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EXHIBIT 10.12
SOUTHERN LINKS GROUP
JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT (the "AGREEMENT"), effective as
of September ___, 1995, is by and between SOUTHERN MINERAL CORPORATION ("SMC"),
a Texas corporation, and THE LINKS GROUP, INC. ("LINKS"), a [Texas]
corporation, and will constitute a binding agreement with respect to the rights
and obligations of SMC and Links in and to prospects generated within the AMI
Area, as hereinafter defined. SMC and Links may sometimes individually be
referred to as "PARTY" and collectively as the "PARTIES."
PRELIMINARY STATEMENTS
1. Links has assembled over 2,000 miles of 2-D seismic data (the
"DATA") in the offshore Texas state waters encompassing the Brazos and
Matagorda areas as delineated in the attached Exhibit A (such area shall
hereinafter be referred to as the "AMI AREA") and has identified more than ten
prospect areas within such AMI Area.
2. Links desires to provide SMC with access to and copies of such
Data and SMC desires to provide Links with financial and marketing assistance
in the acquisition of and farm-in of any prospects which are generated within
the AMI Area and the subsequent sale of or farm-out of such prospects.
NOW THEREFORE, in consideration of the mutual promises
contained herein, the benefits to be derived by each Party hereunder, and
intending to be legally bound, the Parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS AND REFERENCES
1.1 As used in this Agreement, the words and terms which are
capitalized herein and the references used herein shall have the meaning
ascribed to them in Exhibit B attached hereto and made a part hereof for all
purposes.
ARTICLE II
FORMATION OF THE JOINT VENTURE
2.1 FORMATION OF THE JOINT VENTURE.
(a) The Parties hereby join in and form a joint venture
(hereinafter referred to a the "VENTURE" or "JOINT VENTURE") for the
limited purposes and scope hereinafter set forth.
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(b) Except as expressly provided for herein to the
contrary, the rights and obligations of the Parties and the
administration and termination of the Joint Venture shall be governed
by the Texas Uniform Partnership Act (the "ACT"). Each Party's
interest in the Joint Venture shall be personal property for all
purposes. All real and other property owned by the Joint Venture
shall be deemed owned by the Joint Venture as an entity, and no Party,
individually, shall have any ownership of such property.
2.2 NAME OF THE JOINT VENTURE. The business of the Joint Venture
shall be conducted solely under the name Southern Links Group and such name
shall be used at all times in connection with the Joint Venture affairs. The
Parties shall execute and file all assumed or fictitious name certificates
required by law to be filed in connection with the formation of the Joint
Venture.
2.3 PURPOSES AND SCOPE OF JOINT VENTURE. The purposes of the
Joint Venture are, and the sole and exclusive business of the Joint Venture
shall be, to acquire and own, operate, develop, lease, sell, exchange, promote
or otherwise dispose of oil and gas properties located within the AMI Areas.
2.4 POWERS. To accomplish the purposes of the Joint Venture, the
Joint Venture shall have the power to take any lawful action which is permitted
by the Act and which is reasonably related to the purposes of the Joint
Venture.
2.5 PRINCIPAL PLACE OF BUSINESS. The principal place of business
of the Joint Venture shall be 00000 Xxxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000-0000.
ARTICLE III
MANAGEMENT OF THE JOINT VENTURE
3.1 MANAGEMENT OF THE JOINT VENTURE.
(a) The overall management and control of the business
and affairs of the Joint Venture shall be vested solely in SMC.
Effective September __, 1995, SMC is hereby designated as the manager
(hereinafter sometimes referred to as the "MANAGER") with duties
prescribed in this Agreement. The Manager shall be responsible for
the implementation of the decisions of the Parties and for conducting
the ordinary and usual business and affairs of the Joint Venture.
(b) No act shall be taken, sum expended, or obligation
incurred by the Joint Venture, Manager, or any Party with respect to a
matter within the ambient of any of the major decisions ("MAJOR
DECISIONS") affecting the Joint
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Venture, as enumerated below, unless such of the Major Decisions have
been approved by all of the Parties. The Major Decisions shall
include:
(1) Purchase and acquisition of any Prospect;
(2) Financing of the Joint Venture, including but
not limited to interim and permanent financing of acquiring
any Prospect;
(3) Sale, lease or other transfer, or mortgaging
or other encumbrance of any Prospect;
(4) Making any expenditure or incurring any
obligation by or of the Joint Venture involving a sum in
excess of $5000; provided, however, that expenditures made and
obligations incurred in excess of the dollar limits set forth
above in the event of an emergency or other situation
requiring an immediate decision which should not reasonably be
delayed until approval by all of the Parties has been secured,
but as promptly as practicable, the Parties shall be informed
of such emergency or other situation necessitating the
immediate decision and, if known, the approximate total amount
of the expenditure or obligations so made or incurred; and
(5) Any other decision or action which by any
provision of this Agreement is required to be approved by the
Parties and shall not be subject to receiving its approval
outside the terms of this Agreement.
3.2 DUTIES OF MANAGER.
(a) The Manager, at the expense of and on behalf of the
Joint Venture, shall implement or cause to be implemented all Major
Decisions of the Joint Venture and shall conduct or cause to be
conducted the ordinary and usual business and affairs of the Joint
Venture, all in accordance with the provisions of this Agreement.
(b) Any provision of this Agreement to the contrary
notwithstanding, the Manager shall not have any authority to make any
expenditure or incur any obligation on behalf of the Joint Venture
involving in the aggregate for each such transaction or group of
similar transactions in excess of the sums specified pursuant to
Section 3.1(b)(4) hereof, unless approved by all of the Parties.
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ARTICLE IV
PROSPECTS
[4.1 INITIAL PROSPECTS. Exhibit C, attached hereto and made a part
hereof, describes the initial prospects that are subject to this Agreement
("INITIAL PROSPECTS"). Links continues to work on the Initial Prospects and is
concurrently herewith furnishing SMC with respect to each Initial Prospect the
geological and geophysical data and other information which Links has acquired
with respect thereto (exclusive of data and information which Links is by prior
agreement prohibited from disclosing), along with the maps, evaluations and
studies made by Links. Such information shall also contain, where available, a
specification of the location of the initial well to be drilled on the
prospect, the specified objective depth to which the initial well is to be
drilled, and an estimate of the costs and expenses to be incurred in drilling,
testing, completing and equipping, or in plugging and abandoning, the initial
well (which is an estimate only and not a representation).
4.2 PROPOSED ADDITIONAL PROSPECT ACQUISITIONS. As Links
identifies additional opportunities to acquire any acreage, or the rights
thereto, within the AMI Area then Links shall give written notice of the
proposed acquisition to Southern, specifying the location of the proposed
acquisition, the estimated number of acres to be acquired, the identity of the
party owning the right to produce oil and gas from such acreage if such
acquisition is a farm-in and the estimated cost to acquire such acreage or
rights. Southern shall have thirty (30) days after receipt of the notice
within which to notify Links whether they elect to participate in the cost of
such acquisition. If both Parties agree to the acquisition of the proposed
acreage, then such acquisition shall be deemed to be a Prospect for purposes of
this Agreement. Failure of Southern to reply within the period above fixed
shall constitute an election by Southern not to participate in the cost of the
acquisition and Links shall be free to acquire leases for the lands covering
said acreage in its own name and Southern shall have no rights with respect to
such leases or lands.
ARTICLE V
SMC CONTRIBUTIONS
5.1 INITIAL CONTRIBUTION. In consideration for the Data, the
exclusive use of Links' personnel and Links' best efforts to pursue the
objectives of this Agreement, SMC agrees to pay to Links upon execution of the
Agreement by both Parties an amount equal to SEVENTY FIVE THOUSAND AND
NO/DOLLARS ($75,000.00) (the "INITIAL CONTRIBUTION").
5.2 PROSPECT ACQUISITIONS. SMC agrees to pay for any and all
Investment Amounts, which are deemed necessary or advisable in SMC's sole
discretion, related to the acquisition of a Prospect.
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ARTICLE VI
OWNERSHIP INTERESTS
6.1 RECOUPMENT OF CONTRIBUTIONS. Notwithstanding the Ownership
Interests set forth in Section 6.2, SMC shall be entitled to receive 100% of
the Joint Venture's share of proceeds from any Prospect until such time
(hereinafter referred to as "PAYOUT") that the proceeds of the sale of such
share, calculated at the well, or market value thereof if such share is not
sold (after deducting any and all costs of production, applicable ad valorem,
production, severance, and excise taxes, royalty, overriding royalty and other
interests payable out of or measured by the production from such well accruing
with respect to such interest until it reverts), shall equal an amount which is
the sum of (a) any Initial Contributions which have not been recouped by SMC
and (b) any unrecouped Investment Amounts contributed by SMC whether such
amounts are attributed to said Prospect or are unrecouped amounts from any
prior Prospect which was acquired by the Parties pursuant to this Agreement.
6.2 OWNERSHIP INTERESTS. Upon acquisition of any lease for lands
covering a Prospect acquired pursuant to this Agreement, all income and costs
attributable to such Prospect shall be allocated on the basis of seventy-five
percent (75%) interest to SMC and twenty-five percent (25%) interest to Links.
After Payout for any Prospect, any and all income and costs incurred in
connection with the Prospect shall be allocated seventy-five percent (75%) to
SMC and twenty-five percent (25%) to Links. In addition, after Payout, any
property interest or income received therefrom which is retained, backed in or
farmed out in connection with a Prospect by the Parties hereto shall be
allocated seventy-five percent (75%) to SMC and twenty-five percent (25%) to
Links.
ARTICLE VII
COVENANTS
7.1 EXCLUSIVE DEALINGS. Links shall furnish the Data and any and
all technical support which is required in connection therewith to SMC and
shall undertake to lease, develop and promote exploratory prospects on an
exclusive basis with SMC in the AMI Area. Links will provide all management
and technical support necessary to identify, lease, package and sell the
Prospects.
7.2 OPERATIONS. Prospects which are developed jointly by SMC and
Links or in which SMC and Links retain an interest in accordance with this
Agreement, shall be operated in accordance with a joint operating agreement
which is mutually agreed to by the Parties and any third party holding an
interest in such Prospect upon development.
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ARTICLE VIII
CONFIDENTIALITY
8.1 CONFIDENTIALITY. During the period that a Prospect is covered
by this Agreement or an operating agreement agreed to by the Parties, the
Parties shall be prohibited from disclosing to any third party any geological,
geophysical or reservoir information with respect to any Prospect, or any logs
or other information pertaining to the progress, tests or results of any well
drilled thereon, unless agreed to by all Parties; except that a Party may make
confidential information available to:
(a) courts or governmental agencies as required by
statute, regulation or order; provided that the disclosing Party shall
use its best efforts to require the court or governmental agency be
bound by the confidentiality provisions hereof;
(b) officers, directors, employees, agents and other
representatives of the Parties; provided that such officers,
directors, employees, agents and other representatives agree to be
bound by the confidentiality provisions hereof
(c) prospective assignees under a purchase or farmout
agreement; provided that such prospective assignee agrees to be bound
by the confidentiality provisions hereof.
8.2 PUBLICITY. It is agreed that all Parties shall mutually
approve the timing and content of all news releases concerning a Prospect.
ARTICLE IX
TERM AND TERMINATION
9.1 TERM. This Agreement shall be in effect for a term beginning
on the date hereof and shall continue through December 31, 1997, unless
otherwise terminated in accordance with this Agreement. Thereafter the
Agreement shall continue in full force and effect from year to year unless
terminated by either Party upon written notice delivered to the other Party on
or before sixty (60) days prior to the end of the calendar year.
9.2 AUTOMATIC TERMINATION.
(a) If any Party shall file a voluntary petition under
any bankruptcy or insolvency law or under the arrangement or
reorganization provisions of the United States Bankruptcy Code or
under the provisions of any law of like import, or makes an assignment
of its property for the benefit of creditors, or if an involuntary
petition is filed against any Party under any bankruptcy,
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insolvency, or reorganization provision of any law or if a receiver of
any Party or for the property of any Party shall be appointed and if
such proceedings are not stayed or terminated within the sixty (60)
day period following such occurrence, the Joint Venture shall
terminate automatically, such Party shall be deemed to be the
"WITHDRAWING PARTY."
(b) The Joint Venture shall terminate automatically upon
the dissolution or termination of any corporation, partnership, or
trust which is or shall hereafter become a Party. The corporation,
partnership, or trust which is a Party which so dissolves shall be the
Withdrawing Party.
9.3 TERMINATION FOR DEFAULT.
(a) Except where expressly provided for herein to the
contrary, if any Party fails to perform any of its respective
obligations hereunder, the other party ("NON-DEFAULTING PARTY") shall
have the right to give such party ("DEFAULTING PARTY") a notice of
default ("NOTICE OF DEFAULT"). The notice of Default shall set forth
the nature of the obligation which the Defaulting Party has not
performed.
(b) If, within the thirty (30) day period following
receipt of the Notice of Default, the Defaulting Party in good faith
commences to perform such obligation and cure such default and
thereafter prosecutes to completion with diligence and continuity the
curing thereof and cures such default within a reasonable time, it
shall be deemed that the Notice of Default was not given and the
Defaulting Party shall lose no rights hereunder. If within such
thirty (30) day period, the Defaulting Party does not commence in good
faith the curing of such default or does not thereafter prosecute to
completion with diligence and continuity the curing thereof, the
Non-Defaulting Party shall have the right to terminate this Joint
Venture by giving the Defaulting Party written notice thereof. If the
Joint Venture is so terminated, the Defaulting Party shall be deemed
to be the Withdrawing Party and the Non-Defaulting Party shall be
referred to as the Non-Withdrawing Party.
9.4 REMEDIES OF THE NON-WITHDRAWING PARTY. In the case of a
termination of the Joint Venture under Sections 9.2 and 9.3 hereof, the
Non-Defaulting Party shall have all the remedies available at law or in equity
in connection therewith, and, further, shall have the right to purchase the
Ownership Interest and all of the right, title and interest of the Withdrawing
Party in and to the Joint Venture for an amount equal to [do we want to set up
capital accounts and if so is the positive balance in the Withdrawing Parties
capital account satisfactory as a settlement mechanism for such purchase]. In
the event the Non-Withdrawing Party shall elect to purchase such Ownership
Interest and all of the right, title and interest of the Withdrawing Party
under this Section 9.4, the Non-Withdrawing Party is hereby appointed
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as the agent and attorney-in-fact of the Withdrawing Party to execute such
assignments and bills of sale as shall be necessary to effect such transfer.
9.5 TERMINATION UPON DISPOSITION OF VENTURE PROPERTY. Upon sale
(not including an exchange) or condemnation of all or substantially all of the
Venture assets the Venture shall terminate. In such case, the Manager shall
immediately commence to wind up the Venture's affairs and shall liquidate the
assets of the Venture as promptly as possible, but in an orderly and
businesslike manner, so as not to involve undue sacrifice. The proceeds of
such liquidations (or the non-cash assets as the case may be) shall be applied
and distributed in the order of priority provided in Article 6.2 hereof.
ARTICLE X
MISCELLANEOUS
10.1 NOTICES. All notices, elections, demands or other
communications required or permitted to be made or given pursuant to this
Agreement shall be in writing and shall be considered as properly given or made
if given by (a) personal delivery, (b) expedited delivery service with proof of
delivery, (c) first class mail postage prepaid, or (i) prepaid telegram, telex
or facsimile (provided that such telegram, telex or facsimile is confirmed by
expedited delivery service in the manner previously described). Each Party's
address for notices and other communications hereunder shall be that set forth
below. Any Party may change its address by giving notice in writing to the
other Party of its new address.
SMC:
Southern Mineral Corporation
00000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxxx
LINKS:
The Links Group, Inc.
00000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telecopy: (713)
Attention: Xx. Xxxxxx X. Xxxxxxx
10.2 OTHER BUSINESS ACTIVITIES. Each of the Parties reserves the
right to generate and formulate prospects other than those generated within the
AMI Area and to carry on
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exploratory, drilling and production operations with respect thereto, either
alone or with other parties.
10.3 KNOWLEDGEABLE INVESTOR. Each of the Parties hereby
acknowledges that it is sophisticated, knowledgeable and active in the business
of oil and gas investments, operations and exploration, that such business
involves substantial risks, and that there is no guarantee or representation
whatsoever that any of the prospects covered by this Agreement will be
productive of oil, gas or other minerals.
10.4 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the parties.
10.5 ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement and understanding between the Parties and supersedes any and all
prior agreements, understandings and negotiations, written or oral, relating to
the subject matter hereof, unless referenced and incorporated herein. This
Agreement may be modified and amended only by written instrument executed by
the Parties.
10.6 ASSIGNMENT. The Parties agree that they shall not have the
right to transfer, sell, pledge or assign their shares in the Joint Venture, or
any of their obligations or duties under this Agreement, without the prior
written consent of the other Party.
10.7 GOVERNING LAW. Any dispute between the Parties concerning the
interpretation, performance or breach of this Agreement shall be governed by
the laws of the State of Texas without regard to conflict of laws principles.
10.8 NO WAIVER OF RIGHTS. Failure to exercise any right or power
by any Party under this Agreement does not constitute a waiver of such power or
right, unless expressly agreed in writing.
10.9 SEVERABILITY. Each of the provisions of this Agreement is
severable from every other provision of this Agreement and the invalidity or
unenforceability of any one or more provisions of this Agreement shall not
affect the validity or enforceability of the remaining provisions of this
Agreement.
[SIGNATURES ON THE NEXT PAGE]
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IN WITNESS WHEREOF, the undersigned has executed this
Agreement effective as of the day first written above.
SOUTHERN MINERAL CORPORATION
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
THE LINKS GROUP, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EXECUTION COPY
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EXHIBIT B
Attached to that certain Joint Venture Agreement
by and between Southern Mineral Corporation
and The Links Group, Inc. dated
September ___, 1995
1. DEFINITIONS. When used in the Agreement, the following terms
shall have the respective meanings assigned to them in this Exhibit B or in the
sections, subsections or other subdivisions referred to below:
ACT shall have the meaning attributed to it in Section 2.1(b)
of this Agreement.
AGREEMENT shall have the meaning attributed to it in the first
paragraph herein.
AMI AREA shall have the meaning attributed to it in the first
recital of this Agreement.
DATA shall have the meaning attributed to it in the first
recital of this Agreement.
DEFAULTING PARTY shall have the meaning attributed to it in
Section 9.3(a) of this Agreement.
ELECTING PARTY shall have the meaning attributed to it in
Section 4.2.
EVENT OF DISSOLUTION shall have the meaning attributed to in
Section 9.2 of this Agreement.
INITIAL CONTRIBUTION shall have the meaning attributed to it
in Section 5.1.
INVESTMENT AMOUNT shall mean the sum of (1) the actual amount
paid by or on behalf of the Joint Venture for the acquisition of the Prospects,
and (2) examination costs, broker's commissions, attorney's fees, due diligence
fees, filing fees, recording costs, and transfer and sales taxes, if any, and
other similar costs incurred with respect to such Prospects in connection with
their acquisition.
JOINT VENTURE shall have the meaning attributed to it in
accordance with Section 2.1 of this Agreement.
LINKS shall mean The Links Group, Inc., a [Texas] corporation.
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MANAGER shall have the meaning attributed to it in accordance
with Section 3.1(a) of this Agreement.
NON-DEFAULTING PARTY shall have the meaning attributed to it
in Section 9.3(a) of this Agreement.
NON-WITHDRAWING PARTY shall have the meaning attributed to it
in Section ___ of this Agreement.
NOTICE OF DEFAULT shall have the meaning attributed to it in
Section 9.3(a) of this Agreement.
PARTY or PARTIES shall have the meaning attributed to them in
the first paragraph of this Agreement.
PAYOUT shall have the meaning attributed to it in Section 6.1.
PROPOSING PARTY shall have the meaning attributed to it in
Section 4.2.
PROSPECT shall mean
SMC shall mean Southern Mineral Corporation, a Texas
corporation.
VENTURE shall have the meaning attributed to it in accordance
with Section 2.1 of this Agreement.
WITHDRAWING PARTY shall have the meaning attributed to it in
Section ___ of this Agreement.
2. REFERENCES. All references in this Agreement to articles,
sections, subsections and other subdivisions of this Agreement unless expressly
provided otherwise. Titles appearing at the beginning of any of such articles,
sections, subsections and other subdivisions are for convenience only and shall
not constitute part of such subdivisions and shall be disregarded in construing
the language contained in such subdivisions. The words "this Agreement,"
"herein," "hereof," "hereby," "hereunder," and words of similar import refer to
this Agreement as a whole and not to any particular subdivision unless
expressly so limited. Words in the singular form shall be construed to include
the plural and vice versa, unless the context otherwise requires.
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