ASSET PURCHASE AGREEMENT
Exhibit 2.1
This Asset Purchase Agreement (the “Agreement”) is entered into as of August 14, 2009, by and
between Sonoran Energy, Inc. (“Seller”) and Texas Producers Energy LLC (“Buyer”). Reference is
made to the Bidding Procedures entered July 23, 2009 (the “Bidding Procedures”). Any capitalized
term not defined herein shall have the meaning assigned to it in the Bidding Procedures.
Recitals
WHEREAS, Seller desires to sell and Buyer desires to buy substantially all of the Assets of
Seller, as hereinafter described;
WHEREAS, Seller is a debtor-in-possession in a case under Chapter 11 of title 11 of the United
States Code (the “Bankruptcy Code”) pending in the United States Bankruptcy Court for the Northern
District of Texas, Dallas Division (the “Bankruptcy Court”) as Case No. 09-33852 (HDH) (the
“Bankruptcy Case”); and
WHEREAS, Seller has been soliciting bids for Seller’s assets, including the Assets, to be sold
pursuant to this Agreement, and has determined that the offer of Buyer for the Assets set forth
below is the highest and best offer received for those Assets and constitutes a fair and adequate
purchase price.
NOW, THEREFORE, in consideration of the mutual promises, covenants and conditions set forth
herein, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by all parties, the parties have agreed as follows:
Agreement
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Definitions. For purposes of this Agreement, the following terms shall have the
following respective meanings:
“Agreement” has the meaning set forth in the opening paragraph of this document.
“Assets” shall mean:
(a) the oil, gas and mineral leases described on Schedule 1.1(a) attached hereto (and
any ratifications and/or amendments to such leases, whether or not such ratifications or amendments
are described on such Schedule 1.1(a) (collectively, the “Leases”), and all rights and
privileges appurtenant to the Leases;
(b) all oil, gas and/or condensate xxxxx (whether producing, not producing or abandoned), and
water source, water injection, and other injection or disposal xxxxx located on
the Leases or lands unitized or pooled therewith, including the xxxxx listed on Schedule
1.1(b) attached hereto (collectively, the “Xxxxx”);
(c) all contracts and contractual rights and interests relating to the Leases or any other
interest described in this definition of Assets, including unit agreements, farmout agreements,
farmin agreements, saltwater disposal agreements, operating agreements, surface damage agreements,
and hydrocarbon sales, purchase, gathering, transportation, treating, marketing, exchange,
processing and fractionating agreements, and including, without limitation, the contracts and
agreements described in Schedule 1.1(c) attached hereto (collectively, the “Assumed
Contracts”);
(d) all files, records, and data relating to the Leases, Xxxxx and Contracts, or any other
Asset described herein, including, but not limited to, all title files, well files, lease files,
contract files, and production data and all seismic, geological and geophysical data and
information (collectively, the “Records”); and
(e) all other assets and/or interests of Seller located in Bidding Lot 3, (the state of
Louisiana) (collectively, the “Lands”), including, without limitation, any additional interest in
oil and gas rights, pooled units, xxxxx, facilities, hydrocarbons produced therefrom, equipment,
Receivables, trade secrets, other Intellectual Property, and all other assets used in Seller’s
Business.
“Assumed Contracts” means the executory contracts and unexpired leases set forth in
Schedule 1.1(c) hereto as the same may be modified through closing.
“Bankruptcy Case” has the meaning set forth in the recitals of this Agreement.
“Bankruptcy Code” has the meaning set forth in the recitals of this Agreement.
“Bankruptcy Court” has the meaning set forth in the recitals of this Agreement.
“Business” shall mean all related aspects of the business of hydrocarbon production, as
currently engaged in by the Seller in the State of Louisiana.
“Business Day” shall mean a date on which major banks are open for business in the City of
Dallas, Texas.
“Buyer” has the meaning set forth in the opening paragraph of this Agreement.
“Closing” shall mean the closing of the transactions contemplated herein.
“Closing Date” shall mean the date on which the Closing occurs.
“Excluded Assets” shall mean (i) all causes of action, other than Receivables, product
warranty claims, claims to enforce the Assumed Contracts or Leases or claims that third parties
have infringed or are infringing any of the Intellectual Property, (ii) cash and cash equivalents,
(iii) tax refunds, (iv) rights to the purchase price and other rights of the Seller under this
Agreement, (v) any excluded executory contracts or unexpired leases designated on Schedule
1.1(d) attached hereto or hereafter designated by Buyer as excluded prior to or at Closing and
(vi) all assets and interests of Seller not related to Seller’s Business, or the Assets
contemplated to be conveyed pursuant hereto.
“Intellectual Property” shall mean all intellectual property owned by the Seller, including,
without limitation, trade names, trade secrets and trademarks, which are useful in operating the
Business, as determined in good faith by Seller, including, without limitation, those set forth on
Schedule 1.1(e) hereto.
“Legal Proceedings” shall mean any judicial, administrative or arbitral actions, suits,
proceedings (public or private) or claims or any proceedings by or before a governmental or
administrative body.
“Material Adverse Effect” shall mean any result, occurrence, condition, fact, change,
violation, event, or effect that, individually or in the aggregate with any such other results,
occurrences, conditions, facts, changes, violations, events, or effects, has the effect of reducing
the value of the Assets by an amount exceeding Two-Hundred Thousand Dollars ($200,000.00).
“Permitted Exceptions” shall mean (a) all defects, exceptions, restrictions, easements, rights
of way and encumbrances disclosed in the title reports which will be made available to Buyer; (b)
any statutory liens for current taxes, assessments or other governmental charges not yet delinquent
or the amount or validity of which is being contested in good faith by appropriate proceedings
provided an appropriate reserve is established therefor; (c) mechanics’, carriers’, workers’,
repairers’ and similar liens arising or incurred in the ordinary course of business; (d) zoning,
entitlement and other land use and environmental regulations by any governmental body provided that
such regulations have not been violated; and (e) such other imperfections in title, charges,
easements, restrictions and encumbrances which would not result in a Material Adverse Effect on the
transaction contemplated by this Agreement.
“Receivables” shall mean accounts receivable from customers and debtors of Seller, or
otherwise arising in the ordinary course of the Business.
“Sale Order” shall mean an order of the Bankruptcy Court approving the transactions
contemplated in this Agreement.
“Seller” has the meaning set forth in the opening paragraph of this Agreement.
1.2 Purchase; Purchase Price and Xxxxxxx Money.
(a) Purchase. Subject to final approval of this transaction by the Bankruptcy Court
and upon the terms and subject to the conditions contained in this Agreement, Seller shall sell,
assign, and deliver to Buyer, free and clear of all claims, interests, liens and encumbrances,
other than the Permitted Exceptions, and Buyer shall purchase and accept, all right, title and
interest of the Seller in and to the Assets.
(b) Purchase Price. The consideration for the Assets consists of a cash component of
$410,000.00, ($365,000.00 of which shall be wired to Seller, or its designee, at Closing, and
$45,000.00 of which shall be paid directly by Buyer as part of the cure costs under the BPR
Agreement (as defined below) , and a non-cash component which shall consist of each of the
following:
1. An overriding royalty interest equal to 20% of 8/8ths in and to the Xxxxxx 25 Well and the
Leases associated therewith, each as further described on Schedules 1.1(a) and 1.1(b)
attached hereto.
2. An after payout of post-closing development costs, back-in 25% of 8/8ths working interest
in and to the Xxxxxx 25 Well and the Leases associated therewith.
3. An overriding royalty interest equal to 15% of 8/8ths in and to the Xxxxxx 36A Well and the
Leases associated therewith, each as further described on Schedules 1.1(a) and 1.1(b)
attached hereto, including any renewals and/or extensions of the Leases comprising the Xxxxxx 36A
unit.
4. An after payout of post-closing development costs, back-in 10% working interest in and to
the Xxxxxx 36A Well and the Leases associated therewith, including any subsequent acquisition,
renewal, and/or extension of the Leases comprising the Xxxxxx 36A unit, regardless of when such
acquisition, renewal, or extension is obtained by Buyer.
5. An overriding royalty interest equal to 5% of 8/8ths in all of Buyer’s currently existing
xxxxx and associated oil and gas leases located in the state of Louisiana, including the Xxxxx and
Leases, save and except the Xxxxxx 25 Well and the Xxxxxx 36A Well.
6. (a) An after payout of $100,000.00 post-closing net revenue from all of Buyer’s oil and gas
producing assets in the state of Louisiana, save and except the Xxxxxx 25 well and the Xxxxxx 36A
well, back-in 6% of 8/8ths working interest in all xxxxx and associated Leases in the state of
Louisiana, save and except the Xxxxxx 25 well and the Xxxxxx 36A well.
(b) Buyer shall execute all documents and agreements necessary to convey the non-cash
consideration interests, subject to customary and standard industry terms for the conveyance of
such interests. Upon the terms and subject to the conditions set forth in this Agreement, Buyer
shall pay to Seller for the Assets transfer in immediately available funds, subject to adjustment
as set forth in the next paragraph, provided, however that fifty thousand dollars ($50,000.00) (the
“BPR Cure Amount”) of the Purchase Price shall be applied by Buyer to cure the breach or breaches
under the Lease and memorandum of understanding with BPR Enterprises, Inc. (the “BPR Agreement”) at
Closing and Buyer shall receive a $45,000.00 credit against the Purchase Price for payment of the
BPR Cure Amount as described above.
(c) Assumed Liabilities: Buyer shall assume all cure costs associated with the BPR
Agreement.
(d) Xxxxxxx Money. Buyer has delivered to Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, LLP, in its
capacity as escrow agent (the “Escrow Agent”), a deposit in the amount of $25,000.00 (the “Escrow
Funds”). The Escrow Agent shall hold said Escrow Funds in an interest-bearing escrow account
pursuant to the terms of the escrow agreement entered into in connection with the Auction. Such
deposit shall be non-refundable in all events, excepting only if the transaction with Buyer does
not close due to (i) Seller accepting the bid of a rival bidder at a time when Buyer is not in
breach of this Agreement, (ii) Seller breaching any of its representations and warranties,
conditions or covenants hereunder, or (iii) the parties not
consummating this transaction by September 15, 2009. The Escrow Funds shall be released by
the Escrow Agent and delivered to either Buyer or Seller as set forth below. The Escrow Funds
(together with all accrued interest thereon) shall be distributed as follows:
(i) if Closing shall occur, the Escrow Funds shall be applied toward the Purchase Price
payable by Buyer to Seller and all accrued interest thereon shall be delivered to Buyer at Closing;
(ii) if this Agreement is terminated as a result of Buyer breaching any of its representations
and warranties, conditions or covenants hereunder, the Escrow Funds, together with all accrued
interest thereon, shall be delivered to Seller;
(iii) if this Agreement is terminated as a result of Seller’s breach of any of its
representations and warranties, conditions or covenants hereunder, or failure to obtain the Sale
Order by September 15, 2009, the Escrow Funds, together with all accrued interest thereon, shall be
delivered to Buyer.
1.3 No Assumption of Any Liabilities. It is understood and agreed that Buyer shall
not assume or become liable directly, indirectly, contingently or otherwise for the payment of any
debts, liabilities, losses, accounts payable, bank indebtedness, mortgages, or other obligations of
Seller of any nature whatsoever, whether related to the Assets or otherwise and such other
liabilities, whether the same are known or unknown, now existing or hereafter arising, of whatever
nature or character, whether absolute or contingent, liquidated or disputed, except as expressly
set forth herein. Buyer shall not have any successor liability related to Seller or the Assets to
the maximum extent permitted by law. Buyer shall only be liable for any taxes of any kind,
including production taxes and ad valorem taxes, incurred after the Closing Date. None of the
Louisiana taxing authorities have objected to the sale or the findings in the final cash collateral
order and Seller asserts that the Assets are being transferred free and clear of any tax claim for
taxes accrued or accruing for pre-closing periods. In the event a Louisiana taxing authority
commences an administrative or judicial action to recover taxes incurred prior to Closing, Buyer
may tender the defense of such action to the then owner(s) of the non-cash portion of the purchase
price. If the owner(s) of the non-cash portion of the purchase price decline to defend the action,
Buyer may, in its sole discretion, settle, compromise, aribitrate or adjudicate to a final
determination, Buyer’s liability, if any, for such tax. If, as a result of any settlement or award
or judgment, Buyer becomes liable for any such tax, Buyer shall be entitled to a credit against the
non-cash portion of the Purchase Price for such pre-Closing taxes.
1.4 Closing. Subject to the satisfaction or waiver of the conditions set forth
herein, the consummation of the purchase and sale of the Assets which has been approved by the
Bankruptcy Court shall take place within five Business Days (such day, the “Closing Date”)
following the satisfaction or waiver of all other conditions to Closing set forth in Article VI, in
the Dallas office of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, LLP, 0000 XxXxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxx 00000(xx on such other date at such other time and place as the parties shall agree in
writing). The Closing shall be deemed effective and all right, title and interest of Seller to be
acquired by Buyer hereunder shall be considered to have passed to Buyer as of 12:01 a.m. (Eastern
time) on the Closing Date.
(a) Deliveries by Seller. At the Closing, Seller shall deliver to Buyer all instruments of
conveyance and transfer, in the form and substance reasonably acceptable to Buyer, as may be
necessary to convey the Assets to Buyer.
(b) Deliveries by Buyer. At Closing, Buyer shall deliver to Seller (i) the Purchase Price
(less the Escrow Funds and the accrued interest thereon as of the Closing Date, less the non-cash
portions of the Purchase Price to be paid upon payout, and less the Cure Amount and (ii) such other
documents, instruments and certificates as Seller may reasonably request.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
2.1 Organization, Standing and Power. Seller is a corporation organized, validly
existing and in good standing under the laws of the State of Washington and has the requisite
corporate power and authority to carry on its business as now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power or authority would
not, individually or in the aggregate, have a Material Adverse Effect on Seller.
2.2 Authority. Subject to obtaining entry of an order from the Bankruptcy Court approving this
Agreement and authorizing the Sale of the Assets to the Buyer under the terms described herein (the
“Sale Order”), Seller has all requisite power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of this Agreement by
Seller and the consummation by Seller of the transactions contemplated hereby have been duly and
validly authorized by all necessary action on the part of Seller. This Agreement has been duly and
validly executed and delivered by Seller and (assuming the valid authorization, execution and
delivery of this Agreement by Buyer) this Agreement constitutes the legal, valid and binding
obligation of Buyer and is enforceable against Seller in accordance with its terms.
2.3 Brokers. No broker, investment banker or other person engaged by Seller is
entitled to any broker’s, finder’s or other similar fee or commission in connection with the
transactions contemplated by this Agreement.
2.4 No Conflict; No Consent of Third Parties. The consummation of the transactions
contemplated by this Agreement and compliance with the provisions hereof will not (i) conflict with
or result in a breach of the terms, conditions or provisions of any order of any court or other
agency of government, the charter or bylaws of Seller or any contract or permit with any third
party, (ii) result in the creation or imposition of any lien, charge or encumbrance of any kind
whatsoever on any of the Assets, or (iii) except for the entry of the Sale Order, at Closing,
require any consent, preferential right to purchase, or permit from any third party.
2.5 Title. To the knowledge of the Chief Restructuring Officer, Seller holds title to
all of the Assets free and clear of all liens, charges and encumbrances, except for the Permitted
Exceptions, and has not received any material claims of infringement against Seller related to the
Intellectual Property. Buyer will be vested with marketable or indefeasible title to the Assets.
2.6 Property Obligations. To the knowledge of the Chief Restructuring Officer, all
rentals, royalties, shut-in royalties, overriding royalties and other payments due pursuant to, or
with respect to, the Leases due through the Closing Date have been properly paid.
2.7 Due Notice. Seller has served notice of the hearing in the Bankruptcy Court on
this sale transaction on all creditors who are listed in Seller’s creditor matrix or who have filed
proofs of claim in the Bankruptcy Case as of the date of service.
2.8 Actions and Proceedings. Except as set forth in Statement of Financial Affairs of
the Debtor, there are no actions, suits, labor disputes or other litigation, legal or
administrative proceedings or governmental investigations pending or, to the Knowledge of Seller,
as hereinafter defined, threatened against or affecting Seller or any of its subsidiaries or any of
its or their present or former officers, directors, employees, consultants, agents or shareholders,
as such, or any of its or their properties, assets or business relating to the transactions
contemplated by this Agreement or which could have the effect of delaying or prohibiting the
consummation of the transactions contemplated by this Agreement other than the Bankruptcy Case.
For purposes of this Agreement, “Knowledge of Seller,” means the knowledge of the Chief
Restructuring Officer of Seller after due inquiry.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
3.1 Organization, Standing and Power. Buyer is a limited liability company organized,
validly existing, and in good standing under the laws of the State of Nevada and has the requisite
power and authority to carry on its business as now being conducted and to effect the transactions
contemplated hereunder.
3.2 Authority. Buyer has all requisite power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Buyer and the consummation by Buyer of the transactions contemplated hereby have
been duly and validly authorized by all necessary action on the part of Buyer. This Agreement has
been duly and validly executed and delivered by Buyer and (assuming the valid authorization,
execution and delivery of this Agreement by Seller) this Agreement constitutes the legal, valid and
binding obligation of Buyer and is enforceable against Buyer in accordance with its terms.
3.3 Consents and Approvals; No Violation. The execution and delivery of this
Agreement by Buyer do not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give to others a right of termination,
cancellation or acceleration of any obligation or the loss of a material benefit under, or result
in the creation of any lien, security interest, charge or encumbrance upon any of the properties or
assets of Buyer or any of its subsidiaries under, any provision of (i) the charter or
organizational document or bylaws of Buyer, (ii) any provision of the comparable charter or
organizational documents of any of Buyer’s subsidiaries, (iii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or
license applicable to Buyer or any of its subsidiaries or (iv) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Buyer or any of its subsidiaries or any
of their respective properties or assets, other than, in the case of clauses (ii), (iii) or (iv),
any such violations, defaults, rights, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not prevent the consummation of any of the transactions
contemplated hereby in accordance with the terms of this Agreement. No filing or registration
with, or authorization, consent or approval of, any governmental entity is required by or with
respect to Buyer or any of its subsidiaries in connection with the execution and delivery of this
Agreement by Buyer or is necessary for the consummation of the transactions contemplated by this
Agreement. Buyer has obtained an agreement to have any record-title interest in the Xxxxxx 25
Lease and/or Well held by Whole Tech, Inc., reconveyed to Buyer at Seller’s request at or prior to
Closing.
3.4 Actions and Proceedings. There are no actions, suits, labor disputes or other
litigation, legal or administrative proceedings or governmental investigations pending or, to the
Knowledge of Buyer, as hereinafter defined, threatened against or affecting Buyer or any of its
subsidiaries or any of its or their present or former officers, directors, employees, consultants,
agents or shareholders, as such, or any of its or their properties, assets or business relating to
the transactions contemplated by this Agreement or which could have the effect of delaying or
prohibiting the consummation of the transactions contemplated by this Agreement. For purposes of
this Agreement, “Knowledge of Buyer,” means the knowledge of Xxxxx X. Row, the attorney-in-fact of
Buyer after due inquiry.
3.5 Brokers. No broker, investment banker or other person engaged by Buyer is
entitled to any broker’s, finder’s or other similar fee or commission payable by the Seller in
connection with the transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Buyer.
3.6 Financials. The financial support documents of Buyer provided to Seller dated as
of August 12, 2009, fairly represent the financial position of Buyer as of the date therefore and
there has been no material adverse change in the Buyer since the date of such support documents.
ARTICLE IV
COVENANTS OF SELLER
4.1 Pre-Closing Covenants of Seller. Seller covenants to Buyer that pending
completion of the sale of Assets contemplated hereby and as of the Closing Date:
(a) Each representation and warranty set forth in Article II hereof shall be true and correct
in all material respects.
(b) Seller will maintain itself at all times up to and including the Closing Date as a duly
licensed corporation in good standing under the laws of its state of incorporation.
(c) Seller will not mortgage, pledge or allow any lien to be placed upon any of the Assets,
except those in existence on June 19, 2009, and those authorized upon order of the
Bankruptcy Court with due advance notice to Buyer. Any sale shall be free and clear of any
and all such liens.
(d) Seller will operate the Business in a manner reasonably consistent with the post-petition
practices in place and will not sell any Assets to be conveyed hereunder.
(e) Seller will, as promptly as practicable following the execution of this Agreement, file
with the Bankruptcy Court the sale motion seeking entry of the Sale Order.
ARTICLE V
COVENANTS OF BUYER AND SELLER
5.1 Approvals of Third Parties; Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions set forth in this Agreement, each of the
parties agrees to use reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement, including, without limitation: (i)
the obtaining of all necessary actions or non-actions, waivers, consents, approvals, authorizations
and exemptions from all governmental entities and the making of all necessary registrations and
filings (including filings with governmental entities) and the taking of all reasonable steps as
may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any
governmental entity; (ii) the obtaining of all necessary consents, approvals or waivers from third
parties, including Seller’s lenders; (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby, including seeking to have any stay or temporary restraining
order entered by any court or other governmental entity vacated or reversed; and (iv) the execution
and delivery of any additional instruments necessary to consummate the transactions contemplated by
this Agreement. No party to this Agreement shall consent to any voluntary delay of the
consummation of the transactions contemplated by this Agreement at the behest of any governmental
entity without the consent of the other parties to this Agreement, which consent shall not be
unreasonably withheld. Buyer shall cause the settlement agreement related to Xxxxxx 25 to be
entered into and consummated with no adjustment to the purchase price and non-cash consideration.
(b) Seller will use its reasonable best efforts to cause or obtain the satisfaction of the
conditions applicable to Seller specified in Sections 6.1 and 6.3 below. Buyer will use its
reasonable best efforts to cause or obtain the satisfaction of the conditions applicable to Buyer
specified in Sections 6.1 and 6.2 below.
5.2 Cure of BPR Agreement. Buyer will apply the BPR Cure Amount from the Purchase
Price to cure any and all breaches and/or defaults under the BPR Agreement on or within 1 business
day of the Closing Date, as described above.
5.3 Fees and Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby including, without limitation, the fees and
disbursements of counsel, financial advisors and accountants, shall be paid by the party
incurring such costs and expenses.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
6.1 Conditions to Each Party’s Obligations. The respective obligations of each party
to effect the transactions contemplated by this Agreement shall be subject to the fulfillment on or
prior to the Closing Date of the following conditions:
(a) No Order Preventing Transactions. No court or other governmental entity having
jurisdiction over Seller or Buyer, or any of their respective subsidiaries, shall have enacted,
issued, promulgated, enforced or entered any law, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent) which is then in effect and
has the effect of making the transactions contemplated by this Agreement illegal.
(b) Bankruptcy Court Approval. The Bankruptcy Court shall have entered the Sale
Order, which Sale Order shall not have been reversed or subject to any stay. The Sale Order shall
be in form and substance acceptable to Buyer in its reasonable discretion and shall contain
customary protections for the Buyer, including that the assets are being sold free and clear of all
liens, claims and encumbrances; the Buyer will not be liable to any third party as a successor to
the Seller; that the sale is an arms length, good faith transaction for fair considerations; and
that proper notice of the sale was provided to all parties entitled to notice.
6.2 Conditions to Obligation of Seller. The obligation of Seller to effect the
transactions contemplated by this Agreement shall be subject to the fulfillment on or prior to the
Closing Date of the condition that Buyer shall have performed in all material respects each of its
covenants and agreements contained in this Agreement required to be performed on or prior to the
Closing Date, including payment of the Purchase Price, and each of the representations and
warranties of Buyer contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date as if made on and as of such date.
6.3 Conditions to Obligations of Buyer. The obligations of Buyer to effect the
transactions contemplated by this Agreement shall be subject to the fulfillment on or prior to the
Closing Date of the following additional conditions:
(a) Performance of Obligations; Representations and Warranties. Seller shall have
performed in all material respects each of its covenants and agreements contained in this Agreement
required to be performed on or prior to the Closing Date, and each of the representations and
warranties of Seller contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date as if made on and as of such date.
(b) Transfer and Assumption Documents. Seller shall convey title to Buyer by
executing documents in form and substance reasonably acceptable to Buyer. Such conveyance shall
include 100% of the working interest in the Xxxxxx 25 Well including implementing the settlement
agreement with no cost to the Seller or credit against the Purchase Price. Buyer shall provide
reasonable cooperation to Seller to assist Seller in satisfaction of this condition.
(c) Other Closing Documents. Seller shall deliver lien releases from the liens filed
by Standard Bank as Collateral Agent on the Assets and such other documents as Buyer may reasonably
request at Closing.
(d) Transition Services Agreement. Buyer and Seller shall have agreed upon the terms
of a Transition Services Agreement, which shall have been executed by Seller and shall have been
delivered to Buyer and executed by Buyer at Closing.
ARTICLE VII
TERMINATION, AMENDMENT, AND WAIVER
7.1 Termination. This Agreement may be terminated in writing at any time prior to the
Closing Date:
(a) By Buyer, (i) if the Closing does not occur within fifteen (15) days after the date of
entry of a final and nonappealable Sale Order and such failure is not due to a breach by Buyer or
(ii) no Sale Order has been entered by September 15, 2009; other than due to Buyer’s breach of its’
representations and warranties, covenants or conditions of this Agreement;
(b) By Seller, (i) if the Closing does not occur within fifteen (15) days after the date of
entry of a final and nonappealable Sale Order and such failure is not due to a breach by Seller or
(ii) no Sale Order has been entered by September 15, 2009; other than due to Seller’s breach of
its’ representations and warranties, covenants or conditions of this Agreement; or
(c) By Buyer or Seller if, before the Closing Date, the other party is in material breach of
any representations, warranty, covenant, condition or agreement contained herein and has not cured
the same.
7.2 Liability if Agreement Terminated. Termination of this Agreement shall not
relieve any party of any liability for breaches of this Agreement prior to the date of termination.
7.3 Expense Reimbursement. In the event Buyer is the successful bidder at auction for
the Assets and its bid is approved by the Bankruptcy Court, and subsequently an alternative
transaction is closed pursuant to which the Assets are sold to another buyer (other than due to
Buyer’s breach of its’ representations and warranties, covenants or conditions of this Agreement),
Buyer shall be entitled to an expense reimbursement of its out of pocket expenses up to
$50,000.00.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Survival of Representations and Warranties. The representations and warranties
set forth in this Agreement or in any schedule, exhibit or instrument delivered pursuant to this
Agreement by Seller shall terminate upon Closing. The parties hereto agree that the covenants
contained in this Agreement to be performed at or after Closing shall survive the Closing
hereunder, and each party hereto shall be liable to the other after the Closing for any breach
thereof.
8.2 Expenses. Each party shall pay its own expenses incident to this Agreement and
the transactions hereby contemplated. In the event of any litigation between the parties arising
out of this Agreement, the prevailing party shall be entitled to recover from the other party its
court costs and reasonable attorneys’ fees at the trial and all appellate levels.
8.3 Notices. Any notice, communication, request, reply or advice hereunder (a
“Notice”) must be in writing and shall be delivered by email with a copy by reputable overnight
commercial courier service or hand delivery. Notice so given shall be effective when delivered on
a Business Day before 5 p.m. Refusal of delivery shall be deemed to be receipt. Notice given in
any other manner shall be effective when received by the party to whom it is given. For purposes
of Notice, the addresses of the parties shall be as follows:
If to Seller:
|
Sonoran Energy, Inc. | |
| Attn: Xxxxxxx X. Xxxxxx, Chief Restructuring Officer | ||
| XX Xxx 0000 | ||
| Xxxxxxxxxxxx, XX 00000 | ||
| Facsimile: (000) 000-0000 | ||
| Email: xxxxxxx@xxxxxxxxxxxxxxxxxxx.xxx | ||
| With a copy (which shall not constitute notice) to: | ||
| Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, LLP | ||
| Attn: Xxxx Xxxxx | ||
| Xxxxxx Xxxxxxxx | ||
| 0000 XxXxxxxx, Xxxxx 0000 | ||
| Xxxxxx, XX 00000 | ||
| Facsimile: (000) 000-0000 | ||
| Email: xxxxxx@xxxxxxxxxxxx.xxx | ||
| Email: xxxxxxxxx@xxxxxxxxxxxx.xxx | ||
If to Buyer:
|
Texas Producers Energy LLC | |
| Attn: Xxxxx X. Row | ||
| Galleria Financial Center | ||
| 0000 Xxxxxxxxxx Xxxx, Xxxxx 000 | ||
| Xxxxxxx, XX 00000 | ||
| Email: xxxx@xxxxx.xxx | ||
| With a copy (which shall not constitute notice) to: | ||
| Xxxxx & XxXxxxxx LLP | ||
| Attn: Xxxxx X. Xxxxxx | ||
| 2300 Xxxxxxxx Xxxx Center | ||
| 0000 Xxxx Xxxxxx | ||
| Xxxxxx, XX 00000 | ||
| Facsimile: (000) 000-0000 | ||
| Email: xxxxx.x.xxxxxx@xxxxxxxx.xxx |
8.4 Section and Other Headings. Section or other headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
8.5 Exhibits. Each exhibit attached hereto shall be deemed to be a part of this
Agreement to the same extent as if set forth verbatim in the body of this Agreement.
8.6 Enforcement. The laws of the State of Texas shall govern the interpretation,
validity, performance and enforcement of this Agreement. If any provision of this Agreement should
be held to be invalid or unenforceable, the validity and enforceability of the remaining provisions
of this Agreement shall not be affected thereby. So long as the Bankruptcy Case remains open, the
parties may enforce this Agreement in the Bankruptcy Court and consent to the Bankruptcy Court’s
jurisdiction with respect to all such matters. After the Bankruptcy Case closes, the parties agree
that they will submit to jurisdiction in the State of Texas.
8.7 Parties; No Third Party Beneficiaries. This Agreement shall be binding upon and
enforceable against, and shall inure solely to the benefit of, the parties hereto and their
respective successors and assigns. Nothing herein shall confer any rights or remedies to any
person or entity which is not a party hereto. No assignment of this Agreement or of any rights or
obligations hereunder may be made by any party hereto without prior written consent of the other
parties hereto and any attempted assignment with out the required consnets shall be void.
8.8 Counterparts. This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one and the same instrument and any of the parties hereto
may execute this Agreement by signing any such counterpart.
8.9 Facsimile Signature. This Agreement may be executed and accepted by facsimile
signature and any such signature shall be of the same force and effect as an original signature.
8.10 Further Assurances. Seller will execute such further documentation or take such
further actions as Buyer may reasonably request to effectuate and record the transfer of the Assets
and implement this Agreement.
8.11 WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY RIGHT TO
TRIAL BY JURY IN CONNECTION WITH ANY DISPUTE RELATED IN ANY WAY TO BUYER’S BID OR THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above.
| BUYER TEXAS PRODUCERS ENERGY LLC |
||||
| By: | /s/ Xxxxx X. Row | |||
| Name: | Xxxxx X. Row | |||
| Title: | Attorney-in-Fact | |||
| SELLER SONORAN ENERGY, INC. |
||||
| By: | /s/ Xxxxxxx Xxxxxx | |||
| Name: | Xxxxxxx Xxxxxx | |||
| Title: | Chief Restructuring Officer | |||
