EXHIBIT 10.1
PURCHASE AND SALE AGREEMENT
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This Purchase and Sale Agreement ("Agreement") dated as of December 13,
2002, is by and among FLYING J OIL & GAS INC., a Utah corporation ("Flying
J") and BIG WEST OIL & GAS INC., a Utah corporation ("Big West"),
(collectively "Seller") and NPC Inc., a Colorado corporation ("Buyer"), and ST.
MARY LAND & EXPLORATION COMPANY, a Delaware corporation ("St. Mary")
relative to the "Interests" (as hereinafter defined).
In consideration of the mutual promises contained herein, the benefits
to be derived by each party hereunder and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller
agree as follows:
Article I
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PURCHASE AND SALE
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1.01 Purchase and Sale. Seller agrees to sell and convey and Buyer
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agrees to purchase and pay for the Interests subject to the terms and conditions
of this Agreement.
1.02 Interests. All of Seller's right, title and interest in and to the
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following (except for the "Excluded Assets" defined below) which shall be
referred to as the "Interests":
(a) All of Seller's interests, in and to the entire estates
created by the leases, licenses, permits and other agreements described in
Exhibit "A" (the "Leases") and the lands described in Exhibit "A" (the "Lands"),
and including any overriding royalty interests, mineral fee interests,
reversionary interests, production payments, net profits interests, and any
other interests Seller may own in or affecting the oil and gas minerals
underlying the Lands, and including all of Seller's interests in and to its oil
and gas assets whether correctly described herein unless specifically included
within the Excluded Assets, together with (i) all rights, privileges, benefits
and powers conferred upon Seller as the holder of the Leases with respect to the
use and occupation of the surface of the Lands that may be necessary, convenient
or incidental to the possession and enjoyment of the Leases, (ii) all rights in
respect of any pooled, communitized, or unitized acreage located in whole or in
part within the Lands by virtue of the Leases, including rights to production
from the pool, communitized area, or unit allocated to any Lease being a part
thereof, regardless of whether such production is from the Lands, (iii) all
rights, options, titles and interests of Seller granting Seller the right to
obtain, or otherwise earn interests within the Lands no matter how earned, and
(iv) all tenements, hereditaments and appurtenances belonging to any of the
foregoing;
(b) The undivided interests in and to all of the oil and gas
wells, saltwater disposal wells and injection wells (the "Wells") as set forth
in Exhibit "A-1" together with all hydrocarbons produced from the Wells and
Leases together with any tight sands tax credits associated therewith, gas
balancing positions, and all of the personal property, fixtures and improvements
now or as of the Effective Time (as defined in Section 1.04 below) on the Lands,
appurtenant thereto or used in connection therewith or with the production,
gathering, storing, measuring, treating, operating, maintaining, marketing, or
transportation of production from the Wells, Lands or Leases or lands pooled,
communitized or unitized therewith, including all surface or downhole equipment
and personal property associated with the Wells or situated upon the Leases,
together with all such surface and downhole equipment, fixtures and inventory
and personal property and equipment, if any, not physically located upon the
Leases, but used, or intended for use, in connection with the Leases (the
"Equipment") and specifically including the Sidney, Montana, field office and
with any other field office or yard associated with the Leases together with all
real and personal property comprising or associated with all such field offices
and yards;
(c) The contracts and contractual rights, obligations and
interests, including all farmout agreements, farmin agreements, drilling
contracts, operating agreements, sales contracts, saltwater disposal agreements,
division orders and transfer orders, hedges, swaps and collars relating to
production by Seller and other contracts or agreements covering or affecting any
or all of the Wells, Leases and/or Lands (the "Contracts");
(d) The easements, licenses, authorizations, permits, rights of
way, servitudes, surface leases, the building lease for any field office and
similar rights and interests applicable to the ownership or operation of the
Wells;
(e) All of Seller's right, title and interest in and to those
gathering pipeline systems commencing at or near each Well connected to each
subsystem and lying upstream of the interconnects with other pipeline systems,
all as designated and depicted on Exhibit "A-2" hereto (the "Gas Gathering
Systems") together with all of Seller's right, title and interest in and to (1)
all easements, rights-of-way, licenses, permits and other agreements necessary
or incidental to the ownership, maintenance and operation of the Gas Gathering
Systems; (2) all other agreements, permits, licenses, contracts, property and
rights incident or appurtenant to Gas Gathering Systems; and (3) all pipelines,
gathering lines, meters, meter runs, drips, taps, valves, compressors,
generators, dehydrators, building, facilities, telecommunication equipment and
other personal property (including, without limitation, any inventory) used to
receive gas into a Gas Gathering System and to transport and redeliver the same
out of such system at the interconnection points depicted on Exhibit "A-2".
(f) Insofar as such pertain to the Leases, Lands, Wells and the
other equipment, personal property, Contracts, Gas Gathering Systems and other
matters described herein, all books, records, reports, manuals, files, title
documents, including correspondence, records of production, maintenance,
revenue, sales, expenses, warranties, lease files, land files, well files,
division order files, abstracts, title opinions, assignments, reports, and other
written material relating to the Interests and in Seller's possession, including
without limitation, property records, contract files, operations files, copies
of tax and accounting records (but excluding Federal income tax returns and
records) and files, maps, core data, hydrocarbon analyses, well logs, mud logs,
field studies, together with other files, contracts, and other records and data,
including all geologic and geophysical data and seismic data of Seller relating
to the Interests, whether maintained in paper or electronic form(the "Records");
however, Seller shall have no obligation to furnish Buyer any data or
information which Seller cannot provide to Buyer because of third party
restrictions.
1.03 Excluded Assets. As used herein, "Excluded Assets" means, (a) all
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trade credits and all accounts, instruments and general intangibles (as such
terms are defined in the Utah Uniform Commercial Code) attributable to the
Interests with respect to any period of time prior to the Effective Time; (b)
all claims and causes of action of Seller (i) except as set forth in Section
5.09, arising from acts, omissions or events, or damage to or destruction of
property, occurring prior to the Effective Time, (ii) arising under or with
respect to any Contracts that are attributable to periods of time prior to the
Effective Time (including claims for adjustments or refunds), or (iii) with
respect to any of the Excluded Assets; (c) all rights and interests of Seller
(i) under any policy or agreement of insurance or indemnity, (ii) under any
bond, or (iii) to any insurance or condemnation proceeds or awards arising, in
each case, from acts, omissions or events, or damage to or destruction of
property, occurring prior to the Effective Time; (d) all substances produced or
sold from the Lands and Leases with respect to all periods prior to the
Effective Time, together with all proceeds from or of such substances; (e)
claims of Seller for refunds of or loss carry forwards with respect to (i)
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
Excluded Assets; (f) all amounts due or payable to Seller as adjustments to
insurance premiums related to the Interests with respect to any periods prior to
the Effective Time; (g) all proceeds, income or revenues (and any security or
other deposits made) attributable to (i) the Interests for any period prior to
the Effective Time, or (ii) any Excluded Assets; (h) all personal computers and
associated peripherals and all radio and telephone equipment except that which
is located on the Wells; (i) all of Seller's proprietary computer software,
patents, trade secrets, copyrights, names, trademarks, logos and other
intellectual property; (j) all documents and instruments of Seller that may be
protected by an attorney-client privilege; (k) data that cannot be disclosed or
assigned to Buyer as a result of confidentiality arrangements under agreements
with persons unaffiliated with Seller; (l) all audit rights arising under any
Contracts or otherwise with respect to any period prior to the Effective Time or
to any of the Excluded Assets; and, (m) Seller's interests in and to the Uinta
Basin, White River Dome and Powder River Basin Coalbed Methane properties and
the Rife's Rim Field all as described on Exhibit A-3; and (n) that certain field
office of Seller located in Ballard, Utah.
1.04 Effective Time. The purchase and sale of the Interests shall be
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effective for all purposes as of November 1, 2002, at 12:01 a.m., local time at
the location of the Interests (the "Effective Time").
Article II
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PURCHASE PRICE
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2.01 Purchase Price. The purchase price for the Interests shall be
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$85,000,000.00 (the "Purchase Price"), which shall be adjusted only in
accordance with the provisions of Article V. In addition, the parties shall make
the adjustments described in Section 2.02 below at and after Closing in
accordance with the terms hereof, which adjustments shall be netted on a cash
basis and paid as provided in this Agreement. The Purchase Price shall be paid
by Buyer to Seller at Closing in the form of shares of common stock of St. Mary,
the "grandparent" of Buyer. These shares of common stock are hereinafter
referred to as the "St. Mary Stock." Assuming an unadjusted Purchase Price,
Seller, in the proportions requested by Seller as to each party constituting
Seller, shall have issued to Seller the total of 3,400,000 shares of St. Mary
Stock. The number of shares of St. Mary Stock shall be proportionately and
appropriately adjusted in the event of any stock split, stock dividend,
recapitalization, reclassification, or any similar capital stock restructure by
St. Mary occurring prior to Closing. Additionally, to the extent the Purchase
Price is adjusted either upward or downward in accordance with the provisions of
Article V hereof, the number of shares of St. Mary Stock to be issued to Seller
shall likewise be adjusted proportionately based on this original number of
shares and the unadjusted Purchase Price.
2.02 Adjustments to Purchase Price. The parties shall make the
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following monetary adjustments in cash to account for the various financial
matters that will arise regarding the Interests both before and after the
Effective Time as follows:
(a) The following shall be paid to Seller:
(i) The value of all oil and gas in storage or in pipelines or
the tanks and above the pipeline connection or upstream of the sales meter as of
the Effective Time which is credited to the Interests, such value to be the
market value or, if applicable, the contract price in effect as of the Effective
Time, less taxes and deductions by the purchaser; provided however, Seller shall
remain responsible for the payment of any taxes on this production and all
royalty, overriding royalty, and other non-cost bearing burdens affecting this
production;
(ii) The amount of all verifiable expenditures under
applicable operating agreements or other similar arrangements or agreements and,
in the absence of such agreements, such expenses of the sort customarily billed
thereunder, paid by Seller in connection with the Interests for the period
subsequent to the Effective Time;
(iii) An amount equal to all prepaid expenses attributable to
the Interests that are paid by Seller or any affiliate of Seller prior to the
Closing Date that inure to the benefit of Buyer and that are, in accordance with
generally accepted accounting principles, attributable to the period after the
Effective Time, including without limitation, prepaid ad valorem, property,
production, severance and similar taxes (but not including income taxes) based
upon or measured by the ownership of property or the production of hydrocarbons
or the receipt of proceeds therefrom; provided however, that ad valorem and
similar taxes shall be considered assessed for the period for which they are
stated to be assessed, even if such taxes are calculated from or based upon
production or other activities occurring in prior periods;
(iv) An amount equal to $1.00 per MCF of the underproduced gas
imbalance with respect to any gas production, pipeline, storage, processing or
other gas imbalance attributable to the Interests as of the Effective Time; and,
(v) Any other amount agreed upon by Seller and Buyer.
(b) The following shall be paid to Buyer:
(i) The value of proceeds received by Seller from the sale of
oil, gas or other hydrocarbons attributable to the Interests and relating to
production after the Effective Time, less all applicable taxes not reimbursed to
Seller by a purchaser; and less all royalties, overriding royalties and other
non-cost bearing burdens affecting this production;
(ii) An amount equal to all unpaid ad valorem, property,
production, severance and similar taxes and assessments (but not including
income taxes) based upon or measured by the ownership of property or the
production of hydrocarbons or the receipt of proceeds therefrom accruing to the
Interests prior to the Effective Time; provided however, that ad valorem and
similar taxes shall be considered assessed for the period for which they are
stated to be assessed, even if such taxes are calculated from or based upon
production or other activities occurring in prior periods;
(iii) The amount of all authorized and verifiable expenditures
paid by Buyer for work actually done and performed in connection with the
Interests for the period prior to the Effective Time;
(iv) An amount equal to $1.00 per MCF of the overproduced gas
imbalance with respect to any gas production, pipeline, storage, processing or
other gas imbalance attributable to the Interests as of the Effective Time; and,
(v) Any other amount agreed upon by Seller and Buyer.
2.03 Allocation of Purchase Price. The Purchase Price shall be
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allocated ("Allocated Value") among the Interests including the specifically
identified proved undeveloped locations and behind pipe intervals, the hedges,
collars and swaps and other specifically identified items all as set forth in
Exhibit "B" hereto and which has been approved by Seller.
Article III
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REPRESENTATIONS AND WARRANTIES
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3.01 Representations and Warranties of Seller. Seller, each as to its
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individual ownership position in the Interests, represents and warrants to Buyer
as follows:
(a) Flying J and Big West are each a Utah corporation, each is
duly organized, validly existing and in good standing under the laws of its
state of organization, and each is duly qualified to carry on its business in
each of the states identified in Exhibit "A". Flying J is the sole shareholder
of Big West.
(b) Seller has the requisite power and authority to carry on its
business as presently conducted, to enter into this Agreement, to sell the
Interests on the terms described in this Agreement and to perform its
obligations under this Agreement. The consummation of the transactions
contemplated by this Agreement will not violate, nor be in conflict with, any
provision of Seller's governing documents, or any agreement or instrument to
which Seller is a party or is bound, or any judgment, decree, order, statute,
rule or regulation applicable to Seller.
(c) The execution, delivery and performance of this Agreement and
the transactions contemplated hereby have been duly and validly authorized by
all requisite action on the part of Seller, including but not limited to the
approval of this Agreement and the transactions contemplated thereby by Flying J
as the sole shareholder of Big West.
(d) This Agreement has been duly executed and delivered on behalf
of Seller, and at the Closing all documents and instruments required hereunder
to be executed and delivered by Seller shall have been duly executed and
delivered. This Agreement does, and such documents and instruments shall,
constitute legal and valid obligations of Seller fully enforceable in accordance
with its terms.
(e) Seller has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions contemplated by this
Agreement for which Buyer or St. Mary shall have any responsibility whatsoever.
(f) To the best of Seller's knowledge, no claim, demand, filing,
hearing, notice of violation, proceeding, notice or demand letter,
investigation, administrative proceeding, civil, criminal or other action, suit
or other legal proceeding is pending or threatened against Seller relating to,
resulting from or affecting the ownership or operation of the Interests.
(g) Subject to the provisions of this paragraph and to the best of
Seller's knowledge, (i) the production and expense data heretofore furnished or
caused to be furnished by Seller to Buyer (the "Information"), and any
supplement thereto, was complete and correct in all material respects as of the
date of such delivery, and (ii) the Information, as of its respective dates and
of the respective dates of its delivery, did not contain a material misstatement
of fact regarding the matters described herein and did not omit to state therein
a material fact necessary to make the statements therein not misleading, in
light of the circumstances under which they were made. Except as set forth in
this Section 3.01 (g) or elsewhere in this Agreement, no representation or
warranty of any kind is made by Seller as to the Information or with respect to
the Interests to which the Information relates and Buyer expressly agrees that
any conclusions drawn therefrom shall be the result of its own independent
review and judgment. The representations contained in this paragraph shall apply
only to matters of fact, and shall not apply to any information, data,
printouts, extrapolations, projections, documentation, maps, graphs, charts, or
tables which reflect, depict, present, portray, or represent, or which are based
upon or derived from, in whole or in part, interpretation of the Information
including, but not limited to, matters of geological, geophysical, engineering,
or scientific interpretation, except that with respect to the foregoing
materials described in this sentence Seller represents that they have been
prepared in good faith utilizing assumptions and other bases which Seller deems
to be reasonable.
(h) The Interests are subject to a mortgage and lien in favor of a
syndicate of lenders represented by Bank One, NA as Agent pursuant to the Credit
Agreement among Flying J Oil and Gas Inc. and Big West Oil & Gas Inc., as
Borrowers and Bank One, NA and the Institutions named in such Credit Agreement
dated March 15, 2002. The mortgage and lien under this Credit Agreement shall be
released at Closing. Except as provided in this Section 3.01(h), the transfer of
the Interests to Buyer does not violate any covenants or restrictions imposed on
Seller by any bank or other financial institution in connection with a mortgage
or other instrument, and will not result in the creation or imposition of a lien
on any portion of the Interests.
(i) Except as disclosed by Seller in writing, to the best of
Seller's knowledge, it is in compliance with all laws, rules, regulations,
ordinances, codes, orders, licenses, concessions and permits pertaining to the
Interests.
(j) To the best of Seller's knowledge, Seller has all material
governmental licenses and permits and has properly made all material filings,
necessary or appropriate to obtain those licenses and permits to own and operate
the Interests, and such licenses, permits and filings are in full force and
effect, and no material violations exist in respect of any such licenses,
permits or filings, no proceeding is pending or to the best of Seller's
knowledge is threatened looking toward the challenging, revocation or limitation
of any such licenses, permits or filings.
(k) To the best of Seller's knowledge, (i) the material terms of
all Leases, operating agreements, production sales contracts, farmout agreements
and other contracts or agreements respecting the Interests can be found either
of record in the counties in which the Interests are located or are reflected or
referenced in Seller's files, and (ii) the Contracts are currently in full force
and effect in accordance with their applicable terms.
(l) To the best of Seller's knowledge, Seller has received no
notice of termination of any of the Leases.
(m) Seller is not (i) obligated by virtue of any prepayment
arrangement under any contract for the sale of hydrocarbons, including "take or
pay" obligation, hedging or forward sale agreements, or similar provisions or a
production payment or any other arrangement to deliver hydrocarbons from the
Interests at some future time without then or thereafter receiving full payment
therefor, (ii) subject to any production sales agreements currently in effect
that cannot be terminated with sixty (60) days prior written notice, and (iii)
subject to any calls on production affecting the Interests.
(n) To the best of Seller's knowledge, information, and belief
there are no surface use or access agreements currently in force and effect that
would materially interfere with oil and gas operations on the Leases.
(o) Except as disclosed on Schedule 3.01(o), to the best of
Seller's knowledge, none of the Wells included within the Interests has been
represented by its operator, either in a pending AFE or other written proposal
to other well participants, as being in need of being plugged and abandoned.
(p) Subject to the provisions of Sections 2.02(a)(iii) and
2.02(b)(ii), to the best of Seller's knowledge, all ad valorem, property,
production, severance and similar taxes and assessments based on or measured by
the ownership of property or the production of hydrocarbons or the receipt of
proceeds therefrom with respect to the Interests for all periods prior to the
Effective Time have been properly paid and all such taxes and assessments which
must be paid prior to the Closing shall have been properly paid by Seller.
(q) Seller has provided to Buyer the hedging, swap and collar
contracts currently in force and effect regarding the Interests.
(r) With regard to the hedges, swaps and collars included in the
Interests, there are no material terms or conditions that have not been
furnished to Buyer for its review prior to the execution of this Agreement.
(s) There are no gas imbalances affecting the Interests beyond
those set forth on the attached Schedule 3.01(s).
(t) Subject to the provisions of the Registration Rights Agreement
set forth in Exhibit F, Seller, and each of them, is an "accredited investor" as
defined under Regulation D promulgated under the Securities Act of 1933, as
amended (the "Act"), and is acquiring the St. Mary Stock for its own respective
account, and not with a view to, or for offer of resale in connection with, a
distribution thereof within the meaning of the Act and any other rules,
regulations or laws, whether state or federal, pertaining to the distribution of
securities.
3.02 Representations and Warranties of Buyer. Buyer represents and
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warrants to Seller as follows:
(a) Buyer is a Colorado corporation duly organized, validly
existing and in good standing under the laws of its state of organization and is
or will be at Closing duly qualified to carry on its business in each of the
states identified in Exhibit "A".
(b) Buyer has all requisite power and authority to carry on its
business as presently conducted, to enter into this Agreement, to purchase the
Interests on the terms described in this Agreement and to perform its other
obligations under this Agreement. The consummation of the transactions
contemplated by this Agreement will not violate, or be in conflict with, any
provision of Buyer's governing documents, or any agreement or instrument to
which Buyer is a party or is bound, or any judgment, decree, order, statute,
rule or regulation applicable to Buyer.
(c) The execution, delivery and performance of this Agreement and
the transactions contemplated hereby have been duly and validly authorized by
all requisite action on the part of Buyer.
(d) This Agreement has been duly executed and delivered on behalf
of Buyer, and at the Closing all documents and instruments required hereunder to
be executed and delivered by Buyer shall have been duly executed and delivered.
This Agreement does, and such documents and instruments shall, constitute legal
and valid obligations of Buyer fully enforceable in accordance with their terms.
(e) Buyer has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions contemplated by this
Agreement for which Seller shall have any responsibility whatsoever.
(f) In entering into this Agreement, Buyer has relied solely on
the express representations and covenants of Seller in this Agreement, its
independent investigation of, and judgment with respect to, the Interests and
the advice of its own legal, tax, economic, environmental, engineering,
geological and geophysical advisors and not on any comments or statements of any
representatives of, or consultants or advisors engaged by Seller or its
representatives.
(g) Buyer is an experienced and knowledgeable investor and
operator in the oil and gas business. Buyer is acquiring the Interests for its
own account and not with a view to, or for offer of resale in connection with, a
distribution thereof within the meaning of the Securities Act of 1933, as
amended, and any other rules, regulations and laws, whether state or federal,
pertaining to the distribution of securities.
3.03 Representations and Warranties of St. Mary.
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(a) St. Mary is a Delaware corporation duly organized, validly
existing and in good standing under the laws of its state of organization.
(b) St. Mary has all requisite power and authority to carry on its
business as presently conducted, to enter into this Agreement and to perform its
obligations under this Agreement. The consummation of the transactions
contemplated by this Agreement will not violate, or be in conflict with, any
provision of St. Mary's governing documents, or any agreement or instrument to
which St. Mary is a party or is bound, or any judgment, decree, order, statute,
rule or regulation applicable to St. Mary.
(c) The execution, delivery and performance of this Agreement and
the transactions contemplated hereby have been duly and validly authorized by
all requisite action on the part of St. Mary.
(d) This Agreement has been duly executed and delivered on behalf
of St. Mary, and at the Closing all documents and instruments required hereunder
to be executed and delivered by St. Mary shall have been duly executed and
delivered. This Agreement does, and such documents and instruments shall,
constitute legal and valid obligations of St. Mary fully enforceable in
accordance with their terms.
(e) At Closing the St. Mary Stock will have been duly authorized,
validly issued and will be fully paid and non-assessable and free of preemptive
rights.
(f) St. Mary has incurred no liability, contingent or otherwise,
for brokers' or finders' fees relating to the transactions contemplated by this
Agreement for which either Seller shall have any responsibility whatsoever.
(g) St. Mary has filed all required reports, schedules, forms,
statements and other documents required to be filed with the Securities and
Exchange Commission ("SEC") (collectively, including all exhibits thereto, the
"St. Mary SEC Reports"). No direct or indirect subsidiary of St. Mary, including
Buyer, is required to file any form, report or other document with the SEC. None
of the St. Mary SEC Reports, as of their respective dates (and, if amended or
superceded by filings prior to the date of this Agreement or the Closing, then
on the date of such filing), contained any untrue statement of a material fact
or omitted to state a material fact to be required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Each of the financial statements
(including the related notes) included in the St. Mary SEC Reports presents
thoroughly, in all material respects, the consolidated financial position and
consolidated results of operations and cash flows of St. Mary and its direct and
indirect subsidiaries as of the respective dates or for the respective periods
set forth therein, all in accordance with GAAP consistently applied during the
periods involved except as otherwise noted therein. All of such St. Mary SEC
Reports, as of their respective dates (and as of the date of any amendment to
the respective St. Mary SEC Report), comply as to form in all material respects
with the applicable requirements of the Securities Act of 1933 and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
(h) Since September 30, 2002, there has not been any material
adverse change in, or event or condition which has had a material adverse effect
on, the condition (financial or otherwise), properties, assets, liabilities of
St. Mary (other than any change or circumstance relating to the economy or
securities markets in general or to the oil and gas industry in general).
(i) St. Mary has not caused any material act or omission to occur
which (i) is improper under the laws, regulations, or accounting rules
applicable to St. Mary and (ii) has resulted or would be likely to result when
discovered in a material decline in the average trading price for the publicly
traded shares of St. Mary common stock.
(j) At Closing the St. Mary Stock shall be free and clear of all
liens, security interests, options, rights of first refusal and other
encumbrances of every nature whatsoever, excepting however, the stock pledge and
the call option granted to St. Mary, and the share transfer restriction and
standstill agreement obligation of Seller pursuant to the exhibits attached to
this Agreement.
(k) Buyer is a wholly-owned subsidiary of Nance Petroleum
Corporation which is a wholly-owned subsidiary of St. Mary.
Article IV
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COVENANTS
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4.01 Covenants of Seller. Seller covenants and agrees with Buyer that
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from the date hereof to the Closing Date, except (i) as provided herein, (ii) as
required by any obligation, agreement, lease, contract or instrument affecting
the Interests, or (iii) as otherwise consented to in writing by Buyer, Seller
shall:
(a) Give Buyer and its representatives access to, and the right to
copy, at Buyer's expense, all information in its possession relating to the
Interests unless specifically precluded by a third party agreement which shall
include, without limitation, title opinions, abstracts of title, land records,
accounting records, production records, operating expense records, engineering,
geological and geophysical data, development plans and permits, and any other
information of whatsoever kind relating to the production and operation of the
Interests. All such information shall be open to inspection and photocopying at
Seller's offices at any reasonable time during the term of this Agreement. Prior
to Closing, all such information shall remain subject to the existing
Confidentiality Agreements dated May 20, 2002, and December 13, 2002, by and
between parties hereto or their affiliates, which agreements will also bind
Buyer as though it were an original signatory thereto.
(b) Prior to the Closing, Seller shall continue to operate its oil
and gas business in the ordinary course and generally consistent with past
practice, and Seller shall give Buyer prompt notice of what it believes to be
any material occurrence in its business. From and after the date of this
Agreement, Seller shall not, except as set forth in Schedule 4.01(b) attached
hereto, (i) enter into any new agreements or commitments with respect to the
Interests which terms would extend beyond the Closing, (ii) conduct any single
or related series of capital or workover projects with respect to the Interests
with a total cost in excess of $100,000, (iii) abandon any Well located on the
Leases nor release or abandon all or any portion of any of the Leases, (iv)
modify or terminate any of the existing agreements and (v) encumber, sell or
otherwise dispose of any of the Interests other than personal property that is
replaced by equivalent property and production sold in the ordinary course of
business and which is accounted for hereunder or consumed in the normal
operation of the Interests.
(c) Take or cause to be taken all such actions as may be
reasonably necessary or advisable to consummate and make effective the sale of
the Interests and the transactions contemplated by this Agreement and to assure
that as of the Closing Date it will not be under any material organizational,
legal or contractual restriction that would prohibit or delay the timely
consummation of such transactions.
(d) Promptly notify Buyer (i) if any representation or warranty of
Seller contained in this Agreement is discovered to be or becomes untrue, or
(ii) if Seller fails to perform or comply with any covenant or agreement
contained in this Agreement or it is reasonably anticipated that Seller will be
unable to perform or comply with any covenant or agreement contained in this
Agreement.
(e) Keep and maintain all policies of insurance relating to the
Interests in full force and effect through Closing.
(f) Cooperate with Buyer in the notification of all applicable
governmental regulatory authorities of the transactions contemplated hereby and
cooperate with Buyer in obtaining the issuance by each such authority of such
permits, licenses and authorizations as may be necessary for Buyer to own and
operate the Interests following the consummation of the transactions
contemplated by this Agreement.
(g) Exercise all due diligence in safe-guarding and securely
maintaining all engineering, geological and geophysical data, reports and maps,
all other confidential information, in any medium or form whatsoever, in the
possession of Seller relating to the Interests.
(h) Promptly notify Buyer if any material adverse change occurs
with respect to the Interests.
(i) Immediately cease and cause to be terminated all existing
discussions and negotiations, if any such exist, with any parties conducted
heretofore with respect to any Acquisition Proposal. As used in this Section
4.01(i), "Acquisition Proposal" means any tender offer or exchange offer by a
non-affiliated third party for fifty percent or more of the outstanding shares
of common stock either or both of the parties constituting Seller, or any
proposal or offer by a non-affiliated third party for a merger, consolidation,
amalgamation or other business combination involving either party constituting
Seller, or any equity securities (or securities convertible into equity
securities) of either party constituting Seller, or any proposal or offer by a
non-affiliated third party to acquire in any manner a fifty percent or greater
equity or beneficial interest in, or a material portion of the assets or value
of either party constituting Seller, other than pursuant to the transactions
contemplated by this Agreement. Unless and until this Agreement shall have been
terminated, the parties constituting Seller shall not permit any of their
respective officers, directors, employees, agents, financial advisors, counsel
or other representatives (collectively, the "Representatives") to, directly or
indirectly (i) solicit, initiate or take any action with the intent of
facilitating the making of, any offer or proposal that constitutes or that is
reasonably likely to lead to any Acquisition Proposal, (ii) participate in any
discussions or negotiations regarding any Acquisition Proposal, or (iii) furnish
to any person or business entity (other than St. Mary, Buyer, or any affiliate
or Representative of Seller) any nonpublic information or nonpublic data outside
the ordinary course of conducting Seller's business. Seller shall notify Buyer
of any such inquiries, offers or proposals (including the identity of the person
or entity making any inquiry, offer or proposal) as promptly as possible and in
any event within twenty four hours after receipt thereof or the occurrence of
such events, as appropriate.
(j) Subject to the provisions of Section 2.02(a)(iii), Seller
shall pay all ad valorem, property, production, severance and similar taxes and
assessments with respect to the Interests for all periods prior to the Effective
Time.
(k) Seller shall retain and discharge all of its liabilities and
obligations accruing prior to Closing other than those associated with the
operation and maintenance of the Interests in the ordinary course of business
and incurred from the Effective Time until Closing, unless such liabilities and
obligations are otherwise specifically attributed to Buyer in accordance with
the terms of this Agreement.
(l) Seller shall grant Buyer, or Buyer's authorized
representatives, at all reasonable times prior to Closing and upon adequate
notice to Seller, physical access to the Interests for the purpose of inspecting
same insofar as Seller is the operator for such portion of the Interests. If
Seller is not the operator of the affected portion of the Interests, Seller
shall make a good faith effort to give Buyer, or Buyer's authorized
representatives, at all reasonable times before Closing, and upon adequate
notice to Seller, physical access to such portion of the Interests for the
purpose of inspecting the same. Where Seller is not the operator, Buyer
recognizes that Seller's ability to obtain access to such portion of the
Interests and the manner and extent of such access is subject to the rules,
regulations and conditions of such third party operators. Buyer agrees to comply
fully with the rules, regulations and instructions issued by Seller or the
operator of such property where Seller is not the operator, regarding the
actions of Buyer while upon, entering or leaving the Interests.
4.02 Covenants of Buyer and St. Mary. Buyer, and St. Mary where
----------------------------------
specifically so identified, each covenants and agrees with Seller that from the
date hereof to the Closing Date, except (i) as provided herein, or (ii) as
otherwise consented to in writing by Seller, Buyer, and as appropriate, St.
Mary, shall:
(a) Take or cause to be taken all such actions as may be necessary
or advisable to consummate and make effective the purchase of the Interests and
the transactions contemplated by this Agreement and to assure that as of the
Closing Date it will not be under any material organizational, legal or
contractual restriction that would prohibit or delay the timely consummation of
such transactions.
(b) Cause all the representations and warranties of Buyer
contained in this Agreement to be true and correct on and as of the Closing
Date.
(c) Promptly notify Seller (i) if any representation or warranty
of Buyer contained in this Agreement is discovered to be or becomes untrue, or
(ii) if Buyer fails to perform or comply with any covenant or agreement
contained in this Agreement or it is reasonably anticipated that Buyer will be
unable to perform or comply with any covenant or agreement contained in this
Agreement.
(d) St. Mary shall, subject to the provisions of the
Confidentiality Agreement between St. Mary and Seller, provide Seller with full
access at all reasonable times to its assets, liabilities, records and
employees, and shall provide such other information as Seller may reasonably
request in order for Seller to have the opportunity to confirm the accuracy of
the representations and warranties of St. Mary as contained herein.
(e) St. Mary shall maintain its books, records and accounting
practices in accordance with generally accepted accounting principles, and all
applicable laws, rules, orders, regulations and directives of any applicable
federal and/or state governing body or regulatory authority. St. Mary shall file
in a timely manner all certifications, reports, forms, schedules, statements and
other documents required by the SEC, New York Stock Exchange, and other
applicable regulatory authorities.
(f) St. Mary shall obtain any necessary authorizations, approvals
or consents from any governmental, regulatory agency or any securities exchange
necessary for the execution, delivery or performance of this Agreement.
(g) St. Mary shall cause the Shares of St. Mary Stock issued to
Seller upon the Closing to be approved for listing (subject to official notice
of issuance) on the New York Stock Exchange.
(h) Prior to the Closing, Buyer will satisfy all bonding and
regulatory requirements of all state and federal governmental authorities so
that Buyer is qualified to own the Interests. The consummation of the
transactions contemplated hereby will not cause Buyer to be disqualified as an
owner of state or federal oil, gas and mineral leases, or to exceed any acreage
limitation imposed by any law, statute, rule or regulation.
Article V
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TITLE MATTERS, ENVIRONMENTAL MATTERS,
-------------------------------------
CASUALTY LOSS AND ABANDONMENT
-----------------------------
5.01 Seller's Title. Seller represents to Buyer that Seller's title to
--------------
the Interests as of the Effective Time is (and as of the Closing shall be)
"Marketable Title" as defined in Section 5.02 hereinbelow.
5.02 Definition of Marketable Title. As used in this Agreement, the
-------------------------------
term "Marketable Title" shall mean, as to each of the Interests including the
proved undeveloped locations and behind pipe intervals specifically identified
on Exhibit "B", that the title acquired by Buyer:
(a) Will entitle Buyer to receive not less than the Net Revenue
Interests set forth in Exhibit "B" and a like share of all hydrocarbons
produced, saved and marketed from the Interests throughout the productive life
of the Interests.
(b) Will obligate Buyer to bear the percentage of the costs and
expenses related to the maintenance, development and operation of the Interests
not greater than the Working Interests set forth on Exhibit "B" throughout the
productive life of the Interests.
(c) Is free and clear of all liens, security interests,
encumbrances, burdens and claims of any kind, except for Permitted Encumbrances.
5.03 Definition of Permitted Encumbrances. As used herein, the term
------------------------------------
"Permitted Encumbrances" shall mean:
(a) Lessors' royalties, overriding royalties, reversionary
interests and similar burdens, whether recorded or unrecorded, that do not
operate to reduce the Net Revenue Interests set forth in Exhibit "B".
(b) Division orders and sales contracts terminable without penalty
upon no more than thirty (30) days' notice to the purchaser.
(c) Except as provided in Section 5.06 below, preferential rights
to purchase and required third-party consents and similar agreements with
respect to which waivers or consents are obtained under this Agreement prior to
the Closing from the appropriate parties or the appropriate time period for
asserting the right has expired prior to the Closing without an exercise of such
right.
(d) Encumbrances relating to the Interests that arise under
operating agreements to secure payment of amounts not yet delinquent and are of
a type and nature customary in the oil and gas industry.
(e) Encumbrances relating to the Interests securing payments to
mechanics and materialmen and encumbrances securing payment of taxes or
assessments that are, in either case, not yet delinquent or, if delinquent, are
being contested in good faith in the normal course of business and Seller shall
have agreed to remain responsible therefor if such arose before the Effective
Time.
(f) All rights to consent by, required notices to, filings with,
or other actions by governmental entities in connection with the sale or
conveyance of oil and gas leases or interests therein if they are customarily
obtained subsequent to the sale or conveyance.
(g) Conventional rights of reassignment obligating Seller to
reassign its interest in any portion of the Interests to a third party in the
event it intends to release or abandon such Interests prior to the expiration of
the primary term or other termination of such Interests.
(h) Easements, rights of way, servitudes, permits, surface leases,
surface use restrictions and other surface uses and impediments on, over or in
respect to any of the Interests that do not, taken as a whole, materially
interfere with the operation, value or use of the Interests.
(i) All rights reserved to or vested in any governmental,
statutory or public authority to control or regulate any of the Interests in any
manner, and all applicable laws, rules and orders of governmental authority
provided that Seller's ownership or operation of the Interests is not in
violation thereof.
(j) The terms and conditions of all Leases and all agreements to
which the Interests are subject provided that such do not operate to reduce the
Net Revenue Interests attributable to the Interests.
(k) Such Title Defects affecting the Interests of which Buyer
fails to deliver notice to Seller in writing as provided in Section 5.05(b)
below.
(l) All reversionary interests set forth in Schedule 5.03(l)
attached hereto.
5.04 Definition of Title Defect. As used in this Article V, the term
---------------------------
Interests includes all items specifically identified on Exhibit B, and the use
of the term Interest refers to any single item specifically identified on
Exhibit B. As used in this Agreement, the term "Title Defect" shall mean any
defect which renders title to an Interest, as herein defined, less than
Marketable Title.
5.05 Title Procedure.
---------------
(a) As used herein, "Title Defect Amount" shall mean, with respect
to any reduction of the Net Revenue Interest set forth on Exhibit "B" hereto, an
amount calculated by multiplying the percentage reduction in the Net Revenue
Interest by the Allocated Value for such affected Interests; and, with respect
to any Title Defect that does not cause the Net Revenue Interest set forth on
Exhibit "B" to decrease or cause the Working Interest set forth on Exhibit "B"
to increase, an amount determined by evaluating the portion of the Interests
affected by such Title Defect, the legal effect of the Title Defect, and the
potential economic effect of the Title Defect over the life of the affected
Interests. The Title Defect Amount as to any particular Interest, however, shall
never exceed the Allocated Value therefor. Furthermore, in the event it is
determined that the Net Revenue Interests for any affected Interest is greater
than set forth on Exhibit "B" hereto, the Purchase Price shall be
proportionately adjusted upward by multiplying the percentage increase in the
Net Revenue Interest by the Allocated Value for such affected Interest.
Increases or decreases in the Working Interest without a corresponding increase
or decrease in the Net Revenue Interest shall be evaluated by rerunning the
economics used in determining the Allocated Value for the affected Interest to
determine the impact on the Allocated Value for such affected Interests.
Notwithstanding any terms contained in this Agreement to the contrary, no Title
Defect shall be asserted by Buyer unless the Title Defect Amount is at least
$15,000.00. This $15,000.00 threshold shall likewise apply to any upward
adjustment sought by Seller under this Section 5.05(a).
(b) If Buyer discovers any Title Defect, Buyer shall give Seller
notice of such Title Defect no later than ten (10) days prior to the Closing
Date. Such notice shall be in writing and shall include (i) a description of the
Title Defect and (ii) the Title Defect Amount therefor. Buyer shall be deemed to
have waived all Title Defects to which Buyer has not given timely notice to
Seller thereof.
(c) Seller shall notify Buyer in writing no later than five (5)
days before the Closing Date whether it elects to cure the alleged Title Defect.
If Seller has elected to cure the Title Defect, then the Interests subject to
the Title Defect shall not be assigned at the Closing and Seller shall use
commercially reasonable efforts to cure such Title Defect during a period ending
sixty (60) days after Closing. Upon the completion of the cure of such Title
Defect, the affected Interest shall be assigned to Buyer and the Purchase Price
reduction which occurred with respect to such Title Defect shall be paid to
Seller. Notwithstanding the foregoing, Seller shall be under no obligation to
cure any Title Defect unless Seller otherwise expressly agrees in writing to
cure such Title Defect.
(d) With respect to any Title Defect that Seller elects not to
cure or fails to cure within sixty days, Seller shall have the option to:
(i) Exclude the Interest, including pipelines and other
personal property necessary to operate the particular Interest subject to the
Title Defect, in which event the Purchase Price shall be reduced by the
Allocated Value of the excluded Interest; or
(ii) If Buyer and Seller so agree, sell the Interest subject
to such Title Defect to Buyer and the Purchase Price shall be reduced by the
Title Defect Amount, or by such other amount as the parties shall agree.
(e) Notwithstanding any terms contained in this Agreement to the
contrary, in the event the aggregate adjustments to the Purchase Price exceed
twenty percent (20%) of the Purchase Price as a result of (i) the Title Defect
Amounts and (ii) the Environmental Defect Amounts, excluding exercised
preferential rights to purchase, either Seller or Buyer may elect to terminate
this Agreement.
5.06 Consents and Preferential Rights.
--------------------------------
(a) If any third party consent to the sale and transfer of the
Interests is not obtained prior to the Closing, Buyer shall not treat that
portion of the Interests subject to such consent requirement as a Title Defect
if such consent is customarily secured after the Closing or such consent does
not materially affect the value of the affected Interests if such consent were
withheld.
(b) If any of the Interests are subject to a preferential right to
purchase, Seller shall in a good faith, prior to the Closing Date, attempt to
notify each third party which holds a preferential right to purchase covering
that portion of the Interests subject thereto. If the notice period under any
preferential right to purchase has not expired prior to the Closing Date, Buyer
shall nevertheless purchase that portion of the Interests which may be affected
by the exercise of such preferential right but the Interests subject to such
unexpired preferential right shall not be treated as a Title Defect. If after
the Closing any party holding a preferential right to purchase elects to
exercise same, Buyer shall then coordinate with Seller in connection with the
execution by such third party of a purchase and sale agreement substantially in
the form hereof. Buyer shall be due any consideration paid by such third party
upon the exercise of such preferential right to purchase in exchange for Buyer
delivering such third party an assignment for that portion of the Interests
affected by the exercise of such preferential right.
5.07 Environmental Procedure.
-----------------------
(a) Prior to the Closing Date, Buyer may conduct a field
inspection of the Interests and Buyer may further secure, at its sole risk, cost
and expense, an environmental audit of all or any of the Interests. If obtained,
Buyer shall immediately furnish a copy of such environmental audit to Seller and
the contents of such environmental audit shall remain confidential unless
required to be disclosed by any rule, order or governmental proceeding.
(b) As used herein, "Environmental Defect" shall mean any material
environmental defect relating to the Interests in the nature of environmental
pollution or contamination, including pollution of the soil or water, whether
surface or subsurface, or the air, and which is a violation of environmental or
land use laws, rules, regulations, or orders of appropriate state or federal
regulatory agencies.
(c) As used herein, "Environmental Defect Amount" means the cost
to remediate such Environmental Defect in accordance with applicable
environmental laws. Notwithstanding any terms contained in this Agreement to the
contrary, no adjustment to the Purchase Price shall be made unless the aggregate
sum of all such Environmental Defect Amounts is more than Two Hundred Fifty
Thousand and No/100 Dollars ($250,000.00). This $250,000.00 sum is a deductible,
and if this sum is exceeded, the Purchase Price shall be adjusted by the
difference between the total sum of these defects and the sum of $250,000.
Notwithstanding any terms contained in this Agreement to the contrary, no
Environmental Defect shall be asserted by Buyer unless the Environmental Defect
Amount is at least $10,000.00.
(d) If Buyer discovers any Environmental Defect, Buyer shall give
Seller notice of such Environmental Defect no later than ten (10) days prior to
the Closing Date. Such notice shall be in writing and shall include (i) a
description of the Environmental Defect and (ii) the Environmental Defect Amount
therefor. Except as otherwise specifically provided in Section 8.03(d), Buyer
shall be deemed to have waived all Environmental Defects to which Buyer has not
given timely notice to Seller thereof.
(e) Seller shall notify Buyer in writing no later than five (5)
days before the Closing Date whether it elects to cure the alleged Environmental
Defect. If Seller has elected to cure the Environmental Defect, then the
Interest subject to the Environmental Defect shall not be assigned at the
Closing and Seller shall use commercially reasonable efforts to cure such
Environmental Defect during a period ending one hundred eighty (180) days after
Closing. Upon the completion of the cure of such Environmental Defect, the
affected Interest shall be assigned to Buyer and the Purchase Price reduction
which occurred with respect to such Environmental Defect shall be paid to
Seller. Notwithstanding the foregoing, Seller shall be under no obligation to
cure any Environmental Defect unless Seller otherwise expressly agrees in
writing to cure such Environmental Defect.
(f) With respect to any Environmental Defect that Seller elects
not to cure, Seller shall have the option to:
(i) Exclude the Interest, including pipelines and other
personal property necessary to operate the particular Interest subject to the
Environmental Defect, in which event the Purchase Price shall be reduced by the
Allocated Value of the excluded Interest; or
(ii) If Buyer and Seller shall so agree, sell the Interest
subject to the Environmental Defect to Buyer and the Purchase Price shall be
reduced by the Environmental Defect Amount or such other amount as the parties
shall agree.
(g) Notwithstanding any terms contained in this Agreement to the
contrary, in the event the aggregate adjustments to the Purchase Price exceed
twenty percent (20%) of the Purchase Price as a result of (i) the Environmental
Defect Amounts and (ii) the Title Defect Amounts, excluding exercised
preferential rights to purchase, either Seller or Buyer may elect to terminate
this Agreement.
5.08 Casualty Loss. If, prior to the Closing, all or any portion of the
-------------
Interests shall be destroyed or damaged by fire or other casualty, or if any
portion of the Interests shall be taken in condemnation or under the right of
eminent domain, or if proceedings for such purposes shall be pending or
threatened (collectively "Casualty Losses"), except as provided below, this
Agreement shall remain in full force and effect notwithstanding any such
destruction or taking, and Seller shall have the option to either (i) exclude
the Interest from this transaction , including pipelines and other personal
property necessary to operate the particular Interest subject to the Casualty
Loss, in which event the Purchase Price shall be reduced by the Allocated Value
of the excluded Interest or (ii) at Closing, convey the affected Interest to
Buyer and pay to Buyer all sums paid to Seller by reason of such destruction or
taking. If Seller elects not to exclude such Interest, Seller shall assign,
transfer and set over unto Buyer all of the right, title and interest of Seller
in and to any unpaid awards or other payments arising out of such destruction or
taking and the Purchase Price shall be reduced by the amount of Seller's
deductible under any applicable policy of insurance or other sums not covered by
Seller's insurance or any shortfall in the unpaid awards insofar as they pertain
to payments arising out of the destruction or taking of the affected Interests.
Seller shall not voluntarily compromise, settle or adjust any amounts payable by
reason of such destruction or taking without first obtaining the written consent
of Buyer. Notwithstanding the foregoing, in the event the total value of
Casualty Losses exceeds twenty percent (20%) of the Purchase Price, either Buyer
or Seller may elect to terminate this Agreement.
5.09 Exclusivity of Defect Process. The provisions of Sections 5.05 and
-----------------------------
5.07 shall constitute Buyer's exclusive remedy for any Purchase Price adjustment
for Title Defects or Environmental Defects (collectively "Defects"). Buyer shall
give Seller notice of all such Defects in accordance with the terms of these two
Sections. All Defects of which Buyer fails to notify Seller shall be deemed
waived by Buyer. If Buyer identifies a Defect pursuant to these two Sections,
whether (a) Buyer elects not to assert the Defect, (b) Buyer asserts the Defect
and receives an adjustment to the Purchase Price or Seller cures the Defect, or
(c) Buyer waives the Defect, such Defect shall not be the subject of any other
claim for a Purchase Price adjustment by Buyer against Seller. Further, such
Defects shall not be asserted as the basis for any indemnity under Article VIII
hereof; provided however, nothing in this Section 5.09 shall preclude Buyer from
seeking any indemnity to which it is entitled in accordance with the provisions
of either Sections 8.03(b) or 8.03(d) hereof to the extent that a matter covered
by either of Sections 8.03(b) or 8.03(d) is asserted by a third party and
provided that Buyer first discovers such matter following the date the notice
for any such Defects is due.
5.10 Hedging Contracts. Seller is a party to the hedging contracts
------------------
identified on Schedule 5.10. It is the understanding and assumption by both
Seller and Buyer that these hedging contracts can and will be assigned from
Seller to Buyer at Closing. Inasmuch as it is the intent of Seller that Buyer
receive the economic consequences of these hedging contracts, if for some reason
they are not assignable, Seller agrees that it will cooperate with Buyer in
attempting to cause the economic consequences of all of these hedging contracts
to pass through Seller to Buyer. Further, if this goal of allowing Buyer to
receive the economic consequences of all of these hedging contracts cannot be
accomplished, then the parties agree that the Purchase Price will be reduced by
the portion of the Allocated Value for the hedging contracts attributable to the
hedging contracts for which Buyer will not receive the economic consequences.
5.11 Plugging and Abandonment. Upon Closing, Buyer shall assume all of
------------------------
Seller's plugging, replugging, abandonment, removal, disposal and restoration
obligations associated with the Wells acquired hereunder. Such obligations being
assumed shall include, but not be limited to, all necessary and proper plugging
and abandonment and/or removal and disposal of all of the Wells, whether
pre-existing or drilled by Seller, and all structures, personal property and
equipment located on or associated with the Leases, the necessary and proper
capping and burying of all associated flowlines, and any necessary disposal of
naturally occurring radioactive material (NORM) or asbestos except those matters
which are asserted as Environmental Defects and which remain uncured. All
plugging, replugging, abandonment, removal, disposal and restoration operations
shall be in compliance with applicable laws, rules and regulations and conducted
in a good and workmanlike manner.
5.12 Disclaimer of Warranties. THE EXPRESS REPRESENTATIONS AND
--------------------------
WARRANTIES OF SELLER CONTAINED IN THIS AGREEMENT (OR IN THE ASSIGNMENT TO BE
EXECUTED PURSUANT TO THIS AGREEMENT) ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER
REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, AND
SELLER EXPRESSLY DISCLAIMS ANY AND ALL SUCH OTHER REPRESENTATIONS AND
WARRANTIES, EXCEPT THAT SELLER WARRANTS TITLE TO THE INTERESTS BY, THROUGH, AND
UNDER SELLER, BUT NOT OTHERWISE. WITHOUT LIMITATION OF THE FOREGOING, AND
SUBJECT TO THE PROVISIONS OF THIS AGREEMENT, THE INTERESTS SHALL BE CONVEYED
PURSUANT HERETO WITHOUT ANY WARRANTY OR REPRESENTATION, WHETHER EXPRESS,
IMPLIED, STATUTORY, OR OTHERWISE RELATING TO THE CONDITION, QUANTITY, QUALITY,
FITNESS FOR A PARTICULAR PURPOSE, CONFORMITY TO THE MODELS OR SAMPLES OF
MATERIALS, OR MERCHANTABILITY OF ANY EQUIPMENT OR ITS FITNESS FOR ANY PURPOSE,
AND WITHOUT ANY OTHER EXPRESS, IMPLIED, STATUTORY, OR OTHER WARRANTY OR
REPRESENTATION WHATSOEVER. BUYER SHALL HAVE INSPECTED, OR WAIVED (AND UPON
CLOSING SHALL BE DEEMED TO HAVE WAIVED) ITS RIGHT TO INSPECT THE INTERESTS FOR
ALL PURPOSES AND SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL
CONDITION, BOTH SURFACE AND SUBSURFACE, INCLUDING, BUT NOT LIMITED TO,
CONDITIONS SPECIFICALLY RELATED TO THE PRESENCE, RELEASE, OR DISPOSAL OF
HAZARDOUS SUBSTANCES, SOLID WASTES, ASBESTOS OR OTHER MANMADE FIBERS OR
NATURALLY OCCURRING RADIOACTIVE MATERIALS ("NORM") IN, ON, OR UNDER THE
INTERESTS. BUYER IS RELYING SOLELY UPON ITS OWN INSPECTION OF THE INTERESTS, AND
BUYER SHALL, EXCEPT AS PROVIDED OTHERWISE HEREIN, ACCEPT ALL OF THE SAME "AS IS,
WHERE IS". WITHOUT LIMITATION OF THE FOREGOING, AND SUBJECT TO THE EXPRESS
PROVISIONS OF THIS AGREEMENT, SELLER MAKES NO WARRANTY OR REPRESENTATION,
EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF
ANY DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION, OR MATERIALS NOW,
HERETOFORE, OR HEREAFTER FURNISHED OR MADE AVAILABLE TO BUYER IN CONNECTION WITH
THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, PRICING ASSUMPTIONS OR QUALITY OR
QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE INTERESTS OR THE
ABILITY OR POTENTIAL OF THE INTERESTS TO PRODUCE HYDROCARBONS OR THE
ENVIRONMENTAL CONDITION OF THE INTERESTS OR ANY OTHER MATERIALS FURNISHED OR
MADE AVAILABLE TO BUYER BY SELLER, OR BY SELLER'S AGENTS OR REPRESENTATIVES.
SUBJECT TO THE EXPRESS PROVISIONS OF THIS AGREEMENT, ANY AND ALL SUCH DATA,
RECORDS, REPORTS, PROJECTIONS, INFORMATION, AND OTHER MATERIALS (WRITTEN OR
ORAL) FURNISHED BY SELLER OR OTHERWISE MADE AVAILABLE OR DISCLOSED TO BUYER ARE
PROVIDED TO BUYER AS A CONVENIENCE AND SHALL NOT CREATE OR GIVE RISE TO ANY
LIABILITY OF OR AGAINST SELLER, AND ANY RELIANCE ON OR USE OF THE SAME SHALL BE
AT BUYER'S SOLE RISK TO THE MAXIMUM EXTENT PERMITTED BY LAW.
Article VI
----------
CONDITIONS TO CLOSING
---------------------
6.01 Conditions to Obligations of Seller. The obligations of Seller to
-----------------------------------
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, or waiver by Seller, of the condition that all representations,
warranties and covenants of Buyer contained in this Agreement shall be true in
all material respects at and as of the Closing as if such representations and
warranties were made at and as of the Closing, and Buyer shall have performed
and satisfied all covenants and agreements required by this Agreement to be
performed and satisfied by Buyer at or prior to the Closing. St. Mary and Buyer
shall provide to Seller certificates signed by an appropriate officer of St.
Mary and Buyer certifying that all representations, warranties and covenants of
St. Mary and of Buyer are true and correct as of the date of Closing and all
conditions to which Closing is subject have been satisfied or waived.
6.02 Conditions to Obligations of Buyer. The obligations of Buyer to
----------------------------------
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, or waiver by Buyer, of the condition that all representations,
warranties and covenants of Seller contained in this Agreement shall be true in
all material respects at and as of the Closing as if such representations and
warranties were made at and as of the Closing, and Seller shall have performed
and satisfied all covenants and agreements required by this Agreement to be
performed and satisfied by Seller at or prior to the Closing. The foregoing
condition shall not apply to any representation or warranty breach to the extent
that it has resulted in an adjustment of the Purchase Price or an exclusion of
any Interest from this transaction. Seller, and each of them, shall provide to
St. Mary and Buyer certificates signed by an appropriate officer of each party
constituting Seller certifying that all representations, warranties and
covenants of Seller are true and correct as of the date of Closing and all
conditions to which Closing is subject have been satisfied or waived. Buyer's
obligations to consummate the transactions contemplated by this Agreement are
also subject to Flying J Inc.'s execution at Closing of the Indemnity Guarantee
on the form attached hereto as Exhibit J.
Article VII
-----------
CLOSING
-------
7.01 Date of Closing. Subject to the conditions stated in this
-----------------
Agreement, the consummation of the transactions contemplated by this Agreement
(the "Closing") shall be held on January 29, 2003, at 10:00 a.m., or such
earlier date as the parties shall agree in writing. Said date shall be referred
to as the "Closing Date". Notwithstanding the foregoing, if with its good faith
best efforts to obtain the credit facility Buyer is currently negotiating with
Wachovia Securities, Inc., Buyer is unable to fund by the Closing Date the loan
evidenced by the Note with the funds from this credit facility, Buyer may delay
the Closing to a date on or before February 15, 2003, by giving written notice
to Seller prior to the Closing Date. Notwithstanding the foregoing, if with its
good faith best efforts Seller is unable to satisfy the conditions to closing
referenced in Section 6.02, Seller may delay the Closing to a date on or before
February 15, 2003, by giving written notice to Buyer prior to the Closing Date.
7.02 Place of Closing. The Closing shall be held at the offices of
----------------
Seller, or at such other place as Buyer and Seller may agree upon in writing.
7.03 Closing Obligations. At the Closing, the following events shall
-------------------
occur, each being a condition precedent to the others and each being deemed to
have occurred simultaneously with the others:
(a) Seller shall execute, acknowledge and deliver (in sufficient
counterparts to facilitate recording) the Assignment, Conveyance and Bill of
Sale ("Assignment") conveying the Interests to Buyer in substantially the form
attached as Exhibit "C" hereto. As appropriate, Seller shall also execute,
acknowledge and deliver separate assignments of the Interests on officially
approved forms, in sufficient counterparts, to satisfy applicable statutory and
regulatory requirements. In addition to the Assignment, Seller and Buyer, as
appropriate shall execute the Nonrecourse Secured Promissory Note in form
attached hereto as Exhibit D (the "Note"), the Stock Pledge Agreement in the
form attached hereto as Exhibit E, the Registration Rights Agreement in the form
attached hereto as Exhibit F, the Put and Call Option Agreement in the form
attached hereto as Exhibit G, the Standstill Agreement attached hereto as
Exhibit H and the Share Transfer Restriction Agreement in the form attached
hereto as Exhibit I. With respect to the Note, notwithstanding that the stated
principal amount of the Note in Exhibit D is $72,000,000, if the Purchase Price
as adjusted by the application of Article V is more or less than the $85,000,000
set forth in Section 2.01, the principal amount of the Note set forth therein
and in the Stock Pledge Agreement in Exhibit E shall be adjusted to be 84.7059
percent of the adjusted Purchase Price. For example, if the Purchase Price as
adjusted is $80,000,000, the principal amount of the Note shall be $67,764,720
and if the Purchase Price as adjusted is $90,000,000, the principal amount of
the Note shall be $76,235,310. If the Purchase Price as adjusted by the
application of Article V is more or less than the $85,000,000 set forth in
Section 2.01, the principal amount of the Put Payment Price set forth in the Put
and Call Option Agreement in Exhibit G shall be adjusted to equal the principal
amount of the Note (and increased as set forth in the Put and Call Option
Agreement) and the Call Payment Price set forth therein shall be adjusted so
that it is 115.2941 percent of such adjusted Purchase Price.
(b) Seller and Buyer shall execute a settlement statement (the
"Preliminary Settlement Statement") prepared by Seller that shall set forth the
Preliminary Amount (as hereinafter defined) and each adjustment and the
calculation of such adjustments used to determine such amount. The term
"Preliminary Amount" shall mean the amount of money determined as provided in
Section 2.02 using for such adjustments the best information then available.
After these amounts are determined in accordance with Section 2.02, and netted
against one another, the party owing money to the other shall at the Closing pay
the amount owed by wire transfer in readily available U.S. funds to an account
as directed by the party to whom the monies are due. Any disagreement as to the
Preliminary Settlement Statement shall be resolved pursuant to the provisions of
Section 8.01.
(c) Buyer shall deliver to Seller the number of shares of St. Mary
Stock corresponding to this Purchase Price as adjusted by the application of
Article V based upon one share of St. Mary Stock for each $25 of adjustment
(rounded to the nearest $25 increment) and Seller shall redeliver the St. Mary
Stock to Buyer pursuant to the terms of the Stock Pledge Agreement.
(d) Seller shall deliver to Buyer exclusive possession of the
Interests.
(e) Seller shall prepare and both it and Buyer shall execute,
acknowledge and deliver transfer orders or letters in lieu thereof directing all
purchasers of production to make payment of proceeds attributable to production
from the Interests after the Effective Time to Buyer.
(f) Seller shall deliver to Buyer the original Records. Buyer
agrees to furnish Seller at Seller's cost after the Closing with a copy of any
of the Records upon written request by Seller.
(g) If Seller is the operator of any of the Interests, Seller and
Buyer shall execute the appropriate regulatory forms prepared by Seller
transferring operatorship of the Interests to Buyer and Seller shall file such
forms subject to the provisions of Article X hereinbelow.
(h) Seller shall transfer to Buyer all proceeds from production
attributable to the Interests which are currently held in suspense for any
reason. Buyer shall be responsible for proper distribution of all such suspended
proceeds to the parties lawfully entitled to them.
(i) Seller shall provide all reasonable assistance to Buyer in its
efforts to become Seller's successor operator with respect to the Interests.
Article VIII
------------
OBLIGATIONS AFTER CLOSING
-------------------------
8.01 Post-Closing Adjustments. After the Closing, Seller and Buyer
-------------------------
shall make available to each other all accounting records necessary for Seller
to prepare within 120 days of Closing, in accordance with this Agreement, a
statement (the "Final Settlement Statement") setting forth each adjustment or
payment which was not finally determined as of the Closing and showing the
calculation of such adjustments. As soon as practicable after receipt of the
Final Settlement Statement, Buyer shall deliver to Seller a written report
containing any changes which Buyer proposes be made to the Final Settlement
Statement. The parties shall undertake to agree with respect to the amounts due
pursuant to such post-closing adjustment no later than one hundred fifty (150)
days after the Closing. If such post-closing adjustment has not been agreed to
within one hundred fifty (150) days after the Closing, either party may seek to
enforce any rights it claims hereunder. The date upon which such agreement is
reached or upon which these adjustments are established, shall be referred to as
the "Final Settlement Date." The net sums due shall be referred to herein as the
"Final Settlement Amount." In the event that (i) the Final Settlement Amount is
more than the Preliminary Amount, Buyer shall deliver to Seller or to Seller's
account by wire transfer the amount of such difference in readily available U.S.
funds as directed by Seller, or (ii) the Final Settlement Amount is less than
the Preliminary Amount, Seller shall deliver to Buyer's account by wire transfer
the amount of such difference in readily available U.S. funds as directed by
Buyer. The payment required hereby shall be made within five (5) days after the
Final Settlement Date. To the extent not accounted for in the computation of the
Final Settlement Amount, all uncollected accounts receivable attributable to the
Interests accruing on or after the Effective Time shall be assigned to Buyer.
8.02 Sales Taxes and Recording Fees. Buyer shall pay all sales taxes
------------------------------
occasioned by the sale of the Interests. Buyer shall pay all documentary, filing
and recording fees required in connection with the filing and recording of all
assignments.
8.03 Indemnification. After the Closing, Buyer and Seller shall
---------------
indemnify each other as follows:
(a) Including any "Environmental Claim" as defined in Section
8.03(c) hereinbelow, Buyer shall defend, indemnify and save and hold harmless
Seller against any and all costs, expenses, claims, demands and causes of action
of whatsoever kind or character, including court costs and attorneys' fees,
arising out of any operations conducted, commitment made or any action taken or
omitted with respect to the Interests, which accrue or relate to times on and
after the Effective Time, subject to the provisions of Article X.
(b) Excluding any "Environmental Claim" as defined in Section
8.03(c) hereinbelow, Seller shall defend, indemnify and save and hold harmless
Buyer against any and all costs, expenses, claims, demands and causes of action
of whatsoever kind or character, including court costs and attorneys' fees,
arising out of any operations conducted, commitment made or any action taken or
omitted with respect to the Interests, which accrue or relate to times prior to
the Effective Time and of which Seller has been timely notified pursuant to
Section 8.06.
(c) Notwithstanding any terms contained in Sections 8.03(a) and
(b) above, but in furtherance of same, and subject to the provisions of Article
X, Buyer expressly agrees to assume all liabilities and obligations arising out
of or related to, and to fully and promptly pay, perform and discharge, defend,
indemnify and hold Seller harmless from and against any and all costs, expenses,
claims, demands and causes of action of whatsoever kind or character, including
court costs and attorneys' fees, resulting from any "Environmental Claim" as
hereinafter defined arising out of any operations conducted, commitment made or
any action taken or omitted at any time, whether accruing or relating to times
prior to or after the Effective Time, with respect to the Interests. For
purposes of this paragraph "Environmental Claim" shall mean any claim, demand or
cause of action asserted by any governmental agency or any person, corporation
or other entity for personal injury (including sickness, disease or death),
property damage or damage to the environment resulting from the discharge or
release of any chemical, material or emission into one or more of the
environmental media at or in the vicinity of the Interests.
(d) Notwithstanding the provisions of Section 8.03(c), if after
the Closing, but in no event later than one (1) year after the Closing Date, any
third party other than Buyer asserts an Environmental Claim arising from an act,
omission or other event which occurred prior to the Effective Time and the
out-of-pocket cost of resolving such Environmental Claim, including the cost to
remediate in accordance with applicable environmental laws, or damages incurred
with respect thereto, exceeds $35,000.00 net to Seller's interest (individually
a "Retained Environmental Liability" and collectively the "Retained
Environmental Liabilities"), Buyer may notify Seller in writing to assume such
Environmental Claim relating to such Retained Environmental Liabilities in
accordance with the terms of this Section 8.03(d). Such written notice shall
describe the details known to Buyer of the Environmental Claim relating to such
Retained Environmental Liability and Buyer shall concurrently furnish to Seller
all information available to Buyer relating to such Environmental Claim. If
Buyer timely notifies Seller of such Environmental Claim relating to a Retained
Environmental Liability on or before one (1) year after the Closing Date, Seller
shall retain the risk, cost, expense and liability related to such Retained
Environmental Liability. If Buyer fails to notify Seller in writing of any
Environmental Claim within the 1 year period following the Closing Date, Buyer
shall have waived and forfeited Buyer's right to require Seller to retain the
risk, cost, expense and/ or liability relating to such Retained Environmental
Liability. It is agreed that Seller and Buyer will cooperate with each other in
connection with the disposition of the Retained Environmental Liability which
may require either (i) remediation, (ii) reacquisition of the affected Interests
by Seller (taking into consideration the Allocated Value therefor less net
profits owed or received by Buyer and the value added by subsequent development
or operations), or (iii) such other disposition as Seller and Buyer shall
mutually agree. Notwithstanding the foregoing, if the parties cannot agree on
the disposition of or the cost to remediate or otherwise resolve a Retained
Environmental Liability, the affected Interest shall be reacquired by Seller.
Notwithstanding the provisions of this Section 8.03(d), Seller shall have no
obligation under this section unless the aggregate value of all Retained
Environmental Liabilities exceeds $500,000.00, which amount is a threshold, not
a deductible, and if such threshold is exceeded, the indemnity obligation
provided in this Section 8.03(d) shall be from the first dollar.
(e) THE INDEMNIFICATION, RELEASE AND ASSUMPTION PROVISIONS
PROVIDED FOR IN THIS AGREEMENT SHALL BE APPLICABLE WHETHER OR NOT THE LOSSES,
COSTS, EXPENSES AND DAMAGES IN QUESTION AROSE SOLELY OR IN PART FROM THE GROSS,
ACTIVE, PASSIVE OR CONCURRENT NEGLIGENCE, OR OTHER FAULT OF ANY INDEMNIFIED
PARTY. BUYER AND SELLER ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE
EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.
8.04 Further Assurances. Seller and Buyer shall execute, acknowledge
-------------------
and deliver or cause to be executed, acknowledged and delivered such instruments
and take such other action as may be necessary or advisable to carry out their
obligations under this Agreement and under any exhibit, document, certificate or
other instrument delivered pursuant hereto.
8.05 Survival. The representations, warranties, covenants, agreements
--------
and indemnities contained in this Agreement shall terminate at the Closing
except for the provisions of Section 3.01(t), Section 3.02(g), Section 5.09,
Section 5.10 and all of Articles VIII., X. and XI.
8.06 Limitation on Seller's Liability. After the Closing, any assertion
--------------------------------
by Buyer that Seller is liable under this Agreement (i) for the inaccuracy of
any surviving representation or warranty, (ii) for breach of any surviving
covenant, (iii) for any surviving indemnity under the terms of this Agreement
other than under Section 8.03(d), or (iv) otherwise in connection with the
transactions contemplated in this Agreement, must be made by Buyer in writing
and must be given to Seller on or prior to the first business day following the
first anniversary of the Closing Date. The notice shall state the facts known to
Buyer that give rise to such notice in sufficient detail to allow Seller to
evaluate the assertion of Buyer.
8.07 Transaction Not to Constitute a Reorganization for Tax Purposes.
-----------------------------------------------------------------
Buyer and Seller do not intend that the transaction contemplated by this
Agreement qualify as a tax-free reorganization. Consequently, Buyer and Seller
agree to report this transaction on all applicable federal and state income tax
returns as a taxable purchase and sale of assets. Seller represents and
warrants, and covenants that neither party constituting Seller intend to and
neither will distribute the St. Mary Stock they receive pursuant to this
transaction for at least one calendar year after Closing, and these parties
further represent that they have no present plan to make such distribution. The
parties constituting Seller recognize that the shares of St. Mary Stock they
will receive in the course of this transaction will be restricted in the manner
set forth in the Share Transfer Restriction Agreement attached hereto as Exhibit
I, and Seller agrees to be bound by these restrictions.
Article IX
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TERMINATION OF AGREEMENT
------------------------
9.01 Termination. This Agreement and the transactions contemplated
-----------
hereby may be terminated in the following instances:
(a) By Buyer if any condition set forth in Section 6.02 above
shall not be satisfied on or before the Closing, or Buyer otherwise elects to
terminate this Agreement pursuant to Sections 5.05(e), 5.07(g) or 5.08 of this
Agreement.
(b) By Seller if any condition set forth in Section 6.01 above
shall not be satisfied on or before the Closing or Seller otherwise elects to
terminate this Agreement pursuant to Sections 5.05(e), 5.07(g) or 5.08 of this
Agreement.
(c) By the mutual written agreement of Buyer and Seller.
9.02 Return of Information. If this Agreement is terminated, Buyer
---------------------
shall return to Seller all information and material delivered to Buyer by Seller
pursuant to the terms of this Agreement or pursuant to other agreements between
Buyer and Seller.
9.03 Liquidated Damages. Subject to the delay of Closing provision of
-------------------
Section 7.01, if Seller is ready, willing and able to close the transaction
contemplated by this Agreement in compliance herewith and is not in material
breach of this Agreement and Buyer is not otherwise entitled to avoid Closing by
operation of Sections 5.05(e), 5.07(g), 5.08 or 6.02, but Buyer nevertheless
elects for any reason not to close the transaction contemplated by this
Agreement, then Seller shall be entitled to liquidated damages in the amount of
$5,000,000 which shall be immediately due and payable in readily available funds
from Buyer. Subject to the delay of Closing provision of Section 7.01, if Buyer
is ready, willing and able to close the transaction contemplated by this
Agreement in compliance herewith and is not in material breach of this Agreement
and Seller is not otherwise entitled to avoid Closing by operation of Sections
5.05(e), 5.07(g), 5.08 or 6.01, but Seller nevertheless elects for any reason
not to close the transaction contemplated by this Agreement, then Buyer shall be
entitled to liquidated damages in the amount of $5,000,000 which shall be
immediately due and payable in readily available funds from Seller. Buyer and
Seller acknowledge that each of them will have incurred significant costs and
will have invested significant time and resources investigating and negotiating
this Agreement and each agrees that the specific damages provided for herein
constitute reasonable liquidated damages in light of the anticipated or actual
harm to Buyer or Seller that would be caused by a failure of this transaction to
close for the reasons provided for in this Section 9.03. Buyer and Seller
further agree that actual damages would be extremely difficult if not impossible
to ascertain with precision, and therefore, both of these parties agree to the
use of this liquidated damage provision which shall constitute the exclusive
remedy for a failure of this transaction to close for the reasons provided for
in this Section 9.03.
Article X
---------
INTERIM OPERATIONS
------------------
If Seller is the operator of the Interests, Seller shall continue to
operate the Interests during the period between the Effective Time and 7:00 a.m.
on the first day of the month following the Closing Date (the "Interim Period"),
but Seller shall not have any obligation to operate the Interests after the
Interim Period. Seller shall operate the Interests during the Interim Period in
a prudent manner consistent with generally accepted industry practices and
standards, applicable laws and regulations, and all applicable lease and other
agreement terms, but shall not be liable to Buyer except for gross negligence or
willful misconduct. Seller shall be entitled (i) to charge Buyer the COPAS
overhead rates under existing operating agreements, or where none exist, a rate
of $500.00 per well per month during the Interim Period proportionately reduced
to the affected Interests and (ii) to retain any overhead fees owing or paid by
any third party non-operators attributable to the operations during the Interim
Period. Seller makes no representation or warranty that Buyer will become
operator of any portion of the Interests, as that matter is controlled by the
applicable operating agreements and governmental regulatory requirements.
Article XI
----------
MISCELLANEOUS
-------------
11.01 Expenses. Except as otherwise specifically provided in this
--------
Agreement, all fees, costs and expenses (including investment banking fees)
incurred by Buyer or Seller in negotiating this Agreement or in consummating the
transactions contemplated by this Agreement shall be paid by the party incurring
the same, including without limitation, legal and accounting fees, costs and
expenses.
11.02 Notices. All notices and communications required or permitted
-------
under this Agreement shall be in writing and shall be effective when receive by
mail, telecopy or hand delivery as follows:
If to Seller:
------------
Flying J Oil & Gas Inc. and Big West Oil &
Gas Inc.
333 West Center Street
North Salt Lake, Utah 84054-2805
Attn: Mr. Chris J. Malan, Manager of Lands, General
Counsel
Telephone: 801-296-7700
Telecopy: _801-296-7888
With a copy to:
Flying J Inc.
1104 Country Hills Drive
Ogden, Utah 84403
Attn: Mr. Barre Burgon, General Counsel
Telephone: 801-624-1402
Telecopy: 801-624-1263
If to Buyer:
-----------
NPC Inc.
550 N. 31st Street, Suite 500
Billings, Montana 59101
Attn: Mr. Ron Santi, Vice President - Land
Telephone: 406-245-6248
Telecopy: 406-245-9106
With a copy to:
St. Mary Land & Exploration Company
1776 Lincoln St., Suite 700
Denver, Colorado 80203
Attn: Milam Randolph Pharo, Vice President, Land
& Legal
Telephone: 303-863-4313
Telecopy: 303-863-1040
Either party may, by written notice so delivered to the other, change the
address to which notice shall thereafter be made.
11.03 Amendment. This Agreement may not be altered or amended, nor any
---------
rights hereunder be waived, except by an instrument in writing executed by the
party or parties to be charged with such amendment or waiver. No waiver of any
term, provision or condition of this Agreement, in any one or more instances,
shall be deemed to be, or construed as, a further or continuing waiver of any
other term, provision or condition of this Agreement.
11.04 Assignment. No party to this Agreement may assign or delegate
----------
any portion of its duties or obligations under this Agreement without the prior
written consent of all the other parties, which consent will not be unreasonably
withheld.
11.05 Announcements. Seller and Buyer shall consult with each other
-------------
with regard to all press releases and other announcements concerning this
Agreement or the transaction contemplated hereby and, except as may be required
by applicable laws or regulations of any governmental agency, neither Buyer nor
Seller shall issue any such press release or make any other announcement without
the prior written consent of the other party.
11.06 Generality of Provisions. The specificity of any representation,
------------------------
warranty, covenant, agreement or indemnity included or provided in this
Agreement, or in any exhibit, document, certificate or other instrument
delivered pursuant hereto, shall in no way limit the generality of any other
representation, warranty, covenant, agreement or indemnity included or provided
in this Agreement, or in any exhibit, document, certificate or other instrument
delivered pursuant hereto.
11.07 Headings. The headings of the articles and sections of this
--------
Agreement are for guidance and convenience of reference only and shall not limit
or otherwise affect any of the terms or provisions of this Agreement.
11.08 Counterparts. This Agreement may be executed by St. Mary, Buyer
------------
and Seller in any number of counterparts and shall be binding upon each party
executing same whether or not executed by all parties. Each of the counterparts
shall be deemed an original instrument, but all of which together shall
constitute but one and the same instrument.
11.09 References. References made in this Agreement, including use of
----------
a pronoun, shall be deemed to include where applicable, masculine, feminine,
singular or plural, individuals, partnerships or corporations. As used in this
Agreement, "person" shall mean any natural person, corporation, partnership,
trust, estate or other entity. As used in this Agreement, "affiliate" of a
person shall mean any partnership, joint venture, corporation or other entity in
which such person has an interest or which controls, is controlled by or is
under common control of such person.
11.10 Governing Law. This Agreement, and the transactions contemplated
-------------
hereby, shall be construed in accordance with, and governed by, the laws of the
State of Utah.
11.11 Entire Agreement. This Agreement (including the exhibits hereto)
----------------
constitutes the entire understanding between the parties with respect to the
subject matter hereof and supersedes all negotiations, prior discussions and
prior agreements and understandings relating to such subject matter. No material
representation, warranty, covenant, agreement, promise, inducement or statement,
whether oral or written, has been made by Seller or Buyer and relied upon by the
other that is not set forth in this Agreement or in the instruments referred to
herein, and neither Seller nor Buyer shall be bound by or liable for any alleged
representation, warranty, covenant, agreement, promise, inducement or statement
not so set forth.
11.12 Severability. If any term or provision of this Agreement shall
------------
be determined to be illegal or unenforceable, all other terms and provisions of
this Agreement shall nevertheless remain effective and shall be enforced to the
fullest extent permitted by applicable law.
11.13 Parties in Interest. This Agreement shall be binding upon, and
-------------------
shall inure to the benefit of, the parties hereto and their respective
successors and, subject to the provisions of Section 11.04, assigns. Nothing
contained in this Agreement, express or implied, is intended to confer upon any
other person or entity any benefits, rights or remedies.
EXECUTED as of the date first above mentioned.
SELLER:
FLYING J OIL & GAS INC. BIG WEST OIL & GAS INC.
By:/s/ JOHN R. SCALES By:/s/ JOHN R. SCALES
------------------------ ----------------------------
John R. Scales John R. Scales
President President
BUYER: ST. MARY:
NPC INC. ST. MARY LAND & EXPLORATION
COMPANY
By:/s/ RONALD D. SANTI By:/s/ MILAM RANDOLPH PHARO
------------------------ ----------------------------
Ronald D. Santi Milam Randolph Pharo
Vice President - Land Vice President - Land &
Legal