ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into effective
as of October 1, 1998 (the "Effective Date"), between DDD Energy, Inc., a
Delaware corporation ("DDD"), as purchaser, and the DDD 1994 Oil & Gas
Partnership, a Texas general partnership (the "Partnership"), as seller, acting
by and through its managing general partner, DDD. Seitel, Inc. ("Seitel"), the
parent corporation of DDD, joins herein solely with respect to Section 3 hereof.
RECITALS:
WHEREAS, the Partnership was formed to invest in non-operating working
interests in oil and gas properties acquired from third parties by DDD;
WHEREAS, DDD is the managing general partner of the Partnership;
WHEREAS, DDD has generally taken title to the non-operating working
interests acquired by the Partnership in its own name to hold in trust for the
Partnership;
WHEREAS, the Partners in the Partnership (other than DDD) have voted,
pursuant to the terms of the partnership agreement governing the Partnership, to
approve the sale of all of the Partnership's assets (other than cash) to DDD on
the terms set forth herein;
WHEREAS, a committee of disinterested directors of Seitel has approved the
purchase of such assets by DDD from the Partnership; and
WHEREAS, it is anticipated that the transfer of title to the assets of the
Partnership to DDD will not require any formal documentation other than this
Agreement;
NOW, THEREFORE, DDD and the Partnership agree to the purchase and sale of
the assets hereunder subject to the following terms and conditions:
1. ACQUIRED ASSETS. The Partnership hereby sells, transfers and conveys to
DDD, and DDD hereby acquires, all of the assets of the Partnership (other than
cash), including but not limited to those non-operating working interests in oil
and gas properties listed on Exhibit A hereto (the "Assets"), effective as of
October 1, 1998.
2. PURCHASE PRICE. Seitel has contributed shares of Seitel, Inc. Common
Stock, par value $0.01 per share (the "Stock") to DDD in a transaction intended
to qualify under Treasury regulation ss.1.1502-13(f)(6)(2) and DDD will use the
Stock as a portion of "Purchase Price" payable by DDD to the Partnership. The
"Purchase Price" for the Assets shall be $1,167,303.00 payable by DDD to the
Partnership in the form of 32,642 shares of Stock valued at $11.00 per share and
$115.93 in cash.
3. REGISTRATION RIGHTS. Seitel has granted certain registration rights to
the Partnership (which may be transferred to its partners upon distribution of
such Stock to the partners) as set forth in a Registration Rights Agreement
effective as of the date hereof.
4. ASSUMED LIABILITIES. DDD hereby assumes the liability of the Partnership
to DDD of $808,125.07 for amounts advanced by DDD on behalf of the Partnership
prior to the Effective Date. DDD also assumes the liabilities disclosed on
Exhibit "B" hereto. Except as specifically set forth in this Section 3, DDD
assumes no obligations or liabilities of the Partnership.
5. COVENANTS, REPRESENTATIONS AND WARRANTIES.
(a) Conveyance of the Assets shall be with full substitution and
subrogation of DDD, its successors and assigns, in and to all covenants and
warranties heretofore given or made in respect of the rights, properties,
and assets conveyed and transferred hereby, or any part thereof. The
Partnership agrees to execute such further instruments and other documents
as may be reasonably necessary to more fully convey to DDD the Assets
conveyed or intended to be conveyed hereby.
(b) The Partnership warrants to DDD and its successors and assigns
title to the Assets against claims and demands of all persons whomsoever
may claim the same or any part thereof by, through and under the
Partnership, but not otherwise.
(c) The Partnership represents the following to DDD:
(i) The Partnership owns the Assets and has the full power and
right to sell and convey the same to DDD free of any lien, claim or
encumbrance by, through or under the Partnership;
(ii) The Partnership has complied, in all material respects, with
the provisions and requirements of all orders, regulations and rules
issued or promulgated by governmental authorities having jurisdiction
with respect to the Assets and has filed for and obtained all
governmental certificates, permits and other authorizations necessary
for current operation of the Assets other than permits, consents and
authorizations required for the sale and transfer of the Assets to DDD
which shall be the responsibility of DDD; and
(iii) The leases comprising the Assets are in full force and
effect.
(d) All ad valorem taxes regarding the Assets (i) for the years 1997
and before shall be borne and paid by the Partnership and (iii) for the
years 1998 and thereafter shall be borne and paid by DDD.
(e) The Partnership represents and warrants to DDD that the
Partnership has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions contemplated by this
Agreement for which DDD shall have any responsibility whatsoever. DDD
represents and warrants to the Partnership that DDD has incurred no
liability, contingent or otherwise, for brokers' or finders' fees relating
to the transactions contemplated by this Agreement for which the
Partnership shall have any responsibility whatsoever.
(f) The Partnership represents and warrants that each and every
partner in the Partnership is an accredited investor as defined in Rule 501
under the Securities Act of 1933, as amended.
(g) Investment Representations.
(i) The Partnership is acquiring the Stock for its own account
and the account of the partners therein 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 (other than a distribution to
such partners pro rata), except pursuant to an applicable exemption
under the Securities Act or in an offering covered by an effective
registration statement under the Securities Act relating to the Stock.
In acquiring the Stock, neither the Partnership nor its partners are
offering or selling, nor will offer or sell, for Seitel or DDD in
connection with any distribution of the Stock, and neither the
Partnership nor any partner therein has a participation or will
participate in any such undertaking or in any underwriting of such an
undertaking, except in compliance with applicable federal and state
securities laws.
(ii) The Partnership acknowledges that it and its partners have
been furnished with substantially the same kind of information
regarding Seitel and its business, assets, results of operations and
financial condition as would be contained in a registration statement
prepared in connection with a public sale of the Stock. The
Partnership further represents that it and its partners have had an
opportunity to ask questions of and receive answers from Seitel
regarding Seitel and its business, assets, results of operations and
financial condition and the terms and conditions of the issuance of
the Stock.
(iii) The Partnership acknowledges that it and its partners are
able to fend for itself or themselves, can bear the economic risk of
its or their investment in the Stock, and have such knowledge and
experience in financial and business matters that it or they are
capable of evaluating the merits and risks of an investment in the
Stock.
(iv) The Partnership and its partners understand that the Stock,
when issued to the Partnership or subsequently to a partner therein,
will not have been registered pursuant to the Securities Act or any
applicable state securities laws, that the Stock will be characterized
as "restricted securities" under federal securities laws, and that
under such laws and applicable regulations the Stock cannot be sold or
otherwise disposed of without registration under the Securities Act or
an exemption therefrom. In this connection, the Partnership and its
partners represent that they are familiar with Rule 144 promulgated
under the Securities Act, as currently in effect, and understand the
resale limitations imposed thereby and by the Securities Act. Stop
transfer instructions may be issued accordingly to the transfer agent
for the Stock.
(v) It is agreed and understood by the Partnership and its
partners that the certificates representing the Stock 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 EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT, OR (ii) IN ACCORDANCE WITH RULE 144 UNDER SUCH ACT,
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.
6. INDEMNITIES BY THE PARTNERSHIP AND DDD. As used in this paragraph and
the subparagraphs hereunder, "claims" shall include claims, demands, causes of
action, liabilities, damages, fines, penalties and judgments of any kind or
character, whether matured or unmatured, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated or known or unknown, and all costs and
fees (including, without limitation, interest, attorneys' fees, costs of
experts, court costs and costs of investigation) in connection therewith.
(a) The Partnership (i) shall be responsible for all duties and
obligations express and implied with respect to the Assets accruing prior
to the Effective Date, including, without limitation, those accruing under
or by virtue of any lease, contract, agreement, document, permit, law,
statute or rule, regulation or order of any governmental authority, except
those expressly assumed by DDD pursuant to this Agreement, and (ii) SHALL
DEFEND, INDEMNIFY AND HOLD DDD HARMLESS FROM ANY AND ALL CLAIMS IN
CONNECTION THEREWITH.
(b) DDD (i) shall be responsible for all duties and obligations
express and implied with respect to the Assets accruing from and after the
Effective Date, including, without limitation, those accruing under or by
virtue of any lease, contract, agreement, document, permit, law, statute or
rule, regulation or order of any governmental authority, and (ii) SHALL
DEFEND, INDEMNIFY AND HOLD THE PARTNERSHIP HARMLESS FROM ANY AND ALL CLAIMS
IN CONNECTION THEREWITH.
(c) THE PARTNERSHIP SHALL DEFEND, INDEMNIFY AND HOLD DDD HARMLESS FROM
ANY AND ALL CLAIMS FOR DAMAGES, INCLUDING, WITHOUT LIMITATION, ECONOMIC
HARM, PERSONAL INJURY, DEATH OR DAMAGE TO PROPERTY OR ENVIRONMENT, OR FOR
ENVIRONMENTAL CLEANUP, REMEDIATION, OR COMPLIANCE, OR FOR ANY OTHER RELIEF
(COLLECTIVELY, "LOSSES"), ACCRUING PRIOR TO THE EFFECTIVE DATE DIRECTLY OR
INDIRECTLY FROM OR INCIDENT TO THE USE, OCCUPATION, OPERATION, MAINTENANCE
OR ABANDONMENT OF ANY OF THE ASSETS, OR THE CONDITION OF THE ASSETS, OR THE
PRODUCTION OR SALE OF HYDROCARBONS THEREFROM, WHETHER LATENT OR PATENT,
INCLUDING, WITHOUT LIMITATION, CONTAMINATION OF THE PROPERTY OR PREMISES
WITH NATURALLY OCCURRING RADIOACTIVE MATERIALS.
(d) Any claim for indemnity under this paragraph or under any other
provision of this Agreement shall be made by written notice from the party
seeking indemnification (the "Indemnified Party") to the party required to
provide same (the "Indemnifying Party"), together with a written
description of any third-party claim against the Indemnified Party, stating
the nature and basis of such claim and, if ascertainable, the amount
thereof. The Indemnifying Party shall have a period of thirty (30) days
after receipt of such notice within which to respond thereto or, in the
case of a third party claim which requires a shorter time for response,
then within such shorter period as specified by the Indemnified Party in
such notice (the "Notice Period"). If the Indemnifying Party denies
liability or fails to respond to the notice within the Notice Period, the
Indemnified Party may defend or compromise the claim as it deems
appropriate without prejudice to any of the Indemnified Party's rights
hereunder, with no further obligation to inform the Indemnifying Party of
the status of the claim and no right of the Indemnifying Party to approve
or disapprove any actions taken in connection therewith by the Indemnified
Party. If the Indemnifying Party accepts liability, it shall so notify the
Indemnified Party within the Notice Period and elect either (a) to
undertake the defense or compromise of such third party claim with counsel
selected by the Indemnifying Party and reasonably approved by the
Indemnified Party or (b) to instruct the Indemnified Party to defend or
compromise such claim. If the Indemnifying Party undertakes the defense or
compromise of such third-party claim, the Indemnified Party shall be
entitled, at its own expense, to participate in such defense. No compromise
or settlement of any third-party claim shall be made without reasonable
notice to the Indemnified Party and, unless such compromise or settlement
includes a general release of the Indemnified Party in respect of the
matter with no admission of liability on the part of the Indemnified Party
and no constraints on the future conduct of its business, without the prior
written approval of the Indemnified Party.
THE INDEMNITIES CONTAINED IN THIS PARAGRAPH SHALL SURVIVE THE
EFFECTIVE DATE AND EXTEND TO THE INDEMNIFIED PARTY AND ITS OWNERS AND EACH
OF THEIR PRESENT AND FUTURE DIRECTORS, OFFICERS, EMPLOYEES,
REPRESENTATIVES, CONTRACTORS AND AGENTS, AND EACH OF THEIR HEIRS,
EXECUTORS, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE "INDEMNIFIED GROUP")
AND SHALL APPLY TO ALL OBLIGATIONS AND LIABILITIES DESCRIBED ABOVE,
INCLUDING THOSE BASED ON NEGLIGENCE, INCLUDING SOLE NEGLIGENCE, SIMPLE
NEGLIGENCE, CONCURRENT NEGLIGENCE, ACTIVE NEGLIGENCE, PASSIVE NEGLIGENCE,
GROSS NEGLIGENCE, STRICT LIABILITY OR FAULT OF THE INDEMNIFIED GROUP OR ANY
OTHER THEORY OF LIABILITY OR FAULT, WHETHER IN LAW (WHETHER COMMON OR
STATUTORY) OR EQUITY.
7. SEVERABILITY AND CHOICE OF LAW. If any one or more of the provisions of
this Agreement shall for any reason be held by a court of competent jurisdiction
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not effect the remaining provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been a part hereof. This Agreement shall be
construed in accordance with the laws of the State of Texas, without giving
effect to any conflict of law rules or provisions.
8. ENTIRE AGREEMENT AND WAIVER. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all previous communications, representations or agreements, whether
oral or written, with respect to the subject matter herein, and no agreement or
understanding varying or extending the terms hereof will be binding on either
party unless in writing and executed by an authorized representative of each
party. A benefit, right or duty provided by this Agreement shall be deemed
waived only when expressly agreed in writing between the parties. The waiver of
one instance of any act, omission, condition or requirement shall not constitute
a continuing waiver unless specifically so stated in the aforesaid written
waiver.
DDD ENERGY, INC.
By: /s/ XXXXXX X. XXXXXXX
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XXXXXX X. XXXXXXX, President
DDD 1994 OIL & GAS PARTNERSHIP
By: DDD Energy, Inc., Managing Partner
By: /S/ XXXXXX X. XXXXXXX
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XXXXXX X. XXXXXXX, President
SEITEL, INC.
(solely with respect to Section 3 hereof)
By: /S/ XXXXX X. XXXXXX
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XXXXX X. XXXXXX, Executive Vice President
