EXHIBIT 10.19
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MEDUSA SPAR AGREEMENT
AMONG
XXXXXX EXPLORATION & PRODUCTION COMPANY-USA,
XXXXXX PETROLEUM OPERATING COMPANY
AND
OCEANEERING INTERNATIONAL, INC.
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TABLE OF CONTENTS
Page
ARTICLE I ORGANIZATION OF MEDUSA SPAR LLC...........................................2
1.1 Medusa Spar LLC............................................................2
1.2 Initial Capital Contributions..............................................2
ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS OF XXXXXX AND CALLON...........4
2.1 Representations and Warranties.............................................4
2.2 Covenants..................................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF OII...................................8
3.1 Organization of OII........................................................8
3.2 Authority..................................................................8
3.3 Availability of Funds......................................................9
3.4 Brokers or Finders..........................................................9
ARTICLE IV FINANCING AND OTHER MATTERS..............................................9
4.1 Deemed Value................................................................9
4.2 Commitment for Non-Recourse Financing.......................................9
4.3 Costs Prior to the Closing.................................................10
4.4 BBD Approval...............................................................
4.5 Release of the Bay Lien....................................................
ARTICLE V MEDUSA SPAR OPERATING AND PRODUCTION HANDLING AGREEMENT..................10
5.1 Medusa Spar Operating and Production Handling Agreement...................10
ARTICLE VI CLOSING.................................................................10
6.1 Closing Conditions........................................................10
6.2 Closing...................................................................13
6.3 Medusa Spar Contractors and Suppliers.....................................15
ARTICLE VII SURVIVIAL OR REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION...........15
7.1 Survival of Representations and Warranties................................15
7.2 Indemnification by Transaction Parties....................................15
7.3 Matters Involving Third Parties...........................................16
7.4 Limitation on Damages.....................................................17
7.5 Exclusive Remedies........................................................18
ARTICLE VIII GENERAL PROVISIONS....................................................18
8.1 Notices...................................................................18
8.2 Expenses..................................................................19
8.3 Interpretation............................................................19
8.4 Counterparts..............................................................19
8.5 Entire Agreement; Assignment..............................................19
8.6 Severability..............................................................19
8.7 Governing Law; Jurisdiction; Venue........................................20
8.8 Rules of Construction.....................................................20
8.9 Survival..................................................................20
8.10 Medusa JOA................................................................20
8.11 News Releases.............................................................21
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INDEX OF EXHIBITS
EXHIBIT "A" Dedicated Blocks
EXHIBIT "B" Certificate of Formation of Medusa Spar LLC
EXHIBIT "C" LLC Agreement
EXHIBIT "D" Xxxxxx Assignment
EXHIBIT "E" Callon Assignment
EXHIBIT "F" Xxxxxx Third Party Encumbrances
EXHIBIT "G" Medusa Spar Operating and Production Handling Agreement
EXHIBIT "H" Form of Certificate from Xxxxxx and Callon as Required by
Section 6.1(a) (viii)
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MEDUSA SPAR AGREEMENT
THIS MEDUSA SPAR AGREEMENT (this "Agreement") is made and entered into
among XXXXXX EXPLORATION & PRODUCTION COMPANY-USA, a Delaware corporation
("Xxxxxx"), XXXXXX PETROLEUM OPERATING COMPANY, a Delaware corporation
("Callon"), and OCEANEERING INTERNATIONAL, INC., a Delaware corporation ("OII"),
and shall be effective as of the date (the "Effective Date") on which this
Agreement has been fully executed by Xxxxxx, Xxxxxx and OII (each a "Party", and
hereinafter referred to collectively as the "Parties" or the "Members").
RECITALS
X. Xxxxxx is the successor owner of certain assets that Xxxxxx acquired
from Xxxxxx Exploration & Production Company, a Delaware corporation ("MEPCO"),
and as such successor, Xxxxxx is the owner of an undivided 60% interest in that
certain truss spar, hull, buoyancy cans, deck, facilities, equipment and
moorings located on Mississippi Canyon Block 582, Outer Continental Shelf, Gulf
of Mexico, USA (the "Medusa Spar"), being constructed under that certain EPCI
contract between J. Xxx XxXxxxxxx, Inc. and MEPCO, dated February 23, 2001, as
amended (the "EPCI Contract"), and Callon is the owner of an undivided 15%
interest in the Medusa Spar.
B. British-Borneo Deepwater, LLC ("BBD") is the successor owner of
certain assets that BBD acquired from British-Borneo Petroleum, Inc. ("BBP"),
and as such successor, BBD owns an undivided 25% interest in the Medusa Spar,
and the Medusa Spar is subject to, and is to be operated under, that certain
Joint Operating Agreement, dated February 1, 1999, among MEPCO, Callon and BBP
(hereinafter referred to as the "Medusa JOA").
X. Xxxxxx and Xxxxxx desire to contribute their collective undivided
75% interest in the Medusa Spar to a new Delaware limited liability company
("Medusa Spar LLC"), and in return for such contribution, acquire a 50%
membership interest in Medusa Spar LLC in the proportions of 40% to Xxxxxx and
10% to Callon.
D. OII desires to make a cash contribution to Medusa Spar LLC as set
forth hereinafter, and in return for such contribution, acquire a 50% membership
interest in Medusa Spar LLC.
E. The Parties intend to arrange for non-recourse financing for Medusa
Spar LLC (the "Non-Recourse Financing"), in an amount equal to 50% of the Deemed
Value (as defined hereinafter).
X. Xxxxxx, Callon and OII further desire to enter into an agreement
with Medusa Spar LLC for, among other things, the operation of the Medusa Spar,
and the production and the handling of the production of Xxxxxx and Callon, from
those certain Mississippi Canyon Blocks (the "Dedicated Blocks") as listed on
Exhibit "A" attached hereto and made a part hereof.
NOW THEREFORE, in consideration of the covenants, provisions and
representations set forth herein, and for other good and valuable consideration,
the Parties hereto, intending to be legally bound, hereby agree as follows:
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ARTICLE I
ORGANIZATION OF MEDUSA SPAR LLC
1.1 Medusa Spar LLC.
(a) Not less than five (5) business days prior to the Closing (as
defined in Section 6.2 hereinafter), the Parties shall cause the
formation of Medusa Spar LLC by filing a certificate of formation
(hereinafter referred to as the "LLC Formation Document") with the
Secretary of State of the State of Delaware pursuant to the
Delaware Limited Liability Company Act. The LLC Formation Document
shall be in the form of, and shall contain the terms, conditions
and provisions as are more particularly set forth in, Exhibit B
attached hereto and is made a part hereof. As used in this
Agreement, the term "business day" shall mean any day other than a
Saturday, Sunday or legal holiday on which banks in New Orleans,
Louisiana are open for the conduct of a substantial part of their
commercial banking business.
(b) Xxxxxx, Xxxxxx and OII shall each be a "Member" of Medusa Spar
LLC. OII shall have a membership interest in Medusa Spar LLC of
50%, Xxxxxx shall have a membership interest in Medusa Spar LLC of
40%, and Callon shall have a membership interest in Medusa Spar
LLC of 10%.
(c) At the Closing, the Members shall execute an agreement
memorializing the affairs of Medusa Spar LLC and the conduct of
its business (the "LLC Agreement"). The LLC Agreement shall be in
the form of, and contain the terms, conditions and provisions as
are more particularly set forth in, Exhibit C attached hereto and
made a part hereof.
1.2 Initial Capital Contributions.
(a) At the Closing, each of the Members shall make an initial capital
contribution (the "Initial Capital Contribution") to Medusa Spar
LLC as follows:
(i) Xxxxxx shall assign and transfer to Medusa Spar LLC: an
undivided sixty percent (60%) ownership in the Medusa Spar,
free and clear of any liens, charges or other encumbrances,
except for the lien and security interest granted pursuant to
Section 6.3 of the Medusa JOA, which assignment (the "Xxxxxx
Assignment") shall be in the form of, and contain such terms,
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conditions and provisions as are more particularly set forth
in, Exhibit D attached hereto and made a part hereof;
(ii) Callon shall assign and transfer to Medusa Spar LLC: an
undivided fifteen percent (15%) ownership in the Medusa Spar,
free and clear of any liens, charges or other encumbrances,
except for (A) the lien and security interest granted pursuant
to Section 6.3 of the Medusa JOA, and (B) the Callon Third
Party Encumbrances (as defined hereinafter), which assignment
(the "Callon Assignment") shall be in the form of, and contain
such terms, conditions and provisions as are more particularly
set forth in, Exhibit E attached hereto and made a part
hereof; and
(iii) OII shall assign and transfer to Medusa Spar LLC a cash
amount (the "OII Initial Capital Cash Contribution") equal to
$83,625,000.00, less the sum of (A) 50% of the amount of the
Non-Recourse Financing, (B) $120,000.00 incurred by OII for
out-of-pocket expenses for due diligence, and (C) $30,000.00
incurred by OII for the fees and costs for independent
engineers retained by OII to provide the certification set
forth in Section 6.1(a)(vii), as evidenced by applicable
documentation that is acceptable to Xxxxxx and Callon in all
reasonable respects.
(iv) Each Member shall contribute its percentage share of the
required initial working capital as determined by unanimous
vote of the Members.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF XXXXXX AND CALLON
2.1 Representations and Warranties.
Except as otherwise stated in this Article II, Xxxxxx and Callon hereby
respectively represent and warrant, each as to itself, to OII, as
of the Effective Date and as of the Closing, that:
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(a) Xxxxxx is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Xxxxxx has
the power to execute, deliver and perform this Agreement and to
own its undivided interest in the Medusa Spar.
(b) Callon is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Callon has
the power to execute, deliver and perform this Agreement and to
own its undivided interest in the Medusa Spar.
(c) Each of Xxxxxx and Callon has all requisite authority to execute
and deliver this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary formal action on the part of
Xxxxxx and Callon. No vote of, or consent by, the holders of any
class or series of stock or other equity issued by Xxxxxx or
Callon is necessary to authorize the execution and delivery by
Xxxxxx or Callon of this Agreement or the consummation by it of
the transactions contemplated herein. This Agreement has been duly
executed and delivered by Xxxxxx and Callon and constitutes the
legal, valid and biding obligation of Xxxxxx and Callon,
enforceable against each such Party in accordance with its terms,
except as the enforcement hereof may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium and other similar laws now
or hereafter in effect relating to creditors' rights generally and
(b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
(d) Neither Xxxxxx nor Callon nor any of its subsidiaries has entered
into any agreement or arrangement entitling any agent, broker,
investment banker, financial advisor or other firm or entity to
any broker's or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated in
this Agreement, except for any fees associated with the
Non-Recourse Financing.
(e) Xxxxxx and Callon, each as to its own interest, have valid and
merchantable title in and to an undivided seventy-five percent
(75%) ownership interest in and to the Medusa Spar (the
"Xxxxxx/Callon Spar Interest").
(f) The Xxxxxx/Callon Spar Interest is free and clear of any liens,
charges or other encumbrances of any kind whatsoever, other than
(i) the liens and security interests granted by Xxxxxx and Callon
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pursuant to Section 6.3 of the Medusa JOA, (ii) the lien and
privilege being claimed by Xxxxx Contracting, LP d/b/a Bay Ltd.
which is more particularly described in (A) that certain Statement
of Privilege recorded in the records of Plaquemines Parish,
Louisiana, in MOB 370, page 228, under Entry No. 03004606, as
amended by that certain Amendment to Statement of Privilege
recorded in the records of Plaquemines Parish, Louisiana, in MOB
372, page 531, under Entry No. 03005125, (B) that certain UCC-1
financing statement filed in the UCC records of Plaquemines
Parish, Louisiana, under Original File No. 00-00-000, as amended,
(C) that certain UCC-1 financing statement filed with the Delaware
Department of State, UCC Filing Section, under Initial Filing
Number 3164184 7, as amended, and (D) that certain Statement of
Privilege and UCC-1 financing statement filed with the Minerals
Management Service on June 27, 2003, as amended (the "Bay Lien"),
which Bay Lien will be released on or before August 29, 2003, and
(iii) the liens and security interests granted by Callon (the
"Callon Third Party Encumbrances") disclosed on Exhibit "F"
attached hereto and made a part hereof, which Callon Third Party
Encumbrances burdening Xxxxxx'x undivided fifteen percent (15%)
ownership interest in and to the Medusa Spar and the right to
dedicate Xxxxxx'x working interest production from the Dedicated
Blocks for handling on the Medusa Spar will be released or
subordinated at or prior to the Closing.
(g) The Medusa Spar and production risers have been operated and
maintained by Xxxxxx on behalf of the working interest owners
under the Medusa JOA in a safe and workmanlike manner in
accordance with all applicable laws and regulations and the
generally accepted standards of petroleum industry practices for a
prudent operator.
(h) The installation of the export pipelines attached to the Medusa
Spar has been completed and, to the best of Xxxxxx'x and Xxxxxx'x
knowledge, have been operated and maintained by Shell Pipeline
Company LP and VK Deepwater Gathering Company LLC in a safe and
workmanlike manner in accordance with all applicable laws and
regulations and the generally accepted standards of petroleum
industry practices for a prudent operator. As used in this
Agreement, "knowledge" means the actual (and not constructive or
imputed) knowledge of an officer of Xxxxxx or Callon, as the case
may be.
(i) Xxxxxx has obtained and maintained in force and effect all
licenses, permits, franchises, consents, privileges and other
authorizations issued by any government or authority having
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jurisdiction related to the ownership and operation of the Medusa
Spar.
(j) Xxxxxx, as operator under the Medusa JOA, represents that, except
for the amount being claimed with respect to the Bay Lien, all
amounts due and payable to manufacturers, suppliers or contractors
that constructed, equipped or installed the Medusa Spar or that
otherwise provided goods, supplies or services in relation to the
Medusa Spar have been paid.
(k) Xxxxxx and Callon have provided to OII all material documents,
contracts and agreements relating to the transfer of the
Xxxxxx/Callon Spar Interest.
(l) All obligations or requirements under the Medusa JOA or any other
applicable agreement or document have been satisfied in order to
mortgage, pledge or otherwise encumber the Xxxxxx/Callon Spar
Interest.
(m) Xxxxxx and Callon has each paid as due all charges authorized
under the Medusa JOA, and Xxxxxx and Callon, each as to itself,
has not received a notice that it is in default for non-payment of
any such charges pursuant to Section 6.4 of the Medusa JOA.
(n) Xxxxxx, as operator under the Medusa JOA, has paid as due (a)
rentals, royalties and other fees as required under Section 19.2
of the Medusa JOA, and (b) taxes and assessments as required under
Article 20 of the Medusa JOA and Callon, as non-operator has paid
any such charge that has been billed pursuant to the Medusa JOA.
(o) Except for (i) the liens and security interests granted by Xxxxxx
and Callon pursuant to Section 6.3 of the Medusa JOA, (ii) the
Callon Third Party Encumbrances, (iii) the Bay Lien, which will be
released on or before August 29, 2003, and (iv) the Non-Recourse
Financing contemplated in this Agreement, neither Xxxxxx nor
Callon shall have allowed any lien, charge or other encumbrance to
attach to or burden its interest under the Medusa JOA, its working
interests in the Dedicated Blocks, or its share of hydrocarbon
production from the Dedicated Blocks.
(p) Neither Xxxxxx nor Callon shall have (i) assigned, or otherwise
transferred, all or any portion of its rights or obligations under
the Medusa JOA, (ii) made a non-consent election under the Medusa
JOA that would reduce its interest or rights in or to the Medusa
Spar, (iii) proposed or elected to withdraw from the Medusa JOA,
or (iv) made any dedication of the reserves in and under the
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Dedicated Blocks to any processing agreement other than those
agreements contemplated herein.
(q) Except for the Bay Lien, which will be released on or before
August 29, 2003, there are no claims, demands, litigation,
arbitrations, or other proceedings on-going, pending or threatened
in writing in relation to the Dedicated Blocks.
(r) The Medusa JOA is in full force and effect. Except for the Bay
Lien, which will be released on or before August 29, 2003, there
are no claims, demands, litigation, arbitrations, or other
proceedings on-going, pending or threatened in writing in relation
to the Medusa JOA or the Medusa Spar.
(s) The Medusa Spar does not constitute "qualified property" within
the meaning of Section 168(k)(2) of the United States Internal
Revenue Code.
(t) Except for the representations and warranties expressly contained
in this Article II, neither Xxxxxx nor Callon nor any other person
or entity acting on behalf of Xxxxxx or Callon makes any
representation or warranty, express or implied.
2.2 Covenants.
Prior to the Closing:
(a) Xxxxxx and Callon shall use their good faith efforts to obtain the
right to provide OII promptly after provision or receipt, but
without duplication, with a copy of any proposal or notice of any
type, including, without limitation, AFEs, Plans and Budgets,
given or received pursuant to the Medusa JOA that relates to or
may affect, directly or indirectly, the ownership, operation, use
or condition of the Medusa Spar or that relates to or may affect,
directly or indirectly, Xxxxxx'x or Xxxxxx'x rights in or to the
Medusa Spar.
(b) Prior to casting a vote, making an election, granting or
withholding approval, or otherwise taking any action pursuant to
the Medusa JOA which relates to or may affect, directly or
indirectly, the ownership, operation, use or condition of the
Medusa Spar or that relate to or may affect, directly or
indirectly, Xxxxxx'x or Xxxxxx'x rights in or to the Medusa Spar,
Xxxxxx and Callon shall each consult with OII.
(c) Xxxxxx and Callon shall each use its commercially reasonable
efforts not to take any action that would have a direct adverse
effect on the ownership, operation, use or condition of the Medusa
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Spar, other than such actions relating to human health, safety,
the environment or otherwise that would be taken by a prudent
operator under generally accepted standards of petroleum industry
practices.
(d) Xxxxxx and Callon shall, but without duplication, promptly notify
OII of all material developments related to the Medusa Spar. As
used in this Section 2.2 (d), "material" means one or more events,
occurrences, changes or effects which, individually or in the
aggregate, has had or could be reasonably expected to have an
adverse effect or impact on any Party's ability to consummate the
transactions contemplated by this Agreement, in accordance with
the terms of this Agreement.
(e) Xxxxxx and Callon shall, but without duplication, promptly notify
OII of any on-going, pending or threatened claim, demand,
litigation, arbitration or other proceeding related to the federal
oil and gas leases covered by the Medusa JOA, the Medusa JOA, or
the Medusa Spar.
(f) Xxxxxx, Xxxxxx and OII shall each execute and deliver at the
Closing such documents as may be required by lenders in order to
obtain the Non-Recourse Financing.
(g) Xxxxxx and Callon shall obtain the release of the Bay Lien on or
before August 29, 2003.
(h) Xxxxxx and Callon shall each use its reasonable efforts to obtain
on or before August 29, 2003, a written amendment to the Medusa
JOA, signed by Xxxxxx, Xxxxxx and BBD, and approved by OII,
evidencing to the reasonable satisfaction of all Parties hereto,
BBD's approval of the transactions contemplated by this Agreement
(the "BBD Approval").
(i) Neither Xxxxxx or Callon shall claim (directly or indirectly) any
additional allowance for depreciation under Section 168(k) of the
United States Internal Revenue Code with respect to the Medusa
Spar.
(j) Xxxxxx and Callon shall each cause its representations and
warranties to be true, correct and accurate in all respects as of
the Closing, and neither shall take any action that would cause a
representation and warranty to be untrue, incorrect or inaccurate.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF OII
OII represents and warrants to Xxxxxx and Callon, as of the
Effective Date and as of the Closing, that:
3.1 Organization of OII.
OII is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. OII has the corporate power to
own, lease and operate its properties and to carry on its business as now being
conducted.
3.2 Authority.
OII has all requisite authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary formal action on the part of OII. No vote of, or
consent by, the holders of any class or series of stock or other equity issued
by OII is necessary to authorize the execution and delivery by OII of this
Agreement or the consummation by it of the transactions contemplated herein.
This Agreement has been duly executed and delivered by OII and constitutes the
legal, valid and binding obligation of OII, enforceable against OII in
accordance with its terms, except as the enforcement hereof may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
3.3 Availability of Funds.
OII currently has access to sufficient immediately available funds in
cash or cash equivalents and will at the Closing have sufficient immediately
available funds, in cash, to pay the OII Initial Capital Cash Contribution and
to pay any other amounts payable pursuant to this Agreement and to effect the
transactions contemplated in this Agreement.
3.4 Brokers or Finders.
Neither OII nor any of its subsidiaries has entered into any agreement
or arrangement entitling any agent, broker, investment banker, financial advisor
or other firm or entity to any broker's or finder's fee or any other commission
or similar fee (collectively, "Commissions") in connection with any of the
transactions contemplated in this Agreement other than Convergent Energy Group
LLC (hereinafter referred to as "OII's Broker") which has heretofore acted, and
shall hereafter continue to act, for and on behalf of OII. OII represents and
warrants to Xxxxxx and Callon that there will be no Commissions payable by
Xxxxxx and/or Callon in connection with this Agreement or any of the
transactions contemplated by this Agreement by reason of any dealings,
negotiations or communications with OII's Broker.
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ARTICLE IV
FINANCING AND OTHER MATTERS
4.1 Deemed Value.
As used in this Agreement, the term "Deemed Value" shall mean
$167,250,000.00.
4.2 Commitment for Non-Recourse Financing.
The Parties intend to obtain the Non-Recourse Financing for Medusa Spar
LLC in an amount equal to 50% of Deemed Value. Collateral for the Non-Recourse
Financing may include a security interest in the Parties' interests in Medusa
Spar LLC, as well as accounts receivable, contracts, cash accounts, guarantees,
insurances, pledges and cash flows of Medusa Spar LLC. The terms and conditions
of the Non-Recourse Financing shall require the unanimous approval by all of the
Parties. Should the Parties, despite the good-faith efforts of the Parties, be
unable to obtain a written commitment letter (or similar document) for the
Non-Recourse Financing by not later than September 30, 2003, then any Party may
terminate this Agreement by providing written notice thereof to the other
Parties, but only if the Party wishing to terminate this Agreement is not in
material breach of this Agreement, and upon such termination, the Parties hereto
shall have no further obligation or liability to each other hereunder. If the
commitment letter (or similar document) for the Non-Recourse Financing is not
obtained because of a Party's material breach of this Agreement, the other
Parties shall be entitled to all remedies which they may have at law or in
equity.
4.3 Costs Prior to the Closing.
Xxxxxx and Callon will be responsible for the payment of all costs
incurred in connection with their combined undivided 75% interest in the Medusa
Spar prior to the Closing.
4.4 BBD Approval.
If the BBD Approval is not obtained on or before August 29, 2003, then
any Party may terminate this Agreement by providing written notice thereof to
the other Parties, but only if the Party wishing to terminate this Agreement is
not in material breach of this Agreement.
4.5 Release of the Bay Lien.
If the Bay Lien is not released on or before August 29, 2003, then any
Party may terminate this Agreement by providing written notice thereof to the
other Parties, but only if the Party wishing to terminate this Agreement is not
in material breach of this Agreement.
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ARTICLE V
MEDUSA SPAR OPERATING AND PRODUCTION HANDLING AGREEMENT
5.1 Medusa Spar Operating and Production Handling Agreement.
At the Closing, Murphy, Callon, OII and Medusa Spar LLC will enter into
an agreement pursuant to which, among other things: (i) the Parties will agree
on the manner in which the rights and obligations under the Medusa JOA related
to the Medusa Spar will be exercised and fulfilled, (ii) Xxxxxx will operate the
Medusa Spar, (iii) Xxxxxx and Callon will dedicate for handling on the Medusa
Spar, and Medusa Spar LLC will handle, the production of Xxxxxx and Callon from
the Dedicated Blocks as listed on Exhibit "A" attached hereto, and (iv) Medusa
Spar LLC may handle on the Medusa Spar third party production (the "Medusa Spar
Operating and Production Handling Agreement"). The Medusa Spar Operating and
Production Handling Agreement shall be in the form of Exhibit G attached hereto
and made a part hereof.
ARTICLE VI
CLOSING
6.1 Closing Conditions.
(a) As used in this Agreement, the term "Closing Conditions
Satisfaction Date" shall mean the first date on which all of the
following conditions have been satisfied:
(i) the EPCI Contract shall have been completed, or substantially
completed, as the case may be, and Xxxxxx and Callon shall
have either finally accepted the Medusa Spar and production
risers from the applicable contractors, or, in the case of
such substantial completion, such final acceptance shall be
conditioned on the completion of minor or inconsequential
matters that remain to be finished, and/or the correction of
minor defects or errors in the work on the Medusa Spar that
need to be remedied;
(ii) the export pipelines from the Medusa Spar shall have been
accepted and placed in operation by Shell Oil Pipeline LC and
VK Deepwater Gathering Company LLC ;
(iii) all permits and authorizations required for the operation of
the Medusa Spar, production risers and pipelines shall have
been obtained;
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(iv) Xxxxxx and Callon shall have conducted production operations
through the Medusa Spar for a period of not less than ten (10)
days after the first date of such production operations
without significant interruption or underperformance due to
equipment problems;
(v) no material default by Xxxxxx, Xxxxxx or OII shall have
occurred and be continuing under (a) this Agreement, (b) any
lease or operating agreement for any of the Dedicated Blocks
listed on Exhibit "A" or (c) any construction or installation
contract for the construction or installation of the Medusa
Spar, production risers, or related export pipelines;
(vi) there are no claims, demands, litigation, arbitrations, or
other proceedings on-going, pending or threatened in writing
in relation to the transactions contemplated by this
Agreement;
(vii) Medusa Spar LLC shall have received a certification from
independent engineers retained by OII that the matters
described in items (i) through (iv) and (v) (c) above have
occurred, unless waived by OII;
(viii) Medusa Spar LLC shall have received a certification from
Xxxxxx and Callon that the conditions described in items (i)
through (vi) have occurred, which certification shall be in
the form of, and shall contain such terms, conditions and
provisions as are more particularly set forth in, Exhibit H
attached hereto and made a part hereof;
(ix) Xxxxxx, Xxxxxx and OII and/or Medusa Spar LLC shall have
entered into a credit agreement (or similar financing
document) for the Non-Recourse Financing;
(x) the leases for the Dedicated Blocks shall be in full force and
effect;
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(xi) the Callon Third Party Encumbrances shall have been released
or subordinated as represented in Section 2.1(f).
Each Party shall use commercially reasonable efforts to cause the
conditions set out above to be satisfied in an expeditious manner, and
no Party shall take any action that would cause the conditions not to
be satisfied.
(b) In addition to the satisfaction of the conditions set out in
Section 6.1(a), the obligation of OII to proceed with Closing is
subject to the satisfaction at 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, by OII:
(i) Xxxxxx and Callon shall each have complied in all respects
with each of its covenants contained in this Agreement, and
each representation and warranty contained in Section 2.1
shall be true, correct and accurate;
(ii) OII shall have received a certificate, dated as of Closing,
of an officer of each of Xxxxxx and Callon certifying as to
the matters specified in Section 6.1(b)(i);
(iii) the matters set out in Section 6.2(b) shall have occurred;
(iv) the Bay Lien shall have been released; and
(v) the BBD Approval shall have been obtained.
(c) In addition to the satisfaction of the conditions set out in
Section 6.1(a), the obligation of each of Xxxxxx and Callon to
proceed with Closing is subject to the satisfaction at 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, by Xxxxxx or Callon:
(i) OII shall have complied in all respects with each of its
covenants contained in this Agreement, and each representation
and warranty of OII contained in Section 3.1 shall be true,
correct and accurate;
(ii) Xxxxxx and Callon shall each have received a certificate,
dated as of Closing, of an officer of
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OII certifying as to the matters specified in Section
6.1(c)(i);
(iii) the matters set out in Section 6.2(b) shall have occurred;
(iv) the Bay Lien shall have been released; and
(v) the BBD Approval shall have been obtained.
(d) To the extent that a matter set out in Section 6.2(b) is within
the control of OII, and neither Xxxxxx or Callon is in breach of
this Agreement and both are ready, willing and able to perform,
OII shall use its best efforts to cause the matter to occur. To
the extent that a matter set out in Section 6.2(b) is within the
control of Xxxxxx or Callon, and OII is not in breach of this
Agreement and is ready, willing and able to perform, Xxxxxx and
Callon shall each use its best efforts to make the matter occur.
6.2 Closing.
(a) The closing of the transactions contemplated by this Agreement
(the "Closing") shall occur on a date that is not later than the
fifth (5th) business day after the Closing Conditions Satisfaction
Date. The Closing shall be held at such location, and on such date
(the "Closing Date"), as may be specified by written notice from
Xxxxxx to Callon and OII not less than three (3) days prior to the
Closing Date. If Closing has not occurred on or before December
15, 2003 despite the good-faith efforts of the Parties, any Party
may terminate this Agreement by providing written notice thereof
to the other Parties, but only if the Party wishing to terminate
this Agreement is not in material breach of this Agreement. If the
Closing does not occur because of a Party's material breach of
this Agreement or because of a Party's failure or refusal to close
that is not permitted by the terms of this Agreement, the other
Parties shall be entitled to all remedies which they may have at
law or in equity.
(b) On the Closing Date, the Closing shall take place as follows:
(i) Xxxxxx, Xxxxxx and OII shall execute the LLC Agreement and, by
virtue of the execution of the Xxxxxx Assignment by Xxxxxx and
the Callon Assignment by Callon, Murphy and Callon shall make
their respective Initial Capital Contributions to Medusa Spar
LLC as set forth in Section 1.2(a) (i) and (ii) above;
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(ii) OII shall pay to Medusa Spar LLC the OII Initial Capital Cash
Contribution as specified in Section 1.2 (a)(iii) above;
(iii) Xxxxxx, Xxxxxx and OII shall execute and/or deliver such
documents as may be required to obtain the Non-Recourse
Financing;
(iv) the Non-Recourse Financing shall fund;
(v) Murphy, Callon, OII and Medusa Spar LLC shall execute the
Medusa Spar Operating and Production Handling Agreement; and
(vi) Medusa Spar LLC will distribute the sum of the OII Initial
Capital Cash Contribution and the funds received from the
Non-Recourse Financing to Xxxxxx and Callon in the respective
proportions of 80% and 20%.
(c) At the Closing, Xxxxxx and Callon shall each deliver to OII:
(i) a Secretary's Certificate or Assistant Secretary's Certificate
certifying as to the due authorization of the signatory to the
documents signed at the Closing; and
(ii) the certificate contemplated by Section 6.1(b)(ii).
(d) At the Closing, OII shall deliver to each of Xxxxxx and Callon:
(i) a Secretary's Certificate or Assistant Secretary's Certificate
certifying as to the due authorization of the signatory to the
documents signed at the Closing; and
(ii) the certificate contemplated by Section 6.1(c)(ii).
6.3 Medusa Spar Contractors and Suppliers.
Any amounts payable to manufacturers, suppliers or contractors that
constructed, equipped or installed the Medusa Spar or that otherwise provided
goods, supplies or services in relation to the Medusa Spar shall remain the
responsibility of Xxxxxx and Callon and shall be paid by Xxxxxx and Callon when
due, provided that, subject to Sections 2.2(g), 4.5, 6.1(b)(iv) and 6.1(c)(iv),
the amount being claimed with respect to the Bay Lien shall not be paid until
the amount in dispute has been resolved to the satisfaction of all parties
having an interest in such
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dispute, including, without limitation, Xxxxxx and Xxxxxx. Xxxxxx and Callon
will provide evidence satisfactory to OII of full payment of all such amounts.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
7.1 Survival of Representations and Warranties.
All of the Parties' representations, warranties, covenants, and
agreements in this Agreement or in any certificate or instrument delivered
pursuant to this Agreement shall survive the Closing of the transactions
contemplated in this Agreement.
7.2 Indemnification by Transaction Parties.
Each of the Parties (a "Transaction Indemnifying Party") shall
reimburse, indemnify, defend and hold harmless the other Parties from and
against any and all claims, demands, lawsuits, liabilities, judgments, damages,
awards, fines, costs, expenses, fees, penalties, deficiencies, losses, amounts
paid or incurred in defense and/or settlement and related expenses, including
without limitation interest, court and other legal proceeding costs, reasonable
fees of attorneys, accountants, and other experts or other expenses of
litigation or other proceedings or of any claim, default or assessment
(collectively, "Losses") incurred by each of the other Parties, and its and
their officers, directors, employees, and agents (a "Transaction Indemnified
Party"), in each case net of insurance proceeds if and when received by such
Transaction Indemnified Party in connection with such Losses, directly or
indirectly as a result of any of the following events (an "Indemnification
Event"):
(a) any inaccuracy in, or breach of, a representation or warranty of
the Transaction Indemnifying Party contained herein (or in any
certificate or instrument delivered by the Transaction
Indemnifying Party pursuant to this Agreement);
(b) any failure by the Transaction Indemnifying Party to perform or
comply with any of its covenants or agreements contained herein;
and/or
(c) third party claims related to ownership, operation, use, or
condition of the Medusa Spar prior to Closing, regardless of when
any such claim arises, in which case Xxxxxx and Callon shall each
be a Transaction Indemnifying Party, and Medusa Spar LLC and OII,
and its and their officers, directors, employees and agents, shall
be the Transaction Indemnified Party;
provided, however, that no indemnification shall be owed by a Transaction
Indemnifying Party to a Transaction Indemnified Party under this Section 7.2,
and no amount of indemnity shall be payable by a Transaction Indemnifying Party
in the case of a claim by any Transaction Indemnified Party under this Section
7.2, unless and until an Indemnified Event has occurred and
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is continuing for a period of thirty (30) business days after written notice
thereof given by the Transaction Indemnified Party to the Transaction
Indemnifying Party in accordance with Section 8.1 of this Agreement.
7.3 Matters Involving Third Parties.
(a) If any third party shall notify any Party entitled to
indemnification under Section 7.2 (the "Indemnified Party") with
respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against any other Party hereto (the
"Indemnifying Party") under this Article VII, then the Indemnified
Party shall promptly notify (and in any event by the sooner to
occur of (i) 10 days after receipt of notice by it, and (ii) five
days prior to the date a responsive pleading is due (which
notification shall be made by either facsimile or overnight
delivery pursuant to Section 8.1 hereof) each Indemnifying Party
thereof in writing; provided, however, that no delay on the part
of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder
unless (and then solely to the extent) the Indemnifying Party
thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of
its choice reasonably satisfactory to the Indemnified Party so
long as (i) the Indemnifying Party promptly notifies the
Indemnified Party in writing that the Indemnifying Party will
indemnify the Indemnified Party, to the extent indemnification is
provided for under Section 7.2, (ii) the Indemnifying Party
provides the Indemnified Party with evidence reasonably acceptable
to the Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim and
fulfill its indemnification obligations hereunder, and (iii) the
Indemnifying Party conducts the defense of the Third Party Claim
actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 7.3(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost
and expense and participate in the defense of the Third Party
Claim, (ii) the Indemnified Party will not consent to the entry of
any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnifying Party (which consent shall not unreasonably be
withheld), (iii) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to
the Third Party Claim unless a written agreement is obtained
releasing the Indemnified Party from all liability thereunder,
(iv) the Indemnifying Party will
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not consent to the entry of any judgment or enter into any
settlement with respect to a Third Party Claim, which involves an
injunction or other equitable relief, without the consent of the
Indemnified Party, which consent will not be unreasonably
withheld, and (v) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to
a Third Party Claim which will, in the good faith judgment of the
Indemnified Party, likely establish a precedential custom or
practice adverse to the continuing business interests of the
Indemnified Party.
(d) In the event any of the conditions in Section 7.3(b) above is or
becomes unsatisfied, however, (i) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into
any settlement with respect to, the Third Party Claim in any
manner it may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party
in connection therewith), (ii) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the
costs of defending against the Third Party Claim (including
attorneys' fees and expenses), provided that the Third Party Claim
is subject to indemnification under Section 7.2 and (iii) the
Indemnifying Parties will remain responsible for any Losses the
Indemnified Party may incur to the extent provided in Section 7.2.
7.4 Limitation on Damages.
Except for such damages that must be paid by an Indemnified Party to a
third party, no Party shall be entitled to indemnification under this Article
VII for incidental, indirect, consequential, exemplary or punitive damages;
provided, however that it is understood and agreed that diminution in value of
the Medusa Spar shall constitute actual damages.
7.5 Exclusive Remedies.
The remedies provided in this Article VII constitute the sole and
exclusive remedies available to each of the Parties for recoveries against the
other Parties for breaches or failures to comply with or non-fulfillments of the
representations, warranties, covenants and agreements of this Agreement or in
any certificate or document furnished to any of the Parties by any other Party
pursuant to this Agreement except that nothing in this Agreement shall limit the
right of a Party to pursue any appropriate remedy at equity, including specific
performance for breach of any of the covenants of any other Party contained
herein or rescission based upon allegations of fraud or willful misconduct in
connection with this Agreement.
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ARTICLE VIII
GENERAL PROVISIONS
8.1 Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given when delivered by hand, or when sent by electronic
facsimile transmission (with acknowledgement of complete transmission), or on
the first business day after delivery to any overnight commercial delivery
service, freight prepaid, or fourteen (14) days after being mailed by registered
or certified mail (return receipt requested), postage prepaid, and addressed to
the Parties at the following addresses (or at such other address for a Party as
shall be specified by like notice):
(a) if to Xxxxxx, to:
Xxxxxx Exploration & Production Company-USA
000 Xxxxx Xxxxxxxxx, Xxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, General Manager-Land
Facsimile: 000-000-0000
(b) if to Callon, to:
Xxxxxx Petroleum Operating Company
000 Xxxxx Xxxxx Xxxxxx, Xxxxxxx, XX 00000
Attention: Xxx X. Xxxxxx, Land Manager
Facsimile: 000-000-0000
(c) if to OII, to
Oceaneering International, Inc.
00000 XX 000, Xxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxx, Vice President and General Manager-MOPS
Facsimile: 000-000-0000
8.2 Expenses.
In the event the transactions contemplated in this Agreement are not
consummated, all fees and expenses incurred in connection with the transactions
contemplated in this Agreement including, without limitation, all legal,
accounting, financial advisory, consulting and all other fees and expenses of
third parties ("Third Party Expenses") incurred by a Party in connection with
the negotiation and implementation of the terms and conditions of this Agreement
and the transactions contemplated hereby, shall be the obligation of the
respective Party incurring such fees and expenses, provided, however, that in
the event the transactions contemplated by this Agreement are not consummated as
a result of the willful misconduct of any of the Parties (which willful
misconduct shall not include failure of a condition to be satisfied where such
Party has used reasonable commercial efforts to satisfy such condition), and in
addition to all other remedies at law and in equity, then the Party who has
committed such
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willful misconduct will reimburse to the other Parties all such xxxx Party
Expenses incurred in connection with such transactions immediately upon demand
therefor.
8.3 Interpretation.
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. The term "Person" means any individual, corporation, partnership,
association, trust, limited liability company or partnership, unincorporated
organization, joint venture, other legal entity or group.
8.4 Counterparts.
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the Parties and
delivered to the other Parties, it being understood that all Parties need not
sign the same counterpart.
8.5 Entire Agreement; Assignment.
This Agreement, the schedules and Exhibits hereto, and the documents
and instruments and other agreements among the Parties hereto referenced herein:
(a) constitute the entire agreement among the Parties with respect to the
subject matter hereof and supersede all prior agreements (including that certain
Medusa Spar Ownership and Operation Letter of Intent, dated April 29, 2003, as
amended, among Xxxxxx, Xxxxxx and OII) and understandings, both written and
oral, among the Parties with respect to the subject matter hereof; (b) are not
intended to confer upon any other person any rights or remedies hereunder; and
(c) shall not be assigned by operation of law or otherwise except as otherwise
specifically provided, or with the written consent of each of the other Parties
hereto.
8.6 Severability.
In the event that any provision of this Agreement, or the application
thereof, becomes or is declared by a court of competent jurisdiction to be
illegal, void or unenforceable, the remainder of this Agreement will continue in
full force and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
Parties hereto. The Parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of
such void or unenforceable provision.
8.7 Governing Law; Jurisdiction; Venue.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Louisiana excluding any provisions of Louisiana
conflicts of law which would require application of the substantive laws of
another jurisdiction. Such law shall govern the validity, interpretation,
performance and breach of this Agreement. The Parties agree that any action,
proceeding or suit seeking to enforce any provision of, or based on any rights
of the Parties arising out of, this Agreement shall be brought in the Courts of
the State of Louisiana,
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and further agree the United States District Court for the Eastern District of
Louisiana shall have exclusive jurisdiction to hear and determine any suit to
enforce the rights of the Parties under this Agreement. Each of the Parties
consents to the jurisdiction of such court (and of the appropriate Appellate
Courts), in an any such action, claim or proceeding and waives any objection to
venue. Each of the Parties further agrees that process may be served upon them
in any manner authorized by the laws of the State of Louisiana for such persons,
and waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction and venue and such process. Further, in the
event jurisdiction is denied in the United States District Court for the Eastern
District of Louisiana, the Parties agree that any action, proceeding or suit may
be brought against any of the Parties in the 24th Judicial District Court for
the Parish of Jefferson, State of Louisiana, and each of the Parties consents to
the jurisdiction of such Court (and of the appropriate Appellate Courts) in any
such action or proceeding and waives and covenants not to assert or plead any
objection which they might otherwise have to such jurisdiction and venue.
8.8 Rules of Construction.
The Parties hereto agree that they have been represented by counsel
during the negotiation and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document will be construed against the
Party drafting such agreement or document.
8.9 Survival.
Articles VII and VIII shall survive termination of this Agreement.
8.10 Medusa JOA.
Each of the Parties hereto recognize that the Medusa Spar is subject
to, and is operated under the Medusa JOA. If any of the terms, conditions or
provisions in this Agreement, or in any document or agreement executed pursuant
to this Agreement, conflicts with any of the terms, conditions or provisions of
the Medusa JOA as they affect a working interest owner under the Medusa JOA that
is not a Party to this Agreement, the terms, conditions and provisions of the
Medusa JOA shall be controlling in application to such working interest owner.
8.11 News Releases.
The Parties hereto shall use reasonable efforts to unanimously agree
upon the timing and content of releases to the news media covering the signing
of this Agreement and/or the occurrence of the Closing. However, in the event
the Parties cannot unanimously agree upon either the timing and/or the content
of the news release within two (2) business days of such proposed news release,
then the Party proposing such news release shall be entitled to issue the news
release as so proposed.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, Xxxxxx has caused this Agreement to be signed by its duly
authorized officer, on the date set forth below, to be effective as of the
Effective Date.
XXXXXX EXPLORATION & PRODUCTION COMPANY-USA
BY:
--------------------------------------------
NAME:
TITLE:
DATE:
--------------------------------------
22
IN WITNESS WHEREOF, Callon has caused this Agreement to be signed by its duly
authorized officer, on the date set forth below, to be effective as of the
Effective Date.
XXXXXX PETROLEUM OPERATING COMPANY
BY:
--------------------------------------------
NAME: XXXXXX X. XXXXXXXXX
XXXXX: CHIEF OPERATING OFFICER
DATE: AUGUST 7, 2003
23
IN WITNESS WHEREOF, OII has caused this Agreement to be signed by its duly
authorized officer, on the date set forth below, to be effective as of the
Effective Date.
OCEANEERING INTERNATIONAL, INC.
BY:
----------------------------------------------
NAME: T. XXX XXXXXXX
TITLE: PRESIDENT AND CHIEF OPERATING OFFICER
Date:
----------------------------------------
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