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EXHIBIT 2.5
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (the "Agreement") is made and entered into as of
the 3rd day of December, 1997, by and between Xxxxxx Gas Transmission, Inc., a
Colorado corporation (the "Company"), and Odessa Exploration Incorporated, a
Delaware corporation ("Purchaser").
RECITALS
WHEREAS, the Company is engaged in the business of acquiring and
managing natural gas gathering, processing and transportation facilities and
other related natural gas assets through the acquisition of ownership and
management interests in limited partnerships, business trusts and similar
business entities (the "Business"); and
WHEREAS, the Company desires to sell, and Purchaser desires to purchase,
beneficial interest shares in, and the right to receive cash payments in an
amount equal to one-third (1/3) of the fees that the Company is entitled to
receive as the managing trustee of, two natural gas assets business trusts, as
well as the right of first refusal to participate in any future similar
programs in which the Company participates, upon the terms and subject to the
conditions set forth herein;
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, agreements, representations and warranties set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto, intending to be legally bound hereby,
agree as follows:
Section 1. Sale and Purchase of Revenue Interest.
Section 1.1 Sale and Purchase. At the Closing (as defined
below), upon the terms and subject to the conditions set forth in this
Agreement, the Company shall sell, assign and transfer to Purchaser, and
Purchaser shall purchase from the Company, the Purchased Shares (as defined
below) and the Revenue Interest (as defined below).
Section 1.2 Purchase Price. As payment in consideration for
the sale and transfer of the Purchased Shares and the Revenue Interest, and the
grant of the Right of First Refusal (as defined below) by the Company to
Purchaser, Purchaser shall pay, upon the terms and subject to the conditions
set forth herein, a total purchase price of $1,000,000 (the "Purchase Price")
to the Company, or its designated successors or assigns, in cash or by wire
transfer of immediately available funds to an account designated by the Company
or its designee or assignee, as follows:
(a) The amount of $600,000.00 shall be paid by
Purchaser to the Company at the Closing; and
(b) Purchaser shall pay to the Company the amount of
$50,000.00 quarterly in eight (8) consecutive quarters commencing January 1,
1998; provided, however, that in the event any
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payment due date falls on a Saturday, Sunday or legal holiday, then such
payment shall be due on the first business day thereafter.
Section 1.3 Definitions. As used in this Agreement, the
following capitalized terms have the respective meanings set forth below:
(a) "Revenue Interest" means the right of Purchaser to
receive cash payments from the Company, upon the terms and subject to the
conditions set forth herein, in an amount equal to one-third (1/3) of the
aggregate gross amount of Program Fees (as defined below) that the Company is
entitled to receive from each of the Programs (as defined below), to the extent
of the Distributable Cash (as defined below) of that Program, from and after
the Closing Date, without offset or reduction for costs or fees incurred by the
Company.
(b) "Programs" means Xxxxxx Midstream 1995-2 Business
Trust ("1995 Trust") and Xxxxxx Midstream 1997-1 Business Trust ("1997 Trust"),
but specifically does not include Xxxxxx-Xxxxxxx Pipeline Program 1993-1 L.P.
("1993 Program") or any Future Program (as defined below).
(c) "Future Program" means any future business trust,
limited partnership, limited liability company, joint venture or other similar
business entity through which the Company conducts the Business commencing on
or after the date hereof on a basis similar to the Programs, but specifically
does not include the Programs or the 1993 Program.
(d) "Program Documents" means, as applicable, the
declaration of trust, agreement of limited partnership, limited liability
company operating agreement or other similar charter and governing documents of
any Program or Future Program.
(e) "Program Fees" means, with respect to a Program,
the amount in cash the Company becomes entitled to receive from such Program
(as permitted by the terms of the Program Documents of such Program), to the
extent of the Distributable Cash of such Program, as fees for its services as
the managing trustee of such Program, including, but not limited to, management
fees, administrative fees and liquidation fees, but excluding any distributions
to the shareholders of such Program with respect to the Shares (as defined
below).
(f) "Distributable Cash" means, with respect to a
Program, the cash available for the payment of Program Fees that the Company is
entitled to receive from such Program without adversely affecting such
Program's ability to pay its other debts and obligations as they become due or
to carry out its ordinary business and affairs.
(g) "Shares" means the shares of beneficial interest
owned by the Company in the Programs, which consist of: (i) 5.65 Preferred
Shares and 40 Performance Shares in the 1995 Program, and (ii) 9.25 Preferred
Shares and 17 Performance Shares in the 1997 Program.
(h) "Purchased Shares" means the Shares to be purchased
by Purchaser hereunder, which consist of (i) 1.88333 Preferred Shares and
13.333 Performance Shares in the 1995 Program, and (ii) 3.08333 Preferred
Shares and 5.666 Performance Shares in the 1997 Program.
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Section 2. Revenue Interest.
Section 2.1 Timing of Payments. Within 45 days after the end
of each calendar quarter in which the Company becomes entitled to receive
Program Fees from either Program, the Company shall make a cash payment to
Purchaser in the amount of the Revenue Interest for such quarter.
Section 2.2 Distributions In Kind. In the event of any
distribution of assets by either Program to the Company other than cash
("Program Assets"), (a) if the Company retains such Program Assets, then the
amount of Program Fees shall be deemed to include the fair market value of such
Program Assets as of the date of the distribution, and, notwithstanding the
provisions of Section 2.1 hereof, Purchaser shall not be obligated to make a
cash payment of the Revenue Interest to the Company until up to three months
after receipt of such Program Assets, and (ii) if the Company makes a bona fide
sale of the assets to an unaffiliated person or entity, then the Program Fees
shall be deemed to include the amount of cash proceeds received in exchange for
the sale of such Program Assets and shall be payable by the Company to
Purchaser within 45 days after the end of the calendar quarter in which the
cash proceeds of the sale are received by the Company. The Company shall have
the right to elect, in its sole discretion, whether to retain or sell any
Program Assets received from either Program.
Section 2.3 Records of Program Fees. The Company shall
provide a written report of the calculation of the Revenue Interest to
Purchaser within 45 days after the end of each calendar quarter. The Company
will maintain accurate and complete books and records of the Revenue Interest
and the Program Fees, and Purchaser shall have the right, at its sole expense,
upon reasonable notice, to conduct an audit, directly or through its
independent accountants, of such books and records. For two years after the
end of each calendar year, Purchaser shall have the right to give written
notice to the Company of Purchaser's objections, if any, to the Revenue
Interest calculation during such calendar year. If Purchaser makes any such
objection, the parties will use commercially reasonable efforts to resolve any
such dispute within 30 days after the Company's receipt of Purchaser's notice
of objection to the Revenue Interest calculation. Any amounts which remain in
dispute after 30 days will be submitted for resolution to a "Big 6" accounting
firm (as presently constituted or their successors) mutually agreeable to the
Company and Purchaser, whose resolution will be conclusive. The Company and
Purchaser will bear the fees and expenses payable to such accounting firm in
connection with the determination in proportion to the allocation of disputed
amounts by such accounting firm. Any payment required will be made within ten
business days after the final determination (whether by agreement or by an
accounting firm).
Section 2.4 Taxes. Purchaser shall be responsible for the
filing of all reports and the payment of all federal, state, local and foreign
income, sales and other taxes attributable to Purchaser's receipt of payments
pursuant to the Revenue Interest.
Section 2.5 Revenue Interest Not An Interest in Either Program.
The Revenue Interest in and of itself shall represent only an obligation of the
Company and shall not represent any obligation of, or any shares or other
interest (ownership, management or otherwise) in, or any rights against, either
Program. Nothing set forth in this Agreement, express or implied, is intended,
or shall be construed or deemed, (a) to create or confer upon Purchaser any
legal or equitable right to manage or otherwise exercise any power or authority
of the managing trustee of the Program; or (b) to constitute Purchaser as a co-
managing trustee with, or the substitute managing trustee for, the Company in
either Program.
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Section 2.6 Revenue Interest Not an Equity Interest in the
Company or a Lien Against the Program Fees. The Revenue Interest, in and
of itself, represents only an obligation of the Company to make cash payments
to Purchaser in accordance with the terms and conditions of this Agreement.
Nothing set forth in this Agreement, express or implied, is intended, or shall
be construed, (a) to constitute or create a security interest, pledge or lien
of or against the Company's interest in the Program, the Program Fees or any
other assets or property of the Company; (b) to create or constitute any equity
interest in the Company or to constitute the sale or issuance of capital stock
of the Company to Purchaser; or (c) to give Purchaser the right to become a
shareholder of the Company or to exercise any of the rights of a shareholder of
the Company. The Company shall have the right to pay the amount due for the
Revenue Interest out of any source, shall not be restricted to making Revenue
Interest payments out of Program Fees, and shall not be required to segregate
any portion of the Program Fees.
Section 2.7 No Guarantee of Amount of Payments. EXCEPT AS
EXPRESSLY AND SPECIFICALLY SET FORTH IN SECTION 5 HEREOF, PURCHASER UNDERSTANDS
AND AGREES THAT THE COMPANY IS NOT MAKING ANY EXPRESS OR IMPLIED REPRESENTATION
OR WARRANTY, PROMISE, GUARANTEE OR ASSURANCE THAT ANY SPECIFIC OR MINIMUM
AMOUNT OF REVENUE INTEREST OR PROGRAM FEES WILL BE ACHIEVED IN THE FUTURE.
PURCHASER FURTHER UNDERSTANDS THAT THE COMPANY WILL HAVE NO LIABILITY OR
OBLIGATION TO PURCHASER HEREUNDER IN THE EVENT EITHER PROGRAM INCURS ANY
LOSSES, FAILS TO BE REQUIRED TO MAKE ANY PROGRAM FEES DURING ANY PERIOD OF
TIME, OR IS REQUIRED TO MAKE PROGRAM FEES THAT ARE LESS THAN THOSE MADE IN THE
PAST OR THAN THE EXPECTATIONS OF PURCHASER. THE COMPANY SPECIFICALLY DISCLAIMS
ANY PRIOR STATEMENT BY THE COMPANY OR ANY OFFICER OR OTHER PERSON AUTHORIZED TO
ACT ON BEHALF OF THE COMPANY THAT MAY HAVE BEEN INTERPRETED OR CONSTRUED AS A
REPRESENTATION, WARRANTY, PROMISE, GUARANTEE OR ASSURANCE WITH RESPECT TO THE
AMOUNT OF REVENUE INTEREST OR PROGRAM FEES. NO PERSON HAS BEEN AUTHORIZED BY
THE COMPANY TO MAKE ANY ORAL OR WRITTEN REPRESENTATION, WARRANTY, PROMISE,
GUARANTEE OR ASSURANCE WITH RESPECT TO THE AMOUNT OF REVENUE INTEREST OR
PROGRAM FEES, OR TO MAKE ANY OTHER EXPRESS OR IMPLIED REPRESENTATION, WARRANTY,
COVENANT, PROMISE, GUARANTEE OR ASSURANCE OTHER THAN THOSE SET FORTH IN SECTION
5 HEREOF, AND, IF GIVEN OR MADE, ANY SUCH REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
Section 3. Relationship of Parties The relationship between the
Company and Purchaser shall not be construed to create a joint venture,
partnership, association or any other affiliation between the parties hereto
other than that of independent parties to a contractual relationship as set
forth in this Agreement. It is understood and agreed by the parties hereto
that the Company and Purchaser are independent parties to this Agreement and
have no actual right, power or authority to bind or contract on behalf of the
other party with respect to any matters relating hereto. Neither party hereto
may represent to any other person or entity that it is the partner or agent of
the other party hereto or otherwise perform such acts or omit to perform such
acts that would cause another person or entity to reasonably believe that such
party hereto is a partner or agent of the other party hereto.
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Section 4. Rights Of First Refusal.
Section 4.1 Right of First Refusal of Purchaser to Participate
in Future Programs.
(a) From and after the Closing Date, Purchaser shall
have the right, but not the obligation, to participate in any Future Program
relating to the Business in which the Company participates in either an
investment or a management capacity or both, but only on the same terms and
conditions and with the same duties, obligations and liabilities as the Company
in such future Program ("Right of First Refusal").
(b) The Company shall, at least 30 days before the
consummation of any Future Program or the commencement of any private placement
of interests in the Future Program, deliver to Purchaser a notice of such
Future Program ("Notice of Future Program"), which Notice of Future Program
shall include a copy or summary of the terms and conditions of the proposed
Future Program and reasonable details thereof, including, without limitation,
the name and address of the seller, if any, a description of the assets, if
any, to be acquired, the purchase price of any assets to be purchased, the form
of proposed entity, the proposed structure of the Future Program, including
the types of interests, the types of interests, the management structure and
the description of any financing. The Company shall also provide, promptly
after written request, such additional information regarding the Future Program
as is reasonably requested by Purchaser.
(c) In the event Purchaser elects to exercise its
Right of First Refusal, it shall give written notice of such exercise ("Notice
of Exercise") to the Company on or before the thirtieth (30th) day after
Purchaser shall have received the Notice of Future Program. The Notice of
Exercise shall specify the amount and extent of Purchaser's participation in
the Future Program. In the event Purchaser elects to exercise its Right of
First Refusal, Purchaser shall cooperate with the Company and shall execute,
acknowledge, deliver and file any documents, instruments, consents, permits and
other assurances, documents and instruments reasonably requested in connection
with such Future Program, and deliver consideration for its participation in
the Future Program, on the same terms and conditions as the Company.
(d) Whether or not Purchaser elects to exercise its
Right of First Refusal with respect to any Future Program, the Revenue Interest
shall not include any fees or distributions to the Company from any Future
Program.
Section 4.2 Right of First Refusal to Purchase Purchased
Shares.
(a) From and after the Closing Date, if either the
Company or Purchaser ('Seller") desires to sell, transfer or otherwise dispose
of ("Transfer") all or any of its Shares or Purchased Shares, as applicable
("Offered Shares"), pursuant to a bona fide offer from a third party to
purchase the Offered Shares ("Bona Fide Offer"), the Seller shall first deliver
to the other party hereto ("Offeree") a notice of such offer ("Notice of
Offer") in respect of the Offered Shares. The Notice of Offer shall include a
copy or summary of the Bona Fide Offer and shall set forth the terms and
conditions of the proposed Transfer in reasonable detail, including, without
limitation, the name and address of the prospective purchaser ("Prospective
Purchase"), the proposed purchase price (or the basis of determining the
purchase price) ("Purchase Price"), the terms and conditions of payment and the
amount of the Offered Shares.
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(b) The Offeree shall have the prior right and option
("Right of First Refusal") to purchase all, but not less than all, of the
Offered Shares upon the terms set forth in the Bona Fide Offer, including, in
the event of a sale of Shares by the Company accompanied with the sale of its
interest as a managing trustee of a Program, the acquisition of that managing
trustee interest and acceptance of the duties and obligations associated
therewith by Purchaser. The Offeree shall exercise its Right of First Refusal
by giving written notice of such exercise ("Notice of Exercise") to the Seller
on or before the thirtieth (30th) day after the Offeree shall have received the
Notice of Offer.
(c) Should the Purchase Price specified in the Notice
of Offer be payable in property other than cash or evidences of indebtedness,
then the Offeree shall have the right to pay the Purchase Price in the form of
cash equal in amount to the value of such property. If the Seller and the
Offeree cannot agree on such cash value within ten business days after the
Seller's receipt of the Notice of Exercise, then the valuation shall be made by
an appraiser of recognized standing mutually agreeable to the Seller and the
Offeree or, if they cannot agree on an appraiser within 15 business days after
the Seller's receipt of the Notice of Exercise, each shall select an appraiser
of recognized standing and the two appraisers shall designate a third appraiser
of recognized standing, whose appraisal shall be determinative of such value.
The cost of such appraisal shall be shared equally by the Offeree and the
Seller.
(d) The Closing of Rights of First Refusal. The
closing of the purchase of the Offered Shares by Offeree shall take place at
the principal place of business of the Seller on a date thirty business days
(or, if later, five business days after any necessary valuation shall have been
made as provided in Section 4.2(c) above) after the date the Seller receives
the Notice of Exercise, unless the Seller and the Offeree unanimously agree on
a different place or time. The aggregate purchase price to be paid by the
Offeree shall be equal to the aggregate purchase price set forth in the Bona
Fide Offer, and shall be paid on the payment terms and conditions set forth in
the Bona Fide Offer or, at the option of the Offeree, in cash. At the closing,
the Seller shall deliver any certificates or other instruments evidencing the
purchase of the Offered Shares, along with an assignment of the Offered Shares,
in form and substance reasonably satisfactory to the Offeree, conveying to the
Offeree the Offered Shares free and clear of all liens, claims and
encumbrances, with general warranty covenants, along with all documents
reasonably necessary or appropriate to transfer such Offered Shares against
payment of the Purchase Price pursuant to the terms and conditions of the Bona
Fide Offer.
(e) Non-Exercise of Rights of First Refusal. If the
Offeree does not exercise its Right of First Refusal, then the Seller shall
have the right, for a period ending on the ninetieth (90th) day after the
delivery of a Notice of Offer, to Transfer the Purchased Shares to the
Prospective Purchaser identified in the Notice of Offer, at the same Purchase
Price and otherwise upon the same terms and conditions described in the Notice
of Offer; provided, however, that any such Transfer shall be effected in
compliance with law and the applicable Program Documents. If the Offered
Shares are not sold to such Prospective Purchaser during such 90 day period,
all of the restrictions, conditions and obligations imposed by this Agreement
on the Purchased Shares shall again apply to the Offered Shares.
Section 5. Representations and Warranties of the Company. The
Company hereby represents and warrants to Purchaser as follows:
Section 5.1 Organization of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Colorado.
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Section 5.2 Power and Authority. The Company has all
requisite right, power and authority to conduct the Business as it is presently
conducted, to own, lease and operate its assets, and to execute, deliver and
perform its obligations under this Agreement. The execution and delivery by
the Company of this Agreement and the performance by the Company of its
obligations hereunder have been duly and validly authorized by all requisite
corporate action of the Company.
Section 5.3 Enforceability. This Agreement has been duly and
validly executed and delivered on behalf of the Company and constitutes a
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforcement may be limited
by applicable bankruptcy, insolvency, receivership, reorganization, moratorium
and other similar laws now or hereafter in effect relating to or affecting
creditors' rights and remedies generally, or by general principles governing
the availability of equitable remedies.
Section 5.4 No Conflicts. Except for the consent of
Commercial National Bank in Shreveport, (the "Xxxxxx Bank Consent"), the
execution and delivery by the Company of this Agreement and the performance by
the Company of the transactions contemplated hereby do not and will not
violate, conflict with, or constitute a breach of or a default (or an event
that, after the giving of notice or the lapse or time or both, would constitute
a default) under (a) the Company's articles of incorporation or bylaws, (b) the
Program Documents of the Programs, or (c) any law, statute, rule or regulation,
or any contract, note, security agreement, mortgage, lease, loan agreement,
franchise, license, permit, order, injunction, writ, judgment, decree or any
other agreement, authorization or ruling binding upon the Company or the
Programs.
Section 5.5 Consents. Except for the Xxxxxx Bank Consent, no
consent, authorization, permit or approval of any person or entity is necessary
for the Company to execute and deliver this Agreement and to consummate its
obligations hereunder.
Section 5.6 Litigation. There are no actions, suits, claims
or other proceedings pending or, to the best knowledge of the Company, overtly
threatened by or before any court or governmental authority against or
affecting the Company or the Programs, which, if adversely determined, would be
reasonably likely to have a material adverse effect on the Programs or on the
ability of the Company to execute, deliver and perform its obligations under
this Agreement.
Section 5.7 Organization of Programs. Each Program is a
Delaware business trust, duly organized, validly existing and in good standing
under the laws of the State of Delaware.
Section 5.8 Financial Statements of Programs. The Company
has furnished to Purchaser true and complete copies of the 1995 Trust's audited
balance sheet as of December 31, 1996, and the related audited statements of
operations and cash flows for the fiscal year then ended, and the 1995 Trust's
unaudited consolidated balance sheet as of June 30, 1997 and the related
unaudited statements of operations and cash flows for the six months then
ended, and the 1997 Trust's unaudited consolidated balance sheet as of August
13, 1997 (the date of formation) (the "Financial Statements"). The Financial
Statements (i) present fairly in all material respects the financial condition,
results of operations and cash flows of the Programs as of the specified dates
thereof and for the respective periods covered thereby; (ii) have been prepared
in accordance with generally accepted accounting principles consistently
applied throughout the periods indicated and with prior periods (except as set
forth in the notes thereto and subject, in the case of interim financial
statements, to normal year-end adjustments); and (iii) have been prepared in
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accordance and consistent with the books and records of the Programs, which
have been maintained in accordance with sound business practices.
Section 5.9 No Material Adverse Change to Programs. Since
June 30, 1997, there has been no material adverse change to the business,
affairs, condition or results of operation of the 1995 Trust. Since August 13,
1997, there has been no material adverse change to the business, affairs,
condition or results of operations of the 1997 Trust.
Section 5.10 Historical Information Regarding Programs. The
Company has furnished to Purchaser copies of all information furnished to
investors in the Programs. All historical information furnished by the
Company to Purchaser regarding the Programs is accurate and complete in all
material respects, as of the date thereof.
Section 5.11. The Company's Interest in Programs. The Company
is the managing trustee of each Program. The Company owns good and marketable
title to 5.65 Preferred Shares and 40 Performance Shares, in the 1995 Program
(representing 5% and 40%, respectively, of the outstanding shares of each such
class), and 8 Preferred Shares and 17 Performance Shares in the 1997 Program
(representing 5% and 42.5%, respectively, of the outstanding shares of each
such class), free and clear of any and all mortgages, pledges, security
interests and liens, other than those imposed under applicable law, the Program
Documents and the restrictions to be waived in the Xxxxxx Bank Consent. All
Purchased Shares were duly authorized by the Programs and were validly issued
in compliance with all applicable laws.
Section 5.12. Broker's Fees. No broker, finder or investment
broker is or shall be entitled to receive any fee, commission or other
remuneration or compensation relating to the transactions contemplated by this
Agreement based on any action taken by or at the direction of the Company.
Section 6. Representations and Warranties of Purchaser.
Section 6.1 Corporate Status. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
Section 6.2 Power and Authority. Purchaser has all requisite
right, power and authority to execute, deliver and perform its obligations
under this Agreement. Purchaser's execution and delivery of this Agreement and
performance of its obligations hereunder have been duly and validly authorized
by all requisite corporate action of Purchaser.
Section 6.3 Enforceability. This Agreement has been duly and
validly executed and delivered on behalf of Purchaser and constitutes a legal,
valid and binding obligation of Purchaser enforceable against Purchaser in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, receivership, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights and
remedies generally or by principles governing the availability of equitable
remedies.
Section 6.4 No Conflicts. The execution and delivery by
Purchaser of this Agreement and the performance by Purchaser of the
transactions contemplated hereby do not and will not violate, conflict with, or
constitute a breach of or a default (or an event that, after the giving of
notice or the lapse or
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time or both, would constitute a default) under Purchaser's articles of
incorporation or bylaws, any law, statute, rule or regulation, or any contract,
note, security agreement, mortgage, lease, loan agreement, franchise, license,
permit, order, injunction, writ, judgment, decree or any other agreement,
authorization or ruling binding upon Purchaser.
Section 6.5 Consents. No consent, authorization permit or
approval of any person or entity is necessary for Purchaser to execute and
deliver this Agreement and to perform its obligations hereunder.
Section 6.6 Litigation. There are no actions, suits, claims
or other proceedings pending or, to the best knowledge of Purchaser, overtly
threatened by or before any court or governmental authority against or
affecting Purchaser which, if adversely determined, would be reasonably likely
to have a material adverse effect on the ability of Purchaser to execute,
deliver and perform its obligations under this Agreement.
Section 6.7 Intention, Sophistication and Access. Purchaser
is purchasing the Purchased Shares and the Revenue Interest solely for its own
account, and not as nominee or agent for any other person or entity, and not
with a view to any subsequent transfer of the Purchased Shares and the Revenue
Interest. Purchaser has such knowledge and experience in business and
financial matters to be capable of independently evaluating the merits and
risks of purchasing the Purchased Shares and the Revenue Interest. Purchaser
has independently evaluated the risks and merits of purchasing the Purchased
Shares and the Revenue Interest and has independently determined that the
Purchased Shares and the Revenue Interest is a suitable purchase for Purchaser.
Purchaser and its representatives have made an independent investigation of the
Company and the Programs in order to evaluate the risks and merits of
purchasing the Purchased Shares and the Revenue Interest. Purchaser and its
representatives have had an opportunity to ask questions of and to receive
answers from representatives of the Company, and has been given access to all
of the agreements, instruments, financial statements, books, records and other
information concerning the Company and the Programs as Purchaser deemed
necessary and appropriate to make an informed investment decision. Except as
expressly provided herein, in entering into this Agreement, Purchaser has not
relied upon any express or implied representations, warranties, assurances or
guarantee of any specified or minimum levels of Revenue Interest or Program
Fees or other estimates of future performance of the Programs or the Company or
the amounts of Program Fees or Revenue Interest, provided by the Company or any
agent authorized to act on behalf of the Company.
Section 6.8 Brokers' Fees. No broker, finder or investment
broker is or shall be entitled to receive any fees, commissions or other
remuneration relating to the transactions contemplated by this Agreement based
on any action by or at the direction of Purchaser.
Section 7. Additional Covenants.
Section 7.1 Access. Between the date of this Agreement and
the Closing Date, the Company shall provide Purchaser with reasonable access
during normal business hours to the books, records, financial statements and
other information relating to the Programs and the Company's interest in the
Programs.
Section 7.2 Confidentiality. Purchaser recognizes and
acknowledges that, prior to the date hereof it has had, and from and after the
date hereof it and its representatives will have, access to certain
confidential information relating to the Company and the Programs
("Confidential
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Information") that constitute valuable, special and unique assets of the
Company, the Programs and the Future Programs which are maintained as trade
secrets and proprietary property. The Confidential Information will also
include information about the amount and timing of Program Fees and payments of
the Revenue Interest, but shall exclude publicly available information (other
than by disclosure caused by Purchaser), and information required to be
disclosed by court order. Purchaser shall at all time treat and hold as
strictly confidential all such Confidential Information and will not at any
time on or after the date of this Agreement disclose to any person or entity or
use any such Confidential Information for any purpose, other than in connection
with the transactions contemplated by this Agreement. In the event this
Agreement is terminated for any reason whatsoever, before or after the Closing
Date. Purchaser will, upon request, return to the Company all written
Confidential Information furnished to Purchaser or its representatives in
connection herewith (including all summaries, extracts, copies and embodiments
thereof), immediately after the termination of this Agreement, without
retaining copies thereof.
Section 7.3 Consummation of Transactions. Upon the terms and
subject to the conditions of this Agreement, each of the parties hereto shall
use commercially reasonable efforts to cause all conditions to its and the
other party's obligations hereunder to be satisfied and to consummate its
obligations under this Agreement, and to cause the transactions contemplated by
this Agreement to be promptly consummated, including, but not limited,
obtaining the Xxxxxx Bank Consent.
Section 7.4 Public Announcements. Purchaser and the Company
shall consult with each other before issuing any press release or otherwise
making any public statements or disclosures with respect to this Agreement or
the transactions contemplated hereby, and shall not issue any such press
release or make any such public statements or disclosures without the prior
consent of the other party, which consent shall not be unreasonably withheld or
delayed, except as may be required by applicable law, rules or regulations or
applicable stock exchange or stock market policies.
Section 7.5 Program Fees.
(a) The Company shall not resign its position as the managing
trustee of either Program or take any action reducing the amount of any fees,
including administration, management and liquidation fees, payable to the
Company as managing trustee by the Programs, without the consent of Purchaser,
which consent shall not be unreasonably withheld.
(b) (i) The parties hereto acknowledge and agree that the
Purchase Price is allocated among the Revenue Interest and the Purchased Shares
of the Programs for all purposes (including financial reporting and tax
purposes and the reimbursement set forth below) as set forth below:
1995 TRUST:
Revenue Interest $ 141,853
Purchased Shares 333,276
----------
Total 1995 Trust $ 475,129
1997 TRUST:
Revenue Interest $ 208,781
Purchased Shares 316,090
----------
Total 1997 Trust 524,871
------------
Total Purchase Price $ 1,000,000
============
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(ii) In the event that the Company either resigns its
position as the managing trustee of either Program, or otherwise takes any
action which results in the reduction of future Revenue Interests payable to
Purchaser as a result of the reduction and/or elimination of the Program Fees
of either Program, then Purchaser shall be entitled to reimbursement of a
portion of the Purchase Price equal to the unrecovered portion, if any, of the
Purchase Price allocable to the Revenue Interest (the "Unrecovered PPRI") of
the Program with respect to which such action was taken. The Unrecovered PPRI,
if any, shall be computed after giving effect to any cash distributed or to be
distributed as a result of the action which resulted in the claim or potential
claim for reimbursement. In the event of any such action, the Unrecovered
PPRI, if any, shall be paid to Purchaser within 45 days after the end of the
calendar quarter in which the action occurred.
(iii) The Company shall maintain a ledger of the
Unrecovered PPRI of each Program. The opening balance of the Unrecovered PPRI
shall be $141,853 for the 1995 Trust and $208,781 for the 1997 Trust. The
ledger balance of the Unrecovered PPRI of each Program shall be reduced by the
amount of payments of Revenue Interest to Purchaser with respect to such
Program. The Company shall also maintain a ledger for the unrecovered portion,
if any, of the Purchaser Price allocated to the Purchased shares ("Unrecovered
PPPS") of such Program. The ledger balances of the Unrecovered PPPS shall be
reduced by the amount of distributions made with respect to the Shares with
respect to such Program. Once the ledger balance of a Program's PPPS reaches
zero ($0), then future cash payments related to such Purchased Shares
(including any proceeds from the sale or liquidation of such Purchased Shares)
shall be used first to reduce the respective Program's PPRI, and thereafter to
reduce the other Program's PPRI ledger balance. Once a Program's PPRI has been
reduced to zero ($0), Purchaser shall have no further rights to any
reimbursement of the Purchase Price with respect to such Program.
Section 7.6 IRS Section 754 Election. The Company agrees to
cause the Programs to file an election under Section 754 of the Internal
Revenue Code of 1986, as amended, with respect to the transfer of the Purchased
Shares, upon the timely written request of Purchaser.
Section 8. Conditions Precedent to Purchaser's Obligations. The
obligation of Purchaser to purchase the Purchased Shares and the Revenue
Interest is subject to the satisfaction (unless waived in writing by
Purchaser), at or prior to the Closing, of each of the following conditions:
Section 8.1 Accuracy of Representations and Warranties. The
representations and warranties made by the Company in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date with the same effect as if such representations and
warranties had been made or given on the Closing Date.
Section 8.2 Performance of Covenants. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements, obligations and conditions under this Agreement which are to be
performed, satisfied or complied with by the Company at or prior to the
Closing.
Section 8.3 No Litigation. No action, suit, arbitration,
investigation or other proceeding shall be pending or overtly threatened by or
before any court or governmental authority by, against or affecting the
Company, the Programs or the Business (a) which questions the legality or
validity of this Agreement or the transactions contemplated hereby, or (b)
which, if decided adversely to the Company, would be reasonably likely to be a
material adverse effect on the Company, the Programs, the Business or the
Revenue Interest, or on the Company's ability to perform its obligations
hereunder.
12
Section 8.4 Deliveries at Closing. The Company shall have
delivered to Purchaser at the Closing the Purchased Shares, the Revenue
Interest and each instrument required to be delivered by the Company to
Purchaser hereunder.
Section 8.5 Consents. The Xxxxxx Bank Consent and all other
consents by persons or entities necessary to permit the consummation of the
transactions contemplated hereby shall have been duly obtained by the Company
prior to the Closing.
Section 8.6 Guaranty. The obligations of the Company to make
payments of the Revenue Interest as and when due and payable under Section 2.1
hereof and to indemnify Purchaser under Section 11.2(b) hereof shall be
guaranteed by Xxxxxx Natural Gas Services, Inc., the sole shareholder of the
Company, in a written guaranty delivered at the Closing, in substantially the
form of Exhibit A hereto (the "Xxxxxx Guaranty").
Section 9. Conditions Precedent to the Company's Obligations. The
obligations of the Company to sell the Purchased Shares and the Revenue
Interest to Purchaser is subject to the satisfaction (unless waived in writing
by the Company), at or prior to the Closing, of each of the following
conditions:
Section 9.1 Accuracy of Representations and Warranties. The
representations and warranties made by Purchaser in this Agreement shall be
true and correct in all material respects on and as of the date of this
Agreement and as of the Closing Date with the same effect as if such
representations and warranties had been made or given on the Closing Date.
Section 9.2 Performance of Covenants. Purchaser shall have
performed, satisfied and complied in all material respects with all of the
covenants, agreements, obligations and conditions under this Agreement which
are to be performed, satisfied or complied with by Purchaser at or prior to the
Closing.
Section 9.3 No Litigation. No action, suit, arbitration,
investigation or other proceeding shall be pending or overtly threatened by or
before any court or governmental authority by, against or affecting Purchaser
(a) which questions the legality or validity of this Agreement or the
transactions contemplated hereby, or (b) which, if decided adversely to
Purchaser, would be reasonably likely to be a material adverse effect on
Purchaser's ability to execute and deliver this Agreement or perform its
obligations hereunder.
Section 9.4 Deliveries at Closing. Purchaser shall have
delivered to the Company at the Closing the portion of the Purchase Price to be
delivered at the Closing and each of the other instruments required to be
delivered to the Company hereunder.
Section 9.5 Consents. The Xxxxxx Bank Consent and all other
consents by persons or entities necessary to permit the consummation of the
transactions contemplated hereby shall have been duly obtained by the Company
prior to the Closing.
Section 10. The Closing.
Section 10.1 Date and Place. The consummation of the sale and
purchase of the Revenue Interest contemplated hereby (the "Closing") shall take
place within two (2) business days of the satisfaction of all conditions to the
Closing (the "Closing Date") at the offices of Xxxxxx Natural Gas Services,
Inc. at
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0000 Xxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, at 2:00 p.m. local time, or
at such other time and place as the parties shall mutually agree.
Section 10.2 Deliveries by the Company. At the Closing, the
Company shall deliver or cause to be delivered to Purchaser:
(a) The Xxxxxx Bank Consent, if necessary;
(b) Instruments of assignment of the Purchased Shares
and the Revenue Interest;
(c) A Certificate duly executed by the President of the
Company, dated as of the Closing Date, certifying that, to the best of his
knowledge and belief after due inquiry, (i) the Company has fully performed,
satisfied and complied with all agreements, obligations, covenants and
conditions required by this Agreement to be performed, satisfied or complied
with at or prior to the Closing, and (ii) all of the representations and
warranties of the Company set forth in Section 5 of this Agreement are true and
correct in all material respects as of the Closing Date;
(d) The Xxxxxx Guaranty; and
(e) All other items required to be delivered by the
Company pursuant to any provisions of this Agreement.
Section 10.3 Deliveries by Purchaser. At the Closing, Purchaser
shall deliver to the Company:
(a) The Purchase Price on the terms set forth in
Section 2.1 hereof; and
(b) A Certificate duly executed by the President of
Purchaser, dated as of the Closing Date, certifying that, to the best of his
knowledge and belief after due inquiry, (i) Purchaser has fully performed,
satisfied and complied with all agreements, obligations, covenants and
conditions required by this Agreement to be performed, satisfied or complied
with at or prior to the Closing, and (ii) all of the representations and
warranties of Purchaser set forth in Section 5 of this Agreement are true and
correct in all material respects as of the Closing Date; and
(c) All other items required to be delivered by Purchaser
pursuant to any provision of this Agreement.
Section 10.4 Effectiveness of Closing. No action to be taken or
delivery to be made at the Closing shall be effective until all of the actions
to be taken and deliveries to be made at the Closing are complete.
Section 11. Survival and Indemnification
Section 11.1 Survival. The representations and warranties of
the parties hereto as set forth herein shall survive the Closing until the
second anniversary of the Closing Date. The obligation of the Company to pay
Revenue Interest, the obligation of Purchaser to pay Purchaser Price to the
Company, and the other agreements and obligations of the parties hereto under
this Agreement shall survive the Closing.
14
Section 11.2 Indemnification.
(a) The Company, on the one hand, and Purchaser, on the
other hand, shall indemnify, defend and hold harmless the other party, its
affiliates, successors and assigns, and their officers, directors,
shareholders, employees, agents and representatives, from and against any and
all losses, liabilities, damages, demands, taxes, claims, actions, costs and
expenses (including, without limitation, interest, fines, penalties, reasonable
attorneys' fees and court costs and amounts paid in settlement) ("Damages")
arising out of or resulting from any inaccuracy in any representation or
warranty made by it, or any breach, violation or failure by it to perform any
covenant, agreement or other obligation of it.
(b) In addition, the Company shall indemnify, defend
and hold harmless Purchaser, its affiliates, successors and assigns, and their
officers, directors, shareholders, employees, agents and representatives, from
and against any and all Damages arising out of or resulting from any claim by
any person or entity against any Program based upon facts, circumstances,
actions or omissions arising prior to the Closing Date.
Section 11.3 Claims for Indemnification.
(a) Whenever either party believes it has suffered or
incurred or is likely to suffer or incur any Damages, or any action or
proceeding is commenced or threatened or claim is made that could result in
Damages, which is reasonably likely to give rise to a claim ("Claim") for
indemnification under this Agreement, the party seeking indemnification
("Indemnified Party") shall, upon obtaining knowledge thereof, promptly notify
in writing the party against whom indemnification is sought ("Indemnifying
Party") of the Claim and, when and to the extent known, the facts constituting
the basis for such Claim and the amount and nature of the Damages or an
estimate thereof. The Indemnified Party's failure to timely notify the
Indemnifying Party of any Claim or potential Claim shall not relieve the
Indemnifying Party of any liability hereunder unless and only to the extent
that such failure causes the Indemnifying Party to lose the right to assert any
substantive rights or defenses or to the extent that the Indemnifying Party is
actually prejudiced in its rights or obligations.
(b) The Indemnified Party shall give the Indemnifying
Party a reasonable opportunity to participate in and to assume the defense of
any such Claim at the Indemnifying Party's own expense and with counsel of the
Indemnifying Party's own selection, reasonably satisfactory to the Indemnified
Party; provided, however, that the Indemnified Party shall at all times also
have the right, but not the obligation, to fully participate in the defense of
the Claim and to employ its own counsel at is own expense. If the Indemnifying
Party has not in fact employed legal counsel to assume the defense of such
Claim within a reasonable time after receiving notice of the Claim, then the
reasonable fees, disbursements and other charges of counsel from one separate
firm selected by the Indemnified Party shall be reimbursed by the Indemnifying
Party promptly as they are incurred.
(c) No party hereto shall compromise, settle or consent
to the entry of any judgment with respect to any Claim without the prior
written consent of the other interested party (which consent shall not be
unreasonably withheld or delayed).
(d) Each party hereto shall cooperate in every
reasonable way with the party assuming responsibility for the defense and
disposition of any such Claim, including making available to the defending
party all books, records and other material reasonably required by the
defending party for its use in defending the Claim.
15
Section 11.4 Limitation on Liability.
(a) Neither Purchaser's nor the Company's liability
under this Section 11 shall exceed the aggregate amount of $1,000,000;
provided, however, that such limitation on liability shall not apply to the
Company's indemnification obligations arising under Section 11.2(b) hereof.
(b) Neither party shall seek or be entitled to
consequential damages or damages for lost profits in any Claim for
indemnification under this Section 11 nor shall it accept payment of any award
or judgment against the other party to the extent that such award of judgment
includes consequential damages or damages for lost profits.
Section 11.5 Effect of Knowledge. No party to this Agreement
shall be liable under this Section 11 for Damages resulting from any event
relating to a breach or inaccuracy of any representation or warranty if the
Indemnified Party had actual knowledge of such breach or inaccuracy on or
before the Closing Date of such event.
Section 12. Termination Before Closing; Term of Agreement.
Section 12.1 Termination Before Closing.
(a) Events of Termination Before Closing. This
Agreement may be terminated at any time prior to the Closing as follows:
(i) By mutual written agreement of the Company
and Purchaser;
(ii) By the Company or Purchaser by giving two
(2) business days prior written notice of such termination to the other if the
non-terminating party has materially breached any of its representations,
warranties, agreements or covenants hereunder;
(iii) By either Purchaser or the Company by giving
written notice to the other if the Closing Date has not occurred on or before
January 31, 1998, unless such party's intentional failure to fulfill any
obligation hereunder has been the cause of, or has resulted in, the failure of
the Closing to occur on or before such date.
(b) Effect of Termination. The termination of this
Agreement prior to the Closing, whether in accordance with any of the preceding
provisions of this Section 12.1 or otherwise, shall terminate all obligations
of the parties hereto under this Agreement, except for the obligations set
forth in Sections 7.2, 7.4, 11 and 13 hereof; provided, however, that the
termination of this Agreement shall not affect the rights of either the Company
or Purchaser against the other for breach of any representation, warranty,
covenant or agreement set forth in this Agreement.
Section 12.2 Term of Agreement. The term of this Agreement
shall commence as of the date of this Agreement and shall continue thereafter
until the dissolution, winding-up and liquidation of both Programs has been
completed, unless earlier terminated as provided in Section 12.1 hereof.
16
Section 13. General Provisions
Section 13.1 Governing Law and Forum Selection. This Agreement
shall in all respects be governed by and construed and enforced in accordance
with the internal substantive laws of the State of Delaware, without giving
effect to any principle or rule of conflict or choice of laws. Any action,
suit or other proceeding seeking to enforce any right, remedy, obligation,
duty, covenant or provision of, or arising out of, this Agreement shall be
brought and entered against any party hereto exclusively in any federal or
state court of the State of Delaware or of the United States located in the
State of Delaware. Each party hereto irrevocably submits to the personal
jurisdiction of any such court and irrevocably waives, to the fullest extent of
the law, any objection that it may now or hereafter have to the laying of venue
in any such court and any claim that such action, suit or proceeding has been
brought in an inconvenient forum.
Section 13.2 Expenses. Each of the parties to this Agreement
agrees to pay its own costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby, including the fees and
expenses of its counsel, accountants and other advisers and agents, whether or
not the Closing occurs.
Section 13.3 Assignment. Neither this Agreement nor any of the
rights or obligations hereunder may be assigned, in whole or in part, by either
party hereto without the prior written consent of the other party hereto;
provided, however, that either party shall have the right from time to time to
assign this Agreement or any or all of its rights or obligations hereunder to
its parent corporation, to any of its majority-owned subsidiaries, or to any
other majority-owned subsidiary of its parent corporation.
Section 13.4 Company Actions. Nothing set forth in this
Agreement shall preclude the Company from merging or combining with, or
transferring all or substantially all of its asset to, another entity which
assumes all of the Company's obligations hereunder.
Section 13.5 Amendments. This Agreement may not be amended or
modified in any manner in whole or in part except by a writing signed by all
parties to this Agreement that specifically states that it amends this
Agreement.
Section 13.6 Notices. Any and all notices, requests, demands
and other communications required or permitted to be given hereunder shall be
in writing and shall be deemed to have been duly given hereunder on the date
given if delivered personally, or sent by facsimile transmission (upon receipt
of confirmation of delivery) on the next business day if sent by overnight
courier service, or three business days after being sent by first class
(registered/certified) mail, postage prepaid, return receipt requested, to the
parties at the following addresses:
If to the Company: Xxxxxx Gas Transmission, Inc.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: W. Xxxxxxx Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to: Xxxxxx Natural Gas Services, Inc.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: W. Xxxxxxx Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
17
If to Purchaser: Odessa Exploration Incorporated
0000 Xxxxxxx 000, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: D. Xxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to: Key Energy Group, Inc.
Xxx Xxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxx, XX 00000
Attn: General Counsel
Telephone: 000-000-0000
Facsimile: 000-000-0000
Any party may change its designated address by giving written notice
thereof to all other parties hereto in the manner provided in this Section
13.6. Any party hereto may send any notice, request, demand, or other
communication to the intended recipient at the address above by using any other
means (such as telecopy, telex, expedited courier, messenger, ordinary mail or
electronic mail), but no such notice, demand, request or other communication
shall be deemed had been given until it is actually received by the recipient.
Section 13.7 Waiver. The obligations of any party hereto may be
waived only with the written consent of the party giving the waiver. Any
waiver by any party of a breach of any provision of this Agreement shall not
operate or be construed to be a waiver of any other breach of that provision or
of any breach of any other provision of this Agreement. The failure of a party
to insist upon strict adherence to any provision of this Agreement on one or
more occasions shall not be considered a continuing waiver or deprive that
party of the right thereafter to insist upon strict adherence to that provision
or any other provision of this Agreement.
Section 13.8 Severability. If any provision of this Agreement
is invalid, illegal or unenforceable in any situation, the balance of this
Agreement shall remain in effect, and such illegality, invalidity or
unenforceability shall not affect the legality, validity or enforceability of
that provision in any other situation or legality, validity or enforceability
of any other provision of this Agreement.
Section 13.9 Headings. The headings used in this Agreement are
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
Section 13.10 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 13.11 Pronouns, Etc. The number and gender of each
pronoun used in this Agreement and the term "person" or "persons" or the like
shall be construed to mean both the number and gender of the individual,
corporation, partnership, firm, trust, agency and other entity as the context,
18
circumstance or its antecedent may require. The terms "herein," "hereof," and
"hereto," and the like refer to this Agreement as a whole.
Section 13.4 No Third Party Beneficiaries. This Agreement does
not confer or create, is not intended by the parties hereto to confer or
create, and shall not be construed to as conferring or creating, upon any
person or entity other than the parties hereto and their successors and
permitted assigns any rights, remedies or causes of action under or by reason
of this Agreement.
Section 13.5 Counterparts. This Agreement may be executed in
one or more counterparts including counterparts executed by less than all
positions hereto, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 13.6 Entire Agreement. This Agreement constitutes the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersedes all prior arrangements, agreements and
understandings, whether oral or written, among the parties hereto in connection
with the subject matter of this Agreement.
[Signature Page to Follow]
* * * * * * *
19
IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement to be executed and delivered by their respective duly authorized
officers as of the date first set forth above.
XXXXXX GAS TRANSMISSION, INC.
By: /s/ W. Xxxxxxx Xxxxxx
----------------------------------------
W. Xxxxxxx Xxxxxx, Chairman and
Chief Executive Officer
ODESSA EXPLORATION INCORPORATED
By: /s/ D. Xxxx Xxxxxxx
----------------------------------------
D. Xxxx Xxxxxxx, President
