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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BETWEEN
XXXXXX OIL & GAS COMBINATION PARTNERSHIP 1989-1, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP
SELLER
AND
GOLDKING TRINITY BAY CORP.
PURCHASER
FOR THE SELLER'S INTEREST IN
THE PROPERTIES KNOWN AS
UMBRELLA POINT FIELD
JUNE 30, 1995
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") dated as of June 30,
1995 by and between Goldking Trinity Bay Corp., a Texas corporation,
("Purchaser") and Xxxxxx Oil & Gas Combination Partnership 1989-1, L.P., a
California limited partnership ("Seller");
W I T N E S S E T H:
WHEREAS, Seller owns the working interest and net revenue interest set
forth opposite such Seller's name on Schedule 1.2.2;
WHEREAS, Seller desires to sell to Purchaser the Transferred Assets,
and Purchaser desires to purchase from Seller the Transferred Assets, upon the
terms and subject to the conditions hereinafter set forth; and
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto hereby agree as follows.
ARTICLE I
PURCHASE AND SALE
Unless defined elsewhere in this Agreement, all capitalized terms used
herein shall have the respective meanings given them in Appendix A hereto, which
is incorporated herein by reference and shall be deemed to be a part of this
Agreement for all purposes.
1.1. CONVEYANCE AND TRANSFER OF TRANSFERRED ASSETS. Seller and
Purchaser hereby agree that, at the Closing, upon the terms and subject to the
conditions of this Agreement, Seller shall convey, transfer and assign to
Purchaser, the Transferred Assets.
For purposes of this Agreement, the term "Transferred Assets"
shall mean all of each Seller's right, title and interest in certain oil and gas
properties located in Galveston Bay, including all of each Seller's right, title
and interest in and to the following assets:
(a) All of the oil and gas leases, oil, gas and mineral leases
as described in Exhibit A attached hereto and incorporated herein
(collectively referred to hereinafter as the "Leases" and individually
as a "Lease"), and the leasehold estates created thereby, and the fee,
mineral, royalty and overriding royalty interests, net profits
interests, payments out of production and other real property interests
described in Exhibit A, together with each and every kind and character
of right, title, claim or interest that Seller has in and to the lands
covered thereby, even though the interests of Seller therein may be
incorrectly described, stated or limited on Exhibit A (collectively the
"Properties", or singularly, a "Property"), together with all of each
Seller's right, title and interest in and to all the property and
rights incident thereto, including without limitation all of Seller's
right, title and interest in and to:
(i) the rights, privileges, benefits and powers
conferred upon the holder of any Property with respect to the
use and occupation of the surface of, and the subsurface
depths under, the land covered by such Property that may be
necessary, convenient or incidental to the possession and
enjoyment of such Property;
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(ii) the rights in any pooled, communitized or
unitized acreage included in whole or in part in any Property,
including all production from the unit, pool or communitized
area allocated to any such Property, and all interests in any
xxxxx within the unit, pool or communitized area allocated to
such Property, whether such unit or pool production comes from
xxxxx located within or without the areas covered by a
Property; and
(iii) all tenements, hereditaments and
appurtenances belonging to such Properties;
(b) All of each Seller's right, title and interest in and to
the rights-of-way, easements, servitudes, permits, licenses,
franchises, certificates of public convenience and necessity and
similar rights and privileges, and other rights and interests in land
primarily owned or used in connection with the Properties;
(c) All of each Seller's right, title and interest in and to
all real, personal and mixed property and fixtures located at the
Closing on the Properties or the aforesaid rights-of-way, easements and
other related properties, or primarily used or held for use in
connection with the ownership, management, development, exploration or
operation of the Transferred Assets, including without limitation all
of each Seller's right, title and interest in and to all xxxxx, well
equipment, platforms, pipes, valves, boilers, compressors, separators,
heaters, dehydrators, gauges, meters and other measuring equipment,
regulators, extractors, communication equipment, gas gathering systems,
casing, tubing, pipelines, power lines, fuel lines, generators, pumps,
motors, buildings, storage tanks and facilities, improvements,
fittings, machinery, equipment (including, without limitation, personal
computers and related peripheral equipment located in the field and
software that is legally transferable without cost), supplies, spare
parts, materials and inventories, other than inventories of
Hydrocarbons in storage tanks or other facilities above the pipeline
connection to each such storage tank or facility, and in gas pipelines
downstream from the delivery point sales meters on such pipelines
existing as of the Effective Time;
(d) All of each Seller's right, title and interest in and to
all contracts, agreements, leases, and/or other arrangements, presently
owned or acquired as a result of any agreement in existence prior to
the Closing, including all causes of action pursuant thereto, to the
extent used in connection with the ownership, management, development,
exploration or operation of the Transferred Assets, including without
limitation, all gas purchase and sale agreements, crude purchase and
sale agreements, natural gas liquids purchase and sale agreements,
farmin or farmout agreements, exchange agreements, bottom hole
agreements, dry hole agreements, acreage contribution agreements,
support agreements, seismic agreements, exploration agreements, joint
venture agreements, operating agreements, unit agreements, pooling and
communitization agreements, orders or declarations, balancing
agreements, gas and natural gas liquids processing agreements,
gathering and transportation agreements, construction and operation
agreements, options, liens, security interests, vendor financing
agreements, surface leases, subleases and leases of equipment or
facilities to the extent used or primarily useful in connection with
the ownership, management, development, exploration or operation of the
Transferred Assets and reasonably separable from Seller's other
material rights in the contracts not used in connection with the
Transferred Assets; provided, however, that no insurance
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contract or other insurance arrangement shall be included in the
Transferred Assets (collectively, the "Contracts");
(e) All of each Seller's right, title and interest in and to
all Hydrocarbons produced from or attributable to, the Properties and
proceeds attributable thereto, at and after the Effective Time (subject
to the provision of Section 1.3); provided, however, that all
Hydrocarbons in storage tanks and other facilities above the pipeline
connection to each such storage tank or facility, or in gas pipelines
downstream from the delivery point sale meters on such pipelines at the
Effective Time, shall remain the property of Seller; and
(f) All of each Seller's right, title and interest in and to
all property and rights incident or attributable to the foregoing
interests, including, without limitation all of each Seller's right,
title and interest in and to:
(i) subject to the limitations of Section 13.2.8,
originals (or, to the extent that originals are not available,
copies) of all books, records, files, contracts, muniments of
title, reports, surveys and similar documents or materials,
including computer tapes, disks and data with respect to any
of the foregoing records, that relate to the foregoing
interests, including without limitation, the purchase,
exchange, operation, administration, sale or marketing
thereof, or that constitute evidence of ownership thereof, to
the extent such records are reasonably separable from Seller's
corporate records, and excluding work product of Seller's
legal counsel (other than title opinions) and documents
relating to the negotiation and consummation of the
transactions contemplated by this Agreement (collectively, the
"Records");
(ii) (A) the proprietary geological, geophysical and
seismic data, materials and information (the "Proprietary
Data"), (B) the non-proprietary geological, geophysical and
seismic data, materials and information the transfer of which
is not prohibited by any copyright or validly existing third
party agreement, that is transferable to Purchaser without
payment of a transfer fee or other consideration, (C) the
maps, interpretations, records and other technical information
related to or based upon the Proprietary Data and not related
to or based upon the Non-Proprietary Data (the "Proprietary
Information") and (D) the maps, interpretations, records and
other technical information related to or based upon any
combination of the Proprietary Data and the Non-Proprietary
Data (the "Combined Information" and collectively, the
"Evaluation Data"); and
(iii) all division orders, purchase orders, invoices,
storage or warehouse receipts, bills of lading and
certificates of title to the extent the same are attributable
or relate to any of the Transferred Assets, and all documents,
instruments, general intangibles and chattel paper primarily
related to any of the Transferred Assets (other than the
bonds, letters of credit and guarantees posted with
governmental agencies, which are expressly reserved by Seller)
and all estimated prepayments of royalty obligations of Seller
with any federal or state authorities that are directly
related to the Transferred Assets and that are transferable to
Purchaser;
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provided, however, that the Transferred Assets shall not include (i) any rights
and causes of action by Seller to receive amounts (or rights to production from
the Properties prior to the Effective Time) pursuant to the Retained Liabilities
and (ii) rights and causes of action with respect to the Lawsuits and the facts
and circumstances giving rise to such Lawsuits as retained by Seller and more
particularly described in Section 14.
1.2. PURCHASE PRICE AND PURCHASE PRICE ALLOCATION.
1.2.1. PURCHASE PRICE. The aggregate purchase price (the "Purchase
Price") for the Transferred Assets shall be THREE HUNDRED SEVENTY-SEVEN THOUSAND
SIXTY-TWO DOLLARS ($377,062)) subject to adjustments as set forth in Section
1.3., of which FOUR THOUSAND NINE HUNDRED TWENTY-NINE DOLLARS ($4,929) ("Initial
Payment") shall be paid to the Seller in immediately available funds upon
delivery to Purchaser by Seller of counterparts of this Agreement executed by
Seller. At the Closing, the Purchase Price, less the amount of the Initial
Payment (the "Cash at Closing") and as adjusted as provided in the Purchase
Price Adjustment Certificate described in Section 1.3.2, shall be paid to Seller
by wire transfer in federal or otherwise immediately available funds.
Simultaneously therewith, Seller shall execute and deliver, effective as of the
Effective Time, the Instruments of Transfer.
1.2.2. PURCHASE PRICE ALLOCATION. The Purchase Price shall be allocated
among the types and classes of assets constituting the Transferred Assets as set
forth on a schedule to be provided by Purchaser and Seller at Closing.
1.3. ADJUSTMENTS TO PURCHASE PRICE.
1.3.1. ADJUSTMENTS. In addition to any adjustments pursuant to Article
VI, the Cash at Closing shall be adjusted as follows:
(i) The Cash at Closing shall be increased by the
following:
(a) An agreed upon amount representing the value of
all merchantable oil in storage above the pipeline connection
at the Effective Time that is credited to the Properties;
(b) Solely to the extent related to the Transferred
Assets, the amount of (I) all actual direct operating
expenditures, (2) all capital expenditures and (3) all costs
and expenses that are incurred by Seller in connection with,
or are otherwise allocable to, the operation of the
Transferred Assets under the terms of the joint operating
agreement during the period of time after the Effective Time;
(c) The amount of any Taxes that have been paid by
Seller on or prior to the Closing that are attributable to the
time after the Effective Time and for which Purchaser is
liable pursuant to Article VIII.
(ii) The Cash at Closing shall be decreased by the
following:
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(a) The proceeds that are received by, or payable to,
Seller or any other person and that are attributable to the
operation of the Transferred Assets for the period of time
between the Effective Time and the Closing; and
(b) Any amount agreed upon by Purchaser and Seller as
the value of any Title Defects, less any amount agreed upon by
Purchasers and Seller as the value of any Title Benefits.
1.3.2. CLOSING ESTIMATE. At least three (3) business days prior to the
Closing Date, Seller on behalf of Seller, shall estimate the Purchase Price
Adjustment Amount and deliver to Purchaser a certificate of an officer of Seller
setting forth in reasonable detail the calculation thereof. The Cash at Closing
shall be adjusted as set forth in such certificate. The Purchase Price
Adjustment Certificate shall include a computation of any reduction in the
Purchase Price caused by the failure of one or more Seller's to deliver on the
Closing Date their respective interests in the Transferred Assets.
1.3.3. PURCHASE PRICE ADJUSTMENT CERTIFICATE. As soon as reasonably
practicable, and in any event within sixty (60) days following the Closing Date,
Seller shall deliver to Purchaser the Purchase Price Adjustment Certificate.
Within thirty (30) days after delivery of the Purchase Price Adjustment
Certificate, Purchaser shall notify Seller on behalf of Seller, whether
Purchaser agrees or disagrees with the determination of the Purchase Price
Adjustment Amount set forth in the Purchase Price Adjustment Certificate. If
Purchaser disagrees with such determination, representatives of Purchaser and
Seller shall meet and endeavor to resolve their differences regarding the
determination of the Purchase Price Adjustment Amount. If the representatives of
Purchaser and Seller are unable to agree upon such determination of the Purchase
Price Adjustment Amount within twenty (20) business days after Purchaser's
receipt of such notification, Seller shall select an independent accounting firm
from a list of three (3) such firms provided by Purchaser, which firm shall
audit the Purchase Price Adjustment Certificate and determine the Purchase Price
Adjustment Amount. The decision of such independent accounting firm shall be
binding on Seller and Purchaser, and the fees and expenses of such independent
accounting firm shall be borne one-half by Seller and one-half by Purchaser.
1.3.4. PAYMENT OF PURCHASE PRICE ADJUSTMENT AMOUNT. If the Purchase
Price Adjustment Amount as finally determined pursuant to Section 1.3.3 is a
smaller upward adjustment or a larger downward adjustment than that estimated
pursuant to Section 1.3.2, Seller shall pay to Purchaser the amount of such
excess plus interest thereon at the Agreed Interest Rate from (and including)
the Closing Date to (but excluding) the date of payment. If the Purchase Price
Adjustment Amount as finally determined pursuant to Section 1.3.3 is a larger
upward adjustment or a smaller downward adjustment than that estimated pursuant
to Section 1.3.2, Purchaser shall pay to Seller the amount of such deficiency
plus interest thereon at the Agreed Interest Rate from (and including) the
Closing Date to (but excluding) the date of payment. Any payments contemplated
by this Section 1.3.4 shall be made by wire transfer in federal or other
immediately available funds on or before the fifth business day following the
final determination of the amount thereof.
1.4. RETAINED RIGHTS AND CLAIMS. Notwithstanding any provision herein
to the contrary, Transferred Assets shall not include any rights or claims of
Seller with respect to the facts and circumstances giving rise to those certain
proceedings collectively referred to as the "Lawsuits" and filed:
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In the Matter of the Libel and Petition of Exxon Corporation, as Owner
of the M/V "Bobcat" and Xxxxxxxxxx Boat Works, as Charterer of the M/V
"Bobcat," her engines tackle, apparel. etc., in a cause of exoneration
from or limitation of liability; C.A. Xx. X-00-000, Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx for the Southern District of Texas, Corpus Christi
Division; and
French Production Incorporated v. Exxon Corporation d/b/a Exxon Company
USA. Xxxxxxxxxx Boat Works and Captain X.X. Xxxxxxx; Xx. 00-000000,
Xxxxxxxx Xxxxx xx Xxxxxx Xxxxxx, Texas, 295th
Judicial District.
1.5. LIABILITIES ASSUMED AND RETAINED.
1.5.1. ASSUMED LIABILITIES. Purchaser shall assume and agree to pay,
perform and discharge in the ordinary course of business, only those
liabilities, debts or obligations of Seller that are set forth below (the
"Assumed Liabilities"):
(i) all liabilities and obligations of or relating to
the Transferred Assets accruing after the Effective Time;
(ii) all liabilities and obligations that accrue
after the Effective Time, pursuant to the Leases that have
been properly consented to and assigned; and
(iii) all liabilities and obligations that accrue
after the Effective Time, pursuant to the Contracts that have
been properly consented to and assigned.
1.5.2 RETAINED LIABILITIES. Except for the Assumed Liabilities,
Purchaser shall not assume and Seller shall retain and agree to pay, perform and
discharge in the ordinary course of business all liabilities, debts or
obligations of any nature that arise out of or result from any occurrence,
transaction or event occurring prior to the Closing Date relating to the
operation, ownership or use of the Transferred Assets, whether accrued,
absolute, contingent or otherwise, whether due or to become due, including
without limitation any such liability of Seller related to the Lawsuits (the
"Retained Liabilities"); provided however, that Retained Liabilities shall not
include any liability accruing after the Effective Time based on the violation
or alleged violation of any statute, ordinance, rule, regulation, order or other
law of any state, federal, county, local or other governmental subdivision, due
to any occurrence, transaction or event occurring prior to the Effective Time,
which occurrence, transaction or event was not a violation of any laws existing
as of the Effective Time. The Retained Liabilities shall include any liabilities
with respect to the facts and circumstances giving rise to the Lawsuits.
ARTICLE II
THE CLOSING
2.1. CLOSING. The Closing shall take place at the offices of Purchaser,
in Houston, Texas at 9:00 a.m. on December 31, 1995 or such earlier or later
date as provided hereafter.
2.2. INSTRUMENTS OF TRANSFER. Seller shall execute and deliver at
Closing the Xxxx of Sale, Conveyance and Assignment, the form of which is
attached as Exhibit "B" and any other instruments of
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transfer sufficient to convey to Purchaser the Transferred Assets, including
without limitation the following (the "Instruments of Transfer"):
(a) any personal property included in the Transferred
Assets;
(b) the Leases, assignment of leasehold interests;
(c) the Contracts; and
(d) the Properties.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents, warrants and covenants as follows:
3.1. ORGANIZATION AND GOOD STANDING. Seller is a partnership duly
organized, validly existing and in good standing under the laws of its
jurisdiction of formation and has all requisite power and authority to own and
lease the properties and assets it owns and leases and to carry on its business
as such business is conducted.
3.2. SUBSIDIARIES. No Seller has any Subsidiaries that own any of the
Transferred Assets.
3.3. AUTHORITY; AUTHORIZATION OF AGREEMENT. Seller at closing will have
all requisite power and authority to execute and deliver this Agreement, the
Instruments of Transfer and each of the other agreements and documents
contemplated, to consummate the transactions contemplated hereby and thereby and
to perform all the terms and conditions to be performed by it. The execution and
delivery of this Agreement, the Instruments of Transfer and each of the other
agreements and documents contemplated, the performance of all the terms and
conditions to be performed by Seller and the consummation of the transactions
contemplated hereby and thereby will be duly authorized and approved by the
partners of Seller. This Agreement, the Instruments of Transfer and each of the
other agreements and documents contemplated, have been duly executed and
delivered by each Seller and constitutes the valid and binding obligation of
each Seller, enforceable against such Seller in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency or other
laws relating to or affecting the enforcement of creditors' rights generally and
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3.4. NO VIOLATIONS. Subject to Article VIII(7)2.4., this Agreement, the
Instruments of Transfer and each of the other agreements and documents
contemplated hereby or thereby, and the execution and delivery hereof by Seller
does not, and the fulfillment and compliance with the terms and conditions
hereof and thereof and the consummation of the transactions contemplated hereby
and thereby will not:
(i) conflict with, or require the consent of any Person under,
any of the terms, conditions or provisions of the partnership agreement
of the Seller;
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(ii) violate any provision of the Code, the NGA or the NGPA,
or require any filing, consent, authorization or approval under, any
Legal Requirement applicable to or binding upon Seller, other than the
consent to the transfer and assignment of Leases by the General Land
Office of the State of Texas, which consent Seller shall obtain as soon
as possible following the Closing;
(iii) conflict with, result in a breach of, constitute a
default under (without regard to requirements of notice or the lapse of
time or both), accelerate or permit the acceleration of the performance
required by, or require any consent, authorization or approval under,
(a) any mortgage, indenture, loan, credit agreement or other agreement
or instrument evidencing indebtedness for borrowed money or any
Contract to which Seller is a party or by which Seller is bound or to
which any of its properties are subject or (b) any Lease to which
Seller is a party or by which it is bound or to which any of its
properties are subject; or
(iv) result in the creation or imposition of any Encumbrance
upon the Transferred Assets;
which violation, breach or Encumbrance with respect to the matters specified in
clauses (ii) through (iv) of this Section 3.4 have had or would reasonably be
expected to have a Material Adverse Effect.
3.5. NO DEFAULT. Seller is not in default under, and no condition
exists that with notice or lapse of time or both would constitute a default
under, (i) any mortgage, indenture, loan, credit agreement or other agreement or
instrument evidencing indebtedness for borrowed money or (ii) any Contract or
Lease to which Seller is a party or by which Seller is bound or to which any of
the Transferred Assets is subject.
3.6. ABSENCE OF CERTAIN CHANGES. Since the Effective Time, there has
not been any material damage, destruction or loss to, or of, the Transferred
Assets, that has not been covered by insurance.
3.7. TAXES. All returns, statements and reports with respect to Taxes
that are required to be filed by Seller on or before the Closing have been (or
will have been by the Closing) timely filed with the appropriate Governmental
Authorities and all such Taxes shown thereon as due have been (or will have been
by the Closing) paid or deposited.
3.8. DEFENSIBLE TITLE. Seller has, and will have at the Closing Date,
Defensible Title to the Oil and Gas Interests. Each Seller represents as to
itself only that it is transferring 100% of its interest in the Transferred
Assets and that by, through and under it, no event has occurred and no
conveyance has been made that would cause such Seller's interest in the
Transferred Assets to be less than the Warranted Interest. Each Seller, as to
itself only, represents and warrants that it owns the Warranted Interest;
provided that the representation and warranty contained in this sentence shall
terminate at Closing. Purchaser's exclusive remedy for any breach of the
warranties set forth in this Section 3.8 shall be the remedy provided in Article
VI.
3.9. LEASES. With respect to the Leases:
(i) the Leases have been maintained according to their terms,
in compliance with the agreements to which the Leases are subject,
during the period in which Seller has owned an interest in such Leases;
(ii) Seller has made or caused to be made all payments,
including royalties, delay rentals and shut-in royalties (due in
respect of the Leases thereunder), during the period in which
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Seller has owned an interest in such Leases and no amounts of such
payments due during such period are now being held in suspense;
(iii) to the Knowledge of Seller, no other Party to any Lease
is in breach or default with respect to any of its obligations
thereunder;
(iv) there has not occurred any event, fact or circumstance
which with the lapse of time or the giving of notice, or both, would
constitute such a breach or default on behalf of the Seller or, to the
Knowledge of Seller, with respect to any other parties; and
(v) neither Seller nor, to the Knowledge of Seller, any other
party to any Lease has given or threatened to give notice of any action
to terminate, cancel, rescind or procure a judicial reformation of any
Lease or any provisions thereof.
3.10. ENVIRONMENTAL MATTERS.
(a) To the Knowledge of Seller, since, May 19, 1989, the date
that Seller closed the acquisition of its interest in the Properties,:
(i) the use of the Transferred Assets has been
limited to the conduct of oil and gas exploration and
production operations and related activities;
(ii) Seller has not received notice that any
Governmental Authority has commenced any investigation or
inquiry regarding failure of the Transferred Assets and/or the
operations conducted thereon to comply with Environmental Laws
or any notice under the Comprehensive Environmental Response,
Compensation, and Liability Act, or any state or local laws;
(iii) Except for the disposal of salt water produced
from the xxxxx located on the Leases using practices
consistent with those customarily used by the oil and gas
industry operating in the Gulf Coast area, the Transferred
Assets have not been used for the generation, storage or
disposal of Hazardous Substances or as a landfill or other
waste disposal site for Hazardous Substances, in any manner
that would constitute a violation of the Environmental Laws by
such person; and
(iv) Seller has not installed and has not discovered,
on the Lands, any underground storage tanks other than the
ordinary underground pipeline systems used in the conduct of
oil and gas operations on the Transferred Assets.
(b) To the Knowledge of Seller:
(i) the Transferred Assets and the operations
conducted thereon are not the subject of any existing,
unfulfilled administrative or judicial orders, decrees,
judgments, license or permit conditions, or other directives,
under any Environmental Law, except as listed on Schedule
3.10;
(ii) no equipment or other personal property or
improvements owned or used on the Transferred Assets contain
asbestos in such amount, concentration or level that would
constitute a violation of Environmental Laws, except as listed
on Schedule 3.10;
(iii) no equipment or other personal property or
improvements owned or used on the Transferred Assets contain
any polychlorinated biphenyls in such amount,
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concentration or level that would constitute a violation of
Environmental Laws, except as listed on Schedule 3.10;
(iv) no equipment or other personal property or
improvements owned or used on the Transferred Assets contain
any naturally occurring radioactive material in such amount,
concentration or level that would constitute a violation of
Environmental Laws, except as listed on Schedule 3.10;
(v) except for violations that would not have a
Material Adverse Effect on the Transferred Assets or the
operations being conducted thereon, such operations conducted
thereon are not in violation of, or non-compliance with, any
Environmental Laws, nor are they the subject of any activities
under the Comprehensive Environmental Response, Compensation,
and Liability Act, or analogous state or local laws; and
(vi) neither the execution of this Agreement nor the
consummation of the transactions contemplated by this
Agreement will violate any Environmental Law or require the
consent or approval of any agency charged with enforcing any
Environmental Law.
(c) Notwithstanding any contrary provision in this Agreement
or any document or instrument delivered with respect to this Agreement,
(i) Seller makes no representation or warranty with
respect to compliance with any Environmental Law of any kind
except as provided in this Section 3.10;
(ii) All representations and warranties contained in
this Section 3.10 are qualified by the knowledge of Seller and
Purchaser that the Environmental Protection Agency has not
issued permits for the discharge of salt water and other
materials from oil and gas exploration and production
facilities such as those that are included in the Transferred
Assets and that located in the Gulf Coast area, that until
recently the Environmental Protection Agency had not provided
any written guidance as to the procedures required for
application for such permits and that the operator of the
Transferred Assets, like other operators of oil and gas
exploration and production facilities in the Gulf Coast area,
has not been able to obtain such permit; and
(iii) All representations and warranties contained in
this Section 3.10 shall terminate at the end of the
Environmental Indemnity Period, following which the Purchaser
agrees not to institute any action or claim for a breach of
such representation or warranty; provided, however, that the
expiration of the Environmental Indemnity Period shall be
extended as to any bona fide claim with respect to the breach
of such representation or warranty, solely to the extent that
Purchaser asserted such claim according to the procedures
provided in Section 10.5 and Section 10.6, if the Purchaser
shall have transmitted the Claim Notice with respect to such
claim to the Seller prior to the expiration of such
Environmental Indemnity Period.
3.11. OPERATIONS AND EXPENDITURES. With respect to the joint, unit or
other operating agreements affecting the Transferred Assets, there are no
outstanding calls or payments under authorities for expenditures concerning any
single expenditure to be made by Seller in excess of $5,000 that are due or
which Seller has committed to make and that have not been made, except as set
forth on Schedule 3.11 annexed to this Agreement.
3.12. CONTRACTS. All of the Contracts are set forth on Exhibit "A" to
this Agreement.
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3.13. TAX PARTNERSHIPS. Except as disclosed on Schedule 3.13 annexed to
this Agreement, none of the Transferred Assets are subject to a tax partnership,
except Seller's partnership agreement.
3.14. FULL DISCLOSURE. No representation or warranty by Seller in this
Article III, in any schedule or exhibit to this Agreement, or in any certificate
or document furnished or to be furnished by Seller on the Closing Date, contains
or will contain any untrue statement of a material fact, or omits or will omit
to state a material fact necessary to make the statements contained therein not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as otherwise disclosed in this Agreement, Purchaser hereby
represents and warrants that:
4.1. ORGANIZATION AND GOOD STANDING. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation.
4.2. CORPORATE AUTHORITY; AUTHORIZATION OF AGREEMENT. Purchaser has all
requisite corporate power and authority to execute and deliver this Agreement,
to consummate the transactions contemplated hereby and to perform all the terms
and conditions hereof to be performed by it. The execution and delivery of this
Agreement by Purchaser, the performance by Purchaser of all the terms and
conditions hereof to be performed by it and the consummation of the transactions
contemplated hereby will have been duly authorized and approved by the Board of
Directors of Purchaser. This Agreement has been duly executed and delivered by
Purchaser and constitutes the valid and binding obligation of Purchaser,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or other laws relating
to or affecting the enforcement of creditors' rights generally and general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4.3. NO VIOLATIONS. This Agreement and the execution and delivery
hereof by Purchaser do not, and the fulfillment and compliance with the terms
and conditions hereof and the consummation of the transactions contemplated
hereby will not:
(i) conflict with, or require the consent of any Person under,
any of the terms, conditions or provisions of the certificate of
incorporation or bylaws of Purchaser;
(ii) violate any provision of, or require any filing, consent,
authorization or approval under, any Legal Requirement applicable to or
binding upon Purchaser (assuming receipt of all routine governmental
consents typically received after consummation of transactions of the
nature contemplated by this Agreement);
(iii) conflict with, result in a breach of, constitute a
default under (without regard to requirements of notice or the lapse of
time or both), accelerate or permit the acceleration of the performance
required by, or require any consent, authorization or approval under
(a) any mortgage, indenture, loan, credit agreement or other agreement
or instrument evidencing indebtedness for borrowed money to which
Purchaser is a party or by which Purchaser is bound or to which any of
its properties is subject or (b) any lease, license, contract or other
agreement or instrument to which Purchaser is a party or by which it is
bound or to which any of its properties is subject; or
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(iv) result in the creation or imposition of any Encumbrance
upon the assets of Purchaser;
which violation, breach or encumbrance with respect to the matters specified in
clauses (ii) through (iv) of this Section 4.3 might reasonably be expected to
have a material adverse effect on the business, financial condition or results
of operations of Purchaser, taken as a whole.
4.4. LITIGATION. There is no action, suit, proceeding or governmental
investigation or inquiry pending, or, to the Knowledge of Purchaser, threatened
against Purchaser or its subsidiaries or any of their respective properties that
might delay, prevent or hinder the consummation of the transactions contemplated
hereby.
ARTICLE V
ADDITIONAL AGREEMENTS AND COVENANTS
5.1. COVENANTS OF SELLER. Seller covenants and agrees with Purchaser as
follows:
5.1.1. CERTAIN CHANGES. Except as may be expressly permitted by this
Agreement or set forth in any Schedule hereto, from the date hereof until the
Closing, without first obtaining the written consent of Purchaser (which consent
will not be unreasonably withheld), Seller will not:
(i) enter into, assign, terminate or amend in any material
respect any Contract or Lease;
(ii) sell, lease or otherwise dispose of any of the
Transferred Assets;
(iii) purchase, lease or otherwise acquire any property of any
kind whatsoever other than in the ordinary course of business;
provided, however, that no such action involving an expenditure of
$5,000 or more by Seller shall be taken by Seller without Purchaser's
prior written consent;
(iv) mortgage, encumber or pledge any of the Transferred
Assets;
(v) operate the Transferred Assets except diligently and in
the usual, regular and ordinary manner, consistent with past practices;
or
(vi) commit itself to do any of the foregoing.
5.1.2. OPERATION OF PROPERTIES. Except as may be expressly permitted
hereunder or as set forth in any Schedule hereto, from the date hereof until the
Closing, without first obtaining the written consent of Purchaser (which consent
will not be unreasonably withheld), Seller will not:
(i) waive any right of material value relating to any of the
Transferred Assets;
(ii) release or abandon any material part of any of the
Transferred Assets;
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(iii) convey, farm out or otherwise dispose of Transferred
Assets with a fair market value exceeding either $5,000 on an
individual basis or $5,000 in the aggregate;
(iv) commence or consent to any material operations on any
Property that it has not previously committed to and that may be
expected to cost Seller in excess of $5,000 (except for emergency
operations, in which case Seller shall promptly notify Purchaser and
from the date of Purchaser's response to such notice Seller shall once
again be subject to the limitations contained in this clause (iv));
(v) enter into, modify or terminate any Contracts or Lease; or
(vi) commit itself to do any of the foregoing;
provided, however, that nothing contained in this Section 5.1.2 or elsewhere in
this Agreement shall limit the rights of Seller to produce, consume and sell
Hydrocarbons from the Properties in the ordinary course of business and to
comply with requirements of the NGA, the NGPA and any rules or regulations
issued thereunder.
5.1.3. CERTAIN COVENANTS WITH RESPECT TO THE TRANSFERRED ASSETS. Except
as may otherwise be expressly provided herein, Seller will, from the date hereof
to the Closing, unless otherwise consented to in writing by Purchaser (which
consent will not be unreasonably withheld):
(i) promptly notify Purchaser of the receipt of any written
notice or written claim or written threat of notice or claim of which
Seller becomes aware relating to any default or breach under, or of any
termination or cancellation or written threat of termination or
cancellation of, any of the Leases, Properties or Material Contracts;
(ii) promptly notify Purchaser of any loss of or damage to any
portion of the Transferred Assets exceeding $5,000 in amount;
(iii) cause to be paid all rentals, shut-in royalties, minimum
royalties and other payments that are necessary to maintain in force
its rights in and to the Properties, and pay timely all costs and
expenses incurred by it in connection with the Properties, except such
costs and expenses as are being contested in good faith; and
(iv) as to the Properties, use its Best Efforts to maintain
and operate the Properties in accordance with all applicable Legal
Requirements (to the extent consistent with customary practices in the
oil and gas industry), in accordance with the Contracts relating
thereto, and in substantially the same manner that Seller hereto has
operated such properties.
5.1.4. ACCESS. Seller will afford to Purchaser and its authorized
representatives upon reasonable notice, reasonable access from the date hereof
until the Closing Date, during normal business hours, to its personnel,
financial data properties, books and records which are related to the
Transferred Assets to the extent that such access and disclosure would not
unreasonably interfere with the normal operation of the business of Seller or
violate the terms of any agreement by which Seller is bound or any applicable
Legal Requirement; provided, however, that the confidentiality of any data or
information so acquired shall be maintained by Purchaser and its representatives
in accordance with Section 5.2.4.
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5.1.5. BEST EFFORTS. Seller will use its Best Efforts to obtain the
satisfaction of the conditions to Closing set forth in Section 7.1.
5.1.6. PUBLIC ANNOUNCEMENTS. Except for communications with its
partners, Seller shall not issue any public announcement or statement with
respect to the transactions contemplated hereby except upon the consent of
Purchaser or upon the advice of counsel that such announcement or statement is
legally required; provided, however, that Seller shall, if practical under the
circumstances, consult with Purchaser prior to issuing any such public
announcement or statement.
5.1.7. PERMISSIONS. Seller will cooperate with Purchaser and take all
action reasonably necessary (i) to obtain all such permissions, approvals and
consents by Governmental Authorities and others as may be required to consummate
the transactions contemplated in this Agreement and (ii) to obtain the transfer
to Purchaser of any and all operating rights held by Seller.
5.2. COVENANTS OF PURCHASER. Purchaser covenants and agrees with Seller
as follows:
5.2.1. BEST EFFORTS. Purchaser will use its Best Efforts to obtain the
satisfaction of the conditions to Closing set forth in Section 7.2.
5.2.2. PUBLIC ANNOUNCEMENTS. Purchaser shall not issue any public
announcement or statement with respect to the transactions contemplated hereby
except upon the consent of Seller or upon the advice of counsel that such
announcement or statement is legally required; provided, however, that Purchaser
shall, if practical under the circumstances, consult with Seller prior to
issuing any such public announcement or statement.
5.2.3. CONFIDENTIAL INFORMATION. In the event that this Agreement is
terminated or, if not terminated, until the Closing, the confidentiality of any
data or information received by Purchaser regarding the business and assets of
Seller shall be maintained by Purchaser and its representatives in accordance
with the Confidentiality Agreement that was executed by Purchaser.
5.2.4. USE OF TRADE NAMES. After the Closing, Purchaser shall not use
any logos, trademarks or trade names belonging to Seller, and will, as soon as
reasonably practicable after the Closing, remove any such trade names from all
signs or labels on the Transferred Assets.
ARTICLE VI
INSPECTION OF TITLE MATTERS
6.1. TITLE DEFECTS.
(a) Any Encumbrances that individually or in the aggregate
with other defects could cause the title of Seller in any Property
described in Exhibit A to be less than Defensible Title shall be a
title defect ("Title Defect"). Purchaser shall be entitled to the
remedies set forth in Section 6.3 for any matter that constitutes a
Title Defect even though Purchaser could, but for this provision, after
Closing obtain indemnification for such matter pursuant to Section
10.2.
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(b) Any circumstances or condition that could operate to cause
(i) the Net Revenue Interest of Seller to increase above that set forth
on Exhibit A without an increase in the Working Interest of Seller, or
(ii) the Working Interest of Seller to decrease below that set forth on
Exhibit A without a decrease in the Net Revenue Interest of Seller,
shall be a title benefit ("Title Benefit").
6.2. NOTICE OF TITLE DEFECTS AND TITLE BENEFITS.
(a) From time to time during the period from the date of
execution of this Agreement until seven (7) days prior to the Closing
Date (the "Title Examination Period"), Purchaser shall have the right
(but not the obligation) to notify Seller of any Title Defect of which
Purchaser becomes aware, providing in such notice a reasonably detailed
description of such Title Defect. If the Closing Date is extended
beyond the Closing Date stated herein in accordance with the provisions
hereof, then the Title Examination Period shall be extended for a
similar and parallel length of time. With respect to each notice of a
Title Defect given during such period, Seller may, but shall have no
obligation to, attempt to cure such Title Defect prior to Closing.
Purchaser's failure to give notice of a Title Defect shall not impair
Purchaser's rights under any express warranty or indemnification made
by Seller under this Agreement or the Instruments of Transfer.
(b) From time to time during the Title Examination Period,
Purchaser shall notify Seller of any Title Benefits of which Purchaser
becomes aware and Seller shall have the right (but not the obligation)
to notify Purchaser of any Title Benefit of which they become aware.
The value of any such Title Benefits shall be mutually agreed upon by
Purchaser and Seller, taking into consideration the allocated value of
the Property (asset forth on allocation of the Purchase Price) subject
to the Title Benefit, the portion of the Property subject to the Title
Benefit, the legal effect of the Title Benefit and the anticipated
economic effect of the Title Benefit over the life of the Property
subject to such Title Benefit.
6.3. REMEDIES FOR TITLE DEFECTS. In the event that any Title Defects is
not cured on or before Closing, Purchaser may, at its own election, (a) waive
such Title Defect, (b) elect to terminate this Agreement pursuant to Section
9.1, or (c) reduce the Purchase Price by an amount mutually agreed upon by
Purchaser and Seller as being the value of such Title Defect, taking into
consideration the allocated value of the Property subject to the Title Defect,
the portion of the Property subject to the Title Defect, the legal effect of the
Title Defect on the Property and the liability of Purchaser relative to the
allocated liabilities related to the Property and/or whether the Title Defect is
applicable to a portion of the Property that is not encumbered by the allocated
liability, and the anticipated economic effect of the Title Defect over the life
of the Property subject to the Title Defect (including the potential amount of
reduction of discounted present net worth of net future cash flow on account of
such Title Defect), subject to offset for the value of Title Benefits. If the
parties are unable to agree as to the amount of any adjustment under Section 6.3
(c), either party may terminate this Agreement. Notwithstanding anything to the
contrary in this Section 6.3, in no event shall the reduction in the Purchase
Price for all Title Defects affecting any Property exceed the allocated value of
such Property.
6.4. SELLER'S WARRANTY OF TITLE. The Conveyances shall contain a
special warranty of title whereby Seller binds and obligates itself, its
successors and assigns, to warrant and forever defend unto Purchaser, its
successors and assigns, title to the Properties and other tangible Transferred
Assets against all persons lawfully claiming or to claim the same or any part
thereof by, through or under Seller, but not
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otherwise, together with full subrogation of Purchaser, to the extent that
Seller is entitled to grant such subrogation, to all representations and
warranties of any predecessors of Seller in title.
ARTICLE VII
CONDITIONS TO CLOSING
7.1. CONDITIONS TO THE OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to proceed with the Closing contemplated hereby are subject to the
satisfaction on or prior to the Closing of all of the following conditions, any
one or more of which may be waived, in whole or in part, in writing by
Purchaser:
7.1.1. COMPLIANCE. Except as otherwise contemplated or permitted
herein, the representations and warranties made herein by Seller shall be
correct at and as of the Closing as though such representations and warranties
were made at and as of the Closing, and Seller shall have complied with all the
covenants and other agreements hereof required by this Agreement to be performed
by it at or prior to the Closing.
7.1.2. OFFICER'S CERTIFICATES. Purchaser shall have received
certificates, dated the Closing Date, of an executive officer of Seller
certifying as to the matters specified in Section 7.1.1.
7.1.3. NO ORDERS. The Closing hereunder shall not violate any order or
decree of any Governmental Authority having competent jurisdiction over the
transactions contemplated by this Agreement; provided, however, that if such
order or decree is a temporary restraining order or other ex parte order or
decree and all other conditions precedent to Closing have been satisfied or
waived, the Closing Date shall be extended to a date five (5) business days
subsequent to the date on which such temporary restraining order or other ex
parte order or decree ceases to be in effect.
7.1.4. CONSENTS TO ASSIGNMENTS. Seller shall have delivered to
Purchaser satisfactory consents to the assignment of the Leases and Contracts.
7.1.5. TITLE OPINION. Purchaser shall have received within ten (10)
business days prior to Closing a title opinion, in a form reasonably
satisfactory to Purchaser, from Purchaser's special title opinion counsel
relating to the Transferred Assets.
7.1.6. DAMAGE TO TRANSFERRED ASSETS. Purchaser's obligation to purchase
the Seller's interest in the Transferred Assets is conditioned upon the absence
of any material damage, destruction or loss to, or of, the platform, platform
equipment, pipelines, tankage or related surface equipment, included as part of
the Transferred Assets, that has not been covered by insurance.
7.1.7. FRENCH CLOSING. Purchaser's obligation to purchase the Seller's
interest in Transferred Assets is conditioned upon Purchaser's closing on the
purchase of at least seventy-five percent (75%) of the Working Interest in the
Leases pursuant to that certain Asset Purchase Agreement between Purchaser and
Pelham, Inc., et al., dated May 15, 1995.
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7.2. CONDITIONS TO THE OBLIGATIONS OF SELLER. The obligation of Seller
to proceed with the Closing contemplated hereby is subject to the satisfaction
on or prior to the Closing of all of the following conditions, any one or more
of which may be waived, in whole or in part, in writing by Seller:
7.2.1. COMPLIANCE. Except for such breaches of representations or
warranties by and covenants of Purchaser made herein as would not have a
material adverse effect on the business, financial condition and results of
operations of Purchaser, taken as a whole, the representations and warranties
made herein by Purchaser shall be correct at and as of the Closing as though
such representations and warranties were made at and as of the Closing, and
Purchaser shall have complied with all the covenants and other agreements
required by this Agreement to be performed by it at or prior to the Closing.
7.2.2. OFFICER'S CERTIFICATE. Seller shall have received a certificate
dated the Closing Date of an executive officer of Purchaser, certifying as to
the matters specified in Section 7.2.1.
7.2.3. NO ORDERS. The Closing hereunder shall not violate any order or
decree of any Governmental Authority having competent jurisdiction over the
transactions contemplated by this Agreement; provided, however, that if such
order or decree is a temporary restraining order or other ex parte order or
decree and all other conditions precedent to Closing have been satisfied or
waived, the Closing Date shall be extended to a date five (5) business days
subsequent to the date on which the temporary restraining order or such other ex
parte order or decree ceases to be in effect.
7.2.4. APPROVAL BY PARTNERS. Seller shall have received the affirmative
vote of at least 75% of the Seller's partners to ratify and approve this
Agreement and the transactions contemplated hereby.
ARTICLE VIII
TAX MATTERS
8.1. LIABILITY FOR TAXES.
8.1.1. SELLER. Seller shall be liable for (i) all Taxes for any taxable
period ending on or before the Effective Time, (ii) any income taxes which are
imposed on the gain recognized by Seller on the sale of the Transferred Assets
pursuant to this Agreement, (iii) the portion that is determined as described in
Section 8.1.4, of any Taxes (other than Taxes described in clause (ii) above)
for any taxable period beginning before and ending after the Effective Time and
that is allocable to the portion of such period occurring on or before the
Effective Time (the "Seller Period") and (iv) any sales, use, transfer or
similar taxes arising from the transactions contemplated in this Agreement.
8.1.2. PURCHASER. Purchaser shall be liable for all Taxes attributable
to the Transferred Assets and arising after the Effective Time.
8.1.3. INDEMNITY. Seller shall indemnify and hold Purchaser harmless
from any liability for amounts for which Seller is liable pursuant to Section
8.1.1. Purchaser shall indemnify and hold Seller harmless from any liability for
amounts for which Purchaser is liable pursuant to Section 8.1.2. The amount of
any indemnity under this Section 8.1.3 shall include any additional amount
necessary to indemnify the recipient of the indemnity payment against any taxes
imposed, and any attorneys' fees or other litigation costs incurred, in
connection with such indemnity payment.
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8.1.4. AD VALOREM TAXES. Whenever it is necessary for purposes of
Section 8.1.1 to determine the portion of any Taxes for a taxable period
beginning before and ending after the Effective Time, which portion is allocable
to the Seller Period, the determination shall be made for ad valorem Taxes, on a
per diem basis and for other Taxes, on the assumption that the Seller Period
constitutes a separate taxable period and by taking into account the actual
taxable events occurring during such period (except that exemptions, allowances
and deductions for a taxable period beginning before and ending after the
Effective Time that are calculated on an annual or periodic basis, such as the
deduction for depreciation, shall be apportioned to the Seller Period on a per
diem basis).
8.1.5. REFUNDS. If any Seller or Purchaser or any affiliate of a Seller
or Purchaser receives (whether by payment, credit, offset or otherwise) a refund
in respect of any Taxes for which the other party is liable under Section 8.1.1
or 8.1.2, the party receiving such refund shall, within thirty (30) days after
receipt of such refund, remit it to the party liable for the Taxes with respect
to which the refund was received. The parties shall cooperate with each other in
taking all necessary steps to claim any such refund.
8.1.6. ADJUSTMENT. For purposes of this Section 8.1, the amount of any
downward adjustment to the Purchase Price pursuant to Section 1.3.1(ii)(b) shall
be treated as a payment by Seller of ad valorem taxes imposed with respect to
the Transferred Assets for 1994.
8.2. COOPERATION AN EXCHANGE OF INFORMATION. Seller or Purchaser will
provide, or cause to be provided, to the other party copies of all
correspondence received from any taxing authority by such party or any of its
affiliates in connection with the liability for Taxes for any period for which
such other party is or may be liable under Section 8.1.1 or 8.1.2. The parties
will provide each other with such cooperation and information as they may
reasonably request of each other in preparing or filing any return, amended
return or claim for refund, in determining a liability or a right to refund or
in conducting any audit or other proceeding in respect of Taxes imposed on the
parties or their respective affiliates. The parties and their affiliates will
preserve and retain all returns, schedules, work papers and other documents
relating to any such returns, claims, audits or other proceedings until the
expiration of the statutory period of limitations (with regard to waivers and
extensions) of the taxable periods to which such documents relate and until the
final determination of any payments which may be required with respect to such
periods under this Agreement and shall make such documents available to
representatives of the other party upon reasonable notice and at reasonable
times, it being understood that such representatives shall be entitled to make
copies of any such books and records as they shall deem necessary. Seller or
Purchaser further agree to permit representatives of the other party to meet
with employees of such party on a mutually convenient basis in order to enable
such representatives to obtain additional information and explanations of any
documents provided pursuant to this Section 8.2. Seller or Purchaser shall make
available to the representatives of the other party at the then current
administrative headquarters of such party sufficient work space and facilities
to perform the activities described in the two preceding sentences. Any
information obtained pursuant to this Section 8.2 shall be kept confidential,
except as may be otherwise necessary in connection with the filing of returns or
claims for refund or in conducting any audit or other proceeding. Each party
shall provide the cooperation and information required by this Section 8.2 at
its own expense.
8.3. PAYMENT OF TAXES.
8.3.1. PAYMENT. All Taxes shall be paid by the party that, on the date
that such Taxes are required to be paid, is legally responsible to pay such
Taxes.
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8.3.2. TIME OF PAYMENT. Except as otherwise provided in this Article
VIII or in Section 1.3, any amount to which a party is entitled under this
Article VIII shall be promptly paid to such party by the party obligated to make
such payment following written notice to the party so obligated that the Taxes
to which such amount relates are due and that provides details supporting the
calculation of such amount.
8.4. SURVIVAL OF OBLIGATIONS. The obligations of the parties set forth
in this Article VIII shall be unconditional and absolute and shall remain in
effect without limitation as to time.
8.5. CONFLICT. In the event of a conflict between the provisions of
this Article VIII and any other provisions of this Agreement, the provisions of
this Article VIII shall control.
ARTICLE NINE
TERMINATION
9.1. GROUNDS FOR TERMINATION. This Agreement may be terminated at any
time prior to the Closing:
(i) by the mutual written agreement of Seller and Purchaser;
(ii) by Seller or Purchaser, if the consummation of the
transactions contemplated hereby would violate any nonappealable final
order, decree or judgment of any Governmental Authority having
competent jurisdiction enjoining, restraining or otherwise preventing
the consummation of this Agreement or the transactions contemplated
hereby; provided, however, that a party shall not be allowed to
exercise any right of termination pursuant to this Section 9.1(ii) if
the event giving rise to such right shall be due to the negligent or
willful failure of such party to perform or observe in any material
respect any of the covenants or agreements set forth herein to be
performed or observed by such party;
(iii) by Purchaser or Seller if the Closing shall not have
occurred prior to 5:00 p.m., December 31, 1995; provided, that the
Closing was not delayed as a result of the negligent or willful failure
of the terminating party's obligation to perform hereunder;
(iv) by Seller or Purchaser if the non-terminating party has
breached its representations and warranties, defaulted in the
performance of its covenants or not satisfied its conditions to
Closing;
(v) by Purchaser, or by Seller, as provided in Section 6.3; or
(vi) by Seller, if there is a breach of any representation or
warranty under Section 3.10 and the cost of curing such breach would
exceed $500,000 and such breach is not waived by Purchaser.
9.2. EFFECT OF TERMINATION. The following provisions shall apply in the
event of a termination of this Agreement:
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9.2.1. NO LIABILITY. If this Agreement is terminated as permitted under
Section 9.1 (i), (ii), (iii), (v) or (vi), such termination shall be without
liability of any party to this Agreement or any affiliate, shareholder,
director, officer, employee, agent or representative of such party and Seller
shall return to Purchaser the Initial Payment. In such event, the representation
contained in the second sentence of Section 4.2 shall be of no effect.
9.2.2. PURCHASER'S LIABILITY. If this Agreement is terminated by
Seller, as permitted under Section 9.1 (iv), Seller shall retain the Initial
Payment, as Seller's sole remedy, and Purchaser shall have no further obligation
to Seller for failure to close the transaction.
9.2.3. SELLER'S LIABILITY. If this Agreement is terminated by
Purchaser, as permitted under Section 9.1 (iv), Purchaser's sole remedy shall be
the right to seek specific performance of Seller's obligation to sell to
Purchaser the Transferred Assets in complete satisfaction of any other damages,
thereby sustained or incurred by Purchaser.
9.2.4. SURVIVAL. Notwithstanding the foregoing, the provisions of this
Article IX and Section 5.2.3 shall survive any termination of this Agreement.
ARTICLE X
EXTENT AND SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION
10.1. SCOPE OF REPRESENTATIONS OF SELLER. Except as and to the extent
expressly set forth herein, Seller makes no representations or warranties
whatsoever, and disclaim all liability and responsibility for any
representation, warranty, statement or information made or communicated (orally
or in writing) to Purchaser (including, but not limited to, any opinion,
information or advice that may have been provided to Purchaser by any affiliate,
officer, stockholder, director, employee, agent, consultant or representative of
Seller, any petroleum engineer or engineering firm, Seller's counsel or any
other agent, consultant or representative). Without limiting the generality of
the foregoing, except as and to the extent expressly set forth herein and in the
Instruments of Transfer, Seller makes no representations or warranties as to (i)
the title to any of the properties of Seller, (ii) the amounts of Hydrocarbon
reserves attributable to such properties or (iii) any geological or other
interpretations or economic evaluations. Purchaser acknowledges and affirms that
it has had full access to the records of Seller and the information contained
in, or made available or provided with respect to materials contained in, the
records of Seller, and that Purchaser has made its own independent
investigation, analysis and evaluation of the Transferred Assets, (including its
own estimate and appraisal of the extent and value of Seller's Hydrocarbon
reserves). Notwithstanding the foregoing, to the Knowledge of Seller, the
information contained in the records of Seller and information otherwise made
available or furnished in writing to Purchaser by Seller with respect to the
Transferred Assets does not contain any untrue statement of a material fact or
omit to state any material fact that would make such information not false or
misleading.
10.2. INDEMNIFICATION OF PURCHASER. Seller agrees (i) to indemnify
Purchaser against, and hold Purchaser harmless from, any loss. damage or expense
(including reasonable attorneys' fees) sustained by Purchaser arising out of or
resulting from any inaccuracy in or breach of any of the representations,
warranties or covenants made by Seller in this Agreement, (ii) to pay, perform,
fulfill and discharge all costs, expenses and liabilities incurred in connection
with the Transferred Assets prior
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to the Closing Date with respect to the ownership or operation of the
Transferred Assets prior to the Closing Date and (iii) to indemnify, defend and
hold Purchaser harmless from and against any and all claims, losses, damages,
costs, expenses, causes of action and judgments of any kind or character with
respect to all liabilities, including the Retained Liabilities, arising out of
or in connection with the ownership or operation of the Transferred Assets prior
to the Closing Date, including, without limitation, any interest, penalty and
other costs and expenses incurred in connection therewith or the defense thereof
(provided that any loss, damage or expense sustained by Purchaser arising out of
or resulting from any breach or violation of Section 3.10 shall be governed by
Section 10.4); provided, however, that Purchaser shall not be entitled to assert
rights of indemnification under this Section 10.2 or Section 10.4 unless and
until the aggregate of all such losses exceeds $25,000 (it being understood that
such losses shall accumulate until such time or times as the aggregate of all
such losses exceeds $25,000, whereupon Purchaser shall be entitled to
indemnification under this Section 10.2 or Section 10.4 for any such losses);
and provided, further, that the maximum aggregate of all losses for which
Purchaser shall be entitled to indemnification by any Seller, whether under this
Section 10.2, Section 10.4 or otherwise, shall not exceed such Seller's share of
the Purchase Price.
10.3. INDEMNIFICATION OF SELLER. Purchaser agrees (i) to indemnify
Seller against, and hold Seller harmless from, any loss, damage or expense
(including reasonable attorneys' fees) sustained by Seller arising out of or
resulting from any inaccuracy in or breach of any of the representations,
warranties or covenants made by Purchaser in this Agreement, (ii) to pay,
perform, fulfill and discharge all costs, expenses and liabilities incurred from
and after the Closing Date with respect to the ownership or operation of the
Transferred Assets from and after the Closing Date and (iii) to indemnify,
defend and hold Seller harmless from and against any and all claims, losses,
damages, costs, expenses, causes of action and judgments of any kind or
character with respect to all liabilities to third parties arising out of or in
connection with the ownership or operation of the Transferred Assets from and
after the Closing Date, including, without limitation, any interest, penalty and
other costs and expenses incurred in connection therewith or the defense thereof
(provided that any loss, damage or expense sustained by Seller arising out of or
resulting from any breach or violation of Article VIII shall be governed by
those provisions); provided, however, that Seller shall not be entitled to
assert rights of indemnification under this Section 10.3 unless and until the
aggregate of all such losses exceeds $25,000 (it being understood that such
losses shall accumulate until such time or times as the aggregate of all such
losses exceeds $25,000, whereupon Seller shall be entitled to indemnification
under this Section 10.3 for any such losses).
10.4. ENVIRONMENTAL INDEMNITY.
(a) Subject to the financial limitations regarding the
indemnity of Seller described in Section 10.2, Seller agrees, during
the Environmental Indemnity Period, to indemnify and save Purchaser
harmless from and against, and to reimburse Purchaser with respect to,
any and all claims, demands, losses, damages, liabilities, causes of
action, judgments, penalties, costs and expenses (including, without
limitation, reasonable legal fees and expenses, clean-up costs and
disbursements) accrued or incurred by Purchaser at any time and from
time to time, during the Environmental Indemnity Period by reason of
(i) the breach of any representation or warranty of Seller as set forth
in Section 3.10, (ii) any violation with respect to or affecting the
Transferred Assets on or before the Closing Date of any Environmental
Laws in effect on or before the Closing Date, (iii) the clean-up of the
Transferred Assets required under Environmental Laws for any activities
prior to the Closing Date, (iv) any act, omission, event or
circumstance existing or occurring on or prior to the Closing Date
(including without limitation, the presence on the
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Properties of Hazardous Substances or the presence off site of
Hazardous Substances generated on the Properties, on or prior to the
Closing Date) that result from or that are in connection with the
ownership, construction, occupancy, operation, use and/or maintenance
of the Properties, regardless of whether the act, omission, event or
circumstance constituted a violation of any Environmental Laws at the
time of its existence or occurrence, and (v) any and all claims or
proceedings (whether brought by private party or Governmental
Authority) for bodily injury, property damage, abatement or
remediation, environmental damage or impairment or any other injury or
damage resulting from or relating to any Hazardous Substances located
upon the Properties prior to the Closing Date. Seller shall also
indemnify and hold Purchaser harmless from and against any liability,
loss, cost or expense, including reasonable attorneys' fees and
expenses, arising from or relating to the imposition or recording of a
lien on the Properties in connection with any contamination of the
Properties or pursuant to any Environmental Laws in the event only that
such contamination occurred prior to the Closing Date. Seller shall
also hold harmless and indemnify Purchaser from any liability incurred
by Purchaser arising out of regulatory action or third-party claims
with respect to contamination of the Properties or offsite locations
that occurred prior to the Closing Date.
(b) Notwithstanding anything contained in this Agreement to
the contrary, the indemnities in this Section 10.4 shall survive the
Closing Date only until the end of the Environmental Indemnity Period,
and shall be limited in scope only to any activities discovered after
the Closing Date but before the end of the Environmental Indemnity
Period that occurred before the Closing Date. For all purposes with
respect to the Transferred Assets, Purchaser agrees that it shall have
the burden of proof that any alleged activities, violations, events or
conditions occurred before the Closing Date.
(c) Seller shall have the right to control any action for
which indemnity is required under this Section 10.4 through counsel of
its choice, subject to Purchaser's consent, which shall not be
unreasonably withheld or delayed, provided, however, at Purchaser's
option, Purchaser may participate in such action and appoint its own
counsel. If Seller does not notify Purchaser in writing of its intent
to control such action within thirty (30) days (or five (5) days less
than such lesser time as may be required to respond to such claims)
after receipt by Seller of written notice of such claims, Purchaser
shall have the right to undertake the control, conduct or settlement of
such claims through its own counsel at Seller's expense and may settle
such matter without Seller's consent at its sole expense. In the event
any proposed settlement includes non-monetary relief, including
clean-up, Purchaser may agree to such clean-up and settle such matter
only with the consent of Seller, which consent shall not be
unreasonably withheld or delayed; provided, however, if Seller fails to
respond to such a notification by Purchaser regarding such non-monetary
relief within ten (10) days after Purchaser's notification to Seller,
Seller shall be deemed to have consented to such non-monetary relief.
(d) Purchaser agrees that the rights and remedies provided in
this Section 10.4 shall be the exclusive rights and remedies available
to it for any matter within the scope of Section 10.4 and that the
general indemnification provisions of Section 10.2 and any other rights
or remedies of Purchaser with respect to the Seller for any matter
within the scope of Section 10.4, whether provided in this Agreement,
at law or in equity, shall not be applicable and are hereby waived.
Nothing in this Section 10.4 or elsewhere in this Agreement shall limit
or impair any rights or remedies of Purchaser against any third party
under any Environmental Laws, including, without limitation, any rights
of contribution or indemnification available hereunder.
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(e) Any indemnification provided in this Section 10.4 shall
terminate at the end of the Environmental Indemnity Period, following
which the Purchaser agrees not to institute any action or claim for
indemnification or other recovery with respect to the matter within the
scope of Section 10.4; provided, however, that the expiration of the
Environmental Indemnity Period shall be extended as to any bona fide
claim for indemnification within the scope or Section 10.4, solely to
the extent that Purchaser asserted such claim according to the
procedures provided in Section 10.5 and Section 10.6, if the Purchaser
shall have transmitted the Claim Notice with respect to such claim to
the Seller prior to the expiration of such Environmental Indemnity
Period.
10.5. SURVIVAL. The representations and warranties set forth in this
Agreement (other than those set forth in Article VIII) shall survive until the
second anniversary of the Closing Date, following which date none of the parties
may bring any action or present any claim for a breach of such representations
and warranties; provided, however, that there shall be no termination of any
representation or warranty as to which a bona fide claim has been asserted if
the Indemnified Party shall have transmitted the Claim Notice with respect
thereto prior to the anniversary of the Closing Date. The representations and
warranties set forth in 3.8.2 shall remain terminate in accordance with the
terms of Article VIII.
10.6. INDEMNIFICATION PROCEDURES. All claims for indemnification under
this Agreement (other than claims for indemnification under Article VIII) shall
be asserted and resolved as follows:
10.6.1. NOTICE. An Indemnified Party shall promptly (i) notify an
Indemnifying Party of any Third-Party Claim asserted against the Indemnified
Party and (ii) transmit to the Indemnifying Party a Claim Notice relating to
such Third-Party Claim, a copy of all papers served with respect to such claim
(if any), an estimate of the amount of damages attributable to the Third-Party
Claim and the basis of the Indemnified Party's request for indemnification under
this Agreement. During the Election Period, an Indemnifying Party shall notify
an Indemnified Party (a) whether the Indemnifying Party disputes its potential
liability to the Indemnified Party under this Article X with respect to such
Third-Party Claim and (b) whether an Indemnifying Party desires, at the sole
cost and expense of such Indemnifying Party, to defend the Indemnified Party
against such Third-Party Claim.
10.6.2. DEFENSE BY INDEMNIFYING PARTY. If an Indemnifying Party
notifies an Indemnified Party within the Election Period that the Indemnifying
Party does not dispute its potential liability to the Indemnified Party under
this Article X and that the Indemnifying Party elects to assume the defense of
the Third-Party Claim, then the Indemnifying Party shall have the right to
defend, at its sole cost and expense, such Third-Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this Section 10.6.2. The Indemnifying
Party shall have full control of such defense and proceedings, including any
compromise or settlement thereof; provided, however, that any settlement
entailing non-monetary consideration must be approved, in advance, by the
Indemnified Party, which approval shall not be unreasonably delayed or withheld.
The Indemnified Party is hereby authorized, at the sole cost and expense of the
Indemnifying Party (but only if the Indemnified Party is actually entitled to
indemnification hereunder or if the Indemnifying Party assumes the defense with
respect to the Third-Party Claim), to file, during the Election Period, any
motion, answer or other pleadings which the Indemnified Party shall deem
necessary or appropriate to protect its interests or those of the Indemnifying
Party and not prejudicial to the Indemnifying Party (it being understood and
agreed that if an Indemnified Party takes any such action that is prejudicial
and conclusively causes a
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final adjudication adverse to the Indemnifying Party, the Indemnifying Party
shall be relieved of its obligations hereunder with respect to such Third-Party
Claim). If requested by the Indemnifying Party, the Indemnified Party agrees, at
the sole cost and expense of the Indemnifying Party, to cooperate with the
Indemnifying Party and its counsel in contesting any Third-Party Claim that the
Indemnifying Party elects to contest, including, without limitation, the making
of any related counterclaim against the person asserting the Third-Party Claim
or any cross-complaint against any person. The Indemnified Party may participate
in, but not control, any defense or settlement of any Third-Party Claim
controlled by the Indemnifying Party pursuant to this Section 10.6, and shall
bear its own costs and expenses with respect to any such participation.
10.6.3. DEFENSE BY INDEMNIFIED PARTY. If an Indemnifying Party fails to
notify an Indemnified Party within the Election Period that the Indemnifying
Party elects to defend the Indemnified Party pursuant to Section 10.6.2, or if
the Indemnifying Party elects to defend the Indemnified Party pursuant to
Section 10.2 but fails diligently and promptly to prosecute or settle the
Third-Party Claim, then the Indemnified Party shall have the right to defend, at
the sole cost and expense of the Indemnifying Party, the Third-Party Claim by
all appropriate proceedings, which proceedings shall be diligently prosecuted by
the Indemnified Party to a final conclusion or settled. The Indemnified Party
shall have full control of such defense and proceedings; and provided, however,
that without the Indemnifying Party's consent, which consent shall not be
unreasonably delayed or withheld, the Indemnified Party shall not be authorized
by the Indemnifying Party to enter into any compromise or settlement of such
Third Party Claim on any non-monetary basis; and provided further, however, that
if requested by the Indemnified Party, the Indemnifying Party shall, at the sole
cost and expense of the Indemnifying Party, cooperate with the Indemnified Party
and its counsel in contesting any Third-Party Claim that the Indemnified Party
is contesting, or, if appropriate and related to the Third-Party Claim in
question, in making any counterclaim against the person asserting the
Third-Party Claim or any cross-complaint against any person. Notwithstanding the
foregoing, if the Indemnifying Party has delivered a written notice to the
Indemnified Party to the effect that the Indemnifying Party disputes its
potential liability to the Indemnified Party under this Article X and if such
dispute is resolved in favor of the Indemnifying Party by a final, nonappealable
order of a court of competent jurisdiction, the Indemnifying Party shall not be
required to bear the costs and expenses of the Indemnified Party's defense
pursuant to this Section 10.6 or of the Indemnifying Party's participation
therein at the Indemnified Party's request, and the Indemnified Party shall
reimburse the Indemnifying Party in full for all costs and expenses of such
litigation. The Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party pursuant to this
Section 10.6, and the Indemnifying Party shall bear its own costs and expenses
with respect to any such participation.
10.6.4. OTHER CLAIMS. In the event any Indemnified Party should have a
claim against any Indemnifying Party hereunder that does not involve a
Third-Party Claim, the Indemnified Party shall transmit to the Indemnifying
Party an Indemnity Notice with respect to such claim. If the Indemnifying Party
does not notify the Indemnified Party in writing within Sixty (60) days from its
receipt of the Indemnity Notice that the Indemnifying Party disputes such claim,
the claim specified by the Indemnified Party in the Indemnity Notice shall be
deemed a liability of the Indemnifying Party hereunder. If the Indemnifying
Party has timely disputed such claim, as provided above, such dispute shall be
resolved by binding arbitration.
10.7. TAX BENEFITS, INSURANCE PROCEEDS AND INDEMNIFICATION PAYMENTS. In
determining the amount of any loss, liability or expense for which an
Indemnified Party is entitled to indemnification under this Article X, the gross
amount thereof will be reduced by any correlative insurance proceeds, if
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any, realized or to be realized by such Indemnified Party, and such correlative
insurance benefit shall be net of any insurance premium that becomes due as a
result of such claim.
10.8. TAX ON INDEMNIFICATION PAYMENTS. After taking into account any
adjustment required by Section 10.6, the amount of each payment by an
Indemnifying Party under Section 10.2 and Section 10.3 shall include any
additional amount necessary to indemnify the Indemnified Party against any taxes
imposed in connection with such payment.
ARTICLE XI
BROKERS
Seller has retained Xxxx Investments Inc. to assist and advise it in
connection with the transactions contemplated by this Agreement Seller will be
responsible for any fees payable to Xxxx. Purchaser and Seller represent to the
other that, except as set forth in the preceding sentence, neither has, directly
or indirectly, employed any broker, finder or intermediary in connection with
such transactions that might be entitled to a fee or commission for which the
other party shall have any obligation or responsibility upon the execution of
this Agreement or the consummation of such transactions.
ARTICLE XII
EXPENSES
Except as specifically provided herein, all legal and other costs and
expenses in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party that incurred such costs and expenses.
ARTICLE XIII
NOTICES; MISCELLANEOUS
0.1. NOTICES. All notices and other communications given hereunder
shall be in writing and shall be deemed given if delivered personally, including
delivery by a nationally recognized courier service, or mailed by registered or
certified mail, return receipt requested, to the parties at the following
addresses:
(i) If to Purchaser, to:
Goldking Trinity Bay Corp.
0000 XxXxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Xx.
With a copy to:
Looper, Reed, Xxxx & XxXxxx
0 Xxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxx
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(ii) If to Seller to:
Xxxxxx Oil & Gas Combination
Partnership 1989-1, L.P.
c/x Xxxxxx Oil & Gas Company
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
13.2. MISCELLANEOUS.
13.2.1. EXCLUSIVE AGREEMENT. This Agreement supersedes all prior
written or oral agreements between the parties with respect to the transactions
contemplated herein, and is intended as a complete and exclusive statement of
the terms of the agreement between the parties with respect to the transactions
contemplated herein.
13.2.2. CHOICE OF LAW; CHOICE OF FORUM; AMENDMENTS; HEADINGS. This
Agreement shall be governed by the internal laws of the State of Texas, without
giving effect to principles of conflicts of laws. This Agreement may not be
changed or terminated orally. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Terms such as "herein," "hereby," "hereto" and
"hereof" refer to this Agreement as a whole. The term "include" and derivatives
thereof are used in an illustrative sense and not a limitative sense.
13.2.3. ASSIGNMENTS AND THIRD PARTIES. No party hereto shall assign
this Agreement or any part hereof without the prior written consent of the other
parties; provided, however, that Purchaser shall be authorized to assign this
Agreement provided that no such assignment shall release Purchaser from any of
its obligations under this Agreement. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. Nothing in this Agreement
shall entitle any Person, other than the parties hereto or their respective
permitted successors and assigns, to any claim, cause of action, remedy or right
of any kind.
13.2.4. SUBSEQUENT FILINGS. Effective at the Closing Date, Purchaser
shall file with General Land Office of the State of Texas and with such other
Governmental Authorities such notices or certificates as are necessary to
reflect the sale of the Transferred Assets to Purchaser.
13.2.5. SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon any binding determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable and legally
enforceable manner, to the end that the transactions contemplated hereby may be
completed to the extent possible.
13.2.6. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute but one and the same agreement.
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13.2.7. FURTHER ASSURANCES.
(i) The parties each agree to deliver or cause to be delivered
to the others on the Closing Date, and at such other times thereafter
as shall be reasonably requested, any additional instrument that the
other may reasonably request for the purpose of carrying out this
Agreement.
(ii) After the Closing, Seller and Purchaser shall, and shall
cause their affiliates to, execute, acknowledge and deliver all such
further conveyances, transfer orders, division orders, notices,
assumptions, releases and acquittances, and such other instruments, and
shall take such further actions as may be necessary or appropriate to
assure fully to Purchaser, its successors or assigns, all of the
Transferred Assets intended to be conveyed to Purchaser by the
Instruments of Transfer pursuant to this Agreement, and to assure fully
to Seller and its affiliates and its successors and assigns, the
assumption of the liabilities and obligations intended to be assumed by
Purchaser pursuant to this Agreement.
13.2.8. PRESERVATION OF BOOKS AND RECORDS. For a period of seven (7)
years (five (5) years with respect to geophysical data related to the
Transferred Assets) after the Closing Date, Purchaser and Seller (if and to the
extent Seller has retained any of the hereinafter described records not
delivered to Purchaser at Closing) shall (i) preserve and retain the corporate,
accounting, legal, auditing and other books and records that relate to the
conduct of Seller's businesses and operations prior to the Closing Date
(including, but not limited to, any documents relating to any governmental or
non-governmental actions, suits, proceedings or investigations arising out of
the conduct of the business and operations of Seller prior to the Closing Date
and including, but not limited to, all financial statements and other data and
information necessary or desirable for Purchaser to comply with their public
reporting requirements) and (ii) make such books and records available at their
then current administrative headquarters to the other party and its officers,
employees, agents and affiliates upon reasonable notice and at reasonable times,
it being understood that such other party shall be entitled to make and retain
copies of any such books and records as it shall deem necessary. Purchaser and
Seller agree to permit representatives of the other party to meet with its
employees on a mutually convenient basis in order to enable such other party to
obtain additional information and explanations of any materials provided
pursuant to this Section 13.2.8.
-the remainder of this page left blank intentionally-
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
PURCHASER: GOLDKING TRINITY BAY CORP.
By:________________________________________
Name:______________________________________
Title:_____________________________________
SELLER:
XXXXXX OIL & GAS COMBINATION
PARTNERSHIP 1991-1, L.P.
By: XXXXXX OIL AND GAS COMPANY,
Managing General Partner
By:________________________________________
Name:______________________________________
Title:_____________________________________
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APPENDIX A
Definitions
Capitalized terms used in this Agreement shall have the meanings
ascribed to them in this Appendix A unless such terms are defined elsewhere in
this Agreement:
Agreed Interest Rate: Ten percent (10%) per year.
Best Efforts: A party's best efforts in accordance with reasonable
commercial practices and without the incurrence of unreasonable expense.
Claim Notice: A written notice delivered by an Indemnified Party to an
Indemnifying Party pursuant to Section 10.6.1 describing in reasonable detail
the nature of a Third-Party Claim that could give rise to a right of
indemnification under this Agreement.
Claimed Interest Additions: The Interest Additions claimed by Seller on
the list to be submitted to Purchaser within thirty (30) days after the date of
this Agreement pursuant to Section 6.3.
Closing: The closing of the transactions contemplated by this
Agreement.
Closing Date: The date of the Closing.
Code: The Internal Revenue Code of 1986, as amended.
Data Rooms: The data rooms prepared by Seller to provide information to
Persons considering the acquisition of the Transferred Assets.
Defensible Title: Such title to the Transferred Interests, free and
clear of all Encumbrances other than Permitted Encumbrances, that is deducible
of record and free from reasonable doubt to the end that a prudent person
engaged in the business of the ownership, development and operation of producing
oil and gas properties, with knowledge of all the facts and the legal bearing of
such facts and the commercial effect of such facts on the continued control and
operation of the Transferred Assets, would be willing to accept such title.
Effective Time: The effective time of the transfer of the Transferred
Assets to Purchaser, which shall be deemed to be 7:00 a.m., Houston, Texas time,
on January 1, 1995.
Election Period: The 30-day period following receipt by an Indemnifying
Party of a Claim Notice.
Encumbrance: Any mortgage, lien, security interest, pledge, charge,
encumbrance, claim, limitation, preferential right to purchase, consent to
assignment, irregularity, burden or defect or any other claim that Seller does
not own the Warranted Interest.
Entity: A corporation, partnership, joint venture, trust or
unincorporated organization or association or other entity.
Environmental Laws: All federal, state and local laws relating to the
protection of human health and safety or the environment, including but not
limited to the federal Comprehensive Environmental Response, Compensation, and
Liability Act, the Resource Conservation and Recovery Act, the Safe
Appendix A
Page 1
31
Drinking Water Act, the Toxic Substances Control Act, the Clean Water Act, the
Coastal Zone Management Act, the Endangered Species Act, the Oil and the
Hazardous Materials Transportation Act, all as amended, and all analogous state
and local laws.
Environmental Indemnity Period: The period beginning on the Closing
Date and ending two (2) years after the Closing Date.
Governmental Authority: The United States of America, any state,
commonwealth, territory or possession thereof and any political subdivision of
any of the foregoing, including but not limited to courts, departments,
commissions, boards, bureaus, agencies or other instrumentalities.
Hazardous Substance: Any substance or material now or hereafter defined
as a "hazardous substance", "hazardous material", "hazardous waste",
"contaminant", or "pollutant" under any environmental laws, including but not
limited to Section 1.01 of the Comprehensive Environmental Response,
Compensation and Liability Act, 4-2 U.S.C.A 9601.
Hydrocarbons: Oil, gas, minerals (including but not limited to sulfur)
and other gaseous and liquid hydrocarbons or any combination thereof.
Indemnified Party: A party claiming indemnification under this
Agreement (other than a claim for indemnification under Section 10.4, Article VI
or Article VIII).
Indemnifying Party: A party from whom indemnification under this
Agreement (other than indemnification under Section 10.4, Article VI or Article
VIII) is sought.
Indemnity Notice: A written notice from an Indemnified Party to an
Indemnifying Party with respect to a claim for indemnification under this
Agreement (other than indemnification under Section 10.4, Article VI or Article
VIII) not involving a Third-Party Claim, which notice shall describe in detail
the nature of the claim and set forth an estimate of the amount of damages
attributable to such claim and the basis of the Indemnified Party's request for
such indemnification.
Initial Payment: The initial payment of the Purchase Price in the
amount of FOUR THOUSAND NINE HUNDRED TWENTY-NINE DOLLARS ($4,929), paid by
Purchaser to Seller, on the date this Agreement was executed.
Knowledge: The actual knowledge of each executive officer of Seller
(assuming such Seller is a corporation, and if not, a Person in a similar
capacity) after reasonable inquiry, or Purchaser, as the case may be.
Leases: As defined in the Instruments of Transfer.
Legal Requirement: Any law, statute, ordinance, decree, requirement,
order, judgment, rule or regulation of, including the terms of any license or
permit issued by, any Governmental Authority.
Material Adverse Effect: Any material adverse effect on or with respect
to the Transferred Assets or on the business, operations, prospects or condition
of the Transferred Assets, taken as a whole.
Net Revenue Interest: The interest (expressed as a percentage) of
Seller in and to Hydrocarbons produced from or allocated to a Property after
deducting all applicable Production Burdens.
NGA: The Natural Gas Act of 1938.
NGPA: The Natural Gas Policy Act of 1978.
Appendix A
Page 2
32
Permitted Encumbrances: Any or all of the following:
(i) encumbrances that arise under operating agreements to secure
payment of amounts not yet delinquent and are of a type and nature customary in
the oil and gas industry;
(ii) encumbrances that arise as a result of pooling and unitization
agreements, and production sales contracts securing the payment of amounts not
yet delinquent;
(iii) consents to assignment by Governmental Authorities (a) that are
obtained on or prior to the Closing Date or (b) that are customarily obtained
after the consummation of transactions of the nature contemplated by this
Agreement;
(iv) conventional rights of reassignment obligating Seller to reassign
its interest in any portion of the Properties to a third party in the event it
intends to release or abandon such interest prior to the expiration of the
primary term or other termination of such interest;
(v) easements, rights-of-way, servitudes, permits, surface leases,
surface use restrictions and other surface uses and impediments on, over or in
respect of any of the Properties that are not such as to interfere materially
with the operation, value or use of any of the Properties;
(vi) such Title Defects and Environmental Defects as Purchaser has
expressly waived in writing;
(viii) such Title Defects for which Purchaser failed to give timely
notice according to Section 6.2;
(ix) such Environmental Defects (to the extent the Purchaser has
Knowledge of such Environmental Defect) for which Purchaser failed to give
timely notice according to Section 6.2 or for which Purchaser failed to provide
written information as required by Section 6.2;
(x) rights reserved to or vested in any municipality or governmental,
tribal, statutory or public authority to control or regulate any of the
Properties in any manner, and all applicable laws, rules and orders of any
municipality or governmental or tribal authority;
(xi) all production burdens that do not operate to (A) reduce the Net
Revenue Interest below the Warranted Interest or (B) increase the Working
Interest above the Warranted Interest;
(xii) the preferential purchase rights for which waivers have been
obtained prior to the Closing Date;
(xiii) the terms and conditions of the Contracts, insofar and only
insofar as the Contracts do not operate to (A) reduce the Net Revenue Interest
of Seller below that set forth on Exhibit A hereto, (B) increase the Working
Interest of Seller above that set forth on Exhibit A hereto without a
proportionate increase in the Net Revenue Interest of Seller;
(xiv) any other Encumbrance affecting any portion of a Transferred
Asset that individually does not materially adversely affect the operation,
value or use of any such Transferred Asset; and
(xv) solely during the period prior to the Closing, any Encumbrance
that is released on or before Closing.
Person: shall mean a corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof, or a governmental agency.
Appendix A
Page 3
33
Production Burdens: All royalty interests, overriding royalty
interests, production payments, net profits interests or other similar interests
that constitute a burden on, are measured by or are payable out of the
production of Hydrocarbons or the proceeds realized from the sale or other
disposition thereof.
Purchase Price Adjustment Amount: The net adjustment to the Purchase
Price to be made pursuant to Section 1.3.1.
Purchase Price Adjustment Certificate: A statement of the Purchase
Price Adjustment Amount (specifying whether the Purchase Price is to be
increased or decreased by such amount), which shall be certified by an officer
of Seller.
Seller's Affiliate: Any person that directly or indirectly, through one
or more intermediaries, controls, is controlled by or is under common control
with, such Seller.
Subsidiary: shall mean, as to a Person, any other Person (a) more than
50% of the outstanding voting stock of which is held, directly or indirectly, by
such Person, or (b) over which such Person has the power, directly or
indirectly, to designate a majority of the directors thereof (if such other
Person is a corporation) or the individuals exercising similar functions (if
such other Person is unincorporated).
Third-Party Claim: A third-party claim asserted against an Indemnified
Party that could give rise to a right of indemnification under this Agreement
(other than a right of indemnification under Section 10.4, Article VI or Article
VIII).
Transferred Assets: As defined in Section 1.1.
Warranted Interests: Those interests whereby a Seller is (i) entitled
to receive not less than the "Net Revenue Interest" set forth on Exhibit A
hereto of all oil, gas and associated liquid and gaseous Hydrocarbons produced,
saved and marketed from the Properties, without reduction, throughout the
productive life of such Properties and (ii) obligated to bear the percentage of
the costs and expenses related to the maintenance, development and operation of
the Properties in an amount not greater than the "Working Interest" set forth on
Exhibit A hereto, without increase, throughout the productive life of such
Properties, except increases that result in a proportionate increase in such
Seller's Net Revenue Interest and increases that results from contribution
requirements with respect to defaulting co-owners.
Working Interest: The interest (expressed as a percentage) of a Seller
in any Transferred Asset before giving effect to any applicable Production
Burdens and the percentage of all costs and expenses associated with the
exploration, development and operation of such Transferred Asset required to be
borne by such Seller.
Appendix A
Page 4
34
SCHEDULE 1.2.1
INDIVIDUAL INTEREST VALUATIONS
WORKING NET REVENUE PURCHASE
SELLER INTEREST INTEREST PRICE
Xxxxxx Oil & Gas Combination 4.928910% 4.115640% $377,062.00
Partnership 1989- 1, L. P.,
a California limited partnership
35
XXXX OF SALE, CONVEYANCE AND PARTIAL ASSIGNMENT
STATE OF TEXAS Section.
Seciton.
COUNTY OF XXXXXXXX Section.
This Xxxx of Sale, Conveyance and Partial Assignment is from XXXXXX OIL
& GAS COMBINATION PARTNERSHIP 1989-1, L.P., a California limited partnership,
whose mailing address is 0000 Xxxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxx
("Grantor"), to GOLDKING TRINITY BAY CORP., a Texas corporation ("Grantee"),
whose mailing address is 0000 XxXxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000.
I.
NOW, THEREFORE, for and in consideration of Ten and No/100 Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Grantor has granted, bargained, sold,
transferred, assigned and conveyed, and by these presents does hereby grant,
bargain, sell, transfer, assign and convey unto Grantee, its successors and
assigns, subject to the hereinafter stated exceptions, restrictions, covenants
and conditions, all of Grantor's interest in and to the following described
properties, to-wit:
(a) The leasehold estate created by each of the Oil, Gas and
Mineral Leases listed and described in Exhibit "A", which is
annexed hereto and incorporated herein for all purposes, such
leases being hereinafter sometimes referred to as "Subject
Leases";
(b) All payments out of production, overriding royalty interests,
carried interests, reversionary interests, and all other
rights and interests, incident to, or held and owned by
Grantor in connection with the Subject Leases, save and except
the overriding royalty excepted and reserved herein below by
Grantor;
(c) All oil, gas, condensate, casinghead gas and other related
hydrocarbon substances produced and saved subsequent to the
Effective Date of this conveyance from lands covered and
affected by the Subject Leases. (The interest described under
subparagraphs (a) and (b) above, and this subparagraph (c) are
hereinafter sometimes collectively referred to as "Subject
Properties");
(d) All personal property and facilities located on lands covered
by the Subject Leases or the Subject Interests, or both,
incident to or held and used in connection with the Subject
Interests, including, but not limited to, all tanks, tanks
batteries, gas plants, disposal facilities, buildings,
structures, platforms, field separators and liquid extractors,
treators, dehydrators, compressors, pumps, pumping units,
valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, implements, tools, appliances, cables,
wires, towers, casing, tubing and rods, gathering lines or
other pipelines, field gathering systems and any and all other
fixtures and equipment of every type and description to the
extent that the same are used or held in connection with the
ownership or operation of the Subject Interests;
(e) All oil, natural gas or water source xxxxx, whether producing,
operating, shut-in, or temporarily abandoned; all types of
injection xxxxx; and all equipment used or held by Grantor in
connection with the production of oil, gas, condensate,
casinghead gas and other related hydrocarbon substances from
or attributable to lands covered by the Subject Leases;
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36
(f) All tenements, appurtenances, surface leases, easements,
permits, licenses, servitudes, or rights-of-way in any way
appertaining, belonging, affixed and used in connection with,
or incident to, the ownership and operation of the Subject
Interest, including, but not limited to, those tenements,
appurtenances, surface leases, easements, permits, licenses,
servitudes or rights-of-way listed and described in Exhibit
"B", annexed hereto and incorporated herein for all purposes;
(g) All leases, options, rights of first refusal, orders,
contracts, operating agreements, bottom-hole agreements,
farmin/farmout agreements, acreage contribution agreements,
unit agreements, processing agreements, maintenance
agreements, purchase and sale agreements for gas, oil or other
minerals, and other agreements and instruments to the extent
that same relate, appertain, belong or are in any way
incidental to the ownership of the Subject Interests by
Grantor, including, but not limited to, those listed and
described in Exhibit "C", annexed hereto and incorporated
herein for all purposes;
(h) All lease files, land files, well files, abstracts, title
opinions, title curative, accounting records, royalty payment
records, seismic records and surveys, gravity maps, electric
logs, contracts, correspondence, microfiche lists, geological
and geophysical maps, pressure date and decline curves,
graphical production curves and other geological or
geophysical data, records and other documents and records of
every kind and description which relate to and are possessed
by Grantor in connection with the Subject Interests, to the
extent and as provided for or limited by that certain Purchase
and Sale Agreement dated effective April 1, 1989 by and
between Grantor and Texaco Producing Inc.; and
(i) Any and all monies held by any individual, partnership, or
corporate entity, whether or not such monies are held in
escrow, payable to either Texaco Producing Inc. or Grantor, or
both, for oil, gas condensate, casinghead gas or other related
hydrocarbon substance produced and saved from or attributable
to the Subject Leases and purchased by such individual,
partnership or corporate entity subsequent to the Effective
Date of this conveyance.
The interests described under subparagraphs (a) through (i)
hereinabove are herein sometimes collectively referred to as "Subject
Interests".
II.
This Xxxx of Sale, Conveyance and Assignment is made by Grantor and
accepted by Grantee subject to the following:
(a) All terms, conditions and obligations contained and provided
for in the Subject Leases;
(b) The terms and conditions of all existing orders, rules,
regulations and ordinances of any federal, state or other
governmental agency that are applicable or related to the
Subject Interests;
(c) The terms and conditions of the Purchase and Sale Agreement,
dated the same date as this conveyance instrument, by and
between Grantor, as a Seller and Grantee as the Purchaser,
concerning the Subject Interests; and
(d) Grantee accepting the Subject Interest in its "as is, where
is" condition; Grantor disclaiming any and all liability
arising in connection with any environmental matters,
including, without limitation, any presence of naturally
occurring radio-active material on the property; and Grantee
expressly waiving the provisions of Chapter XVII, Subchapter
E, Sections 17.41 through 17.63, inclusive, except Section
17.555 which is
2
37
not waived, of Vernon's Texas Code Annotated, Business and
Commerce Code. In addition, there are no warranties or
representations, either express or implied, as to the quality
or quantity of the hydrocarbon reserves, if any, attributable
to the interest conveyed herein or the ability of the property
to produce hydrocarbons.
TO HAVE AND TO HOLD all and singular the Subject Interest, as
hereinabove described, unto Grantee, its successors and assigns, and Grantor,
for itself, its successors and assigns, does hereby WARRANT AND FOREVER DEFEND,
all and singular, title to the Subject Interests, free from all liens, claims,
assessments and encumbrances, other than the existing burdens, unto Grantee,
Grantee's successors and assigns, against every person lawfully claiming or to
claim the same, or any part hereof, BY, THROUGH OR UNDER GRANTOR, BUT NOT
OTHERWISE. The reference herein to the "existing burdens" is for the purpose of
protecting Grantor on Grantor's warranties, and shall not create, nor constitute
a recognition of any rights in third parties. Grantor grants unto Grantee full
power and right of substitution and subrogation in and to all covenants and
warranties by others heretofore given or made in respect of the Subject
Interests.
III.
The provisions hereof shall inure to the benefit of and be binding upon the
parties hereto, their respective legal representatives, successors and assigns.
IN TESTIMONY WHEREOF, this Conveyance is executed on the dates and at
the places indicated in the respective acknowledgments below, but is stipulated
herein to be effective as of 7:00 a.m., C.D.S.T., the 1st day of January, 1995.
GRANTOR: XXXXXX OIL & GAS COMBINATION
PARTNERSHIP 1989-1, L.P.
By: _______________________________
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[acknowledgments]
4
