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EXHIBIT 2.3
SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT
This SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT ("Second Amendment"),
is made as of the 2nd day of January, 1997, by and among InterCoast Energy
Company, a Delaware corporation, InterCoast Gas Services Company, a Delaware
corporation and KCS Energy, Inc., a Delaware corporation.
WITNESSETH:
WHEREAS, the parties hereto have entered into that certain Stock
Purchase Agreement dated as of November 14, 1996, as amended by the First
Amendment thereto dated as of December 31, 1996 (the "Stock Purchase
Agreement"); and
WHEREAS, the parties desire to further amend the Stock Purchase
Agreement, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and for other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Except as otherwise set forth in this Second Amendment,
defined terms used herein shall have the respective meanings ascribed thereto
in the Stock Purchase Agreement.
2. The parties agree that, notwithstanding the provisions of
Section 1.3(a)(i) of the Stock Purchase Agreement to the contrary, the
Purchaser shall pay (by wire transfer of immediately available funds to the
bank or banks and to the account or accounts thereat which the Shareholders
have previously specified by written notice to the Purchaser) to the
Shareholders at the Closing an amount equal to the difference between (i)
$210,015,000 (being the agreed upon amended cash portion of the Purchase
Price), as adjusted by $619,037 in accordance with the provisions of Sections 9
and 10 of this Second Amendment (such adjusted cash portion of the Purchase
Price being equal to $209,395,963) and (ii) $15,276,000 (the "Estimated
Difference"), being the amount by which the parties have estimated in good
faith that the Threshold Amount will exceed the amount of the Intercompany
Payables immediately prior to the Reclassification as of the Closing Date; and
Section 1.6(g) of the Stock Purchase Agreement is hereby modified and amended
to read in its entirety as follows:
"(g) Within ten days after the determination of the Final
Closing Date Statement, the Shareholders shall pay to Purchaser the
difference, if positive, between (i) the difference between the
Threshold Amount and the Estimated Difference and (ii) the amount of
Intercompany Payables on the Final Closing Date Statement, or Purchaser
shall pay to the Shareholders the difference, if positive, between (x)
the amount of Intercompany Payables on the Final Closing Date Statement
and (y) the difference between the Threshold Amount and the
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Estimated Difference, in either event with interest at the Agreed Rate
(as hereinafter defined) on the amount of the payment for the period
from the Closing Date to the date of payment."
The parties also agree that the sixth sentence of Section 1.6(b) is hereby
modified and amended to insert the following phrase after the words "Interim
Period" in clause (i) of such sentence: "which is includable in any
consolidated, combined or unitary income tax return which includes the MEC
Selling Group and the Companies and Subsidiary for the Interim Period".
3. Section 3.13 of the Stock Purchase Agreement is hereby
modified and amended to add a new clause (g) thereto which shall read in its
entirety as follows:
"(g) Certain Environmental Matters.
(i) No Hydrocarbons have been stored in the underground
storage tank referred to under item number 2 of Attachment I to
the Environmental Liabilities Notice (as hereafter defined).
(ii) To the extent they constitute Environmental
Liabilities, the defects referred to in the report by American
Environmental Research Inc. dated May 3, 1993, that are referred
to under item number 3 of Attachment I to the Environmental
Liabilities Notice have been remediated.
(iii) To the extent they constitute Environmental
Liabilities, the defects referred to in the report by American
Environmental Research Inc. dated July 25, 1993, that are
referred to under item number 5 of Attachment I to the
Environmental Liabilities Notice have been remediated.
(iv) To the extent they constitute Environmental
Liabilities, the defects referred to in the report by EDC
Environmental Corporation dated December 1996, that are referred
to as defects "d" and "e" of such report under item number 8 of
Attachment I to the Environmental Liabilities Notice have been
remediated and/or repaired.
(v) SPCC plans for each of the Properties listed under
the following item numbers of Schedule B to the Environmental
Liabilities Notice have been implemented: 1, 3 through 5, 7, 9,
11 through 17, and 19.
(vi) SPCC plans are not required with respect to
Properties listed under item numbers 2 and 10 of Schedule B to
the Environmental Liabilities Notice.
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(vii) Copies of the SPCC plan and XXXX Tier II reports
referred to under item numbers 6 and 18 of Schedule B to the
Environmental Liabilities Notice, respectively, are in existence
and have been furnished to Purchaser.
(viii) The Property referred to under item number 8 of
Schedule B to the Environmental Liabilities Notice has been
sold."
4. The last sentence of Section 9.2(b) of the Stock Purchase
Agreement is hereby modified and amended to read in its entirety as follows:
"The provisions of this Section 9.2(b) shall not apply to Losses or
Environmental Liabilities referred to in clause (i) of Section 10.3."
5. Clause (i) of Section 10.3 of the Stock Purchase Agreement
is hereby modified and amended to read in its entirety as follows:
(i) 90% of all Losses and Environmental Liabilities arising
from or incurred in connection with the claim disclosed as item 17 on
Schedule 3.8 or any of the facts, circumstances or conditions referred
to in any of the following reports: 1) Environmental Site Assessment,
Rancho San Francisco Lease, Newhall-Potrero Oil Field, Los Angeles,
California by Xxxxx-Xxxxxxx & Associates, Inc. dated August 1993; 2)
Environmental Lease Inspection by EDC Environmental Corporation dated
December 1996; 3) Final Report, Phase II-Preliminary Site Investigation,
Newhall-Potrero Field, Santa Clarita, California by Dames & Xxxxx dated
June 5, 1990; 4) Phase 1 Assessment, Rancho San Francisco Oil Lease,
Near Newhall, California by Xxxxxxxx-Xxxxx Consultants dated May 1,
1991; 5) Preliminary Groundwater Quality Investigation at the Former Gas
Plant Site, The Rancho San Francisco Oil Lease, Newhall, California by
Xxxxxxxx-Xxxxx Consultants dated June 1991; or 6) Preliminary Risk
Assessment and Development of Soil Target Cleanup Levels for a Former
Gas Plant Site, Oryx Energy Company, Newhall, California by Xxxxxxxx-
Xxxxx Consultants dated February 14, 1991, in each case to the extent
such reports relate to the Rancho San Francisco or Xxxxxxxx leases in
Newhall, California (except for matters related to the Notice to Comply
dated May 10, 1995 from South Coast Air Quality Management District
("SCAQMD") or the Facility Permit to Operate (I.D. No. 100844), as
amended, issued by SCAQMD),"
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6. The last sentence of the introductory paragraph of Section
10.6 (immediately preceding Section 10.6(a)) is hereby modified and amended to
read in its entirety as follows:
"Shareholders' obligations with respect to Environmental Matters and
Environmental Liabilities referred to in clause (i) of Section 10.3
shall be governed by Section 10.3 rather than this Section 10.6 except
to the extent contemplated by Section 10.3."
7. Subject to consummation of the Closing, Shareholders
hereby release Purchaser from any liability with respect to and waive any
rights Shareholders may have pursuant to the Stock Purchase Agreement or
otherwise relating either to (i) the alleged breaches of representations,
warranties and agreements described in the Shareholders' notice to Purchaser
dated December 19, 1996 (the "Notice") or (ii) any other breaches of
representations, warranties or agreements in the Stock Purchase Agreement that
may be attributable directly or indirectly to the litigation described in the
Notice or the settlement thereof.
8. The letter agreement (the "Section 29 Agreement") dated
October 17, 1996 among ICE, InterCoast Global Marketing, Inc. ("IGM") and
Purchaser (which letter agreement relates to an option (the "Option") under an
assignment (the "Assignment") executed in connection with a Purchase and Sale
Agreement dated April 12, 1996 between IOG and IGM) is hereby terminated, and
no party thereto shall have any liability or obligation to any other party
arising out of or with respect to the Section 29 Agreement or arising out of
the termination thereof. The termination of the Section 29 Agreement shall not
affect the right of IOG to exercise the Option hereafter in accordance with its
terms.
9. Reference is made to the Title Defect Notice dated
December 10, 1996, from Purchaser to Shareholders (the "December Title Defect
Notice"). As of the date hereof, Purchaser has not given any other Title
Defect Notice to Shareholders. This Section 9 shall constitute Shareholders'
Response Notice with respect to all of the Title Defects asserted in the
December Title Defect Notice. Shareholders and Purchaser hereby agree as
follows:
(i) The Title Defects asserted under each of item numbers 1,
12, 13, 21, 22 and 23 of the December Title Defect Notice have been
resolved as to all Properties with respect to which Purchaser could
assert such Title Defects and shall be deemed conclusively to be
Permitted Encumbrances, and the Purchase Price shall not be reduced on
account thereof.
(ii) Without admitting the existence of such asserted Title
Defects and/or agreeing with the Defect Amounts asserted with respect
thereto, Shareholders elect to attempt to cure or resolve the Title
Defects asserted under the following item numbers of the December Title
Defect Notice: 2, 4, 5, 18, 19, 24 and 26.
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(iii) The parties agree that the Title Defects asserted under
item number 11 of the December Title Defect Notice are not Title Defects
as to all Properties with respect to which Purchaser could assert such
Title Defects, subject to Purchaser's verification during the Cure
Period that Shareholders have accurately determined that the payout
referred to in such item 11 will not occur prior to January 1, 2001, in
accordance with its terms, based on the Netherland, Xxxxxx and
Associates Inc. December 31, 1995 estimated total proved reserves for
the interests acquired from SAS Exploration and applying IOG's "A96A"
(acquisition escalated) price deck and with the actual initial December
31, 1995 payout balance which is estimated to be approximately
$4,750,047.
(iv) The Title Defects asserted under each of the following
item numbers of the December Title Defect Notice have been resolved and
shall be deemed conclusively to be Permitted Encumbrances, and the
Purchase Price shall be reduced on account thereof by the amount set
forth opposite such item number:
Item Number Amount
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3 $11,560
6 1,405
7 32,828
8 4,777
9 13,235
10 2,202
14 2,532
15 51,286
16 14,229
17 8,843
20 78,987
28 2,153
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Total $224,037
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(v) The Title Defects asserted under item number 25 of the
December Title Defect Notice have been resolved and shall be deemed
conclusively to be Permitted Encumbrances, and the Purchase Price shall
not be reduced on account thereof. Shareholders agree to cause IGM to
execute and deliver to Purchaser such instruments, in form reasonably
acceptable to Shareholders and Purchaser, as Purchaser may reasonably
request in order to further evidence IOG's presently existing security
interest in the production from the xxxxx referred to under such item
number (the "Section 29 Production") and the revenues and proceeds
attributable to such production. Shareholders shall use their best
efforts to obtain all necessary consents from the required lenders to
allow IGM to grant to IOG a security interest in the assets described on
Schedule I hereto, provided, however, that Shareholders shall not be
required to pay any consideration in connection with seeking such
consents. Upon obtaining such consents, Shareholders shall cause IGM to
execute and deliver such documents as are reasonably required to grant
such security interest; provided, however, that IGM shall not be
required to grant such security interest if the granting thereof would
adversely affect income tax credits to be received by IGM on account of
the Section 29 Production.
(vi) Without admitting the existence of such asserted Title
Defect and/or agreeing with the Defect Amount asserted with respect
thereto, Shareholders elect to attempt to cure the Title Defect asserted
under item number 27 of the December Title Defect Notice. In this
regard, Purchaser agrees to put in place a nation-wide Bureau of Indian
Affairs bond, but shall have no obligation to post any other type of
bond.
10. Reference is made to the Notification for Environmental
Liabilities dated December 9, 1996, from Purchaser to Shareholders and the
attachments and schedules thereto (the "Environmental Liabilities Notice"). As
of the date hereof, Purchaser has not given any other notice of Environmental
Liabilities to Shareholders. This Section 10 and Section 5 above resolve all
Environmental Liabilities asserted in the Environmental Liabilities Notice.
Shareholders and Purchaser hereby agree as follows:
(i) Item number 1 of Attachment I to the Environmental
Liabilities Notice is hereby withdrawn from the Environmental
Liabilities Notice.
(ii) The Environmental Liabilities asserted under item numbers
2, 9 and 10 of Attachment I to the Environmental Liabilities Notice and
Schedules A and B to the Environmental Liabilities Notice have been
resolved, and the Purchase Price shall not be reduced on account
thereof.
(iii) The Environmental Liabilities asserted under each of the
following item numbers of Attachment I to the Environmental Liabilities
Notice have been resolved, and the Purchase Price shall be reduced on
account thereof by the amount set forth opposite such item number:
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Item Number Amount
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3 $ 7,500
4 250,000
5 15,000
6 17,500
7 30,000
8 75,000
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Total $395,000
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11. This Second Amendment shall be governed by and enforced in
accordance with the internal laws of the State of Delaware.
12. This Second Amendment may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
13. Except as expressly amended hereby, the Stock Purchase
Agreement remains in full force and effect and the rights and obligations of
the parties shall be as set forth therein.
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IN WITNESS WHEREOF, the parties hereto have executed this SECOND
AMENDMENT as of the date first set forth above.
InterCoast Energy Company,
a Delaware corporation
By:
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Name:
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Title:
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InterCoast Gas Services Company,
a Delaware corporation
By:
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Name:
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Title:
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KCS Energy, Inc.,
a Delaware corporation
By:
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Name:
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Title:
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