EXHIBIT 10.39
PURCHASE AND SALE
AGREEMENT
between
SBE Partners LP
as Seller
and
Catena Oil & Gas
LLC
as Buyer
Dated as of
May 29, 2009
PURCHASE AND SALE
AGREEMENT
THIS PURCHASE AND SALE AGREEMENT
dated as of May 29, 2009, is made by and between SBE Partners
LP, a Texas limited partnership (“ Seller ”),
and Catena Oil & Gas LLC, a Texas limited liability
company (“ Buyer ”).
W I T N E S S E T
H:
WHEREAS , Seller shall contemporaneously sell and convey
to Buyer an undivided 36.2% of Seller’s right, title and
interest in all assets owned by Seller, and Buyer shall
contemporaneously purchase and accept title to such
assets;
WHEREAS , Seller and Buyer desire to set forth herein
the purchase price for such assets and certain representations,
warranties and covenants that shall survive the execution and
delivery of the Conveyance (defined below);
NOW, THEREFORE
, Seller and Buyer agree as
follows:
1. Property Sold and
Purchased
Section 1.1 Property Sold and
Purchased . The
assets that shall be contemporaneously sold and conveyed by Seller
and purchased by Buyer shall be an undivided 36.2% of
Seller’s right, title and interest in and to:
(a) The oil and gas leases described
on Exhibit A hereto; and
(b) Without limitation of the
foregoing, all other right, title and interest (of whatever kind or
character, whether legal or equitable, and whether vested or
contingent) of Seller in and to the oil, gas and other minerals in
and under or that may be produced from the lands described on
Exhibit A hereto (including, without limitation, interests
in oil, gas and/or mineral leases, overriding royalties, production
payments, net profits interests, fee mineral interests, fee royalty
interests and other interests insofar as they cover such lands),
even though Seller’s interest therein may be incorrectly
described in, or omitted from, such Exhibit A ;
and
(c) All presently existing and valid
oil, gas and/or mineral unitization, pooling, and/or
communitization agreements, declarations and/or orders (including,
without limitation, all units formed under orders, rules,
regulations, or other official acts of any federal, state, or other
authority having jurisdiction, and voluntary unitization
agreements, designations and/or declarations), any other orders,
permits or credits of any governmental entity, and any and all
severance tax refunds to the extent that they relate to any of the
properties described in subsections (a) and (b) above;
and
(d) All presently existing and valid
production sales contracts, operating agreements, and other
agreements and contracts to the extent that they relate to any of
the properties described in subsections (a), (b) and
(c) above; and
(e) All materials, supplies,
machinery, equipment, improvements and other personal property and
fixtures (including, but not by way of limitation, all wells,
wellhead equipment, pumping units, flowlines, tanks, buildings,
injection facilities, saltwater disposal facilities, compression
facilities, gathering systems, and other equipment) located on the
properties described in subsections (a), (b) and
(c) above and used in connection with the exploration,
development, operation or maintenance thereof.
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The properties, rights and interests
(as to the undivided 36.2% conveyed hereby) specified in the
foregoing subsections (a), (b), (c), (d) and (e) are
herein sometimes collectively called the “ Properties
”.
Section 1.2 Excluded
Properties . The
Properties do not include, and there is hereby expressly excepted
and excluded therefrom and reserved to Seller:
(a) all rights and choses in action,
arising, occurring or existing in favor of Seller prior to the
Effective Date or arising out of the operation of or production
from the Properties prior to the Effective Date (including, but not
limited to, any and all contract rights, claims, receivables,
revenues, recoupment rights, recovery rights, accounting
adjustments, mispayments, erroneous payments or other claims of any
nature in favor of Seller and relating and accruing to any time
period prior to the Effective Date).
(b) any accounts receivable relating
to the Properties accruing before the Effective Date;
(c) all corporate, financial, tax
and legal (other than title) records of Seller;
(d) all contracts of insurance or
indemnity, to the extent that the proceeds relate to the losses of
Seller based on its interests in and to the Properties;
(e) any refund of costs, taxes or
expenses borne by Seller attributable to the period prior to the
Effective Date, except for severance tax refunds conveyed to Buyer
above;
(f) all deposits, cash, checks,
funds and accounts receivable attributable to Seller’s
interests in the Properties with respect to any period of time
prior to the Effective Date;
(g) all computer or communications
software or intellectual property (including tapes, data and
program documentation and all tangible manifestations and technical
information relating thereto) owned, licensed or used by Seller,
and not otherwise in possession of the Buyer; and
These excluded properties are
collectively referred to as the “ Excluded Properties
.” It is understood that certain of the Excluded Properties
may not be embraced by the term “Properties.” The fact
that certain assets have been expressly excluded is not intended to
suggest that had they not been excluded they would have constituted
Properties and shall be not used to interpret the meaning of any
word or phrase used in describing the Properties.
2. Purchase
Price
Section 2.1 Purchase
Price . Buyer shall
pay Seller cash in the amount of Forty-Nine Million Three Hundred
Forty Thousand Three Hundred Eighty-Six Dollars and no/100
($49,340,386.00) for the Properties (“ Purchase Price
”), to be adjusted after Closing in accordance with the terms
hereof.
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Section 2.2 Purchase Price
Allocation . Seller
and Buyer agree that they shall allocate the Purchase Price, as
adjusted herein, among the Properties for tax purposes in a manner
consistent with Section 1060 of the Internal Revenue Code and
the Treasury Regulations promulgated thereunder, based upon the
fair market values of the Properties. The Purchase Price allocation
shall be agreed upon before the earliest due date of the tax
returns of Seller and Buyer for the year in which the parties
entered into this Agreement. Seller and Buyer agree to file all
information reports and tax returns (including IRS Form 8594 and
any amended tax returns or claims for refund) in a manner
consistent with the Purchase Price allocation agreed upon under
this Section 2.2 .
3. Representations and
Warranties of Seller
Seller represents to Buyer
that:
Section 3.1 Organization and
Existence . Seller is
a duly organized, validly existing, and in good standing under the
laws of the state of its formation. Seller is duly qualified to
transact business in the State of Texas.
Section 3.2 Power and
Authority . Seller
has all requisite authority to execute, deliver, and perform this
Agreement and the Conveyance.
Section 3.3 Valid and Binding
Agreement . This
Agreement and the Conveyance when executed will constitute, a valid
and legally binding obligation of Seller, enforceable against it in
accordance with their respective terms, except that such
enforceability may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting
creditors’ rights generally and (b) equitable principles
which may limit the availability of certain equitable remedies
(such as specific performance) in certain instances.
Section 3.4
Non-Contravention . Other than requirements (if any) that there be
obtained consents to assignment (“ Consents ”)
or waivers of preferential rights to purchase (“
Preferential Rights ”) from third parties and
Governmental Consents, neither the execution, delivery, and
performance by Seller of this Agreement and the Conveyance
(a) violate any governing instruments of Seller,
(b) violate any provision of, or constitute (with or without
the giving of notice or the passage of time or both) a default
under, or give rise (with or without the giving of notice or the
passage of time or both) to any right of termination, cancellation,
or acceleration under, any bond, debenture, note, mortgage or
indenture, or any material lease, contract, agreement, or other
instrument or obligation to which Seller is a party or by which
Seller or any of its properties may be bound, (c) result in
the creation or imposition of any lien or other encumbrance upon
the Properties or (d) violate any applicable law, rule or
regulation binding currently imposed by a governmental entity upon
Seller or the Properties. For purposes of this Agreement, “
Governmental Consents ” shall mean approvals required
to be obtained from governmental entities who are lessors under
leases forming a part of the Properties (or who administer such
leases on behalf of such lessors) which are customarily obtained
post-closing and which Seller has no reason to believe cannot be
obtained.
Section 3.5
Approvals . Other
than requirements (if any) that there be obtained Consents or
waivers of Preferential Rights from third parties and Governmental
Consents, no consent, approval, order, or authorization of, or
declaration, filing, or registration with, any court or
governmental agency or of any third party is required to be
obtained or made by Seller in connection with the execution,
delivery, or performance by Seller of this Agreement or the
Conveyance.
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Section 3.6 Pending
Litigation . To
Seller’s knowledge, there are no pending threatened suits,
actions, notices of violations, or other proceedings or claims
(collectively, “ Claims ”) in which Seller is or
may be a party which relate to the Properties, or affect the
execution and delivery of this Agreement or the
Conveyance.
Section 3.7 Disclaimer of
Warranties . THE
EXPRESS REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN
SECTIONS 3.1 THROUGH 3.6 ABOVE 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. THE CONVEYANCE DELIVERED AT CLOSING
WILL BE A CONVEYANCE WITHOUT WARRANTY OF TITLE. WITHOUT LIMITATION
OF THE FOREGOING, THE PROPERTIES 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, EXCEPT AS PROVIDED OTHERWISE IN THE
FIRST SENTENCE OF THIS PARAGRAPH, WITHOUT ANY OTHER EXPRESS,
IMPLIED, STATUTORY OR OTHER WARRANTY OR REPRESENTATION WHATSOEVER.
BUYER SHALL HAVE INSPECTED, AND DEEMED TO HAVE WAIVED, ITS RIGHT TO
INSPECT, THE PROPERTIES 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 AND OTHER MAN MADE FIBERS, OR
NATURALLY OCCURRING RADIOACTIVE MATERIALS (“NORM”).
BUYER IS RELYING SOLELY UPON ITS OWN INSPECTION OF THE PROPERTIES,
AND BUYER SHALL ACCEPT ALL OF THE SAME IN THEIR “AS
IS”, “WHERE IS” CONDITION. ALSO WITHOUT
LIMITATION OF THE FOREGOING, 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, RELATIVE TO PRICING
ASSUMPTIONS, OR QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF
ANY) ATTRIBUTABLE TO THE PROPERTIES OR THE ABILITY OR POTENTIAL OF
THE PROPERTIES TO PRODUCE HYDROCARBONS OR THE ENVIRONMENTAL
CONDITION OF THE PROPERTIES OR ANY OTHER MATTERS CONTAINED IN ANY
MATERIALS FURNISHED OR MADE AVAILABLE TO BUYER BY SELLER OR BY
SELLER’S AGENTS OR REPRESENTATIVES. ANY AND ALL SUCH
DATA,
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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.
4. Representations and
Warranties of Buyer
Buyer represents to Seller
that:
Section 4.1 Organization and
Existence . Buyer is
a duly organized, legally existing and in good standing under the
laws of its state of formation, and is qualified to do business in
the State of Texas.
Section 4.2 Power and
Authority . Buyer has
all requisite authority to execute, deliver, and perform this
Agreement and each other document executed by Buyer in connection
with the transactions contemplated hereby. The execution, delivery,
and performance by Buyer of this Agreement and each other document
executed by Buyer in connection with the transactions contemplated
hereby have been duly authorized by all necessary action of
Buyer.
Section 4.3 Valid and Binding
Agreement . This
Agreement has been duly executed and delivered by Buyer and
constitutes a valid and legally binding obligation of Buyer,
enforceable against it in accordance with their respective terms,
except that such enforceability may be limited by
(a) applicable bankruptcy, insolvency, reorganization,
moratorium, and similar laws affecting creditors’ rights
generally and (b) equitable principles which may limit the
availability of certain equitable remedies (such as specific
performance) in certain instances.
Section 4.4
Non-Contravention . The execution, delivery, and performance by
Buyer of this Agreement and the acquisition of the Properties will
not (a) violate any provision of any governing instruments of
Buyer, or (b) violate any applicable law, rule or regulation
binding upon Buyer.
Section 4.5
Approvals . No
consent, approval, order, or authorization of, or declaration,
filing, or registration with, any court or governmental agency or
of any third party is required to be obtained or made by Buyer in
connection with the execution, delivery, or performance by Buyer of
this Agreement.
Section 4.6 Pending
Litigation . There
are no pending suits or threatened claims, in which Buyer is a
party which affect the execution and delivery of this
Agreement.
5. Closing of
Transaction .
Contemporaneous with the execution and delivery of this Agreement
(the “ Closing ”):
Section 5.1 Conveyance of
Properties . Seller
shall execute, acknowledge and deliver the conveyance attached
hereto as Exhibit I (“ Conveyance ”) to
Buyer, effective as to runs of oil and deliveries of gas as of
12:01 o’clock a.m., Central Daylight Time on May 1, 2009
(the “ Effective Date ”).
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Section 5.2 Payment of
Purchase Price .
Buyer shall deliver the Purchase Price to the Seller, by wire
transfer to the following account:
Deutsche Bank Trust Company
Americas
New York, NY
ABA No. 021-001-033
Account Name: EFS O&G,
LLC
Account
No. 50-279-484
TC - AX47
Ref: SBE Energy Partners -
EFS21760
Attn: R. Dakin
6. Certain Accounting
Adjustments
Section 6.1
Adjustments .
Appropriate adjustments shall be made between Buyer and Seller so
that (a) all expenses (including all drilling costs, all
capital expenditures, and all overhead charges under applicable
operating agreements, and all other overhead charges actually
charged by third parties) which are incurred in the operation of
the Properties after the Effective Date will be borne by Buyer, and
all proceeds (net of applicable production, severance, and similar
taxes) from the sale of oil, gas and/or other minerals produced
from the Oil and Gas Properties after the Effective Date will be
received by Buyer, and (b) all expenses which are incurred in
the operation of the Properties before the Effective Date will be
borne by Seller, all proceeds from the termination or modification
of any hedges by the Seller prior to the date of this Agreement
shall be received solely by Seller regardless of the time period to
which such proceeds relate, and all proceeds (net of applicable
production, severance, and similar taxes) from the sale of oil, gas
and/or other minerals produced from the Properties before the
Effective Date will be received by Seller. For purposes of the
adjustments described above, all capital expenditures related to
the Longstreet well in Montgomery County, Texas shall be deemed
expenses incurred after the Effective Date. Further Seller and
Buyer agree that all real property taxes, personal property taxes
and similar ad valorem taxes that are levied with respect to the
Properties for assessment periods within which the Effective Date
occurs shall be apportioned between Seller and Buyer as of the
Effective Date based on the number of days in any such period
falling before the Effective Date, on the one hand, and on or after
the Effective Date, on the other hand (it being understood that
Buyer is responsible for the portion of each such taxes
attributable to the period beginning on the Effective Date).
Further, the accounting settlement adjustment shall reflect the
36.2% undivided interests in Seller’s interest in any
severance tax refunds which was included in the Properties conveyed
to Buyer in Section 1.1 above.
Section 6.2 Post-Closing
Accounting Settlements .
(a) On or before ninety
(90) days after Closing, Buyer and Seller shall review any
information which may then be available pertaining to the
adjustments provided for in Section 6.1 , and shall
make any such adjustments by appropriate payments from Seller to
Buyer or from Buyer to Seller.
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(b) Should any additional items
which would be the subject of adjustments provided for in
Section 6.1 above come to the attention of Buyer or
Seller after such adjustments under subsection (a) above are
concluded, such adjustments shall be made by appropriate payments
from Buyer to Seller or from Seller to Buyer.
Section 6.3 Sales
Taxes . All sales,
use and other similar taxes (if any) imposed with respect to the
transactions contemplated hereby and undertaken pursuant to this
Agreement shall be the responsibility of, and shall be paid by,
Buyer. Buyer agrees to be solely responsible in timely remitting
such sales taxes and transfer taxes to the appropriate governmental
agency, and shall defend, indemnify and hold Seller (and its
partners and affiliates, and its and their owners, dir
