1
EXHIBIT 10.21
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement ("Agreement") is made this 31st day of March,
2000, between UNION OIL COMPANY OF CALIFORNIA, a California corporation, whose
address is P. O. Xxx 00000, Xxxxxxxxx, Xxxxxxxxx 00000-0000 ("Seller"), and
ENERGY PARTNERS, LTD., a Delaware corporation, whose address is 000 Xx. Xxxxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxx 00000 ("Purchaser").
RECITALS
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase
from Seller on the terms and conditions set forth in this Agreement certain oil
and gas interests, properties and related rights.
NOW, THEREFORE, for good and valuable consideration and the covenants and
agreements contained herein, Seller and Purchaser agree as follows:
I.
PURCHASE AND SALE
1.1 EFFECTIVE DATE AND ASSETS AND DISCLAIMER OF REPRESENTATIONS AND
WARRANTIES: Subject to the terms and conditions of this Agreement,
Seller shall sell and Purchaser shall purchase and pay for at Closing
(as defined herein), effective as of 7:00 a.m. on January 1, 2000
("Effective Date"), ON AN "AS IS, WHERE IS, WITH ALL FAULTS" BASIS,
WITHOUT ANY REPRESENTATION OR WARRANTY OF TITLE, EXCEPT AS SET FORTH IN
SECTION 1.6, WHATSOEVER, EITHER EXPRESS OR IMPLIED, EVEN FOR THE RETURN
OF THE PURCHASE PRICE, AND WITHOUT ANY OTHER REPRESENTATIONS AND
WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY OF TITLE, FITNESS
FOR A PARTICULAR PURPOSE, MERCHANTABILITY, OR FREEDOM FROM HIDDEN VICES
OR DEFECTS OF THE MATERIAL, EQUIPMENT OR FACILITIES CONVEYED, AND
WITHOUT WARRANTY OF ANY KIND OR NATURE WHATSOEVER, the following:
2
Purchase and Sale Agreement
Page No. 2
All of Seller's right, title and interest in and to:
(a) The oil, gas and mineral leases described on Exhibit "A" attached
hereto, including any and all record title, operating rights, leasehold
interests, oil and gas leasehold estates, royalties, overriding
royalties and other mineral interests as set forth in Exhibit "A"
attached hereto and made a part hereof, whether or not specifically
described on said exhibit ("Leasehold Property"); and,
(b) All xxxxx, equipment and facilities which are located on, appurtenant
to, or used directly in connection with the production, treatment or
transportation of oil and gas from the Leasehold Property including but
not limited to platforms, pipelines, gathering systems, fixtures, tools
and other personal property acquired for use or used on the Leasehold
Property; and,
(c) Any easements, rights of way, permits, licenses, surface leases, use
agreements, and servitudes to the extent assignable, applicable or used
in connection with operation of the Leasehold Property, including but
not limited to those listed on Exhibit "B", together with all of
Seller's rights and interests in and to all units, pooling and
unitization agreements, operating agreements, gas balancing agreements,
gas sales contracts and other agreements and instruments to the extent
that they directly relate to or are associated with the Leasehold
Property, including, but not limited to those identified on Exhibit "E"
attached hereto; except any insurance contracts or bonds held by Seller
or its parent, subsidiary or affiliated Corporations for Seller's
benefit; and any employment, consulting, office lease or accounting
service contracts; and,
(d) All other miscellaneous interests or other assets on or used in
connection with the Leasehold Property, including at Purchaser's
expense, copies of all files and records (except as set forth below)
relating to the Leasehold Property: subject to any restrictions on
Seller's disclosure of the same, including but not limited to lease
files, unit files, lease contract files, well files and geological
data, but excluding data or information which is (1) utilized to
calculate reserves (2) restricted by third party agreement (3) covered
by the attorney-client privilege and (4) corporate, tax or computer
records (collectively, the "Records"). THIS AGREEMENT BY SELLER TO
CONVEY COPIES OF THE AFOREMENTIONED RECORDS IS GRANTED BY SELLER TO THE
EXTENT THAT SELLER HAS AUTHORITY TO DO SO WITHOUT VIOLATING ANY
CONFIDENTIALITY OBLIGATIONS TO A THIRD PARTY, IS WITHOUT WARRANTY AS TO
THE ACCURACY OR COMPLETENESS OF THE INFORMATION DELIVERED, AND SHALL BE
AT PURCHASER'S SOLE EXPENSE.
All of the foregoing rights, interests and properties are hereinafter
collectively referred to as the "Assets."
It is specifically agreed that Seller is not selling and Purchaser is not
purchasing the following assets ("Excluded Assets"):
3
Purchase and Sale Agreement
Page No. 3
(i) Those interests in pipelines, facilities, contract rights and
surface access agreements owned by Unocal that are not used in
connection with the Assets or which cover lands described in
the Leasehold Property, but which are used in connection with
properties that are not being sold under the terms of this
Agreement to the extent only identified on Exhibit "C";
(ii) any right to use the "Seller" name, marks, trade dress or
insignia, or to use the name of any other subsidiary of Seller
and all of Seller's intellectual property, including, but not
limited to patents, trade secrets, and copyrights;
(iii) all amounts due or payable to Seller as adjustments or refunds
under any contracts affecting the Assets for all periods of
time prior to the Effective Date, specifically including,
without limitation, amounts recoverable from audits under
operating agreements;
(iv) all rights, titles, claims and interests of Seller or its
Affiliates, which accrued prior to the Effective Date, to or
under any policy or agreement of insurance or indemnity, any
bond, or to any insurance proceeds or awards; and any
employment, consulting, office lease or accounting service
contracts;
(v) all claims and chooses in action of Seller arising from acts,
omissions or events, or damages to or destruction of property,
occurring prior to the Effective Date; and
(vi) all proceeds, benefits, refunds, settlement, income or revenue
accruing and attributable to the Assets prior to the Effective
Date, and any claims of Seller for refunds of or losses
carried forwards with respect to taxes attributable to the
Assets for any period prior to the Effective Date.
1.2 CLOSING: Closing, as used herein, shall mean the date on which the
Purchase Price (as defined below) is to be paid to Seller and the
conveyancing instruments (as described herein) are to be delivered to
Purchaser. Closing shall occur on March 31, 2000, at Seller's office
located at Suite 3400, 000 Xx. Xxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxx
00000, or at such other place, date and time as may be mutually agreed
upon by Seller and Purchaser.
1.3 ASSUMPTION OF OBLIGATIONS: From and after the Effective Date, but
subject to the terms of Section 1.5 and except for those matters
specifically retained by Seller in this Agreement and those matters set
forth on Exhibit "D", for which Seller retains liability ("Retained
Matters"), Purchaser shall personally assume, pay for, discharge, be
responsible for, perform and comply with all duties, liabilities and
obligations of Seller, express or implied, relating to the Assets,
including, but not limited to, those arising from or by virtue of
Contract, as hereinafter defined, and those arising from or by virtue
of any permit, statute, rule, regulation or order of any governmental
authority, together with all
4
Purchase and Sale Agreement
Page No. 4
Assumed Liabilities (as hereinafter defined), REGARDLESS OF WHETHER
ATTRIBUTABLE (IN WHOLE OR IN PART) TO THE SOLE, JOINT OR CONCURRENT
NEGLIGENCE, STRICT LIABILITY, BREACH OF CONTRACT, ENVIRONMENTAL
LIABILITY, REGULATORY LIABILITY OR OTHER FAULT OR RESPONSIBILITY OF
SELLER OR ANY OTHER PERSON OR PARTY, except as otherwise set forth
herein. For purposes hereof, the following terms shall have the
following respective definitions:
"ASSUMED LIABILITIES" means all Environmental Liabilities, General
Liabilities, Plugging and Abandonment Obligations and other liabilities
and obligations assumed by Purchaser under the terms of this Agreement.
"GENERAL LIABILITIES" means subject to the limitations of Section 1.5
below, all obligations, duties, losses, liabilities, claims, fines,
expenses, damages, costs (including attorneys fees and expenses) or
penalties created by, related to, or arising out of ownership or
operation of the Assets, any contractual relationship, or any
applicable law, order, rule, regulation, judgment or decree of any
federal, state, tribal, county or municipal governing authority having
jurisdiction over the Assets or the Parties, whether Accruing before or
after the Effective Date and whether attributable, in whole or in part,
to actions, events or conditions existing or occurring before or after
the Effective Date; excluding those obligations, duties or liabilities
for the payment of royalties, overriding royalties and taxes which
Accrued prior to the Effective Date, those addressed in Section 1.5 and
Retained Matters.
"ENVIRONMENTAL LAWS" means any applicable laws, orders, rules,
regulations, judgments or decrees of any federal, state, tribal, county
or municipal governing authority having jurisdiction over any Asset or
Party which relate to pollution, the protection or cleanup of the
environment, or the release or disposal of deleterious substances into
the environment, including but not limited to ambient air, surface
water, groundwater, land surface or subsurface strata; including all
such laws, orders, rules, regulations, judgments or decrees as they may
be amended, varied or modified in the future.
"ENVIRONMENTAL LIABILITIES" means all obligations, duties, losses,
liabilities, claims, fines, expenses, damages, costs (including
attorney's fees and expenses) or penalties created by, related to, or
arising out of any Environmental Law, whether Accruing before or after
the Effective Date, and whether attributable, in whole or in part, to
actions, events or conditions existing or occurring before or after the
Effective Date.
"PLUGGING AND ABANDONMENT OBLIGATIONS" means all usual and normal
prudent operations for the plugging, abandonment, surface restoration,
site clearance, and disposal of related waste materials, including NORM
and asbestos, of all oil, gas, injection, water or other xxxxx, sumps,
pits, ponds, tanks, impoundments, foundations, pipelines, structures
and equipment of any kind or description on the Assets, in compliance
with all applicable contractual obligations and applicable rules and
regulations of governmental bodies having
5
Purchase and Sale Agreement
Page No. 5
jurisdiction over the Assets. Plugging and Abandonment Obligations do
not include cleanup of polluted lands, air or water other than routine
cleanup normally associated with plugging and abandonment (such cleanup
obligations which are other than routine being included within the
definition of Environmental Liabilities).
"ACCRUING" or "ACCRUED" means, with respect to any obligation, duty,
loss, liability, claim, fine, expense, damage, cost or penalty, the
occurring or happening of any event which causes such obligation, duty,
loss, liability, claim, fine, expense, damage, cost or penalty to
become demandable, requirable, assertible, enforceable, due and owing,
or being incurred or occurring, as the case may be.
1.4 CALL ON PRODUCTION:
(a) On Oil - If not already reserved by another party, Seller hereby
reserves, at its option, the option to buy any and all oil and other
liquid hydrocarbons produced from or attributable to the Assets from
the Effective Date to May 1, 2000 at 7:00 a.m.
(b) Applicable price - The price to be paid shall be:
(i) Seller's posted market price at the xxxxx for oil or
condensate, or if Seller has no posted price at the well
prevailing in the field where produced for substance of like
grade and gravity. If there are no such posted price, the
price to be paid by Seller will be the average price being
paid by purchasing companies in the field or locality where
the Assets are located for substance of like grade and
gravity.
(ii) Seller shall never be required to pay a price higher than the
price allowed by State or Federal statutes or regulations in
effect at the time of purchase.
1.5 RETAINED CONTRACTUAL OBLIGATIONS: To the extent binding on Seller,
Purchaser and Seller agree that the Assets shall be conveyed subject to
the terms and conditions of the contracts, agreements, letter
agreements, pooling agreements, easements, rights-of-way and all other
agreements or instruments which are listed on Exhibit "E" and the
leases described on Exhibit "A" hereto (collectively the "Contracts").
Upon closing, Purchaser shall expressly assume Seller's obligations
under the Contracts insofar as such obligations relate to the Assets
and are attributable to the period of time after the Effective Date.
However, under no circumstance shall Purchaser assume or be responsible
for (i) contractual performance or non-performance by Seller due and
owing prior to the Effective Date; (ii) underpayments or failure to pay
royalties, overriding royalties, and other burdens due by Seller on or
under the Assets prior to the Effective Date; or (iii) any accounting
or payments due to third parties for hydrocarbon production (or the
proceeds from the sale thereof) or transportation or processing
attributable to the period of time
6
Purchase and Sale Agreement
Page No. 6
prior to the Effective Date; all of which shall remain the
responsibility of Seller for which Seller shall indemnify and hold
harmless Purchaser.
1.6 TITLE:
Seller will convey all of its rights, title and interest in and to the
Assets to Purchaser without warranty of title, express, statutory or
implied, EXCEPT that Seller specifically warrants and agrees to defend
title to the interests in the Assets as set forth and described on
Exhibit "A" hereto, against any and all claims and demands of all
persons claiming an interest (including an encumbrance) in the Assets
by, through and/or under Seller and/or Spirit (as hereinafter defined)
but not otherwise; and with full substitution and subrogation to all
rights and actions of warranty against all former owners and vendors.
II.
CONSIDERATION
2.1 PURCHASE PRICE; ALLOCATIONS: Subject to the terms and conditions of
this Agreement, Purchaser shall purchase the Assets at Closing for
forty-eight million two hundred fifty thousand ($48,250,000.00)
("Purchase Price"), in cash, subject to the adjustments provided in
Section 2.3 below and other amounts provided elsewhere herein.
2.2 Intentionally omitted.
2.3 ADJUSTED PURCHASE PRICE: The net price which Purchaser shall pay for
the Assets ("Adjusted Purchase Price") shall be:
(a) The Purchase Price as set forth in Section 2.1 above;
(b) Plus the amount of all expenditures made by Seller that are
attributable to the Assets for the period between the Effective Date
and Closing, including, without limitation, royalties, rentals and
similar charges and expenses, including those billed under applicable
operating agreements, and all prepaid expenses;
(c) Less the amount of (or Purchaser's good faith estimate of) any
expenditures that are attributable to the Assets prior to the Effective
Date, which have not been paid for or satisfied by Seller.
(d) Plus the value of all oil in storage at 7:00 a.m. on the Effective Date
that is credited to the Assets (value to be the market or contract
price in effect as of Effective Date less royalties, other lease
burdens and taxes on production) which has not been sold prior to
closing. If the Effective Date is subsequent to the date of this
instrument, all oil, condensate or liquid hydrocarbons in storage shall
be gauged and all gas meter charts
7
Purchase and Sale Agreement
Page No. 7
shall be replaced at the Effective Date with Purchaser having the right
to have a representative present at the Effective Date for
Seller-operated interests;
(e) Less the amount of the proceeds received by Seller between the
Effective Date and Closing that are attributable to the Assets after
the Effective Date, net of any royalties, other lease burdens and any
production, severance, sales or windfall profit taxes not reimbursed to
Seller by the Purchaser;
(f) Less the amount of (or Seller's good faith estimate of) all proceeds
owed by Seller to Purchaser for the oil and other liquid hydrocarbons
produced from or attributable to the Assets from the Effective Date to
May 1, 2000 at 7:00 a.m.
(g) Less or plus, as applicable, any amounts determined to be a price
adjustment pursuant to Article III hereof ("Title Examination");
(h) Less an amount equal to the value of the Assets, determined pursuant to
Article III hereof, with respect to which Preferential Purchase Rights
have been exercised;
(i) Less or plus any other amounts mutually agreed upon in writing by the
parties hereto;
(j) Plus the amount of royalty overpaid to the MMS by Purchaser for
production attributable to Seller's interest in the Assets prior to the
Effective Date. The parties agree for the limited purpose of this
adjustment (subject to the provisions of Section 9.3 below) that this
amount is $2,447,124.92.
2.4 PAYMENT OF ADJUSTED PURCHASE PRICE: At Closing, Purchaser shall pay to
Seller the Adjusted Purchase Price, by cashier's check or wire transfer
of cash in United States Currency, in a manner specified by Seller in
writing. Seller shall present to Purchaser at least three business days
prior to Closing a proposed closing statement and the parties shall
agree on said statement prior to Closing.
2.5 Intentionally omitted.
III.
TITLE EXAMINATION
3.1 ACCESS TO TITLE INFORMATION: After the date of this Agreement and until
Closing, at Purchaser's request, Seller shall make the records
described in Section 1.1(d) available to Purchaser at Seller's office
located at 4021-4023 Ambassador Xxxxxxx Parkway, Xxxxxxxxx, Xxxxxxxxx
00000, or such other place as deemed appropriate by Seller, during
normal business hours for examination by Purchaser. Seller shall not be
obligated to perform any additional title work, and any additional
abstracts and title opinions will not be made current by Seller. NO
WARRANTY OR REPRESENTATION OF ANY KIND
8
Purchase and Sale Agreement
Page No. 8
IS MADE BY SELLER, AS TO THE INFORMATION SO SUPPLIED, AND PURCHASER
AGREES THAT ANY CONCLUSIONS DRAWN THEREFROM SHALL BE THE RESULT OF ITS
OWN INDEPENDENT REVIEW AND JUDGMENT. NO WARRANTY OF ANY KIND IS MADE BY
SELLER AS TO THE INFORMATION SO SUPPLIED, AND PURCHASER AGREES THAT ANY
CONCLUSIONS DRAWN THEREFROM SHALL BE THE RESULT OF ITS OWN INDEPENDENT
REVIEW AND JUDGMENT. SUBJECT TO THE OTHER PROVISIONS OF THIS AGREEMENT,
PURCHASER ASSUMES THE RISK OF ANY TITLE DEFECTS AND/OR CONFLICTING
ADVERSE RIGHT(S), TITLE(S) AND/OR INTEREST(S) WHICH A RECORD TITLE
CHECK AND/OR PHYSICAL INSPECTION REVEALS OR WOULD HAVE REVEALED.
3.2 TITLE DEFECTS: For the purpose of this Agreement, a "Title Defect"
shall mean a material (defined as greater than $10,000) deficiency
(other than with respect to a Permitted Encumbrance, as defined below)
in one or more of the following respects only:
(a) Seller's title at the Effective Date, as to one or more of the Assets,
is subject to an outstanding mortgage, deed of trust, lien or
encumbrance or adverse claim that is not listed on Exhibit "F" attached
hereto, nor considered a "Permitted Encumbrance," as that term is
defined below;
(b) Seller's interest in any of the Assets is more or less than represented
on Exhibit "A" hereto;
(c) Seller's rights and interests are subject to being reduced now or in
the future by virtue of the exercise by a third party of a
reversionary, back-in or similar right not listed on Exhibit "G"
attached hereto, nor considered a "Permitted Encumbrance," as that term
is defined below;
3.3 PERMITTED ENCUMBRANCES: "Permitted Encumbrances," as that term is used
in this Agreement, means:
(a) liens for taxes not yet delinquent;
(b) lessor's royalties, overriding royalties, reversionary interests and
other lease burdens that do not operate, now or in the future, to
reduce the net revenue interest of Seller in any of the Assets to less
than the amount set forth therefor on Exhibit "A";
(c) Contracts that do not, now or in the future, operate to increase the
working interest or decrease the net revenue interest of Seller in any
of the Assets from that set forth on Exhibit "A";
(d) rights of way, easements, and other agreements of a similar nature
relating to or restricting surface use on, over or in respect of the
Assets;
9
Purchase and Sale Agreement
Page No. 9
(e) preferential rights to purchase which, prior to Closing, have either
expired or have been waived by the holders thereof to the extent such
rights affect the Assets;
(f) all necessary consents, permissions and approvals by third parties in
connection with the sale and transfer of the Assets which have been
obtained prior to Closing and those governmental consents customarily
generated and received in the ordinary course of business at a
post-Closing date;
(g) such Title Defects or other deficiencies or irregularities waived by
Purchaser in writing;
(h) liens released at or prior to Closing;
(i) rights reserved or vested in any governmental subdivision, political
entity or public authority to control rights or regulate the Assets in
any manner, and all applicable laws, rules and orders of such
subdivisions, entities and authorities; and
(j) all matters disclosed in Exhibit "H" hereto which affect the quality or
quantity of title.
3.4 NOTICE OF TITLE DEFECT: Upon discovery of a Title Defect, the
discovering party shall immediately notify the other party in writing
of the nature of the Title Defect and the proposed adjustment in the
Purchase Price attributable to such Title Defect.
3.5 REMEDIES FOR TITLE DEFECTS:
(a) Upon timely delivery of notice of a Title Defect either by Purchaser or
by Seller of an increase or decrease in interest, Purchaser and Seller
shall meet and use their reasonable efforts to agree on the validity of
the claim and the amount of any required price adjustment. If the
parties cannot agree on the amount of a price adjustment, such amount
shall be determined in accordance with the following guidelines:
(i) If it is determined that a Title Defect exists which results
in Seller owning a different interest than that shown on
Exhibit "A" and Seller has elected not to attempt to cure such
Title Defect, then Seller shall reduce or increase the
Purchase Price, as appropriate. Purchaser must accept or
reject this adjusted Purchase Price within twenty-four (24)
hours from receipt of written notice thereof. If rejected by
Purchaser, this Agreement shall terminate.
(ii) Seller may elect to cure any or all Title Defects; provided,
however, if Seller elects to cure a Title Defect, but has not
been able to do so by the Closing Date, the Parties shall
proceed with the Closing, with the Defect Value being an
adjustment to the Purchase Price.
10
Purchase and Sale Agreement
Page No. 10
(iii) If a Title Defect is a lien, encumbrance or other charge which
is liquidated in amount, and provided that Purchaser approves
same, Seller can reserve the option to retain the obligation
of this Title Defect and to challenge the validity of any such
Title Defect or any portion thereof and to hold Purchaser
harmless with regard thereto. Purchaser agrees to cooperate
with Seller in such efforts at no risk or expense to
Purchaser.
(b) Notwithstanding anything to the contrary hereinabove, the Purchase
Price will be adjusted only if the net amount of all adjustments in
favor of Purchaser or Seller, taken together, exceeds five percent (5%)
of the Purchase Price. In the event the net amount of the purchase
price adjustments exceeds twenty percent (20%) of the total Purchase
Price, then either Seller or Purchaser may, upon written notice to the
other party, terminate this Agreement, and the same shall be of no
further force and effect.
(c) If a Title Defect is a Section 3.2 (a)-(c) Title Defect which increases
or decreases Seller's interest in the Assets, and Seller does not elect
to or does not cure the Title Defect, the Purchase Price shall be
adjusted up or down by the Defect Value of the Title Defect.
(d) If Seller contests the existence of a Title Defect or Purchaser's good
faith estimate of the Defect Value of the Title Defect or if Purchaser
contests Seller's cure, the Parties shall meet and use their best
efforts to agree on the validity, cure and/or value of the Title
Defect. If the Parties cannot agree on the validity, cure and/or value
of a Title Defect, and neither Party elects to waive its claim, the
dispute shall be submitted to arbitration in accordance with the
arbitration procedures set forth in EXHIBIT "I".
(e) For purposes hereof, the term "Defect Value shall mean (i) with respect
to a claim of Title Defect is made pursuant to Section 3.2 (a) for a
matter not covered by Sections 3.2 (b) or (c), the value of the defect
for a defect that is a liquidated or certain amount shall be such
liquidated or certain amount, and as to unliquidated or uncertain
amounts it shall be an amount necessary to compensate Purchaser for the
adverse economic effect of such Title Defect on the value of the
property(ies) affected, taking into consideration all relevant factors,
including the practical and legal effect of the Title Defect.
(f) If Purchaser is entitled to receive an adjustment for a Title Defect,
as provided in this Agreement, Seller shall have the right, but not the
obligation, to attempt to cure the Title Defect and cancel the
reduction in the Purchase Price. If Seller chooses to cure the Title
Defect, but has not done so by Closing, Seller shall have the right to
postpone Closing for a period not to exceed twenty (20) business days
from the original Closing Date.
3.6 PREFERENTIAL PURCHASE RIGHTS: With respect to each preferential
purchase right covering the Leasehold Property, Seller shall send to
the holder of such right a notice offering to sell to such holder, in
accordance with the contractual provisions applicable to such right,
those Assets covered by such right on substantially the same terms
hereof, subject to
11
Purchase and Sale Agreement
Page No. 11
adjustments in the same manner as the Purchase Price is adjusted
pursuant to Section 3.5 of this Agreement. Preferential purchase rights
shall not be considered Title Defects hereunder provided such are
waived or exercised prior to Closing.
If, prior to Closing, any holder of a preferential purchase right
notifies Seller that it intends to consummate the purchase of the
Assets to which its preferential purchase right applies, then those
Assets shall be excluded from the Assets to be conveyed to Purchaser,
and the Purchase Price shall be reduced as set forth in Section 3.5.
IV.
ENVIRONMENTAL CONDITION
4.1 NO ADMISSION AGAINST INTEREST: Nothing contained in this Article IV, or
elsewhere in this Agreement, shall be construed to be an admission
against interest as to Seller or Purchaser. Seller and Purchaser have
not included environmental liability related provisions herein due to
any perceived liability and specifically disclaim the existence of any
such liability to third parties (including governmental entities) based
on contract, tort, statute or otherwise.
4.2 PHYSICAL CONDITION OF THE ASSETS: The Assets have been used for oil and
gas drilling and production operations, related oil field operations,
and possibly, for the storage and disposal of waste materials or
hazardous substances. Physical changes in or under the Leasehold
Properties or adjacent lands may have occurred as a result of such
uses. The Assets also may contain buried pipelines and other equipment,
whether or not of a similar nature, the locations of which may not now
be known by Seller nor readily apparent by a physical inspection of the
property. Purchaser understands that Seller does not have the requisite
information with which to determine the exact nature or condition of
the Assets nor the effect any such use has had on the physical
condition of the Assets. Pursuant to the Safe Water Drinking and Toxic
Enforcement Act of 1986, Purchaser is hereby notified and assumes the
risk that detectable amounts of chemicals known to cause cancer, birth
defects and other reproductive harm may be found in, on or around the
Assets. In addition, Purchaser acknowledges that some oil field
production equipment may contain asbestos and/or naturally-occurring
radioactive material (NORM). In this regard, Purchaser expressly
understands that NORM may affix or attach itself to the inside of
xxxxx, materials and equipment as scale or in other forms, and that
xxxxx, materials and equipment located on the Assets described herein
may contain NORM and that NORM-containing materials may be buried or
have been otherwise disposed of on or under the Assets. Purchaser also
expressly understands that special procedures may be required for the
removal and disposal of asbestos and NORM from the Assets where it may
be found, and that Purchaser assumes all liability and responsibility
for such activities when and if performed.
12
Purchase and Sale Agreement
Page No. 12
4.3 ENDANGERED SPECIES, CRITICAL HABITAT, WETLANDS, GEOLOGIC HAZARDS AND
FLOODING: "Endangered Species" as used herein shall have the same
meaning as "endangered species" is defined pursuant to 16 U.S.C.
1532(6) or the laws of the state in which the Leasehold Property is
located; as "threatened species" is defined pursuant to 16 U.S.C.
1533(30) or the laws of the state in which the Leasehold Property is
located; and/or, as a candidate species for such listing under federal
or state law. "Critical Habitat" as used herein shall have the meaning
as defined pursuant to 16 U.S.C. 1532(5). "Wetland" as used herein
shall have the meaning as defined in 40 Code of Federal Regulations
ss.230.3(a), or under the laws of the state in which the Leasehold
Property is located. "Geologic Hazards" as used herein shall include
seismic hazard and any earth slides or other earth movement. "Flooding"
as used herein shall include the risks associated with a flood plain,
flood way or restriction zone and/or any diminution in the value of the
Leasehold Property or restriction of its use by reason of the risk of
water entering or remaining thereon. WITHOUT IN ANY WAY LIMITING ANY
OTHER DISCLAIMERS OF WARRANTY HEREIN AND NOTWITHSTANDING ANY
DISCLOSURES MADE BY SELLER TO PURCHASER, SELLER DISCLAIMS ANY EXPRESS
OR IMPLIED WARRANTY OR REPRESENTATION AS OF THE DATE OF THIS AGREEMENT
AND/OR AS OF THE CLOSING OF THE COMPLETENESS OF ANY SUCH DISCLOSURE OR
THAT THE PROPERTY IS FREE FROM ANY ENDANGERED SPECIES OR THAT ALL OR
ANY PART OF THE PROPERTY IS NOT A CRITICAL HABITAT OR A WETLAND, OR
THAT ANY PART OF THE ASSETS DOES NOT INCLUDE A GEOLOGIC HAZARD, OR THAT
ANY PART OF THE PROPERTY IS NOT SUBJECT TO FLOODING. Notwithstanding
any knowledge that could be imputed to Seller, Purchaser has the
obligation to ascertain the presence of and extent of any Endangered
Species, Critical Habitat, Wetland, Geologic Hazards and the risk of
Flooding on the Property.
4.4 ENVIRONMENTAL ASSESSMENT DURING EXAMINATION PERIOD: Purchaser has had
at least thirty (30) days to make its environmental assessment
("Examination Period"). Purchaser and its agents shall have the right
to enter upon the Assets and all buildings and improvements thereon,
inspect the same, conduct soil and water tests and borings, and
generally conduct such tests, examinations, investigations and studies
as may be necessary or appropriate for the preparation of appropriate
engineering and other reports, and evaluations relating to the Assets,
their condition, and the presence of waste or contaminants. If such an
assessment was performed, Purchaser agrees to immediately provide to
Seller a copy of the environmental assessment, including any reports,
data and conclusions upon which it is based.
4.5 WITHDRAWAL BY PURCHASER DUE TO ENVIRONMENTAL PROBLEMS: If, during the
Examination Period, Purchaser, in its sole discretion, determines that
hazardous waste materials located on the Assets may create substantial
problems for Purchaser or users of the Assets and the reasonable
remediation and/or clean up costs which are asserted and currently
required by a governmental entity, having jurisdiction over the
affective property(ies), pursuant to applicable law exceeds 5% of the
Purchase Price, then, by so notifying Seller in writing within the
Examination Period, Purchaser may, if Seller in its
13
Purchase and Sale Agreement
Page No. 13
sole discretion elects not to indemnify Purchaser against any loss,
terminate this Agreement, upon which termination of this Agreement
shall be null and void, and Purchaser shall have no further obligation
or liability of any kind hereunder or with respect hereto. Failure of
Purchaser to so notify Seller within the Examination Period shall be
deemed a waiver of any right to terminate the Agreement relating to any
environmental problems. If Seller contests the existence of an
environmental problem or the amount of reasonable remediation and/or
clean-up costs (which shall mean only the cost to remedy such
Environmental Liability using the most cost effective methods and
manner to satisfy applicable Environmental Laws, and which are
consistent with the continued use of the affected Assets in the same
capacity and for the same purposes as they were being used on the
Effective Dates) and the parties are unable to reach mutual agreement,
then if after Seller notifies Purchaser that it does not concur with
the existence of a required remediation or cleanup or with respect to
Purchaser's determination of the estimated remediation and/or clean-up
costs, Purchaser may still elect to terminate this Agreement and
request a determination of the value of the required remediation and/or
clean-up costs by the following procedure: the Parties will submit the
issue to arbitration in accordance with the arbitration procedures set
forth in EXHIBIT "I". If the arbitrators determine that the required
remediation and/or clean-up costs are equal to or less than 5% of the
Purchase Price, Purchaser will pay the arbitration costs. If the
arbitrators find that the required remediation and/or clean-up costs do
exceed 5% of the Purchase Price, Seller will pay the arbitration costs.
If Purchaser does not elect to terminate this Agreement in a written
notice to Seller prior to the commencement of arbitration in connection
with this Section, then Purchaser shall be deemed to have waived its
right to terminate this Agreement under this Section unless and until
the arbitors determine that the required remediation and/or clean-up
costs do exceed 5% of the Purchase Price, and if such arbitors
determine that the required remediation and/or clean-up costs are equal
to or less than 5% of the Purchase Price, then Purchaser shall pay all
arbitration costs an proceed toward Closing, subject to the other terms
and conditions of this Agreement. Notwithstanding anything stated
herein to the contrary, if Purchaser elects to pursue arbitration under
this Section, then at any time prior to a determination by the
arbitors, Seller has the right, upon written notice to Purchaser, to
elect to terminate this Agreement (and this Agreement shall thereafter
be null and void) and the parties will be responsible for their own
respective fees or other costs regarding arbitration incurred them.
4.6 CONDITIONAL ACCESS TO ASSETS: Purchaser is hereby granted access to the
Assets to conduct its environmental assessment upon the following
conditions:
(a) The environmental assessment shall be conducted at Purchaser's sole
risk and expense, and Purchaser waives and releases all claims against
Seller, its directors, officers, employees and agents and parent or
subsidiary companies for injury to, or death of, persons or damage to
property arising in any way from the exercise of rights granted to
Purchaser hereby. REGARDLESS OF THE SOLE, JOINT OR CONCURRENT
NEGLIGENCE, STRICT LIABILITY, PREMISES LIABILITY, BREACH OF
14
Purchase and Sale Agreement
Page No. 14
CONTRACT OR OTHER FAULT OR RESPONSIBILITY OF SELLER OR ANY OTHER PERSON
OR PARTY.
(b) Purchaser RELEASES AND AGREES TO INDEMNIFY, DEFEND AND HOLD HARMLESS
Seller, its directors, officers, employees, agents and Affiliates
against all claims for injury to, or death of, persons or damage to
property arising in any way from the exercise of access rights granted
to Purchaser for environmental due diligence or due diligence for any
other purpose. Purchaser shall indemnify Seller, its directors,
officers, employees, agents and Affiliates against and hold each and
all of said indemnitees harmless from any and all loss, cost, damage,
expense or liability, including attorney's fees, arising out of (i) any
and all third party statutory or common-law liens or other encumbrances
for labor or materials furnished in connection with such tests,
samplings, studies or surveys as Purchaser may conduct with respect to
the Assets; and (ii) any injury to or death of persons or damage to
property occurring in, on or about the Assets as the result of
Purchaser's due diligence activities REGARDLESS OF THE SOLE, JOINT OR
CONCURRENT NEGLIGENCE, STRICT LIABILITY, PREMISES LIABILITY, BREACH OF
CONTRACT, OR OTHER FAULT OR RESPONSIBILITY OF SELLER OR ANY OTHER PARTY
OR PERSON (except for any such injuries or damages caused solely by the
gross negligence or willful misconduct of any said indemnitees). The
foregoing obligation of indemnity shall survive Closing or termination
of this Agreement without Closing.
4.7 "AS IS, WHERE IS" PURCHASE: In the event Purchaser does not elect to
terminate this Agreement as above provided, then Purchaser shall
acquire the Assets in their "AS IS, WHERE IS, WITH ALL FAULTS"
condition and shall assume the risks that the Assets may contain waste
materials, contaminants or hazardous substances, that adverse physical
conditions, including, but not limited to, the presence of waste
materials, contaminants or hazardous substances or the presence of
unknown abandoned oil and gas xxxxx, water xxxxx, pits, sumps and
pipelines may not have been revealed by Purchaser's investigation,
including, but not limited to, any and all Environmental Liabilities
and other Assumed Liabilities. Except as otherwise set forth herein, on
and after the Effective Date, all responsibility and liability related
to all such adverse environmental conditions, whether known or unknown,
shall be transferred to and borne solely by Purchaser.
4.8 ASSUMPTION AND INDEMNIFICATION OF ENVIRONMENTAL RISK AND ENVIRONMENTAL
LIABILITIES: Except as otherwise set forth herein, Purchaser, subject
to the terms of this Agreement, shall assume full responsibility for,
and agrees to comply with and perform all environmentally-related
duties and obligations of Seller and TO INDEMNIFY, DEFEND AND HOLD
HARMLESS SELLER, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
REPRESENTATIVES AND AFFILIATED OR PARENT COMPANIES (WHICH ADDITIONAL
PARTIES ARE HEREINAFTER COLLECTIVELY REFERRED TO AS "SELLER'S AGENTS"),
from and against all losses, liabilities, causes of action, damages,
liens, penalties, fines, settlements, judgments, expenses, attorney's
fees, court costs and claims (hereinafter
15
Purchase and Sale Agreement
Page No. 15
referred to collectively as "claims") caused by or arising out of any
rule, order, permit, statute, or regulation of a governmental authority
applicable to any waste material, contaminant or hazardous substance on
or included with the Assets or the presence, disposal, release or
threatened release of any waste material, contaminant or hazardous
substance from the Assets into the atmosphere or into or upon land or
any water course or body of water, including ground water, whether or
not such claims are attributable to Seller's activities or the
activities of third parties, whether or not Seller or the Seller's
Agents were or are aware of such activities and whether or not such
claims arose prior to, during or after the period of Seller's ownership
of the Assets, including, but not limited to, any and all Environmental
Liabilities. This indemnification and assumption of responsibility
shall also apply to liability for voluntary environmental response
actions undertaken pursuant to the Comprehensive Environmental Response
Compensation and Liability Act (CERCLA) or any other federal, state or
local law, regulation or order. THE ASSUMPTION AND INDEMNIFICATION OF
ALL ENVIRONMENTAL LIABILITIES BY PURCHASER, UNDER SECTION IV SHALL
APPLY REGARDLESS OF WHETHER SUCH LIABILITIES ARE KNOWN OR UNKNOWN,
RELATE TO ACTIONS, EVENTS OR CONDITIONS EXISTING OR OCCURRING PRIOR TO
OR AFTER THE EFFECTIVE DATE, AND REGARDLESS OF WHETHER ATTRIBUTABLE (IN
WHOLE OR IN PART) TO THE ACTIONS, SOLE, JOINT OR CONCURRENT NEGLIGENCE,
STRICT LIABILITY, BREACH OF CONTRACT, PRODUCTS LIABILITY, ENVIRONMENTAL
LIABILITY, OR OTHER FAULT, LIABILITY OR RESPONSIBILITY OF SELLER, THE
SELLER'S AGENTS OR ANY OTHER PERSON OR PARTY, AND REGARDLESS OF WHETHER
ASSERTED UNDER ANY THEORY OF LIABILITY; PROVIDED, HOWEVER, THAT THIS
ASSUMPTION AND INDEMNIFICATION BY PURCHASER SHALL NOT COVER OR INCLUDE
CLAIMS OR LIABILITIES DIRECTLY RELATING TO THOSE HAZARDOUS MATERIALS
WHICH HAVE BEEN TRANSPORTED FOR DISPOSAL PRIOR TO THE EFFECTIVE DATE BY
SELLER OFF OF THE ASSETS TO PROPERTIES OWNED BY SELLER AND/OR THIRD
PARTIES (INSOFAR AS SUCH HAZARDOUS MATERIALS ARE REGULATED BY
GOVERNMENTAL AGENCIES UNDER CURRENT, APPLICABLE ENVIRONMENTAL LAWS) AND
SELLER RETAINS SUCH LIABILITY AND SHALL INDEMNIFY PURCHASER FOR SAME.
4.9 EXCLUSIVE REMEDY. The indemnities provided in this Article IV and
elsewhere in this Agreement set forth the exclusive remedy of the
parties with respect to the claims, liabilities and obligations covered
thereby.
V.
5.1 CASUALTY LOSS: The risk of casualty loss relating to the Assets shall
pass from Seller to Purchaser as of the Effective Date, and Purchaser
shall assume all risk of any change in condition of the Assets from and
after the Effective Date, REGARDLESS OF THE
16
Purchase and Sale Agreement
Page No. 16
SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, BREACH OF
CONTRACT OR OTHER FAULT OR RESPONSIBILITY OF SELLER OR ANY OTHER PARTY
OR PERSON, except to the extent any change in condition is directly
caused by the gross negligence or willful misconduct of Seller.
VI.
REPRESENTATIONS
6.1 PURCHASER'S REPRESENTATIONS: Purchaser represents and warrants to
Seller as of the Effective Date and Closing as follows:
(a) EXISTENCE: Purchaser is duly organized, validly existing, and in good
standing under the corporation laws of the jurisdiction of its
organization and is duly qualified at Closing to carry on business in
the state(s) where the Assets are located.
(b) AUTHORIZATION: Purchaser has the corporate power and authority to enter
into and perform this Agreement and the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and
the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate action on the part of Purchaser.
This Agreement has been duly executed and delivered on behalf of
Purchaser, and at Closing all documents and instruments required
hereunder to be executed and delivered by Purchaser shall have been
fully executed and delivered.
(c) BROKERS: Purchaser has not incurred any obligation or liability,
contingent or otherwise, for brokers' or finders' fees with respect to
the matters provided for in this Agreement which will be the
responsibility of Seller; and any such obligation or liability that may
exist shall be the sole obligation of the creating party.
(d) ENFORCEABILITY: This Agreement constitutes, and the documents and
instruments to be executed pursuant hereto will constitute, the legal,
valid and binding obligations of Purchaser, enforceable against
Purchaser in accordance with their respective terms, except to the
extent that such enforcement may be limited by applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and
by general equitable principles.
(e) FURTHER DISTRIBUTION: Purchaser is acquiring the Assets for its own
account and not with the intent of making a public distribution thereof
within the meaning of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
(f) FEDERAL LEASES: If the Assets include any federal leases, Purchaser is
qualified to own such federal leases or will be so qualified at
Closing, and, if Purchaser intends to operate such assets, Purchaser is
qualified to operate such federal lease or will be so qualified at
Closing.
17
Purchase and Sale Agreement
Page No. 17
6.2 SELLER'S REPRESENTATIONS: Seller represents and warrants to Purchaser
as follows as of the Effective Date and the Closing:
(a) EXISTENCE: Seller is duly organized, validly existing, and in good
standing under the corporation laws of the jurisdiction of its
organization and is duly qualified at to carry on business in the
state(s) where the Assets are located.
(b) AUTHORIZATION: Seller has the corporate power and authority to enter
into and perform this Agreement and the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and
the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate action on the part of Seller.
This Agreement has been duly executed and delivered on behalf of
Seller, and at Closing all documents and instruments required hereunder
to be executed and delivered by Seller shall have been fully executed
and delivered.
(c) BROKERS: Seller has not incurred any obligation or liability,
contingent or otherwise, for brokers' or finders' fees with respect to
the matters provided for in this Agreement which will be the
responsibility of Purchaser; and any such obligation or liability that
may exist shall be the sole obligation of the creating party.
(d) ENFORCEABILITY: This Agreement constitutes, and the documents and
instruments to be executed pursuant hereto will constitute, the legal,
valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and by general
equitable principles.
(e) NO VIOLATIONS: The execution, delivery and performance of this
Agreement by Seller, and the transactions contemplated hereby, will not
violate (i) any material agreement or instrument to which Seller is a
party or by which Seller or the Assets is bound, (ii) any judgment,
order, ruling or decree applicable to Seller or the Assets, (iii) any
law, rule or regulation applicable to Seller or the Assets or (iv) any
of the organizational documents of Seller.
(f) NO CONSENTS: The execution, delivery and performance of this Agreement
by Seller does not require the consent, approval, authorization, order
or other action of, nor any filing with, any third party.
(g) PREFERENTIAL PURCHASE RIGHTS AND CONSENTS TO ASSIGNMENT: To the best of
Seller's knowledge, the Assets are not subject to any agreements
containing preferential purchase rights or consent to assignment
provisions that must be complied with prior to the assignment of the
Assets to Purchaser.
18
Purchase and Sale Agreement
Page No. 18
(h) LITIGATION: Excluding any ongoing MMS audits, and except as set forth
on Exhibit "J" is neither any claim, suit, action, or other proceeding
pending before any court or governmental agency nor, to Seller's
knowledge, any claim, dispute, suit, action, investigation or other
proceeding threatened against the Assets or against Seller or any
Affiliate of Seller relating to the Assets.
(i) TAXES: To Seller's knowledge, all ad valorem, property, production,
excise, severance, windfall profit and similar taxes and assessments
payable with respect to the Assets and based on or measured by the
ownership of property or the production or removal of hydrocarbons or
the receipt of proceeds therefrom have been and will be timely paid in
all respects.
(j) LEASES: To Seller's knowledge, (i) Seller is not in material default
under any of the terms and provisions of any of the leases or under any
agreement to which the same are subject; and (ii) all royalties,
rentals, and other payments due thereunder by Seller have been timely
and properly paid in full on or before the due dates thereof.
(k) MARKETING: Except as provided in Section 1.4 above and as set forth on
Exhibit "K", no amount of Seller's hydrocarbons produced from the
Assets and marketed by others is subject to a sales or processing
contract (except for contracts terminable without penalty by Seller on
not more than 30 days' notice), and no person has any call upon, option
to purchase or similar rights under any agreement with respect to the
Assets or to the production therefrom. Seller has not in any respect
collected, nor will Seller in any respect collect, any proceeds from
the Assets that are subject to refund by Purchaser. Seller has not been
nor will Seller be obligated by virtue of any prepayment made under any
gas transportation, production sales contract or any other contract
containing a "take or pay" clause, or under any gas balancing, deferred
production or similar arrangement to deliver oil, gas or other minerals
produced from or allocated to any of the Assets at some future time
without receiving full payment therefor at the time of delivery.
(l) CONTRACT RIGHTS: To Seller's knowledge, with respect to the Contracts:
(i) all Contracts are identified on Exhibit "E" which have not
previously expired or been terminated by mutual agreement and all such
Contracts are in full force and effect and are the valid and legally
binding obligations of the parties thereto and are enforceable in
accordance with their respective terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally, and by general
equitable principles; (ii) Seller is not in material breach or default
with respect to any of its obligations under any Contract; and (iii)
neither Seller nor any other party to any Contract has given or
threatened to give notice of any action to terminate, cancel, rescind,
or procure a judicial reformation of any Contract or any provision
thereof.
6.3 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES: Except as otherwise set
forth herein, including but not limited to the warranties set forth in
Section 1.6, THE ASSETS ARE SOLD "AS IS," "WHERE IS" AND "WITH ALL
FAULTS AS TO ALL MATTERS,"
19
Purchase and Sale Agreement
Page No. 19
AND SELLER EXPRESSLY DISCLAIMS AND NEGATES ANY REPRESENTATION OR
WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE, OR OTHERWISE
RELATING TO (a) THE CONDITIONS OF THE ASSETS (INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, OF
FITNESS FOR A PARTICULAR PURPOSE, OR OF CONFORMITY TO MODELS OR SAMPLES
OF MATERIALS), (b) ANY INFRINGEMENT BY SELLER OF ANY PATENT OR
PROPRIETARY RIGHT OF ANY THIRD PARTY, (c) ANY INFORMATION, DATA OR
OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED TO PURCHASER BY OR ON
BEHALF OF SELLER (INCLUDING WITHOUT LIMITATION, IN RESPECT OF
GEOLOGICAL AND ENGINEERING DATA, THE EXISTENCE OR EXTENT OF OIL, GAS OR
OTHER MINERAL RESERVES, THE RECOVERABILITY OF OR THE COST OF RECOVERING
ANY SUCH RESERVES, THE VALUE OF SUCH RESERVES, ANY PRODUCT PRICING
ASSUMPTIONS, AND THE ABILITY TO SELL OIL OR GAS PRODUCTION AFTER
CLOSING), (d) THE ENVIRONMENTAL CONDITION AND OTHER CONDITION OF THE
ASSETS AND ANY POTENTIAL LIABILITY ARISING FROM OR RELATED TO THE
ASSETS, AND (e) THE FAILURE OF ANY COMPUTER, ELECTRONICS, SOFTWARE, OR
COMPONENTS TO BE FREE OF ANY BUGS OR ERRORS, INCLUDING, BUT NOT LIMITED
TO, ANY DEFICIENCIES RELATING TO THE INABILITY TO PROPERLY FUNCTION
BEYOND DECEMBER 31, 1999.
VII.
CONDITIONS OF CLOSING
Purchaser's and Seller's obligations to consummate the transactions provided for
herein are subject to the satisfaction or waiver by the other party of the
following conditions:
7.1 REPRESENTATIONS: The representations of Purchaser and Seller contained
in Article VI hereof shall be true and correct in all material respects
on the date of Closing as though made on and as of that date.
7.2 PERFORMANCE: Both Purchaser and Seller shall have performed in all
material respects the obligations, covenants and agreements hereunder
to be performed by them at or prior to Closing.
7.3 PENDING MATTERS: No suit, action or other proceeding by a third party
or a governmental authority shall be pending or threatened which seeks
substantial damages from Purchaser or Seller in connection with the
Assets, or seeks to restrain, enjoin or otherwise prohibit the
consummation of the transactions contemplated by this Agreement.
20
Purchase and Sale Agreement
Page No. 20
7.4 XXXX-XXXXX-XXXXXX ACT: If either party is of the opinion that the
transaction described in this instrument falls within the purview of
the Xxxx-Xxxxx-Xxxxxx ("HSR Act"), Purchaser shall prepare and submit
in a timely manner, any necessary filings for Purchaser in connection
with the transactions contemplated by this Agreement under the HSR Act
and the rules and regulations thereunder. Purchaser shall request
expedited treatment of such filing by the Federal Trade Commission,
shall promptly make any appropriate or necessary subsequent or
supplemental filings, and shall furnish to Seller copies of all filings
made under the HSR Act at the same time they are filed with the
government.
7.5 GOVERNMENTAL BONDS: Purchaser shall have delivered to Seller either:
(i) copies of any bonds covering the Assets required under any laws,
rules or regulations of any federal, state or local governmental agency
having jurisdiction over the Assets issued by corporate sureties
satisfactory to Seller; or (ii) a commitment by a surety company,
satisfactory to Seller, to issue such bonds upon Closing, and (iii)
copies of all other necessary or appropriate consents, permits,
insurance, approvals, authorizations and similar items required of
Purchaser to purchase, receive, own, and operate the Assets as of the
Closing and to otherwise transact business in the applicable
jurisdiction(s).
7.6 CONSENTS AND WAIVERS: All necessary consents, permissions and approvals
by third parties in connection with the sale and transfer of the Assets
shall have been received prior to Closing, except those governmental
consents customarily generated and received in the ordinary course of
business at a post-Closing date.
7.7 PLUGGING AND ABANDONMENT: The parties hereto recognize that the United
States Department of Interior, Minerals Management Service ("MMS")
shall require Purchaser to post supplemental bonds specific to the
plugging and abandonment and restoration of the Leasehold Property (the
"P&A Bonds"). In the event (i) Purchaser qualifies with the MMS as a
company exempt from this type of supplemental bonding requirement and
(ii) as a result of such qualification, the MMS releases in favor of
Purchaser the P&A Bonds, Purchaser shall immediately provide to Seller
a bond in an amount equal to the lessor of (i) an amount sufficient to
cover the costs (limited to Seller's interest, being 80%), at the time,
to plug and abandon and restore the Leasehold Property to the extent
and only the extent such Leasehold Property includes those xxxxx and
platforms, which were in existence before the date that the Regional
Director of the MMS approves the assignment of leasehold interest from
Seller in favor of Purchaser (the "Assignment"); or (ii) an amount
equal to the amount of the P&A Bonds, as required by the MMS to approve
the Assignment.
21
Purchase and Sale Agreement
Page No. 21
VIII.
CLOSING
8.1 CLOSING ITEMS: At Closing, as defined in Section 1.2 hereof, the
following shall occur, unless postponed pursuant to Section 3.5(g)
hereof:
(a) Seller shall execute, acknowledge and deliver Assignments of Oil and
Gas Lease and a Xxxx of Sale substantially in the form and substance of
Exhibit "L" attached hereto, covering all of the Assets to be sold
pursuant hereto and the Indemnity Agreement substantially in the form
and substance of Exhibit "L-1" attached hereto ("Indemnity Agreement").
(b) Purchaser shall deliver to Seller either by cashier's check or wire
transfer of cash as specified by Seller the remaining balance of the
total Purchase Price as adjusted hereunder.
(c) Purchaser shall provide Seller with executed change of operator forms
on all xxxxx (active or inactive) operated by Seller, as required by
the Minerals Management Service to effect a change of operator for the
properties being sold. Seller shall execute same at Closing, and
promptly thereafter, file said forms with the Minerals Management
Service.
(d) Seller shall provide Purchaser with executed non-foreign affidavits,
and such other instruments and documents as may be reasonably requested
by Seller.
(e) Seller shall (subject to the terms of applicable operating agreements
and other provisions hereof) deliver to Purchaser exclusive possession
of the Assets, effective as of the Effective Date.
(f) Upon Purchaser's request, Seller shall, at or as promptly as reasonably
possible after Closing, provide Purchaser, at Purchaser's expense, with
copies of the Records. All information and data shall be furnished as a
matter of convenience only to Purchaser and Purchaser's reliance on
same shall be at Purchaser's sole risk.
(g) Seller shall deliver letters in lieu of transfer orders directing all
purchasers of production to pay Purchaser the proceeds of production
produced from the Assets from and after the Effective Date, to the
extent that such purchasers of production have not already paid the
same to Seller.
(h) Seller and Purchaser will execute all documentation necessary to
reflect the termination of agreements between the parties relating to
the Assets described on Exhibit "M". Copies of such instruments shall
be in substantially the form and substance of Exhibit "M-1" attached
hereto.
22
Purchase and Sale Agreement
Page No. 22
Immediately after Closing, Purchaser shall notify all pertinent operators,
non-operators, oil or gas purchasers, governmental agencies and royalty owners
that it has purchased the Assets.
8.2 ADDITIONAL CLOSING ITEMS: Contemporaneously with the Closing of the
transactions contemplated hereby, and for the same stated
consideration, Seller will (i) cause Spirit Energy Management, L.L.C.
and Spirit 76 Development, L.P. (collectively "Spirit") to convey to
Purchaser all of their rights in the Assets, being all rights in the
Assets created by that certain deed entitled "Conveyance of Overriding
Royalty Interest", executed by Seller in favor of Spirit and (ii)
execute and cause Spirit and Concord Investors LLC to execute a waiver
in connection therewith. Such conveyance and waiver to be in the form
attached hereto as Exhibit "N-1". At Closing, Seller shall provide to
Purchaser a legal opinion in a form similar to that attached hereto as
Exhibit "N" upon which Purchaser may rely in connection with these
matters.
Contemporaneously with the Closing, Seller will also cause Unocal
Pipeline Company to convey in favor EPL Pipeline, L.L.C. the pipeline,
rights-of-way, surface lease and equipment, as further identified in
the Pipeline Purchase Agreement to be entered into by said parties, a
copy of which is attached hereto and made a part hereof as Exhibit "O".
IX.
CONTINUING OBLIGATIONS
9.1 FINAL ACCOUNTING: Within 120 days after Closing, Seller shall provide
Buyer with a statement of accounting ("Final Accounting"). Buyer shall
have the right to cause its accountant, in consultation with Seller's
accountant, to review the Final Accounting within an additional sixty
(60) days following Seller's delivery of such notice. If Buyer's
accountant and Seller's accountant are unable to agree upon the Final
Accounting within an additional sixty (60) days following completion of
Buyer's review thereof, then the two respective accountants jointly
shall select, within such sixty (60) day period, an independent
accounting firm of national reputation that shall determine the Final
Accounting as soon as reasonably possible, but in no event later than
210 days after Closing. The determination by such independent
accounting firm shall be conclusive. The expense of such independent
accounting firm shall be borne by Seller and Buyer, in equal
proportions. The Final Accounting, including a determination by an
accounting firm, shall not limit the parties' rights and obligations
pursuant to Section 9.3 below.
9.2 RECEIPTS AND CREDITS: Except as otherwise provided in this Agreement,
(a) All monies, proceeds, receipts, credits and income attributable to the
Assets for all periods of time on and after the Effective Date shall be
the sole property and entitlement of the Purchaser, and to the extent
received by Seller, Seller shall fully disclose, account for and
transmit same to Purchaser promptly.
23
Purchase and Sale Agreement
Page No. 23
(b) All monies, proceeds, receipts and income attributable to the Assets
for all periods of time prior to the Effective Date shall be the sole
property and entitlement of Seller and, to the extent received by
Purchaser, Purchaser shall fully disclose, account for and transmit
same to Seller promptly.
(c) All costs, expenses, disbursements, obligations and liabilities
attributable to the Assets for periods of time prior to the Effective
Date, regardless of when due or payable shall be the sole obligation of
Seller and Seller shall promptly pay, or if paid by Purchaser, promptly
reimburse Purchaser for and hold Purchaser harmless from and against
same.
(d) All costs, expenses, disbursements, obligations and liabilities
attributable to the Assets for periods of time on and after the
Effective Date, regardless of when due or payable, shall be the sole
obligation of Purchaser, and Purchaser shall promptly pay, or if paid
by Seller, promptly reimburse Seller for and hold Seller harmless from
and against same.
9.3 UNDERPAYMENT OR FAILURE TO PAY ROYALTY
Notwithstanding the adjustment to the Purchase Price contained in
Section 2.3(j) or the Final Accounting (including a determination by an
accounting firm), the obligation of Seller to indemnify and hold
harmless Purchaser from any claims or damages arising out of or related
to Seller's underpayment or failure to pay royalties shall survive the
Final Accounting and any determination by an accounting firm pursuant
thereto.
24
Purchase and Sale Agreement
Page No. 24
9.4 INDEMNITIES:
(a) Purchaser agrees to indemnify, defend and hold harmless Seller, its
officers, directors, employees, agents, representatives and affiliated
or parent companies (which additional parties are hereinafter
collectively referred to as "Seller Agents") from and against any and
all losses, liabilities, causes of action, damages, liens, penalties,
fines, settlements, judgments, expenses, attorney's fees, court costs
and claims (hereinafter referred to collectively as "claims") arising
(i) from the breach of this Agreement by Purchaser, (ii) from the
Assumed Liabilities, or (iii) on or after the Effective Date, in any
way connected with, attributable to, or resulting from Purchaser's
ownership or operation of, or activities on the Assets, including, but
not limited to, claims for damage to property or injury or death to
persons, claims for breach of duties and obligations arising under or
by virtue of any lease, contract, agreement, permit, applicable statute
or rule. Purchaser's obligations to indemnify, defend and hold
harmless, as set forth above, shall also specifically extend to all
such claims REGARDLESS OF WHETHER ATTRIBUTABLE, IN WHOLE OR IN PART TO,
CLAIMS WHICH ARE KNOWN OR UNKNOWN, CLAIMS ARISING FROM THE SOLE, JOINT,
CONCURRENT NEGLIGENCE, STRICT LIABILITY, BREACH OF CONTRACT,
ENVIRONMENTAL LIABILITY, PRODUCTS LIABILITY, OR OTHER FAULT OR
RESPONSIBILITY OF SELLER, ITS SELLER AGENTS OR ANY OTHER PARTY OR
PERSON, AND REGARDLESS WHETHER OR NOT SUCH CLAIMS AROSE PRIOR TO THE
EFFECTIVE DATE OR RELATE TO CONDITIONS THAT EXISTED PRIOR TO THE
EFFECTIVE DATE. In addition, and without limiting the generality of the
foregoing, Purchaser shall be solely liable and responsible for the
proper plugging and abandoning of all xxxxx now located on or hereafter
drilled on the Assets, and any surface restoration or environmental
clean-up associated therewith, and shall indemnify, defend and hold
harmless Seller and its agents from and against all claims relating to
same.
(b) Except as otherwise set forth herein and except for the Assumed
Liabilities of Purchaser, Seller agrees to indemnify, defend and hold
harmless, Purchaser and its agents, officers, from and against any and
all claims arising from the breach of this Agreement by Seller and/or
any obligations or liabilities retained by Seller hereinafter. Seller's
obligations to indemnify, defend and hold harmless, as set forth above,
shall also specifically extend to all such claims REGARDLESS OF WHETHER
ATTRIBUTABLE, IN WHOLE OR IN PART TO, CLAIMS WHICH ARE KNOWN OR
UNKNOWN, CLAIMS ARISING FROM THE SOLE, JOINT, CONCURRENT NEGLIGENCE,
STRICT LIABILITY, BREACH OF CONTRACT, ENVIRONMENTAL LIABILITY, PRODUCTS
LIABILITY, OR OTHER FAULT OR RESPONSIBILITY OF PURCHASER, ITS
PURCHASER AGENTS OR ANY OTHER PARTY OR PERSON.
(c) Nothing in this section shall reduce or diminish the specific indemnity
and assumption of liability and responsibility by Purchaser with regard
to environmental risks set forth
25
Purchase and Sale Agreement
Page No. 25
hereinabove in Article IV or the specific indemnity and assumption of
liability and responsibility of Seller as set forth in Indemnity
Agreement to be executed by Seller at Closing.
(d) Any claim for indemnity under any provision of this Agreement,
including Sections 4.8 and 9.4, 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 action,
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: (i) 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 (ii) 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 non constraints on
the future conduct of its business, without the prior written approval
of the Indemnified Party.
9.5 FURTHER ASSURANCES: After Closing, Seller and Purchaser agree to take
such further actions and to execute, acknowledge and deliver all such
further documents that are necessary or useful in carrying out the
purposes of this Agreement or of any document delivered pursuant
hereto.
9.6 RECORDING: Purchaser shall immediately file for all requisite approvals
of the appropriate federal governmental agencies to the Assignment(s)
of the Assets. The Assignment(s) of federal oil and gas leases shall be
filed in the appropriate governmental offices in compliance with the
applicable rules of such governmental agencies. Purchaser shall supply
Seller with a true and accurate photocopy of all the recorded and filed
Assignment(s) within a reasonable period of time after their recording
and filing.
26
Purchase and Sale Agreement
Page No. 26
9.7 CONFIDENTIALITY AND PUBLICITY: In the event Closing does not occur for
any reason except as required by law and with prior notice to Seller,
Purchaser and its officers, directors, employees, agents and
representatives will hold in strict confidence all data and information
obtained from Seller in connection with the Assets, whether before or
after execution of this Agreement, except any data or information
which:
(a) at the time of the disclosure to Purchaser by Seller is in the public
domain;
(b) after disclosure to Purchaser by Seller becomes part of the public
domain by publication or otherwise, except by breach of this provision
by Purchaser;
(c) Purchaser can establish by competent proof was rightfully in its
possession at the time of disclosure to Purchaser by Seller;
(d) Purchaser rightfully received from third parties free of any
obligations of confidence; or,
(e) is developed independently by Purchaser, provided the person or persons
alleged to have independently developed the information shall not have
any access to data or information obtained from Seller in connection
with the transactions contemplated by this Agreement.
If this Agreement is terminated for any reason, Purchaser shall return to Seller
all copies of confidential information, as requested by Seller, in the
possession of Purchaser obtained from Seller or pursuant to any provision of
this Agreement, which information is at the time of termination required to be
held in confidence pursuant to this section.
9.8 PRESERVATION OF BOOKS AND RECORDS: For a period of six (6) years after
Closing, Seller will retain the books, records and files pertaining to
the Assets and will make such books, records and files available to
Purchaser upon reasonable notice at Seller's headquarters (or at such
other location in the United States as Seller may designate in writing
to Purchaser) at reasonable times and during regular office hours.
9.9 THIRD-PARTY CONSENTS Certain of the transfers contemplated by this
Agreement are subject to various forms of third-party consents, which
are identified on Exhibit "P" ("Consents"). Seller and Purchaser shall
cooperate and shall promptly take such action as may be required to
obtain all necessary Consents prior to Closing. Seller and Purchaser
agree that to the extent any Assets, contract or permit that would
otherwise be assigned under this Agreement is not capable of being
assigned, transferred, subleased or sublicensed without any such
Consent of, or waiver by any other party thereto, or any other Person,
or if such assignment, transfer, sublease or sublicense or attempted
assignment, transfer, sublease or sublicense would constitute a breach
thereof, or a violation of any law, this Agreement shall not constitute
an assignment, transfer, sublease or sublicense, or an attempted
assignment, transfer, sublease or sublicense of any such contract or
permit. With respect to each Asset, contract that, but for the reasons
set forth in the first sentence of this Section, would be assigned,
Seller agrees to provide Purchaser with the benefits (including the
right to
27
Purchase and Sale Agreement
Page No. 27
terminate any such contract or permit in accordance with the terms
thereof) of such Asset, contract or permit, to the extent related to
transactions or periods that occur at or after Closing, and to the
extent it is possible to do so; and, if and to the extent such benefits
are provided to Purchaser, Purchaser agrees to observe and perform such
contract or permit. Seller shall continue to use its reasonable efforts
to obtain an assignment to Purchaser of each Asset, contract or permit
that, but for the reasons set forth in the first sentence of this
Section, would be assigned; provided, however, that Seller shall not be
required to pay any consideration or suffer any financial disadvantage
to obtain such assignment.
X.
TAXES
10.1 APPORTIONMENT OF AD VALOREM AND PROPERTY TAXES: All ad valorem taxes,
real property taxes, personal property taxes and similar obligations
with respect to the Assets for the tax period in which the Effective
Date occurs shall be apportioned as of the Effective Date between
Seller and Purchaser. That portion of such apportioned tax liability
which is attributable to Seller shall be credited to Purchaser's
account. Purchaser shall file or cause to be filed all required reports
and returns incident to such taxes and shall pay or cause to be paid to
the taxing authorities all such taxes relating to the tax period in
which the Effective Date occurs. Seller will use its reasonable efforts
to provide Purchaser with all necessary information. Purchaser shall
supply Seller with copies of the filed reports and proof of payment
promptly after filing and paying them.
10.2 SALES TAXES, FILING FEES, ETC.: The transactions contemplated by this
Agreement are an occasional sale and should be deemed exempt from any
state and local sales and use taxes, and the Parties hereto will use
reasonable efforts to report and have this transfer treated as exempt
from such taxes. The Purchase Price and the Adjusted Purchase Price
provided for herein are net of any sales taxes or other transfer taxes
in connection with the sale of the Assets. Purchaser shall be liable
for any sales tax or other transfer tax, as well as any applicable
conveyance, transfer and recording fees and real estate transfer stamps
or taxes imposed on the transfer of the Assets pursuant to this
Agreement. If Seller is required by applicable state law to report and
pay these taxes and/or fees, Purchaser shall, upon presentment of an
invoice by Seller, promptly deliver a check to Seller in full payment
of the invoice. Purchaser shall defend, indemnify and hold Seller
harmless with respect to the payment of any of those taxes including
any interest or penalties assessed thereon.
10.3 OTHER TAXES: All production, severance, excise, and other similar such
taxes or fees (other than income taxes) relating to production of oil,
gas and condensate attributable to the Assets prior to the Effective
Date shall be paid by Seller, and all such taxes relating to such
production on and after the Effective Date shall be paid by Purchaser.
Purchaser and Seller shall supply each other with copies of the filed
reports and proof of payment promptly after filing and paying them.
28
Purchase and Sale Agreement
Page No. 28
XI.
TERMINATION
This Agreement and the transactions contemplated hereby may be terminated only
in the following instances:
(a) If the conditions set forth in Article VII are not satisfied or waived
as of Closing;
(b) By way of Sections 3.5(b), 4.5 hereof or any other right to terminate
under Article IV hereof;
(c) At any time by mutual written agreement of Seller and Purchaser and in
accordance with any other express provisions of this Agreement.
XII.
MISCELLANEOUS
12.1 GOVERNING LAW: This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Louisiana. All assignments and
instruments executed in accordance with this Agreement shall be
governed by and interpreted in accordance with the laws of the state
where the Assets conveyed thereby are located.
12.2 ENTIRE AGREEMENT: This Agreement, together with any confidentiality
agreements relating to the Assets previously executed by Purchaser, and
the Indemnity Agreement to be executed by Seller at Closing constitute
the entire agreement between the parties and supersede all prior
agreements, understandings, negotiations and discussions, whether oral
or written, of the parties. No supplement, amendment, alteration,
modification, waiver or termination of this Agreement shall be binding
unless executed in writing by the parties hereto.
12.3 WAIVER: No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
12.4 CAPTIONS: The captions in this Agreement are for convenience only and
shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
29
Purchase and Sale Agreement
Page No. 29
12.5 ASSIGNMENT: Prior to closing, neither party hereto shall assign this
Agreement or any of its rights or obligations hereunder without the
prior written consent of the other party, and any assignment made
without such consent shall be void. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective permitted successors and
assigns.
12.6 NOTICES: Any notice provided or permitted to be given under this
Agreement shall be in writing, and may be served by personal delivery
or by depositing same in the United States mail, addressed to the party
to be notified, postage prepaid, and registered or certified with a
return receipt requested. Notices deposited in the mail in the manner
hereinabove described shall be deemed to have been given and received
upon the date of delivery as shown on the return receipt. Notice served
in any other manner shall be deemed to have been given and received
only if and when actually received by the addressee. For purposes of
notice, until receipt of written notice changing same, the addresses of
the parties shall be as follows:
SELLER'S MAILING
Union Oil Company of California
4021-4023 Ambassador Xxxxxxx Parkway
Post Office Box 69200 (70596-9200)
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx III
PURCHASER'S MAILING ADDRESS:
Energy Partners, Ltd.
000 Xx. Xxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attention: L. Xxxxx Xxxxxxx
12.7 WAIVER OF COMPLIANCE WITH BULK TRANSFER LAWS: Purchaser waives
compliance with any applicable bulk transfer law relating to the
transactions contemplated by this Agreement, and agrees to assume all
risk and liability in connection with the failure to so comply.
12.8 UTPCPL WAIVER: TO THE EXTENT APPLICABLE TO THE ASSETS OR ANY PORTION
THEREOF, PURCHASER HEREBY WAIVES THE PROVISIONS OF THE LOUISIANA UNFAIR
TRADE PRACTICES AND CONSUMER PROTECTION LAW (LA. R. S. 51:1402, ET
SEQ.). PURCHASER WARRANTS AND REPRESENTS THAT IT: (i) IS EXPERIENCED
AND KNOWLEDGEABLE WITH RESPECT TO THE OIL AND GAS INDUSTRY GENERALLY
AND WITH TRANSACTIONS OF THIS TYPE SPECIFICALLY; (ii) POSSESSES AMPLE
KNOWLEDGE, EXPERIENCE AND EXPERTISE TO EVALUATE INDEPENDENTLY THE
MERITS AND RISKS OF THE TRANSACTION HEREIN CONTEMPLATED; AND, (iii) IS
30
Purchase and Sale Agreement
Page No. 30
NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION IN NEGOTIATIONS
WITH SELLER.
12.9 WAIVER OF CONSUMER RIGHTS PURCHASER HEREBY WAIVES ITS RIGHTS UNDER THE
DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41 ET
SEQ., BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL
RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF ITS OWN
SELECTION, PURCHASER VOLUNTARILY CONSENTS TO THIS WAIVER. IN ADDITION,
TO THE EXTENT APPLICABLE TO THE ASSETS OR ANY PORTION THEREOF,
PURCHASER HEREBY WAIVES THE PROVISIONS OF THE TEXAS CONSUMER PROTECTION
LAWS REGARDING FALSE, MISLEADING AND DECEPTIVE BUSINESS PRACTICES,
UNCONSCIONABLE ACTIONS AND BREACHES OF WARRANTY; PROVIDED, HOWEVER,
THAT NOTHING HEREIN CONTAINED SHALL BE DEEMED A WAIVER BY PURCHASER
WHERE SUCH WAIVER IS PROHIBITED BY LAW. IN ORDER TO EVIDENCE ITS
ABILITY TO GRANT SUCH WAIVER, PURCHASER HEREBY REPRESENTS AND WARRANTS
TO SELLER THAT PURCHASER (i) IS IN THE BUSINESS OF SEEKING OR
ACQUIRING, BY PURCHASE OR LEASE, GOODS, OR SERVICES FOR COMMERCIAL OR
BUSINESS USE, (ii) HAS ASSETS OF FIVE MILLION DOLLARS OR MORE ACCORDING
TO IT MOST RECENT FINANCIAL STATEMENT PREPARED IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, (iii) HAS KNOWLEDGE AND
EXPERIENCE IN FINANCIAL MATTERS THAT ENABLE IT TO EVALUATE THE MERITS
AND RISKS OF THE TRANSACTION CONTEMPLATED HEREBY, AND (iv) IS NOT IN A
SIGNIFICANTLY DISPARATE BARGAINING POSITION. Nothing in this Section
shall be interpreted as a waiver of the express representations and
warranties in this Agreement.
12.10 WAIVER OF JURY TRIAL: SELLER AND PURCHASER DO HEREBY IRREVOCABLY WAIVE,
TO THE FULLEST EXTENT PERMITTED BY LAW, AND ANY AND ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER LEGAL PROCEEDING BASED UPON,
ARISING OUT OF, OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
12.11 LIMITATION OF LIABILITY: NOTWITHSTANDING ANYTHING HEREIN PROVIDED TO
THE CONTRARY, SELLER AND PURCHASER DO HEREBY COVENANT AND AGREE THAT
THE RECOVERY BY EITHER PARTY HERETO OF ANY DAMAGES SUFFERED OR INCURRED
BY IT AS A RESULT OF ANY BREACH BY THE OTHER PARTY OF ANY OF ITS
COVENANTS, AGREEMENTS, REPRESENTATIONS, GUARANTIES, WARRANTIES,
DISCLAIMERS, WAIVERS OR CONTINUING OBLIGATIONS UNDER THIS AGREEMENT
SHALL BE LIMITED TO THE ACTUAL DAMAGES SUFFERED OR INCURRED BY THE
NON-BREACHING PARTY AS A RESULT OF SUCH BREACH, AND IN NO EVENT SHALL
SUCH RECOVERY INCLUDE ANY INDIRECT,
31
Purchase and Sale Agreement
Page No. 31
CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES; PROVIDED, HOWEVER, THAT
NOTHING IN THIS SECTION SHALL REDUCE OR DIMINISH THE SPECIFIC INDEMNITY
AND ASSUMPTIONS OF LIABILITY AND RESPONSIBILITY OF SELLER AS SET FORTH
IN THE INDEMNITY AGREEMENT TO BE EXECUTED BY SELLER AT CLOSING.
12.12 NO ADMISSIONS: The Purchaser and Seller agree that neither this
Agreement, nor any part hereof, nor any performance under this
Agreement, nor any payment of any amount pursuant to any provision of
this Agreement shall constitute or be construed as a finding, evidence
of, or an admission or acknowledgment of any liability, fault, or past
or present wrongdoing, or violation of any law, rule, regulation, or
policy, by either Seller or Purchaser or by their respective officers,
directors, employees or agents.
12.13 ANNOUNCEMENTS: Purchaser agrees that prior to the issuance of its
initial press announcement, if any, which specifically addresses its
acquisition of the Assets as being from Seller, it shall seek the
approval of Seller of same; provided, however, that such approval
cannot be unreasonably withheld. Seller and Purchaser, including their
respective Affiliates, agree that from the date of this Agreement and
continuing for twelve (12) months after the Closing if reserve volumes
are estimated in a news release in conjunction with a Purchase Price
disclosure the release must state that the reserve estimates are the
disclosing Party's reserve estimates; provided, that either Party may
make all disclosures which are required or prudent under applicable
laws, including, but not limited to, rules, regulations and guidelines
of the Securities and Exchange Commission and applicable stock
exchanges.
12.14 BOOKS AND RECORDS: Seller shall, at or as promptly as reasonably
possible after Closing, provide and make available to the Purchaser, at
Purchaser's cost and expense, subject to the attorney-client privilege,
photocopies of the Records. Notwithstanding any other provision herein
contained, Purchaser shall retain all original documents, if any,
delivered by Seller hereunder which pertain to the Assets (documents
delivered by Seller hereunder may be maintained on compact discs) for
as long as it so desires and make the same available after the Closing
for inspection and copying by Seller during normal business hours, upon
reasonable request and upon reasonable notice; provided, however, that
during the first six (6) years after Closing, such books, records or
documents shall not be disposed of or destroyed by Purchaser without
first advising Seller in writing and giving Seller reasonable
opportunity to obtain possession thereof.
12.15 THIRD PARTY BENEFICIARIES: Neither this Agreement, nor any performance
hereunder by Seller or Purchaser, shall be deemed or interpreted to
create any right, claim, cause of action, or remedy on behalf of any
person not a party hereto.
12.16 EXPENSES: Except as otherwise provided herein, each party shall be
solely responsible for all expenses incurred by it in connection with
this transaction, including without limitation, fees and expenses of
its own legal counsel and accountants.
32
Purchase and Sale Agreement
Page No. 32
12.17 SEVERABILITY: If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced under any applicable
rule or law, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transaction contemplated hereby is
not affected in a materially adverse manner with respect to either
party.
12.18 USE OF SELLER'S NAME: As soon as practicable after Closing, Purchaser
shall remove or cause to be removed the names and marks used by Seller
and all variations and derivations thereof and logos relating thereto
from the Assets and shall not thereafter make any use whatsoever of
those names, marks and logos.
12.19 SURVIVAL: Except as otherwise specifically provided in this Agreement,
all covenants, agreements, representations, guaranties, warranties,
disclaimers, waivers and continuing obligations shall survive the
execution of the Agreement, the Closing, and the delivery and recording
of any deeds, assignments or bills of sale which convey title to the
Assets from Seller to Purchaser.
12.20 LISTING OF EXHIBITS: The Exhibits listed below are attached to this
Agreement and by this reference are fully incorporated herein:
Exhibit "A" - Assets
Exhibit "B" - Easements etc.
Exhibit "C" - Assets Not Sold
Exhibit "D" - Retained Matters
Exhibit "E" - Contracts
Exhibit "F" - Liens, Mortgage etc.
Exhibit "G" - Back-in, Reversion etc.
Exhibit "H" - Quality or Quantity of Title
Exhibit "I" - Arbitration
Exhibit "J" - Litigation
Exhibit "K" - Marketing
Exhibit "L" - Assignment and Xxxx of Sale
Exhibit "L-1" - Indemnity Agreement
Exhibit "M" - Termination of Agreement
Exhibit "M-1" - Termination of Agreement
Exhibit "N" - Legal Opinion
Exhibit "N-1" - Override Conveyance
Exhibit "N-2" - Consent and Waiver
Exhibit "O" - Pipeline Purchase Agreement
Exhibit "P" - Consents
12.21 COUNTERPARTS: This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
33
Purchase and Sale Agreement
Page No. 33
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first set forth above.
WITNESSES: SELLER:
UNION OIL COMPANY OF CALIFORNIA
BY:
------------------------------- --------------------------------
Xxxxxx X. Xxxxx
Attorney-in-Fact
-------------------------------
PURCHASER:
ENERGY PARTNERS, LTD.
BY:
------------------------------- --------------------------------
Xxxxxxx X. Xxxxxxxx
President
-------------------------------
34
Purchase and Sale Agreement
Page No. 00
XXXXX XX XXXXXXXXX
XXXXXX XX XXXXXXX
Xx this 31st day of March, 2000, before me appeared Xxxxxx X. Xxxxx, to
me personally known, who, being by me duly sworn, did say that he is the
Attorney-in-Fact of UNION OIL COMPANY OF CALIFORNIA, a California Corporation,
and that the foregoing instrument was executed on behalf of said Corporation and
said Appearer acknowledged said instrument to be the free act and deed of said
Corporation.
------------------------
NOTARY PUBLIC
My commission is for life.
XXXXX XX XXXXXXXXX
XXXXXX XX XXXXXXX
Xx this 31st day of March, 2000, before me appeared Xxxxxxx X.
Xxxxxxxx, to me personally known, who, being by me duly sworn, did say that he
is the President of ENERGY PARTNERS, LTD. a Delaware Corporation, and that the
foregoing instrument was executed on behalf of said Corporation and said
Appearer acknowledged said instrument to be the free act and deed of said
Corporation.
------------------------
NOTARY PUBLIC
My commission is for life.
