ACQUISITION AND DISTRIBUTION AGREEMENT
THIS ACQUISITION AND DISTRIBUTION AGREEMENT (this "AGREEMENT") is made
and entered into as of this 4th day of May 1998, by and between Texoil, Inc., a
Nevada corporation ("TEXOIL"), Cliffwood Oil & Gas Corp., a Texas corporation
(the "GENERAL PARTNER"), and Cliffwood Acquisition - 1996 Limited Partnership, a
Texas limited partnership (the "PARTNERSHIP").
RECITALS:
A. The Partnership was formed in 1996 and is governed by that certain
Agreement of Limited Partnership dated as of September 27, 1996, as amended (the
"PARTNERSHIP AGREEMENT"). The General Partner is the sole general partner of the
Partnership. The limited partners of the Partnership are EnCap Equity 1996
Limited Partnership, a Texas limited partnership ("ENCAP LP"), and Energy
Capital Investment Company PLC, an English investment company ("ECIC")
(individually, a "LIMITED PARTNER" and collectively, the "LIMITED PARTNERS").
B. Texoil, the General Partner and the Partnership deem in it in their
mutual best interests to enter into the transaction contemplated hereby. As
provided more particularly herein, the transaction contemplated hereby
essentially has two components: (i) an in-kind distribution to the General
Partner by the Partnership of the General Partner's interest in the
Partnership's oil and gas properties and related assets; and (ii) a sale by the
Partnership to Texoil of the remaining portion of the Partnership's interest in
such oil and gas properties and related assets.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual covenants and agreements contained herein, the parties hereto do hereby
agree as follows:
ARTICLE I
DEFINITIONS AND REFERENCES
SECTION 1.1. CERTAIN DEFINED TERMS. When used in this Agreement, the
following terms shall have the respective meanings assigned to them in this
SECTION 1.1 or in the sections, subsections or other subdivisions referred to
below:
"AGREEMENT" shall mean this Agreement, as hereafter changed, amended or
modified in accordance with the terms hereof.
"CASH PORTION" shall have the meaning assigned to such term in ARTICLE
III.
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"CLOSING" and "CLOSING DATE" shall have the respective meanings assigned
to such terms in SECTION 6.1.
"COMMON STOCK" shall mean shares of Texoil common stock, $.01 par value
per share.
"ECIC" shall have the meaning assigned to such term in PARAGRAPH A of
the Recitals hereto.
"EFFECTIVE DATE" shall have the meaning assigned to such term in SECTION
6.2(A).
"ENCAP LP" shall have the meaning assigned to it in PARAGRAPH A of the
Recitals hereto.
"EXCHANGE SHARES" shall have the meaning assigned to it in SECTION 9.13.
"GENERAL PARTNER"shall have the meaning assigned to such term in the
introductory paragraph to this Agreement.
"LIMITED PARTNERS" shall have the meaning assigned to such term in
PARAGRAPH A of the Recitals hereto.
"OIL AND PROPERTIES" shall have the meaning assigned to such term in
ARTICLE II.
"PARTNERSHIP" shall have the meaning assigned to such term in the
introductory paragraph to this Agreement.
"PROPERTIES" shall have the meaning assigned to such term in ARTICLE II.
"PURCHASE SHARES" shall have the meaning assigned to it in ARTICLE III.
"PURCHASED PORTION" shall have the meaning assigned to such term in
ARTICLE II.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
all rules and regulations under such Act.
"STOCK AUTHORIZATION APPROVAL" shall have the meaning assigned to it in
SECTION 9.13.
"TEXOIL" shall have the meaning assigned to such term in the
introductory paragraph to this Agreement.
SECTION 1.2. REFERENCES AND CONSTRUCTION.
(a) All references in this Agreement to articles, sections, subsections
and other subdivisions refer to corresponding articles, sections, subsections
and other subdivisions of this Agreement unless expressly provided otherwise.
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(b) Titles appearing at the beginning of any of such subdivisions are
for convenience only and shall not constitute part of such subdivisions and
shall be disregarded in construing the language contained in such subdivisions.
(c) The words "this Agreement", "this instrument", "herein", "hereof",
"hereby", "hereunder" and words of similar import refer to this Agreement as a
whole and not to any particular subdivision unless expressly so limited.
(d) Words in the singular form shall be construed to include the plural
and VICE VERSA, unless the context otherwise requires. Pronouns in masculine,
feminine and neuter genders shall be construed to include any other gender.
(e) Unless the context otherwise requires or unless otherwise provided
herein, the terms defined in this Agreement which refer to a particular
agreement, instrument or document also refer to and include all renewals,
extensions, modifications, amendments or restatements of such agreement,
instrument or document, provided that nothing contained in this subsection shall
be construed to authorize such renewal, extension, modification, amendment or
restatement.
(f) Examples shall not be construed to limit, expressly or by
implication, the matter they illustrate.
(g) The word "includes" and its derivatives means "includes, but is not
limited to" and corresponding derivative expressions.
(h) No consideration shall be given to the fact or presumption that one
party had a greater or lesser hand in drafting this Agreement.
(i) Unless otherwise indicated, all references herein to "$" or
"dollars" shall refer to U.S. Dollars.
(j) EXHIBITS II, 6.2(A), 6.3(C) and 6.3(D) are attached hereto. Each
such Exhibit is incorporated herein by reference for all purposes and references
to this Agreement shall also include such Exhibit unless the context in which
used shall otherwise require.
ARTICLE II
PROPERTY TO BE TRANSFERRED
The Partnership agrees to transfer and assign, and the General Partner
agrees to receive, subject to the terms and provisions herein contained
(including the last full paragraph of this ARTICLE II), the following described
properties, rights and interests:
(a) All right, title and interest of the Partnership in and to
the oil, gas and/or mineral leases described in EXHIBIT II hereto (and
any ratification and/or amendments to
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such leases, whether or not such ratifications or amendments are
described on EXHIBIT II) insofar as such leases (and such ratifications
and amendments ) cover the lands and depths described on such EXHIBIT
II; and
(b) Without limiting the foregoing, all other right, title and
interest (of whatever kind or character, whether legal or equitable, and
whether vested or contingent) of the Partnership in and to the oil, gas
and other minerals in and under or that may be produced from the lands
and depths described on EXHIBIT II (including interests in oil, gas
and/or mineral leases covering such lands and depths, overriding
royalties, production payments and net profits interests in such lands
or such leases, and fee mineral interests, fee royalty interests and all
other interests of any kind or character in such oil, gas and other
minerals); and
(c) All rights, titles and interests of the Partnership in and to
all permits; licenses; servitudes; easements; rights-of-way; orders;
farm-in and farm-out agreements; bottom hole agreements; crude oil,
condensate and natural gas purchase and sale, gathering, transportation
and marketing agreements; hydrocarbon storage agreements; acreage
contribution agreements; operating agreements; balancing agreements;
pooling agreements; unitization agreements; processing agreements;
saltwater disposal agreements; options; facility ore equipment leases;
and other contracts, agreements, and rights owned by the Partnership, in
whole or in part, to the extent that they are (i) appurtenant to or
affect the properties described in SUBSECTIONS (A) and (B) above or (ii)
used or held for use in connection with the ownership or operation of
the properties described in SUBSECTIONS (A) and (B) above or the
production or treatment of oil, gas, and other hydrocarbons and
associated products on or produced from the properties described in
SUBSECTIONS (A) and (B) above, or the sale or disposal of water, oil,
gas and other hydrocarbons and associated products; and
(d) All rights, titles and interests of the Partnership in and to
all materials, supplies, machinery, equipment, improvements and other
personal property and fixtures (including, but not by way of limitation,
all xxxxx, saltwater disposal xxxxx, wellhead equipment, compression
equipment, flow lines, pipelines, gathering systems, processing and
separation systems, and other equipment) whether or not located on the
properties described in SUBSECTIONS (A), (B) and (C) above and used in
connection with the exploration, development, operation or maintenance
thereof and all oil, gas and other hydrocarbons produced from or
allocated thereto; and
(e) All of the files, records, information, and data, whether
written or electronically stored, relating to the interests of the
Partnership in the properties described in SUBSECTIONS (A), (B) and (C)
above, including without limitation: (i) land and title records
(including abstracts of title, title opinions, and title curative
documents); (ii) contract files; (iii) correspondence; (iv) operations,
environmental, production and accounting records (but not including
general financial accounting or tax accounting records); (v) facility
and well records; and (vi) geological, geophysical and other scientific
and technical data and information relating to the properties described
in
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SUBSECTIONS (A), (B) and (C) above that is nonproprietary and that the
Partnership has the unencumbered right to transfer.
The properties and interests specified in the foregoing SUBSECTIONS (A), (B) and
(C) are herein sometimes collectively called the "OIL AND GAS PROPERTIES," and
the properties and interests specified in the foregoing SUBSECTIONS (A),(B),(C),
(D) and (E) are herein sometimes collectively called the "PROPERTIES".
It is specifically agreed that the transfer contemplated by this ARTICLE
II shall be deemed to constitute (x) an in-kind distribution to the General
Partner by the Partnership of the General Partner's interest in the Properties
(which, for purposes hereof, shall constitute 10% of the Partnership's interest
in the Properties) and (y) a sale by the Partnership to Texoil, and a purchase
by Texoil from the Partnership, of the Partnership's entire interest in the
Properties less the interest described in CLAUSE (X) above. The portion of the
Partnership's interest in the Properties described in CLAUSE (Y) of the
immediately preceding sentence shall be herein called the "PURCHASED PORTION".
It is hereby acknowledged and affirmed that Texoil has directed the Partnership
to convey and assign to the General Partner, a wholly-owned subsidiary of
Texoil, the Purchased Portion.
ARTICLE III
PURCHASE PRICE FOR PURCHASED PORTION
In consideration of the sale by the Partnership to Texoil of the
Purchased Portion, as provided in the last full paragraph of ARTICLE II, Texoil
shall pay to the Partnership an aggregate purchase price consisting of the
following: (a) $4,465,000 cash (the "CASH PORTION"); and (b) 898,000 shares of
Common Stock (the "PURCHASE SHARES").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP
The Partnership hereby represents and warrants to Texoil as follows:
SECTION 4.1. ORGANIZATION AND EXISTENCE. The Partnership is a limited
partnership duly formed and validly existing under the laws of the State of
Texas.
SECTION 4.2. POWER AND AUTHORITY. The Partnership has full partnership
power and partnership authority to execute, deliver, and perform this Agreement
and each other agreement, instrument, or document executed or to be executed by
the Partnership in connection with the transactions contemplated hereby to which
it is a party and to consummate the transactions contemplated hereby and
thereby. The execution, delivery, and performance by the Partnership of this
Agreement and each other agreement, instrument, or document executed or to be
executed by the Partnership in connection with the transactions contemplated
hereby to which it is a party, and the consummation by it of the transactions
contemplated
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hereby and thereby, have been duly authorized by all necessary partnership
action of the Partnership.
SECTION 4.3. VALID AND BINDING AGREEMENT. This Agreement has been duly
executed and delivered by the Partnership and constitutes, and each other
agreement, instrument, or document executed or to be executed by the Partnership
in connection with the transactions contemplated hereby to which it is a party
has been, or when executed will be, duly executed and delivered by the
Partnership and constitutes, or when executed and delivered will constitute, a
valid and legally binding obligation of the Partnership, enforceable against it
in accordance with their respective terms, except that such enforceability may
be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium,
and similar laws affecting creditors' rights generally and (b) equitable
principles which may limit the availability of certain equitable remedies (such
as specific performance) in certain instances.
SECTION 4.4. NON-CONTRAVENTION. Other than requirements (if any) that
there be obtained consents to assignment (or waivers of preferential rights to
purchase) from third parties, and except for approvals required to be obtained
from governmental entities who are lessors under leases forming a part of the
Oil and Gas Properties (or who administer such leases on behalf of such lessors)
which are customarily obtained post-closing, neither the execution, delivery,
and performance by the Partnership of this Agreement and each other agreement,
instrument, or document executed or to be executed by the Partnership in
connection with the transactions contemplated hereby to which it is a party nor
the consummation by it of the transactions contemplated hereby and thereby do
and will (a) conflict with or result in a violation of any provision of the
partnership agreement or other governing instruments of the Partnership, (b)
conflict with or result in a violation of any provision of, or constitute (with
or without the giving of notice or the passage of time or both) a default under,
or give rise (with or without the giving of notice or the passage of time or
both) to any right of termination, cancellation, or acceleration under, any
bond, debenture, note, mortgage, indenture, lease, contract, agreement, or other
instrument or obligation to which the Partnership is a party or by which the
Partnership or any of its properties may be bound, (c) result in the creation or
imposition of any lien or other encumbrance upon the properties of the
Partnership, or (d) violate any applicable law, rule or regulation binding upon
the Partnership.
SECTION 4.5. APPROVALS. Other than requirements (if any) that there be
obtained consents to assignment (or waivers of preferential rights to purchase)
from third parties, and except for approvals required to be obtained from
governmental entities who are lessors under leases forming a part of the Oil and
Gas Properties (or who administer such leases on behalf of such lessors) which
are customarily obtained post-closing, no consent, approval, order, or
authorization of, or declaration, filing, or registration with, any court or
governmental agency or of any third party is required to be obtained or made by
the Partnership in connection with the execution, delivery, or performance by
the Partnership of this Agreement and each other agreement, instrument, or
document executed or to be executed by the Partnership in connection with the
transactions contemplated hereby to which it is a party or the consummation by
it of the transactions contemplated hereby and thereby.
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SECTION 4.6. INVESTMENT INTENT. The Partnership is acquiring the
Purchase Shares to be acquired by it hereunder for its own account for
investment and not with a view to, or for sale or other disposition in
connection with, any distribution of all or any part thereof, except (i) in an
offering covered by a registration statement filed with the Securities and
Exchange Commission under the Securities Act covering the Purchase Shares, or
(ii) pursuant to an applicable exemption under the Securities Act; provided,
however, that it is specifically acknowledged and agreed that the Partnership
shall be permitted to make a distribution of the Purchase Shares to the Limited
Partners immediately after receipt by the Partnership of such shares.
SECTION 4.7. INVESTMENT EXPERIENCE. The Partnership acknowledges that it
is able to fend for itself, can bear the economic risk of its investment in the
Purchase Shares to be acquired by it hereunder, and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of an investment in the Purchase Shares. The Partnership
represents that it has not been organized for the purpose of acquiring the
Purchase Shares to be acquired by it hereunder.
SECTION 4.8. RESTRICTED SECURITIES. The Partnership understands that the
Purchase Shares will not have been registered pursuant to the Securities Act or
any applicable state securities laws, that such Purchase Shares will be
characterized as "restricted securities" under federal securities laws, and that
under such laws and applicable regulations such Purchase Shares cannot be sold
or otherwise disposed of without registration under the Securities Act or an
exemption therefrom.
SECTION 4.9. LEGEND. It is agreed and understood by the Partnership that
the certificates representing the Purchase Shares shall each conspicuously set
forth on the face or back thereof, in addition to any legends required by
applicable law or other agreement, a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
UNLESS THEY ARE FIRST REGISTERED PURSUANT TO THAT ACT AND APPLICABLE
STATE SECURITIES LAWS OR UNLESS THE CORPORATION RECEIVES A WRITTEN
OPINION OF COUNSEL, WHICH OPINION AND COUNSEL ARE SATISFACTORY TO THE
CORPORATION, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
SECTION 4.10. DISCLAIMER OF WARRANTIES. Other than those expressly set
out in this ARTICLE IV, the Partnership hereby expressly disclaims any and all
representations or warranties with respect to the Properties or the transaction
contemplated hereby, and Texoil agrees that the Properties are being sold or
otherwise transferred by the Partnership "where is" and "as is". Specifically as
a part of (but not in limitation of) the foregoing, Texoil acknowledges that
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the Partnership has not made, and the Partnership hereby expressly disclaims,
any representation or warranty (express, implied, under common law, by statute
or otherwise) as to the condition of the Properties (INCLUDING WITHOUT
LIMITATION, THE PARTNERSHIP DISCLAIMS ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR CONFORMITY TO MODELS OR
SAMPLES OF MATERIALS), status of title to the Properties, the compliance by the
Partnership with environmental or other laws, rules, regulations and/or orders,
the extent of oil, gas and/or other mineral reserves, the recoverability of or
the cost of recovering any of such reserves, the value of reserves, prices (or
anticipated prices) at which production has been or will be sold and the ability
to sell oil or gas production from the Properties.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TEXOIL ENTITIES
Texoil and the General Partner (in this ARTICLE V, a "TEXOIL ENTITY")
hereby jointly and severally represent and warrant to the Partnership and for
the benefit of the Limited Partners as follows:
SECTION 5.1. ORGANIZATION AND EXISTENCE. Each Texoil Entity is a
corporation duly organized, legally existing and in good standing under the laws
of its state of incorporation, and, in the instance of Texoil, is qualified to
do business in the State of Texas.
SECTION 5.2. POWER AND AUTHORITY. Subject to the Stock Authorization
Approval, each Texoil Entity has full corporate power and corporate authority to
execute, deliver, and perform this Agreement and each other agreement,
instrument, or document executed or to be executed by such Texoil Entity in
connection with the transactions contemplated hereby to which it is a party and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery, and performance by each Texoil Entity of this Agreement and each other
agreement, instrument, or document executed or to be executed by such Texoil
Entity in connection with the transactions contemplated hereby to which it is a
party, and the consummation by it of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate action of such
Texoil Entity except for the Stock Authorization Approval.
SECTION 5.3. VALID AND BINDING AGREEMENT. This Agreement has been duly
executed and delivered by each Texoil Entity and constitutes, and each other
agreement, instrument, or document executed or to be executed by such Texoil
Entity in connection with the transactions contemplated hereby to which it is a
party has been, or when executed will be, duly executed and delivered by such
Texoil Entity and constitutes, or when executed and delivered will constitute, a
valid and legally binding obligation of such Texoil Entity, enforceable against
it in accordance with their respective terms, except that such enforceability
may be limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium, and similar laws affecting
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creditors' rights generally and (b) equitable principles which may limit the
availability of certain equitable remedies (such as specific performance) in
certain instances.
SECTION 5.4. NON-CONTRAVENTION. The execution, delivery, and performance
by each Texoil Entity of this Agreement and each other agreement, instrument, or
document executed or to be executed by such Texoil Entity in connection with the
transactions contemplated hereby to which it is a party and the consummation by
it of the transactions contemplated hereby and thereby do not and will not (a)
conflict with or result in a violation of any provision of the charter or bylaws
or other governing instruments of such Texoil Entity, (b) conflict with or
result in a violation of any provision of, or constitute (with or without the
giving of notice or the passage of time or both) a default under, or give rise
(with or without the giving of notice or the passage of time or both) to any
right of termination, cancellation, or acceleration under, any bond, debenture,
note, mortgage, indenture, lease, contract, agreement, or other instrument or
obligation to which such Texoil Entity is a party or by which such Texoil Entity
or any of its properties may be bound, (c) result in the creation or imposition
of any lien or other encumbrance upon the properties of such Texoil Entity, or
(d) violate any applicable law, rule or regulation binding upon such Texoil
Entity.
SECTION 5.5. APPROVALS. No consent, approval, order, or authorization
of, or declaration, filing, or registration with, any court or governmental
agency or of any third party is required to be obtained or made by each Texoil
Entity in connection with the execution, delivery, or performance by such Texoil
Entity of this Agreement and each other agreement, instrument, or document
executed or to be executed by such Texoil Entity in connection with the
transactions contemplated hereby to which it is a party or the consummation by
it of the transactions contemplated hereby and thereby, other than the Stock
Authorization Approval and compliance with any applicable requirements of the
Securities Act and any applicable state securities laws.
SECTION 5.6. PENDING LITIGATION. There are no pending suits, actions, or
other proceedings in which any Texoil Entity is a party which affect the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
SECTION 5.7. KNOWLEDGEABLE PURCHASER. Each Texoil Entity is a
knowledgeable purchaser, owner and operator of oil and gas properties, has the
ability to evaluate (and in fact has evaluated) the Properties for purchase, and
is acquiring the Properties for its own account and not with the intent to make
a distribution within the meaning of the Securities Act of 1933 (and the rules
and regulations pertaining thereto) or a distribution thereof in violation of
any other applicable securities laws.
SECTION 5.8. TEXOIL COMMON STOCK. Upon receipt of the Stock
Authorization Approval, the Purchase Shares and the Exchange Shares will be duly
authorized for such issuance and, when issued and delivered by Texoil in
accordance with the provisions of this Agreement, will be validly issued, fully
paid, and nonassessable.
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SECTION 5.9. SEC FILINGS. Texoil is current in its obligations to file
all periodic report and proxy statements with the Commission required to be
filed under the Exchange Act. Texoil's Annual Report on Form-10KSB for the year
ended December 31, 1997 (the "SEC DOCUMENTS") do not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. Since
December 31, 1997, there have been no material developments, transactions or
events affecting Texoil (other than developments or events affecting the oil and
gas exploration and production industry generally) other than as disclosed by
Texoil in the SEC Documents or to the Partnership and the Limited Partners in
writing. There are no material liabilities of Texoil (contingent or otherwise),
other than as disclosed in the SEC Documents and the financial statements
included therein.
ARTICLE VI
CLOSING OF TRANSACTION
SECTION 6.1. THE CLOSING. The closing (herein called the "CLOSING") of
the transaction contemplated hereby shall take place in the offices of Xxxxxxxx
& Xxxxxx, P.C., at 1700 Chase Tower, 000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxx, at 10:30
a.m. Central Standard Time, on the date hereof (such date and time being herein
called the "CLOSING DATE").
SECTION 6.2. THE PARTNERSHIP'S CLOSING OBLIGATIONS. At the Closing, the
Partnership shall:
(a) execute, acknowledge and deliver to Texoil and the General
Partner Assignments of the Properties (the "ASSIGNMENTS"), in the form
attached hereto as EXHIBIT 6.2(A), being effective as to runs of oil and
deliveries of gas as of 12:01 o'clock a.m., Central Daylight Time on
February 1, 1998 (the "EFFECTIVE DATE");
(b) to the extent requested by Texoil or the General Partner,
execute and deliver to Texoil or the General Partner (i) letters in lieu
of transfer orders (or similar documentation), in form acceptable to
both parties; and
(c) to the extent requested by Texoil or the General Partner,
execute and deliver an affidavit or other certification (as permitted by
such code) that the Partnership is not a "foreign Person" within the
meaning of Section 1445 (or similar provisions) of the Internal Revenue
Code of 1986 as amended (I.E., the Partnership is not a non-resident
alien, foreign corporation, foreign partnership, foreign trust or
foreign estate as those terms are defined in such code and regulations
promulgated thereunder).
SECTION 6.3. TEXOIL'S AND GENERAL PARTNER'S CLOSING OBLIGATIONS. At the
Closing:
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(a) Texoil shall deliver to the Partnership, by wire transfer to
an account or accounts designated by the Partnership in a bank located
in the United States, an amount equal to the Cash Portion;
(b) (i) The General Partner shall furnish to the Partnership such
evidence (including, without limitation, evidence of satisfaction of all
applicable bonding requirements) as the Partnership or the Limited
Partners may require that the General Partner is qualified with the
applicable authorities to succeed the Partnership as the owner and,
where applicable, operator of the Properties, (ii) with respect to
properties operated by the Partnership where the General Partner is to
succeed the Partnership as operator, the General Partner shall execute
and deliver to the Partnership appropriate evidence reflecting change of
operator as required by applicable authorities, and (iii) the General
Partner shall execute and deliver to the Partnership such forms as the
Partnership or the Limited Partners may reasonably request for filing
with the applicable authorities to reflect the General Partner's
assumption of plugging and abandonment liabilities with respect to the
xxxxx located on the Properties or on units in which the Properties
participate;
(c) Texoil shall execute and deliver that certain Registration
Rights Agreement substantially in the form of the document attached
hereto as EXHIBIT 6.3(C); and
(d) Texoil and the General Partner shall cause to be delivered to
the Partnership an opinion of counsel reasonably acceptable to the
Partnership, which opinion shall cover the matters described in EXHIBIT
6.3(D) and shall be in form and scope reasonably acceptable to the
Limited Partners.
SECTION 6.4. DELIVERY OF FILES. Within 30 days after the Closing, the
Partnership shall deliver to the General Partner the files and other materials
referenced in SUBSECTION (E) of ARTICLE II. Notwithstanding the foregoing, to
the extent such files or other materials include items which the Partnership
cannot provide to the General Partner without, in the opinion of the
Partnership, breaching confidentiality agreements with other parties, the
Partnership shall have no obligation to furnish such items. The Partnership may
retain copies of all or any parts of the files or other materials so furnished,
and all costs of copying such files shall be borne by the Partnership. So long
as such files or other materials so delivered by the Partnership to Texoil are
maintained by the General Partner or an affiliate, the General Partner shall
permit the Partnership, its partners and their respective representatives to
have access to the same for a period of three years after Closing. The General
Partner shall advise the Partnership and its partners before it destroys any
such files or other materials (and will, if requested by the Partnership or any
partner thereof, deliver to the Partnership or such partner any files or other
materials it intends to destroy).
ARTICLE VII
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ASSUMPTION AND INDEMNIFICATION
The General Partner agrees, as of the date of Closing (and, upon the
execution and delivery of the Assignments by the Partnership, the General
Partner shall be deemed to have agreed), (a) to assume, and to timely pay and
perform, all duties, obligations and liabilities relating to the ownership
and/or operation of the Properties, whether arising before, on or after the
Effective Date (including, without limitation, those arising under the contracts
and agreements described in ARTICLE II(C), and (b) to indemnify and hold the
Partnership, its partners and its and such partners' parent and subsidiary
companies and other affiliates, and its and their respective shareholders,
members, owners, directors, officers, managers, employees and agents harmless
from and against any and all claims, actions, liabilities, losses, damages,
costs or expenses (including court costs and attorneys' fees) of any kind or
character arising out of or otherwise relating to the ownership and/or operation
of the Properties, whether arising before, on or after the Effective Date. In
connection with (but not in limitation of) the foregoing, it is specifically
understood and agreed that matters arising out of or otherwise relating to the
ownership and/or operation of the Properties shall include all matters arising
out of the condition of the Properties (including, without limitation, within
such matters all obligations to properly plug and abandon, or replug and
re-abandon, xxxxx located on the Properties, to restore the surface, and to
comply with, or to bring the Properties into compliance with, applicable
environmental laws including conducting any remediation activities which may be
required on, or otherwise in connection with activities on, the Properties),
regardless of when the events occurred which give rise to such condition (AND
REGARDLESS OF WHETHER THE PARTNERSHIP, ITS PARTNERS AND ITS AND SUCH PARTNERS'
PARENT AND SUBSIDIARY COMPANIES AND OTHER AFFILIATES, AND ITS AND THEIR
RESPECTIVE SHAREHOLDERS, MEMBERS, OWNERS, DIRECTORS, OFFICERS, MANAGERS,
EMPLOYEES AND AGENTS, WERE WHOLLY OR PARTIALLY NEGLIGENT OR OTHERWISE AT FAULT),
and the above provided for assumptions and indemnifications by the General
Partner shall expressly cover and include such matters so arising out of such
condition.
ARTICLE VIII
NOTICES
All notices and other communications required under this Agreement shall
(unless otherwise specifically provided herein) be in writing and be delivered
personally, by recognized commercial courier or delivery service (which provides
a receipt), by telecopier (with receipt acknowledged), or by registered or
certified mail (postage prepaid), at the following addresses:
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IF TO THE PARTNERSHIP: Cliffwood Acquisition - 1996
Limited Partnership c/o Cliffwood Oil & Gas Corp.
000 Xxxxxxx Xxxxxxx Xx.
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Fax No.: 000-000-0000
WITH A COPY TO:
EnCap Investments, L.C.
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax No.: 000-000-0000
IF TO TEXOIL OR
THE GENERAL PARTNER: c/o Texoil, Inc.
000 Xxxxxxx Xxxxxxx Xx.
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Fax No.: 000-000-0000
and shall be considered delivered on the date of receipt. Either Texoil and the
General Partner, on the one hand, or the Partnership, on the other hand, may
specify as its proper address any other post office address within the
continental limits of the United States by giving notice to the other, in the
manner provided in this Article, at least ten (10) days prior to the effective
date of such change of address.
ARTICLE IX
MISCELLANEOUS MATTERS
SECTION 9.1. SURVIVAL OF PROVISIONS. All representations and warranties
made herein by Texoil, the General Partner and the Partnership shall be
continuing and shall be true and correct on and as of the date of Closing with
the same force and effect as if made at that time; further, all of such
representations and warranties shall survive the Closing and the delivery of the
Assignments. The provisions of, and the obligations of the parties under,
ARTICLE VI (to the extent the same are, by mutual agreement, not performed at
Closing), and ARTICLES VII through IX inclusive shall survive the Closing and
the delivery of the Assignments.
SECTION 9.2. FURTHER ASSURANCES. From time to time after the Closing, at
the request of any party hereto and without further consideration, the
Partnership, on the one hand, and
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Texoil and the General Partner, on the other hand, shall execute and deliver to
the requesting party such instruments and documents and take such other action
(but without incurring any material financial obligation) as such requesting
party may reasonably request in order to consummate more fully and effectively
the transactions contemplated hereby.
SECTION 9.3. BINDING EFFECT; SUCCESSORS AND ASSIGNS. The Agreement shall
be binding on the parties hereto and their respective successors and permitted
assigns. No party hereto shall have the right to assign its rights under this
Agreement without the prior written consent of the other party first having been
obtained.
SECTION 9.4. COMMISSIONS. Texoil and the General Partner jointly and
severally agree to indemnify and hold harmless the Partnership and the Limited
Partners from and against any and all claims, obligations, actions, liabilities,
losses, damages, costs or expenses (including court costs and attorneys fees) of
any kind or character arising out of or resulting from any agreement,
arrangement or understanding alleged to have been made by, or on behalf of,
Texoil or the General Partner with any broker or finder in connection with this
Agreement or the transactions contemplated hereby.
SECTION 9.5. EXPENSES; SALES TAXES; FILINGS AND RECORDING FEES.
(a) Texoil and the General Partner, on the one hand, and the
Partnership, on the other hand, shall bear and pay all expenses incurred by them
or it in connection with the transaction contemplated by this Agreement.
(b) Notwithstanding anything to the contrary herein, since the
transaction contemplated hereby is an isolated transaction, no sales tax will be
collected from Texoil or the General Partner. If, however, this transaction is
later deemed to be other than an occasional sale, Texoil and the General Partner
jointly and severally agree to be solely responsible, and shall indemnify and
hold the Partnership (and their respective partners, and each of their and each
such partners' parent and subsidiary companies and other affiliates, and
shareholders, managers, owners, directors, officers, employees, consultants, and
agents, respectively) harmless, from any and all sales or transfer taxes or fees
(including related penalty, interest or legal costs) due by virtue of this
transaction on the Properties transferred pursuant hereto and Texoil or the
General Partner shall remit such sales or transfer taxes at that time. The
Partnership, the General Partner and Texoil agree to cooperate with each other
in demonstrating that the requirements for an occasional or isolated sale or any
other sales tax exemption have been met.
(c) Texoil and the General Partner shall be solely responsible for all
filings and recordings of assignments and other documents related to the
Properties and for all fees connected therewith, and Texoil or the General
Partner shall furnish the Partnership and its partners with pertinent recording
data. The Partnership (or the Limited Partners) shall not be responsible for any
loss to Texoil or the General Partner because of Texoil's or the General
Partner's failure to file or record documents correctly or promptly.
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SECTION 9.6. ENTIRE AGREEMENT. This Agreement and the documents referred
to herein to be delivered at Closing contain the entire understanding of the
parties hereto with respect to subject matter hereof and supersede all prior
agreements, understandings, negotiations, and discussions among the parties with
respect to such subject matter. Time is of the essence in this Agreement.
SECTION 9.7. PUBLIC STATEMENTS. The Partnership, on the one hand, and
Texoil, on the other hand, shall consult with each other with regard to all
publicity and other releases at or prior to Closing concerning this Agreement
and the transactions contemplated hereby and, except as required by applicable
law or the applicable rules or regulations of any governmental body or stock
exchange, neither the Partnership, on the one hand, nor Texoil, on the other
hand, shall issue any publicity or other release without the prior consent of
the other.
SECTION 9.8. INJUNCTIVE RELIEF. The parties hereto acknowledge and agree
that irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement, and shall be entitled to enforce specifically the provisions of this
Agreement, in any court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which the parties may be
entitled under this Agreement or at law or in equity.
SECTION 9.9. DECEPTIVE TRADE PRACTICES. To the extent applicable to the
transaction contemplated hereby or any portion thereof, TEXOIL CAN AND DOES
EXPRESSLY WAIVE THE PROVISIONS OF THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER
PROTECTION ACT, SECTION 17.41 ET SEQ., TEXAS BUSINESS & COMMERCE CODE, OTHER
THAN SECTION 17.555, WHICH IS NOT WAIVED, AND ALL OTHER CONSUMER PROTECTION LAWS
OF THE STATE OF TEXAS, OR ANY OTHER STATE, APPLICABLE TO THIS TRANSACTION THAT
MAY BE WAIVED BY THE PARTIES. IN CONNECTION WITH SUCH WAIVER, TEXOIL HEREBY
REPRESENTS TO THE PARTNERSHIP THAT TEXOIL (A) IS IN THE BUSINESS OF SEEKING OR
ACQUIRING BY PURCHASE OR LEASE, GOODS OR SERVICES FOR COMMERCIAL OR BUSINESS
USE, (B) HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT
ENABLES IT TO EVALUATE THE MERITS AND RISKS OF THE TRANSACTIONS CONTEMPLATED
HEREBY, (C) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION AND (D) HAS
ASSETS OF $5,000,000 OR MORE ACCORDING TO ITS MOST RECENT FINANCIAL STATEMENTS.
SECTION 9.10. AMENDMENTS. This Agreement may be amended, modified,
supplemented, restated or discharged (and provisions hereof may be waived) only
by an instrument in writing signed by the parties hereto.
SECTION 9.11. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
SECTION 9.12. COUNTERPARTS. This Agreement may be executed in
counterparts, all of which are identical and all of which constitute one and the
same instrument. It shall not be
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necessary for Texoil, the General Partner, the Partnership and the Limited
Partners to sign the same counterpart.
SECTION 9.13. POST-CLOSING COVENANT OF TEXOIL REGARDING STOCK
AUTHORIZATION APPROVAL. Texoil covenants and agrees with and for the benefit of
the Partnership and the Limited Partners that (a) immediately after the Closing,
it will commence to take all necessary steps to amend its charter or other
applicable documents so as to increase the number of authorized shares of Common
Stock to an amount sufficient to permit it to duly issue (i) to the Partnership,
the Purchase Shares, and (ii) to the Limited Partners, the Exchange Shares,
including, if necessary, obtaining the requisite consent or approval of the
shareholders of Texoil, and (b) it will have duly completed the actions
described in the immediately preceding CLAUSE (A) no later than May 25, 1998.
The actions described in CLAUSE (A) of the immediately preceding sentence shall
be herein called the "STOCK AUTHORIZATION APPROVAL". Immediately upon receipt of
the Stock Authorization Approval, Texoil shall (A) issue and deliver to the
Partnership a certificate or certificates representing the Purchase Shares
registered in the name of the Partnership or, if requested by the Partnership,
the Limited Partners; (B) shall issue and deliver to the Limited Partners, in
consideration of and upon the delivery of the instruments described in SECTION
9.14(C), a certificate or certificates representing shares of Common Stock (the
"EXCHANGE SHARES") as follows: EnCap LP - 1,251,919 shares of Common Stock; and
EClC- 417,306 shares of Common Stock; and (C) shall cause to be delivered to the
Limited Partners an opinion of counsel reasonably satisfactory to the Limited
Partners to the effect that the Purchase Shares and the Exchange Shares have
been duly and validly authorized and issued and are fully paid and
non-assessable.
SECTION 9.14. JOINDER. Each Limited Partner joins in the execution of
this Agreement for the limited purposes of making the representations,
warranties and covenants below:
(a) Each Limited Partner severally (and not jointly and severally)
represents and warrants to Texoil and the General Partner that such Limited
Partner has not placed a mortgage, lien or other similar encumbrance on the
Properties.
(b) In connection with the contemplated distribution by the Partnership
to such Limited Partner of Purchase Shares and the receipt by such Limited
Partner of Exchange Shares under SECTION 9.13, each Limited Partner severally
(and not jointly and severally) represents and warrants to Texoil as follows:
(i) Such Limited Partner is acquiring the Purchase Shares to be
received by it upon distribution from the Partnership and the Exchange
Shares for its own account for investment and not with a view to, or for
sale or other disposition in connection with, any distribution of all or
any part thereof, except (i) in an offering covered by a registration
statement filed with the Securities and Exchange Commission under the
Securities Act covering the Purchase Shares and the Exchange Shares, or
(ii) pursuant to an applicable exemption under the Securities Act.
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(ii) Such Limited Partner acknowledges that it is able to fend
for itself, can bear the economic risk of its investment in the Purchase
Shares to be received from the Partnership and the Exchange Shares, and
has such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of an investment in the
Purchase Shares and the Exchange Shares. Such Limited Partner has not
been organized for the purpose of acquiring the Purchase Shares to be
received by it from the Partnership or the Exchange Shares.
(iii) Such Limited Partner understands that the Purchase Shares
and the Exchange Shares will not have been registered pursuant to the
Securities Act or any applicable state securities laws, that such
Purchase Shares and Exchange Shares will be characterized as "restricted
securities" under federal securities laws, and that under such laws and
applicable regulations such Purchase Shares and Exchange Shares cannot
be sold or otherwise disposed of without registration under the
Securities Act or an exemption therefrom.
(iv) It is agreed and understood by such Limited Partner that the
certificates representing the Purchase Shares and the Exchange Shares
shall each conspicuously set forth on the face or back thereof, in
addition to any legends required by applicable law or other agreement, a
legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
UNLESS THEY ARE FIRST REGISTERED PURSUANT TO THAT ACT AND APPLICABLE
STATE SECURITIES LAWS OR UNLESS THE CORPORATION RECEIVES A WRITTEN
OPINION OF COUNSEL, WHICH OPINION AND COUNSEL ARE SATISFACTORY TO THE
CORPORATION, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
(c) In consideration of and against receipt by the Limited Partners of
the Exchange Shares as provided in SECTION 9.13, (i) ECIC will transfer and
assign to Texoil Stock Purchase Warrant No. 001 dated September 27, 1996,
entitling ECIC to purchase 75,000 shares of the common stock of Cliffwood Oil &
Gas Corp., a Texas corporation; and (ii) EnCap LP will transfer and assign Stock
Purchase Warrant No. 002 dated September 27, 1996, entitling EnCap LP to
purchase 225,000 shares of the common stock of Cliffwood Oil & Gas Corp., a
Texas corporation.
(d) At the Closing, each Limited Partner will execute and deliver that
certain Registration Rights Agreement substantially in the form of the document
attached hereto as EXHIBIT 6.3(C).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement is executed by the parties hereto on
the date set forth above.
CLIFFWOOD ACQUISITION - 1996 LIMITED
PARTNERSHIP
By: CLIFFWOOD OIL & GAS CORP.,
General Partner
By:_________________________________
Xxxxx X. Xxxxxxxxx, President
TEXOIL, INC.
By:_________________________________
-----------------, --------------
CLIFFWOOD OIL & GAS CORP.
By:_________________________________
Xxxxx X. Xxxxxxxxx
EXECUTED FOR THE SOLE
PURPOSE OF BEING BOUND
BY SECTION 9.14:
ENCAP EQUITY 1996 LIMITED PARTNERSHIP
By: EnCap Investments L.C.
By:____________________________
Xxxxxx X. Xxxxxx, Managing Director
ENERGY CAPITAL INVESTMENT COMPANY PLC
By:_____________________________
Xxxx X. Xxxxxxxx, Director
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