PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, (hereinafter referred to as "AGREEMENT"), made and
entered into this 19th day of May, 1998, by and among TEXSTAR PETROLEUM, INC., a
Texas corporation, 0000 Xxxxxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxx, 00000,
(hereinafter referred to as "Texstar"), and SOUTHERN GAS CO. OF DELAWARE, INC.,
a Delaware Corporation, 000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx, 00000
(hereinafter referred to as "Southern").
RECITALS
WHEREAS, Southern owns certain working and revenue interest in oil and gas
properties, leases, xxxxx and pipelines located in Mississippi (the "Assets");
and
WHEREAS, Texstar desires to purchase from Southern the Assets and Southern
desire to sell to Texstar the Assets; and
WHEREAS, the parties are desirous of evidencing their agreements in respect
of such purchase and sale of the Assets, which is to be made on all the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, the
parties agree as follows:
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ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINITIONS. Except as otherwise expressly defined herein,
all capitalized terms in this Agreement shall have the meanings assigned to
them as follows:
GLOSSARY OF TERMS
"SOUTHERN" shall have the meaning assigned to such term in the Preamble
"ASSETS" shall in addition to the meaning assigned to such term in Section
2.1 and the Preamble, mean all tangible and intangible personal and real
property, including but not limited to all equipment, inventory, mineral
leasehold interest, xxxxx and pipelines appurtenant to the xxxxx which are the
subject of this Agreement, in Wayne, Jones, Xxxxxxxx and Xxxxxxxxx Xxxxx
Counties, Mississippi.
"CLOSING" shall mean the closing of the transactions contemplated by this
Agreement.
"CLOSING DATE" shall mean the date on which the Closing occurs.
"CODE" shall mean the Internal Revenue Code of 1986.
"IRS" shall mean the Internal Revenue Service.
"KNOWLEDGE" shall mean actual knowledge or knowledge that such party should
have obtained, acting diligently, by making due inquiry of such parties'
directors, officers, employees, agents and/or others reasonably expected to be
familiar with the particular subject matter.
"LEASES" shall mean any oral or written contract for the use or occupancy
of real or personal property, or mineral rights thereunder.
"PERSON" shall mean any individual, firm, corporation, partnership or other
business entity.
"TEXSTAR" shall have the meaning assigned to such term in the Preamble.
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ARTICLE II
PURCHASE AND SALE
2.1 PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions
of this Agreement and in reliance on the representations, warranties,
covenants and agreements contained herein, Southern shall sell, assign,
transfer and deliver to Texstar and Texstar agrees to purchase and acquire
from Southern, at the Closing on the Closing Date (as defined in Section
3.3), the following assets and properties of Southern (the "ASSETS"):
a. All of Southern's interest in and to those oil and/or gas xxxxx (the
"Xxxxx") as set forth and identified in Exhibit "A", attached hereto
and made a part hereof.
b. All of Southern's interest in and to those oil and gas leases (the
"Leases") as set forth and identified in Exhibit "B", attached hereto
and made a part hereof.
c. All surface and underground equipment and other personalty and
fixtures in or on the Leases, to the extent Southern owns, possesses
and has the right to transfer same (the "Facilities").
2.2 PURCHASE PRICE. In reliance upon the representations and warranties
and subject to the terms and conditions hereinafter set forth, Southern hereby
sells, transfers, assigns and delivers to Texstar and Texstar hereby purchases
and acquires from Southern all of the Assets for an aggregate deemed
consideration of One Million Two Hundred and Fifty Thousand Dollars
($1,250,000.00) Dollars and the conveyance of a 5.5% working interest in the
White Castle Dome
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Prospect (collectively the "Purchase Price"), which shall be paid by Texstar to
Southern at the time of Closing.
2.3 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
as set forth in Exhibit "C", attached hereto and made a part hereof.
2.4 EFFECTIVE DATE. The conveyance of the Assets as contemplated in this
Agreement shall be deemed for all respects, except that all Representations and
Warranties of Southern shall be applicable at the time of the Closing, to be
effective on May 1, 1998.
2.5 WHITE CASTLE DOME RIGHT OF FIRST REFUSAL. The parties acknowledge
that Texstar is required to give notice of its intention to sale its interest in
the White Castle Dome Prospect and that interest is subject to a "RIGHT OF FIRST
REFUSAL" by Shell Western E&P, Inc. Texstar stipulates that the parties have
established a value on its interest in White Castle Dome Prospect at $780,000
(the "Right of First Refusal Payment"), and in the event Shell Western E&P, Inc.
elects to exercise their right of first refusal and acquire Texstar's interest
for the Right of First Refusal Payment, Texstar, upon receipt, shall immediately
remit said monies to Southern. Furthermore, should Texstar be unable to
transfer its interest to Southern by August 1, 1998, it shall remit the sum of
$780,000 to Southern. Texstar agrees to use its best efforts to transfer its
interest in the White Castle Dome Prospect to Southern.
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ARTICLE III
CLOSING
3.1 CLOSING. The Closing of the purchase and sale of the Assets (the
"CLOSING"), shall be held on May 19, 1998 (the "CLOSING DATE"), or on such other
date as shall be mutually agreed upon by Texstar and Southern. The Closing
shall be held at the offices of Texstar in Houston, Texas, or at such other
location as the parties hereto may mutually agree upon.
3.2 DELIVERIES BY SOUTHERN TO TEXSTAR. Southern shall deliver to Texstar
at Closing:
(a) Xxxx of sale, assignment and/or other instruments of transfer
referred to in this Agreement, in the forms attached hereto as
Exhibits "X-0", "X-0" and "D-3" to effect the transfer of the
Assets to Texstar.
(b) A copy of the resolutions, certified by the Secretary of
Southern, authorizing Southern to enter into the transactions
contemplated by this Agreement to which it is a party.
3.3 DELIVERIES BY TEXSTAR TO SOUTHERN. At the Closing, Texstar shall
deliver to Southern:
(a) A bank cashier's check or wire transfer for the Purchase Price as
provided in Section 2.2.
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(b) A copy of the resolutions, certified by the Secretary of Texstar,
authorizing Texstar to enter into the transactions contemplated
by this Agreement.
(c) Xxxx of sale, assignment and/or other instruments of transfer
referred to in this Agreement, in the form attached hereto as
Exhibit "E", to effect the transfer of Texstar interest in the
White Castle Dome Prospect to Southern.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SOUTHERN
WITH RESPECT TO THE ASSETS
In order to induce Texstar to enter into this Agreement and to consummate
the transactions contemplated hereby, to the extent that the representations and
warranties contained in this Article IV, relate to the Assets, or the falsity of
such representations or warranties could affect Texstar's rights in or use of
the Assets, Southern represents and warrants to Texstar as follows:
4.1 FORMATION OF SOUTHERN. That Southern is a corporation which was duly
formed, validly existing and in good standing under the laws of the State of
Delaware, with the power and authority to own, lease and operate its properties
and to carry on their business as now being conducted.
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4.2 AUTHORITY OF SOUTHERN. Southern has the necessary power and
authority, and has taken all necessary and proper action to approve this
Agreement and to consummate the transactions contemplated hereby and thereby.
True and complete copies of the resolutions heretofore duly and validly adopted
by Southern evidencing such authorization (which resolutions have not been
modified or rescinded and will be in full force and effect at the Closing),
certified by an Officer of Southern. This Agreement will, upon the execution
and delivery hereof and thereof, constitute a valid and binding obligation of
Southern enforceable against Southern in accordance with its respective terms.
4.3 TITLE TO PROPERTIES; ENCUMBRANCES. Southern makes no representation
or warranty as to title and Texstar accepts the assignment of the Assets with
full knowledge that it is acquiring Southern's interest without any such
warranty or representation.
4.4 LITIGATION. There are no claims, actions, suits, proceedings, or, to
the best of Southern's Knowledge and belief, investigations (collectively,
"Actions") pending or threatened by or against, or involving the Assets, and
there are no actions which question or challenge the validity of this Agreement
or any action taken or to be taken by Southern pursuant to this Agreement or in
connection with the transactions contemplated hereby or thereby, and Southern
does not know of any valid basis for any such Action.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF TEXSTAR
Texstar hereby represents and warrants to Southern as follows:
5.1 ORGANIZATION OF TEXSTAR. Texstar is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas,
it is qualified to do business as a foreign corporation in every jurisdiction
in which it transacts business and has the corporate power and authority to
own, lease and operate its properties and to carry on its business as now
being conducted.
5.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Texstar has the corporate
power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby and thereby. The execution and delivery
of this Agreement by Texstar, and the consummation by Texstar of the
transactions contemplated hereby and thereby, have been duly authorized (or
will be ratified) by Texstar's Board of Directors and no other corporate
proceedings on the part of Texstar or any other Person are (will be)
necessary to authorize Texstar's entering into this Agreement to which it is
a party or the consummation of the transactions contemplated hereby and
thereby. True and complete copies of the resolutions duly and validly adopted
by such Board of Directors evidencing such authorizations (or ratification)
(which resolutions shall not have been modified or rescinded and will be in
full force and effect on the Closing Date), certified by the Secretary of
Texstar, will be delivered to Southern by Texstar on or before the Closing.
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5.3 PURCHASE PRICE. Texstar has the funds in which to fully comply
with the terms and conditions of Article II.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF SOUTHERN
The obligation of Southern to consummate the transactions contemplated
by this Agreement is subject to the satisfaction, on or before the Closing
Date, of each of the following conditions, unless waived in writing by
Southern:
6.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Texstar contained in, or made pursuant to, this Agreement shall
be true, complete and accurate in all material respects as of the date when
made, and at and as of the Closing Date as though such representations and
warranties were made at and as of the Closing, except for changes expressly
permitted or contemplated by the terms hereof or thereof.
6.2 PERFORMANCE. Texstar shall have performed and complied with all
agreements, obligations and conditions required by this Agreement to be
performed or complied with by them on or prior to the Closing Date.
6.3 NO GOVERNMENT PROCEEDING OR LITIGATION. No suit, action,
investigation, inquiry or other proceeding by any governmental body or other
person or legal or administrative
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proceeding shall have been instituted or threatened which questions the
validity or legality of the transactions contemplated by this Agreement.
6.4 CONSENTS. All permits, authorizations, consents, approvals and
waivers necessary for the consummation of the transactions contemplated by
this Agreement shall have been obtained and copies thereof delivered by
Southern. The consummation of this transaction is subject to Southern
receiving consent from its primary lenders of the divestiture of the Assets.
6.5 PAYMENT OF CONSIDERATION. Texstar shall have paid the purchase
price as provided for in Article II of this Agreement.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF TEXSTAR
The obligation of Texstar to consummate the transactions contemplated by
this Agreement is subject to the satisfaction, on or before the Closing Date,
of each of the following conditions, unless waived in writing by Texstar.
7.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Southern contained in this Agreement shall be true and accurate
in all material respects as of the date when made, and at and as of the
Closing Date, as though such representations and warranties
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were made at and as of the Closing Date, except for changes expressly
permitted or contemplated by the terms hereof or thereof.
7.2 PERFORMANCE. Southern shall have performed and complied with all
agreements, obligations and conditions required by this Agreement to be
performed or complied with by Southern on or prior to the Closing Date.
7.3 NO GOVERNMENTAL PROCEEDING OR LITIGATION. No suit, action,
investigation, inquiry or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated by this Agreement.
ARTICLE VIII
TERMINATION
8.1 METHODS OF TERMINATION. The transactions contemplated by this
Agreement may be terminated;
(a) By mutual consent of Texstar and Southern; or
(b) By either party on the Closing Date if any of the conditions
provided for in this Agreement shall not have been met or
waived in writing prior to such date.
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ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by written agreement between Texstar and
Southern.
9.2 WAIVER OF COMPLIANCE. Any failure of Texstar to comply with any
obligation, covenant, agreement, or condition herein may be waived by
Southern, and any failure of Southern to comply with any obligation,
covenant, agreement or condition herein may be waived by Texstar; PROVIDED,
HOWEVER, that any such waiver may be made only by a written instrument signed
by the party or parties granting such waiver, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
9.3 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns;
PROVIDED, HOWEVER, Texstar may assign this Agreement in whole or in part, or
assign any of its respective rights, interests or obligations hereunder
without the written consent of Southern.
9.4 FURTHER ASSURANCES. From time to time, at the request of Texstar,
and without further consideration, Southern at their expense, will execute
and deliver to Texstar such other
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documents, and take such other action as Texstar may reasonably request in
order to consummate more effectively the transactions contemplated hereby and
to vest in Texstar title to the Assets.
9.5 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas (without regard to its
conflicts of law doctrines).
9.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument and shall become a
binding agreement when one or more of the counterparts have been signed by
each of the parties hereto and delivered to each of the other parties.
9.7 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered by hand,
courier, mailed by registered or certified mail (return receipt requested),
or telecopied to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
IF TO SOUTHERN:
Southern Gas Co. of Delaware, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
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IF TO TEXSTAR:
Texstar Petroleum, Inc.
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: 000-000-0000
Fax: 000-000-0000
Attention: Xxxxx Xxxxxx
9.8 ENTIRE AGREEMENT. This Agreement, including the Exhibits attached
hereto, and the schedules, other documents and instruments referred to in
this Agreement (which are hereby incorporated by reference and deemed to
constitute a part of "this Agreement"), enbodies the entire agreement and
understanding of the parties hereto in respect of the subject matter
contained herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
9.9 HEADINGS. The section or paragraph headings contained in this
Agreement are for convenience reference only, and shall not in any way effect
the meaning or interpretation of this Agreement. This Agreement may be
executed simultaneously.
9.10 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable or being enforced by any rules, law or public
policy, all other conditions and provisions of this Agreement shall,
nevertheless, remain in full force and effect so long as economic or legal
substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid,
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illegal, or incapable of being enforced, the parties hereto shall negotiate
in good faith to modify this Agreement so as to affect the original intent of
the parties as closely as possible, in an acceptable manner to the end of the
transactions contemplated hereby are fulfilled to the extent possible.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
TEXSTAR PETROLEUM, INC.
BY: /s/ Xxxxxx X. XxXxxxx
------------------------------
Xxxxxx X. XxXxxxx
ITS:
------------------------------
President
SOUTHERN GAS CO. OF DELAWARE, INC.
BY: /s/ Xxxxx Xxxxxxx
------------------------------
Xxxxx Xxxxxxx
ITS:
------------------------------
General Counsel
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