH SHALL BE HANDLED IN ACCORDANCE WITH SECTION 8.3,
PROVIDED THAT THE CLOSING OCCURS, BUYER SHALL RELEASE SELLERS AND SELLERS'
AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS AND EMPLOYEES (COLLECTIVELY,
THE "SELLER GROUP") FROM AND SHALL FULLY PROTECT, INDEMNIFY, AND DEFEND THE
SELLER GROUP FROM AND AGAINST ANY AND ALL CLAIMS AND ANY AND ALL OCCURRENCES AND
CONDITIONS WHICH WOULD CONSTITUTE CLAIMS BUT WHICH ARE ASSERTED BY BUYER
RELATING TO, ARISING OUT OF, OR CONNECTED WITH (I) THE BREACH BY BUYER OF THE
REPRESENTATIONS CONTAINED IN ARTICLE 11 HEREOF, (II) THE ASSUMED OBLIGATIONS AND
(III) THE OWNERSHIP OR OPERATION OF THE PROPERTIES (A) PERTAINING TO THE PERIOD
AFTER THE EFFECTIVE TIME, AND (B) PERTAINING TO THE PERIOD PRIOR TO THE
EFFECTIVE TIME, UNLESS SUCH CLAIMS OR OCCURRENCES AND CONDITIONS SHALL HAVE BEEN
SUBMITTED TO SELLERS IN ACCORDANCE WITH THE NOTICE PROVISIONS HEREOF WITHIN NINE
(9) MONTHS AFTER THE CLOSING DATE AND ARE IN THE AGGREGATE GREATER THAN EIGHTY
FIVE THOUSAND DOLLARS (US $85,000). THIS INDEMNITY SHALL APPLY REGARDLESS OF ANY
NEGLIGENCE OF ACT OR OMISSION BY SELLER GROUP.
8.3 ENVIRONMENTAL CLAIMS. BUYER SHALL RELEASE SELLER GROUP AND SHALL FULLY
PROTECT, INDEMNIFY, AND DEFEND SELLER GROUP FROM AND AGAINST ANY AND ALL
ENVIRONMENTAL CLAIMS AND ANY AND ALL OCCURRENCES AND CONDITIONS WHICH WOULD
CONSTITUTE ENVIRONMENTAL CLAIMS BUT WHICH ARE ASSERTED BY BUYER, RELATING TO,
ARISING OUT OF OR CONNECTED WITH THE OWNERSHIP OR OPERATION OF THE PROPERTIES
(I) PERTAINING TO THE PERIOD AFTER THE EFFECTIVE TIME, AND (II) PERTAINING TO
THE PERIOD PRIOR TO THE EFFECTIVE TIME, UNLESS SUCH ENVIRONMENTAL CLAIMS OR
OCCURRENCES AND CONDITIONS SHALL HAVE BEEN SUBMITTED TO SELLERS IN ACCORDANCE
WITH THE NOTICE PROVISIONS HEREOF WITHIN NINE (9) MONTHS AFTER THE CLOSING DATE
13
AND ARE IN THE AGGREGATE GREATER THAN EIGHTY FIVE THOUSAND DOLLARS (US $85,000),
IN WHICH CASE SELLERS SHALL INDEMNIFY BUYER WITH RESPECT TO SUCH ENVIRONMENTAL
CLAIMS AS PROVIDED IN SECTION 8.1 ABOVE.
8.4 Asbestos and NORM. The parties acknowledge that the Properties may
contain asbestos and/or NORM, and that special procedures may be required for
the assessment, remediation, removal, transportation or disposal of asbestos and
NORM. Buyer agrees to assume any and all liability associated with or
attributable to the assessment, remediation, removal, transportation and
disposal of the asbestos or NORM associated with or attributable to the
Properties and shall conduct said activities in accordance with all applicable
Laws.
8.5 Notice and Cooperation. If a Claim is asserted against a party for
which the party would be liable under the provisions of this Agreement, it is a
condition precedent to the indemnifying party's obligations hereunder that the
indemnified party gives the indemnifying party written notice of such Claim
setting forth full particulars of the Claim, as known by the indemnified party,
including a copy of the Claim (if it was a written Claim.) The indemnified party
shall make a good faith effort to notify the indemnifying party within one(1)
month of receipt of a Claim and shall in all events effect such notice within
such time as will allow the indemnifying party to defend against such Claim and
no later than three (3) calendar months after receipt of the Claim by the
indemnified party. The notice of a Claim given hereunder is referred to as a
"Claim Notice."
8.6 Defense of Claims.
8.6.1 Counsel. Upon receipt of a Claim Notice, the indemnifying party may
assume the defense thereof with counsel selected by the indemnifying party and
reasonably satisfactory to the indemnified party. The indemnified party shall
cooperate in all reasonable respects in such defense. If any Claim involves
Claims with respect to which Buyer indemnifies Sellers and also Claims for which
Sellers indemnify Buyer, each party shall have the right to assume the defense
of and hire counsel for that portion of the Claim for which it has liability.
The indemnified party shall have the right to employ separate counsel in any
Claim and to participate in the defense thereof, provided the fees and expenses
of counsel employed by an indemnified party shall be at the expense of the
indemnified party unless otherwise agreed between the parties.
8.6.2 Settlement. If the indemnifying party does not notify the indemnified
party within the earlier to occur of: (a) the time a response is due in the
relevant litigation matter, or (b) three (3) calendar months after receipt of
the Claim Notice, that the indemnifying party elects to undertake the defense
thereof, the indemnified party has the right to defend, at the sole expense of
the indemnifying party, the Claim with counsel of its own choosing, subject to
the right of the indemnifying party to assume the defense of any Claim at any
time prior to settlement or final determination thereof at the indemnifying
party's sole expense. In such event, the indemnified party shall send a written
notice to the indemnifying party of any proposed settlement of any Claim, which
settlement the indemnifying party may accept or reject, in its reasonable
judgment, within thirty (30) days of receipt of such notice, unless the
settlement offer is limited to a shorter period of time in which case the
indemnifying party shall have such shorter period of time in which to accept or
reject the proposed settlement. Failure of the indemnifying party to accept or
reject such settlement within the thirty (30)-day period shall be deemed to be
its rejection of such settlement. The indemnified party may settle any matter
over the objection of the indemnifying party but shall in so doing be deemed to
have waived any right to indemnity therefor as to (and only as to) liabilities
with respect to which the indemnifying party has recognized its liability.
8.7 WAIVER OF CERTAIN DAMAGES. EACH OF THE PARTIES HEREBY WAIVES, AND
AGREES NOT TO SEEK, INDIRECT, CONSEQUENTIAL, PUNITIVE, EXEMPLARY OR SPECIAL
DAMAGES OF ANY KIND WITH RESPECT TO ANY CLAIM, OCCURRENCE, CONDITION OR DISPUTE,
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR BREACH HEREOF; PROVIDED,
HOWEVER, THAT THIS PROVISION DOES NOT DIMINISH OR AFFECT IN ANY WAY THE PARTIES'
RIGHTS AND OBLIGATIONS UNDER ANY INDEMNITIES PROVIDED FOR IN THIS AGREEMENT.
8.8. LIMITATION ON INDEMNITIES. NOTWITHSTANDING ANY PROVISIONS IN SECTIONS
8.1 AND 8.2 TO THE CONTRARY, IN NO EVENT SHALL AN INDEMNIFYING PARTY HAVE ANY
OBLIGATION OF INDEMNIFICATION TO THE OTHER PARTY, IF THE CLAIM, OCCURRENCE,
14
CONDITION OR DISPUTE FOR WHICH INDEMNITY IS SOUGHT WAS CAUSED BY THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT ON THE PART OF THE INDEMNIFIED PARTY AND/OR ITS
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, CONTRACTORS, SUBCONTRACTORS OR
AFFILIATES.
8.9. SOLE REMEDY. If the Closing occurs, the sole and exclusive remedy of
each of the Buyer Group with respect to the Properties, including this purchase
and sale, shall be pursuant to the express indemnification provisions of this
Article 8. Any and all (a) claims relating to the representations, warranties,
covenants and agreements of Sellers contained in this Agreement, (b) other
claims by Buyer pursuant to, or in connection with, this Agreement, or (c) other
claims by Buyer relating to the Properties and the purchase and sale thereof,
shall be subject and pursuant to the provisions set forth in this Article 8. If
the Closing occurs, except for claims made pursuant to the express
indemnification provisions of this Article 8, Buyer, on behalf of each of the
Buyer Group shall be deemed to have waived, to the fullest extent permitted
under applicable law, any right to contribution against Sellers or any of the
Seller Group, and any and all other rights, claims, and causes of action it may
have against Sellers or any of the Seller Group, arising under or on any
federal, state, or local statute, law ordinance, rule or regulation, common law
or otherwise.
ARTICLE 9. WARRANTIES AND DISCLAIMERS
9.1 SPECIAL WARRANTY OF TITLE. SELLERS SHALL WARRANT AND DEFEND TITLE TO
THE PROPERTIES CONVEYED TO BUYER AGAINST EVERY PERSON WHOMSOEVER LAWFULLY
CLAIMING THE PROPERTIES OR ANY PART THEREOF BY, THROUGH OR UNDER SELLERS, BUT
NOT OTHERWISE, AND SUBJECT TO THE PERMITTED ENCUMBRANCES.
9.2 DISCLAIMER - REPRESENTATIONS AND WARRANTIES. BUYER ACKNOWLEDGES AND
AGREES THAT THE PROPERTIES ARE BEING SOLD, ASSIGNED AND CONVEYED FROM SELLERS TO
BUYER "AS-IS, WHERE-IS", AND WITH ALL FAULTS IN THEIR PRESENT CONDITION AND
STATE OF REPAIR, WITHOUT RECOURSE. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, SELLERS HEREBY DISCLAIM ANY AND ALL REPRESENTATIONS AND WARRANTIES
CONCERNING THE PROPERTIES, EXPRESS, STATUTORY, IMPLIED OR OTHERWISE, INCLUDING
WITHOUT LIMITATION, ANY WARRANTY OF TITLE (EXCEPT AS SET FORTH IN SECTION 9.1),
THE QUALITY OF HYDROCARBON RESERVES, THE QUANTITY OF HYDROCARBON RESERVES, THE
AMOUNT OF REVENUES, THE AMOUNT OF OPERATING COSTS, CONDITION (PHYSICAL OR
ENVIRONMENTAL), QUALITY, COMPLIANCE WITH APPLICABLE LAWS, ABSENCE OF DEFECTS
(LATENT OR PATENT), SAFETY, STATE OF REPAIR, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, AND BUYER EXPRESSLY RELEASES SELLERS FROM THE SAME.
9.3 DISCLAIMER - STATEMENTS AND INFORMATION. EXCEPT AS EXPRESSLY SET FORTH
IN THIS AGREEMENT, SELLERS DISCLAIM ANY AND ALL LIABILITY AND RESPONSIBILITY FOR
AND ASSOCIATED WITH THE QUALITY, ACCURACY, COMPLETENESS OR MATERIALITY OF THE
RECORDS AND ANY OTHER INFORMATION PROVIDED AT ANY TIME (WHETHER ORAL OR WRITTEN)
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TO BUYER, ITS OFFICERS, AGENTS, EMPLOYEES AND REPRESENTATIVES IN CONNECTION WITH
THE TRANSACTION CONTEMPLATED HEREIN, INCLUDING WITHOUT LIMITATION, QUALITY OF
HYDROCARBON RESERVES, QUANTITY OF HYDROCARBON RESERVES, AMOUNT OF REVENUES,
AMOUNT OF OPERATING COSTS, FINANCIAL DATA, CONTRACT DATA, ENVIRONMENTAL
CONDITION OF THE PROPERTIES, PHYSICAL CONDITION OF THE PROPERTIES AND CONTINUED
FINANCIAL VIABILITY OF THE PROPERTIES, AND BUYER EXPRESSLY RELEASES SELLERS FROM
THE SAME.
ARTICLE 10. SELLERS' REPRESENTATIONS AND WARRANTIES
Each representation or warranty made herein by a Seller is made solely as
to such Seller and the Properties and not as to any other Seller. Subject to the
foregoing, each Seller (unless expressly limited to a specific Seller) hereby
represents and warrants to Buyer that on the date hereof and as of the Closing
Date:
10.1 Organization and Good Standing. Each Seller that is an organization is
duly organized, validly existing and in good standing under the Laws of the
State of Texas, and has all requisite corporate power and authority to own and
lease the Properties. Each Seller that is an organization is duly licensed or
qualified to do business in the State of Texas and is in good standing in all
jurisdictions in which the Properties are located.
10.2 Corporate Authority; Authorization of Agreement. Each Seller that is
an organization has all requisite corporate power and authority to execute and
deliver this Agreement, to consummate the transactions contemplated herein and
to perform all of the terms and conditions to be performed by it as provided for
in this Agreement. The execution and delivery of this Agreement by Sellers, the
performance by Sellers of all of the terms and conditions to be performed by it
and the consummation of the transactions contemplated herein have been duly
authorized and approved by all necessary corporate action. This Agreement has
been duly executed and delivered by Sellers and constitutes the valid and
binding obligation of Sellers, enforceable against each Seller in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency or other Laws relating to or affecting the enforcement of creditors'
rights and general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
10.3 No Violations. The execution and delivery of this Agreement by each
Seller does not, and the fulfillment and compliance with the terms and
conditions hereof and the consummation of the transactions contemplated herein,
will not:
(a) Conflict with or require the consent of any person or entity under any
of the terms, conditions or provisions of the certificate of incorporation or
bylaws of Sellers;
(b) Violate any provision of, or require any filing, consent or approval
under any Law applicable to or binding upon a Seller (assuming receipt of all
consents and approvals of governmental entities customarily obtained subsequent
to the transfers of title);
(c) Conflict with, result in a breach of, constitute a default under or
constitute an event that with notice or lapse of time, or both, would constitute
a default under, accelerate or permit the acceleration of the performance
required by, or require any consent, authorization or approval under, (i) any
mortgage, indenture, loan, credit agreement or other agreement, evidencing
indebtedness for borrowed money to which a Seller is a party or by which a
Seller is bound or (ii) any order, judgment or decree of any governmental entity
or tribal authority; or
(d) Result in the creation or imposition of any lien or encumbrance upon
the Properties.
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10.4 Absence of Certain Changes. Between the execution date hereof and the
Closing Date, there have not been and there shall not be without Buyer's prior
written consent:
(a) A sale, lease or other disposition of any material part of the
Properties;
(b) A mortgage, pledge or grant of a lien or security interest in any of
the Properties; or
(c) A contract or commitment to do any of the foregoing.
10.5 Operating Costs. To the best of Sellers' knowledge, all costs incurred
in connection with operation of the Properties have been fully paid and
discharged by Sellers, except normal expenses incurred in operating the
Properties within the previous sixty (60) Days or as to which Sellers have not
yet been billed or as to which Sellers are disputing in good faith.
10.6 Litigation and Other Disputes. Except for the matters listed on
Exhibit G (liability for which shall be retained by the affected Seller), there
is no action, suit or proceeding pending or, to the best of Sellers' knowledge,
threatened against Sellers or the Properties which would reasonably be expected
to have a material adverse effect on Buyer or Buyer's interest in the Properties
after Closing or to prevent the consummation of the transaction contemplated by
this Agreement. For purposes of this provision, "material" means an impact of
greater than Ten Thousand Dollars (US$10,000).
10.7 Bankruptcy. There are no bankruptcy, reorganization or receivership
proceedings pending, being contemplated by or, to the best of Sellers'
knowledge, threatened against Sellers.
10.8 Material Contracts. To the best of Sellers' knowledge, Exhibit F sets
forth a list of the material contracts, agreements, and commitments to which any
of the Properties are bound: (a) any agreement with any affiliate of Sellers;
(b) any agreement or contract of Sellers for the sale, exchange or other
disposition of Hydrocarbons produced from the Properties that is not cancelable
without penalty on not more than 31 days prior written notice; (c) any agreement
of Sellers to sell, lease, farm out or otherwise dispose of any of its interests
in any of the Properties other than conventional rights of reassignment; (d) any
tax partnership agreement of Sellers affecting any of the Properties; (e) any
operating agreement to which Sellers' interests in any of the Properties is
subject; (f) any agreement pursuant to which Sellers has not consented to, or
forfeited, its rights to participate in future oil and gas operations; (g) any
agreement pursuant to which Sellers have received an advance payment, prepayment
or similar deposit, and has a refund obligation, with respect to any gas or
products purchased, sold, gathered, processed or marketed by or for Sellers out
of the Properties, (h) any contract that requires Sellers to expend more
than$25,000 in any year in connection with the Properties; (i) any option to
purchase or call on the Hydrocarbons produced from the Properties; and (j) any
lease, title retention agreement, or security interest affecting any of the
Equipment.
10.9 Consents and Preferential Rights. To the best of Sellers' knowledge,
except for those consents and approvals customarily obtained subsequent to the
transfer of title, Exhibit J contains a complete and accurate list of all
consents to assignment that are required to be obtained, made or given by
Sellers for the assignment or transfer of the Properties to Buyer and all
preferential purchase rights that affect the Properties.
10.10 Compliance with Law and Permits. Except for those matters set forth
on Exhibit K hereto and such other matters as would not have a material adverse
effect on the value of the Properties, to the best of Sellers' knowledge,
Ricochet and those third parties operating any portion of the Properties, (a)
are in material compliance with all laws, rules, regulations, ordinances,
orders, decisions and decrees of all governmental authorities having
jurisdiction with respect to the Properties or the ownership or operation of any
thereof; (b) have obtained all necessary governmental permits, licenses,
17
approvals, consents, certificates and other authorizations with regard to the
ownership or operation of the Properties and have maintained the same in effect
and no material violations exist in respect of such permits, licenses,
approvals, consents, certificates or authorizations; and (c) are not aware of
any facts, conditions or circumstances in connection with, related to or
associated with the Properties or the ownership or operation of any thereof that
could reasonably be expected to give rise to any claim or assertion that
Sellers, the Properties or the ownership or operation of any thereof is not in
material compliance with any applicable law, rule, regulation, ordinance, order,
decision or decree of any governmental authority or with any term or conditions
of any applicable permit, license, approval, consent, certificate or other
authorization.
10.11 Environmental Compliance. Except for those matters set forth on
Exhibit K hereto and such other matters as would not have a material adverse
effect on the value of the Properties, to the best of Sellers' knowledge,
Ricochet and those third parties operating any portion of the Properties, (a)
have obtained and maintained in effect all environmental and health and safety
permits, licenses, approvals, consents, certificates and other authorizations
necessary for the ownership or operation of the Properties ("Environmental
Permits"); (b) are in material compliance with all applicable Environmental Laws
and with all terms and conditions of all Environmental Permits, and all prior
instances of noncompliance have been fully and finally resolved to the
satisfaction of all governmental authorities with jurisdiction over such
matters; (c) are not subject to any Environmental Claims arising from, based
upon, associated with or related to the Properties or the ownership or operation
of any thereof; (d) have not received any notice of any Environmental Claim or
any violation, noncompliance or possible noncompliance with any Environmental
Law or the terms or conditions of any Environmental Permit, arising from, based
upon, associated with or related to the Properties or the ownership or operation
of any thereof; and (e) are not otherwise aware of any facts, conditions or
circumstances in connection with, related to or associated with the Properties
or the ownership or operation of any thereof, that could reasonably be expected
to give rise to any Environmental Claim or any claim or assertion that Sellers,
the Properties or the ownership or operation thereof is not in compliance with
Environmental Laws or the terms or conditions of any Environmental Permit.
10.12 Status of Contracts. (a) All of the Material Contracts are in full
force and effect, and (b) neither Sellers nor, to the knowledge of Sellers, any
other party to the Material Contracts (i) is in breach of or default, or with
the lapse of time or the giving of notice, or both, would be in breach or
default, with respect to any of its obligations thereunder to the extent that
such breaches or defaults would have a material adverse impact on any of the
Properties or (ii) has given or threatened to give notice of any default under
or inquiry into any possible default under, or action to alter, terminate,
rescind or procure a judicial reformation of any Material Contract.
10.13 Production Burdens, Taxes, Expenses and Revenues. To the best of
Sellers' knowledge, (a) all rentals, royalties, excess royalty, overriding
royalty interests and other payments due under or with respect to the Properties
have been properly and timely paid, (b) all ad valorem, property, production,
severance and other taxes based on or measured by the ownership of the
Properties or the production of Hydrocarbons from the Properties have been
properly and timely paid, (c) all expenses payable by Sellers under the terms of
the Material Contracts have been properly and timely paid except for such
expenses as are being currently paid prior to delinquency or are being contested
in good faith in the ordinary course of business and (d) all of the proceeds
from the sale of Hydrocarbons are being properly and timely paid to Sellers by
the purchasers of production without suspension or indemnity other than standard
division order indemnities.
10.14 Production Sales Matters. Except as set forth on Exhibit L, to the
best of Sellers' knowledge, (a) none of the purchasers under any production
sales contracts is entitled to "makeup" or otherwise receive deliveries of
Hydrocarbons without paying at the time of such deliveries the full contract
price therefore by reason of payments made prior to the Effective Time; (b) none
of the purchasers under any production sales contracts has exercised any
economic out provision; (c) none of the purchasers under any production sales
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contracts has curtailed its takes of natural gas in violation of such contracts;
(d) none of the purchasers under any production sales contracts has given notice
that it desires to amend the production sales contracts with respect to price or
quantity of deliveries undertake-or-pay provisions or otherwise; and (e) Sellers
are not obligated to pay any penalties or other payments under any gas
transportation or other agreement as a result of the delivery of quantities of
gas from the Properties in excess of the contract requirements.
10.15 Capital Commitments. Exhibit M contains a complete and accurate list
as of the date of this Agreement of (a) all authorities for expenditures("AFEs")
to drill or rework wells or for capital expenditures pursuant to any of the
Material Contracts that have been proposed by any person on or after the
Effective Time, whether or not accepted by Sellers or any other person, and
(b)all AFEs and oral or written commitments to drill or rework wells or for
other capital expenditures pursuant to any of the Material Contracts that are
equal to or greater than US $25,000 and for which all of the activities
anticipated in such AFEs or commitments have not been completed by the date of
this Agreement.
10.16 Limitation on Representations. The representations contained in
Sections 10.5 through 10.15 shall survive Closing for a period of nine (9)months
after the Closing Date and shall thereupon terminate. Furthermore, the
representations contained in Sections 10.5 through 10.15 are limited in scope to
those matters that either occurred or that Sellers received actual knowledge of
during the time period extending from April 1, 2012 through the Closing Date.
10.17 Brokers. No Seller has incurred any liability, contingent or
otherwise, for brokers' or finders' fees with respect to this transaction for
which Buyer shall have any responsibility whatsoever.
ARTICLE 11. BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Sellers that on the date hereof and as of
the Closing Date:
11.1 Organization and Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Nevada and
has all requisite corporate power and authority to own and lease the Properties.
Buyer is duly licensed or qualified to do business as a foreign corporation and
is in good standing in all jurisdictions in which the Properties are located.
11.2 Corporate Authority; Authorization of Agreement. Buyer has all
requisite corporate power and authority to execute and deliver this Agreement,
to consummate the transactions contemplated herein and to perform all the terms
and conditions to be performed by it as provided for in this Agreement. The
execution and delivery of this Agreement by Buyer, the performance by Buyer of
all the terms and conditions to be performed by it and the consummation of the
transactions contemplated herein have been duly authorized and approved by all
necessary corporate action. This Agreement has been duly executed and delivered
by Buyer and constitutes the valid and binding obligation of Buyer, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency or other Laws relating to or affecting the
enforcement of creditors' rights and general principles of equity(regardless of
whether such enforceability is considered in a proceeding at law or in equity).
11.3 No Violations. The execution and delivery of this Agreement by Buyer
does not, and the fulfillment and compliance with the terms and conditions
hereof and the consummation of the transactions contemplated herein, do not:
(a) Conflict with or require the consent of any person or entity under any
of the terms, conditions or provisions of the certificate of incorporation or
bylaws of Buyer;
(b) Violate any provision of, or require any filing, consent or approval
under any Law applicable to or binding upon Buyer;
19
(c) Conflict with, result in a breach of, constitute a default under or
constitute an event that with notice or lapse of time, or both, would constitute
a default under, accelerate or permit the acceleration of the performance
required by, or require any consent, authorization or approval under, (i) any
mortgage, indenture, loan, credit agreement or other agreement evidencing
indebtedness for borrowed money to which Buyer is a party or by which Buyer is
bound, or (ii) any order, judgment or decree of any governmental entity or
tribal authority; or
(d) Result in the creation or imposition of any lien or encumbrance upon
the Properties.
11.4 SEC Disclosure. Buyer is an experienced and knowledgeable investor and
operator in the oil and gas business. Buyer is acquiring the Properties for its
own account for use in its trade or business, and not with a view toward or for
sale in connection with any distribution thereof, nor with any present intention
of making a distribution thereof within the meaning of the Securities Act of
1933, as amended.
11.5 INDEPENDENT EVALUATION. AS OF CLOSING, BUYER REPRESENTS THAT IT IS
SOPHISTICATED IN THE EVALUATION, PURCHASE, OPERATION AND OWNERSHIP OF OIL AND
GAS PROPERTIES AND THAT IN MAKING ITS DECISION TO ENTER INTO THIS AGREEMENT AND
TO CONSUMMATE THE TRANSACTION CONTEMPLATED HEREIN, BUYER HAS RELIED AND SHALL
RELY SOLELY ON SELLERS' REPRESENTATIONS CONTAINED HEREIN AND ON ITS
OWNINDEPENDENT INVESTIGATION AND EVALUATION OF THE PROPERTIES AND HAS SATISFIED
ITSELF AS TO THE PHYSICAL CONDITION AND ENVIRONMENTAL CONDITION OF THE
PROPERTIES.
11.6 BUYER'S RELIANCE. BUYER ACKNOWLEDGES AND AGREES THAT IT IS ENTITLED TO
RELY ONLY ON THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS
AGREEMENT.
11.7 Qualified Leaseholder. Buyer meets the operator designation and all
bonding requirements of the state and/or other governmental authorities in which
the Properties are located, and, after the Closing, Buyer will continue to be
able to meet such bonding requirements. Buyer is and, after the Closing, is
expected to continue to be, otherwise qualified to own the Properties. The
consummation of the transactions contemplated hereby will not cause Buyer to be
disqualified to be an owner of federal oil, gas, and mineral leases in the Gulf
of Mexico region, or to exceed any acreage limitation imposed by any law,
statute, rule or regulation. Buyer is not aware of any fact that could
reasonably be expected to cause any governmental authorities to fail to approve
the assignment of the Properties to Buyer.
11.8 Brokers. Buyer has not incurred any liability, contingent or
otherwise, for brokers' or finders' fees with respect to this transaction for
which Sellers shall have any responsibility whatsoever.
ARTICLE 12. ADDITIONAL AGREEMENTS
12.1 Covenants of Sellers. From the date hereof until Closing, without
first obtaining the consent of Buyer, Sellers have not and will not:
(a) waive any righ1t of material value relating to the Properties;
(b) convey, encumber, mortgage, pledge any of the Properties nor dispose of
any of the Properties, other than the sale of production in the ordinary course
of business and except as may be required in connection with the exercise of
preferential rights affecting the Properties;
(c) enter into, modify or terminate any contracts relating to the
Properties;
20
(d) vote to commit to any material project or material expenditure under
any operating agreement affecting the Properties or elect to participate in any
operation on the Properties requiring an expenditure of greater than Twenty Five
Thousand Dollars (US $25,000) to Sellers' interest, except to the extent
required in an emergency to protect life or property from immediate harm or
destruction; or
(e) contract or commit itself to do any of the foregoing.
12.2 Notice of Loss. From the date hereof until Closing, Sellers shall
promptly notify Buyer of any loss or damage to the Properties, or any part
thereof, known to Sellers and in the aggregate exceeding Ten Thousand Dollars
(US $10,000) net to Sellers' interest.
12.3 Subsequent Operations. Sellers make no representations or warranties
to Buyer as to the transferability or assignability of operatorship of the
Properties. Buyer acknowledges that the rights and obligations associated with
operatorship of the Properties are governed by the applicable agreement(s) and
that operatorship of the Properties shall be decided in accordance with the
terms of said agreement(s); provided, however, Sellers agree to provide
reasonable assistance to Buyer (at no expense to Sellers) in connection with
Buyer's effort to be designated as operator of the Properties.
12.4 Buyer's Assumption of Obligations. Except as otherwise expressly
provided in this Agreement, Buyer agrees to assume and shall timely perform and
discharge all duties and obligations of Sellers insofar as the same relate to or
arise out of Sellers' interest in the Properties relating to the period of time
after the Closing, including, without limitation, all duties and obligations of
Sellers under all the Material Contracts (the "Assumed Obligations"), and Buyer
shall indemnify and hold Sellers harmless from and against any and all
liabilities of whatsoever nature arising out of Buyer's failure to properly
perform or discharge the Assumed Obligations, except to the extent the same
relate to the breach of any representation or warranty of Sellers as set forth
in and limited by this Agreement, or the breach of, or failure to perform or
satisfy any covenant of Sellers set forth in this Agreement. Buyer agrees to
accept full responsibility for Sellers' proportionate share of the costs and
expenses associated with or attributable to the plugging and abandonment of all
wells, and the removal of all equipment, platforms and facilities conveyed to
Buyer under this Agreement and the remediation, restoration and cleanup of the
Properties. In conducting the duties and obligations contained in this
Section12.4, Buyer shall comply with the applicable Laws of all governmental
entities and tribal authorities having appropriate jurisdiction. Buyer shall not
assume(i) any duties, obligations or liabilities with respect to or relating to
any matter disclosed under, or that should have been disclosed, under Exhibit G
and(ii) any obligation of Sellers to pay or discharge any refunds, including
interest and penalties, if any, that may be imposed by any governmental
authority arising from the sale of Hydrocarbons and operation of the Properties
prior to the Effective Time.
12.5 Records. Within thirty (30) Days after Closing, Sellers shall make
available to Buyer all Records which are maintained by Sellers to be picked up
at the offices of Ricochet, provided, however, that Sellers are entitled to
retain copies of any or all such Records. Buyer agrees to maintain the Records
received from Sellers in accordance herewith for a period of six (6) years after
the Closing Date and to afford Sellers reasonable access to the Records as
requested by Sellers. If Buyer desires to dispose of any such Records prior to
the end of the six (6) year period, Buyer shall offer in writing to Sellers to
deliver such Records to Sellers; if Sellers elect not to receive such Records or
fail to respond to Buyer's notice within thirty (30) Business Days after receipt
thereof, then Buyer may dispose of such Records within its discretion.
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ARTICLE 13. DISPUTE RESOLUTION
13.1 Independent Expert. Any dispute arising under this Agreement that
cannot be resolved informally by agreement of the parties, including disputes
regarding title issues, environmental issues, or valuations of the Properties or
revisions thereto (each a "DISPUTE"), shall be referred to and resolved by
binding arbitration by an independent expert appointed in accordance with this
Section 13.1 ( the "INDEPENDENT EXPERT"), who shall serve as sole arbitrator.
The Independent Expert shall be appointed by mutual agreement of Buyer and
Ricochet from among candidates with experience and expertise in the area that is
the subject of such Dispute, and failing such agreement, such Independent Expert
for such Dispute shall be selected as would a single arbitrator in accordance
with the Rules (as hereinafter defined.) Disputes to be resolved by an
Independent Expert shall be resolved in accordance with mutually agreed
procedures and rules and failing such agreement, in accordance with the rules
and procedures for arbitration provided in Section 13.2. The Independent Expert
shall be instructed by Buyer and Ricochet to resolve such Dispute as soon as
reasonably practicable in light of the circumstances. The decision and award of
the Independent Expert shall be binding upon the Parties as an award under the
Federal Arbitration Act and final and non-appealable to the maximum extent
permitted by law, and judgment thereon may be entered in a court of competent
jurisdiction and enforced by any Party as a final judgment of such court.
13.2 Rules and Procedures.
13.2.1 Arbitration of Disputes shall be conducted pursuant to the Federal
Arbitration Act, except as expressly provided otherwise in this Agreement. The
validity, construction, and interpretation of this Section 13.2, and all
procedural aspects of the arbitration conducted pursuant hereto shall be decided
by the Independent Expert. The arbitration shall be administered by the American
Arbitration Association (the "AAA"), and shall be conducted pursuant to the
Commercial Arbitration Rules of the AAA (the "Rules"), except as expressly
provided otherwise in this Agreement. The arbitration proceedings shall be
subject to any optional rules contained in the Rules for emergency measures and,
in the case of Disputes with respect to amounts in excess of $1 million,
optional rules for large and complex cases.
13.2.2 All arbitration proceedings hereunder shall be conducted in San
Antonio, Texas or such other mutually agreeable location.
13.2.3 In deciding the substance of the Dispute, the Independent Expert
shall refer to the substantive laws of the State of Texas for guidance
(excluding choice-of-law principles that might call for the application of the
laws of another jurisdiction). Matters relating to arbitration shall be governed
by the Federal Arbitration Act. The parties agree that the Independent Expert
shall not have the authority to grant or award indirect, consequential,
punitive, exemplary or special damages.
13.2.4 The fees and expenses of the Independent Expert shall be borne
equally by Buyer and Sellers, but the decision of the Independent Expert may
include such award of the Independent Expert's fees and expenses and of other
costs and attorneys' fees as the Independent Expert determines appropriate
(provided that such award of costs and fees may not exceed the amount of such
costs and fees incurred by the winning party in the arbitration).
13.2.5 The decision and award of the Independent Expert shall be binding
upon the Parties and final and non-appealable to the maximum extent permitted by
law, and judgment thereon may be entered in a court of competent jurisdiction
and enforced by any Party as a final judgment of such court.
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ARTICLE 14. CONDITIONS PRECEDENT TO CLOSING
14.1 Conditions Precedent to Sellers' Obligation to Close. Sellers shall be
obligated to consummate the sale of the Properties as contemplated by this
Agreement on the Closing Date, provided the following conditions precedent have
been satisfied or have been waived by Sellers:
14.1.1 All representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects at and as of
Closing as though such representations and warranties were made at and as of
such time;
14.1.2 Buyer shall have complied in all material respects with all
obligations and conditions contained in this Agreement to be performed or
complied with by Buyer at or prior to the Closing; and
14.1.3 No suit, action or other proceedings shall be pending before any
court or governmental entity in which it is sought by a person or entity (other
than the parties hereto or any of their Affiliates, officers, directors, or
employees) to restrain, enjoin or otherwise prohibit the consummation of the
transactions contemplated by this Agreement, or to obtain substantial damages in
connection with the transaction contemplated herein, nor shall there be any
investigation by a governmental entity pending which might result in any such
suit, action or other proceedings seeking to restrain, enjoin or otherwise
prohibit the consummation of the transaction contemplated by this Agreement.
14.1.4 This Agreement shall not have been terminated pursuant to the
provisions in Article 15 or otherwise contained herein.
14.2 Conditions Precedent to Buyer's Obligation to Close. Buyer shall be
obligated to consummate the purchase of the Properties as contemplated by this
Agreement on the Closing Date, provided that the following conditions precedent
have been satisfied or have been waived by Buyer:
14.2.1 All representations and warranties of Sellers contained in this
Agreement shall be true and correct in all material respects at and as of
Closing as though such representations and warranties were made at and as of
such time;
14.2.2 Sellers shall have complied in all material respects with all
obligations and conditions contained in this Agreement to be performed or
complied with by Sellers at or prior to the Closing; and
14.2.3 No suit, action or other proceedings shall be pending before any
court or governmental entity in which it is sought by a person or entity (other
than the parties hereto or any of their Affiliates, officers, directors, or
employees) to restrain, enjoin or otherwise prohibit the consummation of the
transactions contemplated by this Agreement, or to obtain substantial damages in
connection with the transaction contemplated herein, nor shall there be any
investigation by a governmental entity pending which might result in any such
suit, action or other proceedings seeking to restrain, enjoin or otherwise
prohibit the consummation of the transaction contemplated by this Agreement.
14.2.4 This Agreement shall not have been terminated pursuant to the
provisions in Article 15 or otherwise contained herein.
ARTICLE 15. TERMINATION
15.1 Grounds for Termination. This Agreement may be terminated at any time
prior to Closing:
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15.1.1 By the mutual written agreement of Sellers and Buyer;
15.1.2 By Sellers if Buyer fails or refuses to Close in breach of this
Agreement or if the conditions precedent to Sellers' obligation to Close are
unmet at the time set for Closing;
15.1.3 By Buyer if Sellers fail or refuse to Close in breach of this
Agreement or if the conditions precedent to Buyer's obligation to Close are
unmet at the time set forth Closing;
15.1.4 By either Sellers or Buyer pursuant to Article 7;
15.1.5 By Sellers if the Purchase Price would be adjusted downward by ten
percent (10%) or more or by Buyer if the Purchase Price would be adjusted upward
by ten percent (10%) or more in accordance with Article 4; or
15.1.6 By either party (provided the terminating party is not then in
breach of any provisions of this Agreement), if Closing shall not have occurred
within sixty (60) days following the originally scheduled Closing Date.
15.2 Effect of Termination.
15.2.1 Except as provided in Section 15.2.2 below, if this Agreement is
terminated in accordance with Section 15.1, such termination shall be without
liability of either party or any Affiliate, officer, director, or employee of
such party, except for Sellers' obligation (if applicable) to return the Earnest
Money Deposit, as provided in Article 3, the obligations to arbitrate any
dispute arising from such termination and the obligations provided in Sections
15.3, 15.4, 15.5, and 17.3.
15.2.2 If this Agreement is terminated because of Buyer's failure or
refusal to Close in breach of this Agreement or because the conditions precedent
to Sellers' obligation to Close provided in Section 14.1 are unmet at the time
set for Closing, Sellers shall be entitled to retain the Earnest Money Deposit
as liquidated damages to reimburse Sellers for out-of-pocket fees and expenses
incurred in connection with the transactions contemplated by this Agreement,
unless any of the conditions precedent to Buyer's obligation to Close provided
in Section 14.2 are also unmet at the time set for Closing, in which case
Sellers shall return the Earnest Money Deposit to Buyer.
15.3 Dispute Over Right to Terminate. If there is a dispute between the
parties over either party's right to terminate this Agreement under Section15.1,
Closing shall not occur, as scheduled. The party which disputes the other
party's right to terminate may initiate arbitration proceedings in accordance
with Article 13 within thirty (30) Days after the date on which Closing was
scheduled to occur and, if arbitration is so initiated, the dispute will be
resolved through such arbitration proceeding. IF THE PARTY WHICH DISPUTES THE
TERMINATION RIGHT DOES NOT INITIATE AN ARBITRATION PROCEEDING TO RESOLVE THE
DISPUTE WITHIN THE TIME PERIOD SPECIFIED HEREINABOVE, SUCH PARTY SHALL BE
DEEMEDTO HAVE WAIVED ITS RIGHT TO OBJECT TO SUCH TERMINATION.
15.4 Return of Documents. If this Agreement is terminated, each party shall
return to the party which owns or is otherwise entitled thereto all books,
records, maps, files, papers and other property in such party's possession
relating to the transaction contemplated by this Agreement.
24
15.5 Confidentiality. Notwithstanding the termination of this Agreement or
any other provision of this Agreement to the contrary, the terms of the
Confidentiality Agreement (as defined in Section 4.1) shall remain in full force
and effect.
ARTICLE 16. THE CLOSING
16.1. Preliminary Closing Statement. At least five (5) Days prior to the
Closing Date, Ricochet shall provide Buyer with a Preliminary Closing Statement
setting forth the adjusted Purchase Price and wiring instructions designating
the account or accounts to which the adjusted Purchase Price is to be delivered
in accordance with Section 16.3.2. Within two (2) Business Days after receipt of
the Preliminary Closing Statement from Ricochet, Buyer shall furnish Ricochet
with Buyer's requested adjustments to such statement. Ricochet and Buyer shall
attempt in good faith to resolve any differences between them, but if the
parties are unable to agree, Sellers' Preliminary Closing Statement shall be
used for Closing.
16.2 Obligations of Sellers at Closing. At the Closing, Sellers shall
deliver to Buyer, unless waived by Buyer, the following:
16.2.1 Documents substantially in the form of the Assignment and Bill of
Sale attached hereto as Exhibit C, conveying all of Sellers' right, title and
interests in and to the Properties. The Assignment and Bill of Sale shall be
executed and acknowledged in three (3) multiple originals or such greater number
as agreed between the parties;
16.2.2 Evidence that all consents and approvals prerequisite to the sale
and conveyance of the Properties (except for (i) consents to assignment that
cannot be unreasonably withheld, or words of similar effect, and for which the
third party has not objected to the transfer or affirmatively stated that the
consent to assignment will not be forthcoming; and (ii) consents and approvals
of governmental entities customarily obtained subsequent to the transfer of
title or with respect to Properties which have been withdrawn from the
transaction in accordance with the terms hereof) have been obtained, as well as
evidence of waiver or lapse of any unexercised preferential purchase rights
applicable to the Properties;
16.2.3 A Certificate substantially in the form of Exhibit D, executed by an
authorized officer of each Seller, certifying as to the matters specified in
Section 14.2.1;
16.2.4 A Non-Foreign Affidavit substantially in the form of Exhibit E,
executed by an authorized officer of each Seller;
16.2.5 Change of operator forms on those Properties operated by any Seller
and, subject to the other provisions of this Agreement, reasonably cooperate to
have operations transferred to Buyer (and Buyer shall file all such change of
operator forms with the Railroad Commission of Texas and provide filed copies of
same to Ricochet within 30 days after the Closing);
16.2.6 Duly executed and acknowledged releases in recordable form of all
mortgages, deeds of trust and security agreements that encumber the Properties;
and
16.2.7 Such other instruments as are necessary to carry out Sellers'
obligations under this Agreement.
16.3 Obligations of Buyer at Closing. At the Closing, Buyer shall deliver
to Sellers, unless waived by Sellers, the following:
25
16.3.1 The Assignment and Bill of Sale referred to in Section 16.2.1,
executed and properly acknowledged (with a recorded copy delivered to Ricochet
within 30 days after Buyer records same in the Frio County public records);
16.3.2 The adjusted Purchase Price (calculated as set forth in Section
16.5), less the Earnest Money Deposit, by wire transfer in accordance with
Article 3;
16.3.3 A Certificate substantially in the form of Exhibit D, executed by an
authorized representative of Buyer, certifying as to the matters specified in
Section 14.1.1.
16.3.4 Evidence of compliance with all requirements, if any, of the
Applicable regulatory authorities in the states in which the Properties are
located for the posting of plugging or other applicable bonds relating to the
ownership or operation of the Properties; and
16.3.5 Such other instruments as are necessary to carry out Buyer's
obligations under this Agreement.
16.4 Site of Closing. Closing shall be held in Ricochet's offices in San
Antonio, Texas or any other location mutually agreed in writing by Sellers and
Buyer.
16.5 Adjustments to Purchase Price at the Closing.
16.5.1 At the Closing, the Purchase Price shall be increased by the
following amounts:
(i) the amount, as of the Effective Time, of all prepaid lease
obligations and prepaid ad valorem, property or similar taxes and
assessments, in each case, based upon or measured by ownership of the
Properties, insofar as such prepaid obligations and taxes relate to
periods of time after the Effective Time;
(ii) an amount equal to all costs and expenses (including rentals,
royalties, production and severance taxes, capital expenditures, lease
operating expenses and overhead) paid by Sellers that are attributable
to the Properties and attributable to the period of time from and
after the Effective Time;
(iii) the value of all merchantable liquid Hydrocarbons produced prior
to the Effective Time but in storage above the sales connection or
upstream of the applicable sales meter on the basis of $90.00 per
barrel (or actual sales price per barrel, if known) multiplied by the
amount in storage in barrels as of the Effective Time; and
(iv) any other amount provided for in this Agreement or agreed upon by
Buyer and Ricochet.
16.5.2 At the Closing, the Purchase Price shall be decreased by the
following amounts:
(i) an amount equal to all unpaid ad valorem, property, production,
severance and similar taxes and assessments based upon or measured by
the ownership of the Properties that are attributable to periods of
time prior to the Effective Time, which amounts shall, to the extent
not actually assessed, be computed based on such taxes and assessments
for the preceding tax year (such amount to be prorated for the period
of Sellers' and Buyer's ownership before and after the Effective
Time);
26
(ii) an amount equal to all costs and expenses (including rentals,
royalties, production and severance taxes, capital expenditures, lease
operating expenses and overhead) paid by Buyer that are attributable
to the Properties and attributable to the period of time prior to the
Effective Time;
(iii) an amount equal to all revenues collected by Sellers with
respect to the Properties and attributable to the period of time after
the Effective Time;
(iv) all downward Purchase Price adjustments for Title Adjustments
(including adjustments for the interests of non-selling working
interests owners in the Properties) determined in accordance with
Section 4.3 herein;
(v) all downward Purchase Price adjustments as provided in Sections
3.4 and 3.5 herein; and
(vi) any other amount provided for in this Agreement or agreed upon by
Buyer and Ricochet.
ARTICLE 17. MISCELLANEOUS
17.1 Notices. All notices and other communications required, permitted or
desired to be given hereunder must be in writing and sent by U.S. mail, properly
addressed as shown below, and with all postage and other charges fully prepaid
or by hand delivery or by facsimile transmission. Date of service by mail and
hand delivery is the date on which such notice is received by the addressee and
by facsimile is the date sent (as evidenced by fax machine confirmation of
receipt), or if such date is not on a Business Day, then on the next date which
is a Business Day. Each party may change its address by notifying the other
party in writing.
If to Seller Ricochet Energy, Inc.
by mail or hand delivery: 16111 Via Shavano
San Antonio, Texas 78249
Attention: Jerry L. Hamblin, President
If to Seller Ricochet Energy, Inc.
by facsimile: Number: (210) 490-3961
Attention: Jerry L. Hamblin, President
If to Buyer Baron Energy, Inc.
by mail or hand delivery: 300 S.C.M. Allen Parkway, Suite 400
San Marcos, Texas 78666
If to Buyer: Baron Energy, Inc.
by facsimile: Number: (512) 392-7238
Attention: Ronnie L. Steinocher, President
With Copy to: Gordon D. Dihle, Esq.
Corporate Legal, LLC
12354 E. Caley Ave., Suite 201
Centennial, Colorado 80111
Facsimile: (303) 974-5587
27
17.2 Conveyance Costs. Buyer shall be solely responsible for filing and
recording documents related to the transfer of the Properties from Sellers to
Buyer and for all costs and fees associated therewith, including filing the
assignment of the Properties with appropriate federal, state and local
authorities as required by applicable Law. Promptly following Buyer's receipt of
the recorded documents, Buyer shall furnish Ricochet with a copy of each such
document with all recording data shown thereon and evidence of all required
filings.
17.3 Brokers' Fees. Neither party has retained any brokers, agents or
finders and none are affiliated with either party or authorized to act on behalf
of either party in this matter. EACH PARTY AGREES TO RELEASE, PROTECT,INDEMNIFY,
DEFEND AND HOLD THE OTHER HARMLESS FROM AND AGAINST ANY AND ALLCLAIMS WITH
RESPECT TO ANY COMMISSIONS, FINDERS' FEES OR OTHER REMUNERATION DUETO ANY
BROKER, AGENT OR FINDER CLAIMING BY, THROUGH OR UNDER SUCH PARTY.
17.4 Further Assurances. From and after Closing, at the request of Sellers
but without further consideration, Buyer will execute and deliver or use
reasonable efforts to cause to be executed and delivered such other instruments
of conveyance and take such other actions as Sellers reasonably may request to
more effectively put Sellers in possession of any property which was not
intended by the parties to be conveyed to Buyer. From and after Closing, at the
request of Buyer but without further consideration, Sellers shall execute and
deliver or use reasonable efforts to cause to be executed and delivered such
other instruments of conveyance and take such other actions as Buyer reasonably
may request to more effectively put Buyer in possession of the Properties. If
any of the Properties are incorrectly described, the description shall be
corrected upon proof of the proper description.
17.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. THE COVENANTS AND
AGREEMENTS OF SELLERS AND BUYER TO BE PERFORMED PRIOR TO OR AT THE CLOSING SHALL
TERMINATE UPON THE CLOSING AND BE OF NO FURTHER FORCE OR EFFECT. UNLESS
OTHERWISE EXPRESSLY LIMITED HEREIN, ALL OTHER REPRESENTATIONS, WARRANTIES,
INDEMNITIES, COVENANTS AND AGREEMENTS CONTAINED IN THIS AGREEMENT, TO THE EXTENT
NOT FULLY PERFORMED OR WAIVED PRIOR TO CLOSING, SHALL SURVIVE THE CLOSING. THE
PARTIES HAVE MADE NO REPRESENTATIONS OR WARRANTIES EXCEPT THOSE EXPRESSLY SET
FORTH IN THIS AGREEMENT.
17.6 Amendments and Severability. No amendments or other changes to this
Agreement shall be effective or binding on either of the parties unless the same
shall be in writing and signed by both Sellers and Buyer. The invalidity of
anyone or more provisions of this Agreement shall not affect the validity of
this Agreement as a whole, and in case of any such invalidity, this Agreement
shall be construed as if the invalid provision had not been included herein.
17.7 Successors and Assigns. Except as set forth in Section 17.19 herein,
this Agreement shall not be assigned, either in whole or in part, without the
prior express written consent of the non-assigning party. Assignment of this
Agreement by either party shall not relieve the assigning party of liability
hereunder in the event of non-performance or breach of this Agreement by such
party's assignee. The terms, covenants and conditions contained in this
Agreement shall be binding upon and shall inure to the benefit of Sellers and
Buyer and their respective successors and assigns, and such terms, covenants and
conditions shall be covenants running with the land and with each subsequent
transfer or assignment of the Properties.
17.8 Headings. The titles and headings set forth in this Agreement have
been included solely for ease of reference and shall not be considered in the
interpretation or construction of this Agreement.
28
17.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER
THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CHOICE OF LAW RULES WHICH MAY
DIRECT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. THIS PROVISION
SURVIVES TERMINATION OF THIS AGREEMENT.
17.10 No Partnership Created. It is not the purpose or intention of this
Agreement to create (and it shall not be construed as creating) a joint venture,
partnership or any type of association, and the parties are not authorized to
act as agent or principal for each other with respect to any matter related
hereto.
17.11 Public Announcements. Neither the Seller Group nor the Buyer Group(as
defined in Article 8) shall issue a public statement or press release with
respect to the transaction contemplated herein (including the price and other
terms) without the prior written consent of the other party, except as required
by Law or listing agreement with a national security exchange and then only
after prior consultation with the other party.
17.12 No Third Party Beneficiaries. Nothing contained in this Agreement
shall entitle anyone other than Sellers or Buyer or their authorized successors
and assigns to any claim, cause of action, remedy or right of any kind
whatsoever.
17.13 DECEPTIVE TRADE PRACTICES. AS PARTIAL CONSIDERATION FOR THE PARTIES
AGREEING TO ENTER INTO THIS AGREEMENT, THE PARTIES EACH CAN AND DO EXPRESSLY
WAIVE THE PROVISIONS OF ALL CONSUMER PROTECTION LAWS OF THE STATE OF TEXAS, OR
ANY OTHER STATE, APPLICABLE TO THIS TRANSACTION THAT MAY BE WAIVED BY THE
PARTIES. IT IS NOT THE INTENT OF THE PARTIES TO WAIVE AND THE PARTIES SHALL NOT
WAIVE ANY APPLICABLE LAW OR PROVISION THEREOF WHICH IS PROHIBITED BY LAW FROM
BEING WAIVED. EACH PARTY REPRESENTS TO THE OTHER THAT SUCH PARTY HAS HAD AN
ADEQUATE OPPORTUNITY TO REVIEW THE PRECEDING WAIVER PROVISION, INCLUDING THE
OPPORTUNITY TO SUBMIT THE SAME TO LEGAL COUNSEL FOR REVIEW AND COMMENT, AND
UNDERSTANDS THE RIGHTS BEING WAIVED HEREIN.
17.14 Tax Deferred Exchange Election. Either party may elect to structure
the conveyance of the Properties as part of an exchange under Article 1031 of
the Internal Revenue Code of 1986, as amended. The parties agree to execute all
documents, conveyances or other instruments necessary to effectuate an exchange.
17.15 NOT TO BE CONSTRUED AGAINST DRAFTER. THE PARTIES ACKNOWLEDGE THAT
THEY HAVE HAD AN ADEQUATE OPPORTUNITY TO REVIEW EACH AND EVERY PROVISION
CONTAINED IN THIS AGREEMENT AND TO SUBMIT THE SAME TO LEGAL COUNSEL FOR REVIEW
AND COMMENT, INCLUDING EXPRESSLY BUT WITHOUT LIMITATION THE WAIVERS AND
INDEMNITIES IN ARTICLES 4, 6, 8, 9, AND 17. BASED ON SAID REVIEW AND
CONSULTATION, THE PARTIES AGREE WITH EACH AND EVERY TERM CONTAINED IN THIS
AGREEMENT. BASED ON THE FOREGOING, THE PARTIES AGREE THAT THE RULE OF
CONSTRUCTION THAT A CONTRACT BE CONSTRUED AGAINST THE DRAFTER, IF ANY, SHALL NOT
BE APPLIED IN THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT.
17.16 Entire Agreement. This Agreement supersedes all prior negotiations,
understandings, letters of intent and agreements (whether oral or written) and
any contemporaneous oral agreements between the parties relating to the
Properties and constitutes the entire understanding and agreement between the
parties with respect to the sale and purchase of the Properties.
29
17.17 CONSPICUOUSNESS OF PROVISIONS. THE PARTIES ACKNOWLEDGE THAT THE
PROVISIONS CONTAINED IN THIS AGREEMENT THAT ARE SET OUT IN "BOLD" SATISFY THE
REQUIREMENT OF THE EXPRESS NEGLIGENCE RULE AND ANY OTHER REQUIREMENT AT LAW OR
IN EQUITY THAT PROVISIONS CONTAINED IN A CONTRACT BE CONSPICUOUSLY MARKED OR
HIGHLIGHTED.
17.18 Execution in Counterparts. This Agreement may be executed in
counterparts, which shall when taken together constitute one valid and binding
agreement.
17.19 Affiliated Entity as Buyer and/or Operator. Notwithstanding any
provisions herein to the contrary, this Agreement may be assigned to a third
party or joint venture type entity affiliated with Buyer so identified by Buyer
to Sellers at Buyer's option, upon written notice to Sellers no later than three
(3) Business Days prior the Closing Date. In the event Buyer elects to assign
its rights hereunder to an affiliated entity Buyer shall provide to Sellers all
pertinent information necessary for Sellers to prepare the Assignment and Bill
of Sale to be delivered to and executed by the third party, which Assignment and
Bill of Sale shall be in the form attached hereto as Exhibit N.
Instead of Buyer succeeding Ricochet as operator, Buyer may designate an
affiliate or affiliates of Buyer to so succeed Ricochet as operator (references
herein to Buyer in the context of succession as operator shall be considered to
include such designees.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first set forth above.
SELLERS
RICOCHET ENERGY, INC.
(for itself and on behalf of the Ricochet Parties
identified in Addendum I)
By:
-------------------------------------------------
Jerry L. Hamblin, President
VAQUILLAS ENERGY EAST PEARSALL, LTD., LLP
By: Vaquillas Energy Management, LLC
Its: General Partner
By:
-------------------------------------------------
James D. Walker, Managing Manager
VAQUILLAS ENERGY RE-ENTRY, LTD., LLP
By: Vaquillas Energy Management, LLC
Its: General Partner
By:
-------------------------------------------------
James D. Walker, Managing Manager
JOB ENERGY PARTNERS II, LTD.
By: JOB Energy, LLC
Its: General Partner
By:
-------------------------------------------------
James D. Walker, Managing Manager
30
LORD'S ENERGY, LTD.
By: Lord's Energy Management, LLC
Its: General Partner
By:
-------------------------------------------------
James D. Walker, Managing Manager
HUBBERD-SMITH ENERGY INVESTMENTS, LTD.
By: Hubberd-Smith, LLC
Its: General Partner
By:
-------------------------------------------------
Clayborne L. Nettleship, Manager
NETTLESHIP ENERGY INVESTMENTS, LTD.
By: Nettleship Enterprises, Inc.
Its: General Partner
By:
-------------------------------------------------
Clayborne L. Nettleship, President
LAREDO GATEWAY ENERGY, LTD.
By: Gateway Professional Builders, LC
Its: General Partner
By:
-------------------------------------------------
Gerardo G. Salinas, Manager
BORDEN JENKINS
BUYER
BARON ENERGY, INC.
By:
-------------------------------------------------
Ronnie L. Steinocher, President and CEO
31
EXHIBIT "A"
(Attached to Purchase and Sale Agreement dated May 29, 2014,
between Ricochet Energy, Inc. et al. and Baron Energy, Inc.)
EAST PEARSALL (STEWART) PROSPECT
TRACT 1 - 1985 ACRES
Lease 1: Oil and Gas Lease dated August 13, 2009, from Federal Royalty LLC, as
General Partner for Federal Royalty Partners, Ltd., as Lessor, to Sien Energy
Company, as Lessee, recorded by Memorandum of Oil and Gas Lease in Volume 66,
page 502, Official Public Records, Frio County, Texas, as amended, covering
1,985 acres of land, more or less, out of the A.B.&M. Survey 5, A-29, the
A.B.&M. Survey 7, A-30, the A.B.&M. Survey 9, A-31, the R.H. Adcock Survey 10,
A-1341 and the B.S.&F. Survey 1, A-111, Frio County, Texas.
Lease 2: Oil and Gas Lease dated March 26, 2009, from Cimarron Texas Minerals,
Ltd., as Lessor, to Sien Energy Company, as Lessee, recorded by Memorandum of
Oil and Gas Lease dated March 31, 2009 in Volume 67, page 831, Official Public
Records, Frio County, Texas, as amended, covering 1,985 acres of land, more or
less, being the same land described above in Lease 1.
Lease 3: Paid Up Oil and Gas Lease dated March 6, 2009, from Joseph M. Dawson,
Jr., as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page
504, Official Public Records, Frio County, Texas, as amended, covering 1,985
acres of land, more or less, being the same land described in Lease 1.
Lease 4: Paid Up Oil and Gas Lease dated March 6, 2009, from Dorothy D. Burlage,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page 508,
Official Public Records, Frio County, Texas, as amended, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.
Lease 5: Paid Up Oil and Gas Lease dated January 16, 2009, from Hager Oil & Gas,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page 512,
Official Public Records, Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.
Lease 6: Paid Up Oil and Gas Lease dated September 28, 2009, from Bill Bishop,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page 528,
Official Public Records, Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.
Lease 7: Paid Up Oil and Gas Lease dated September 28, 2009, from Robert L. Dow,
Jr., as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page
524, Official Public Records, Frio County, Texas, covering 1,985 acres of land,
more or less, being the same land described in Lease 1.
Lease 8: Paid Up Oil and Gas Lease dated September 28, 2009, from Wesley K.
Winn, as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page
517, Official Public Records, Frio County, Texas, covering 1,985 acres of land,
more or less, being the same land described in Lease 1.
Lease 9: Paid Up Oil and Gas Lease dated September 28, 2009, from Tolar N.
Hamblen, III, as Lessor, to Sien Energy Company, as Lessee, recorded in Volume
67, page 828, Official Public Records, Frio County, Texas, covering 1,985 acres
of land, more or less, being the same land described in Lease 1.
Lease 10: Paid Up Oil and Gas Lease dated September 28, 2009, from Ginger
Busboom, as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66,
page 521, Official Public Records, Frio County, Texas, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.
Lease 11: Paid Up Oil and Gas Lease dated August 24, 2009, from Mark E. McCourt
and wife, Susan McCourt, as Lessor, to Sien Energy Company, as Lessee, recorded
32
in Volume 66, page 536, Official Public Records, Frio County, Texas, covering
1,985 acres of land, more or less, being the same land described in Lease 1.
Lease 12: Paid Up Oil and Gas Lease dated August 24, 2009, from A.L. Furnace and
wife, Pauline Furnace, as Lessor, to Sien Energy Company, as Lessee, recorded in
Volume 66, page 532, Official Public Records, Frio County, Texas, covering 1,985
acres of land, more or less, being the same land described in Lease 1.
Lease 13: Paid Up Oil and Gas Lease dated August 10, 2009, from Dickerson
Resources, Arthur J. Milbarger and Joseph E. Stewart, as Lessor, to Sien Energy
Company, as Lessee, recorded in Volume 66, page 540, Official Public Records,
Frio County, Texas, covering 1,985 acres of land, more or less, being the same
land described in Lease 1.
Lease 14: Paid Up Oil and Gas Lease dated March 20, 2009, from Douglas C. Koch,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page 544,
Official Public Records, Frio County, Texas, as amended, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.
Lease 15: Paid Up Oil and Gas Lease dated March 20, 2009, from Wayne A. Bissett,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page 550,
Official Public Records, Frio County, Texas, as amended, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.
Lease 16: Paid Up Oil and Gas Lease dated December 3, 2007, from Clarence J.
Fraser, as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66,
page 556, Official Public Records, Frio County, Texas, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.
Lease 17: Paid Up Oil and Gas Lease dated August 12, 2009, from Dorothy L.
Hardin, as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66,
page 559, Official Public Records, Frio County, Texas, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.
Lease 18: Paid Up Oil and Gas Lease dated August 12, 2009, from Anne L. Madigan,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page 563,
Official Public Records, Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.
Lease 19: Paid Up Oil and Gas Lease dated September 2, 2009, from Jessica
Stansell, as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66,
page 567, Official Public Records, Frio County, Texas, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.
Lease 20: Paid Up Oil and Gas Lease dated March 24, 2009, from Thornton Davis
Minerals, L.P., as Lessor, to Sien Energy Company, as Lessee, recorded in Volume
66, page 570, Official Public Records, Frio County, Texas, covering 1,985 acres
of land, more or less, being the same land described in Lease 1.
Lease 21: Paid-Up Oil and Gas Lease dated September 1, 2009, from Stewart
Information Services Corporation, as Lessor, to Sien Energy Company, as Lessee,
recorded by Memorandum of Oil and Gas Lease in Volume 66, page 574, Official
Public Records, Frio County, Texas, as amended, covering 1,985 acres of land,
more or less, being the same land described in Lease 1.
Lease 22: Paid-Up Oil and Gas Lease dated September 2, 2009, from Nathan Weaver,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 70, page 249,
Official Public Records, Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.
Lease 23: Paid-Up Oil and Gas Lease dated September 2, 2009, from Jesse Walker,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 73, page 621,
Official Public Records, Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.
33
Lease 24: Paid-Up Oil and Gas Lease dated March 23, 2011, from Wanda Weaver, as
Lessor, to Ricochet Energy, Inc., as Lessee, recorded in Volume 91, page 773,
Official Public Records, Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.
Lease 25: Paid Up Oil and Gas Lease dated June 23, 2011, from Charles McClain,
as Receiver for Mineral Interests in Cause No. 11-03-00095CVF, for Nancy Brown
et al., as Lessor, to Ricochet Energy, Inc., as Lessee, recorded in Volume 92,
page 996, Official Public Records, Frio County, Texas, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.
TRACT 2 - 640 ACRES
Lease 1: Paid Up Oil and Gas Lease dated November 6, 2009, from Roxana Kelfer,
Individually and as Trustee of the Louis A. Michael Trust, as Lessor, to Sien
Energy Company, as Lessee, recorded in Volume 68, page 237, Official Public
Records, Frio County, Texas, covering 640 acres of land, more or less, out of
the E.A. Mudd Survey 8, A-1333, Frio County, Texas.
Lease 2: Paid Up Oil and Gas Lease dated November 6, 2009, from Lynn Kendrick,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 68, page 242,
Official Public Records, Frio County, Texas, covering 640 acres of land, more or
less, out of the E.A. Mudd Survey 8, A-1333, Frio County, Texas, being the same
land described in Lease 1.
Lease 3: Paid Up Oil and Gas Lease dated November 6, 2009, from Caroline J.
Wanke, as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 68, page
247, Official Public Records, Frio County, Texas, covering 640 acres of land,
more or less, out of the E.A. Mudd Survey 8, A-1333, Frio County, Texas, being
the same land described in Lease 1.
Lease 4: Paid Up Oil and Gas Lease dated November 6, 2009, from Diana Morawski,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 68, page 251,
Official Public Records, Frio County, Texas, covering 640 acres of land, more or
less, out of the E.A. Mudd Survey 8, A-1333, Frio County, Texas, being the same
land described in Lease 1.
Lease 5: Paid Up Oil and Gas Lease dated November 6, 2009, from Claudia Davis,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 68, page 255,
Official Public Records, Frio County, Texas, covering 640 acres of land, more or
less, out of the E.A. Mudd Survey 8, A-1333, Frio County, Texas, being the same
land described in Lease 1.
Wells Sale WI Sale NRI
----- ------- --------
Ricochet - Stewart No. 1 Well 89.100000% 66.825000%
(API #42-163-33411 / RRC ID #_______)
Ricochet - Stewart No. 2 Well 89.100000% 66.825000%
(API #42-163-33455 / RRC ID #_______)
Ricochet - Stewart-Michael Unit No. 1 Well 89.100000% 66.907685%*
(API #42-163-33535 / RRC ID #_______)
Ricochet - Stewart-Michael No. 2H Unit Well 89.100000% 66.825000%
(API #42-163-33550 / RRC ID #_______)
Ricochet - Stewart No. 4RE Well 95.466809% 71.600107%**
(API #42-163-33585 / RRC ID #_______)
*These interests include an unleased 53/512 mineral interest in a 22.95-acre
tract included within the boundaries of the subject pooled unit. Since the
mineral interest remains unleased, but the land is included within the
boundaries of the unit with the other interests in the acreage that are leased
and pooled, we have allocated this interest to all of the working interest
owners in proportion to their ownership of the working interest in the balance
of the leases pooled in the subject unit.
*Sien Energy Company, LLC tendered its "non-consent" election to drill the
subject well, resulting in forfeiture of its rights in the well and in the
undeveloped portions of the Leases and depths based on the terms of the
Operation Agreement covering this acreage. The non-consenting 6.6% working
interest share has been divided among the other working interest owners in the
well based on their elections to acquire their pro-rata shares of the
non-consent interest.
34
BREAZEALE PROSPECT (NEAL TRUST UNIT)
Lease 1: Paid Up Oil and Gas Lease dated July 25, 2011, from Iven A. Neal and
Ruby Neal, as Trustees of the Iven A. Neal and Ruby Neal Living Trust, as
Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of Paid Up
Oil and Gas Lease in Volume 95, page 113, Official Public Records, Frio County,
Texas, insofar as and only insofar as said lease covers 148.37 acres of land,
more or less, out of the B.S.&F. Survey No. 3, A-112, Frio County, Texas, being
the lands pooled in the Ricochet Energy, Inc. - Neal Trust No. 1H Unit as
described in a Declaration of Unit dated October 10, 2012, recorded in Volume
122, page 855, Official Records, Frio County, Texas.
Lease 2: Paid Up Oil and Gas Lease dated July 25, 2011, from James P. Neal and
Coleen F. Neal, as Trustees of the James P. Neal and Coleen F. Neal Living
Trust, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of
Paid Up Oil and Gas Lease in Volume 95, page 110, Official Public Records, Frio
County, Texas, insofar as and only insofar as said lease covers 148.37 acres of
land, more or less, out of the B.S.&F. Survey No. 3, A-112, Frio County, Texas,
being the lands pooled in the Ricochet Energy, Inc. - Neal Trust No. 1H Unit as
described in a Declaration of Unit dated October 10, 2012, recorded in Volume
122, page 855, Official Records, Frio County, Texas, and being the same land
described in Lease 1.
Lease 3: Oil and Gas Lease dated July 18, 2011, from Providence Minerals, LLC,
as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of Oil
and Gas Lease in Volume 95, page 116, Official Public Records, Frio County,
Texas, insofar as and only insofar as said lease covers 127.9 acres of land,
more or less, out of the B.S.&F. Survey No. 3, A-112, Frio County, Texas, being
the lands pooled in the Ricochet Energy, Inc. - Neal Trust No. 1H Unit as
described in a Declaration of Unit dated October 10, 2012, recorded in Volume
122, page 855, Official Records, Frio County, Texas, and being part of the same
land described in Lease 1.
Lease 4: Oil and Gas Lease dated August 16, 2011, from Texas Osage Royalty Pool,
Inc., as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of
Oil and Gas Lease in Volume 95, page 819, Official Public Records, Frio County,
Texas, insofar as and only insofar as said lease covers 127.9 acres of land,
more or less, out of the B.S.&F. Survey No. 3, A-112, Frio County, Texas, being
the lands pooled in the Ricochet Energy, Inc. - Neal Trust No. 1H Unit as
described in a Declaration of Unit dated October 10, 2012, recorded in Volume
122, page 855, Official Records, Frio County, Texas, and being part of the same
land described in Lease 1.
Lease 5: Paid Up Oil and Gas Lease dated September 30, 2011, from Vicki Lee
Gates and Sherri Lynn Tope, as Lessor, to Ricochet Energy, Inc., as Lessee,
recorded by Memorandum of Paid Up Oil and Gas Lease in Volume 99, page 37,
Official Public Records, Frio County, Texas, insofar as and only insofar as said
lease covers 65.59 acres of land, more or less, out of the B.S.&F. Survey No. 3,
A-112, Frio County, Texas, being the lands pooled in the Ricochet Energy, Inc. -
Neal Trust No. 1H Unit as described in a Declaration of Unit dated October 10,
2012, recorded in Volume 122, page 855, Official Records, Frio County, Texas.
Lease 6: Paid Up Oil and Gas Lease dated October 14, 2011, from The Collis and
Lucille Woodward Family Trust dated August 29, 1990, as Lessor, to Ricochet
Energy, Inc., as Lessee, recorded by Memorandum of Paid Up Oil and Gas Lease in
Volume 100, page 20, Official Public Records, Frio County, Texas, insofar as and
only insofar as said lease covers 88.02 acres of land, more or less, out of the
Frio County School Land League No. 1, A-310, Frio County, Texas, being the lands
pooled in the Ricochet Energy, Inc. - Neal Trust No. 1H Unit as described in a
Declaration of Unit dated October 10, 2012, recorded in Volume 122, page 855,
Official Records, Frio County, Texas.
Lease 7: Paid Up Oil and Gas Lease dated October 14, 2011, from The Clyde E. and
Valerie V. Woodward Family Trust dated November 12, 1996, as Lessor, to Ricochet
Energy, Inc., as Lessee, recorded by Memorandum of Paid Up Oil and Gas Lease in
Volume 100, page 18, Official Public Records, Frio County, Texas, insofar as and
only insofar as said lease covers 88.02 acres of land, more or less, out of the
Frio County School Land League No. 1, A-310, Frio County, Texas, being the lands
pooled in the Ricochet Energy, Inc. - Neal Trust No. 1H Unit as described in a
35
Declaration of Unit dated October 10, 2012, recorded in Volume 122, page 855,
Official Records, Frio County, Texas, and being the same land described in Lease
6.
Wells Sale WI Sale NRI
----- ------- --------
Ricochet - Neal Trust No. 1H Unit Well 100.000% 75.000%
(API #42-163-33643 / RRC ID #_______)
MAXWELL PROSPECT
Lease 1: Paid Up Oil and Gas Lease dated December 22, 2011, from David Maxwell
and wife, Kelli Maxwell et al., as Lessor, to Ricochet Energy, Inc., as Lessee,
recorded by Memorandum of Paid Up Oil and Gas Lease in Volume 105, page 918,
Official Public Records, Frio County, Texas, covering 315 acres of land, more or
less, out of the Pablo Ortiz Survey No. 1411, A-530, Frio County, Texas.
Lease 2: Paid Up Oil and Gas Lease dated January 18, 2012, from James E. Deutsch
and wife, Patricia Deutsch, as Lessor, to Ricochet Energy, Inc., as Lessee,
recorded by Memorandum of Oil and Gas Lease in Volume 105, page 914, Official
Public Records, Frio County, Texas, covering 372.37 acres of land, more or less,
out of the A.B.&M. Survey 5, A-29 and the Pablo Ortiz Survey No. 1411, A-530,
Frio County, Texas.
Lease 3: Paid Up Oil and Gas Lease dated January 3, 2012, from Howard M.
Shelton, Jr., as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by
Memorandum of Paid Up Oil and Gas Lease in Volume 105, page 916, Official Public
Records, Frio County, Texas, covering 100.64 acres of land, more or less, out of
the Pablo Ortiz Survey No. 1411, A-530, Frio County, Texas.
Lease 4: Paid Up Oil and Gas Lease dated March 3, 2012, from Lida O. Pitts, as
Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of Paid Up
Oil and Gas Lease in Volume 110, page 413, Official Public Records, Frio County,
Texas, covering 50.32 acres of land, more or less, out of the Pablo Ortiz Survey
No. 1411, A-530, Frio County, Texas, being a part of the same land described in
Lease 3.
Lease 5: Paid Up Oil and Gas Lease dated March 27, 2012, from James Oliver Harle
et al., as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum
of Paid Up Oil and Gas Lease in Volume 111, page 717, Official Public Records,
Frio County, Texas, covering 50.32 acres of land, more or less, out of the Pablo
Ortiz Survey No. 1411, A-530, Frio County, Texas, being a part of the same land
described in Lease 3.
Lease 6: Paid Up Oil and Gas Lease dated January 17, 2012, from William R. Hoyle
and wife, Mona Hoyle, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded
by Memorandum of Paid Up Oil and Gas Lease in Volume 106, page 130, Official
Public Records, Frio County, Texas, covering 18.26 acres of land, more or less,
out of the Pablo Ortiz Survey No. 1411, A-530, Frio County, Texas.
Wells Sale WI Sale NRI
----- ------- --------
None 100.000% 75.000%
36
PETTY PROSPECT
Lease 1: Paid Up Oil and Gas Lease dated April 9, 2012, from David R. Petty and
wife, Frankie Petty, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by
Memorandum of Paid Up Oil and Gas Lease in Volume 110, page 781, Official Public
Records, Frio County, Texas, covering 933.51 acres of land, more or less, out of
the A.B.&M. Survey 5, A-29, the A.B.&M. Survey 7, A-30 and the A.B.&M. (W.T.
Merriwether) Survey 6, A-963, Frio County, Texas.
Lease 2: Paid Up Oil and Gas Lease dated April 11, 2012, from Janell McDermand
Trees, joined pro forma by her husband, Jerry F. Trees, as Lessor, to Ricochet
Energy, Inc., as Lessee, recorded by Memorandum of Paid Up Oil and Gas Lease in
Volume 110, page 779, Official Public Records, Frio County, Texas, covering
613.32 acres of land, more or less, out of the A.B.&M. Survey 5, A-29 and the
A.B.&M. Survey 7, A-30, Frio County, Texas, being part of the same land
described in Lease 1.
Lease 3: Paid Up Oil and Gas Lease dated April 18, 2012, from Jerry Leon Young,
Jr., as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of
Paid Up Oil and Gas Lease in Volume 113, page 400, Official Public Records, Frio
County, Texas, covering 320.19 acres of land, more or less, out of the A.B.&M.
(W.T. Merriwether) Survey 6, A-963, Frio County, Texas, being part of the same
land described in Lease 1.
Lease 4: Paid Up Oil and Gas Lease dated April 18, 2012, from Patricia Riley
Hines, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of
Paid Up Oil and Gas Lease in Volume 112, page 181, Official Public Records, Frio
County, Texas, covering 320.19 acres of land, more or less, out of the A.B.&M.
(W.T. Merriwether) Survey 6, A-963, Frio County, Texas, being part of the same
land described in Lease 1.
Lease 5: Paid Up Oil and Gas Lease dated April 18, 2012, from Peggy Riley
Franell, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum
of Paid Up Oil and Gas Lease in Volume 112, page 179, Official Public Records,
Frio County, Texas, covering 320.19 acres of land, more or less, out of the
A.B.&M. (W.T. Merriwether) Survey 6, A-963, Frio County, Texas, being part of
the same land described in Lease 1.
Lease 6: Paid Up Oil and Gas Lease dated April 18, 2012, from Janice Claire
Palmer, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum
of Paid Up Oil and Gas Lease in Volume 111, page 713, Official Public Records,
Frio County, Texas, covering 320.19 acres of land, more or less, out of the
A.B.&M. (W.T. Merriwether) Survey 6, A-963, Frio County, Texas, being part of
the same land described in Lease 1.
Lease 7: Paid Up Oil and Gas Lease dated April 18, 2012, from Mary Jo Wainscott,
as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of Paid
Up Oil and Gas Lease in Volume 111, page 715, Official Public Records, Frio
County, Texas, covering 320.19 acres of land, more or less, out of the A.B.&M.
(W.T. Merriwether) Survey 6, A-963, Frio County, Texas, being part of the same
land described in Lease 1.
Lease 8: Paid Up Oil and Gas Lease dated August 1, 2012, from Lucille Watson et
al., as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of
Paid Up Oil and Gas Lease in Volume 119, page 629, Official Public Records, Frio
County, Texas, covering 320.19 acres of land, more or less, out of the A.B.&M.
(W.T. Merriwether) Survey 6, A-963, Frio County, Texas, being part of the same
land described in Lease 1.
Lease 9: Oil and Gas Lease dated April 16, 2012, from Methodist Childrens Home,
as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of Oil
and Gas Lease in Volume 111, page 711, Official Public Records, Frio County,
Texas, covering 320.19 acres of land, more or less, out of the A.B.&M. (W.T.
Merriwether) Survey 6, A-963, Frio County, Texas.
Lease 10: Paid Up Oil and Gas Lease dated May 15, 2012, from Edward Allen Keith,
as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of Paid
37
Up Oil and Gas Lease in Volume 113, page 500, Official Public Records, Frio
County, Texas, covering 10.105 acres of land, more or less, out of the A.B.&M.
Survey 5, A-29 and the A.B.&M. Survey 7, A-30, Frio County, Texas.
Lease 11: Paid Up Oil and Gas Lease dated May 15, 2012, from Connie Gail Beane,
as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of Paid
Up Oil and Gas Lease in Volume 113, page 502, Official Public Records, Frio
County, Texas, covering 20.106 acres of land, more or less, out of the A.B.&M.
Survey 5, A-29 and the A.B.&M. Survey 7, A-30, Frio County, Texas.
Lease 12: Paid Up Oil and Gas Lease dated May 15, 2012, from Sandra Eileen
Keith, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of
Paid Up Oil and Gas Lease in Volume 113, page 504, Official Public Records, Frio
County, Texas, covering 20.106 acres of land, more or less, out of the A.B.&M.
Survey 5, A-29 and the A.B.&M. Survey 7, A-30, Frio County, Texas.
Wells Sale WI Sale NRI
----- ------- --------
None 100.000% 75.000%
FRIO AUSTIN CHALK PROSPECT
(CULPEPPER AREA)
JANE T. CULPEPPER ET AL., LEASES
Lease 1: Oil and Gas Lease dated January 18, 2010, from Jane Culpepper, as
Lessor, to Ricochet Energy, Inc., as Lessee, recorded in Volume 70, page 672,
Official Public Records, Frio County, Texas, as amended by Amendment of Oil and
Gas Lease recorded in Volume 73, page 441, Official Public Records, Frio County,
Texas, covering 718 acres of land, more or less, out of the J. E. Roberts Survey
No. 4, A-903, the L.I.M. & C. Co. Survey No. 112, A-754 and the B.S. & F Survey
No. 3, A-109, Frio County, Texas.
Lease 2: Oil and Gas Lease dated January 18, 2010, from John Culpepper, as
Lessor, to Ricochet Energy, Inc., as Lessee, recorded in Volume 70, page 675,
Official Public Records, Frio County, Texas, as amended by Amendment of Oil and
Gas Lease recorded in Volume 73, page 444, Official Public Records, Frio County,
Texas, covering 593 acres of land, more or less, being a portion of the same
land described above in Lease 1.
Lease 3: Oil and Gas Lease dated January 18, 2010, from Jim Culpepper, as
Lessor, to Ricochet Energy, Inc., as Lessee, recorded in Volume 70, page 678,
Official Public Records, Frio County, Texas, as amended by Amendment of Oil and
Gas Lease recorded in Volume 73, page 446, Official Public Records, Frio County,
Texas, covering 593 acres of land, more or less, being a portion of the same
land described above in Lease 1.
Lease 4: Oil and Gas Lease dated January 18, 2010, from Bill Culpepper, as
Lessor, to Ricochet Energy, Inc., as Lessee, recorded in Volume 70, page 681,
Official Public Records, Frio County, Texas, as amended by Amendment of Oil and
Gas Lease recorded in Volume 73, page 448, Official Public Records, Frio County,
Texas, covering 593 acres of land, more or less, being a portion of the same
land described above in Lease 1.
Lease 5: Oil and Gas Lease dated January 18, 2010, from Nancy C. Flores, as
Lessor, to Ricochet Energy, Inc., as Lessee, recorded in Volume 70, page 684,
Official Public Records, Frio County, Texas, as amended by Amendment of Oil and
Gas Lease recorded in Volume 73, page 450, Official Public Records, Frio County,
Texas, covering 593 acres of land, more or less, being a portion of the same
land described above in Lease 1.
38
Wells Sale WI Sale NRI
----- ------- --------
Ricochet - Culpepper No. 1H Unit Well 100.000% 80.000%
(API #42-163-33480 / RRC ID #_______)
Ricochet - Culpepper No. 2H Unit Well 100.000% 80.000%
(API #42-163-33494 / RRC ID #_______)
JAMES W. CULPEPPER ET AL., LEASES - (3C LEASES)
Lease 1: Oil and Gas Lease dated February 3, 2010, from James Culpepper and
wife, Kat Saunders, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded in
Volume 70, page 765, Official Public Records, Frio County, Texas, covering
657.28 acres of land, more or less, out of the J. E. Roberts Survey No. 2, A-904
and the James Cummings Survey No. 105, A-269, Frio County, Texas.
Lease 2: Oil and Gas Lease dated February 3, 2010, from John Culpepper and wife,
Andrea M. Culpepper, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded in
Volume 70, page 770, Official Public Records, Frio County, Texas, covering
657.28 acres of land, more or less, being the same land described above in Lease
1.
Lease 3: Oil and Gas Lease dated February 3, 2010, from Joe Culpepper, as
Lessor, to Ricochet Energy, Inc., as Lessee, recorded in Volume 75, page 590,
Official Public Records, Frio County, Texas, covering 104.14 acres of land, more
or less, out of the J. E. Roberts Survey No. 2, A-904 and the James Cummings
Survey No. 105, A-269, Frio County, Texas, being a portion of the same land
described above in Lease 1.
Lease 4: Oil and Gas Lease dated October 31, 2010, from Tommy J. Muston and
wife, Deborah A. Muston, as Lessor, to Ricochet Energy, Inc., as Lessee,
recorded by Memorandum of Oil and Gas Lease in Volume 83, page 692, Official
Public Records, Frio County, Texas, covering 224.14 acres of land, more or less,
out of the J. E. Roberts Survey No. 2, A-904 and the J. E. Roberts Survey No. 6,
A-905, Frio County, Texas, being a portion of the same land described above in
Lease 1.
Wells Sale WI Sale NRI
----- ------- --------
Ricochet - 3C No. 1H Unit Well 100.000% 79.715823%
(API #42-163-33508 / RRC ID #_______)
Ricochet - 3C No. 2H Unit Well 100.000% 79.715823%
(API #42-163-33563 / RRC ID #_______)
KOTZEBUE LEASE
Oil and Gas Lease dated August 26, 2010, from David W. Kotzebue and wife,
Deborah R. Kotzebue, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by
Memorandum of Oil and Gas Lease in Volume 79, page 752, Official Public Records,
Frio County, Texas, originally covering 527.33 acres of land, more or less, out
of the J. E. Roberts Survey No. 4, A-903, Frio County, Texas, insofar as and
only insofar as said lease covers 400 acres of land, more or less, being the
retained acreage allocated to the Kotzebue No. 1 Well according to the lease and
the rules of the Railroad Commission of Texas.
Wells Sale WI Sale NRI
----- ------- --------
Ricochet - Kotzebue No. 1 Well 100.000% 75.000%
(API #42-163-33589 / RRC ID #_______)
RIGGAN LEASE
Oil and Gas Lease dated August 18, 2010, from James M. Riggan et al., as Lessor,
to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of Oil and Gas Lease
in Volume 79, page 460, Official Public Records, Frio County, Texas, covering
709 acres of land, more or less, out of the B.S.&F. Survey No. 1, A-111, the
39
A.B.&M. Survey No. 9, A-31, the Mason Maney Survey No. 1-1/2, A-1452 and the
B.S.&F. Survey No. 3, A-112, Frio County, Texas.
Wells Sale WI Sale NRI
----- ------- --------
Ricochet - Riggan No. 1H Well 100.000% 75.000%
(API #42-163-33573 / RRC ID #_______)
Ricochet - Riggan No. 2H Well 100.000% 75.000%
(API #42-163-33593 / RRC ID #_______)
EXPRESS RE-ENTRY PROSPECTS
CANTU-HENDERSON UNIT
Ricochet Energy, Inc. - Cantu-Henderson No. 1H Unit, being the pooled unit of
495.17 acres out of the J. Poitevent Survey No. 5, A-559 and the R.M. Harkness
Survey No. 6, A-890, Frio County, Texas, as more particularly described in that
certain Declaration of Unit dated September 24, 2010, executed by Ricochet
Energy, Inc., recorded in Volume 81, page 174, Official Public Records, Frio
County, Texas, pooling the acreage covered by the following described leases.
Lease 1: Oil, Gas and Mineral Lease dated September 17, 2008, from Herlinda G.
Cantu, as Lessor, to Express Oil & Gas, as Lessee, recorded in Volume 57, page
798, Official Public Records, Frio County, Texas, (and also recorded by
Memorandum of Oil and Gas Lease in Volume 57, page 796, Official Public Records,
Frio County, Texas), as amended, covering 177.45 acres, more or less, out of the
J. Poitevent Survey No. 5, A-559, Frio County, Texas, all of the 177.45 acres
covered by said lease, as more particularly described therein, being included in
this unit.
Lease 2: Oil, Gas and Mineral Lease dated October 28, 2008, from Winfred
Henderson and wife, Alice A. Henderson, as Lessor, to Express Oil & Gas, Co., as
Lessee, recorded in Volume 60, page 193, Official Public Records, Frio County,
Texas, covering 317.72 acres, more or less, out of the R. M. Harkness Survey No.
6, A-890 in Frio County, Texas and A-1014 in LaSalle County, Texas, all of the
317.72 acres covered by said lease, as more particularly described therein,
being included in this unit.
Lease 3: Oil, Gas and Mineral Lease dated October 28, 2008, from Jimmy
Henderson, as Lessor, to Express Oil & Gas, Co., as Lessee, recorded in Volume
60, page 200, Official Public Records, Frio County, Texas, covering 317.72
acres, more or less, out of the R. M. Harkness Survey No. 6, A-890 in Frio
County, Texas and A-1014 in LaSalle County, Texas, all of the 317.72 acres
covered by said lease, comprising the same lands described above in Lease 2,
being included in this unit.
Lease 4: Oil, Gas and Mineral Lease dated October 28, 2008, from Selfa A. Garza,
joined pro forma by her husband, Tino Garza, as Lessor, to Express Oil & Gas,
Co., as Lessee, recorded in Volume 60, page 180, Official Public Records, Frio
County, Texas, as ratified and amended, covering 317.72 acres, more or less, out
of the R. M. Harkness Survey No. 6, A-890 in Frio County, Texas and A-1014 in
LaSalle County, Texas, all of the 317.72 acres covered by said lease, comprising
the same lands described above in Lease 2, being included in this unit.
Lease 5: Oil, Gas and Mineral Lease dated November 17, 2008, from Linda Green,
joined pro forma by her husband, Ken Green, as Lessor, to Express Oil & Gas,
Co., as Lessee, recorded in Volume 60, page 173, Official Public Records, Frio
County, Texas, covering 317.72 acres, more or less, out of the R. M. Harkness
Survey No. 6, A-890 in Frio County, Texas and A-1014 in LaSalle County, Texas,
all of the 317.72 acres covered by said lease, comprising the same lands
described above in Lease 2, being included in this unit.
Lease 6: Oil, Gas and Mineral Lease dated November 17, 2008, from Larry Myrick,
as Lessor, to Express Oil & Gas, Co., as Lessee, recorded in Volume 60, page
187, Official Public Records, Frio County, Texas, covering 317.72 acres, more or
less, out of the R. M. Harkness Survey No. 6, A-890 in Frio County, Texas and
40
A-1014 in LaSalle County, Texas, all of the 317.72 acres covered by said lease,
comprising the same lands described above in Lease 2, being included in this
unit.
Lease 7: Oil, Gas and Mineral Lease dated July 10, 2009, from Donna Myrick, as
Lessor, to Express Oil & Gas, as Lessee, recorded by Memorandum of Oil, Gas and
Mineral Lease in Volume 63, page 76, Official Public Records, Frio County,
Texas, covering 317.72 acres, more or less, out of the R. M. Harkness Survey No.
6, A-890 in Frio County, Texas and A-1014 in LaSalle County, Texas, all of the
317.72 acres covered by said lease, comprising the same lands described above in
Lease 2, being included in this unit.
Lease 8: Oil, Gas and Mineral Lease dated November 17, 2008, from Janice
Hemphill, as Lessor, to Express Oil & Gas, Co., as Lessee, recorded in Volume
63, page 70, Official Public Records, Frio County, Texas, covering 317.72 acres,
more or less, out of the R. M. Harkness Survey No. 6, A-890 in Frio County,
Texas and A-1014 in LaSalle County, Texas, all of the 317.72 acres covered by
said lease, comprising the same lands described above in Lease 2, being included
in this unit.
Wells Sale WI Sale NRI
----- ------- --------
Ricochet - Cantu-Henderson No. 1H Unit Well 100.000% 77.042448%
(API #42-163-33426 / RRC ID #12392)
HARRIS LEASE
Oil, Gas and Mineral Lease dated January 13, 1976, from William Donald Harris
and wife, Mary Ann Harris, as Lessor, to Charles R. Stubblefield, as Lessee,
recorded in Volume 342, page 485, Deed Records, Frio County, Texas, covering
735.00 acres, more or less, out of the William Webber Survey, A-668 and the G.B.
Pilant Survey, A-540, Frio County, Texas, insofar as and only insofar as said
lease covers 281.4 acres of land, more or less, around the Ricochet Energy, Inc.
- Harris No. 2 and Harris No. 3 Wells (but expressly excluding the well and
wellbore for the Express Oil & Gas - Harris #4 Well [API # 42-163-32691]) in
Frio County, Texas.
Wells Sale WI Sale NRI
----- ------- --------
Ricochet - Harris No. 2 Well 90.000% 67.500%
(API #42-163-32604 / RRC ID #15063)
Ricochet - Harris No. 3 Well 90.000% 67.500%
(API #42-163-32647 / RRC ID #15063)
[END]
41
EXHIBIT "C"
(Attached to Purchase and Sale Agreement dated May 29, 2014,
between Ricochet Energy, Inc. et al. and Baron Energy, Inc.)
ASSIGNMENT AND BILL OF SALE
THE STATE OF TEXAS )
: ss.
COUNTY OF FRIO )
This Assignment and Bill of Sale, effective as of , 2014 ("Effective Date"), is
by and between RICOCHET ENERGY, INC., a Texas corporation, RICOCHET INTERESTS,
LTD., a Texas limited partnership, MAIER ENERGY INTERESTS, LP, a Texas limited
partnership, G4S ENERGY, LTD., a Texas limited partnership, CRG ENERGY, Ltd., a
Texas limited partnership, DCPMD ENERGY, LTD., a Texas limited partnership,
STRICKER ENERGY, LTD., a Texas limited partnership, JRODS ENERGY INVESTMENTS,
LTD., a Texas limited partnership, TRIPLE (H) ENERGY, LTD., a Texas limited
partnership, MARVELL ENERGY, LTD., a Texas limited partnership, VAQUILLAS ENERGY
EAST PEARSALL, LTD., a Texas limited partnership, VAQUILLAS ENERGY RE-ENTRY
LTD., LLP, a Texas limited partnership, JOB ENERGY PARTNERS, II, LTD., a Texas
limited partnership, LORD'S ENERGY, LTD., a Texas limited partnership,
HUBBERD-SMITH ENERGY INVESTMENTS, LTD., a Texas limited partnership, NETTLESHIP
ENERGY INVESTMENTS, LTD., a Texas limited partnership, LAREDO GATEWAY ENERGY,
LTD., a Texas limited partnership, and BORDEN JENKINS, an individual
(collectively the "Assignors", and each individually an "Assignor") and BARON
ENERGY, INC., a Nevada corporation, whose address is 300 S. C.M. Allen Parkway,
Suite 400, San Marcos, TX 78666, hereinafter referred to as "Assignee."
WITNESSETH:
For Ten Dollars ($10.00) and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Assignors hereby grant,
sell, convey, assign and transfer to Assignee, effective as of the Effective
Date and subject to the matters set forth herein, the following:
(a) All of Assignors' right, title and interest in, to and under or
derived from the oil and gas leasehold interests, record title interests,
operating rights interests, fee interests, mineral interests and overriding
royalty interests described on Exhibit A (collectively, the "Leases");
(b) All of Assignors' right, title and interest in and to, or derived
from, all of the presently existing and valid unitization and pooling agreements
and units (including all units formed by voluntary agreement and those formed
under the rules, regulations, orders or other official acts of any governmental
entity having appropriate jurisdiction) to the extent they relate to any of the
interests which are expressly described on Exhibit A;
(c) All of Assignors' right, title and interest in and to all oil, gas
and associated liquid and gaseous hydrocarbons (collectively, the
"Hydrocarbons") produced from or attributable to Assignors' interest in the
Leases and attributable to the period from and after the Effective Date;
(d) All of Assignors' right, title and interest in and to, or derived
from, all of the presently existing and valid oil sales contracts, casing head
gas sales contracts, gas sales contracts, processing contracts, gathering
contracts, transportation contracts, easements, rights-of-way, servitudes,
surface leases and other contracts (including the Material Contracts), to the
extent the same are assignable and relate to any of the interests which are
expressly described on Exhibit A;
42
(e) All of Assignors' right, title and interest in and to all personal
property and improvements (collectively, the "Equipment"), including without
limitation, wells (whether producing, plugged and abandoned, shut-in, injection,
disposal or water supply), tanks, boilers, platforms, buildings, fixtures,
machinery, equipment, pipelines, utility lines, power lines, telephone lines,
telegraph lines and other appurtenances located on, in, under and about the
Leases, to the extent the same are situated upon and used or held for use by
Assignors solely in connection with the ownership, operation, maintenance and
repair of the interests which are expressly described on Exhibit A, subject to
the reservations stated below;
(f) All of Assignors' Records to the extent the same are assignable and
relate to any of the interests which are expressly described on Exhibit A;
(g) All franchises, licenses, permits, approvals, consents, certificates
and other authorizations and other rights granted by governmental authorities
and all certificates of convenience or necessity, immunities, privileges, grants
and other rights that relate to the Properties or the ownership or operation of
any thereof, to the extent the same are assignable (the "Permits"); and
(h) All (i) accounts, instruments and general intangibles (as such terms
are defined in the Uniform Commercial Code of Texas) attributable to the
Properties with respect to any period of time on or after the Effective Date,
and (ii) liens and security interests in favor of Assignors, whether choate or
inchoate, under any law, rule or regulation or under any of the Material
Contracts (a) arising from the ownership, operation or sale or other disposition
of Hydrocarbons on or after the Effective Date of any of the Properties or (b)
arising in favor of Assignors whether by contract or statute as the operator or
non-operator of certain of the Properties.
All of the foregoing property and contract rights, titles, and interests
described above are hereinafter collectively called the "PURCHASED PROPERTIES."
Any capitalized terms used herein and not otherwise defined herein shall have
the meaning attributed to such terms in the Purchase and Sale Agreement dated
May 29, 2014 by and between Assignors and Assignee. Notwithstanding the
foregoing, third-parties may rely on the terms of this Assignment alone to grant
title to the Purchased Properties to the Assignee.
TO HAVE AND TO HOLD the said Purchased Properties unto Assignee, its
successors and assigns, forever subject to the terms, reservations, and
conditions contained herein.
All of the Purchased Properties, whether real or personal, are conveyed
subject to a Special Warranty of Title, that the Purchased Properties are free
and clear of and from any lien, claim, mortgage, or other encumbrance, whether
similar or dissimilar, by any person claiming by, through, or under Assignors,
and not otherwise.
Assignors also hereby grant and transfer to Assignee, its successors and
assigns, the benefit of the right to enforce the covenants and warranties, if
any, which Assignors are entitled to enforce with respect to the Purchased
Properties against Assignors' predecessors in title.
By acceptance of this Assignment, on and after the Effective Date,
Assignee assumes and agrees to pay, perform, and discharge all of Assignors'
responsibilities, liabilities, and obligations related to the environmental
condition of the Purchased Properties.
43
Assignee hereby assumes and agrees to perform all duties and obligations
of the Assignors, present, past, and future, applicable to the operations or
prescribed in the leases and all contracts, including the Material Contracts,
covered hereby.
Assignee agrees to defend, indemnify, and hold harmless Assignors from
and against all losses, costs, claims, demands, suits, liability, and expenses
with respect to the Purchased Properties which arise out of or relate to
Assignee's ownership and/or operation of such properties, or which in any manner
relates to the condition of the premises and equipment with regard to any event
or occurrence occurring after the Effective Date.
This Assignment may be executed in counterparts, which shall when taken
together constitute one valid and binding agreement. If counterparts of this
Assignment are executed, the signature pages and acknowledgments from various
counterparts may be combined into one composite instrument for all purposes.
IN WITNESS WHEREOF, this Assignment is executed by the parties on the
date of their respective acknowledgments below, but shall be effective for all
purposes as of the Effective Date.
ASSIGNORS
Ricochet Energy, Inc. Ricochet Interests, Ltd.
By: Ricochet Management, LLC,
General Partner
-------------------------------------- --------------------------------------
By: Jerry L. Hamblin, President By: Jerry L. Hamblin, Manager
Maier Energy Interests, LP G4S Energy, Ltd.
By: Maier Energy Management LLC, By: Regallaw, LLC, General Partner
General Partner
-------------------------------------- --------------------------------------
By: Christopher S. Maier, Manager By: Ray Gallaway, Jr., Manager
DCPMD Energy, Ltd. CRG Energy, Ltd.
By: DCPMD Energy Management, LLC, By: CRG Energy Management, LLC,
General Partner General Partner
-------------------------------------- --------------------------------------
By: Dallas R. Plattner, Manager By: Lisa R. Garcia, Manager
JRODS Energy Investments, Ltd. Stricker Energy, Ltd.
By: JRODS Energy Management, LLC, By: Stricker EMC, LLC, General Partner
General Partner
-------------------------------------- --------------------------------------
By: J.R. Rodriguez, Manager By: Roy L. Stricker, Manager
44
Triple (H) Energy, Ltd. MarVell Energy, Ltd.
By: 3H Family Interests, LLC, By: MarVell Management, LLC,
General Partner General Partner
-------------------------------------- --------------------------------------
By: Jerry L. Hamblin, Manager By: Jerry L. Hamblin, Manager
Vaquillas Energy East Pearsall,
Ltd., LLP Vaquillas Energy Re-Entry Ltd., LLP
By: Vaquillas Energy Management, LLC By: Vaquillas Energy Management, LLC
Its: General Partner Its: General Partner
-------------------------------------- --------------------------------------
By: James D. Walker, Managing Member By: James D. Walker, Managing Member
JOB Energy Partners II, Ltd. Lord's Energy, Ltd.
By: JOB Energy, LLC, General Partner By: Lord's Energy Management, LLC
General Partner
-------------------------------------- --------------------------------------
By: James D. Walker, Managing Member By: James D. Walker, Managing Member
Hubberd-Smith Energy Investments, Ltd. Nettleship Energy Interests, Ltd.
By: Hubberd-Smith, LLC, By: Nettleship Enterprises, Inc.
General Partner General Partner
-------------------------------------- --------------------------------------
By: Clayborne L. Nettleship, Manager By: Clayborne L. Nettleship, President
Laredo Gateway Energy, Ltd.
By: Gateway Professional Builders, LC
General Partner
-------------------------------------- --------------------------------------
By: Gerardo G. Salinas, Manager Borden Jenkins
ASSIGNEE
Baron Energy, Inc.
Date: By:
--------------------------------- --------------------------------------
Ronnie L. Steinocher, President and CEO
45
[Acknowledgments and Exhibit A to be included on Execution Original.]
46
EXHIBIT "D"
(Attached to Purchase and Sale Agreement dated May 29, 2014,
between Ricochet Energy, Inc. et al. and Baron Energy, Inc.)
FORM OF SELLER'S CERTIFICATE
SELLER'S CERTIFICATE
Reference is made to that certain Purchase and Sale Agreement dated as of
May ___, 2014 (the "PSA"), by and between _________________, a _____________
("Seller"), the other parties named therein as "Sellers", and Baron Energy,
Inc., a Nevada corporation ("Buyer"). Capitalized terms used but not defined
herein shall have the respective meanings assigned to such terms in the PSA.
I, __________________, do hereby certify that I am the duly elected and
acting _________________ of Seller and, in such capacity, I further certify on
behalf of Seller to Buyer that:
All representations and warranties of Seller contained in the PSA are true
and correct in all material respects at and as of the Closing as though made at
and as of such time.
IN WITNESS WHEREOF, Seller has caused this certificate to be executed on
its behalf by the undersigned as of , 2014.
[COMPANY NAME]
By:
---------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
[END]
47
EXHIBIT "E"
(Attached to Purchase and Sale Agreement dated May 29, 2014,
between Ricochet Energy, Inc. et al. and Baron Energy, Inc.)
FORM OF NON-FOREIGN AFFIDAVIT
NON-FOREIGN AFFIDAVIT
Exemption from Withholding of Tax For
Dispositions of U. S. Real Property Interests
Section 1445 of the Internal Revenue Code provides that a transferee of a U.S.
real property interest must withhold tax if the transferor is a foreign person.
To inform Baron Energy, Inc. that withholding of tax is not required upon the
disposition of a U.S. real property interest by ___________________, the
undersigned hereby certifies the following:
(1) The undersigned is not a nonresident alien, foreign corporation,
foreign partnership, foreign trust, or foreign estate for purposes of
U. S. income taxation;
(2) The taxpayer identifying number for ___________ is ____________;
(3) The home office address of the undersigned is _____________________.
The undersigned understands that this certification may be disclosed to the
Internal Revenue Service by Baron Energy, Inc. and that any false statement
contained herein could be punished by fine, imprisonment, or both.
Under penalties of perjury, I declare that I have examined this certification
and, to the best of my knowledge and belief, it is true, correct, and complete,
and I further declare I have authority to sign this document.
DATED this _________ day of ____________, 2014.
[COMPANY NAME]
By:
---------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
[END]
48
EXHIBIT "F"
(Attached to Purchase and Sale Agreement dated May 29, 2014,
between Ricochet Energy, Inc. et al. and Baron Energy, Inc.)
LIST OF MATERIAL CONTRACTS
EAST PEARSALL (STEWART) PROSPECT
Participation Agreement (East Pearsall Prospect) dated effective January 15,
2010, between Ricochet Energy, Inc., as Operator, and Sien Energy Company et
al., as Participants, together with Joint Operating Agreement dated effective
January 15, 2010 attached thereto, unrecorded.
Participation Agreement (East Pearsall Prospect) dated effective May 1, 2010,
between Ricochet Energy, Inc., as Operator, and Ricochet Interests, Ltd. et al.,
as Participants, unrecorded.
Letter Agreement dated February 24, 2011, between Ricochet Energy, Inc., and
Borden Jenkins, unrecorded, setting forth certain agreements to purchase
interests in the East Pearsall Prospect Leases from Borden Jenkins.
Letter Agreements dated June 1, 2012, between Ricochet Energy, Inc., and Sien
Energy Company, LLC and Mark Thompson, unrecorded, setting forth certain
agreements to purchase certain interests in the East Pearsall Prospect Leases
from Sien Energy Company, LLC and Mark Thompson.
Eastex Crude Company Contract No. 4900, as amended (currently Amendment #18),
dated March 26, 2010, between Eastex Crude Company, and Ricochet Energy, Inc.,
setting forth the terms for sales of crude oil from wells located in Frio
County.
Base Contract for Sale and Purchase of Natural Gas, undated, between Faraday
Pipeline Co., as purchaser, and Ricochet Energy, Inc., as seller, unrecorded.
BREAZEALE PROSPECT (NEAL TRUST UNIT)
Participation Agreement (Breazeale Prospect) dated effective August 1, 2012,
between Ricochet Energy, Inc., as Operator, and Ricochet Interests, Ltd. et al.,
as Participants, together with Joint Operating Agreement dated effective August
1, 2012 attached thereto, unrecorded.
MAXWELL PROSPECT
Letter Agreements dated January 24, 2012, between Ricochet Energy, Inc. and
Vaquillas Energy, Ltd., JOB Energy II, Ltd., Lord's Energy, Ltd., Hubberd-Smith
Energy Investments, Ltd., Nettleship Energy Interests, Ltd. and Laredo Gateway
Energy, Ltd., setting forth elections to participate in drilling and development
activities on the referenced prospect area.
PETTY PROSPECT
Letter Agreements dated April 16, 2012, between Ricochet Energy, Inc. and
Vaquillas Energy, Ltd., JOB Energy II, Ltd., Lord's Energy, Ltd., Hubberd-Smith
Energy Investments, Ltd., Nettleship Energy Interests, Ltd. and Laredo Gateway
Energy, Ltd., setting forth elections to participate in drilling and development
activities on the referenced prospect area.
49
FRIO AUSTIN CHALK PROSPECT
(CULPEPPER, 3C, KOTZEBUE AND RIGGAN)
Participation Agreement (Frio Austin Chalk Prospect) dated effective June 1,
2011, between Ricochet Energy, Inc., as Operator, and Ricochet Interests, Ltd.
et al., as Participants, together with Joint Operating Agreement dated effective
June 1, 2011 attached thereto, unrecorded.
Agreement dated April 21, 2010, between Sien Energy Company, Ricochet Energy,
Inc. and Goodrich Petroleum Company, L.L.C., regarding the sale and conveyance
of certain rights below the top of the Eagleford formation to Goodrich Petroleum
in the "Culpepper" Leases listed therein, unrecorded.
EXPRESS RE-ENTRY PROSPECTS
(CANTU-HENDERSON UNIT AND HARRIS LEASE)
Participation Agreement (Express Re-entry Prospects) dated effective July 15,
2009, between Ricochet Energy, Inc., as Operator, and Express Oil & Gas, Mark
Pinson and Rustic Oil & Gas, L.L.C., covering the Cantu/Henderson Leases and the
Harris Lease in Frio County, unrecorded.
Operating Agreement dated July 15, 2009, between Ricochet Energy, Inc., as
Operator, and Express Oil & Gas, as non-operator, recorded by Memorandum of
Operating Agreement and Financing Statement dated effective July 15, 2009, in
Volume 63, page 442, Official Records, Frio County, Texas, covering the
Cantu/Henderson Lease Prospect.
Operating Agreement dated July 15, 2009, between Ricochet Energy, Inc., as
Operator, and Express Oil & Gas and Rustic Oil & Gas, L.L.C., as non-operators,
recorded by Memorandum of Operating Agreement and Financing Statement dated
effective July 15, 2009, in Volume 63, page 435, Official Records, Frio County,
Texas, covering the Harris Lease (Re-entry) Prospect.
Participation Agreement (Express Re-entry Prospects) dated effective November
10, 2009, between Ricochet Energy, Inc., as Operator, and Ricochet Interests,
Ltd. et al, as Participants, covering the Cantu/Henderson Leases and the Harris
Lease in Frio County, unrecorded.
Gas Sales and Purchase Agreement dated December 1, 2010, between Frio LaSalle
Pipeline, LLC, and Ricochet Energy, Inc., regarding sales of gas from the
Cantu-Henderson No. 1H well in Frio County.
Salt Water Disposal Agreement dated effective September 1, 2012, between Manuel
Cantu Family Trust, as Owner, and Ricochet Energy, Inc., as Operator, regarding
disposal of salt water from the Cantu-Henderson No. 1H Well into the wellbore of
the former Cantu No. 1 Well, unrecorded.
[END]
50
EXHIBIT "G"
(Attached to Purchase and Sale Agreement dated May 29, 2014,
between Ricochet Energy, Inc. et al. and Baron Energy, Inc.)
LITIGATION AND CLAIMS
JOB Energy Partners II, Ltd. (a Texas limited partnership) expressly reserves to
itself, its successors and assigns, and does not bargain, assign, transfer, sell
or convey any rights or interests it has individually and as assignee of JOB
Energy Partners, Ltd. (a Texas limited partnership) in the following:
1. claims against Thomas A. Lamont, Rosendo A. Carranco, L.O.G. Energy
Development, Ltd. (a Texas limited partnership), and Montecristo
Energy Development II, Ltd. (a Texas limited partnership) made the
basis of that certain lawsuit styled Vaquillas Energy, Ltd., et al.,
vs. Thomas A. Lamont, et al., Cause No. 2008-CVF-00353-D1, in the 49th
District Court of Webb County, Texas, affirmed by the 4th Court of
Appeals in San Antonio, and which is currently on appeal at the Texas
Supreme Court;
2. that certain Final Judgment in favor of JOB Energy Partners II, Ltd.
individually and as assignee of JOB Energy Partners, Ltd. in that
certain lawsuit styled Vaquillas Energy, Ltd., et al., vs. Thomas A.
Lamont, et al., Cause No. 2008-CVF-00353-D1, in the 49th District
Court of Webb County, Texas; and
3. all right, title, and interest under that certain Agreement for
Transfer of Prospect to Explore and Develop Oil, Gas, and Related
Hydrocarbons entered into as of October 19, 2006 between JOB Energy
Partners Ltd. and JOB Energy Partners II, Ltd.
Ricochet Energy, Inc. (a Texas corporation) expressly reserves to itself, its
successors and assigns, and does not bargain, assign, transfer, sell or convey
any rights or interests it has in the following:
1. claims or counterclaims against Thomas A. Lamont, L.O.G. Energy
Development, Ltd., L.O.G. Energy Management, LLC, Rosendo A. Carranco,
Montecristo Energy II, Ltd. and Montecristo Management II, LLC in that
certain lawsuit styled Thomas A. Lamont et al., vs. Jerry L. Hamblin,
et al., Cause No. 2008-CVF-000665-D2, in the 111th District Court of
Webb County, Texas, reversed in part by the 4th Court of Appeals in
San Antonio.
[END]
51
EXHIBIT H
Attached to Purchase and Sale Agreement dated May 29, 2014
between Ricochet Energy, Inc. et al. and Baron Energy, Inc.
52
EXHIBIT "I"
(Attached to Purchase and Sale Agreement dated May 29, 2014,
between Ricochet Energy, Inc. et al. and Baron Energy, Inc.)
GAS IMBALANCES
NONE
[END]
53
EXHIBIT "J"
(Attached to Purchase and Sale Agreement dated May 29, 2014,
between Ricochet Energy, Inc. et al. and Baron Energy, Inc.)
CONSENTS AND PREFERENTIAL RIGHTS
EAST PEARSALL (STEWART) PROSPECT
Lease 1: Oil and Gas Lease dated August 13, 2009, from Federal Royalty LLC, as
General Partner for Federal Royalty Partners, Ltd., as Lessor, to Sien Energy
Company, as Lessee, recorded by Memorandum of Oil and Gas Lease in Volume 66,
page 502, Official Public Records, Frio County, Texas, as amended.
* Consent to assignment required (Section 8), not to be unreasonably
withheld.
Lease 2: Oil and Gas Lease dated March 26, 2009, from Cimarron Texas Minerals,
Ltd., as Lessor, to Sien Energy Company, as Lessee, recorded by Memorandum of
Oil and Gas Lease dated March 31, 2009 in Volume 67, page 831, Official Public
Records, Frio County, Texas, as amended.
* Consent to assignment required (Section 7).
Lease 14: Paid Up Oil and Gas Lease dated March 20, 2009, from Douglas C. Koch,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page 544,
Official Public Records, Frio County, Texas, as amended.
* Assignment is not effective until Lessor is furnished with a copy
(Section 23).
Lease 15: Paid Up Oil and Gas Lease dated March 20, 2009, from Wayne A. Bissett,
as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 66, page 550,
Official Public Records, Frio County, Texas, as amended.
* Assignment is not effective until Lessor is furnished with a copy
(Section 23).
Lease 21: Paid-Up Oil and Gas Lease dated September 1, 2009, from Stewart
Information Services Corporation, as Lessor, to Sien Energy Company, as Lessee,
recorded by Memorandum of Oil and Gas Lease in Volume 66, page 574, Official
Public Records, Frio County, Texas, as amended.
* Assignment is not binding on Lessor until Lessor is furnished with a
copy (Section 9.0).
BREAZEALE PROSPECT (NEAL TRUST UNIT)
Lease 3: Oil and Gas Lease dated July 18, 2011, from Providence Minerals, LLC,
as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of Oil
and Gas Lease in Volume 95, page 116, Official Public Records, Frio County,
Texas.
* Consent to assignment required (Section 8), not to be unreasonably
withheld or delayed.
Lease 4: Oil and Gas Lease dated August 16, 2011, from Texas Osage Royalty Pool,
Inc., as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of
Oil and Gas Lease in Volume 95, page 819, Official Public Records, Frio County,
Texas.
* Consent to assignment required (Section 6), for any assignments of
operating rights.
MAXWELL PROSPECT
None
PETTY PROSPECT
None
54
FRIO AUSTIN CHALK PROSPECT
CULPEPPER & 3C LEASES
None
KOTZEBUE LEASE
Oil and Gas Lease dated August 26, 2010, from David W. Kotzebue and wife,
Deborah R. Kotzebue, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by
Memorandum of Oil and Gas Lease in Volume 79, page 752, Official Public Records,
Frio County, Texas.
* Consent to assignment required (Section XI), not to be unreasonably
withheld or delayed, and no assignment shall be binding on lessor until a
recorded copy is delivered to lessor.
RIGGAN LEASE
Oil and Gas Lease dated August 18, 2010, from James M. Riggan et al., as Lessor,
to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of Oil and Gas Lease
in Volume 79, page 460, Official Public Records, Frio County, Texas.
* Consent to assignment required (Section XV.(a)), not to be unreasonably
withheld or delayed, and no assignment will be effective until a copy is
delivered to lessor.
EXPRESS RE-ENTRY PROSPECTS
(CANTU-HENDERSON UNIT AND HARRIS LEASE)
Salt Water Disposal Agreement dated effective September 1, 2012, between Manuel
Cantu Family Trust, as Owner, and Ricochet Energy, Inc., as Operator, regarding
disposal of salt water from the Cantu-Henderson No. 1H Well into the wellbore of
the former Cantu No. 1 Well, unrecorded.
* This agreement shall not be assigned without first obtaining prior written
consent (Section 17) from the Owner.
[END]
55
EXHIBIT "K"
(Attached to Purchase and Sale Agreement dated May 29, 2014,
between Ricochet Energy, Inc. et al. and Baron Energy, Inc.)
VIOLATIONS OF LAWS
None
[END]
56
EXHIBIT "L"
(Attached to Purchase and Sale Agreement dated May 29, 2014,
between Ricochet Energy, Inc. et al. and Baron Energy, Inc.)
PRODUCTION SALES MATTERS
NONE
[END]
57
EXHIBIT "M"
(Attached to Purchase and Sale Agreement dated May 29, 2014,
between Ricochet Energy, Inc. et al. and Baron Energy, Inc.)
CAPITAL COMMITMENTS
NONE
[END]
58
ADDENDUM I
Identification of the Ricochet Parties
Ricochet Interests, Ltd., a Texas limited partnership
Maier Energy Interests, LP, a Texas limited partnership
G4S Energy, Ltd., a Texas limited partnership
CRG Energy, Ltd., a Texas limited partnership
DCPMD Energy, Ltd., a Texas limited partnership
Stricker Energy, Ltd., a Texas limited partnership
JRODS Energy Investments, Ltd., a Texas limited partnership
Triple (H) Energy, Ltd., a Texas limited partnership
MarVell Energy, Ltd., a Texas limited partnership
5
