EXHIBIT 2.1
EXECUTION VERSION
PURCHASE AND SALE AGREEMENT
BY AND AMONG
TRANSWORLD EXPLORATION AND PRODUCTION, INC.,
TRANSWORLD EXPLORATION AND PRODUCTION
(LOCKPORT) INC.,
and TRANSWORLD EXPLORATION AND PRODUCTION
(KINGS BAYOU) INC.
(COLLECTIVELY SELLERS)
AND
THE HOUSTON EXPLORATION COMPANY
(BUYER)
DATED SEPTEMBER 3, 2003
EFFECTIVE JULY 1, 2003
PURCHASE AND SALE AGREEMENT
TABLE OF CONTENTS
ARTICLE I DEFINITIONS............................................................................... 1
1.1 Accounting Expert.............................................................................. 1
1.2 Agreement...................................................................................... 1
1.3 Affiliate...................................................................................... 2
1.4 Assets......................................................................................... 2
1.5 Assumed Environmental Obligations.............................................................. 3
1.6 Assumed Plugging and Abandonment Obligations................................................... 3
1.7 Buyer.......................................................................................... 3
1.8 Buyer's Assumed Obligations.................................................................... 3
1.9 Buyer's Credits................................................................................ 3
1.10 Buyer's Limited Assumption Agreement........................................................... 3
1.11 Buyer's Surviving Representations and Warranties............................................... 3
1.12 Casualty Loss.................................................................................. 4
1.13 Claims......................................................................................... 4
1.14 Closing........................................................................................ 4
1.15 Closing Date................................................................................... 4
1.16 Defect Notice Date............................................................................. 4
1.17 Effective Time................................................................................. 4
1.18 Environmental Defect........................................................................... 4
1.19 Environmental Defect Value..................................................................... 4
1.20 Environmental Laws............................................................................. 4
1.21 Environmental Liability........................................................................ 4
1.22 Equipment...................................................................................... 5
1.23 Excluded Assets................................................................................ 5
1.24 Final Settlement............................................................................... 7
1.25 Final Settlement Statement..................................................................... 7
1.26 Hydrocarbons................................................................................... 7
1.27 Interim Period................................................................................. 7
1.28 Inventory Hydrocarbons......................................................................... 7
1.29 Known or Knowledge............................................................................. 7
1.30 Leases......................................................................................... 7
1.31 Liabilities.................................................................................... 8
1.32 Material Adverse Change........................................................................ 8
1.33 MMS............................................................................................ 8
1.34 Net Revenue Interest........................................................................... 8
1.35 Netherland Xxxxxx Reserve Report............................................................... 8
1.36 NORM........................................................................................... 9
1.37 Notice of Environmental Defect................................................................. 9
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1.38 Notice of Title Defect......................................................................... 9
1.39 OPA............................................................................................ 9
1.40 Party and Parties.............................................................................. 9
1.41 Permits and Easements.......................................................................... 9
1.42 Permitted Encumbrances......................................................................... 9
1.43 Preliminary Settlement Statement............................................................... 9
1.44 Prior Asset Purchase Agreements................................................................ 9
1.45 Property Taxes................................................................................. 9
1.46 Purchase Price................................................................................. 9
1.47 Related Contracts.............................................................................. 9
1.48 Seismic Data................................................................................... 9
1.49 Sellers........................................................................................ 10
1.50 Sellers' Credits............................................................................... 10
1.51 Sellers' Parent-Company Guaranty............................................................... 10
1.52 Sellers' Parent Guarantor...................................................................... 10
1.53 Sellers' Prior Parent Guaranties............................................................... 10
1.54 Sellers' Retained Obligations.................................................................. 10
1.55 Sellers' Surviving Representations and Warranties.............................................. 10
1.56 Tax Period..................................................................................... 10
1.57 TEPI........................................................................................... 10
1.58 Threshold Amount............................................................................... 11
1.59 Title Defect................................................................................... 11
1.60 Transfer Taxes................................................................................. 11
1.61 Units.......................................................................................... 11
1.62 Xxxxx.......................................................................................... 11
1.63 Working Interest............................................................................... 11
ARTICLE II PURCHASE AND SALE......................................................................... 11
2.1 Sale and Purchase.............................................................................. 11
ARTICLE III PURCHASE PRICE AND PAYMENT................................................................ 12
3.1 Purchase Price................................................................................. 12
3.2 Adjustments to Purchase Price.................................................................. 12
3.3 Sellers' Preliminary and Final Settlement Statements........................................... 15
3.4 Resolution of Disputes......................................................................... 15
ARTICLE IV SELLERS' REPRESENTATIONS AND WARRANTIES................................................... 16
4.1 Sellers' Representations and Warranties........................................................ 16
4.2 Seller's Warranties at Closing................................................................. 20
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ARTICLE V BUYER'S REPRESENTATIONS AND WARRANTIES.................................................... 21
5.1 Buyer's Representations and Warranties......................................................... 21
5.2 Buyer's Warranties at Closing.................................................................. 24
ARTICLE VI ACCESS TO INFORMATION AND INSPECTION...................................................... 24
6.1 Title Files.................................................................................... 24
6.2 Other Files.................................................................................... 24
6.3 Inspections.................................................................................... 25
6.4 Confidentiality................................................................................ 25
6.5 Change in Condition............................................................................ 25
ARTICLE VII TITLE AND ENVIRONMENTAL MATTERS........................................................... 26
7.1 Notice of Title Defects........................................................................ 26
7.2 Title Defect................................................................................... 26
7.3 Remedies for Title Defects..................................................................... 29
7.4 Special Warranty of Title...................................................................... 31
7.5 Notice of Environmental Defects................................................................ 31
7.6 Environmental Defect........................................................................... 32
7.7 Remedies for Environmental Defects............................................................. 32
ARTICLE VIII PREFERENTIAL PURCHASE RIGHTS AND CONSENTS................................................. 33
8.1 Preferential Purchase Rights and Consents...................................................... 33
ARTICLE IX COVENANTS PENDING CLOSING................................................................. 34
9.1 Covenants of Sellers Pending Closing........................................................... 34
9.2 Mutual Covenants............................................................................... 35
ARTICLE X CLOSING CONDITIONS........................................................................ 35
10.1 Sellers' Closing Conditions.................................................................... 35
10.2 Buyer's Closing Conditions..................................................................... 38
ARTICLE XI CLOSING................................................................................... 39
11.1 Closing........................................................................................ 39
11.2 Sellers' Closing Obligations................................................................... 39
11.3 Buyer's Closing Obligations.................................................................... 42
11.4 Joint Closing Obligations...................................................................... 43
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ARTICLE XII EFFECT OF CLOSING ASSUMED AND RETAINED RIGHTS AND OBLIGATIONS............................ 44
12.1 Buyer's Rights After Closing................................................................... 44
12.2 Buyer's Obligations After Closing.............................................................. 44
12.3 Sellers' Obligations After Closing............................................................. 46
12.4 Assumed Plugging and Abandonment Obligations................................................... 48
12.5 Assumed Environmental Obligations.............................................................. 49
12.6 Revenues and Expenses.......................................................................... 52
12.7 Suspended Royalties............................................................................ 53
ARTICLE XIII INDEMNITIES............................................................................... 53
13.1 Definition of Liabilities...................................................................... 53
13.2 Application of Indemnities..................................................................... 53
13.3 Buyer's General Indemnity...................................................................... 54
13.4 Buyer's Special Indemnity...................................................................... 55
13.5 Sellers' General Indemnity..................................................................... 55
13.6 Sellers' Special Indemnity..................................................................... 56
13.7 Notices and Defense of Indemnified Claims...................................................... 56
13.8 Waiver of Consequential and Punitive Damages................................................... 56
ARTICLE XIV LIMITATIONS OF WARRANTIES, CERTAIN WAIVERS AND REMEDIES................................... 57
14.1 Limitations.................................................................................... 57
14.2 Use of the Assets.............................................................................. 58
14.3 Waiver of Texas DTPA........................................................................... 58
14.4 Waiver of Louisiana Rights in Redhibition...................................................... 59
14.5 Waivers Conspicuous............................................................................ 59
14.6 Survival....................................................................................... 59
ARTICLE XV CASUALTY LOSS AND CONDEMNATION............................................................ 60
15.1 Casualty Loss.................................................................................. 60
ARTICLE XVI DEFAULT AND REMEDIES...................................................................... 61
16.1 Sellers' Remedies.............................................................................. 61
16.2 Buyer's Remedies............................................................................... 61
16.3 Effect of Termination.......................................................................... 61
16.4 Other Remedies................................................................................. 61
16.5 Performance Deposit............................................................................ 62
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ARTICLE XVII MISCELLANEOUS............................................................................. 62
17.1 Certain Governmental Approvals................................................................. 62
17.2 Adequacy of Supplemental Bonds or Arrangements for the Pledge of Securities.................... 64
17.3 Special Offshore Interests..................................................................... 64
17.4 Louisiana Approvals............................................................................ 65
17.5 Public Announcements........................................................................... 65
17.6 Filing and Recording of Assignments, etc....................................................... 65
17.7 Further Assurances and Records................................................................. 66
17.8 Notices........................................................................................ 67
17.9 Incidental Expenses............................................................................ 68
17.10 Entire Agreement............................................................................... 68
17.11 Governing Law.................................................................................. 68
17.12 Exhibits....................................................................................... 69
17.13 Audits; Access to Assets....................................................................... 69
17.14 Counterparts................................................................................... 69
17.15 Waiver......................................................................................... 69
17.16 Binding Effect; Assignment..................................................................... 70
17.17 Taxes.......................................................................................... 70
17.18 Gas Transportation/Processing.................................................................. 72
17.19 Expenses of Sale............................................................................... 72
17.20 Third Party Rights............................................................................. 72
17.21 Time Limits.................................................................................... 72
17.22 Severance of Invalid Provisions................................................................ 72
17.23 Construction of Ambiguity...................................................................... 73
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LIST OF EXHIBITS AND SCHEDULES
Exhibits A-1 to A-5: Descriptions of Leases, including the WI and NRI
Applicable to Each Lease and/or Well
Exhibit B: List of Contracts
Exhibit C -1 to C-2: Surface Use Agreements
Exhibit D-1 to D-2: List of Xxxxx
Exhibit E: Form of Assignment of Record Title to Oil and Gas
Lease (Offshore)
Exhibit F: Form of Assignment of Oil and Gas Lease Operating
Rights (Offshore)
Exhibit G: Form of Assignment, Conveyance and Xxxx of Sale for
Oil and Gas Lease (Onshore Leases)
Exhibit H: Form of Assignment of Rights of Way (Offshore)
Exhibit I: Form of Assignment of Contract Rights (unrecorded)
Exhibit J: Form of Xxxx of Sale (Offshore)
Exhibit K: Letters in Lieu of Transfer Orders
Exhibit L: Non-Foreign Affidavit
Exhibit M: Form of Buyer's Limited Assumption Agreement
Exhibit N: List of Certain Excluded Assets
Exhibit O: Form of Sellers' Parent-Company Guaranty
Exhibit P: Form of Joinder in Agreement
Schedules
Schedule 1.27 Certain Corporate Officers
Schedule 3.1 Allocation of Purchase Price to the Assets
Schedule 4.1(f) Pending Litigation Proceedings
Schedule 4.1(g) Gas Imbalances
Schedule 4.1(h) Matters Pertaining to Related Contracts
Schedule 4.1(i) Preferential Rights, Rights of First Refusal, and
Consents to Assign
Schedule 4.1(m) Take-or-Pay Claims
Schedule 4.1(n) Outstanding AFE's in Excess $75,000
Schedule 4.1(p) Environmental Matters
Schedule 4.1(q) Schedule of Obligations under Prior Asset Purchase
Agreements
Schedule 4.1(r) Schedule of Sellers' Prior Parent Company Guaranties
Schedule 9.1(a) Capital Expenditures Incurred by Sellers Between
Effective Time and Date of this Agreement
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PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made by and AMONG TRANSWORLD EXPLORATION AND
PRODUCTION, INC. ("TEPI"), TRANSWORLD EXPLORATION AND PRODUCTION (LOCKPORT) INC.
("TEPI (LOCKPORT)"), and TRANSWORLD EXPLORATION AND PRODUCTION (KINGS BAYOU)
INC. ("TEPI (KINGS BAYOU)"), each a Delaware corporation (each a "Seller" and
collectively the "Sellers") and THE HOUSTON EXPLORATION COMPANY, a Delaware
corporation ("Buyer"). Sellers and Buyer are sometimes referred to herein
individually as "Party" and together referred to herein as "Parties".
WITNESSETH:
WHEREAS, Sellers own certain oil and gas leasehold and other interests
situated in the Gulf of Mexico, offshore the States of Louisiana and Texas, and
onshore in the States of Kansas, Louisiana and Texas as more particularly
described in the Exhibits hereto;
WHEREAS, Sellers desire to sell and assign the aforementioned leasehold
and other interests and associated contractual rights and obligations to Buyer,
and Buyer desires to purchase, pay for, and acquire Sellers' interest in the
same on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, Sellers and Buyer hereby agree as follows:
ARTICLE I
DEFINITIONS
In this Agreement, the following terms shall have the following
meanings:
1.1 Accounting Expert has the meaning specified in Section 3.4
1.2 Agreement means this Purchase and Sale Agreement among Sellers
and Buyer, including the Exhibits and Schedules hereto.
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1.3 Affiliate means any corporation, limited liability company or
partnership (including a limited partnership), or other entity controlling,
controlled by or under common control with a Party to this Agreement. "Control"
means the ownership directly or indirectly of 50% (fifty percent) or more of the
voting rights in a legal entity with respect to the election of directors or
other governing persons. "Controls," "controlled by" and other derivatives shall
be construed accordingly.
1.4 Assets means the following described interests, rights,
contracts, assets, and properties (except to the extent constituting Excluded
Assets):
(a) The Leases including without limitation the Working
Interests, Net Revenue Interests and contract rights set forth on
Exhibit "A-1" through Exhibit "A-5" and any other interests owned by
Sellers in and to the lands covered by the Leases, including without
limitation overriding royalty interests, production payments, carried
interests and reversionary interests;
(b) All lease files, land files, well files, division
order files, abstracts, title opinions, regulatory reports and all
other books, files and records, information and data and all rights
thereto of Sellers insofar as the same are directly related to the
Assets and to the extent the transfer thereof is not prohibited by
existing contractual obligations with third parties after reasonable
effort has been made to obtain a waiver of such prohibition;
(c) The Inventory Hydrocarbons;
(d) The Xxxxx;
(e) The Units;
(f) The Equipment;
(g) Oil, condensate, natural gas, and natural gas liquids
produced after the Effective Time, including "line fill" and inventory
below the pipeline connection in tanks,
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attributable to the Assets;
(h) The Related Contracts;
(i) The Permits and Easements;
(j) All of Seller's right, title and interest in and to a
seismic survey shot by Shell Offshore Inc. covering Xxxxxx Island Block
331;
(k) The Seismic Data; and
(l) All rights, obligations, benefits, proceeds, claims,
awards, judgments, and settlements for any imbalances which may exist
as of the Effective Time with third parties with respect to production
or processing of Hydrocarbons attributable to Sellers' interest in and
ownership of Hydrocarbons produced from the Assets prior to the
Effective Time.
1.5 Assumed Environmental Obligations has the meaning set forth in
Section 12.5(a).
1.6 Assumed Plugging and Abandonment Obligations has the meaning
set forth in Section 12.4(a).
1.7 Buyer means The Houston Exploration Company, a Delaware
corporation.
1.8 Buyer's Assumed Obligations has the meaning set forth in
Section 12.2(a).
1.9 Buyer's Credits has the meaning set forth in Section 3.2(b).
1.10 Buyer's Limited Assumption Agreement means the agreement by
which Buyer assumes certain obligations as specified in this Agreement, in the
form attached hereto as Exhibit "M".
1.11 Buyer's Surviving Representations and Warranties shall mean
the representations and warranties of Buyer contained in Article V.
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1.12 Casualty Loss has the meaning set forth in Section 15.1.
1.13 Claims means any and all losses, liabilities, damages,
punitive damages, obligations, expenses, fines, penalties, costs, claims, causes
of action and judgments for: (a) breaches of contract; (b) loss or damage to
property, injury to or death of persons, and other tortious injury; (c)
violations of applicable laws, rules, regulations, orders; and (d) any other
legal right or duty actionable at law or equity. The term "Claims" also includes
reasonable attorneys fees, court costs, and other reasonable costs of litigation
resulting from the defense of any claim or cause of action within the scope of
the indemnities in this Agreement.
1.14 Closing has the meaning set forth in Section 11.1.
1.15 Closing Date has the meaning set forth in Section 11.1.
1.16 Defect Notice Date has the meaning set forth in Section 7.1.
1.17 Effective Time means 7:00 a.m., Houston, Texas time, on July
1, 2003.
1.18 Environmental Defect has the meaning set forth in Section 7.6.
1.19 Environmental Defect Value has the meaning set forth in
Section 7.5.
1.20 Environmental Laws means federal, state, and local laws,
rules, regulations, orders and all agreements and contracts binding on Sellers
with respect to pollution or protection of the environment relating to the
Assets, including laws, rules, regulations, orders, contracts and agreements
relating to actual or threatened emissions, discharges, or releases of
pollutants, contaminants, or hazardous substances, or other toxic materials or
wastes into ambient air, surface water, ground water or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants of hazardous
substances, or other toxic materials or wastes.
1.21 Environmental Liability has the meaning set forth in Section
12.5(a)(vii).
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1.22 Equipment means equipment and facilities, machinery, fixtures,
flowlines, pumps, platforms, sulfur recovery facilities, compressors, compressor
stations, dehydration facilities, treating facilities, pipeline gathering lines,
flow lines, and transportation lines, valves, meters, separators, tanks, tank
batteries, spare parts, tools, office quarters and other fixtures, materials,
improvements, abandoned property and junk, and any other real, personal,
immovable and mixed property located on, used or formerly used in the operation
of, or relating to the production, treatment, sale, or disposal of hydrocarbons,
water and associated substances produced from the Leases, Units and Xxxxx
including, but not limited to, those described on any Schedule or Exhibit
hereto;
1.23 Excluded Assets means the following:
(a) (i) All trade credits, accounts receivable, notes
receivable and other receivables attributable to Sellers' interest in
the Assets with respect to any period of time prior to the Effective
Time; (ii) all deposits, cash, checks in process of collection, cash
equivalents and funds attributable to Sellers' interest in the Assets
with respect to any period of time prior to the Effective Time; and
(iii) all deposits, cash, checks in the process of collection, cash
equivalents and funds attributable to Sellers' interest in the Assets
which were received by Sellers after the Effective Time and which are
attributable to the period prior to the Effective Time under generally
accepted accounting principles;
(b) Sellers' corporate, financial, and tax records;
reserve estimates, economic analyses and pricing forecasts; and
documents and records subject to confidentiality agreements, claims of
privilege or other restrictions on access, in each case to the extent
that the foregoing do not adversely affect the value, use or operation
of the Assets;
(c) All claims and causes of action of Sellers (i)
arising from acts, omissions or events, or damage to or destruction of
the Assets occurring prior to the Effective Time to the extent that
they do not offset or serve as counterclaims to Buyer's Assumed
Obligations, or (ii) with respect to any of the other Excluded Assets;
(d) All rights, titles, claims and interests of Sellers
arising prior to the Effective
5
Time (i) under any policy or agreement of insurance or indemnity, (ii)
under any bond, or (iii) to any insurance or condemnation proceeds or
awards;
(e) All Hydrocarbons produced from or attributable to the
Assets with respect to all periods prior to the Effective Time,
together with all proceeds from or of such Hydrocarbons, except (i) the
Inventory Hydrocarbons and (ii) the unsold inventory of gas plant
products, if any, attributable to the Leases at the Effective Time
allocable to Sellers' ownership;
(f) Claims of any Seller for refund of or loss carry
forwards with respect to (i) production, windfall profit, severance, ad
valorem or any other taxes attributable to any period prior to the
Effective Time, (ii) income or franchise taxes, (iii) any taxes
attributable to the Excluded Assets, or (iv) refunds of estimated
royalties paid to the MMS;
(g) All amounts due or payable to any Seller as
adjustments or refunds under any contracts or agreements, affecting the
Assets, relating to periods prior to the Effective Time;
(h) All amounts due or payable to any Seller as
adjustments to insurance premiums related to the Assets with respect to
any period prior to the Effective Time;
(i) All proceeds, benefits, income or revenues accruing
(and any security or other deposits made) with respect to (i) the
Assets prior to the Effective Time; (ii) all accounts receivable
attributable to the Assets for the period of time from the Effective
Time until Closing, it being recognized and agreed that Buyer will
receive full credit therefor pursuant to the provisions of Section 3.2
hereof; or (iii) any Excluded Assets;
(j) All of Sellers' intellectual property including but
not limited to licensed 3-D seismic data and interpretations,
proprietary or licensed computer software, patents, trade secrets,
copyrights, names, marks, and logos, but excluding the Seismic Data;
(k) Seismic, geological, and geophysical information and
data that does not constitute the Seismic Data; and
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(l) All third-party and leased equipment as listed on
Exhibit "N".
1.24 Final Settlement has the meaning set forth in Section 3.3.
1.25 Final Settlement Statement has the meaning set forth in
Section 3.3.
1.26 Hydrocarbons means crude oil, natural gas, casinghead gas,
condensate, sulphur, natural gas liquids, products, and other liquid or gaseous
hydrocarbons (including CO(2)), and shall also refer to all other minerals of
every kind and character which may be produced from or allocable to the Leases
and Assets.
1.27 Interim Period means that period of time occurring after the
Effective Time and prior to the Closing.
1.28 Inventory Hydrocarbons means all merchantable oil and
condensate produced from or attributable to the Leases prior to the Effective
Time which have not been sold or taken by Sellers for their own account and are
in storage on the Leases or onshore at the Effective Time.
1.29 Known or Knowledge means whenever a statement regarding the
existence (or absence) of any fact in this Agreement is qualified by a phrase
such as "to such Party's Knowledge" or "Known to such Party," the Parties intend
that the only information to be attributed to such Party is information actually
known, in the case of a corporation, to current officers or employees who devote
substantial attention to matters of such nature during the ordinary course of
their employment and who are identified on Schedule 1.27. Unless otherwise
specifically provided in this Agreement, no Party is represented or obligated to
have undertaken a separate investigation in connection with the transaction
contemplated in this Agreement to determine the existence (or absence) of any
statement or representation qualified by a phrase such as "to such Party's
Knowledge" or "Known to such Party."
1.30 Leases means the oil, gas and other mineral leases and the oil
and gas leases identified on Exhibits "A-1" through "A-4" hereof and the lands
affected by each such Lease.
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1.31 Liabilities has the meaning set forth in Section 13.1.
1.32 Material Adverse Change means an event which is materially
adverse to the Assets; provided, however, that (a) (i) any occurrence,
development or condition which relates to general industry conditions (including
the price of oil and gas), domestic or international, or general economic or
general political occurrences, developments, or conditions, or (ii) any change
in the condition of the Assets from the date of this Agreement until Closing for
production of Hydrocarbons through normal depletion, including without
limitation the watering-out of any well, collapsed, corroded, or perforated
casing, tubing or flowlines, or sand infiltration of any well and the
depreciation of personal property through ordinary wear and tear, shall be
deemed not to be "Material" for purposes of this Agreement, and (b) any item or
matter having a value singly of $2,000,000.00 (two million dollars) or less, or
collectively of 5% (five percent) of the Purchase Price or less (for the
purposes hereof, matters shall be considered "collectively" only to the extent
that they relate to items or matters of a similar or related classification or
nature) shall be deemed not to be "Material" for purposes of this Agreement.
1.33 MMS means the Minerals Management Service of the United States
Department of the Interior.
1.34 Net Revenue Interest means the aggregate fractional or
percentage ownership of Sellers immediately prior to the Effective Time (and for
all periods thereafter during the term of the applicable Lease) of the right to
receive Hydrocarbon production (either in-kind or the share of proceeds from
sales of Hydrocarbon production) from the applicable Leases, Units or Xxxxx,
after the deduction of all burdens upon a Lease, Unit or Well such as lessors
royalty on production (other than taxes) as that share is set out in Exhibits
"A-1" through "A-5" subject to any exclusions or exceptions noted thereon.
1.35 Netherland Xxxxxx Reserve Report means the Estimate of
Reserves and Future Revenue to the Transworld Exploration and Production, Inc.
Interest in Certain Oil and Gas Properties Located in Louisiana, Texas, and the
Gulf of Mexico as of July 1, 2003, prepared for Sellers by Netherland, Xxxxxx &
Associates, Inc., and transmitted to TEPI by such firm under cover of a letter
dated July 11, 2003.
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1.36 NORM means naturally occurring radioactive material.
1.37 Notice of Environmental Defect has the meaning set forth in
Section 7.5.
1.38 Notice of Title Defect has the meaning set forth in Section
7.1.
1.39 OPA has the meaning set forth in Section 10.1(f).
1.40 Party and Parties mean Sellers or Buyer, individually or
collectively, as indicated by the context.
1.41 Permits and Easements means to the extent transferable, all
surface use agreements, easements, rights of way, road use agreements, licenses,
authorizations, permits, and similar rights and interests applicable to, or used
or useful in connection with, any or all of the Leases, Units, and Xxxxx
including those identified on Exhibit "C".
1.42 Permitted Encumbrances has the meaning set forth in Section
7.2(b).
1.43 Preliminary Settlement Statement has the meaning set forth in
Section 3.3.
1.44 Prior Asset Purchase Agreements shall mean those asset
purchase agreements pursuant to which Sellers acquired certain of the Assets, as
such agreements are listed on Schedule 4.1(q).
1.45 Property Taxes has the meaning set forth in Section 17.17(a).
1.46 Purchase Price has the meaning set forth in Section 3.1.
1.47 Related Contracts means the contracts and agreements listed on
Exhibits "A-1" through "X-0", "X" and "C", to the extent that Sellers have
copies of such contracts and agreements and make such copies available to Buyer
by no later than September 15, 2003.
1.48 Seismic Data means all (i) seismic, geological, geochemical,
or geophysical data
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(including cores and other physical samples of materials from xxxxx or tests)
belonging to Sellers or licensed from third parties that can be transferred
without additional consideration to such third parties or in the event Buyer
agrees to pay such additional consideration to such third parties, and (ii)
interpretations of seismic, geological, geochemical or geophysical data
belonging to Sellers or licensed from third parties that can be transferred
without additional consideration to such third parties or in the event Buyer
agrees to pay such additional consideration to such third parties.
1.49 Sellers means Transworld Exploration and Production, Inc.,
Transworld Exploration and Production (Lockport) Inc., and Transworld
Exploration and Production (Kings Bayou) Inc., each a Delaware corporation; and
"Seller" means any one of them.
1.50 Sellers' Credits has the meaning set forth in Section 3.2(a).
1.51 Sellers' Parent-Company Guaranty means a guaranty issued by
Sellers' Parent Guarantor for the benefit of Buyer in the form of Exhibit O
hereto.
1.52 Sellers' Parent Guarantor means Transworld Oil U.S.A., Inc., a
Texas corporation and the direct parent company of TEPI and the indirect parent
company of the other Sellers.
1.53 Sellers' Prior Parent Guaranties shall mean those guaranties
issued by TEPI's parent company Transworld Oil U.S.A., Inc., in support of
certain of TEPI's obligations under certain of the Prior Asset Purchase
Agreements, as such guaranties are listed on Schedule 4.1(r).
1.54 Sellers' Retained Obligations has the meaning set forth in
Section 12.3(a).
1.55 Sellers' Surviving Representations and Warranties shall mean
the following representations and warranties of Sellers: Sections 4.1(a) through
4.1(h), inclusive, and Sections 4.1(j) through 4.1(o), inclusive, and Sections
4.1(q) through 4.1(s), inclusive.
1.56 Tax Period has the meaning set forth in Section 17.17(a).
1.57 TEPI shall mean Transworld Exploration and Production, Inc., a
Delaware
10
corporation and one of the Sellers.
1.58 Threshold Amount has the meaning set forth in Section 13.4.
1.59 Title Defect has the meaning set forth in Section 7.2.
1.60 Transfer Taxes has the meaning set forth in Section 17.17(b).
1.61 Units means the units specified in Exhibit "A-5".
1.62 Xxxxx means the oil, gas and condensate xxxxx, salt water
disposal xxxxx, injection xxxxx and other xxxxx (whether plugged or unplugged)
which are located on the Leases or on the lands or waterbottoms pooled or
associated therewith, or which are encompassed within any contractual well-bore
rights included within the Assets, including but not limited to those identified
on Exhibits "D-1" and "D-2".
1.63 Working Interest means the aggregate fractional or percentage
working interest, record title interest, operating rights interest and contract
interest of Sellers in and to each Lease, Unit or Well as a result of any Lease,
contract or operating rights immediately prior to the Effective Time by virtue
of which any Seller has the right to conduct the operations contemplated by a
Lease or contract and this Agreement as set out in Exhibits "A-1" through "A-5",
subject to any exceptions noted thereon.
ARTICLE II
PURCHASE AND SALE
2.1 Sale and Purchase. Subject to the terms and conditions of this
Agreement, Sellers agree to sell and convey to Buyer, and Buyer agrees to
purchase and pay for, as of the Effective Time, all of Sellers' right, title and
interest in and to the Assets.
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ARTICLE III
PURCHASE PRICE AND PAYMENT
3.1 Purchase Price. (a) Subject to adjustment as set forth below,
the Purchase Price for the Assets shall be one hundred seventy-five million U.S.
dollars (US$175,000,000.00) (hereafter the "Purchase Price"). As additional
consideration for the sale of the Assets, Buyer shall timely and fully assume
and satisfy the Buyer's Assumed Obligations, including the Assumed Plugging and
Abandonment Obligations and the Assumed Environmental Obligations, and shall
perform the covenants contained herein.
(b) An xxxxxxx money deposit in the amount of ten percent (10%) of
the Purchase Price (hereinafter referred to as the "Performance Deposit") shall
be paid by Buyer to Sellers by wire transfer in immediately available funds upon
execution of this Agreement by Buyer to an account or accounts designated for
that purpose by Sellers. Sellers covenant that such funds shall be retained by
TEPI, on behalf of itself and the other Sellers, in an account at Bank One
Texas, N.A., in Houston, Texas, until the Closing shall have occurred, or, if
the Closing does not occur, until such time as Sellers may be required to return
such funds to Buyer pursuant to Article XVI. Payment of the remaining ninety
percent (90%) of the Purchase Price, subject to adjustment as set forth below,
shall be made at Closing by bank wire transfer in immediately available funds to
an account or accounts designated for that purpose by Sellers.
(c) The Purchase Price shall be allocated among the Assets, and
among the fields contained within the Assets, as provided for in Schedule 3.1
hereof. Sellers and Buyer covenant and agree that the values allocated to
various portions of the Assets that are set forth in Schedule 3.1 shall be
binding on Seller and Buyer and shall be used for the purposes of adjusting the
Purchase Price pursuant to Articles VII and VIII.
3.2 Adjustments to Purchase Price. The Purchase Price shall be
adjusted, at Closing and upon Final Settlement, pursuant to the procedure
provided in Section 3.3, downward by an amount equal to the Buyer's Credits and
upward by an amount equal to the Sellers' Credits.
(a) "Sellers' Credits" shall equal the sum of the
following:
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(i) Sellers' share of the value of (A) all
Inventory Hydrocarbons, such value to be based upon the price
actually received for such Inventory Hydrocarbons (determined
on a FIFO basis), less taxes, transportation and other fees
deducted by the purchaser of such Hydrocarbons, such
Hydrocarbons to be measured at the Effective Time by the
operators of the Assets, and (B) the market value of the
unsold inventory of gas plant products, if any, attributable
to the Leases at the Effective Time allocable to Sellers'
ownership;
(ii) Sellers' share of the amount of all
operating and capital expenditures (including overhead charged
in the same manner as provided in the applicable joint
operating agreement or in the absence of such agreement as
customarily billed in the oil and gas industry) incurred and
paid by Sellers and approved by Buyer pursuant to Section
9.1(a) attributable to the operation of the Assets during the
Interim Period in accordance with generally accepted
accounting principles. Such expenses and expenditures shall
include, without limitation, royalties (excluding royalties on
Inventory Hydrocarbons), rentals and other similar charges;
expenses paid by any Seller to a third person under applicable
joint operating agreements or other contracts or agreements
included in the Assets, or in the absence of any joint
operating agreement, those customarily billed under such
agreement, including without limitation, drilling, completion,
reworking, deepening, sidetracking, plugging and abandoning,
geological and geophysical and land costs paid by or on behalf
of such Seller in connection with the operation of the Assets
which are attributable to the period of time after the
Effective Time; ad valorem, property, production, excise,
severance, and any other taxes (except income or franchise
taxes) based upon or measured by the ownership of property or
the production of Hydrocarbons or the receipt of proceeds
therefrom; pro rata insurance premium costs after the
Effective Time, including without limitation the costs to
extend and/or cancel any coverages directly related to the
Assets; and the costs of bonding and/or canceling bonding
relating to the Assets after the Effective Time;
(iii) An amount equal to any upward adjustment
provided elsewhere in this Agreement or agreed between Sellers
and Buyer in writing prior to or at Closing; and
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(iv) An amount equal to the net volume due
Sellers for gas imbalances which exist at the Effective Time,
valued at $4.00 (four dollars) per thousand cubic feet of gas,
such amount to be as shown in Schedule 4.1(g) updated to the
Effective Time.
(b) "Buyer's Credits" shall equal the sum of the
following:
(i) Sellers' share of the total sales value (for
oil and condensate, to be valued at the prices actually
received), before deduction of any royalties under the
applicable pricing provisions of any oil, gas and gas plant
liquids sales and processing agreements, of all Hydrocarbons
produced and/or sold during the Interim Period which are
attributable to the Assets and allocable to Sellers'
ownership, and any other monies applicable to purchase or
sales from the Assets on any xxxxx during the Interim Period,
but excepting interest income and income for overhead charged
in the same manner as provided in the applicable joint
operating agreement, regardless of whether or not payment has
been received by Sellers;
(ii) Sellers' share of the amount of all unpaid
ad valorem, property, production, severance and similar taxes
and assessments (but not including income or franchise taxes)
based upon or measured by the ownership of property or the
production of Hydrocarbons or the receipt of proceeds
therefrom which taxes and assessments become due and payable
or accrue to the Assets prior to the Effective Time, which
amount shall, where possible, be computed based upon the tax
rate and values applicable to the Tax Period in question;
otherwise, the amount of the adjustment under this paragraph
shall be computed based upon such taxes assessed against the
applicable portion of the Assets for the immediately preceding
Tax Period just ended; and
(iii) An amount equal to the sum of any downward
adjustments provided elsewhere in this Agreement or agreed
between Sellers and Buyer in writing prior to or at Closing.
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3.3 Sellers' Preliminary and Final Settlement Statements. At least
three (3) business days prior to Closing, Sellers shall furnish Buyer with a
good faith estimated accounting ("Preliminary Settlement Statement") showing the
estimated amount of Sellers' Credits and the estimated amount of Buyer's
Credits, subject to being finally adjusted within one hundred and twenty (120)
days after the Closing as hereinafter provided. Within ninety (90) days after
Closing, Sellers shall provide to Buyer, for Buyer's concurrence, an accounting
("Final Settlement Statement") of the actual amounts of Sellers' and Buyer's
Credits for the adjustments as set out in Section 3.2. Buyer shall have the
right for thirty (30) days after receipt of the Final Settlement Statement to
review and take exceptions to such adjustments. If Buyer does not object to such
Final Settlement Statement in writing within thirty (30) days after receipt, the
Final Settlement Statement shall become final. Upon agreement of Sellers and
Buyer as to the accuracy of the Final Settlement Statement or upon the
expiration of such thirty (30) day period, whichever occurs first, Sellers or
Buyer, as the case may be, shall promptly pay to the other such sum as may be
found due, after making adjustments for any payments made at Closing (herein the
"Final Settlement").
3.4 Resolution of Disputes If Buyer and Sellers are unable to
agree to all adjustments respecting the Final Settlement Statement within thirty
(30) days after Buyer's receipt thereof, then adjustments which are not in
dispute shall be made between Buyer and Sellers at the expiration of such thirty
(30) day period. Any disagreements as to adjustments which remain in dispute
shall be resolved on a good faith basis by Sellers and Buyer; provided, however,
if Buyer and Sellers are unable, in good faith, to resolve such disagreements
within forty-five (45) days after Buyer's receipt of the Final Settlement
Statement, then the matters that remain in dispute shall be settled by reference
to Xxxxx Xxxxxxxx XXX, Xxxxxxx, Xxxxx (the "Accounting Expert"), who shall
resolve all determinations and adjustments with respect to allocating items to
the period before or after the Effective Time in accordance with generally
accepted accounting principles, consistently applied. The Accounting Expert
shall render a decision resolving the matters in dispute within thirty (30) days
following their submission to the Accounting Expert. The decision of the
Accounting Expert shall be final and binding on the Parties. The fees and
expenses of the Accounting Expert shall be shared equally by the Parties.
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ARTICLE IV
SELLERS' REPRESENTATIONS AND WARRANTIES
4.1 Sellers' Representations and Warranties. Sellers represent and
warrant to Buyer as of the date hereof and the Closing Date that:
(a) Each Seller is a corporation duly organized, validly
existing, and in good standing under the laws of its state of
incorporation, and is duly qualified to carry on its business in each
jurisdiction where the ownership of property or the conduct of its
business requires such qualification. Without limiting the foregoing,
TEPI is qualified in Texas; TEPI is qualified to do business in
Louisiana, and in the MMS Gulf of Mexico OCS Region; and TEPI
(Lockport) and TEPI (Kings Bayou) are qualified to do business in
Louisiana.
(b) Each Seller has all requisite power and authority to
carry on its business as presently conducted, to enter into this
Agreement and the other documents and agreements contemplated hereby,
to sell the Assets owned by it on the terms described in this
Agreement, and to perform its obligations under this Agreement and the
other documents and agreements contemplated hereby. The consummation of
the transactions contemplated by this Agreement will not violate, nor
be in conflict with, any provision of any Seller's charter, bylaws or
governing documents or any material agreement or instrument to which
any Seller is a party or by which it is bound (except any provisions
contained in agreements customary in the oil and gas industry relating
to (i) the preferential right to purchase all or any portion of the
Assets, (ii) required consents to transfer and related provisions,
(iii) any other third-party approvals or consents contemplated herein
or any judgment, decree, order, statute, rule, or regulation applicable
to Sellers, and (iv) maintenance of uniform interest provisions). The
execution, delivery and performance of this Agreement and the
transactions contemplated hereunder have been duly and validly
authorized by all requisite corporate action on the part of each of the
Sellers.
(c) This Agreement constitutes, and all documents and
instruments required hereunder to be executed and delivered by Sellers
at Closing constitute, legal, valid and binding obligations of the
respective Sellers in accordance with their respective terms,
16
subject to applicable bankruptcy and other similar laws of general
application with respect to creditors.
(d) There are no bankruptcy, reorganization or
receivership proceedings pending, being contemplated by, or threatened
against any Seller.
(e) (i) Before the date hereof, Sellers have operated and
maintained the Assets (as to which any Seller is Operator) consistent
with good oil- and gas-field practices and have not entered into any
agreements or transactions with respect thereto except for contracts
and agreements with respect to the conduct of operations entered into
in the ordinary course of business. The Equipment, to the extent
necessary or useful for current operations, is in good working order in
all material respects, is satisfactory in all material respects for the
current operation of the Xxxxx, and is in compliance in all material
respects with all rules, regulations, orders and laws of all
governmental authorities having jurisdiction. The Permits and Easements
are sufficient in all material respects for the current efficient and
economic transportation of Hydrocarbons from the Xxxxx to available
markets. (ii) Exhibits "D-1" and "D-2" are a complete and accurate
listing of all the Xxxxx Known to Sellers on the Leases and the status
thereof. Each of the Xxxxx that is currently producing is in compliance
in all material respects with all rules, regulations, orders and laws
of all governmental authorities having jurisdiction.
(f) Except as set forth on Schedule 4.1(f): (i) There
exist no pending suits, proceedings, arbitrations, written Claims, or
government investigations relating to the Assets; (ii) no Seller has
been notified in writing, or received written notices of violation or
non-compliance with any rule, regulation, order or law relating to the
Assets which could have a material and adverse effect upon the Assets
or the value or operation thereof; and (iii) to Sellers' Knowledge no
such matters are threatened, contemplated or warranted.
(g) Sellers and the Assets are in material compliance
with all applicable federal and state laws, rules, regulations, and
orders (except Environmental Laws, as to which Sellers make
representations and warranties separately in Section 4.1(p)). To
Sellers' Knowledge, Sellers' predecessors in interest with respect to
the Assets were in material compliance with all federal and state laws,
rules, regulations, and orders
17
applicable to the ownership and operation of the Assets (except
Environmental Laws, as to which the representations and warranties in
Section 4.1(p) apply separately).
(h) Except for the Related Contracts, there exist no
agreements, contracts or commitments that are material to the
ownership, operation, value, or use of any Assets, or to which any
Assets or Buyer will be subject after the Closing. All Related
Contracts contain only such terms as are typical and customary in the
oil and gas industry for agreements of their nature, and no Related
Contract contains any excessive or uncustomary terms that will
materially interfere with Buyer's ownership and operation of any Asset,
that imposes any financial or other obligations beyond those customary
in agreements of their nature, or that has a material adverse effect on
the value or use of any Asset. Except as set forth on Schedule 4.1(h),
all Related Contracts, including without limitation the Leases, the
Units and the Permits and Easements, are in full force and effect in
all material respects, and no terms thereof have been amended, modified
or waived. Sellers (and to Seller's Knowledge Sellers' predecessors in
interest with respect to the Assets) are not and never have been in
default in any material respect of any obligations under any Related
Contract, including without limitation, the Leases, the Units, and the
Permits and Easements, and no such default has ever been asserted. To
Sellers' Knowledge, no counterparty to any Related Contract, including
without limitation any Lease, Unit, Permit or Easement, is or has ever
been in default of the terms thereof in any material respect and no
such default has ever been asserted.
(i) Except for those items disclosed in Exhibits "A-1"
through "A-5", and subject to Permitted Encumbrances, immediately prior
to and at Closing, title to each Seller's interest in the Assets and
production therefrom is free and clear of any and all liens, pledges,
encumbrances, reservations, options, "after payout" and "before payout"
conversions or reductions, preferential rights, or rights of first
refusal to purchase any of the Assets, and is free of Title Defects.
(j) Except as set forth on Schedule 4.1(j), no imbalances
exist as of the Effective Time with third parties with respect to
production, transportation or processing of Hydrocarbons attributable
to Sellers' interest in and ownership of Hydrocarbons produced from the
Assets prior to the Effective Time.
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(k) Except with respect to approvals of the MMS and the
State of Louisiana, no authorization, consent, approval, license or
exemption from, and no filing or registration with, any court or
governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, is necessary for the valid
execution and delivery by any Seller, or the performance by any Seller,
of its obligations under this Agreement that has not been obtained or
performed.
(l) To each Seller's Knowledge, except as to those
matters described in Sections 4.1(b) and (k), there are no necessary
consents, permissions, waivers, notifications or approvals of third
parties that are necessary to consummate the transfers provided for
herein, or were required to consummate a previous assignment, mortgage
or transfer of the contract rights or of the Leases identified or
referred to in the Exhibits hereto, other than those which have been
obtained by Sellers prior to Closing.
(m) Except as set forth in Schedule 4.1(m), with respect
to each Seller's interests in the Assets, there exist no outstanding
take-or-pay claims or disputes with respect to the Assets, and no such
claims or disputes with respect to the Assets will be settled or
resolved between the date of this Agreement and the Closing Date.
(n) Except as set forth on Schedule 4.1(n), there exist
no outstanding AFE's in excess of the amount of $75,000.00
(seventy-five thousand dollars) net to Sellers with respect to which
Buyer would be expected or required to provide funding.
(o) All ad valorem, property, royalty, production,
excise, severance 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 or will be timely paid in all respects.
All costs and expenses relating to the Assets accruing prior to the
Effective Time and due before Closing have been or will be timely paid
in all respects prior to Closing.
(p) Except as set forth on Schedule 4.1(p): (i) Sellers
and the Assets are in compliance in all material respects with all
Environmental Laws and all material terms
19
and conditions of environmental permits, licenses and authorizations;
(ii) there are no suits, proceedings or investigations pending with
respect to the Assets under any Environmental Law; (iii) no Seller has
Knowledge of, nor has such Seller received written notice of, any
conditions, circumstances, activities, practices, incidents, actions,
or plans that could reasonably interfere or prevent continued
compliance, or that could reasonably give rise to any material
liability, or otherwise form the basis of any material claim, action,
suit, proceeding, hearing or investigation, based on or related to the
processing, distribution, use, treatment, storage, disposal, transport,
or handling, or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, or hazardous
substance or other toxic material or waste on, from or attributable to
the Assets or any portion thereof; and (iv) there are no Environmental
Liabilities.
(q) Schedule 4.1(q) identifies the significant continuing
obligations assumed by any Seller under the Prior Asset Purchase
Agreements, which obligations are to be assumed by Buyer to the extent
provided in Buyer's Limited Assumption Agreement.
(r) Schedule 4.1(r) identifies all obligations assumed by
any parent of any Seller under the Sellers' Prior Parent Guaranties in
connection with the Prior Asset Purchase Agreements, which guaranties
are to be assumed by Buyer to the extent provided in Buyer's Limited
Assumption Agreement.
(s) Sellers have incurred no obligation or liability,
contingent or otherwise, for brokers' or finders' fees in respect of
the matters provided for in this Agreement, except with respect to
Xxxxxxxx Xxxxxxxxx, LP, which obligation and liability Sellers shall
discharge and for which Buyer will have no responsibility.
4.2 Seller's Warranties at Closing. Sellers shall use reasonable
commercial efforts to assure that the warranties and representations herein
contained with respect to them are true and correct as of Closing and shall give
prompt written notice to Buyer after execution of this Agreement and before
Closing of any matter which renders such warranty or representation untrue in
any material respect.
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ARTICLE V
BUYER'S REPRESENTATIONS AND WARRANTIES
5.1 Buyer's Representations and Warranties. Buyer represents and
warrants to Sellers as of the date hereof and the Closing Date that:
(a) Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Delaware
and is duly qualified to carry on its business in Texas and Louisiana,
and in the MMS Gulf of Mexico OCS Region.
(b) Buyer has all requisite power and authority to carry
on its business as presently conducted, to enter into this Agreement
and the other documents and agreements contemplated hereby, to purchase
the Assets on the terms described in this Agreement, and to perform its
obligations under this Agreement and the other documents and agreements
contemplated hereby.
(c) The consummation of the transactions contemplated by
this Agreement will not violate, nor be in conflict with, any provision
of Buyer's charter, bylaws or governing documents, or any material
agreement or instrument to which Buyer is a party or by which it is
bound, or any judgment, decree, order, statute, rule or regulation
applicable to Buyer; and the execution, delivery and performance of
this Agreement and the transactions contemplated hereunder have been
duly and validly authorized by all requisite corporate action on the
part of Buyer.
(d) This Agreement constitutes, and all documents and
instruments required hereunder to be executed and delivered by Buyer at
Closing will constitute, legal, valid and binding obligations of Buyer
in accordance with their respective terms, subject to bankruptcy and
other similar laws of general application with respect to creditors.
(e) There are no bankruptcy, reorganization or
receivership proceedings pending, being contemplated by, or threatened
against Buyer.
21
(f) Buyer is an experienced and knowledgeable investor in
the oil and gas business. Prior to entering into this Agreement, Buyer
was advised by and has relied solely on its own expertise and legal,
tax and other professional counsel.
(g) Buyer has arranged to have available by the Closing
Date sufficient funds to enable the payment to Sellers by wire transfer
of the Purchase Price in accordance with Section 11.3, and otherwise to
perform Buyer's obligations under this Agreement.
(h) Buyer is acquiring the Assets for its own account and
not with a view to, or for offer of resale in connection with, a
distribution thereof, within the meaning of the Securities Act of 1933,
15 U.S.C. Section 77a et seq., and any other rules, regulations, and
laws pertaining to the distribution of securities. Without limitation
of the foregoing, Buyer is not acquiring the Assets with the intent of
distributing fractional undivided interests therein such as would be
subject to regulation by federal or state securities laws, and if, in
the future, Buyer should sell, transfer or otherwise dispose of the
Assets or fractional undivided interests therein, it will do so in full
compliance with any applicable federal and state securities laws.
(i) Buyer is, and after Closing shall continue to be,
qualified to own the federal oil, gas, and mineral leases and any
pipeline(s) subject hereto in the MMS Gulf of Mexico OCS Region,
including meeting their existing or increased bonding or any other
bonding and financial requirements of the MMS or other governmental
agencies.
(j) The consummation of the transactions contemplated
hereby will not cause Buyer to be disqualified to be owner of federal,
oil, gas, and mineral leases in the MMS Gulf of Mexico OCS region, or
to exceed any acreage limitation imposed by any law, statue, rule or
regulation.
(k) Buyer has incurred no obligation or liability,
contingent or otherwise, for brokers' or finders' fees in respect of
the matters provided for in this Agreement.
(l) AT THE TIME OF CLOSING, ASSUMING THAT SELLERS WILL
HAVE COMPLIED WITH SECTIONS 6.1, 6.2 AND 6.3, BUYER (i) WILL HAVE
22
ACQUIRED THE ASSETS ON THE BASIS OF ITS OWN INVESTIGATION OF THE
PHYSICAL CONDITION OF THE ASSETS AND (ii) WILL HAVE UNDERSTOOD THAT THE
ASSETS HAVE BEEN USED IN THE MANNER AND FOR THE PURPOSES SET FORTH
HEREIN AND THAT PHYSICAL CHANGES TO THE ASSETS MAY HAVE OCCURRED AS A
RESULT OF SUCH USE, AND (iii) IN ACQUIRING THE ASSETS, BUYER WILL HAVE
RELIED SOLELY ON ITS INDEPENDENT INVESTIGATION OF, AND JUDGMENT WITH
RESPECT TO, THE ASSETS AND THE ADVICE OF ITS OWN LEGAL, TAX, ECONOMIC,
ENVIRONMENTAL, ENGINEERING, GEOLOGICAL AND GEOPHYSICAL ADVISORS AND NOT
ON ANY COMMENTS OR STATEMENTS OF ANY REPRESENTATIVES OF, OR CONSULTANTS
OR ADVISORS ENGAGED BY SELLERS, AND BUYER IS PURCHASING THE ASSETS "AS
IS, WHERE IS" SUBJECT TO THE TERMS OF THIS AGREEMENT.
(m) BUYER HAS BEEN INFORMED THAT OIL AND GAS PRODUCING
FORMATIONS CAN CONTAIN NORM. SCALE FORMATION OR SLUDGE DEPOSITS CAN
CONCENTRATE LOW LEVELS OF NORM ON EQUIPMENT, MATERIAL AND OTHER ASSETS.
SOME OR ALL OF THE ASSETS SUBJECT TO THIS AGREEMENT MAY HAVE LEVELS OF
NORM ABOVE BACKGROUND LEVELS. A HEALTH HAZARD MAY EXIST IN CONNECTION
WITH THESE ASSETS BY REASON THEREOF. THEREFORE, BUYER MAY NEED TO
FOLLOW SAFETY PROCEDURES WHEN HANDLING THE ASSETS.
(n) EXCEPT AS SET FORTH IN ARTICLE IV, BUYER HEREBY
WAIVES AND ACKNOWLEDGES THAT SELLERS HAVE NOT MADE ANY REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO (a) THE ACCURACY,
COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR OTHER MATERIALS
(WRITTEN OR VERBAL) NOW, HERETOFORE, OR HEREAFTER FURNISHED TO BUYER BY
OR ON BEHALF OF SELLERS OR (b) PRODUCTION RATES, RECOMPLETION
OPPORTUNITIES, DECLINE RATES, GEOLOGICAL OR GEOPHYSICAL
23
DATA OR INTERPRETATIONS, THE QUALITY, QUANTITY, RECOVERABILITY OR COST
OF RECOVERY OF ANY HYDROCARBON RESERVES, ANY PRODUCT PRICING
ASSUMPTIONS, OR THE ABILITY TO SELL OR MARKET ANY HYDROCARBONS AFTER
CLOSING.
5.2 Buyer's Warranties at Closing. Buyer shall use all reasonable
commercial efforts to assure that the warranties and representations herein
contained are true and correct as of Closing and shall give prompt written
notice to Sellers after the execution of this Agreement and before Closing of
any matter which renders such warranty or representation untrue in any material
respect.
ARTICLE VI
ACCESS TO INFORMATION AND INSPECTION
6.1 Title Files. Promptly after the execution of this Agreement
and until the Closing Date, Sellers shall permit Buyer to review at Sellers'
offices in Houston, Texas, and other locations where files or other records may
be kept, upon reasonable request and during normal working hours, all available
title files, ownership maps, lease files, assignments, division orders, payout
statements, agreements, and similar information in Sellers' possession
pertaining to Sellers' title to the Assets. Such information may have been made
available to Buyer prior to the execution of this Agreement under a
confidentiality agreement between any of Sellers and Buyer. No warranty of any
kind is made by any Seller as to the information so supplied, and Buyer agrees
that any conclusions drawn therefrom shall be the result of its own independent
review and judgment.
6.2 Other Files. Promptly after the execution of this Agreement
and until the Closing Date, Sellers shall make available to Buyer, for its
inspection, all environmental, regulatory, operating, production and engineering
books, records and data in possession of Sellers which are directly related to
or constitute a portion of the Assets, and all other files, records, and data
pertaining to the Assets, except (a) all seismic, geological and geophysical
data not constituting a part of the Assets, (b) that which Sellers are prevented
from disclosing by contractual obligations (other than the joint operating
agreements applicable to the Leases) with third parties after Sellers have made
a reasonable effort to secure the waiver of such obligations, and (c) those
which are part of the Excluded Assets. No warranty of any kind is made by any
Seller as to the information so
24
supplied, and Buyer agrees that any conclusions drawn therefrom shall be the
result of its own independent review and judgment.
6.3 Inspections. Promptly after the execution of this Agreement
and until Closing, Sellers, subject to any necessary third-party operator or
other approval, shall permit Buyer and its representatives at reasonable times
and at their sole risk, cost and expense, to conduct reasonable inspections of
the Assets; provided, however, Buyer shall repair any damage it may cause to the
Assets resulting from such inspections and any such inspection shall be covered
by Buyer's indemnity provided in Section 13.3. The Parties understand and agree
that Buyer may perform a Phase I environmental assessment of the Assets, or any
of them, but that Buyer shall not, without Sellers' prior written consent,
perform any Phase II environmental assessment. If Buyer requests the consent of
Sellers to perform any Phase II environmental assessment and Sellers do not
consent, then the field so proposed to be investigated shall be excluded from
the Assets to be purchased and sold hereunder and the Purchase Price shall be
reduced by the value allocated to such field on Schedule 3.1. Buyer shall
promptly provide to Sellers copies of any Phase I or other environmental
assessments of the Assets or any of them that Buyer may conduct.
6.4 Confidentiality. All information made available to Buyer
pursuant to any provision of this Agreement shall be maintained confidential by
Buyer until Closing. Any confidentiality agreements Buyer has previously
executed with or for the benefit of Sellers with respect to the Assets shall
continue in force until Closing, at which time such agreements shall terminate.
Buyer shall further take whatever reasonable steps which may be necessary to
ensure that Buyer's employees, consultants and agents comply with the provisions
of this Section 6.4.
6.5 Change in Condition. Buyer shall assume all risk of loss with
respect to any change in the condition of the Assets from the date of this
Agreement until Closing for production of Hydrocarbons through normal depletion,
including the watering-out of any well, collapsed, corroded, or perforated
casing, tubing or flowlines, or sand infiltration of any well and the
depreciation of personal property through ordinary wear and tear (none of which
shall be a Material Adverse Change under Section 10.2(e)).
25
ARTICLE VII
TITLE AND ENVIRONMENTAL MATTERS
7.1 Notice of Title Defects. If, prior to Closing, Buyer
determines the existence of a "Title Defect" as defined in Section 7.2 below,
Buyer shall notify Sellers in writing of any matter Buyer considers to be a
Title Defect as soon as reasonably possible after such determination but, in any
event, by not later than 5:00 p.m., Houston, Texas, time on October 10, 2003
(the "Defect Notice Date"). Such notice ("Notice of Title Defect") shall include
(i) a specific description of the matter Buyer asserts as a Title Defect, (ii) a
specific description of the Asset or portion of the Assets that is affected by
the Title Defect, (iii) Buyer's calculation of the amount by which each Title
Defect has diminished the value of the Assets, such amount to be determined by
Buyer in good faith and in a commercially reasonable manner based on the
allocation of the Purchase Price to the Assets as set forth on Schedule 3.1
hereto, and (iv) all necessary and desirable supporting documentation. Without
prejudice to Sellers' special warranty of title specified in Section 7.4, which
shall apply in any event, and subject to Sellers' representation and warranty
specified in Section 4.1(i), which representation and warranty will not survive
the Closing, Buyer shall be deemed to have waived any Title Defect which Buyer
fails to assert in its Notice of Title Defect on or before the Defect Notice
Date.
7.2 Title Defect. (a) The term "Title Defect" shall refer to any
defect or deficiency in title to any Asset, except for Permitted Encumbrances,
that (i) creates a lien, charge, contract, agreement, claim, encumbrance or
other adverse claim, defect or deficiency affecting the value, use or ownership
of any Seller in such Asset, (ii) diminishes any Seller's Net Revenue Interest
from that set forth on Exhibits "A-1" through "A-5, (iii) increases any Seller's
Working Interest from that set forth in Exhibits "A-1" through "A- 5" without a
corresponding increase in Seller's Net Revenue Interest, or which creates an
obligation to pay costs or expenses in an amount greater than such interest. No
adjustment to the Purchase Price for Title Defects shall be made unless and
until, and only to the extent that, (a) the value of such individual Title
Defect exceeds $5,000.00 (five thousand dollars) in the case of a Title Defect
relating to a Net Revenue Interest or a Working Interest and $25,000.00
(twenty-five thousand dollars) otherwise and (b) the aggregate value of all
Title Defects exceeds 1.5% (one and one-half percent) of the Purchase Price.
26
(b) For purposes of this Agreement "Permitted
Encumbrances" means:
(i) lessor's royalties, non-participating
royalties, overriding royalties, and division orders and sales
and transportation contracts containing customary terms and
provisions covering oil, gas or associated liquified or
gaseous Hydrocarbons, reversionary interests, and similar
burdens if the net cumulative effect of such burdens does not
operate to reduce the Net Revenue Interest in any Asset to an
amount less than the Net Revenue Interest set forth on
Exhibits "A-1" through "A-5" or increase the Working Interest
of any Asset from that set forth in Exhibits "A-1" through
"A-5" without a corresponding increase in the Net Revenue
Interest;
(ii) subject to the provisions of Section 8.1
hereof, preferential rights to purchase and required
non-governmental third party consents to assignments and
similar agreements identified on Schedule 4.1(i) with respect
to which prior to Closing (A) waivers or consents are obtained
from the appropriate parties, or (B) the appropriate time
period for asserting such rights has expired without an
exercise of such rights;
(iii) liens for taxes or assessments not yet due
or delinquent or, if delinquent, that are being contested in
good faith in the normal course of business;
(iv) all rights to consent by, required notices
to, filings with, or other actions by governmental entities in
connection with the sale or conveyance of oil and gas leases
or interests therein, if the same are customarily obtained
subsequent to such sale or conveyance and Buyer and Sellers
have no reason to believe they cannot be obtained;
(v) such Title Defects as Buyer may have
expressly waived in writing (it being understood and agreed
that Buyer shall not be obligated to waive any defect);
(vi) easements, rights-of way, servitudes,
permits, surface leases and
27
other rights in respect of surface operations; provided they
do not materially interfere with Buyer's operation or use of
the Assets;
(vii) defects, irregularities and deficiencies in
title of or to any rights-of-way, easements, surface leases or
other rights which do not materially impair the use of such
rights-of-way, easements, surface leases or other rights for
the purpose of which such rights will be held by Buyer;
(viii) environmental laws and regulations
applicable to the Assets;
(ix) vendors', carriers', warehousemen's,
repairmen's mechanics' workmen's, materialmen's, construction
or other like liens arising by operation of law in the
ordinary course of business or incident to the construction or
improvement of any property in respect of obligations which
are not yet due and, if due, which will be paid by Sellers
prior to Closing;
(x) all other liens, claims, charges,
encumbrances, contracts, agreements, instruments, obligations,
defects, and irregularities affecting the Assets, and/or which
individually or in the aggregate are not such as to interfere
with the operation, value, or use of any of the Assets, do not
prevent Buyer from receiving the proceeds of production from
the Assets, do not reduce the Net Revenue Interest of any of
the Assets to less than the Net Revenue Interest set forth on
Exhibits ""A-1" through "A-5" and do not obligate Buyer to
bear costs and expenses relating to the maintenance,
development, and operation of any of the interests in any
amount greater than the Working Interest set forth on Exhibits
"A-1" through "A-5" (unless the Net Revenue Interest for such
Asset is greater than the Net Revenue Interest set forth in
Exhibits "A-1" through "A- 5" in the same proportion as any
increase in such Working Interest); and
(xi) the Related Contracts to the extent that,
with respect to an individual Related Contract, Sellers'
representation and warranty in Section 4.1(h) with respect
thereto is true and correct; provided, however, that,
notwithstanding the foregoing, a Related Contract is not a
Permitted Encumbrance (x) if it is not noted on Exhibits
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"A-1" through "A-5" and (y) if and to the extent that it
operates to reduce the Net Revenue Interest in any Asset to an
amount less than the Net Revenue Interest set forth on
Exhibits "A-1" through "A-5" or to increase the Working
Interest of any Asset from that set forth on such Exhibits
without a corresponding increase in the Net Revenue Interest.
7.3 Remedies for Title Defects. Subject to Section 7.2, the
Purchase Price shall be reduced by the value of all Title Defects. Upon timely
delivery by Buyer to Sellers of a Notice of Title Defect, Buyer and Sellers
shall meet and use their commercially reasonable efforts to agree on the
validity of the claim and the amount of any required Purchase Price adjustment.
If the parties cannot agree on the amount of a Purchase Price adjustment, such
amount shall be determined in accordance with the following guidelines:
(a) If a Title Defect is based upon Buyer's notice that
an interest discrepancy exists and Sellers owns a lesser Net Revenue
Interest or is responsible for a greater Working Interest (without a
corresponding and proportionate increase in the applicable Net Revenue
Interest), or Sellers' interest is subject to reduction because of an
undisclosed reversionary or "back-in" interest, then the Purchase Price
shall be reduced. For each interest discrepancy, a report value
reduction shall be calculated as follows. The report value reduction
for a lease or property shall be calculated using the Netherland Xxxxxx
Reserve Report value at a discount rate of 10% for proved reserves of
that Lease or property as the amount of present value of 10% attributed
to the deficiency in interest. This report value reduction shall then
be divided by the Netherland Xxxxxx Reserve Report value for the proved
reserves of the entire subject field to calculate a fraction reduction
in field value. This fraction reduction in field value shall then be
multiplied by the allocation of field value from Schedule 3.1 to
calculate the reduction in Purchase Price. For differences in Net
Revenue Interest or Working Interest in a Lease or property not
included in the Netherland Xxxxxx Reserve Report, if any, the Parties
shall use their commercially reasonable efforts to agree on a mutually
acceptable Purchase Price adjustment.
(b) In the event a third party exercises an applicable
preferential right of purchase, the Purchase Price shall be reduced by
the allocated value of the affected Lease
29
or property or portion thereof on Schedule 3.1, and Closing shall occur
as to the remainder of the Assets, if any.
(c) If a Title Defect is a lien, encumbrance or other
charge upon a Lease which is liquidated in amount, then the adjustment
shall be the sum necessary to be paid to the obligee to remove the
Title Defect from the affected Lease and Sellers shall pay such sum to
the obligee on or before Closing. However, Sellers reserve the right,
but not the obligation, to retain the obligation of this Title Defect
and elect to challenge the validity of any such Title Defect or any
portion thereof, and Buyer shall extend reasonable cooperation to
Sellers in such efforts at no risk or expense to Buyer, and Sellers
shall indemnify Buyer against any and all costs, expenses and losses
relating to such Title Defect. If a Title Defect represents an
obligation or burden upon the affected Lease for which the economic
detriment to Buyer is not liquidated but can be estimated with
reasonable certainty, the adjustment shall be the amount Sellers and
Buyer mutually agree upon as necessary to compensate Buyer at Closing
for the adverse economic effect which such Title Defect will have on
the affected Lease and Buyer shall assume such Title Defect.
(d) If Buyer is entitled to receive an adjustment for a
Title Defect, as provided in this Agreement, Sellers shall have the
right, but not the obligation, to attempt to cure the Title Defect and
cancel the reduction in the Purchase Price if cured, by advising Buyer
of such election within five (5) days of receipt of Buyer's Notice of
Title Defect. If Sellers choose to cure the Title Defect, but have not
done so by Closing, Sellers shall have the right to postpone Closing
for a period not to exceed sixty (60) calendar days from the original
Closing Date.
(e) If the Parties cannot agree on the adjustment to the
Purchase Price resulting from one or more Title Defects, then, assuming
that all conditions to Closing shall have been satisfied or waived,
then, without prejudice to either Party's rights hereunder, the Parties
shall nevertheless proceed to Closing. In such event, Buyer shall at
Closing deposit in an escrow account at a bank mutually agreed by the
Parties the amount of the aggregate allocated values as shown on
Schedule 3.1 of such Assets or portions thereof subject to such Title
Defects. If the Parties have not been able to agree on the
30
value of the adjustment by the thirtieth (30th) business day after the
Closing Date, then the Parties shall refer the matter for determination
by a lawyer in Houston, Texas, who is qualified to render title
opinions with respect to oil and gas properties and who is mutually
acceptable to both Parties, who shall be instructed to resolve the
matter within thirty (30) days after reference to him. Such lawyer may,
if necessary, engage local counsel and an oil-and-gas economic expert
to assist him in rendering his determination. Such lawyer's
determination shall be final and binding on the Parties, and within
five (5) days after such lawyer shall have issued his determination to
the Parties, the Parties shall instruct the escrow agent to release
funds accordingly. The fees and expenses of such lawyer and of the
escrow agent shall be borne equally by the Parties.
7.4 Special Warranty of Title. SELLERS SHALL CONVEY SELLERS'
INTERESTS SPECIFIED IN EXHIBITS "A-1" THROUGH "A-5" IN AND TO THE ASSETS TO
BUYER WITHOUT ANY WARRANTY OF TITLE, EXPRESS OR IMPLIED, EXCEPT FOR SELLERS'
SPECIAL WARRANTY BY, THROUGH AND UNDER SELLERS, BUT NOT OTHERWISE, AS PROVIDED
IN THE FORMS OF ASSIGNMENT ATTACHED AS EXHIBITS "E", "F", "G", "H", "I", "J" AND
"K" HERETO. Sellers' special title warranty above shall not cover those items
expressly waived by Buyer in writing, and Buyer's sole remedy for any breach of
Sellers' special title warranty shall be limited to that portion of the Purchase
Price (without interest) allocated under Schedule 3.1 to the portion of the
Assets affected by Sellers' breach of special title warranty. If there is no
allocation under Schedule 3.1 for the portion of the Assets affected by Sellers'
breach of special title warranty, the Parties shall use their commercially
reasonable efforts to agree on the value of same. If the Parties cannot agree on
such value within thirty (30) days, either Party may seek a judicial
determination thereof in the courts of Xxxxxx County, Texas.
7.5 Notice of Environmental Defects. If, prior to Closing, Buyer
determines the existence of an "Environmental Defect" as defined in Section 7.6
below, Buyer shall notify Sellers in writing of any matter Buyer considers to be
an Environmental Defect as soon as reasonably possible after Buyer becomes aware
of such Environmental Defect but, in any event, by not later than the Defect
Notice Date. Such notice ("Notice of Environmental Defect") shall include (i) a
specific description of the matter Buyer asserts as an Environmental Defect,
(ii) a specific description of the Asset or portion of the Assets that is
affected by the Environmental
31
Defect, (iii) Buyer's calculation of (x) the amount by which each Environmental
Defect has diminished the value of the Assets and (y) the amount necessary to
eliminate or resolve all Environmental Liabilities relating to such
Environmental Defect, such amounts to be determined by Buyer in good faith and
in a commercially reasonable manner (collectively, the "Environmental Defect
Value"), and (iv) all necessary and desirable supporting documentation. Except
for (i) the exclusions from Buyer's Assumed Environmental Obligations specified
in Section 12.5(b) and (ii) Sellers' representation and warranty set forth in
Section 4.1(p), which representation and warranty does not survive the Closing,
Buyer shall be deemed to have waived any Environmental Defect which Buyer fails
to assert in its Notice of Environmental Defect on or before the Defect Notice
Date.
7.6 Environmental Defect. (a) The term "Environmental Defect"
shall refer to (i) the failure of the Assets, or any of them, to be in material
compliance with all applicable Environmental Laws; (ii) the Assets, or any of
them, being subject to any agreements, consent orders, decrees or judgments
based on any Environmental Laws that negatively and materially impact the future
use of any portion of the Assets or that require any material change in the
present conditions of any of the Assets; (iii) the Assets being subject to any
material uncured notices of violations of or material noncompliance with any
applicable Environmental Laws; or (iv) any matter that would constitute a breach
or misstatement of Sellers' representation and warranty stated in Section 4.1(p)
(without giving effect to the exception for the matters listed on Schedule
4.1(p)). No adjustment to the Purchase Price for Environmental Defects shall be
made unless and until, and only to the extent that, (a) the value of such
individual Environmental Defect exceeds $50,000.00 (fifty thousand dollars) and
(b) the aggregate value of all such Environmental Defects exceeds 1.5% (one and
one-half percent) of the Purchase Price.
7.7 Remedies for Environmental Defects. Sellers shall have the
right, but not the obligation, to cure any Environmental Defect affecting the
Assets. If an Environmental Defect is not cured to Buyer's reasonable
satisfaction on or before the Closing Date, the Parties shall nevertheless
proceed to Closing, and Buyer shall, at Sellers' option, but subject to the
provisions of Section 7.6, either:
32
(a) acquire the Assets except for the Asset or Assets affected by
the Environmental Defect or Defects, in which case the
Purchase Price shall be reduced by the allocated value of the
Asset or Assets as set forth on Schedule 3.1; or
(b) accept the Asset or Assets affected by the Environmental
Defect, and acquire all the Assets, in which case the Purchase
Price shall be reduced by the Environmental Defect Value
associated with such Environmental Defect.
ARTICLE VIII
PREFERENTIAL PURCHASE RIGHTS AND CONSENTS
8.1 Preferential Purchase Rights and Consents.
(a) As provided in Section 4.1(l), certain preferential
purchase rights or rights of approval or consent may exist with respect
to the Leases under the agreements and Leases shown on Schedule 4.1(i).
Sellers shall use reasonable efforts to notify all holders of (i)
preferential rights, (ii) rights of consent to the assignment of the
Assets (other than governmental consents, which are to be handled
pursuant to Sections 17.1 and 17.2), or (iii) rights of approval of the
assignment of the Assets, of its intention to sell the portion of the
Assets affected thereby, and of the terms and conditions of this
Agreement. Sellers shall not be liable to Buyer if any preferential
rights are exercised, or any consents are denied, except as expressly
provided in this Section 8.1. Sellers shall promptly notify Buyer if
any preferential rights are exercised, any consents or approvals
denied, or if the requisite period has elapsed without said rights
having been exercised or consents or approvals having been received.
If, prior to Closing, any such preferential rights are timely and
properly exercised, the interest or part thereof so affected shall be
eliminated from the Assets and the Purchase Price reduced by the
portion of the Purchase Price allocated to such interest or part
thereof as provided in Schedule 3.1.
(b) If any additional third party preferential purchase
rights are discovered after Closing, or if a third party preferential
rights holder alleges improper notice, then Buyer agrees to cooperate
with Sellers in giving effect to any such valid third party
preferential
33
purchase rights which are binding on Buyer. In the event any such third
party preferential purchase rights are validly exercised after Closing,
Buyer's sole remedy against Sellers shall be the return by Sellers to
Buyer of that portion of the Purchase Price (without interest)
allocated under Schedule 3.1 to the portion of the Assets on which such
rights are exercised and lost by Buyer to such third party, less the
proceeds of production net of all expenses, capital expenditures,
royalties, and costs of operations (including plugging and abandonment
expenses but excluding mortgage interest and any burdens or
encumbrances created by Buyer which shall be released prior to this
payment) allocable to such interest, without interest. If there is no
allocation under Schedule 3.1 for the portion of the Assets on which
such rights are alleged or exercised, then the Parties shall use their
commercially reasonable efforts to agree on the value of same to be
returned to Buyer in the event it is lost to a third party. If the
Parties cannot agree on such value within thirty (30) days, either
Party may seek a judicial determination thereof in the courts of Xxxxxx
County, Texas.
ARTICLE IX
COVENANTS PENDING CLOSING
9.1 Covenants of Sellers Pending Closing.
(a) From and after the date of execution of this
Agreement and until the Closing, except as otherwise consented to by
Buyer in writing and the constraints of applicable operating and other
agreements, Sellers shall operate, manage, and administer the Assets in
a good and workmanlike manner consistent with their past practices, and
shall carry on their business with respect to the Assets in
substantially the same manner as before execution of this Agreement.
Sellers shall use commercially reasonable efforts to preserve in full
force and effect all Leases, operating agreements, easements,
rights-of-way, permits, licenses, and agreements which relate to the
Assets in which Sellers own an interest, and shall perform all
obligations of Sellers in or under all such agreements relating to the
Assets. Sellers shall, except for emergency action taken in the face of
serious risk to life, property, or the environment, or in order to
maintain any Seller's interest in any Lease (i) submit to Buyer, for
prior written approval, such approval not to be unreasonably withheld,
all requests for operating or capital expenditures which require the
submission of an AFE
34
under the applicable operating agreement and all proposed contracts and
agreements relating to the Assets which involve individual commitments
of more than $100,000.00 (one hundred thousand dollars); (ii) consult
with, inform, and advise Buyer regarding all material matters
concerning the operation, management, and administration of the Assets,
and (iii) obtain Buyer's written approval, such approval not to be
unreasonably withheld, prior to voting on any material matter under any
operating, unit, joint venture, partnership, or similar agreement.
Buyer hereby approves the operating and capital expenditures incurred
by Sellers from the Effective Time through the date of this Agreement,
as such capital expenditures are shown on Schedule 9.1(a).
(b) Sellers shall promptly notify Buyer of any suit,
lessor demand, action, or other proceeding before any court,
arbitrator, or governmental agency and any cause of action or any
threat of any such suit, demand, action, proceeding or cause of action
which relates to the Assets or which might result in impairment or loss
of Sellers' interest in any portion of the Assets or which might hinder
or impede the operation of the Assets.
9.2 Mutual Covenants. Sellers and Buyer agree to use their
commercially reasonable efforts to take or cause to be taken all such actions as
may be necessary to consummate and make effective the purchase and sale
contemplated by this Agreement, to cause the conditions set forth herein to be
satisfied by the Closing Date, and to assure that neither Sellers nor Buyer will
be under any material corporate legal, or contractual restriction that would
prohibit or delay the timely consummation of such purchase and sale.
ARTICLE X
CLOSING CONDITIONS
10.1 Sellers' Closing Conditions. The obligations of Sellers under
this Agreement are subject to the satisfaction at or prior to the Closing of the
following conditions:
(a) All representations and warranties of Buyer contained
in this Agreement shall be true in all material respects at and as of
the Closing as if such representations and warranties were made at and
as of the Closing, and Buyer shall have performed and
35
satisfied all agreements required by this Agreement to be performed and
satisfied by Buyer at or prior to the Closing.
(b) The execution, delivery, and performance of this
Agreement and the transactions contemplated thereby have been duly and
validly authorized by all necessary action, corporate or otherwise, on
the part of Buyer.
(c) Except for approvals covered by Sections 17.1, 17.2
and 17.4 hereof, all necessary consents of and filings, if any, with
any applicable state or federal government authority or agency relating
to the consummation of the transactions contemplated by this Agreement
shall have been obtained, accomplished or waived.
(d) As of the Closing Date, no suit, action or other
proceeding shall be pending or threatened before any court or
governmental agency seeking to restrain Sellers or prohibit the closing
or seeking damages against Sellers as a result of the consummation of
this Agreement.
(e) As of Closing, Buyer has not claimed a Material
Adverse Change with respect to the Assets under Section 10.2(e) hereof.
(f) Buyer or its nominated successor Operator has
insurance providing the following minimum insurance coverages, to be in
effect through such time as the approvals specified in Sections 17.1
through 17.3 are pending, with limits of liability of not less than
those set out below:
(i) Insurance which shall comply with all
applicable workers' compensation and occupational disease laws
and which shall cover all of the Buyer's employees performing
any work or activities as to oil and gas leasehold interests
subject to this Agreement. Buyer shall carry insurance for all
work performed offshore, including insurance to cover claims
under the United States Longshoremen's and Harbor Workers' Act
extended to include the Outer Continental Shelf;
36
(ii) Commercial general liability insurance
(including contractual liability coverage) with a combined
bodily injury and property damage limit of not less than
$1,000,000.00 (one million dollars) for each occurrence and
pollution liability insurance with a coverage of not less than
$1,000,000.00 (one million dollars) for each occurrence. Such
insurance shall include coverage for all liability assumed by
Buyer under the terms of this Agreement with limits not less
than those set out above. As to all commercial general
liability and pollution insurance policies, Buyer shall
endeavor to name Sellers as an additional insured but only to
the extent of those insurable risks assumed by Buyer under
this Agreement.
(iii) Excess liability insurance (including
contractual liability coverage) with a combined bodily injury
and property damage limit of not less than $100,000,000.00
(one hundred million dollars) for each occurrence. Such
insurance shall include excess coverage for all liability
assumed by Buyer under the terms of this Agreement with limits
not less than those set out above. As to all excess insurance
policies, Buyer shall endeavor to name Sellers as an
additional insured but only to the extent of those insurable
risks assumed by Buyer under this Agreement.
(iv) Well control insurance of not less than
$50,000,000.00 (fifty million dollars) for each occurrence.
(v) Such other insurance and proof of financial
responsibility as is required under the applicable provisions
of the Oil Pollution Act of 1990 ("OPA").
(g) Buyer shall have furnished Sellers with certificates
of insurance on forms reasonably acceptable to Sellers, listing all
such insurance policies referred to in paragraph (f) above. Buyer shall
ensure that its insurers waive all rights of recovery or subrogation
against Sellers, its parent, subsidiaries, affiliates, and all of their
agents, directors, officers, employees or servants, with respect to
this Agreement and the Assets. Neither failure to comply, nor full
compliance with, the insurance provisions of this Agreement shall limit
or relieve Buyer from indemnifying and holding Sellers harmless in
accordance with this Agreement. All such certificates shall provide for
not less than thirty (30) days prior written notice to Sellers in the
event of cancellation or material change affecting Sellers' interests.
37
(h) No material adverse change shall have occurred as to
the financial condition of Buyer from the date of this Agreement until
Closing.
(i) Unless waived by Sellers, the Purchase Price shall
not have been subject to aggregate adjustments under Articles VII and
VIII of this Agreement of greater than ten percent (10%).
10.2 Buyer's Closing Conditions. The obligations of Buyer under
this Agreement are subject to the satisfaction at or prior to the Closing of the
following conditions:
(a) All representations and warranties of Sellers
contained in this Agreement shall be true in all material respects at
and as of the Closing as if such representations and warranties were
made at and as of the Closing, and Sellers shall have performed and
satisfied all agreements required by this Agreement to be performed and
satisfied by Sellers at or prior to the Closing.
(b) The execution, delivery, and performance of this
Agreement and the transactions contemplated thereby have been duly and
validly authorized by all necessary action, corporate or otherwise, on
the part of Sellers.
(c) Except for the approvals covered by Sections 17.1,
17.2 and 17.4 hereof, all necessary consents of and filings, if any,
with any applicable state or federal government authority or agency
relating to the consummation of the transactions contemplated by this
Agreement shall have been obtained, accomplished or waived.
(d) As of the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by Buyer) shall be
pending or threatened before any court or governmental agency seeking
to restrain Buyer or prohibit the closing or seeking damages against
Buyer as a result of the consummation of this Agreement.
(e) No Material Adverse Change shall have occurred or
arisen from the date of this Agreement until Closing.
38
(f) Unless waived by Buyer, the Purchase Price shall not
have been subject to adjustments under Articles VII and VIII of this
Agreement of greater than ten percent (10%).
(g) Sellers shall have delivered to Buyer a written
opinion of counsel reasonably acceptable to Buyer to the effect that
Sellers' Parent-Company Guaranty is, subject to customary
qualifications, limitation and exceptions, legal and valid and binding
on and enforceable against Sellers' Parent Guarantor in accordance with
its terms.
ARTICLE XI
CLOSING
11.1 Closing. The actions and events described in this Article XI
are the "Closing" of this transaction, which shall be held beginning at 9:00
a.m. local time at the offices of Sellers located at Suite 800, Bank One Center,
000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, on October 15, 2003, or on such earlier
date or at such other place as the Parties agree in writing ("Closing Date").
The Closing Date shall not be extended unless by written agreement of the
Parties. All events of Closing shall each be deemed to have occurred
simultaneously with the other, regardless of when actually occurring, and each
shall be a condition precedent to the other. If the Closing occurs, all
conditions of Closing shall be deemed to have been satisfied or waived. IT IS
EXPRESSLY AGREED THAT TIME IS OF THE ESSENCE IN CLOSING AND THAT FAILURE TO
CLOSE AND CONSUMMATE THIS TRANSACTION IN THE TIME AND MANNER SET FORTH HEREIN
SHALL CONSTITUTE A MATERIAL BREACH OF THIS AGREEMENT GIVING RISE TO THE REMEDIES
IN ARTICLE XVI.
11.2 Sellers' Closing Obligations. At Closing, except to the extent
comprising the Excluded Assets, Sellers shall deliver to Buyer or perform the
following:
(a) The Assignments of Record Title to Oil and Gas
Lease(s) (Offshore) substantially in the form attached hereto as
Exhibit "E", and such other documents as may be reasonably necessary to
convey Sellers' interests in the related Assets to Buyer in accordance
with the provisions hereof;
39
(b) The Assignments of Oil and Gas Lease(s) Operating
Rights (Offshore) substantially in the form attached hereto as Exhibit
"F", and such other documents as may be reasonably necessary to convey
Sellers' interests in the related Assets to Buyer in accordance with
the provisions hereof;
(c) The Assignments, Conveyances and Bills of Sale for
Oil and Gas Lease(s) (Onshore) substantially in the form attached
hereto as Exhibit "G", and such other documents as may be reasonably
necessary to convey Sellers' interests in the related Assets to Buyer
in accordance with the provisions hereof;
(d) The Assignments of Rights of Way (Offshore)
substantially in the forms attached hereto as Exhibit "H", and such
other documents as may be reasonably necessary to convey Sellers'
interests in the related Assets to Buyer in accordance with the
provisions hereof;
(e) Assignments of each Seller's rights, obligations and
interests in all Related Contracts, substantially in the form of
Exhibit "I";
(f) The Bills of Sale in the form of Exhibit "J" for each
Seller's interest in the Xxxxx and Equipment located offshore;
(g) If applicable, letters-in-lieu of transfer orders
directing all purchasers of production to pay Buyer the proceeds of
production produced from the Assets from and after the Effective Time
substantially in the form of Exhibit "K";
(h) Such other appropriate assignments, bills of sale,
deeds or instruments necessary to transfer the Assets to Buyer or to
effect and support this transaction including without limitation any
conveyances on official forms and related documentation necessary to
transfer the Assets to Buyer in accordance with requirements of
governmental regulations;
(i) A nonforeign affidavit executed by Sellers in the
form of Exhibit "L";
40
(j) A secretary's certificate of each Seller, including
certified resolutions of its Board of Directors, evidencing the
approval of each Seller's shareholders(s) and Board of Directors of
this Agreement and the transactions contemplated hereby and including
an incumbency certificate regarding the authority of the person(s)
signing this Agreement and any of the Closing documents on behalf of
the Sellers, together with a certified resolution or secretary's
certificate of Sellers' Parent Guarantor evidencing the authority of
such entity to execute, deliver and perform Sellers' Parent-Company
Guaranty, each in a form and having content satisfactory to Buyer;
(k) Make arrangements to deliver to Buyer, as soon as
practicable after Closing but in any event within thirty (30) days
thereof, the following documents and information in Sellers' possession
(except to the extent constituting Excluded Assets):
(i) All of the files, contracts, and documents
affecting title to the Leases;
(ii) All books, records, production records,
information, and engineering data relating to the Assets,
except insofar as Sellers are prevented from transferring same
by contractual obligations to third parties, or which
constitute Excluded Assets; and
(iii) All other files, data, and records
pertaining to the Assets to which Buyer is entitled;
(l) Transfer to Buyer, by wire transfer to an account or
accounts specified by Buyer in writing to Sellers, the suspended
royalty funds as specified in Section 12.7, and deliver to Buyer the
related books and records;
(m) Execute and deliver to Buyer Buyer's Limited
Assumption Agreement; and
(n) Cause Sellers' Parent Guarantor to execute and
deliver to Buyer Sellers' Parent-Company Guaranty, and deliver to Buyer
the related opinion of counsel specified in Section 10.2(g).
41
11.3 Buyer's Closing Obligations. At Closing, Buyer shall deliver
to Sellers or perform the following:
(a) The Purchase Price, as adjusted by the amount shown
on the Preliminary Settlement Statement, less the amount of the
Performance Deposit, by wire transfer in immediately available funds to
an account or accounts designated for that purpose by Sellers.
(b) Certificate(s) of insurance confirming the existence
of the insurance coverages by Buyer pursuant to Sections 10.1(f) and
(g);
(c) A secretary's certificate of Buyer, including
certified resolutions of its Board of Directors, evidencing the
approval of Buyer's Board of Directors of this Agreement and the
transactions contemplated hereby and including an incumbency
certificate regarding the authority of the person(s) signing this
Agreement and any of the Closing documents on behalf of the Buyer;
(d) Evidence satisfactory to Sellers that Buyer (or its
nominated successor operator, if one is designated by Buyer upon
Closing) has obtained all lease, pipeline and operating bonds necessary
for it to become operator of record by MMS with respect to the offshore
Leases and oil and gas properties subject hereto;
(e) Where any Seller is the designated Operator of a
Lease, Buyer shall promptly file all appropriate forms, declarations or
bonds with federal and state governmental agencies relative to Buyer's
assumption of operations from such Seller. Buyer shall also take all
actions necessary to qualify as a successor Operator to such Seller
under any applicable joint operating agreement (subject to the terms of
that operating agreement) and to provide appropriate evidence of
financial responsibility as required by OPA; and
(f) Execute and deliver to Sellers Buyer's Limited
Assumption Agreement.
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11.4 Joint Closing Obligations. Both Parties at Closing shall
execute:
(a) A Settlement Statement evidencing the amounts
actually wire transferred into such account(s) as are designated above;
(b) A letter evidencing any Sellers' and Buyer's Credits
as may be agreed by the Parties as provided in Sections 3.2(a)(iii) and
3.2(b)(iii);
(c) Sellers and Buyer shall notify all lessors, royalty
owners, operators, non-operators, purchasers of production and
governmental agencies that Buyer has purchased the Assets and has
assumed liability for their continued operation from and after the
Effective Time. Buyer and Sellers shall execute all transfer orders and
division orders necessary to transfer payment of the proceeds from the
sale of production from the Assets as of the Effective Time to Buyer;
(d) Buyer and Sellers shall execute and file all forms
(and Buyer shall perform all acts) required by the MMS (and other
appropriate governmental agencies) to transfer operatorship of any of
the Assets from Sellers to Buyer effective as of the Effective Time;
and
(e) If Buyer is to succeed any Seller as operator, or has
nominated a successor operator with respect to any of the Assets, Buyer
shall prepare and the Parties shall execute appropriate change of
operator notices and any necessary third party ballots. Sellers and
Buyer shall execute, acknowledge (if necessary) and exchange, as
applicable, any applications necessary to transfer governmental or
regulatory permits to which the Assets are subject, and which Sellers
have agreed to transfer under this Agreement.
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ARTICLE XII
EFFECT OF CLOSING
ASSUMED AND RETAINED RIGHTS AND OBLIGATIONS
12.1 Buyer's Rights After Closing. Upon and after Closing, Buyer
shall receive all of each Seller's right, title and interest in the Assets, with
effect as of the Effective Time.
12.2 Buyer's Obligations After Closing.
(a) Description of Obligations. Upon and after Closing,
Buyer shall assume, pay and perform all the obligations, liabilities,
costs, expenses, and duties with respect to the ownership and (if
applicable) operation of the Assets that are attributable to periods on
and after the Effective Time, whether or not the required governmental
consents and approvals described in Sections 17.1 and 17.2 are obtained
("Buyer's Assumed Obligations"). The Buyer's Assumed Obligations
include without limitation:
(i) Responsibility for payment of all operating
expenses and capital expenditures related to the Assets and
attributable to the period on and after the Effective Time;
(ii) Responsibility for performance of all
express and implied obligations and covenants under the terms
of the Leases, other instruments of record in the chain of
title and the Related Contracts, in each case arising on and
after the Effective Time;
(iii) Responsibility for proper payment of all
royalties, overriding royalties, production payments, net
profits obligations, rentals, shut-in payments and other
burdens or encumbrances to which the Assets are subject that
are attributable to periods on and after the Effective Time;
(iv) Responsibility for proper accounting for and
disbursement of production proceeds from the Assets
attributable to periods on and after the Effective Time;
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(v) Responsibility for compliance with all
applicable laws, ordinances, rules and regulations pertaining
to the Assets, and the procurement and maintenance of all
permits required by public authorities in connection with the
Assets on and after the Effective Time;
(vi) Responsibility for all obligations for
imbalances which may occur with respect to third parties for
production or processing of Hydrocarbons attributable to
Sellers' interest in and ownership of Hydrocarbons produced
from the Assets after the Effective Time;
(vii) Responsibility for all obligations for
imbalances which may exist at the Effective Time with respect
to third parties for production or processing of Hydrocarbons
attributable to Sellers' interest in and ownership of
Hydrocarbons produced from the Assets prior to the Effective
Time;
(viii) To the extent specified in Buyer's Limited
Assumption Agreement, responsibility for all plugging and
abandonment, environmental and other obligations of Sellers,
or any of them, under the Prior Asset Purchase Agreements,
which obligations are summarized on Schedule 4.1(q) hereto;
and
(ix) All other obligations assumed by Buyer under
this Agreement.
(b) Non-Operator's Obligations. With respect to (i) any
part of the Assets for which Buyer is not duly elected operator, or
(ii) any non-operated interests in the Assets, Buyer shall assume full
responsibility and liability for Buyer's Assumed Obligations with
respect to the non-operated interests being conveyed and assigned under
this Agreement.
(c) Replacement of Guaranties; Indemnity. Buyer
acknowledges the list of Sellers' Prior Parent Guaranties set forth on
Schedule 4.1(r). Buyer understands that Sellers shall attempt to obtain
the agreements of the beneficiaries of such guaranties to substitute,
as soon as practicable after the Closing, the credit of Buyer for that
of the applicable Seller's parent company in each such guaranty, such
substitution to be effective as of the Effective
45
Time. Buyer shall use its commercially reasonable endeavors to assist
Sellers in this regard, including by causing appropriately senior and
knowledgeable personnel of Buyer to accompany representatives of
Sellers in conducting such process. Buyer shall, effective from and
after the Effective Time, but subject to the terms and conditions of
Buyer's Limited Assumption Agreement, indemnify Transworld Oil U.S.A.,
Inc., against and hold it harmless from any and all losses, claims,
damages, costs and expenses and proceedings arising from any such
guaranty in which such company is the guarantor, and, to the extent
that Sellers are not able to effect such a substitution with effect
from the Closing Date, Buyer shall, upon Sellers' request where there
is a reasonable prospect of success, assist Sellers in effecting such a
substitution with respect to each Sellers' Prior Parent Guaranty. Any
claim for indemnification brought under this Section 12.3(c) shall be
asserted and resolved pursuant to the procedures set forth in Section
13.7 with such changes as are necessary. If, as and to the extent that
Sellers achieve the substitution of Buyer's credit for a Sellers' Prior
Parent Guaranty and obtain the release and cancellation of such
guaranty, then the preceding indemnity and hold-harmless obligation
shall cease to have effect with respect to such guaranty effective as
of the effective date of such substitution. For purposes of this
Section 12.2(c), Buyer's "commercially reasonable" efforts do not
require Buyer to expend any funds, provide any security, bond, or other
credit support, or undertake any financial or other liabilities or
obligations beyond those expressly contained in the Buyer's Limited
Assumption Agreement.
(d) No Limitation. Nothing in Sections 12.2(a) and
12.2(b) shall limit Buyer's obligations under Section 12.6.
12.3 Sellers' Obligations After Closing.
(a) Description of Obligations. After Closing, Sellers
shall retain responsibility for all liabilities, obligations and duties
with respect to the ownership and (if applicable) operation of the
Assets that are attributable to periods before the Effective Time,
except as otherwise specifically provided in Section 12.2(a), 12.2(b),
12.4 and 12.5 of this Agreement ("Sellers' Retained Obligations"). The
Sellers' Retained Obligations include without limitation:
46
(i) Responsibility for the payment of all
operating expenses and capital expenditures related to the
Assets and attributable to the period prior to the Effective
Time;
(ii) Responsibility for performance of all
express and implied obligations and covenants under the terms
of the Leases, other instruments of record in the chain of
title, the Related Contracts, and all other orders and
contracts to which the Assets or the operation thereof is
subject arising before the Effective Time;
(iii) Responsibility for proper payment of all
royalties, overriding royalties, production payments, net
profits obligations, rentals, shut-in payments and other
burdens or encumbrances to which the Assets are subject that
are attributable to periods before the Effective Time;
(iv) Responsibility for proper accounting for and
disbursement of production proceeds from the Assets
attributable to periods before the Effective Time;
(v) Responsibility for compliance with all
applicable laws, ordinances, rules and regulations pertaining
to the Assets, and the procurement and maintenance of all
permits required by public authorities in connection with the
Assets before the Effective Time;
(vi) Responsibility for the exclusions from the
Assumed Environmental Obligations described in Section
12.5(b); and
(vii) Responsibility for performance of all
express and implied obligations and covenants under the terms
of all contracts, agreements, instruments, and orders to which
the Assets or the operation thereof is subject, arising before
or after the Effective Time, to the extent that such contract,
agreement, instrument or order is not listed in Exhibits "A-1"
through "X-0", "X" or "C".
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(b) Non-Operator's Obligations. With respect to (i) any
part of the Assets for which any Seller was not operator of the Assets,
or (ii) any non-operated interests in the Assets, Sellers retain full
responsibility and liability for Sellers' Retained Obligations with
respect to the non-operated interests being conveyed and assigned under
this Agreement.
(c) No Limitation. Nothing in Sections 12.3(a) or 12.3(b)
shall limit any Seller's obligations under Section 12.6.
12.4 Assumed Plugging and Abandonment Obligations.
(a) Buyer's Obligations. Upon and after Closing, Buyer
assumes full responsibility and liability for the following plugging
and abandonment obligations related to the Assets ("Assumed Plugging
and Abandonment Obligations"), regardless of whether they are
attributable to the ownership or operation of the Assets before or
after the Effective Time, in each case as may be required by laws,
regulations, rules and the Related Contracts:
(i) Plugging, replugging and abandonment of any
and all oil, gas or condensate wellbore(s) (whether producing,
not producing or abandoned or plugged prior to or after the
Effective Time), water source, water injection and other
injection and disposal xxxxx and systems located on each Lease
(or lands pooled with a Lease);
(ii) Removal, abandonment, and disposal of all
platforms, structures, pipelines, flowlines, equipment,
abandoned property and junk located on or comprising part of
the Assets;
(iii) Capping and burying of all associated flow
lines and pipelines located on or comprising part of the
Assets;
(iv) Restoration of the Assets, both surface, sea
floor and subsurface; and
(v) Clean-up or disposal of Assets contaminated
by naturally occurring radioactive material ("NORM").
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(b) Standard of Operations. Buyer shall conduct all
plugging, replugging, abandonment, removal, disposal and restoration
operations in a good and workmanlike manner and in compliance with all
applicable laws and regulations.
(c) Non-Operator's Obligations. With respect to any
non-operated interests in the Assets, Buyer shall assume full
responsibility and liability, from and after the Effective Time, for
the Assumed Plugging and Abandonment Obligations with respect to the
non-operated interests being conveyed and assigned under this
Agreement.
(d) Buyer's Bonds and Sellers' Remedies. Buyer's
liability and obligations under this Section 12.4 are included in the
liabilities and obligations to be secured by the bonds, supplemental or
additional bonds, and/or pledge of securities, as may be established
pursuant to Sections 17.1 and 17.2. If Buyer defaults in the
performance of its obligations pursuant to this Section 12.4, Sellers,
at their option, and after reasonable notice, may complete, or have
completed, the plugging, replugging, abandonment, removal, disposal,
capping, burying, and restoration operations at Buyer's expense.
Exercise of Sellers' rights hereunder shall in no way limit Sellers'
rights to seek recovery for any uncompensated damages resulting from
such default or to exercise any other legal rights and remedies
hereunder.
12.5 Assumed Environmental Obligations.
(a) Buyer's Obligations. Except as provided in Sections
7.5 through 7.7, inclusive, and except as provided in Section 12.5(b),
upon and after Closing, Buyer assumes full responsibility and liability
for the following occurrences, conditions, events and activities on or
in any way related to the Assets ("Assumed Environmental Obligations"),
regardless of whether arising from the ownership or operation of the
Assets before or after the Effective Time, and regardless of whether
resulting from any acts or omissions of Sellers, any third party or the
condition of the Assets when acquired:
(i) Environmental pollution or contamination,
including pollution or contamination of the soil, sea,
groundwater, surface water or air by Hydrocarbons,
49
brine, NORM, other substances or products, or otherwise;
(ii) Underground injection activities and waste
disposal onsite;
(iii) Clean-up responses, and the cost of
remediation, control, assessment or compliance with respect to
surface, sea floor, surface water, groundwater and subsurface
pollution caused by spills, pits, ponds or lagoons;
(iv) Failure to comply with applicable land use,
surface disturbance, licensing or notification requirements;
(v) Any discharge or release on, in, under or
onto the Assets of any hazardous substances, wastes, materials
or products, of any nature whatsoever, whether or not
generated by or used in connection with the ownership or
operation of the Assets before or after the Effective Time;
(vi) Non-compliance with environmental or land
use rules, regulations, demands or orders of appropriate state
or federal regulatory agencies; and
(vii) To the extent not covered by paragraphs (i)
through (vi) above, all other Environmental Liabilities. For
purposes of this Agreement "Environmental Liability" or
"Environmental Liabilities" means any claim, demand, action,
suit, proceeding, or liability, whether accrued, fixed,
absolute or contingent, determined or determinable, known or
unknown, with respect to:
(A) the generation, recycling,
processing, handling, presence, transportation,
storage, treatment or disposal of any solid, liquid
or other hazardous or toxic materials, wastes,
substances, products, pollutants, intermediates,
chemicals, raw materials, gases, chemicals or
petroleum products or any other contaminants of any
nature; or
(B) the release, emission, or discharge
to land, surface or ground waters, navigable or
non-navigable waters, or into the air of any solid,
liquid
50
or other hazardous or toxic materials, wastes,
substances, products, pollutants, intermediates,
chemicals, raw materials, gases, chemicals or
petroleum products or any other contaminants of any
nature;
(C) the exposure of any persons
(including employees of Sellers or Buyer) to any
solid, liquid or other hazardous or toxic materials,
wastes, substances, products, pollutants,
intermediates, chemicals, raw materials, gases,
chemicals or petroleum products or any other
contaminants of any nature;
(D) any other environmental,
environmental health or environmental safety matter;
and
(E) judgments, orders, determinations,
proceedings or awards from governmental bodies having
jurisdiction over the subject matter.
(b) Exclusions from Buyer's Obligations. Buyer's Assumed
Environmental Obligations do not include:
(i) Transportation and disposal offsite from the
Assets before the Effective Time of any hazardous substances,
wastes, NORM, materials and products generated by or used in
connection with the ownership or operation of the Assets by
any Seller before the Effective Time; and
(ii) Claims by third parties against Buyer and/or
Buyer's predecessors in interest with respect to the Assets,
including claims by governmental agencies, of which Sellers
are notified in writing by Buyer within twelve (12 months
after Closing, of a nature referred to in the definition of
"Environmental Liabilities," which arose, accrued, or are
asserted prior to the Effective Time and are attributable to
the operation of the Assets by Sellers or their predecessors
in interest prior to the Effective Time. Sellers shall have no
obligation to Buyer under this Section 12.5(b)(ii) for any
matter for which they are not notified in writing by Buyer
within twelve (12) months after Closing. It is agreed and
understood, moreover, that this
51
exclusion and Sellers' indemnity obligations with respect to
the same under this Agreement shall be limited only to Claims
by third parties, including governmental agencies, against
Buyer and/or Buyer's predecessors in interest with respect to
the Assets. The indemnification obligations of Sellers set
forth in Section 13.5 of this Agreement with respect to this
exclusion shall, after the Closing, be the sole and exclusive
remedies of Buyer with respect to the matters addressed in
this Section 12.5(b)(ii), regardless of any of Sellers'
warranties or representations.
(c) Non-Operator's Obligations. With respect to any
non-operated interests in the Assets being transferred to Buyer under
this Agreement, Buyer agrees to assume full responsibility and
liability, from and after the Effective Time, for the Assumed
Environmental Obligations with respect to the non-operated interests
being conveyed and assigned under this Agreement.
12.6 Revenues and Expenses.
(a) Revenues. To the extent not accounted for in Buyer's
and Sellers' Credits and adjustments under Section 3.2 hereof, all
proceeds, accounts receivable, income, revenues and other items
included in or attributable to the Excluded Assets and the Assets prior
to the Effective Time shall belong to and be retained or paid to
Sellers, and all other proceeds, accounts receivable, income, revenues
and other items included on or attributable to the Assets after the
Effective Time shall belong to and be paid over to the Buyer.
(b) Expenses. To the extent not accounted for in Buyer's
and Sellers' Credits and adjustments under Section 3.2 hereof, all
accounts payable and other costs and expenses with respect to the
Excluded Assets and Sellers' interest in the Assets which are
attributable under generally accepted accounting principles to the
period prior to the Effective Time shall be the obligations of and be
paid by Sellers. Those accounts payable, costs and expenses which are
attributable to the period commencing after the Effective Time shall be
the obligation of and be paid and discharged by Buyer.
(c) Post-Closing Obligations. If any funds are received
by a Party hereto, which belong to the other Party, the Party receiving
such funds shall immediately pay the funds
52
over to the other Party entitled thereto. If an invoice or other
obligation to be discharged is under the terms of this Agreement
partially the obligation of Sellers and partially the obligation of
Buyer, the Party receiving such invoice or request to discharge the
obligation shall promptly notify the other Party which shall promptly
pay over its share thereof after receipt of such notice. If an invoice
or other obligation to be discharged is, under the terms of this
Agreement, solely (as between Sellers and Buyer) the obligation of one
of the Parties, that Party shall promptly pay or discharge such
obligation upon receipt of notice of same.
12.7 Suspended Royalties Buyer acknowledges that Sellers maintain
suspended royalty accounts for certain of their Assets whereby Sellers hold
funds payable to landowners and holders of royalty interests who cannot be
readily located and that, as of June 30, 2003, such accounts totaled
approximately $74,000 (seventy-four thousand dollars). At the Closing, as
specified in Section 11.2(l), Sellers shall transfer to Buyer the balance of
such funds as of the Closing Date, together with the related books and records,
and Buyer shall thenceforth after the Closing administer such accounts and
disburse the funds in accordance with the applicable Leases and all legal
requirements.
ARTICLE XIII
INDEMNITIES
13.1 Definition of Liabilities. As used in this Agreement, the term
"Liabilities" means any and all damage, loss, liability and expense, including
but not limited to Claims, as defined in Section 1.10.
13.2 Application of Indemnities. All indemnities set forth in this
Agreement extend to the Affiliates of the Party indemnified, its successors and
assigns, and each of their respective officers, directors, employees, and
agents. Unless this Agreement expressly provides to the contrary, the
indemnities set forth in this Agreement apply regardless of whether the
indemnified Party (or its employees, agents, contractors, successors or assigns)
causes, in whole or part, an indemnified Liability, including indemnified
Liabilities arising out of or resulting, in whole or part, from the condition of
the Assets or the indemnified Party's (or its employees', agents',
53
contractors', successors' or assigns') sole or concurrent negligence, strict
liability or fault.
13.3 Buyer's General Indemnity. Buyer shall indemnify, defend and
hold each Seller, for an unlimited period of time, harmless from and against any
and all Liabilities, caused by, resulting from, relating to, arising out of or
incidental to:
(a) Buyer's Assumed Obligations;
(b) the Assumed Plugging and Abandonment Obligations;
(c) the Assumed Environmental Obligations;
(d) Any obligations for a brokerage or finder's fee or
commission incurred by Buyer in connection with its purchase of the
Assets;
(e) Any violation by Buyer of state or federal securities
laws, or Buyer's dealings (including any dealings in breach of Buyer's
warranties and representations in Section 5.1(h)) with its partners,
investors, financial institutions, assignees and other third parties in
connection with the transaction under this Agreement, or any subsequent
sale or other disposition of the Assets (or portion thereof) by Buyer,
its Affiliates or assignees;
(f) Buyer's ownership or operation of any portion of the
Assets that is reconveyed or reassigned to Sellers pursuant to Sections
17.1 and 17.2 of this Agreement due to failure to obtain requisite
consents or government approvals, except to the extent any such
Liability is the direct result of Sellers' ownership or operation of
the Assets before the Effective Time;
(g) Sellers continuing to hold the operating rights and
record titles to any Assets as nominee for Buyer pursuant to Section
17.1 hereof;
(h) Buyer's inspection of the Assets under Section 6.3
and any other provisions of this Agreement, except to the extent caused
by Sellers' gross negligence or willful misconduct.
54
13.4 Buyer's Special Indemnity Buyer shall indemnity, defend and
hold Sellers harmless from and against any and all Liabilities caused by,
resulting from, relating to, arising out of or incidental to any inaccuracy in
or breach of Buyer's Surviving Representations and Warranties; provided,
however, that Sellers shall not be entitled to assert rights of indemnification
under this Section 13.4 unless and until the aggregate of the indemnified losses
covered by this Section 13.4 exceeds $500,000.00 (five hundred thousand dollars)
(the "Threshold Amount"), it being understood and agreed that all such
indemnified losses shall accumulate until such time or times as the aggregate of
such losses exceeds the Threshold Amount, whereupon Sellers shall be entitled to
indemnification hereunder for the amount by which the aggregate of such losses
exceeds the Threshold Amount; and provided also, however, that nothing in this
Section 13.4 shall limit, restrict or impair Buyer's obligations stated in
Section 13.3, and this Section 13.4 shall apply only if and to the extent that
the matter is not covered by Section 13.3.
13.5 Sellers' General Indemnity. Sellers shall indemnify, defend
and hold Buyer harmless from and against any and all Liabilities caused by,
resulting from, relating to, arising out of or incidental to:
(a) Sellers' Retained Obligations, including the
exclusions from the Assumed Plugging and Abandonment Obligations and
the exclusions from the Assumed Environmental Obligations; provided,
however, that with respect to the exclusions from the Assumed
Environmental Obligations referred to in this clause (a), Sellers'
obligations of indemnity under this Section 13.5 shall, with respect to
third-party environmental claims, be limited in the aggregate to twenty
percent (20%) of the Purchase Price;
(b) Sellers' operation of the Assets under Section 17.1
of this Agreement (if applicable), to the extent caused by Sellers'
gross negligence or willful misconduct;
(c) Sellers' access to the Assets after Closing for the
purposes described in Sections 17.11, except to the extent caused by
Buyer's gross negligence or willful misconduct; and
(d) Those pending Claims identified on Schedule 4.1(f).
55
13.6 Sellers' Special Indemnity Sellers shall indemnity, defend and
hold Buyer harmless from and against any and all Liabilities caused by,
resulting from, relating to, arising out of or incidental to any inaccuracy in
or breach of Sellers' Surviving Representations and Warranties; provided,
however, that Buyer shall not be entitled to assert rights of indemnification
under this Section 13.6 unless and until the aggregate of the indemnified losses
covered by this Section 13.6 exceeds the Threshold Amount, it being understood
and agreed that all such indemnified losses shall accumulate until such time or
times as the aggregate of such losses exceeds the Threshold Amount, whereupon
Buyer shall be entitled to indemnification hereunder for the amount by which the
aggregate of such losses exceeds the Threshold Amount; and provided also,
however, that nothing in this Section 13.6 shall limit, restrict or impair
Sellers' obligations stated in Section 13.5, and this Section 13.6 shall apply
only if and to the extent that the matter is not covered by Section 13.5; and
provided in addition that the provisions of this Section 13.6 shall not apply
with respect to any Environmental Defect, Environmental Liability or Title
Defect, it being understood and agreed that only Sections 7.5 through 7.7,
Section 12.5, and Sections 7.1 through 7.4, respectively, shall apply to and
govern such matters.
13.7 Notices and Defense of Indemnified Claims. Each Party shall as
soon as practicable notify the other Party of any claim of which it becomes
aware and for which it is entitled to indemnification from the other Party under
this Agreement. The indemnifying Party shall be obligated to defend at the
indemnifying Party's sole expense any litigation or other administrative or
adversarial proceeding against the indemnified Party relating to any claim for
which the indemnifying Party has agreed to indemnify and hold the indemnified
Party harmless under this Agreement. However, the indemnified Party shall owe a
duty of cooperation to the indemnifying Party and shall have the right to
participate with the indemnifying Party in the defense of any such Claim at its
own expense. Each Party shall owe a duty of cooperation to the other with
respect to any claim covered by the terms of this Agreement. The indemnifying
Party may not settle any claim for other than money damages without the consent
of the indemnified Party.
13.8 Waiver of Consequential and Punitive Damages. Neither Buyer
nor Sellers shall be entitled to recover from the other, respectively, for any
losses, costs, expenses, or damages arising under this Agreement or in
connection with or with respect to the transactions contemplated in this
Agreement any amount in excess of the actual damages, court costs and reasonable
attorney fees,
56
suffered by such Party. Buyer and Sellers both waive any right to recover
punitive, special, exemplary and consequential damages arising in connection
with or with respect to the transactions contemplated in this Agreement;
provided, however, any such damages recovered by a third party (other than
Affiliates of a Party) for which a Party owes the other Party an indemnity under
this Article XIII shall not be waived.
ARTICLE XIV
LIMITATIONS OF WARRANTIES, CERTAIN WAIVERS AND REMEDIES
14.1 Limitations. THE EXPRESS REPRESENTATIONS AND WARRANTIES OF
SELLERS CONTAINED IN THIS AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER
REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT
LIMITATION ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE QUALITY, QUANTITY
OR VOLUME OF THE RESERVES, IF ANY, OF OIL, GAS OR OTHER HYDROCARBONS IN OR UNDER
THE LEASES, OR THE ENVIRONMENTAL CONDITION OF THE ASSETS. THE ITEMS OF PERSONAL
PROPERTY, EQUIPMENT, IMPROVEMENTS, FIXTURES AND APPURTENANCES CONVEYED AS PART
OF THE ASSETS ARE SOLD HEREUNDER "AS IS, WHERE IS", AND NO WARRANTIES OR
REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, INCLUDING ANY
WARRANTY OF QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
CONDITION, ARE GIVEN BY OR ON BEHALF OF SELLERS. IT IS UNDERSTOOD AND AGREED
THAT PRIOR TO CLOSING BUYER SHALL HAVE INSPECTED THE ASSETS FOR BUYER'S PURPOSES
AND HAVE FULLY SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL
CONDITION, BOTH SURFACE AND SUBSURFACE, AND THAT BUYER ACCEPTS SAME IN THEIR "AS
IS, WHERE IS" CONDITION. THE WARRANTIES OF SELLERS CONTAINED IN THIS AGREEMENT
ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, AND BUYER
HEREBY WAIVES ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION
ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
CONDITION, OR CONFORMITY TO SAMPLES. EXCEPT FOR THE WARRANTIES AND
REPRESENTATIONS PROVIDED IN ARTICLE IV AND THIS
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SECTION 14.1, SELLERS DO NOT MAKE OR PROVIDE, AND BUYER HEREBY WAIVES, ANY
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE ACCURACY,
COMPLETENESS OR MATERIALITY OF THE INFORMATION, RECORDS, AND DATA NOW,
HERETOFORE, OR HEREAFTER MADE AVAILABLE TO BUYER IN CONNECTION WITH THE ASSETS
OR THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, ANY DESCRIPTION OF THE ASSETS,
QUALITY OR QUANTITY OF HYDROCARBON RESERVES, IF ANY, PRODUCTION RATES,
RECOMPLETION OPPORTUNITIES, DECLINE RATES, POTENTIAL FOR PRODUCTION OF
HYDROCARBONS FROM THE LEASES, OR ANY OTHER MATTERS CONTAINED IN ANY OTHER
MATERIAL FURNISHED TO BUYER BY SELLERS OR BY SELLERS' AGENTS OR
REPRESENTATIVES). ANY AND ALL SUCH DATA, INFORMATION AND MATERIAL FURNISHED BY
SELLERS IS PROVIDED AS A CONVENIENCE ONLY AND ANY RELIANCE ON OR USE OF SAME IS
AT BUYER'S SOLE RISK. THERE ARE NO WARRANTIES THAT EXTEND BEYOND THE FACE OF
THIS AGREEMENT. BUYER ACKNOWLEDGES THAT THIS WAIVER IS CONSPICUOUS.
14.2 Use of the Assets. THE ASSETS HAVE BEEN USED FOR OIL AND GAS
DRILLING AND PRODUCING OPERATIONS, RELATED (DISPOSAL AND OTHER) OILFIELD
OPERATIONS AND THE STORAGE AND TRANSPORTATION OF OIL AND GAS. PHYSICAL CHANGES
IN THE ASSETS 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 SELLERS OR BE READILY
APPARENT BY A PHYSICAL INSPECTION OF THE PROPERTY. BUYER UNDERSTANDS THAT
SELLERS DO NOT HAVE THE REQUISITE INFORMATION WITH WHICH TO DETERMINE THE EXACT
NATURE OR CONDITION OF THE ASSETS OR THE EFFECT ANY SUCH USE HAS HAD ON THE
PHYSICAL CONDITION OF THE ASSETS.
14.3 Waiver of Texas DTPA. SELLERS AND BUYER CERTIFY THAT THEY ARE
NOT "CONSUMERS" WITHIN THE MEANING OF THE TEXAS DECEPTIVE TRADE
PRACTICES-CONSUMER PROTECTION ACT, SUBCHAPTER. E OF CHAPTER 17, SECTIONS 17.41,
ET SEQ., OF VERNON'S TEXAS CODE ANNOTATED, BUSINESS AND COMMERCE CODE, AS
AMENDED THE "DTPA"), IF THE ASSETS ARE LOCATED IN
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TEXAS. BUYER HEREBY WAIVES ITS RIGHTS UNDER THE DTPA, A LAW THAT GIVES CONSUMERS
SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF ITS OWN
SELECTION, BUYER VOLUNTARILY CONSENTS TO THIS WAIVER. TO EVIDENCE ITS ABILITY TO
GRANT SUCH WAIVER, BUYER REPRESENTS TO SELLERS THAT (I) IT IS NOT IN A
SIGNIFICANTLY DISPARATE BARGAINING POSITION; (II) IT IS REPRESENTED BY LEGAL
COUNSEL IN ENTERING INTO THIS AGREEMENT; AND (III) SUCH LEGAL COUNSEL WAS NOT
DIRECTLY OR INDIRECTLY IDENTIFIED, SUGGESTED, OR SELECTED BY SELLERS OR AN AGENT
OF SELLERS.
14.4 Waiver of Louisiana Rights in Redhibition. THE BUYER EXPRESSLY
WAIVES THE WARRANTY OF FITNESS FOR INTENDED PURPOSES OR GUARANTEE AGAINST HIDDEN
OR LATENT REDHIBITORY VICES UNDER LOUISIANA LAW, INCLUDING LOUISIANA CIVIL CODE
ARTICLES 2520 (1870) THROUGH 2548 (1870), AND THE WARRANTY IMPOSED BY LOUISIANA
CIVIL CODE ARTICLES 2476; WAIVES ALL RIGHTS IN REDHIBITION PURSUANT TO LOUISIANA
CIVIL CODE ARTICLE 2520, ET SEQ.; ACKNOWLEDGES THAT THIS EXPRESS WAIVER SHALL BE
CONSIDERED A MATERIAL AND INTEGRAL PART OF THIS SALE AND THE CONSIDERATION
THEREOF; AND ACKNOWLEDGES THAT THIS WAIVER HAS BEEN BROUGHT TO THE ATTENTION OF
BUYER AND EXPLAINED IN DETAIL AND THAT BUYER HAS VOLUNTARILY AND KNOWINGLY
CONSENTED TO THIS WAIVER OF WARRANTY OF FITNESS AND/OR WARRANTY AGAINST
REDHIBITORY VICES AND DEFECTS FOR THE ASSETS, IF THE ASSETS ARE LOCATED IN
LOUISIANA OR A JURISDICTION GOVERNED BY LOUISIANA LAW.
14.5 Waivers Conspicuous. BUYER ACKNOWLEDGES THAT THE WAIVERS IN
THIS ARTICLE 14 ARE CONSPICUOUS.
14.6 Survival. Buyer's Surviving Representations and Warranties and
Sellers' Surviving Representations and Warranties (other than Sections 4.1(f),
(g) and (h)) shall survive the Closing for a period of twelve (12) months
following the Closing Date, but shall thereupon terminate and have no further
force or effect except to the extent that they relate to claims made in writing
to the other Party before the end of such period of twelve (12) months. Sellers'
Surviving
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Representations and Warranties contained in Sections 4.1(f), (g) and (h) shall
survive the Closing for a period of eighteen (18) months following the Closing
Date, but shall thereupon terminate and have no further force or effect except
to the extent that they relate to claims made in writing by Buyer to Sellers
before the end of such period of eighteen (18) months. All other representations
and warranties made in this Agreement shall not survive the Closing and shall be
merged into or superseded by any assignments or other documents delivered at the
Closing.
ARTICLE XV
CASUALTY LOSS AND CONDEMNATION
15.1 Casualty Loss. If, prior to the Closing, all or any portion of
the Assets are destroyed by fire or other casualty or if any portion of the
Assets shall be taken by condemnation or under the right of eminent domain (all
of which are herein called "Casualty Loss" and limited to property damage or
taking only), Sellers shall notify Buyer promptly after Sellers learn of such
event. Sellers shall have the right, but not the obligation, to cure the
Casualty Loss by repairing such damage or, in the case of personal property or
fixtures, replacing them with equivalent items, no later than the Closing Date,
all to Buyer's reasonable satisfaction. If any uncured Casualty Loss exist at
the Closing, Buyer shall proceed with the purchase of such Assets,
notwithstanding any such destruction or taking (without reduction of the
Purchase Price) in which case Sellers shall, at the Closing, pay to Buyer all
sums paid to Sellers by third parties (including underwriters and governmental
agencies) by reason of the destruction or taking of such Assets and shall
assign, transfer and set over unto Buyer all of the right, title and interest of
Sellers in and to any Claims, causes of action, unpaid proceeds or other
payments from third parties arising out of such destruction or taking. Prior to
Closing, Sellers shall not voluntarily compromise, settle or adjust any amounts
payable by reason of any Casualty Loss without first obtaining the written
consent of Buyer, which consent shall not be unreasonably withheld. Sellers
shall, promptly after the execution and delivery of this Agreement, provide to
Buyer information concerning Sellers' insurance coverage on the Assets, and
Sellers shall maintain such insurance as may be in effect on the date of this
Agreement in full force and effect until Closing.
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ARTICLE XVI
DEFAULT AND REMEDIES
16.1 Sellers' Remedies. Upon failure of Buyer to perform the
obligations to be performed by Buyer prior to and on the Closing Date, as such
Closing Date may be extended in accordance herewith, Sellers, at Sellers' sole
option, may (a) enforce specific performance, or (b) terminate this Agreement
and retain the Performance Deposit as Sellers' liquidated damages, as Sellers'
sole and exclusive remedies for such default, all other remedies (except as
expressly retained in this Section 16.1 and in Section 16.4) being expressly
waived and released by Sellers. The Parties agree that Sellers' actual damages
would be difficult to determine and that such liquidated damages are a fair
measure of Sellers' actual damages and are not a penalty.
16.2 Buyer's Remedies. Upon failure of Sellers to perform the
obligations to be performed by Sellers prior to and on the Closing Date, as such
Closing Date may be extended in accordance herewith, Buyer, at Buyer's sole
option, may (a) enforce specific performance, or (b) terminate this Agreement,
receive a return of the Performance Deposit and reimbursement for its actual
out-of-pocket expenses incurred in connection herewith, and be entitled to
receive from Sellers the amount of seventeen million five hundred thousand
dollars ($17,500,000.00) as liquidated damages, all of which shall constitute
Buyer's sole and exclusive remedies for such default, all other remedies (except
as expressly retained in this Section 16.2 and in Section 16.4) being expressly
waived and released by Buyer. The Parties agree that Buyer's actual damages
would be difficult to determine and that such liquidated damages are a fair
measure of Buyer's actual damages and are not a penalty.
16.3 Effect of Termination. Notwithstanding anything to the
contrary in this Agreement (except Sections 16.4 and 16.5), in the event of
termination of this Agreement the transaction shall not close, and this
Agreement shall become void and have no further effect whatsoever, and neither
Buyer nor Sellers shall have any further liability, obligations, right or duty
to the other hereunder, except as provided in Sections 16.1, 16.2 and 16.4 and
the other provisions of this Agreement which by their terms survive termination,
as applicable.
16.4 Other Remedies. Notwithstanding the provisions of Sections
16.1, 16.2 and 16.3, termination of this Agreement shall not prejudice or impair
Buyer's obligations under Sections 6.3
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and 6.4 (and the confidentiality agreements referenced therein) and such other
portions of this Agreement as are necessary to the enforcement and construction
of Sections 6.3 and 6.4.
16.5 Performance Deposit If for any reason, except in the case of
Section 16.1, the transaction contemplated by this Agreement does not close,
Sellers shall return the Performance Deposit to Buyer.
ARTICLE XVII
MISCELLANEOUS
17.1 Certain Governmental Approvals. Buyer shall use its
commercially reasonable efforts after Closing to obtain the unconditional
approval by the MMS of (i) the Assignments of Record Title to Oil and Gas
Lease(s) (Offshore) in the form attached hereto as Exhibit "E"; (ii) the
Assignments of Oil and Gas Lease Operating Rights (Offshore) in the form
attached hereto as Exhibit "F"; and (iii) the Assignments of Rights of Way
(Offshore) in the form attached hereto as Exhibit "H". In the event Buyer or its
nominated operator is elected successor operator under the operating agreements
applicable to any of the Leases, Buyer also obligates itself to ensure that it
or the successor operator makes application to the MMS to qualify as operator
with respect to that portion of the Assets it will operate. Buyer shall take any
actions reasonably required of it by the MMS or any other regulatory agencies to
obtain all requisite regulatory approvals, including but not limited to, the
purchase and posting of any and all bonds, supplemental bonds or other
securities which may be required of it pursuant to OPA and 30 C.F.R Sections
250.7, 256.58, 256.59, and 256.61 in excess of any existing lease, pipeline or
area-wide bond(s). Until the governmental approval with respect to an assignment
described in this Section 17.1 is obtained, however, the following shall occur:
(a) Sellers shall continue to hold the operating rights
and record title to the applicable Assets as nominee for Buyer;
(b) Buyer's indemnity under Section 13.3 shall include
any and all claims, expenses of any kind or character relating to such
Assets accruing after the Effective Time including but not limited to
any bonding or regulatory costs incurred by Sellers;
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(c) Sellers shall act as Buyer's nominee with respect to
such Assets but shall be authorized to act only upon and in accordance
with Buyer's specific written instructions, and Sellers shall have no
authority, responsibility or discretion to perform any tasks or
functions with respect to the Assets other than those which are purely
administrative or ministerial in nature, unless otherwise specifically
requested and authorized by Buyer in writing; and
(d) Buyer shall continue to maintain and provide at its
cost the insurance coverages with minimum limits of liability as set
forth in Section 10.1(f) and (g) of this Agreement.
If the MMS does not, within nine (9) months from the Closing Date, approve all
(i) the Assignments of Record Title of the Leases (Offshore) into Buyer, (ii)
the Assignments of Oil and Gas Lease Operating Rights (Offshore) into Buyer, and
(iii) the Assignments of Rights of Way (Offshore) into Buyer, then:
(w) As to those assignments that the MMS has approved,
the transaction contemplated by this Agreement will proceed as to those
Assets in accordance with the terms and conditions of this Agreement,
mutatis mutandis; and
(x) As to those assignments that the MMS has not
approved, Sellers, at their option, may either:
(i) continue to hold the operating rights, title
to the Leases and the rights of way as
Buyer's nominee, or,
(ii) upon thirty (30) days notice to Buyer,
rescind the purchase and sale of the Assets
that are the subject of such non-approvals
and terminate this Agreement as to those
Assets, but only as to those Assets.
(y) The exercise by Sellers of the option to rescind as
specified in the preceding clause (x)(ii), however, shall be predicated
upon Sellers' determination either (i) that Buyer
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has failed to comply with the requirements of 30 C.F.R. Section 256.64
and not taken any and all actions required by MMS to obtain such
approval, or (ii) there had been a Material Adverse Change to the
financial condition of Buyer after Closing.
(z) Upon such termination and rescission, this Agreement
shall be null and void as between Buyer and Sellers with respect to the
non-approved Assets, and (i) Buyer shall return to Sellers the
assignments and any and all other documents, materials and data
previously delivered to Buyer with respect to such Assets; and (ii)
Sellers shall return to Buyer the Purchase Price allocated to such
Assets in Schedule 3.1, without interest, less the proceeds of
production net of all expenses, capital expenditures, royalties, and
costs of operations (including plugging and abandonment expenses but
excluding mortgage interest and any burdens or encumbrances created by
Buyer which shall be released prior to this payment) attributable to
the Leases and other rights from and after the Effective Time. In no
event, however, shall Sellers ever be required to reimburse Buyer for
any expenditures associated with workovers, recompletions, or the
drilling, completion or plugging and abandonment of xxxxx drilled or
work performed by Buyer on or with respect to such Assets unless same
were necessary to perpetuate the related Leases or operating rights or
other rights. Sellers shall not be liable to Buyer if MMS approvals are
not obtained, except as expressly provided in this Section 17.1.
17.2 Adequacy of Supplemental Bonds or Arrangements for the Pledge
of Securities. Prior to execution hereof, Buyer shall confer with the MMS
regarding the amounts and terms for the posting of supplemental bonds or pledge
of securities pursuant to the provisions of 30 C.F.R Sections 256.61 and 250.7,
and within a reasonable time of any MMS determination pursuant to such
regulations, Buyer (directly or through its representative) shall satisfy the
MMS requirements concerning same, including all financial responsibility
requirements under OPA.
17.3 Special Offshore Interests The Parties acknowledge and agree
that certain of the offshore Assets are in the nature of contract rights that
are not recognized by the MMS as "record title" or "operating rights," and that,
accordingly, the MMS will not approve, and the Parties do not expect the MMS to
approve, the assignment of these interests from TEPI to Buyer. Buyer shall
ensure nevertheless that the assignment documents relating to such interests are
appropriately filed in the "non-required filing" system of the MMS. Such
interests shall be excluded from the scope of
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Section 17.1 for all purposes.
17.4 Louisiana Approvals The Parties acknowledge and agree that
certain of the Leases onshore Louisiana involve the State of Louisiana as
landowner and that, accordingly, the State of Louisiana must approve the
assignment of such leases from the related Seller to Buyer. Buyer shall use its
commercially reasonable efforts after Closing to obtain the approval of the
State of Louisiana with respect to such assignments, and the provisions of
Section 17.1 shall apply, mutatis mutandis, to such Leases and approvals.
17.5 Public Announcements. The Parties hereto agree that prior to
making any public announcement or statement with respect to the transactions
contemplated by this Agreement, the Party desiring to make such public
announcement or statement shall consult with the other Party hereto and exercise
its commercially reasonable efforts to (i) agree upon the text of a joint public
announcement or statement to be made by both of such Parties or (ii) obtain
approval of the other Party hereto to the text of a public announcement or
statement to be made solely by Sellers or Buyer, as the case may be. Nothing
contained in this Section shall be construed to require either Party to obtain
approval of the other Party hereto to disclose information with respect to the
transaction contemplated by this Agreement to any state or federal governmental
authority or agency to the extent required by applicable law or by any
applicable rules, regulations or orders of any governmental authority or agency
having jurisdiction or necessary to comply with disclosure requirements of the
New York Stock Exchange and applicable securities laws.
17.6 Filing and Recording of Assignments, etc. Buyer shall be
solely responsible for all filings and recording of assignments and other
documents related to the Assets and for all fees connected therewith, except as
otherwise provided in this Agreement. Buyer shall furnish Sellers with copies of
all filings made by it pursuant to this Agreement and of the pertinent recording
data pertaining to same. Sellers shall not be responsible for any loss to Buyer
because of Buyer's failure to file or record documents correctly or promptly.
Buyer shall promptly file all appropriate forms or declarations with the MMS
relative to this Agreement and its assumption of the Leases (and operations, if
any Seller is currently the Operator and if Buyer becomes the operator), and
Sellers shall cooperate with Buyer in connection with such filings.
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17.7 Further Assurances and Records.
(a) After the Closing, each of the Parties shall execute,
acknowledge and deliver to the other such further instruments, and take
such other action, as may be reasonably requested in order to more
effectively assure to said Party all of the respective properties,
rights, titles, interests, estates and privileges intended to be
assigned, delivered or inuring to the benefit of such part in
consummation of the transactions contemplated hereby.
(b) Buyer agrees to maintain the files and records of
Sellers that are acquired pursuant to this Agreement for a minimum of
six (6) years after Closing. Buyer shall provide Sellers and its
representatives reasonable access to and the right to copy such files
and records for the purposes of (i) preparing and delivering any
accounting provided for under this Agreement and adjusting, prorating
and settling the charges and credits provided for in this Agreement,
(ii) complying with any law, rule or regulation affecting Sellers'
interest in the Assets prior to the Closing Date, (iii) preparing any
audit of the books and records of any third party relating to Sellers'
interest in the Assets prior to the Closing Date, or responding to any
audit prepared by such third parties, (iv) preparing tax returns, (v)
responding to or disputing any tax audit, or (vi) asserting, defending
or otherwise dealing with any claim or dispute under this Agreement.
(c) Buyer agree that, as soon as practicable after the
Closing, Buyer shall remove or cause to be removed the names and marks
used by Sellers and all variations and derivatives thereof and logos
relating thereto from the Assets and shall not thereafter make any use
whatsoever of such names, marks and logos.
(d) To the extent not obtained or satisfied as of
Closing, Sellers agrees to continue to use all reasonable efforts, but
without any obligation to incur any cost or expense in connection
therewith, and to cooperate with Buyer's efforts to obtain for Buyer
access to files, records and data relating to the Assets in the
possession of either Sellers or third parties.
(e) Buyer shall comply with all current and subsequently
amended applicable laws, ordinances, rules, and regulations applicable
to the Assets and Buyer's ownership or
66
operation thereof, and shall promptly obtain and maintain all permits
required by governmental authorities in connection with the Assets.
17.8 Notices. Except as otherwise expressly provided herein, all
communications required or permitted under this Agreement shall be in writing
and any communication or delivery hereunder shall be deemed to have been duly
given and received when actually delivered to the address set forth below of the
Party to be notified, addressed as follows or when a legible facsimile copy is
received by the Party's facsimile equipment at the number shown below:
If to Sellers:
Transworld Exploration and Production, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: J. Xxxxxx Xxxxxxx, President
Telephone: 000-000-0000
Fax: 000-000-0000
Email: xxx@xxxx.xxx
With a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Vice President and General Counsel
Transworld Oil Limited
#3 Xx. Xxxxx Xxxxx
Xxxxxx Xxxxxxx, Xxxxxxx XX00
Telephone: x0-000-000-0000
Fax: x0-000-000-0000
Email: xxxxxxx@xxxxx.xx
If to Buyer: The Houston Exploration Company
Suite 2000
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
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Attn: Xxxxx Xxxxx, Senior Vice President, Land /
Business Development
Telephone: 000-000-0000
Fax: 000-000-0000
Email: xxxxxx@xxxxxxxxxx.xxx
Provided, however, that any notice required or permitted under this Agreement
shall be effective if given verbally within the time provided, so long as such
verbal notice is followed by written notice thereof in the manner provided
herein within twenty-four (24) hours following the end of such time period. Any
Party may, by written notice so delivered to the other, change the address or
facsimile number to which delivery shall thereafter be made.
17.9 Incidental Expenses. Buyer shall bear and pay (a) all state or
local government sales, transfer, gross proceeds, or similar taxes incident to
or caused by the transfer of the Assets to Buyer, (b) all documentary, transfer
and other state and local government taxes incident to the transfer of the
Assets to Buyer, (c) all filing, recording or registration fees for any
assignment or conveyance delivered hereunder, and (iv) all normal costs or fees
required to obtain consent to assign the Leases. Each Party shall bear its own
respective expenses incurred in connection with the negotiation and Closing of
this transaction, including its own consultants' fees, attorneys' fees,
accountants' fees, and other similar costs and expenses.
17.10 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) embodies the entire agreement between the Parties (superseding
all prior agreements, arrangements and understandings related to the subject
matter hereof), and may be supplemented, altered, amended, modified or revoked
by writing only, signed by the Parties hereto. The headings herein are for
convenience only and shall have no significance in the interpretation hereof.
Nothing herein expressed or implied is intended or shall be construed to confer
upon or give to any person or entity (other than the Parties and their permitted
successors and assigns) any rights or remedies under or by reason of this
Agreement.
17.11 Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED,
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS OTHERWISE
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APPLICABLE TO SUCH DETERMINATIONS.
17.12 Exhibits. All Exhibits and Schedules hereto, and the terms
thereof, which are referred to herein are hereby made a part hereof and
incorporated herein by reference. The Exhibits and Schedules have been arranged
to correspond to the relevant Sections of this Agreement. Any matter disclosed
by Sellers pursuant to any Section of this Agreement shall be deemed to have
been disclosed by Sellers for purposes of each other Section of this Agreement
to which such disclosure would reasonably relate.
17.13 Audits; Access to Assets. Sellers shall have the right, during
reasonable business hours, to audit all records (excepting federal tax records
and records subject to the attorney/client privilege) of Buyer pertaining to the
Assets for a period of two (2) years from Closing only for purposes of verifying
Buyer has paid over all funds due to Seller. Buyer shall have the right, during
reasonable business hours, to audit all records (excepting federal tax records
and records subject to the attorney/client privilege) of Sellers pertaining to
the Assets for a period of two (2) years from and after Closing only for
purposes of verifying that Seller has paid over all funds due to Buyer. Sellers
at their sole cost and risk shall have the right at any time after Closing to
reasonable access to the Assets for the purpose of inspecting Buyer's compliance
with the terms of this Agreement; provided, however, Sellers shall repair any
damage to the Assets resulting from such inspections.
17.14 Counterparts. This Agreement may be executed in any number of
counterparts, and each and every counterpart shall be deemed for all purposes
one and the same Agreement.
17.15 Waiver. Any of the terms, provisions, covenants,
representations, warranties or conditions hereof may be waived only by a written
instrument executed by the Party waiving compliance. Except as otherwise
expressly provided in this Agreement, the failure of any Party at any time or
times to require performance of any provisions hereof shall in no manner affect
such Party's right to enforce the same. No waiver by any Party of any condition,
or of the breach of any term, provision, covenant, representation or warranty
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver
of any such condition or breach or waiver of any other condition or of the
breach of any other term, provision, covenant, representation or warranty.
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17.16 Binding Effect; Assignment.
(a) All the terms, provisions, covenants, obligations,
indemnities, representations, warranties and conditions of this Agreement shall
be enforceable by the Parties hereto and their respective permitted successors
and assigns. Prior to Closing this Agreement may not be assigned or transferred
to any other party, firm, corporation or other entity, without the prior,
express and written consent of the other Party, and such consent may be withheld
for any reason including convenience. After Closing, this Agreement may not be
assigned except in connection with a sale, assignment, or other transfer of all
or a portion of the Assets. In the event Buyer sells, transfers, or assigns all
or a portion of the Assets, (i) this Agreement shall remain in effect between
Buyer and Sellers as to all the Assets regardless of such assignment (and Buyer
shall remain obligated hereunder), and (ii) Buyer shall require its successors
and assigns to expressly assume its obligations under this Agreement, to the
extent related or applicable to the Assets or portion thereof acquired by them.
(b) Notwithstanding the foregoing, within seven (7) business days
after the date of execution of this Agreement, Buyer may, by written notice to
Sellers, designate one or more subsidiary entities to take title to some or all
of the Assets. In such event each such subsidiary shall, at Closing, execute a
joinder in agreement in the form of Exhibit "P" pursuant to which it agrees to
become a party to this Agreement and expressly accepts and agrees to be bound by
each of the terms, provisions, conditions, agreements, and indemnities of Buyer
set forth herein. In no event shall the transfer of title to any designated
subsidiary or the execution of any joinder in agreement by it pursuant to this
provision relieve the Buyer of any of its obligations hereunder.
17.17 Taxes.
(a) Apportionment of Ad Valorem and Property Taxes All ad
valorem, real property taxes and personal property taxes, ("Property
Taxes"), attributable to the Assets with respect to the tax assessment
period ("Tax Period") during which the Effective Time occurs shall be
apportioned as of the Effective Time between the Buyer and the Sellers,
with the Sellers paying a fraction thereof based upon the number of
days in the Tax Period prior to the Effective Time and the Buyer paying
the balance thereof. The owner of record on the assessment date shall
file or cause to be filed all required reports and returns incident
70
to the Property Taxes and shall pay or cause to be paid to all the
taxing authorities all Property Taxes relating to the Tax Period during
which the Effective Time occurs. If a Seller is the owner of record on
the assessment date, then the Buyer shall pay to the Sellers Buyer's
pro rata portion of Property Taxes within thirty (30) days after the
receipt of the Sellers' invoice therefor, except to the extent taken
into account as a purchase price adjustment pursuant to Section 3.2. If
Buyer is the owner of record on the assessment date, then the Sellers
shall pay to the Buyer Sellers' pro rata portion of Property Taxes
within thirty (30) days after the receipt of the Buyer's invoice
therefor, except to the extent taken into account as a purchase price
adjustment pursuant to Section 3.2.
(b) Sales Taxes. The Purchase Price provided hereunder
excludes and the Buyer shall be liable for, any Transfer Taxes (as
defined below) required to be paid in connection with the sale of the
Assets pursuant to the Agreement. To the extent required by law,
Sellers shall collect and remit any Transfer Taxes that are required to
be paid as a result of the transfer of the Assets by Sellers to the
Buyer. If the transfer of the Assets pursuant to this Agreement is
exempt from any Transfer Taxes, Buyer shall, at Closing, provide the
Sellers with properly executed exemption certificates or other
documentation acceptable under applicable law. As used here, the term
"Transfer Taxes" shall mean any sales, use, excise, stock, stamp,
document, filing, recording, registration, authorization, and similar
taxes, fees and charges.
(c) Other Taxes. With the exception of income and
franchise taxes, all other federal, state, and local taxes (including
interest and penalties attributable thereto) on the ownership or
operation of the Assets which are imposed with respect to periods or
portions of periods prior to the Effective Time shall be paid by the
Sellers and all such taxes imposed with respect to periods or portions
of periods beginning on or after the Effective Time shall be paid by
the Buyer.
(d) IRS Form 8594. If the Buyer and the Sellers mutually
agree that the filing of IRS Form 8594 is required, the Parties shall
confer and cooperate in the preparation and filing of their respective
forms to reflect a consistent reporting of the agreed upon allocation
of the value of the Assets.
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17.18 Gas Transportation/Processing. Following Closing, Buyer shall be
responsible for the transportation and processing of oil and gas produced from
the Assets.
17.19 Expenses of Sale. Except as otherwise specifically provided
herein, each Party to this Agreement shall pay its own expenses (including
without limitation, the fees and expenses of their respective agents,
representatives, counsel and accountants) with respect to the negotiation,
execution and the delivery of this Agreement and the consummation of the
transactions under this Agreement.
17.20 Third Party Rights. Notwithstanding any other provision of this
Agreement, this Agreement shall not create benefits on behalf of any person who
is not a Party to this Agreement (including without limitation, any broker or
finder, creditor or other person), and this Agreement shall be effective only as
between the Parties hereto, their successors and permitted assigns.
17.21 Time Limits. Time is of the essence in this Agreement and all
time limits shall be strictly construed and enforced. The failure or delay of
any Party in the enforcement of the rights granted under this Agreement shall
not constitute a waiver of said rights nor shall it be considered as a basis for
estoppel. Except as otherwise limited by the time limits contained in this
Agreement, such Party may exercise its rights under this Agreement despite any
delay or failure to enforce the rights when the right or obligation arose.
17.22 Severance of Invalid Provisions. In case of a conflict between
the provisions of this Agreement and the provisions of any applicable laws or
regulations, the provisions of the laws or regulations shall govern over the
provisions of this Agreement. If, for any reason and for so long as, any clause
or provision of this Agreement is held by a court of competent jurisdiction to
be illegal, invalid, unenforceable or unconscionable under any present or future
law (or interpretation thereof), the remainder of this Agreement shall not be
affected by such illegality or invalidity. Any such invalid provision shall be
deemed severed from this Agreement as if this Agreement had been executed with
the invalid provision eliminated. The surviving provisions of this Agreement
shall remain in full force and effect unless the removal of the invalid
provision destroys the legitimate purposes of this Agreement, in which event
this Agreement shall be null and void. The Parties shall negotiate in good faith
for any required modifications to this Agreement.
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17.23 Construction of Ambiguity. In the event of any ambiguity in any
of the terms or conditions of this Agreement, including any exhibits or
schedules hereto and whether or not placed of record, such ambiguity shall not
be construed for or against any party hereto on the basis that such party did or
did not author the same.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized officers on September 3, 2003.
SELLERS:
TRANSWORLD EXPLORATION AND PRODUCTION, INC.
By: /s/ J. Xxxxxx Xxxxxxx Witness:
Name: J. Xxxxxx Xxxxxxx /s/ Xxxxxxx X. Xxxxxx
Title: President
TRANSWORLD EXPLORATION AND PRODUCTION (LOCKPORT) INC.
By: /s/ J. Xxxxxx Xxxxxxx Witness:
Name: J. Xxxxxx Xxxxxxx /s/ Xxxxxxx X. Xxxxxx
Title: President
TRANSWORLD EXPLORATION AND PRODUCTION (KINGS BAYOU) INC.
By: /s/ J. Xxxxxx Xxxxxxx Witness:
Name: J. Xxxxxx Xxxxxxx /s/ Xxxxxxx X. Xxxxxx
Title: President
BUYER:
THE HOUSTON EXPLORATION COMPANY
By:/s/ Xxxxx Xxxxx Witness:
Name: Xxxxx Xxxxx /s/ Xxxx X. Xxxxxx
Title: Senior Vice President
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* * * * * * * * *
Transworld Oil U.S.A., Inc., a Texas corporation, which is the direct parent
company of TEPI and the indirect parent company of the other Sellers, hereby
absolutely and unconditionally guarantees the full and timely performance by
Sellers, including TEPI, of their - obligations under Sections 3.1(b) and 16.5
of this Agreement.
TRANSWORLD OIL U.S.A., INC.
By: /s/ Xxxx X. Xxxxx, Xx.
Xxxx X. Xxxxx, Xx., Vice President
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ACKNOWLEDGMENTS
STATE OF TEXAS Section
COUNTY OF XXXXXX Section
On this the 4th day of September, 2003, before me,
_____________________________, the undersigned officer, personally appeared J.
Xxxxxx Xxxxxxx, who acknowledged himself to be the President of Transworld
Exploration and Production, Inc., a Delaware corporation, and that he, as such
President, being authorized so to do, executed the foregoing instrument for the
purposes therein contained, by signing the name of the corporation by himself as
President.
In witness whereof, I hereunto set my hand and official seal.
My Commission Expires: _________________________________
_________________________________
Notary Public in and for
the State of Texas
STATE OF TEXAS Section
COUNTY OF XXXXXX Section
On this the 4th day of September, 2003, before me,
_____________________________, the undersigned officer, personally appeared J.
Xxxxxx Xxxxxxx, who acknowledged himself to be the President of Transworld
Exploration and Production (Lockport) Inc., a Delaware corporation, and that he,
as such President, being authorized so to do, executed the foregoing instrument
for the purposes therein contained, by signing the name of the corporation by
himself as President.
In witness whereof, I hereunto set my hand and official seal.
My Commission Expires: _________________________________
_________________________________
Notary Public in and for
the State of Texas
76
STATE OF TEXAS Section
COUNTY OF XXXXXX Section
On this the 4th day of September, 2003, before me,
_____________________________, the undersigned officer, personally appeared J.
Xxxxxx Xxxxxxx, who acknowledged himself to be the President of Transworld
Exploration and Production (Kings Bayou) Inc., a Delaware corporation, and that
he, as such President, being authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself as President.
In witness whereof, I hereunto set my hand and official seal.
My Commission Expires: _________________________________
_________________________________
Notary Public in and for
the State of Texas
STATE OF TEXAS Section
COUNTY OF XXXXXX Section
On this the 4th day of September, 2003, before me,
_____________________________, the undersigned officer, personally appeared
Xxxxx Xxxxx, who acknowledged himself to be the Senior Vice President of The
Houston Exploration Company, a Delaware corporation, and that he, as such Senior
Vice President, being authorized so to do, executed the foregoing instrument for
the purposes therein contained, by signing the name of the corporation by
himself as Senior Vice President.
In witness whereof, I hereunto set my hand and official seal.
My Commission Expires: _________________________________
_________________________________
Notary Public in and for
the State of Texas
77
STATE OF TEXAS Section
COUNTY OF XXXXXX Section
On this the 4th day of September, 2003, before me,
_____________________________, the undersigned officer, personally appeared Xxxx
X. Xxxxx, Xx., who acknowledged himself to be the Vice President of Transworld
Oil U.S.A, Inc., a Texas corporation, and that he, as such Vice President, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained, by signing the name of the corporation by himself as Vice President.
In witness whereof, I hereunto set my hand and official seal.
My Commission Expires: _________________________________
_________________________________
Notary Public in and for
the State of Texas
78
