Exhibit 10.1
PURCHASE AND SALE
AGREEMENT
THIS PURCHASE & SALE
AGREEMENT (this
“Agreement”) is made and entered into this
day of September, 2004, by and between Nowata Oil Properties
LLC (“Seller”), whose address is 2500 South McGee
Drive, Suite 100, Norman, Oklahoma 73072, and Cano Petroleum,
Inc. (“Buyer”), whose address is 309 West Seventh
Street, Suite 1600, Fort Worth, Texas 76102, for the purpose of
Buyer purchasing Seller’s rights in oil, gas and mineral
leases and other related interests under the terms and conditions
of this Agreement.
I. DESCRIPTION OF
TRANSACTION
1.01
Property Being Purchased and Sold. THE ATTACHED EXHIBIT
“A” , WHICH IS INCORPORATED INTO THIS AGREEMENT,
IDENTIFIES THE PROPERTY TO BE SOLD. The term
“Property,” as contained herein, will include both
singular and plural connotations and shall be defined as, and
without limitation shall include, all of Seller’s right,
title and interest, if any, in and to oil and gas property,
non-producing property, mineral rights, leasehold interests and
leased rights, subsurface rights, wells and well equipment,
including all equipment used in connection with the production and
delivery of hydrocarbons and injection of associated waters,
inventory and supplies, storage facilities, contract rights,
easements and rights-of-way, permits and records belonging to or
used or obtained in connection with the assets described in
Exhibit “A.”
In addition to the foregoing, the
term “Property” expressly includes all of the surface
interests owned by Seller with respect to the lands described in
the leases listed on the attached Exhibit “A”
(being approximately 300 acres); provided, however, Seller is not
making any representation or any warranty of any kind whatsoever
with respect to such surface interests.
Notwithstanding the foregoing, the
term “Property” expressly excludes (i) the
distributions, if any, that Seller is entitled to receive under, or
in connection with, the plan of reorganization of Farmland
Industries, Inc. and its affiliates confirmed by the United States
Bankruptcy Court for the Western District of Missouri, which
distributions remain the sole and exclusive property of Seller; and
(ii) the co-generation unit and the other equipment and personal
property that has been provided by Global Power Systems, which
remains the sole and exclusive property of Global Power
Systems. Buyer shall assume the obligations of Seller under
its arrangement with Global Power Systems as of the Effective
Date.
1.02
Purchase Price; Method of Payment. The purchase price for the Property shall
be Two Million Five Hundred Thousand and No/100 ($2,500,000.00)
(the “Purchase Price”) and shall be paid as
follows:
(a)
Escrow Deposit . Upon execution of this Agreement and
the Escrow Agreement attached hereto as Exhibit
“B” and incorporated herein by reference for all
purposes (the “Escrow Agreement”) by the parties
hereto, Buyer shall deposit into an escrow account maintained by
BancFirst (the “Escrow Agent”) cash or immediately
available funds in the amount of Two Hundred Fifty Thousand and
No/100 Dollars ($250,000.00), which shall constitute an irrevocable
deposit (the “Deposit”) and shall be applied toward the
purchase and sale of the Property at the Closing; provided,
however, in the event that the transactions contemplated hereby do
not close for any reason by September 15, 2004 (including as a
result of an election by Buyer to terminate this Agreement
pursuant to Section 6.01(d) but excluding as a result of an
election by Buyer to terminate this Agreement pursuant to Section
6.01(b)), the Escrow Agent shall pay the sum of One Hundred
Twenty-Five Thousand Dollars ($125,000) from the funds held in such
account to Seller and, in the event that the transactions
contemplated hereby do not close for any reason (other than as a
result of an election by Buyer to terminate this Agreement pursuant
to Section 6.01(b) or Section 6.01(d)), the Escrow Agent shall pay
all of the funds held in such account to Seller.
(b)
Closing Payment . Buyer shall pay to Seller at the
Closing (as such term is hereinafter defined) the amount of Two
Million Two Hundred Fifty Thousand and No/100 Dollars
($2,250,000.00), in immediately available funds by confirmed wire
transfer to a bank account to be designated by Seller (such
designation to occur no later than the second business day prior to
the Closing Date) and the funds held by the Escrow Agent in the
account pursuant to Section 1.02(a) shall be paid to
Seller.
1.03
The Closing.
Subject to the termination rights set forth in Section 6.01, the
closing of the purchase and sale contemplated by this Agreement
(the “Closing”) shall take place at such date, time and
place as may be mutually acceptable to the parties hereto, but in
no event shall the Closing occur later than September 15, 2004 (the
actual date of the Closing being referred to herein as the
“Closing Date”). At the Closing, Buyer shall pay
the Purchase Price as herein provided, and Seller shall assign and
convey all of Seller’s right, title and interest in and to
the Property to Buyer with instruments of conveyance in such form
as Buyer shall reasonably request.
1.04
Effective Date and Responsibilities. The “Effective Date” of the
purchase and sale contemplated by this Agreement shall be 7:00
A.M., Central Standard Time, on September 1, 2004. All
production, revenues, expenses and financial obligations with
respect to the Property occurring prior to the Effective Date shall
be the responsibility of Seller, and all such matters occurring
after the Effective Date shall be the responsibility of Seller, and
all such matters occurring after the Effective Date shall be the
responsibility of Buyer; provided, however, it is understood that
Buyer may be required to incur costs and expenses to preserve
leases and wells and that such costs and such expenses shall be the
obligation of Buyer, regardless of whether such costs and such
expenses could have been paid by Seller prior to the Effective
Date.
To the extent that Seller receives
any payments of revenues or any requests for expenditures of funds
that relate to the period after the Effective Date, Seller shall
forward such payments or such requests to Buyer.
II. ABSENCE OF
REPRESENTATION AND WARRANTIES
2.01
Absence of Representations and Warranties. Seller is not making any representation
or any warranty of any kind whatsoever with respect to the Property
and Buyer has agreed to accept the Property in its present
condition, based solely on such inspections and investigations as
may be conducted by Buyer, in the sole discretion of Buyer, prior
to the Closing. THE PROPERTY IS BEING SOLD
“AS-IS,” WITH SELLER MAKING NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE PROPERTY,
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INCLUDING, WITHOUT LIMITATION,
REPRESENTATIONS OR WARRANTIES WITH RESPECT TO TITLE TO THE
PROPERTY, THE CONDITION OF THE PROPERTY, ENVIRONMENTAL MATTERS, THE
STATUS OR THE VALIDITY OF THE LEASES OR THE SUITABILITY OF THE
PROPERTY FOR ANY PARTICULAR PURPOSE.
2.02
Inspection of the Property. Buyer may, during the period prior to the
Closing, conduct such inspections and such investigations as Buyer,
in its sole discretion, may determine. Seller shall
cooperate, in good faith, with Buyer in its conduct of such
inspections and such investigations, including, without limitation,
providing Buyer and its representatives with access to all of the
books and the records of Seller with respect to the Property,
including, without limitation, financial records necessary for
Buyer’s auditors to complete an audit of the Property, which
Buyer may, at its cost and its expense, copy.
III. PRE-CLOSING
OBLIGATIONS OF SELLER
3.01
Standstill. From
the date of this Agreement and until the Closing, Seller shall not,
directly or indirectly, seek, solicit or entertain competitive
offers to purchase the Property, or otherwise discuss the sale of
the Property with any party other than Buyer.
3.02
Absence of Other Obligations. Seller shall have no obligations other
than the obligations expressly set forth in Section 2.02 and
Section 3.01.
IV. CONDITIONS OF
CLOSING
4.01
Seller’s Conditions. Seller’ obligation to consummate
the transaction provided for herein is subject to the satisfaction
or waiver on or before the Closing Date of the following
conditions:
(a)
Performance . Buyer shall have performed in all
material respects the obligations, covenants and agreements
required hereunder to be performed by it at or prior to the
Closing.
(b)
Pending Matters . No suit, action or other proceeding
by a non-affiliated third party or a governmental authority shall
be pending or threatened which seeks substantial damages from
Seller in connection with, or seeks to restrain, enjoin or
otherwise prohibit, the consummation of the transactions
contemplated by this Agreement.
4.02
Buyer’s Conditions. Buyer’s obligation to consummate
the transactions provided for herein is subject to the satisfaction
or waiver on or before the Closing Date of the following
conditions:
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(a)
Performance . Seller shall have performed in all
material respects the obligations, covenants and agreements
required hereunder to be performed by them at or prior to the
Closing.
(b)
Pending Matters . No suit, action or other proceeding
by a non-affiliated third party or a governmental authority shall
be pending or threatened which seek substantial damages from Buyer
in connection with, or seeks to restrain, enjoin or otherwise
prohibit, the consummation of the transactions contemplated by this
Agreement.
(c)
Inspections and Investigations . The inspections and
the investigations conducted by Buyer pursuant to Section 2.02,
including the audit necessary for Buyer to comply with its SEC
reporting requirements, shall have been completed to the reasonable
satisfaction of Buyer.
V. ADDITIONAL
AGREEMENTS
5.01
Buyer’s Indemnity. Buyer agrees to indemnify, defend and
hold harmless Seller, its Affiliates and its managers, officers,
employees, agents and representatives from and against any and all
claims, liabilities, losses, costs and expenses (including, without
limitation, court costs and reasonable attorneys’ fees, but
excluding any amounts reimbursed from third party insurance)
(collectively “Losses”) that are attributable to (i) a
breach of Buyer of its representations, warranties, covenants and
agreements hereunder or that are contained in any document
delivered in connection herewith, and (ii) the condition, ownership
and/or operation of the Property , including, without limitation,
environmental matters, whether arising before or after the Closing
Date.
5.02
Further Assurances. Prior to the Closing, Seller shall
provide Buyer and its representatives with access to the Property
and all documents relating to the Property for the purposes of
Buyer’s inspections and investigations. After Closing,
Seller and Buyer agree to take such further actions and to execute,
acknowledge and deliver such additional documents and instruments
as may be necessary or useful in carrying out the purpose of this
Agreement or of any document delivered pursuant hereto.
5.02
Records. At
Closing, Seller shall make all documents and instruments relating
to the Property in its possession available for delivery to Buyer
at Seller’s Offices in Norman, Oklahoma.
VI.
TERMINATION
6.01
Termination of Agreement. This Agreement may, by written notice
given at or prior to the Closing to the applicable party at its
address in the preamble of this Agreement, be terminated or
abandoned:
(a)
by Seller or Buyer in the event that the Closing shall not have
occurred on or before the close of business on September 15,
2004:;
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