Exhibit 1.1
1,312,500 Shares
Ashland Inc.
Common Stock
Indemnification Agreement
February 21, 1995
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center
250 Vesey Street
New York, N.Y. 10281-1305
Dear Sirs:
Ashland Inc., a Kentucky Corporation (the "Company"), confirms its
agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), with respect to the sale, through Merrill
Lynch as agent or to Merrill Lynch as principal, by Waco Oil & Gas Co.,
Inc., Ira L. Morris and Betty Sue Morris (the "Selling Stockholders"), of
up to 1,312,500 shares of Common Stock of the Company (the "Securities").
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 33-57767) and
a related preliminary prospectus for the registration of the Securities
under the Securities Act of 1933 (the "1933 Act"), has filed such
amendments thereto, if any, and such amended preliminary prospectuses as
may have been required to the date hereof, and will file such additional
amendments thereto and such amended prospectuses as may hereafter be
required. Such registration statement (as amended, if applicable) and the
prospectus constituting a part thereof (including in each case all
documents incorporated or deemed to be incorporated by reference therein
and the information, if any, deemed to be part thereof pursuant to
information, if any, deemed to be part thereof pursuant to Rule 430A(b) of
the rules and regulations of the Commission under the 1933 Act (the "1933
Act Regulations"), as from time to time amended or supplemented pursuant to
the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), or otherwise, are hereinafter referred to as the
"Registration Statement" and the "Prospectus", respectively, except that if
any revised prospectus shall be provided to Merrill Lynch by the Company
for use in connection with the offering of the Securities which differs
from the Prospectus on file at the Commission at the time the Registration
Statement becomes effective (whether or not such revised prospectus is
required to be filed by the Company pursuant to Rule 424(b) of the 1933 Act
Regulations), the term "Prospectus" shall refer to such revised prospectus
from and after the time it is first provided to Merrill Lynch for such use.
All references in this Agreement to financial statements and schedules and
other information which is "contained", "included" or "stated" in the
Registration Statement or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements
and schedules and other information which is or is deemed to be
incorporated by reference in the Registration Statement or the Prospectus,
as the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement or the Prospectus shall be deemed
to mean and include the filing of any document under the 1934 Act which is
or is deemed to be incorporated by reference in the Registration Statement
or the Prospectus, as the case may be.
1. The Company covenants with Merrill Lynch for so long as Merrill
Lynch acts as agent or principal in connection with the sale of the
Securities, as follows:
(a) The Company will notify Merrill Lynch immediately (i) of the
effectiveness of the Registration Statement and any amendment thereto
(including any post-effective amendment), (ii) of the receipt or any
comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement
to the Prospectus or for additional information, and (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that
purpose. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest practicable time.
(b) The Company will give Merrill Lynch notice of its intention to
file or prepare any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by
Merrill Lynch in connection with the offering of the Securities which
differs from the Prospectus on file
at the Commission at the time the Registration Statement becomes effective,
whether or not such revised Prospectus is required to be filed pursuant to
Rule 424(b) of the 1933 Act Regulations) and will furnish with copies of
any such amendment or supplement a reasonable amount of time prior to such
proposed filing or use, as the case may be.
(c) The Company will deliver to Merrill Lynch as many conformed copies
of the Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by reference
therein) as Merrill Lynch may reasonably request.
(d) The Company will furnish to Merrill Lynch from time to time during
the period when the Prospectus is required to be delivered under the 1933
Act or the 1934 Act, such number of copies of the Prospectus (as amended or
supplemented) as Merrill Lynch may reasonably request for the purposes
contemplated by the 1933 Act or the 1934 Act or the respective applicable
rules and regulations of the Commission thereunder.
2. (a) The Company agrees to indemnify and hold harmless Merrill
Lynch, its directors, officers, employees and their agents, and each
person, if any, who controls Merrill Lynch (within the meaning of Section
15 of the 1933 Act or the 1934 Act) against any losses, claims (including
any actual or threatened investigation or proceeding by any governmental
agency or body), damages, liabilities or expenses whatsoever (including the
reasonable costs of investigating and defending against any claims therefor
and reasonable counsel fees incurred in connection therewith) as incurred
to which Merrill Lynch or any such other person may become subject under
the 1933 Act or the 1934 Act or otherwise which arise out of or are based
on the grounds or alleged grounds (i) that the Registration Statement
(including, without limitation any documents incorporated by reference
therein), as amended, includes or allegedly includes an untrue statement of
a material fact or omits or allegedly omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or (ii) that any preliminary prospectus or the
Prospectus (including, without limitation any document(s) incorporated by
reference therein, as amended or supplemented, includes or allegedly
includes an untrue statement of a material fact or omits or allegedly omits
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in
which they were made, not misleading; provided that the foregoing indemnity
agreement shall not apply in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement or alleged
untrue statement in or omission or alleged omission from such Registration
Statement, or any preliminary prospectus or Prospectus, in reliance upon
and in conformity with information furnished to the
Company by or on behalf of the Selling Shareholders or Merrill Lynch for
use in the preparation thereof; and provided further that the Company shall
not be liable to Merrill Lynch or any other person, if any, who controls
Merrill Lynch within the meaning of the 1933 Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such person's
failure to send or give a copy of the Prospectus, as the same may be then
supplemented or amended, to the person asserting an untrue statement or
alleged untrue statement or alleged omission at or prior to the written
confirmation of the sale of the Securities to such person if such statement
or omission was corrected in such Prospectus.
(b) Merrill shall indemnify and hold harmless the Company, its
directors, officers, employees and their agents, each person, if any, who
controls the Company (within the meaning of Section 15 of the 1933 Act or
the 1934 Act) against any losses, claims (including any actual or
threatened investigation or proceeding by any governmental agency or body),
damages, liabilities or expenses whatsoever (including the reasonable costs
of investigating and defending against any claims therefor and reasonable
counsel fees incurred in connection therewith) as incurred to which the
Company or any such other person may become subject under the 1933 Act or
the 1934 Act or otherwise which arise out of or are based on the grounds or
alleged grounds (i) that the Registration Statement (including, without
limitation any documents incorporated by reference therein), as amended,
includes or allegedly includes an untrue statement of a material fact or
omits or allegedly omits to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, or (ii) that any preliminary prospectus or the Prospectus
(including, without limitation any document(s) incorporated by reference
therein, as amended or supplemented, includes or allegedly includes an
untrue statement of a material fact or omits or allegedly omits to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances in which they were
made, not misleading, if such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with
information furnished by Merrill Lynch to the Company for use in the
preparation of such Registration Statement or any preliminary prospectus or
Prospectus.
(c) If any action or claim shall be brought or asserted against an
indemnified party or parties (the "Indemnified "Party") under this
paragraph (vi) in respect of which indemnity may be sought from an
indemnifying party or parties (the "Indemnifying Party") under this
paragraph (2) (a "Claim"), the Indemnified Party shall
immediately give prompt written notice of the Claim to the Indemnifying
Party, who shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of
all expenses, except that any delay or failure to so notify the
Indemnifying Party shall only relieve the Indemnifying Party of its
obligations hereunder to the extent, if any, they are prejudiced by reason
of such delay or failure. The Indemnified Party shall have the right to
employ separate counsel and participate in the defense of the Claim, but
the fees and expenses of such counsel shall be at the expense of the
Indemnified Party unless (i) the employment of counsel by the Indemnified
Party has been authorized by the Indemnifying Party, (ii) the Indemnified
Party shall have reasonably concluded that there is a conflict of interest
between the Indemnifying Party and the Indemnified Party in the conduct of
the defense of such action (in which case the Indemnifying Party shall not
have the right to direct the defense of such action on behalf of the
Indemnified Party) or (iii) the Indemnifying Party shall not in fact have
employed counsel to assume the defense of such action, in each of which
cases the fees and expenses of counsel shall be at the expense of the
Indemnifying Party. An Indemnifying Party shall not be liable for any
settlement of any action or claim effected without its written consent.
Anything in this paragraph (vi) to the contrary notwithstanding, the
Indemnifying Party shall not, without the Indemnified Party's prior written
consent, settle or compromise any claim or consent to the entry of any
judgment with respect to any Claim for anything other than money damages
paid by the Indemnifying Party that would have any adverse affect on the
Indemnified Party.
3. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 2
hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company and
Merrill Lynch shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by said indemnity
agreement incurred by the Company and Merrill Lynch, as incurred, in such
proportions that Merrill Lynch is responsible for that portion represented
by the percentage that the commission received by Merrill Lynch on the
sales of the Securities bears to the sales price of such Securities, and
the Company is responsible for the balance; provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section, each officer, director and employee of Merrill
Lynch and each person, if any, who controls Merrill Lynch within the
meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as Merrill
Lynch, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act shall have the
same rights to contribution as the Company.
4. This Agreement shall inure to the benefit of and be binding upon
Merrill Lynch and the Company and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed
to give any person, firm or corporation, other than Merrill Lynch and the
Company and their respective successors and the controlling persons and
officers, directors and employees referred to in Sections 2 and 3 and their
heirs and legal representatives, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of Merrill Lynch and the
Company and their respective successors, and said controlling persons and
officers, directors and employees and their heirs and legal
representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Securities from Merrill Lynch shall be deemed
to be a successor by reason merely of such purchase.
5. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made to be
performed in said State.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a
binding agreement between Merrill Lynch and the Company in accordance with
its terms.
Very truly yours,
Ashland Inc.
By: /s/ Thomas L. Feazell
Thomas L. Feazell
Senior Vice President,
General Counsel and Secretary
CONFIRMED AND ACCEPTED
as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: /s/ Charles Plohn, Jr.
Authorized Signatory
Exhibit 1.2
1,312,500 Shares
Ashland Inc.
Common Stock
Indemnification Agreement
February 24, 1995
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center
250 Vesey Street
New York, N.Y. 10281-1305
Dear Sirs:
Waco Oil and Gas Co., Inc., a West Virginia Corporation
("Corporate Selling Stockholder"), Ira L. Morris, and Betty Sue Morris (the
"Individual Selling Stockholders") (collectively the (Selling
Stockholders"), confirm their agreement expressed in a letter dated
February 6, 1995 with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), with respect to the sale, through
Merrill Lynch as agent or to Merrill Lynch as principal, by the Selling
Stockholders of up to 1,312,500 shares of Common Stock of Ashland Inc. (the
"Securities").
Ashland Inc. ("Company") has filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(No. 33- ) and a related preliminary prospectus for the registration of the
Securities under the Securities Act of 1933 (the "1933 Act"), has committed
to file such amendments thereto, if any, and such amended preliminary
prospectuses as may have been required to the date hereof, and to file such
additional amendments thereto and such amended prospectuses as may
hereafter be required. Such registration statement (as amended, if
applicable) and the prospectus constituting a part thereof (including in
each case all documents incorporated or deemed to be incorporated by
reference therein and the information, if any, deemed to be part thereof
pursuant to Rule 430(b) of the rules and regulations of the Commission
under the 1933 Act (the "1933 Act Regulations"), as from time to time
amended or supplemented pursuant to the 1933 Act, the Securities Exchange
Act of 1934, as amended (the "1934 Act"), or otherwise, are hereinafter
referred to as the "Registration Statement" and the "Prospectus",
respectively, except that if any revised prospectus shall be provided to
Merrill Lynch by the Company for use in connection with the offering of the
Securities which differs from the Prospectus on file at the Commission at
the time the Registration Statement becomes effective (whether or not such
revised prospectus is required to be filed by the Company pursuant to Rule
424(b) of the 1933 Act Regulations), the term "Prospectus " shall refer to
such revised prospectus from and after the time it is first provided to
Merrill Lynch for such use. All references in this Agreement to financial
statements and schedules and other information which is "contained",
"included" or "stated" in the Registration Statement or the Prospectus (and
all other references of like import) shall be deemed to mean and include
all such financial statements and schedules and other information which is
or is deemed to be incorporated by reference in the Registration Statement
or the Prospectus, as the case may be; and all references in this Agreement
to amendments or supplements to the Registration Statement or the
Prospectus shall be deemed to mean and include the filing of any document
under the 1934 Act which is or is deemed to be incorporated by reference in
the Registration Statement or the Prospectus, as the case may be.
1. The Selling Stockholders covenant with Merrill Lynch, for so
long as Merrill Lynch acts as agent or principal in connection with the
sale of the Securities, as follows:
(a) The Selling Stockholders agree to indemnify and hold harmless
Merrill Lynch, its directors, officers, employees and their agents, and
each person, if any, who controls Merrill Lynch (within the meaning of
Section 15 of the 1933 Act or the 1934 Act) against any losses, claims
(including any actual or threatened investigation or proceeding by any
governmental agency or body), damages, liabilities or expenses whatsoever
(including the reasonable costs of investigating and defending against any
claims therefor and reasonable counsel fees incurred in connection
therewith) as incurred to which Merrill Lynch or any such other person may
become subject under the 1933 Act or the 1934 Act or otherwise which arise
out of or are based on the grounds or alleged grounds (i) that the
Registration Statement (including, without limitation any documents
incorporated by reference therein), as amended, includes or allegedly
includes an untrue statement of a material fact or omits or allegedly omits
to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or (ii) that any
preliminary prospectus or the Prospectus (including, without limitation any
document(s) incorporated by reference therein), as amended or supplemented,
includes or allegedly includes an untrue statement of a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not
misleading, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with information about
the Selling Stockholders furnished to the Company by the Selling
Stockholders for use in the preparation of such Registration Statement or
any preliminary prospectus or Prospectus.
(b) Merrill shall indemnify and hold harmless the Corporate
Selling Stockholder, its directors, officers, employees and their agents,
each person, if any, who controls the Company (within the meaning of
Section 15 of the 1933 Act or the 1934 Act) and the Individual Selling
Stockholders and their agents against any losses, claims (including any
actual or threatened investigation or proceeding by any governmental agency
or body), damages, liabilities or expenses whatsoever (including the
reasonable costs of investigating and defending against any claims therefor
and reasonable counsel fees incurred in connection therewith) as incurred
to which the Selling Stockholders or any such other person may become
subject under the 1933 Act or the 1934 Act or otherwise which arise out of
or are based on the grounds or alleged grounds (i) that the Registration
Statement (including, without limitation any documents incorporated by
reference therein ), as amended, includes or allegedly includes an untrue
statement of a material fact or omits or allegedly omits to state a
material fact required to be stated therein), or necessary in order to make
the statements therein misleading, or (ii) that any preliminary prospectus
or the Prospectus (including, without limitation any document(s)
incorporated by reference therein, as amended or supplemented, includes or
allegedly includes an untrue statement of a material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances in which they are made, not misleading, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with information furnished by Merrill Lynch
to the Company for use in the preparation of such Registration Statement or
any preliminary prospectus or Prospectus.
(c) If any action or claim shall be brought or asserted against an
indemnified party or parties (the "Indemnified Party") under this paragraph
(vi) in respect of which indemnity may be sought from an indemnifying party
or parties (the "Indemnifying Party") under this paragraph (2) (a "
Claim"), the Indemnified Party shall immediately give prompt written notice
of the Claim to the Indemnifying Party, who shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all expenses; except that any delay or
failure to so notify the Indemnifying Party shall only relieve the
Indemnifying Party of its obligations hereunder to the extent, if any, they
are prejudiced by reason of such delay or failure. The Indemnified Party
shall have the right to employ separate counsel and participate in the
defense of the Claim, but the fees and expenses of such counsel shall be at
the expense of the Indemnified Party unless (I) the employment of counsel
by the Indemnified Party has been authorized by the Indemnifying Party,
(ii) the Indemnified Party
shall have reasonably concluded that there is a conflict of interest
between the Indemnifying Party and the Indemnified Party in the conduct of
the defense of such action (in which case the Indemnifying Party shall not
have the right to direct the defense of such action on behalf of the
Indemnified Party) or (iii) the Indemnifying Party shall not in fact have
employed counsel to assume the defense of such action in each of which
cases the fees and expenses of counsel shall be at the expense of the
Indemnifying Party. An Indemnifying Party shall not be liable for any of
any settlement effected without its written consent. Anything in this
paragraph (vi) to the contrary notwithstanding, the Indemnifying Party
shall not, without the Indemnified Party's prior written consent, settle or
compromise any claim or consent to the entry of any judgment with respect
to any Claim for anything other than money damages paid by the Indemnifying
Party that would have any adverse affect on the Indemnified Party.
2. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 1
hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Selling
Stockholders and Merrill Lynch shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by
said indemnity agreement incurred by Merrill Lynch and for that portion
represented by the percentage that the commission received by Merrill Lynch
on the sales of the Securities bears to the sales price of such Securities,
and the Selling Stockholders are responsible for the balance; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section, each officer, director and employee of
Merrill Lynch and each person, if any, who controls Merrill Lynch within
the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as Merrill Lynch, and the individual Selling Stockholders and
the each officer, director and employee of the Corporate Selling
Stockholder, and each person, if any, who controls the Corporate Selling
Stockholder within the meaning of Section 15 of the 1933 Act shall have the
same rights to contribution as the Corporate Selling Stockholder.
3. This Agreement shall inure to the benefit of and be binding
upon Merrill Lynch and the Selling Stockholders and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than
Merrill Lynch and the Selling Stockholders and their respective successors
and the controlling persons and officers, directors and employees referred
to in Sections 1 and 2 and their heirs and legal representatives, any legal
or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of
Merrill Lynch and the Selling Stockholders and their respective successors,
and said controlling persons and officers, directors and employees and
their heirs and legal representatives, and for the benefit or no other
person, firm or corporation. No purchaser of Securities from Merrill Lynch
shall be deemed to be a successor by reason merely of such purchase.
4. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made to be
performed in said State.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Selling Stockholders a counterpart
hereof, whereupon this instrument, along with all counterparts, will become
a binding agreement between Merrill Lynch and the Selling Stockholders in
accordance with its terms.
Very truly yours,
Waco Oil and Gas Co., Inc.
By: /s/ Kenneth L. Greenlief
Title: Executive Vice President
and Treasurer
/s/ Ira L. Morris by Kenneth L.
Greenlief, Attorney-in-fact
Ira L. Morris
CONFIRMED AND ACCEPTED /s/ Betty Sue Morris by Kenneth L.
as of the date first above written: Greenlief, Attorney-in-fact
Betty Sue Morris
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
By /s/ Charles Plohn, Jr.
Authorized Signatory
Exhibit 2.2
AGREEMENT OF SALE AND PURCHASE OF ASSETS
Dated as of February 24, 1995
By and Between
WACO OIL & GAS CO., INC.
IRA L. MORRIS
BETTY SUE MORRIS
("Sellers")
and
ASHLAND INC.
("Buyer")
TABLE OF CONTENTS
Section Subject Page
1. Agreement to Convey................................... 1
2. The Closing........................................... 2
3. The Purchase Price.................................... 2
4. Actions Taken at Closing.............................. 3
5. Effective Time........................................ 4
6. Representations and Warranties of Sellers............. 5
7. Representations and Warranties of Buyer............... 9
8. Survival of Representations and Warranties............ 10
9. Covenants............................................. 10
10. Conditions to Obligations of Buyer and Sellers........ 15
11. Consents and Preferential Purchase Rights............. 16
12. Title, Environmental and Regulatory Matters........... 17
13. Indemnification....................................... 19
14. Taxes................................................. 19
15. Pre and Post-Closing Matters.......................... 19
16. Termination........................................... 20
17. Miscellaneous......................................... 20
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Form of Conveyance
Exhibit B Opinion of Sellers' Counsel
Exhibit C Opinion of Buyer's Counsel
Exhibit D Sellers' Certificate
Schedule 1 List of Leases
Schedule 1A List of Royalties
Schedule 2 List of Wells and Allocated Values
Schedule 3 List of Easements, etc.
Schedule 4 List of Vehicles and Equipment
Schedule 5 List of Assumed Contracts
Schedule 6 Adverse Claims, Litigation, etc.
Schedule 7 Mechanical Defects, etc.
Schedule 8 Consents and Preferential Purchase Rights
Schedule 9 Tax Partnerships
Schedule 10 Mercury Meters
Schedule 11 Section 29 Wells
Schedule 12 Allocation of Stock
Schedule 13 Domestic Customers
Schedule 14 Reversionary Interests
-ii-
AGREEMENT OF SALE AND PURCHASE OF ASSETS
THIS AGREEMENT entered into as of the 23rd day of February, 1995,
between WACO OIL & GAS CO., INC., a West Virginia corporation ("WACO"), MR.
IRA L. MORRIS and MRS. BETTY SUE MORRIS (the "Morrises") (WACO and the
Morrises collectively, jointly and severally called "Sellers"), and ASHLAND
INC., a Kentucky corporation ("Buyer"):
W I T N E S S E T H:
For and in consideration of the premises and of the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
1. Agreement to Convey. At the Closing (as defined in Section 2
hereof), Sellers shall grant, assign, convey and deliver to Buyer the
following described property owned by Sellers (such property referred to
collectively as the "Assets"):
(a) Except for the rights and interests listed on or referred to in
Schedule 14 which, notwithstanding any other term, condition, or
other provision of this agreement are reserved by Sellers, and
except for interests which have been previously assigned to
others by document recorded prior to January 23, 1995, which are
excepted herefrom (hereinafter referred to as the "Excluded
Interests"), all right, title and interest of Sellers in and to
all of the oil and gas leases, producing and nonproducing,
developed and undeveloped (including but not limited to oil and
gas leases, subleases, farmins, farmouts, joint ventures and
leaseholds, overriding royalties, net profits interests, and
carried interests) listed on Schedule 1 attached hereto and all
easements, rights-of-way, and other appurtenances thereunto, and
all rights therein derived from all unitization, pooling and
communitization agreements, declarations and orders and the
properties covered and the units created thereby (all of the
foregoing except the Excluded Interests are hereinafter referred
to as the "Leases");
(b) The stated undivided interests of Sellers in and to all of the
oil and/or gas wells listed on and referred to in Schedule 2
attached hereto, (herein referred to as the "Wells");
(c) All right, title and interest of Sellers in or to the oil and gas
in place listed on or referred to on Schedule 1A and all
easements, rights-of-way and appurtenances thereto (hereinafter
referred to as "Royalty");
(d) All right, title and interest of Sellers in or to all of the
natural gas or oil flow, sales, gathering or transmission lines
and all of the leases, rights-of-way, licenses, easements,
surface leases and other surface rights, and governmental permits
and licenses used to market oil or natural gas from the Wells,
including but not limited to all of the easements, rights-of-way,
licenses, permits or other instruments described or referred to
in Schedule 3 attached hereto, and all pipelines (whether sales,
flow, or gathering or transmission lines) connected to said
Wells, including but not limited to pipe, compressors, pumps and
treatment facilities (all of the foregoing herein referred to as
the "Gathering Lines");
(e) The motor vehicles, four-wheelers, bulldozers, swabbing units and
other equipment, and tools described on Schedule 4 hereto,
together with all maintenance records, (the foregoing referred to
as the "Vehicles");
(f) All right, title and interest of Sellers in and to all oil,
casinghead gas and natural gas sales, purchase, exchange,
transportation and processing contracts, operating agreements,
joint venture agreements, partnership agreements, farmout and
farmin agreements and other contracts and instruments that relate
to any of the Leases, Wells, or Gathering Lines to be conveyed
pursuant to this Agreement or any unit or units in which part or
parts of such properties or interests may be included, or to the
exploration, development or production of oil and gas and
products produced in association therewith from or attributable
to said properties, including but not limited to those described
on Schedule 5 hereto (all of the foregoing referred to as
"Assumed Contracts");
(g) All right, title and interest of Sellers in or to the personal
property, improvements (including but not limited to any wells,
casing, tubing, pipe, valves, nipples, pumps, pump jacks, tanks,
boilers, separators, charts, chart houses, fixtures, injection
facilities, saltwater disposal facilities, compression
facilities, gas measurement, machinery, power lines, roads, and
other appurtenances, easements and facilities), actually being
used by Sellers in the production of oil or gas from the Wells or
any unit or units in which part or parts of the Wells to be
conveyed pursuant to this Agreement may be included (all of the
foregoing referred to as the "Equipment"). It is the intention of
this agreement to transfer only such Equipment as is located on
the Wells and on the Leases, licenses or easements transferred
hereby. The personal property held by Sellers as repair or
replacement parts for the Wells, Leases and Equipment, often in
the yard, warehouses or store rooms of Sellers are not part of
the Equipment transferred hereby;
(h) All right, title and interest of Sellers in and to all lease
files, land files, well files, gas and oil sales contract files,
abstracts, title opinions, seismic, engineering, geophysical or
geochemical records, logs, maps and reports, and all other books,
records, intangible files, maps and accounting records
(collectively the "Records") related to any of the properties or
interests to be conveyed pursuant to this Agreement; provided,
however, that Sellers may retain free of claim from Buyer copies
of the Records;
(i) Such right, title and interest of Sellers in and to all
warranties or representations of third parties relating to the
properties described in the subsections of this Section 1 as can
be conveyed consistent with the reservations of Sellers herein.
2. The Closing. The purchase by Buyer and the sale by Sellers of
the Assets, as contemplated by this Agreement (the "Closing"), shall take
place at 8:00 a.m. on March 1, 1995 (the "Closing Date") at the offices of
Bowles Rice McDavid Graff & Love, 16th Floor, Commerce Square, Lee Street,
Charleston, West Virginia, or at such other location agreed to by Buyer and
Sellers. Buyer and Sellers shall attend a pre-closing on February 28, 1995,
at 9:00 a.m., at the offices of Bowles Rice McDavid Graff & Love for the
purpose of executing all documents necessary to consummate the transactions
contemplated in this Agreement. Once executed, the documents will be held
in trust by the respective parties and exchanged at the Closing.
-2-
3. The Purchase Price.
(a) The total purchase price for the Assets (the "Purchase Price")
shall be composed of part cash and part stock, as follows:
1. Cash. $1,196,734 cash or immediately available funds, which
amount shall be allocated to the purchase of Assets owned by
WACO; plus
2. Stock. The number of shares of Ashland Inc. common stock
("Common Stock") determined by dividing the sum of
$40,488,918 ("Closing Price") per share of Common Stock
valued at the New York Stock Exchange Closing Price for the
trading day immediately prior to the Closing Date; provided,
however, that should the Closing Price per share of Common
Stock when calculated be less than $32 per share then in
such event Buyer shall only be obligated to deliver to
Sellers no more than 1,265,279 shares of Common Stock, in
which event Sellers shall have the option to either accept
the number of shares to be tendered or terminate the
transaction. The Common Stock shall be divided among Sellers
as set forth on Schedule 12 hereto; and the stock portion of
the Purchase Price shall be referred to herein as "Ashland
Stock."
(b) Adjustments to Purchase Price:
1. The Purchase Price shall be adjusted by the following:
(A) Any amounts required pursuant to Sections 5(c), 11, 12
15(b), 15(c) and 17(c); and
(B) Any other amount mutually agreed upon in writing by Sellers
and Buyer.
2. Ad valorem and property tax adjustments to the Purchase
Price have been made to the stock portion of the Purchase
Price and set forth on Schedule 2. The property and ad
valorem tax adjustment of $1,011,082.00 reduced the stock
portion of the Purchase Price to $40,488,918 as reduced
figure set forth in Section 3(a)2. hereof. All adjustments
to the Purchase Price of the Morrises Assets shall be made
to the stock portion of the Purchase Price. All other
adjustments shall be made to the cash portion of the
Purchase Price.
4. Actions Taken at Closing. At the Closing, the following events
shall occur, each event under the control of one party hereto being a
condition precedent to the events under the control of the other party, and
each event being deemed to have occurred simultaneously with the other
events:
(a) Conveyance and Other Documents. Sellers shall execute,
acknowledge and deliver to Buyer sufficient instruments to convey
all of the Assets to Buyer. Sellers shall execute, acknowledge
and deliver to Buyer instruments of conveyance and transfer in
substantially the form set forth as Exhibit A hereto, in
sufficient counterparts to facilitate recording, covering all of
the Assets, together with such other forms of assignment as are
required to comply with applicable statutory, regulatory and
contractual requirements for the transfer of the Assets
contemplated herein.
(b) Payment of Purchase Price. Buyer shall pay the cash portion of
the Purchase Price by wire transfer to an account designated by
WACO and shall pay the stock portion of the Purchase Price by
delivery to Sellers or Sellers' agent certificates representing
the Ashland Stock.
-3-
(c) Sellers' Opinion. At the Closing, Sellers shall deliver to Buyer
an opinion, dated the Closing Date, of counsel for Sellers,
substantially in the form of Exhibit B attached hereto.
(d) Buyer's Opinion. At the Closing, Buyer shall deliver to Sellers
an opinion, dated the Closing Date, of counsel for Buyer,
substantially in the form of Exhibit C attached hereto.
(e) Sellers' Certificate. Sellers shall deliver to Buyer a
certificate dated as of Closing Date in form and substance set
forth in Exhibit D hereto.
(f) Division Orders. Sellers and Buyer shall execute, acknowledge and
deliver, at Buyer's election, division orders, transfer orders or
letters in lieu thereof directing all purchasers of production to
make payment to Buyer of proceeds attributable to production from
the Assets, effective as of the Closing Date.
(g) Transfer of Permits. Sellers and Buyer shall execute and deliver
such instruments and forms as are required to transfer the
permits for the Wells to Buyer. Buyer shall prepare all such
transfer forms.
(h) Files. Sellers shall deliver to Buyer at its offices in Weston,
West Virginia, originals or, if originals have been destroyed or
lost, copies of all Records relating to the Assets, in Sellers'
possession or reasonably obtainable by Sellers.
(i) Nonforeign Certificate. Sellers will execute and deliver
Certificates of Nonforeign Status pursuant to Section 1445 of the
Internal Revenue Code of 1986, as amended.
(j) Releases. Sellers will deliver executed, unconditional and
recordable releases of all deeds of trust, financing statements
or other liens or encumbrances upon the Assets, including but not
limited to those listed on and referred to in Schedule 6 attached
hereto; provided, however, that releases of all liens and
encumbrances in favor of PNC Bank, N.A. ("PNC") or its
predecessor(s) in interest, shall be delivered in trust under the
following conditions: i) all such releases shall be delivered at
or prior to the Closing to an agent designated by Sellers and
acceptable to Buyer ("Designated Agent"); ii) Sellers and
Designated Agent shall enter into an agreement that a) pledges
sufficient shares of the Ashland Stock to completely satisfy the
PNC debt, recognizing and agreeing that the lien cannot and will
not be recorded and that the shares serving as collateral will be
sold immediately upon receipt; b) requires Sellers to pay the PNC
debt immediately upon settlement and receipt of the proceeds from
the sale of the pledged shares; and c) requires the Designated
Agent to deliver the releases to Buyer, immediately upon payment
of the PNC debt. Buyer shall be either a party to or a direct,
named third party beneficiary of the agreement with Designated
Agent and must approve all terms and conditions thereof.
(k) Tax Partnerships. Sellers shall use their best efforts to
terminate before the Closing all tax partnerships identified on
Schedule 9, and shall deliver at Closing evidence of such
termination. If such tax partnerships are terminated before the
Closing, Sellers shall convey to Buyer at the Closing all their
right, title and interest in all Assets previously owned by such
tax partnerships. If such tax partnerships are not terminated
before the Closing, Sellers shall convey to Buyer at the Closing
all Sellers' right, title and interest in and to each such tax
partnership.
-4-
(l) Interests to be Leased. Sellers with other parties own undivided
interest in oil and gas in place. The parties acknowledge that
Buyer is acquiring some, but not all, of the oil and gas in place
owned by Sellers and that the oil and gas in place Buyer is
acquiring is listed on Schedule 1A. Sellers agree to deliver,
within ten (10) days of Buyer's request, a lease on the same
terms and conditions as any previous lease to Sellers from others
with undivided interests of all of Sellers' right, title and
interest in and to all the oil and gas in place owned by Sellers
and underlying any of the leases set forth on Schedule 1.
5. Effective Time.
(a) The effective time (the "Effective Time") of the sale and
purchase contemplated by this Agreement shall be as of 12:01 a.m.
on the Closing Date.
(b) The parties agree that the ownership of the Assets shall be
transferred from Sellers to Buyer on the Closing Date, effective
as between the parties as of the Effective Time. The parties
agree that Sellers, with respect to the rights and obligations
attributable to the ownership of the Assets prior to the
Effective Time, and Buyer, with respect to the rights and
obligations attributable to the ownership of the Assets at or
after the Effective Time, each shall be entitled respectively to
all of the rights incidental to such ownership, and shall be
subject to the duties and obligations of such ownership
attributable to the Assets and attributable to periods of time
prior to or at or after the Effective Time, as the case may be.
(c) Sellers shall use their best efforts to have all crude oil and
brine tanks and all natural gas meters related to the Assets
gauged or read as of the Effective Time. The parties agree to
cooperate in good faith to allocate to said Effective Time all
readings made before or after said Effective Time but not
shipped. The Purchase Price shall be increased by the market
value of such oil as of the Effective Time, which market price
shall be equal to the then current Pennzoil posted price
applicable to the Sellers' Assets. With respect to brine produced
before the Effective Time but not shipped, the Purchase Price
shall be decreased by $4.00 per each barrel of brine remaining.
With respect to natural gas produced before the Effective Time,
the parties will attempt to have the purchasers pay Sellers
direct; if not, Buyer will remit those sales proceeds to Sellers
when received. Similarly, if Sellers receive any proceeds for gas
produced after the Effective Time, Sellers will remit those sales
proceeds to Buyer when received.
6. Representations and Warranties of Sellers. Sellers represent and
warrant to Buyer that:
(a) Organization and Existence. WACO is a corporation duly organized,
validly existing and in good standing under the laws of the State
of West Virginia and has all requisite corporate power and
authority to own, operate and lease its properties and to carry
on its business as now conducted.
(b) Title to Assets. Sellers have title free of Title Defects (as
defined in Section 12 hereof) to all of the Assets, and the right
to convey the Assets, free and clear of any mortgage, pledge,
lien, charge, security interest or any material encumbrance,
subordination or adverse claim except for liens which will be
paid and released at Closing and/or for which releases will be
provided at Closing and escrowed as herein provided and for
current realty and personal property taxes not yet delinquent and
preferential purchase consents
-5-
and restrictions upon transfer set forth on Schedule 8.
Notwithstanding any provision contained herein to the contrary,
Sellers shall not warrant title as to any of the Assets, which
Sellers acquired in connection with the following: (i) Order
dated May 2, 1985, in In re: B&L Oil Company, Case No. 82-B-4065
Mc, in the United States Bankruptcy Court for the District of
Colorado, and Assignment and Bill of Sale dated June 28, 1985;
and (ii) Order dated January 11, 1990, in In re: Ferrell Prior,
Inc., an individual d/b/a Prior Oil Co., P.O.W.V.A., Inc.,
Kanawha Drilling Co., Inc., Gil Disbursement, Inc., Tower
Drilling Corp., Brono Enterprises, Inc., Liquid Energies, Inc.,
Artesian Wells, Inc., and Tower Oil Well Drilling Corp., Case
Numbers 86-00458-W, No. 86-00555-W, and No. 86-0064-1-W, in the
United States Bankruptcy Court for the Northern District of West
Virginia, (jointly the "Bankruptcy Assets"); provided, however,
that Sellers shall convey the Bankruptcy Assets to Buyer free of
Title Defects caused by Sellers.
(c) Leases. (1) Each of the Leases is valid and in full force and
effect, constitutes a valid encumbrance upon the real estate
described therein and vests in the owner thereof the immediate
right to produce oil and gas therefrom, except as identified on
Schedule 14.
(2) To the best of Sellers' actual knowledge, all of the
Leases are being developed, operated and maintained in compliance
with all leases, contracts and commitments to which Sellers are a
party or by which Sellers or any such interest is bound and with
which the failure to comply will result in the substantial
diminution in value of such lease, contract or commitment. There
are no royalties, shut-in royalties, lease rental payments or
other payments or lease obligations that are delinquent; and no
owner of a royalty interest has refused to cash or accept
tendered royalty during the preceding 12 months, except as
identified on Schedule 14. Sellers have received no notice or
claim that any of the Leases are expired, invalid or in default,
except as identified on Schedule 14.
(3) Sellers have made available to Buyer copies of all title
opinions, title abstracts or papers and other title documents and
other agreements, books, files and records which they have in
their possession or control and which in any way relate to the
Leases.
(4) Schedule 5 hereto contains a complete list of all
contracts (including all amendments and agreements relating
thereto) under which the Sellers are selling or are obligated to
sell crude oil, gas or associated hydrocarbons produced or to be
produced from the Leases. Sellers have made available to Buyer
any correspondence from any current purchasers of production from
the Leases stating such purchaser's intent to cancel, terminate
or renegotiate such crude oil or gas sales contract, or suspend
it obligations thereunder, recoup natural gas for which a
take-or-pay payment has been made, or to exercise any "market-out
privileges" or other similar provision whereby such purchaser may
seek to reduce the price it will pay for crude oil, gas or the
minimum quantity it would be required to take.
(5) All proceeds from the sale of the production of oil, gas
and associated hydrocarbons attributable to the Leases are
currently being paid in full; and no portion of such proceeds is
currently being held in suspense by the purchaser thereof.
(6) The Leases are not burdened with production payments,
net profits interests, advance payments for production, the
obligation to pay or make volumetric adjustments to another party
for any share of prior overproduction, claims by gas purchasers
for
-6-
delivery of prepaid gas or liability for refunds, the obligation
to deliver future production without the owner of the Assets then
receiving full payment therefor, or other similar contingent
liabilities, except as set forth on Schedule 14.
(d) Wells. Sellers are the owners of the percentage working interest
in and to each of the Wells and in and to all equipment located
thereon, as shown on Schedule 2. Sellers are the owners of not
less than the percentage net revenue interest in and to each of
the Wells as shown on Schedule 2. There are no outstanding
reversionary interests in any of the Wells, except as identified
on Schedule 14.
(e) Gathering Lines. Production from all of the Wells can currently
be marketed through existing pipelines, except those Mechanical
Defects identified on Schedule 7. To the best of Sellers' actual
knowledge, all gathering lines necessary to market production
from all of the Wells are constructed pursuant to valid leases,
easements, rights- of-way, licenses, permits or similar
instruments; and all such instruments are described on either
Schedule 1 or 3 hereto. To the best of Sellers' actual knowledge,
Sellers have complied with all applicable federal or state
natural gas pipeline safety act laws and regulations.
(f) Assumed Contracts. Sellers have provided Buyer full access to all
of Sellers' books, records, and files pertaining to the Assets;
and Sellers are not currently a party to any material contract or
material agreement pertaining to the Assets to which Buyer has
not been offered full and open access prior to the date of this
Agreement. Sellers have performed in all material respects all
obligations required to be performed by them and are not in
default in any material respect or alleged to be in default under
any of the Assumed Contracts or any other material lease,
contract or agreement relating to the Assets.
(g) Equipment. To the best of Sellers' actual knowledge, all of the
Equipment has been properly maintained, is serviceable and has no
latent defects. Except as described on Schedule 7, Sellers are
not aware of any leaks, mechanical problems or defects relating
to any of the Wells, Gathering Lines or Equipment, nor are
Sellers aware of any material inaccuracies in any measuring
devices measuring natural gas flow from any Wells or Gathering
Lines except as identified on Schedule 7. The equipment is being
sold on an "AS IS" basis. Sellers expressly disclaim any warranty
of merchantability or fitness for a particular purpose.
(h) Governmental Authorizations and Laws. All governmental licenses,
permits, variances, waivers, authorizations and similar rights
("Governmental Authorizations") that are necessary for the
installation, ownership and current operation of the Assets are
in full force and effect. No proceedings are pending or
threatened that might result in any modification, revocation or
suspension of any Governmental Authorizations. Sellers have
operated the Assets in all material respects in accordance with
the conditions and provisions of the Governmental Authorizations
and with all applicable laws, regulations and similar legal
requirements and are in compliance in all material respects with
all obligations thereunder or imposed thereby. There are no
outstanding notices of violation, orders or unresolved consent
decrees from or with the State of West Virginia relating to the
Assets. Sellers have filed all tax and information returns and
paid in a timely manner all taxes due and payable with respect to
the Assets, which, if not paid, could give rise to a lien upon
the Assets.
(i) Authority of Sellers. The execution, delivery and performance by
-7-
Sellers of this Agreement have been duly and validly authorized
by all necessary corporate action (including shareholder action
if required) on the part of Sellers. This Agreement, and all
instruments executed pursuant to this Agreement, are, or upon
their execution and delivery will be, valid and binding
obligations of Sellers, enforceable against Sellers in accordance
with their respective terms. Neither the execution, delivery,
performance nor consummation of the transactions contemplated
hereby, nor compliance by Sellers with any of the provisions
hereof, will (i) conflict with or result in a breach of any
provision of the certificate of incorporation or bylaws of WACO;
(ii) result in a material default (with due notice or lapse of
time or both) or the creation of any lien or encumbrance or give
rise to any right of termination, cancellation or acceleration
under any of the terms, conditions or provisions of any of the
Leases, Gathering Lines or Assumed Contracts, or give rise to the
creation of any lien or encumbrance upon any of the Assets; or
(iii) violate any order, writ, injunction, judgment, decree,
statute, rule or regulation applicable to any of the Assets,
assuming compliance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act").
(j) Litigation and Pending Claims. Except as shown on Schedule 6,
there are no suits, actions or other proceedings pending or, to
the best of Sellers' actual knowledge, threatened before any
court or governmental agency relating to the Assets. In addition,
no judicial or administrative order has been issued which
adversely affects the operation (as currently operated) or
ownership of the Assets for oil and gas exploration and
development except as described on Schedule 6.
(k) Environment. Seller is and has been at all times in compliance in
all material respects with all applicable laws relating to
protection of the environment or health and safety. Seller
represents and warrants that there are no pending citations,
notices of violation, administrative orders, complaints,
judgments, consent orders or consent agreements issued to or
entered into by Sellers relating to any such laws, which are
applicable to the Assets. The storage, treatment, transportation
and disposal of all hazardous waste (as defined on the Closing
Date) resulting from Sellers' operations of the Assets have been
in material compliance with all environmental laws applicable
thereto. Sellers have not been advised of any contamination of
groundwater resulting from Sellers' operation of the Assets and
Sellers have not been advised of any contamination of surface
water or soil resulting from Sellers' operations of the Assets.
(l) Access to Information. Sellers have made available to Buyer and
its representatives all information relating to the ownership of
the Assets, the condition of the Assets, and the operation of the
Assets in Sellers' possession at their various offices.
(m) Brokers and Finders Fees. Sellers have not incurred any
obligation or liability, contingent or otherwise, nor made any
agreement with respect to any broker's or finder's fees arising
out of or in any way related to the transactions contemplated by
this Agreement, for which Buyer shall have any responsibility
whatsoever.
(n) Consents and Preferential Purchase Rights. None of the Assets, or
any portion thereof, is subject to any preferential rights to
purchase or consents to assignment or restrictions on assignment,
except for (i) governmental consents and approvals of assignments
that are customarily obtained after Closing and (ii) such
preferential rights, consents and restrictions as are set forth
on Schedule 8.
-8-
(o) Employees. Sellers have or will before Closing comply with the
Worker Adjustment and Retraining Notification Act of 1989, within
the State of West Virginia, if applicable.
(p) Gathering Lines - Domestic Customers. As used herein, the term
"Domestic Customers" shall mean all persons entitled to receive
natural gas from the Assets for personal use. All Domestic
Customers are listed on Schedule 13. There have been no claims by
the State of West Virginia, its agencies or officials asserting
jurisdiction over Sellers, any of the Gathering Lines or any of
the other Assets as a public utility. Delivery to the Domestic
Customers does not violate any existing contractual obligations
of Sellers. No Domestic Customers have a right to natural gas
except as result from express provisions of a recorded instrument
included on one of the Schedules hereto or as set forth on
Schedule 13. There are no commercial or industrial customers
taking, or entitled to take, either by purchase or free of cost,
natural gas from any of the Assets.
(q) Public Utility Company, Etc. None of Sellers is (i) a "public
utility company," a "holding company," a "subsidiary company" of
a "holding company" or an "affiliate" of any of the foregoing
within the meaning of the Public Utility Holding Company Act of
1935, as amended, and the rules and regulations thereunder or a
utility under any state law.
(r) Information Delivered. No representation, warranty or statement
of Sellers contained in this Agreement or any document executed
and delivered pursuant to this Agreement contains any untrue
statement of a material fact or omits to state any material fact
necessary in order to make the statements contained herein, or
therein, when read together, not materially misleading in light
of the circumstances under which they were made.
(s) Tax Credits. The Wells designated on Schedule 11 are eligible for
certain tax credits as provided by Section 29 of the Internal
Revenue Code of 1986, as amended.
(t) Mechanics' Liens. There are no mechanics' liens filed against any
of the Assets, nor has any labor, services or material been
provided or furnished for any of the Assets which could give rise
to a mechanic's lien, except as will be paid in full by Sellers
prior to the Closing Date.
(u) Labor. Sellers are not parties to any collective bargaining
agreement.
(v) WACO Assets. The Assets being sold by WACO pursuant to this
Agreement constitute less than 80% of the total assets of WACO at
the Closing Date, when measured by fair market value.
(w) Mercury Meters. To the best of Sellers' actual knowledge,
Schedule 10 lists all Wells or Leases which either presently have
a mercury meter on site or previously had a mercury meter on
site.
(x) Investment Representation. Sellers represent that they are
acquiring the Ashland Stock for their sole account and
acknowledge that the issuance of the Ashland Stock to Sellers has
not been registered under the Securities Act of 1933, as amended
(the "1933 Act") and the Ashland Stock must be held indefinitely
unless it is sold pursuant to an effective registration statement
or the sale is exempt from registration.
-9-
7. Representations and Warranties of Buyer. Buyer represents and
warrants to Sellers that:
(a) Organization and Existence. Buyer is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Kentucky and has all requisite corporate power
and authority to own, operate and lease its properties and to
carry on its business as now conducted.
(b) Authority of Buyer. The execution, delivery and performance by
Buyer of this Agreement, the conveyance documents and all other
agreements to be entered into among the parties contemplated
hereby and thereby have been duly and validly authorized and
approved by all necessary corporate action (including shareholder
action if required) on the part of Buyer. Subject to the
foregoing, this Agreement, the conveyance documents and such
other agreements are, or upon their execution and delivery will
be, valid and binding obligations of Buyer, enforceable against
the Buyer in accordance with their respective terms.
(c) Brokers and Finders Fees. Buyer has not incurred any obligation
or liability, contingent or otherwise, nor made any agreement
with respect to any broker's or finder's fees arising out of or
in any way related to the transactions contemplated by this
Agreement for which Sellers shall have any responsibility
whatsoever.
(d) No Breach. The execution, delivery, and performance by Buyer of
this Agreement does not and will not (i) violate any provisions
of the Articles of Incorporation or Bylaws of Buyer; or (ii)
result in Buyer's violation of any law, rule, or regulation or of
any judgment, injunction, order, decree, permit, or license of
any judicial or administrative authority applicable to Buyer.
Buyer is not a party to nor bound by any judgment, injunction, or
decree of any court or governmental authority or any agreement
which in any material respect may restrict or interfere with the
performance of this Agreement.
(e) Litigation and Claims. There are no pending suits, actions, or
other proceedings that seek to restrain or enjoin Buyer's
performance of this Agreement; and, to the best of Buyer's
knowledge, none is threatened.
(f) Governmental Authorizations and Laws. After the Closing, Buyer
will maintain all Governmental Authorizations (as defined in
paragraph 6(h)) that are necessary for the installation,
ownership, and operation of the Assets in full force and effect.
Buyer will operate the Assets in all material respects in
accordance with the conditions and provisions of the Governmental
Authorizations and with all applicable laws, regulations, and
similar legal requirements and in compliance in all material
respects with all obligations thereunder or imposed thereby.
(g) Environment. After the Closing, Buyer will at all times maintain
the Assets in compliance in all material respects with all
applicable laws relating to protection of the environment or
health and safety. In addition, the storage, treatment,
transportation, and disposal of all hazardous waste resulting
from Buyer's operation of the Assets will be in material
compliance with all environmental laws applicable thereto.
8. Survival of Representations and Warranties. Regardless of any
investigation at any time made by or on behalf of any party hereto or of
any information any party may have in respect thereof, all representations
and warranties made hereunder or pursuant hereto or in connection with the
-10-
transactions contemplated hereby shall survive the Closing only until the
third anniversary of the Closing Date, except for the following: (a) the
representations and warranties in Section 6(v) shall survive the Closing
until the expiration of any applicable federal income tax statute of
limitation as applied to Buyer; and (b) the representations and warranties
in Section 6(b) shall survive only until the first anniversary of the
Closing Date.
9. Covenants.
(a) Conduct of Business. From the date of this Agreement to the
Closing Date, Sellers shall conduct operations respecting the
Assets diligently and in the ordinary course of business as a
prudent operator and shall not introduce any new method of
management, operation or accounting. Sellers shall not (i) sell,
farmout, encumber or otherwise dispose of any interest in any of
the Assets, or enter into any commitment to dispose of any of the
Assets; (ii) enter into any gas sale contract for a term in
excess of 31 days; or (iii) enter into any other agreement with
respect to the Assets which will bind Buyer after the Closing
without the prior written consent of Buyer. Sellers shall give
notice to Buyer of any written notice of default received during
such period under any Lease, instrument or agreement involving
the Assets. Sellers will advise Buyer of any regulatory or
litigation-related developments which are related to any of the
Assets which occur from and after the date of this Agreement
through the Closing.
(b) Access. Sellers have allowed and will continue to allow Buyer and
such persons as Buyer may designate to consult with Sellers'
agents or employees, to inspect and inventory the Assets and to
examine the wells, well locations, and all title, land,
engineering, production, sales, financial, gas contract,
regulatory, geological and geophysical records relating thereto.
(c) Maintenance of the Assets. Prior to Closing, Sellers will use
their best efforts to maintain the Assets in full force and
effect, and to operate the Assets (where applicable) in a good
and workmanlike manner and in accordance with the terms and
conditions of the applicable oil, gas and mineral leases, other
agreements and contracts, laws and regulations. Sellers will pay
or cause to be paid in a timely manner all costs, expenses,
rentals, royalties, overriding royalties and other payments
(except as such amounts may be placed into suspense in an account
transferred to Buyer) arising or incurred in respect to the
Assets prior to the Closing.
(d) Employees. (1) Buyer shall have no obligation to offer employment
to any employees of Sellers. If, however, Buyer desires to offer
employment to any of Sellers' employees, Buyer shall furnish
Sellers prior to the Closing a list of such persons (the
"Candidates for Employment"). Sellers shall cooperate with Buyer
and shall otherwise use all reasonable efforts so that the
Candidates for Employment who will be employed by Buyer can start
as soon as possible at or after the Closing. Sellers shall use
all reasonable efforts to assist Buyer by providing Buyer prior
to Closing with access to the Candidates for Employment and, if
the subject employee consents, all personnel files relating to
the Candidates for Employment.
(2) Sellers shall be fully responsible for its employees
whose employment relates to the Assets and Sellers' operations
and business associated therewith through the Closing Date. Buyer
shall have no severance obligation to any of Sellers' employees
whether or not they are hired by Buyer.
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(3) Buyer shall have no obligation to any of Sellers'
employees, whether or not those employees are Candidates for
Employment, with respect to any defined benefit plans or other
employee benefits to which such employees may be entitled as a
result of their employment by Sellers. Any obligation under any
vacation plans, sick leave policies or plans, ERISA plans,
pension and profit sharing plans, stock ownership plans, ESOP
plans, or other benefit plans shall remain the obligation of
Sellers; and Buyer shall not succeed thereto.
(e) Audits. Sellers shall be responsible for resolving all joint
interest audits related to the Assets for the period prior to the
Closing Date. Should the audit period extend beyond such Closing
Date, Buyer shall be responsible for handling and resolving the
audits as they relate to the period subsequent to such date.
Audit exceptions, collections or liabilities noted shall be split
between Sellers' and Buyer's accounts based on the time period to
which they relate. Buyer shall upon request be provided a copy of
all applicable audit reports and resolution documents and shall
also have the right to review Sellers' audit work papers for
joint interest audits covering the period prior to the Closing
Date. Sellers shall advise Buyer of any audit exceptions granted
related to the period prior to the Closing Date.
(f) Operator. Sellers shall use their best efforts to secure consent
from all interested parties for Buyer to become the operator
under all of the operating agreements affecting the Assets
wherein WACO is the operator, if and as instructed by Buyer.
(g) Files. Sellers shall deliver to Buyer at its office in Weston,
West Virginia, as soon as possible after Closing, all Records not
delivered at Closing relating to the Assets, in Sellers'
possession or reasonably obtainable by Sellers.
(h) Registration Statement. (1) Buyer shall, at its sole cost and
expense, file with the Securities and Exchange Commission ("SEC")
a registration statement on Form S-3 ("Registration Statement")
and a prospectus contained therein (the "Prospectus") with
respect to the resale by Sellers of the Ashland Stock. Buyer
shall use its best efforts to cause the Registration Statement to
become effective on or before February 28, 1995, and to remain
effective for a period of 105 days from the Closing Date (the
"Registration Period"). In addition, Buyer shall, at its sole
cost and expense, make all necessary Blue Sky filings associated
with the filing of the Registration Statement. Notwithstanding
the foregoing, Buyer may defer the filing, or suspend the
effectiveness of, the Registration Statement if (i) Buyer is
contemplating an underwritten public offering of its securities
and, in the judgment of the managing underwriter thereof, such
filing or continued effectiveness would have a material adverse
effect on the contemplated offering or (ii) Buyer is in
possession of material information that it deems advisable not to
disclose in a registration statement; provided that the
effectiveness of the Registration Statement may not be suspended
for a period beginning on the Closing Date through ten business
days thereafter.
(2) Buyer further covenants that Buyer shall also provide,
but not be limited to, the following as part of Buyer's
obligation regarding the Registration Statement:
(i) Buyer will notify Sellers and their agent
immediately (i) of the effectiveness of the Registration
Statement and any amendment thereto (including any
post-effective amendment), (ii) of the receipt of any
comments from the
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SEC, (iii) of any request by the SEC for any amendment to
the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (iv) of
the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. Buyer will
make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest practicable time.
(ii) Buyer will give Sellers and their agent notice of
Buyer's intention to file or prepare any amendment to the
Registration Statement (including any post-effective
amendment) or any amendment or supplement to the Prospectus
(including any revised Prospectus which Buyer proposes for
use by Sellers or their agent in connection with the
offering of the Ashland Stock which differs from the
Prospectus on file at the SEC at the time the Registration
Statement becomes effective, whether or not such revised
Prospectus is required to be filed pursuant to Rule 424(b)
of the 1933 Act, and will furnish Sellers or their agent
with copies of any such amendment or supplement a reasonable
amount of time prior to such proposed filing or use, as the
case may be.
(iii) Buyer will deliver to Sellers or their agent as
many conformed copies of the Registration Statement as
originally filed and of each amendment thereto (including
exhibits filed therewith or incorporated by reference
therein) as Sellers or their agent may reasonably request.
(iv) Buyers will furnish to Sellers or their agent from
time to time during the period when the Prospectus is
required to be delivered under the 1933 Act or the
Securities Exchange Act of 1934, as amended (the "1934
Act"), such number of copies of the Prospectus (as amended
or supplemented) as Sellers or their agent may reasonably
request for the purposes contemplated by the 1933 Act or the
1934 Act or the respective applicable rules and regulations
of the Commission thereunder.
(v) Buyer agrees to indemnify and hold harmless
Sellers, their directors, officers, employees and agents,
each person, if any, who controls Sellers (within the
meaning of Section 15 of the 1933 Act or the 1934 Act) and
each underwriter (within the meaning of Section 2(11) of the
1933 Act) against any losses, claims (including any actual
or threatened investigation or proceedings by any
governmental agency or body), damages, liabilities or
expenses whatsoever (including the reasonable costs of
investigating and defending against any claims therefor and
reasonable counsel fees incurred in connection therewith) as
incurred to which Sellers or any such other person may
become subject under the 1933 Act or the 1934 Act or
otherwise which arise out of or are based on the grounds or
alleged grounds (i) that the Registration Statement
(including, without limitation any documents incorporated by
reference therein), as amended, includes or allegedly
includes an untrue statement of a material fact or omits or
allegedly omits to state a material fact required to be
stated therein or necessary in order to make the statements
therein not
-13-
misleading, or (ii) that any preliminary prospectus or the
Prospectus (including, without limitation any document(s)
incorporated by reference therein, as amended or
supplemented, includes or allegedly includes an untrue
statement of a material fact or omits or allegedly omits to
state a material fact required to be stated therein or
necessary in order to make the statements therein, in light
of the circumstances in which they were made, not
misleading; provided that the foregoing indemnity agreement
shall not apply in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon
an untrue statement or alleged untrue statement in or
omission or alleged omission from such Registration
Statement, or any preliminary prospectus or Prospectus, in
reliance upon and in conformity with information furnished
to the Buyer by or on behalf of the Sellers, Sellers' agent
or underwriter, as the case may be, for use in the
preparation thereof; and provided further that the Buyer
shall not be liable to any person who participates as an
underwriter in the offering or sale of Ashland Stock or any
other person, if any, who controls such underwriter within
the meaning of the 1933 Act, in any such case to the extent
that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such
person's failure to send or give a copy of the Prospectus,
as the same may be then supplemented or amended, to the
person asserting an untrue statement or alleged untrue
statement or alleged omission at or prior to the written
confirmation of the sale of Ashland Stock to such person if
such statement or omission was corrected in such Prospectus.
Sellers shall indemnify and hold harmless the Buyer,
its directors, officers, employees and their agents, each
person, if any, who controls the Buyer (within the meaning
of Section 15 of the 1933 Act or the 1934 Act) against any
losses, claims, damages, liabilities or expenses whatsoever
(including the reasonable costs of investigating and
defending against any claims therefor and reasonable counsel
fees incurred in connection therewith) as incurred to which
the Buyer or any such other person may become subject under
the 1933 Act or the 1934 Act or otherwise which arise out of
or are based on the grounds or alleged grounds (i) that the
Registration Statement (including, without limitation any
documents incorporated by reference therein), as amended,
includes or allegedly includes an untrue statement of a
material fact or omits or allegedly omits to state a
material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or (ii)
that any preliminary prospectus or the Prospectus
(including, without limitation any document(s) incorporated
by reference therein, as amended or supplemented, includes
or allegedly includes an untrue statement of a material fact
or omits or allegedly omits to state a material fact
required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances in
which they were made, no misleading, if such statement or
alleged statement or omission or alleged omission was made
in reliance upon and in
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conformity with information about the Sellers furnished to
the Buyer for use in the preparation of such Registration
Statement or any preliminary prospectus or Prospectus.
(vi) If any action or claim shall be brought or asserted against
an indemnified party or parties (the "Indemnified Party")
under this paragraph (vi) in respect of which indemnity may
be sought from an indemnifying party or parties (the
"Indemnifying Party") under this paragraph (vi) (a "Claim"),
the Indemnified Party shall immediately give prompt written
notice of the Claim to the Indemnifying Party, who shall
assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and
the payment of all expenses; except that any delay or
failure to so notify the Indemnifying Party shall only
relieve the Indemnifying Party of its obligations hereunder
to the extent, if any, they are prejudiced by reason of such
delay or failure. The Indemnified Party shall have the right
to employ separate counsel and participate in the defense of
the Claim, but the fees and expenses of such counsel shall
be at the expense of the Indemnified Party unless (i) the
employment of counsel by the Indemnified Party has been
authorized by the Indemnifying Party, (ii) the Indemnified
Party shall have reasonably concluded that there is a
conflict of interest between the Indemnifying Party and the
Indemnified Party in the conduct of the defense of such
action (in which case the Indemnifying Party shall not have
the right to direct the defense of such action on behalf of
the Indemnified Party) or (iii) the Indemnifying Party shall
not in fact have employed counsel to assume the defense of
such action, in each of which cases the fees and expenses of
counsel shall be at the expense of the Indemnifying Party.
An Indemnifying Party shall not be liable for any settlement
of any action or claim effected without its written consent.
Anything in this paragraph (vi) to the contrary
notwithstanding, the Indemnifying Party shall not, without
the Indemnified Party's prior written consent, settle or
compromise any claim or consent to the entry of any judgment
with respect to any Claim for anything other than money
damages paid by the Indemnifying Party that would have any
adverse effect on the Indemnified Party.
(3) Sellers agree to notify Buyer promptly in writing of
their sales of Ashland Stock. Such notification shall include the
date and volume of such sales.
(4) Sellers agree that in the event all of the shares of the
Ashland Stock are not sold during the Registration Period, the
stock certificate(s) representing the remaining unsold shares of
the Ashland Stock will be returned to Buyer within seven calendar
days of the end of the Registration Period for the following
legend to be placed on the certificate(s) representing the unsold
shares: "The shares of Ashland Inc. Common Stock represented by
this certificate have not be registered under the Securities Act
of 1933, as amended, and may not be sold, transferred, pledged or
hypothecated unless subsequently registered under said Act or an
exemption from registration is available."
-15-
10. Conditions to Obligations of Buyer and Sellers.
(a) The obligation of Buyer to consummate the transactions
contemplated by this Agreement is subject to the
satisfaction on or prior to the Closing Date of all of
the following conditions, any one or more of which may be
waived, in whole or in part, in writing by Buyer:
(1) The occurrence of the expiration or earlier
termination of the statutory waiting period required
under the HSR Act; and the absence of any action by the
Department of Justice or the Federal Trade Commission to
enjoin or otherwise prohibit the consummation of the
transactions contemplated by this Agreement.
(2) The representations and warranties by
Sellers contained in this Agreement shall be true and
correct in all material respects as of the date when made
and as of the Closing Date.
(3) There shall have been no material adverse
change as compared to January 23, 1995, in the physical
condition of the Assets as of the Closing Date, except
depletion through normal production within authorized
allowables and rates of production, and depreciation of
equipment by ordinary wear and tear.
(4) No suit or other proceeding shall be pending
or threatened before any court or governmental agency
seeking to restrain, prohibit, or declare illegal, or
seeking damages in connection with, the purchase and sale
contemplated by this Agreement.
(5) Sellers shall have performed or complied
with all agreements and covenants required by this
Agreement for which performance or compliance is required
prior to or at the Closing Date.
(6) The Purchase Price shall not have been
adjusted downward pursuant to Sections 11, 12 and 17(c)
hereof by an aggregate amount greater than 25%.
(b) The obligation of Sellers to consummate the transactions
contemplated by this Agreement is subject to the
satisfaction on or prior to the Closing Date of all of
the following conditions, any one or more of which may be
waived, in whole or in part, in writing by Sellers:
(1) The occurrence of the expiration or earlier
termination of the statutory waiting period required
under the HSR Act; and the absence of any action by the
Department of Justice and the Federal Trade Commission to
enjoin or otherwise prohibit the consummation of the
transactions contemplated by this Agreement.
(2) Buyer shall have filed with the SEC the
Registration Statement; and such Registration Statement
shall have been declared effective.
(3) The representations and warranties by Buyer
set forth in this Agreement shall be true and correct in
all material respects as of the date when made and as of
the Closing Date.
(4) No suit or other proceeding shall be pending
or threatened before any court or governmental agency
seeking to restrain, prohibit, or declare illegal, or
seeking damages in connection with, the purchase and sale
contemplated by this Agreement.
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(5) Buyer shall have performed or complied with
all agreements and covenants required by this Agreement
for which performance or compliance is required prior to
or at the Closing Date.
(c) In the event the conditions of subsection (a) of this
Section 10 are not satisfied at Closing, Buyer may elect
to terminate this Agreement. In the event the conditions
of subsection (b) of this Section 10 are not satisfied at
Closing, Sellers may elect to terminate this Agreement.
Any such election shall be in writing and shall state the
grounds therefor.
(d) Buyer or Sellers may terminate this Agreement if the
transactions contemplated in the three (3) Purchase and
Sale Agreements between Ashland Exploration, Inc., as
Buyer, and (i) The I.L. and Betty Sue Morris Irrevocable
Trust I, as Seller; (ii) The I.L. and Betty Sue Morris
Irrevocable Trust II, as Seller; and (iii) The I.L.
Morris and Betty Sue Morris Irrevocable Trust, III, have
not been or are not contemporaneously consummated.
11. Consents and Preferential Purchase Rights.
(a) Commencing upon the date of this Agreement and continuing
until the Closing, Sellers shall use their best efforts
to obtain all consents ("Required Consents") and waivers
of preferential rights which, in the opinion of Buyer,
are necessary to the conveyance, assignment, and transfer
to Buyer of the Assets hereunder. The parties agree that
Required Consents shall include at a minimum the consents
listed on Schedule 8.
(b) If (i) a Required Consent affecting any Asset has not
been obtained on or before the Closing Date and (ii) the
transfer of such Asset to Buyer as contemplated by this
Agreement would in the opinion of Buyer result in the
termination of such Asset without the prior receipt of
such Required Consent, then Buyer may elect to exclude
such Asset from the Closing and, in such event, the
Purchase Price shall be adjusted downward by the
Allocated Value attributable to such Asset. If any Asset
is excluded from the Closing and if Sellers obtain the
required Consent after the Closing Date but before the
date ninety (90) days after the Closing Date, then (i)
Sellers shall execute and deliver to Buyer an assignment
conveying to Sellers such Asset and (ii) Buyer shall pay
to Sellers an amount in cash equal to the Allocated Value
attributable to such Asset.
(c) Sellers acknowledge that if any preferential rights are
exercised by any third parties as a result of this
Agreement or the transaction contemplated herein, it
shall be Sellers' obligation to deal with such third
parties in accordance with the terms of the agreement
creating such preferential rights. If the exercise of the
preferential right occurs after the Closing, Buyer shall
reconvey to the Sellers the portion of the Assets subject
to the preferential right; and Sellers shall pay Buyer an
amount in cash equal to the Allocated Value attributable
to such Assets. Sellers shall hold Buyer harmless from
and against all claims, direct costs, expenses
(including, without limitation, court costs and attorneys
fees), contractual obligation and liabilities
attributable to or arising from asserted preferential
purchase rights.
(d) If prior to the Closing Date the holder of a Preferential
Purchase right affecting an Asset gives notice of his
intent to exercise such right, the portion of such Asset
so affected shall be excluded from this Agreement. The
Purchase Price shall be adjusted downward by the
Allocated Value attributable to such Assets.
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12. Title, Environmental and Regulatory Matters.
(a) Definitions. As used in this Agreement, the following
terms shall have the respective meanings indicated below:
(1) Good Title. "Good Title," with respect to any
Asset, shall mean good record title, or such title that
Buyer could successfully defend against the claim of
any person, that:
(i) notwithstanding any other provision of this
Agreement entitles Sellers to receive from their
ownership in such property not less than the
interest shown as the "Net Revenue Interest" for
such property on Schedule 2 of all oil and gas
produced, saved and marketed from such property
without reduction, suspension or termination
throughout the productive life of such property
except as identified on Schedule 14;
(ii) obligates Sellers to bear a percentage of the
costs and expenses relating to operations on or
the maintenance and development of such property
and wells associated therewith not greater than
the interest shown as the "Gross Working Interest"
for such property on Schedule 2 without increase
throughout the productive life of such property
except as identified on Schedule 14; and
(iii)is free and clear of liens, monetary encumbrances
and material non-monetary encumbrances and
defects; but
(iv) may be subject to such defects of title as are
generally accepted by knowledgeable oil and gas
producers in the same geographic area, which
defects do not interfere with the present
entitlement to the economic benefits of such
Assets.
(2) Title Defects. "Title Defect" shall mean any
material encumbrance, encroachment, irregularity,
defect in or objection to Sellers' title to any Assets,
particular notice of which is given in writing by Buyer
to Sellers within one (1) year of Closing and that
alone or in combination with other defects renders
Sellers' title to any property to be less than Good
Title.
(3) Environmental Defects. "Environmental Defect"
shall mean any condition or fact with respect to an
Asset which is in violation of the warranties contained
in Sections 6(h) or (k) hereof.
(4) Allocated Value. "Allocated Value" shall mean
the value allocated to an Asset on Schedule 2 hereto;
provided that when referring to an Asset which is, in
accordance with a provision of this Agreement, conveyed
to Buyer after the Closing or reconveyed by Buyer to
Sellers after the Closing, the Allocated Value of such
Asset as of the time of conveyance or reconveyance
shall be reduced by the difference between the revenue
accrued and actual direct expenses incurred for such
Asset during the period from the Closing until the
subsequent conveyance or reconveyance.
(b) Title. (1) Prior to the Closing, Sellers shall continue
to make available to Buyer all of their title opinions,
certificates of title, abstracts of title, title data,
records and files relating to the Assets in their
possession or control. Sellers shall also continue to
make available to Buyer for examination a copy of all
contracts and any information and materials which Buyer
may
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reasonably request which relate to the Assets.
(2) If Buyer discovers the existence of any
Title Defect, or either party discovers, consents or
preferential rights which affect the conveyance,
assignment and transfer to Buyer of the Assets and which
are not listed on Schedule 8, the party discovering such
matter shall promptly inform the other party.
(3) Sellers shall, at their option, either cure
or remove all such Title Defects within 180 days after
notification or elect to delete such Assets from the
Closing, unless waived by Buyer.
(c) Environmental and Regulatory. (1) If Buyer or Sellers
discover the existence of any Environmental Defect, the
party discovering such matter shall promptly inform the
other party of such Environmental Defect.
(2) Sellers shall, at their option, either cure
or remove all such Environmental Defects within 90 days
after notification or elect to delete such Assets from
the Closing.
(d) Procedure. (1) If a Title Defect or Environmental Defect
is identified as herein provided before the Closing and
i) Sellers agree it cannot be timely cured or elect not
to attempt to cure, and ii) it is not waived by Buyer,
then such affected property shall be excluded from the
Closing and the Purchase Price shall be adjusted downward
by an amount equal to the Allocated Value of such
property or by such other amount as is mutually agreed by
Sellers and Buyer.
(2) If a Title Defect or Environmental Defect is
identified before Closing but Sellers desire to attempt
to cure such defect and the cure period has not expired
as of the Closing, then, at Buyer's option, such affected
property shall be excluded from the Closing and the
Purchase Price shall be adjusted downward by an amount
equal to the Allocated Value of such property or by such
other amount or is mutually agreed by Sellers and Buyer.
If, subsequently, the Title or Environmental Defect is
cured as provided herein or waived by Buyer, a closing on
such property shall occur in the same manner as the
Closing, except that the purchase price shall be paid in
cash, in the amount of the Allocated Value of such
property.
(3) If Sellers are notified of a Title Defect or
Environmental Defect after the Closing, at Sellers'
option, (A) Sellers shall have the right to cure such
Defect; provided, however, that prior to curing an
Environmental Defect Sellers and Buyer shall agree to the
method and schedule of work necessary to cure such
Environmental Defect, (B) Sellers shall pay Buyer the
cost to cure the Defect, or (C) Buyer shall reconvey the
property to Sellers in consideration of the payment, in
cash, by Sellers of the Allocated Value of the affected
property, unless waived by Buyer. If property is
reconveyed, then Buyers shall also convey such additional
rights as are convenient to the operation, maintenance
and production of the interests reconveyed, including
rights to use gathering lines at a gathering fee of no
more than ten (10) cents per mmbtu, without cost to
Sellers, free rights of use of easements, rights of way
and licenses, with such other rights and agreements as
are reasonable under the circumstances. In the event the
parties fail to agree on such other rights, then the same
shall be submitted to a third person agreed panel of
arbitrators, the costs of arbitration to be equally
divided.
(4) In the event that a property is conveyed by
Sellers to Buyer or a property is reconveyed by Buyer to
Sellers after the Closing as a result of a Title Defect
or Environmental Defect
-19-
property shall be valued at the Allocated Value.
13. Indemnification. Each party hereto shall indemnify and hold
the other party harmless from and against any and all losses, claims,
including any claim or loss as a result of any Title Defect or
Environmental Defect under Article 12 hereof (unless adjustment is made
therefor at or prior to Closing or the property is reconveyed to Sellers as
provided herein) damages, liabilities, costs, diminutions in value,
increases in tax liability or expenses (including without limitation,
reasonable attorneys' fees, witness fees and other out-of-pocket expenses)
("Indemnification Claims") resulting from any nonperformance, inaccuracy or
breach of any of the representations or warranties contained in this
Agreement, or the nonfulfillment of any obligation or any document
delivered pursuant to this Agreement; provided, however, that no
indemnification shall be required hereunder for Indemnification Claims for
damages incurred as a result of Sellers' breach of such representation and
warranty of no Title Defect until the aggregate amount of such damages
incurred as a result of Sellers' breach of such representation and warranty
exceeds $100,000.00, and provided further that no indemnification shall be
required hereunder for Indemnification Claims for damages incurred as a
result of Environmental Defects until the aggregate amount of such damages
incurred as a result of Environmental Defects exceeds $100,000.00. The
party claiming the right to be indemnified shall cause to be given to the
other party prompt written notice of, and the right to contest or
participate in the defense of any action with respect to any such
Indemnification Claim.
14. Taxes. It is expressly agreed and acknowledged by Sellers and
Buyer that the transaction contemplated by this Agreement is intended to be
a taxable transaction for federal income tax purposes, and the parties
shall so report the transaction on their respective federal income tax
returns. All provisions herein shall be interpreted in a manner consistent
with this agreement and acknowledgment.
15. Pre and Post-Closing Matters.
(a) Not later than ten days before the Closing, Sellers will
prepare and deliver to Buyer a proposed closing statement
describing all adjustments to the purchase price known as
of that date, and describing any amounts held in suspense
by Sellers relating to the Assets. Sellers will update
the closing statement 72 hours before the Closing.
(b) At the Closing, Sellers shall transfer to Buyer all
amounts held by them in suspense for the account of
working interest owner, royalty owner, or overriding
royalty interest owner and arising out of production from
the Assets through the Closing, together with any other
funds held in trust for any reason whatsoever in regard
to the Assets. Buyer shall assume all obligations with
regard to such interest set forth in this Paragraph upon
receipt of all such funds.
(c) Within 120 days after the Closing Date, Buyer shall
prepare and submit to Sellers a statement setting forth
each adjustment or payment that was not finally
determined as of the Closing Date (the "Statement"). The
Statement shall net the amounts of debits and credits
between the parties to arrive at a Final Settlement
Price. Sellers shall notify Buyer, in writing, within
five (5) business days thereafter of any changes to the
Statement. If the Final Settlement Price is greater than
the amounts previously paid Sellers, Buyer shall pay
Sellers the additional sums within thirty (30) days in
cash. If the Final Settlement Price is less than the
amounts previously paid Sellers, Sellers shall pay Buyer
the amount of such difference within thirty (30) days in
cash. Any adjustments between the parties as a result of
proceeds received or expenses paid by either party, which
were not known at the time of calculation of the Final
Settlement Price, shall be settled by that
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party's invoice or remittance, as applicable, to the other
party.
(d) Sellers agree that the Purchase Price includes any sales,
use, transfer, including real property transfer taxes or
similar excise taxes in connection with the transactions
contemplated hereby.
(e) Promptly after any receipt thereof, (i) Sellers agree to
pay to Buyer any and all proceeds received by Sellers
that are attributable to the Assets after the Closing
Date; and (ii) Buyer agrees to pay to Sellers any and all
proceeds that are attributable to the Assets before the
Closing Date, except as otherwise provided herein.
(f) After the Closing, Sellers and Buyer agree to take all
such further actions and to execute, acknowledge and
deliver all such further documents that are necessary or
useful in carrying out the purposes of this Agreement or
of any document delivered pursuant hereto.
16. Termination.
(a) Each party to this Agreement shall use its best efforts
in the performance of its obligations under this
Agreement and the satisfaction of all conditions and
obligations contained herein.
(b) If all of the conditions to the Closing have not been
satisfied or waived on or before March 1, 1995, this
Agreement shall automatically terminate and no party
shall have any obligation or liability to the other party
pursuant to this Agreement, except that if the
Registration Statement described in Section 10(b)(2)
hereof has not been made effective, Buyer or Sellers may
postpone the termination date and Closing for up to 60
days. If all of such conditions to the Closing have been
satisfied or waived on or before the scheduled date for
Closing and either Sellers or Buyer fail to perform their
obligations at Closing, the performing party shall be
entitled to specific performance and any other rights or
remedies available to such parties under this Agreement,
at law or in equity.
(c) In the event of termination of this Agreement, each party
shall return all records, maps, files, papers and other
property of the other then in its possession and neither
party shall thereafter have any liability under this
Agreement of any nature to the other. This provision
shall not, however, preclude liability attaching to a
party who has willfully caused the termination hereof by
any deliberate act or deliberate failure to act in
violation of the terms and provisions of this Agreement.
17. Miscellaneous.
(a) Tax Matters. Buyer and Sellers recognize that the
transaction will be subject to the provisions of Section
1060 of the Internal Revenue Code of 1986. The parties
agree to allocate in good faith the Purchase Price as
adjusted among the purchased Assets for purposes of such
Section in accordance with the allocations on Schedule 2.
(b) Tax Partnerships. The Assets are not subject to any tax
partnerships except for tax partnerships listed in
Schedule 9. At Buyer's request, Sellers will use their
best efforts to assist in the election provided for in
Section 754 of the Internal Revenue Code of 1986 with
respect to the Partnerships listed in Schedule 9.
(c) Casualty Losses. In the event any of the Assets are lost,
damaged or destroyed, in whole or in part, before Closing
because of fire, explosion, theft, other casualty,
appropriation or other reason, Sellers shall immediately
give notice to Buyer and Buyer may, at its option, either
exclude such Assets from the Closing or accept the
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Assets and receive an assignment of all insurance
proceeds, appropriation awards and all other claims or
proceeds relating to such loss.
(d) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be
deemed to have been given if delivered to:
Sellers: WACO Oil & Gas, Inc.
P.O. Box 397
Glenville, WV 26351
Attn: Ira Morris
With a copy to: Bowles Rice McDavid Graff & Love
P. O. Box 1386
Charleston, WV 25325
Attn: Marc A. Monteleone
and
Buyer: Ashland Inc.
c/o Ashland Exploration, Inc.
14701 St. Mary's Lane, Suite 200
Houston, Texas 77079-2907
Attn: Gary J. Celestino,
Vice President and Division Counsel
or to such other address or parties as either party may
communicate in writing.
(e) Recording Fees and Similar Costs. Buyer shall bear any
recording fees, well transfer fees and similar costs
incurred and imposed upon, or with respect to, the Assets
to be transferred hereunder.
(f) Bulk Sales Laws. Sellers and Buyer hereby waive
compliance with all requirements of applicable bulk sales
laws; provided, however, that Sellers shall indemnify and
hold harmless Buyer from and against any and all
liabilities occurring or arising out of such
noncompliance; provided further that in no event shall
Sellers' liability under this paragraph exceed the amount
of debt actually owed.
(g) Assignment. No party hereto shall assign this Agreement
or any part thereof without the prior written consent of
the other parties; provided, however, that following the
Closing Buyer may transfer its rights and remedies
hereunder to any transferee to whom it transfers the
Assets or any portion thereof.
(h) Successors Bound. Subject to the provisions of paragraph
(g) of this Section 17, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and
their respective heirs, personal representatives,
successors and assigns.
(i) Section and Paragraph Headings. The section and paragraph
headings in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation
of this Agreement
(j) Amendment. This Agreement may be amended only by an
instrument in writing executed by all parties hereto.
(k) Entire Agreement. This Agreement, the Exhibits and the
Schedules and other documents referred to herein
constitute the entire agreement of the parties hereto and
supersede all prior understandings with respect to the
subject matter hereof and
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thereof. No representation, promise or statement of
intention has been made by either party that is not
embodied herein; and neither party shall be bound by or
liable for any alleged representation, promise or
statement of intention not so set forth.
(l) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original,
but all of which shall constitute the same instrument.
(m) Choice of Law. This Agreement and the legal relations
between the parties hereto shall be governed by, and
construed in accordance with, the laws of the State of
West Virginia without regard to the principles of
conflicts of laws.
(n) Waiver. Any failure of any party or parties to comply
with any of its or their obligations, agreements or
conditions herein contained may be waived in writing, but
not in any other manner, by the party or parties to whom
such compliance is owed. No waiver of, or consent to a
change in, any of the provisions of this Agreement shall
be deemed or shall constitute a waiver of, or consent to
a change in, other provisions hereof (whether or not
similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto on the date first above written.
BUYER: ASHLAND INC. SELLERS: WACO OIL & GAS CO., INC.
By /s/ Robert C. Bilger By: /s/ Douglas S. Morris
Names: Robert C. Bilger Name: Douglas S. Morris
Title: Authorized Officer Title: Vice President
Date: February 23, 1995. Date: February 23, 1995.
Buyer's Tax Identification Waco's Tax Identification
Number: 610122250 Number: 55-0552700
/s/ Ira L. Morris by Douglas S.
Morris, Attorney-in-fact
IRA L. MORRIS
Date: February 23, 1995.
SS #: ###-##-####
/s/ Betty Sue Morris by Douglas S.
Morris, Attorney-in-fact
BETTY SUE MORRIS
Date: February 23, 1995.
SS #: ###-##-####
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