EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
BETWEEN
EEX OPERATING L.P.
AND
EEX CORPORATION
AS SELLER
AND
CROSS TIMBERS OIL COMPANY
AS BUYER
DATED
FEBRUARY 12, 1998
TABLE OF CONTENTS
1. Assets to be Sold and Purchased.................................................................. 1
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2. Purchase Price................................................................................... 2
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3. Representations of Seller........................................................................ 2
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4. Representations of Buyer......................................................................... 3
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5. Certain Covenants of Seller Pending Closing...................................................... 4
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6. Due Diligence Reviews............................................................................ 5
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7. Certain Purchase Price Adjustments............................................................... 9
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8. Certain Covenants of Buyer Pending Closing....................................................... 10
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9. Conditions Precedent to the Obligations of Buyer................................................. 10
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10. Conditions Precedent to the Obligations of Seller................................................ 11
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11. Termination of Agreement......................................................................... 11
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12. The Closing...................................................................................... 12
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13. Certain Accounting Adjustments................................................................... 13
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14. Assumption and Indemnification................................................................... 14
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15. Disclaimer of Warranties......................................................................... 15
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16. Commissions...................................................................................... 15
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17. Casualty Loss.................................................................................... 16
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18. Notices.......................................................................................... 16
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19. Survival of Provisions........................................................................... 16
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20. Operations....................................................................................... 17
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21. Miscellaneous Matters............................................................................ 17
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PURCHASE AND SALE AGREEMENT
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This Purchase and Sale Agreement ("Agreement") is entered into this 12
day of February, 1998, by and between EEX CORPORATION ("EEX") and EEX OPERATING
L.P. ("EOP") (collectively "Seller"), whose mailing address is 0000 Xxxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 and CROSS TIMBERS OIL COMPANY ("Buyer"),
whose mailing address is 810 Houston, Ste 2000, Xxxx Xxxxx, XX 00000. In
consideration of the mutual covenants and conditions contained in this Agreement
and other good and valuable consideration, the adequacy and sufficiency of which
are hereby acknowledged, the parties agree as follows:
W I T N E S S E T H:
1. ASSETS TO BE SOLD AND PURCHASED. Seller agrees to sell and Buyer
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agrees to purchase, for the consideration hereinafter set forth, and subject to
the terms and provisions herein contained, the following described properties,
rights and interests:
(a) All of Seller's right, title and interest in and to the
oil, gas and/or mineral leases described in Exhibit "A", Exhibit "A-1",
and Exhibit "A-2" (collectively called "Exhibit A") hereto, any
ratifications and/or amendments to such leases (whether or not such
ratifications or amendments are described in Exhibit A), subject to the
exceptions and reservations contained in Exhibit A; and
(b) Without limitation of the foregoing, all of Seller's
right, title and interest (of whatever kind or character, whether legal
or equitable, and whether vested or contingent) in and to the oil, gas
and other minerals in and under or that may be produced from the lands
or leases described in Exhibit A hereto, including, without limitation,
interests in all oil, gas and/or mineral leases covering such lands,
overriding royalties, production payments and net profits interests,
fee mineral interests, fee royalty interests and all other interests in
such oil, gas and other minerals, even though Seller's interest in such
oil, gas and other minerals may be incorrectly described in, or omitted
from, such Exhibit A, but subject in each case to the exceptions and
reservations contained in such Exhibit A; and
(c) All of Seller's rights, titles and interests in and
to, or otherwise derived from, all presently existing and valid oil,
gas and/or mineral unitization, pooling, and/or communitization
agreements, declarations and/or orders and in and to the properties
covered and the units created thereby (including, without limitation,
all units formed under orders, rules, regulations, or other official
acts of any federal, state, or other authority having jurisdiction, and
voluntary unitization agreements, designations and/or declarations)
relating to the properties described in subsections (a) and (b) above;
and
(d) All of Seller's rights, titles and interests in and to all
presently existing and valid rights-of-way and easements, production
sales contracts, operating agreements, unit agreements, and other
agreements and contracts which relate to any of the properties
described in subsections (a), (b) and (c) above; provided that Seller
will retain all obligations and liabilities under any agreements
entered into with ENCOGEN ONE PARTNERS, LTD, and Seller will indemnify
and hold Buyer (and the said properties) harmless from any claims,
liability or obligations related to the said agreements with ENCOGEN;
and
(e) All of Seller's rights, titles and interests in and to all
materials, supplies, machinery, equipment, improvements and other
personal property and fixtures (including, but not by way of
limitation, all xxxxx, wellhead equipment, pumping units, flowlines,
tanks, buildings, injection facilities, saltwater disposal facilities,
compression facilities, gathering
systems, and other equipment) located on the properties described in
subsections (a), (b) and (c) above or on the lands identified on
Exhibit "E" attached hereto being the Field Offices of Seller (which
lands, to the extent of the Fee or leasehold interest of Seller, are
included in the properties conveyed) and used in connection with the
exploration, development, operation or maintenance thereof; and
(f) All of Seller's lease files, abstracts and title opinions,
production records, well files, accounting records (but not including
general financial accounting or tax accounting records), electric logs,
geological data and records (subject to any contractual or other
restrictions relating to the transfer of such data and records), and
other files, documents and records which directly relate to the
properties described above, but nothing contained herein shall preclude
Seller from retaining copies of the same.
The interests of the Seller in the properties and interests specified in the
foregoing subsections (a), (b) and (c) are herein sometimes collectively called
the "Oil and Gas Properties," and the interests of the Seller in the properties
and interests specified in the foregoing subsections (a), (b), (c), (d), (e) and
(f) are herein sometimes collectively called the "Assets".
2. PURCHASE PRICE. The purchase price for the Assets shall be Two
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hundred and sixty-five million ($265,000,000) (herein called the "Base Purchase
Price"). Such Base Purchase Price may be adjusted as provided herein (herein
called the Base Purchase Price, as so adjusted, and as the same may otherwise be
adjusted by mutual agreement of the parties, being herein called the "Purchase
Price"). The Purchase Price shall be paid in cash at the Closing as hereinafter
provided. Buyer has previously paid to Seller the sum of $26,500,000.00 which
shall hereinafter be referred to as the "Deposit". If Buyer and Seller
consummate the transaction contemplated by this Agreement, the Deposit shall be
applied to the Purchase Price. If Buyer and Seller do not consummate the
transaction contemplated by this Agreement because of a refusal by Seller, in
the absence of a default by Buyer, Seller shall return the Deposit to Buyer.
Except as provided in the preceding sentences, if Buyer fails or refuses to
consummate the transaction contemplated by this Agreement, or if the transaction
contemplated by this Agreement otherwise fails to close on the Closing Date,
Seller shall retain the Deposit as liquidated damages. The parties agree that
damages in such an event would be extremely difficult to determine, that the
Deposit represents a fair and reasonable estimate of such damages under the
circumstances, and that such a retention of the Deposit does not constitute a
penalty.
3. REPRESENTATIONS OF SELLER. Seller represents to Buyer that:
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(a) EEX is a corporation and EOP is a limited partnership both
duly organized, and legally existing under the laws of the State of
Texas. Seller is qualified to do business and is in good standing in
each state in which the Assets are located where the laws of such state
require a corporation and a limited partnership owning the Assets
located in such state to qualify to do business.
(b) Seller has full power to enter into and perform its
obligations under this Agreement and has taken all proper action to
authorize entering into this Agreement and performance of its
obligations hereunder, upon obtaining Board approval pursuant to
Section 10(c) below.
(c) Other than requirements (if any) that consents to
assignment, or waivers of preferential rights to purchase, be obtained
from third parties, and except for approvals ("Routine Governmental
Approvals") required to be obtained from governmental entities who are
lessors under leases forming a part of the Oil and Gas Properties, or
who administer such leases on
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behalf of such lessors, which are customarily obtained post-closing, or
as otherwise set forth on Schedule 3(c), neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, nor the compliance with the terms hereof, will
result in any default under any agreement or instrument to which Seller
is a party or by which the Assets are bound, or violate any order,
writ, injunction, decree, statute, rule or regulation applicable to
Seller or to the Assets.
(d) This Agreement and the Conveyance provided for herein to
be delivered at Closing will, when executed and delivered, constitute
the legal, valid and binding obligation of Seller, enforceable in
accordance with its terms, except as limited by bankruptcy or other
laws applicable generally to creditor's rights and as limited by
general equitable principles.
(e) Except as set forth on Schedule 3(e) hereto, there
are no pending suits, actions, or other proceedings in which Seller is
a party which affect the Assets (including, without limitation, any
actions challenging or pertaining to Seller's title to any of the
Assets), or affecting the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
4. REPRESENTATIONS OF BUYER. Buyer represents to Seller that:
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(a) Buyer is a corporation duly organized and legally existing
under the laws of the State of Delaware, and is qualified to do
business and is in good standing in each of the states in which the
Assets are located where the laws of such state would require a
corporation owning the Assets located in such state to qualify to do
business.
(b) Buyer has full power to enter into and perform its
obligations under this Agreement and has taken all proper action to
authorize entering into this Agreement and performance of its
obligations hereunder, upon obtaining Board approval pursuant to
Section 9(c) below.
(c) Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, nor the
compliance with the terms hereof, will result in any default under any
agreement or instrument to which Buyer is a party or by which the
Assets are bound, or violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Buyer or to the Assets.
(d) This Agreement and the Conveyance provided for herein to
be delivered at Closing will, when executed and delivered, constitute
the legal, valid and binding obligation of Buyer, enforceable in
accordance with its terms, except as limited by bankruptcy or other
laws applicable generally to creditor's rights and as limited by
general equitable principles.
(e) There are no pending suits, actions, or other proceedings
in which Buyer is a party which affect the execution and delivery of
this Agreement or the consummation of the transactions contemplated
hereby.
(f) Buyer is a knowledgeable purchaser, owner and operator of
oil and gas properties, has the ability to evaluate oil and gas
properties, and in fact has evaluated the Assets for purchase, and is
acquiring the Assets based upon its own evaluation, and for its own
account and not with the intent to make a distribution within the
meaning of the Securities Act of 1933
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(and the rules and regulations pertaining thereto) or a distribution
thereof in violation of any other applicable securities laws.
(g) With regard to those Assets which Buyer seeks to operate,
Buyer is qualified to operate such Assets under the applicable laws,
rules and regulations of the jurisdiction in which such Assets are
located, or will become so qualified before operating such Assets.
5. CERTAIN COVENANTS OF SELLER PENDING CLOSING. Between the date of
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this Agreement and the Closing Date:
(a) Seller will give Buyer and its attorneys and other
representatives access at all reasonable times to the Assets and, at
Seller's office, to Seller's records (including, without limitation,
title files, division order files, well files, production records,
accounting records, marketing files, equipment inventories, and
production, severance and ad valorem tax records) pertaining to the
ownership and/or operation of the Assets. Seller shall not be obligated
to provide Buyer with access to any records or data which Seller
considers to be proprietary or confidential to it or which Seller
cannot legally provide to Buyer without, in its opinion, breaching, or
risking a breach of, confidentiality agreements with other parties.
Buyer recognizes and agrees that all materials made available to it
(whether pursuant to this Section or otherwise) in connection with the
transaction contemplated hereby are made available to it as an
accommodation, and without representation or warranty of any kind as to
the accuracy and completeness of such materials. Buyer waives and
releases all claims against Seller, its parent or subsidiary companies
or other affiliates, and its and their directors, officers, employees
and agents, for injury to, or death of, persons or for damage to
property arising in any way from the conduct of the investigations and
examinations contemplated by this Section or the conduct of its
employees, agents or contractors in connection with such investigations
and examinations (or the exercise of such rights of access). BUYER
SHALL RELEASE, INDEMNIFY, DEFEND, AND HOLD HARMLESS SELLER, AND ITS
PARENT OR SUBSIDIARY COMPANIES AND OTHER AFFILIATES, AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, CONTRACTORS, AND
AGENTS (HEREINAFTER COLLECTIVELY REFERRED TO AS THE "SELLER GROUP"),
FROM ANY AND ALL CLAIMS, ACTIONS, CAUSES OF ACTION, LIABILITIES,
DAMAGES, LOSSES, COSTS, OR EXPENSES (INCLUDING, WITHOUT LIMITATION,
COURT COSTS AND ATTORNEYS' FEES), OR LIENS OR ENCUMBRANCES FOR LABOR OR
MATERIALS ARISING OUT OF OR IN ANY WAY CONNECTED WITH SUCH ACCESS,
EXAMINATIONS, OR INSPECTIONS. THE FOREGOING RELEASE AND INDEMNIFICATION
SHALL APPLY WHETHER OR NOT SUCH CLAIMS, ACTIONS, CAUSES OF ACTION,
LIABILITIES, DAMAGES, LOSSES, COSTS, OR EXPENSES ARISE OUT OF (i)
NEGLIGENCE (INCLUDING CONCURRENT NEGLIGENCE, ACTIVE NEGLIGENCE, OR
PASSIVE NEGLIGENCE, BUT EXPRESSLY NOT INCLUDING SOLE NEGLIGENCE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT) OF SELLER OR ANY OTHER INDEMNIFIED
PARTY, OR (ii) STRICT LIABILITY.
(b) Seller will continue the operation of the Assets in the
ordinary course of its business; where Seller is not the operator of an
Asset, Seller will continue its actions as a non-operator in the
ordinary course of its business. Seller will not sell or dispose of any
portion of the leases, xxxxx, or property or equipment used in the
operation of the xxxxx, without the prior consent of Buyer.
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(c) Seller will use reasonable efforts, consistent with
industry practices in transactions of this type, to identify (i) all
preferential rights to purchase and all rights to require that consents
to assignment be obtained which would be applicable to the transactions
contemplated hereby and (ii) the parties holding such rights; in
attempting to identify the same, Seller shall in no event be obligated
to go beyond its own records. Seller will request, from the parties so
identified (and in accordance with the documents creating such rights),
waivers of the preferential rights to purchase and requirements that
consents to assignment be obtained which were so identified. Seller
shall have no obligation hereunder other than to so attempt to identify
such preferential rights and requirements for consents to assignment
and to so request such waivers, and shall in no event be under any
obligation to obtain such waivers. Except to the extent that Seller
failed to fulfill the obligations set forth above in this subsection,
Buyer shall indemnify and hold Seller harmless from and against all
claims, actions, liabilities, damages, losses, costs or expenses,
including, without limitation, court costs and attorney's fees,
whatsoever that arise out of the failure to obtain waivers of
preferential rights to purchase or requirements for consents to
assignment with respect to any transfer by Seller to Buyer of any part
of the Assets and with respect to any subsequent transfers. If a party
from whom a waiver of a preferential right to purchase is requested
fails or refuses to give such waiver, Seller will tender (at a price
equal to the amount specified in Exhibit B hereto for the xxxxx located
on such Asset and for the units in which such Asset participates,
reduced appropriately, as determined by Seller, if less than the entire
Asset should be tendered) the required interest in the Asset affected
by such unwaived preferential right to the holder, or holders, of such
right who have elected not to waive such preferential right to purchase
and if, and to the extent that, such preferential right to purchase is
exercised by such party or parties, and such interest in such Asset is
actually sold to such party or parties so exercising such right, such
interest in such Asset will be excluded from the transaction
contemplated hereby and the Base Purchase Price will be reduced by the
amount paid to Seller by the party or parties exercising such right.
(d) Notwithstanding any other provision in this Section, (i)
Seller may take any action prohibited by this Section if reasonably
necessary under emergency conditions provided that Buyer is notified as
soon as practicable thereafter; (ii) except to the extent that a
"Defect" (as hereinafter defined) may result therefrom, Seller shall
have no liability to Buyer for any incorrect payment of delay rentals,
royalties, shut-in royalties or similar payments or for any failure to
make such payments; (iii) Seller's failure to comply with any of the
requirements of this Section 5 shall not be deemed to be a default by
Seller hereunder or grant to Buyer the right not to close the
transaction contemplated hereby, unless such failure has a materially
adverse impact on the value of the Assets taken as a whole.
6. DUE DILIGENCE REVIEWS.
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(a) Immediately upon execution of this Agreement, Buyer shall,
to the extent it deems appropriate, conduct, at its sole cost, such
title examination or investigation, and other examinations and
investigations, as it may choose to conduct with respect to the Assets.
Should, as a result of such examinations and investigations, or
otherwise, matters come to Buyer's attention which would constitute
"Defects" (as defined below), and should there be one or more of such
Defects which Buyer is unwilling to waive and close the transaction
contemplated hereby notwithstanding the fact that such Defects exist,
Buyer shall notify Seller in writing of such Defects as soon as
practicable, but in no event later than April 17, 1998 (herein called
the
[FN]
Seller agrees that it shall promptly (within ten days of execution hereof)
provide Buyer copies of historical financial data for the Properties for the
years 1995, 1996 and 1997, and year-to-date information, (including monthly and
calendar quarter summaries within those periods), including but not limited to,
lease operating statements and lease operating costs reports (detailed by
property with related summaries), and shall allow Buyer's employees and
representatives reasonable access upon prior written notice to supporting
records, invoices and other source documents insofar as required to complete
necessary audits and due diligence procedures, and shall reasonably cooperate
with Buyer to enable Buyer to complete audits and due diligence on a timely
basis, provided, however, that Seller shall provide only such data as it has in
its possession and shall not be obligated to generate such data in any
particular form or format.
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"Defect Date"). Buyer's notice of Defects (herein called a "Defect
Notice") must include (i) a brief description of the matter
constituting the Defect so asserted, (ii) the title opinion, other
reports of experts, or other documentation on which Buyer's assertion
of a Defect is based, (iii) such supporting documents reasonably
necessary for Seller (or a title attorney retained by Seller, if
applicable,) to verify the existence of any such Defect, and (iv)
Buyer's estimate of the diminution in the sum to be paid at Closing
resulting from such alleged Defect. Such Defects of which Buyer so
provides a Defect Notice prior to the Defect Date are herein called
"Asserted Defects". All matters which might constitute a Defect other
than Asserted Defects will be deemed waived for all purposes under this
Agreement. In the event that Buyer notifies Seller of Asserted Defects,
Seller (i) shall have the right (but not the obligation) to attempt to
cure, prior to Closing, such Asserted Defects; (ii) shall have the
right (which may be exercised at any time before the Closing Date) to
require that the Closing take place, deposit the Purchase Price paid by
Buyer and attributable to the Assets having the Asserted Defects in an
escrow account and attempt to cure one or more Asserted Defects after
the Closing; (iii) shall have the right to elect not to cure the
Asserted Defect and adjust the Purchase Price as set forth in Section 7
below; and (iv) shall have the right in lieu of curing or attempting to
cure an Asserted Defect, to elect, at any time prior to Closing, to
indemnify and hold Buyer harmless from and against any actual damages
or loss (but specifically excluding consequential, special, punitive,
or similar damages) Buyer may suffer as a result of a third party claim
based on such Asserted Defect. Each such Asserted Defect shall be
treated under this Agreement as cured. Should the title opinion or
other materials reviewed by Buyer indicate that Seller has a higher
"Net Revenue Interest" (as hereinafter defined) than that specified on
Exhibit B, then Buyer shall inform Seller of the same as soon as
possible, but in any event not later than five (5) days prior to the
Closing.
(b) Buyer shall have the right to make an environmental
assessment of the Assets during the period beginning on the date this
Agreement is fully executed and ending on April 17, 1998 at 5:00 P.M.
local time, Dallas, Texas. Buyer and its agents shall have the right to
enter upon the Assets and all buildings and improvements thereon,
inspect the same, conduct soil and water tests and borings, and
generally conduct such tests, examinations, investigations, and studies
as may be necessary or appropriate for the preparation of appropriate
engineering and other reports in relation to the Assets, their
condition, and the presence of Hazardous Substances (as the term
"Hazardous Substance" is defined in the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Sec. 9601, et seq).
Buyer agrees to provide Seller with a copy of the environmental
assessment promptly upon Buyer's completion thereof, including any
reports, data, and conclusions. Buyer shall keep any data or
information acquired by such examinations and the results of all
analyses of such data and information strictly confidential and shall
not disclose same to any person or agency without the prior written
approval of Seller. BUYER SHALL RELEASE, INDEMNIFY, DEFEND, AND HOLD
HARMLESS THE SELLER GROUP FROM AND AGAINST ANY AND ALL LOSS, COST,
DAMAGE, EXPENSE, OR LIABILITY WHATSOEVER, INCLUDING ATTORNEYS' FEES,
ARISING OUT OF ANY INJURY TO OR DEATH OF PERSONS OR DAMAGE TO PROPERTY
OCCURRING IN, ON, OR ABOUT THE ASSETS AS A RESULT OF SUCH ENVIRONMENTAL
ASSESSMENT (EXCEPT ANY SUCH INJURIES OR DAMAGES CAUSED SOLELY BY THE
GROSS NEGLIGENCE OR WILLFULL MISCONDUCT OF ANY MEMBER OF THE SELLER
GROUP). After March 18, 1998, Buyer shall be deemed to have inspected
the properties or waived its right to inspect the Assets for all
purposes and satisfied itself as to their physical and environmental
condition, both surface and subsurface, including, but not limited to,
conditions specifically related to the presence, release, or disposal
of Hazardous Substances.
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(c) Buyer shall assume full responsibility for, and agrees to
indemnify, hold harmless and defend Seller from and against all loss,
liability, claims, fines, expenses, costs (including attorney's fees
and expenses) and causes of action caused by or arising out of any
violation of any environmental law, rule or regulation (including
common law), relating to the protection of health or the environment of
any kind or character ("Applicable Environmental Law(s)") or the
presence, disposal, release or threatened release of any hazardous
substance ("Hazardous Substance") (as the terms "release" and
"hazardous substance" are defined in the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA), 42 U.S.C.
ss.ss.9601, et seq.) from the Assets into the atmosphere or into or
upon land or any water course or body of water, including groundwater,
whether or not attributable to the Seller's activities or the
activities of third parties (regardless of whether or not the Seller
was or is aware of such activities) after the period of Seller's
ownership of the Assets. This indemnification and assumption shall
apply, but is not limited to, liability for response actions undertaken
pursuant to CERCLA or any other environmental law or regulation.
(d) As used in this Agreement, the term "Defect" shall mean
any matter, other than a "Permitted Encumbrance" (as hereinafter
defined), which causes one or more of the following to be a correct
statement:
(i) Seller's ownership of the Assets is such that,
with respect to a well or unit listed on Exhibit "B" attached
hereto, such ownership shall (a) not be sufficient to entitle
it to receive its decimal share of the oil, gas and other
hydrocarbons produced from, or allocated to, such well or unit
which is at least that decimal share set forth on Exhibit B in
connection with such well or unit in the column headed "Net
Revenue Interest" or (b) obligate it to bear its decimal share
of the cost of operation of such well or unit (herein called
the "Operating Interest") greater than the decimal share set
forth on Exhibit B in connection with such well or unit in the
column headed "Operating Interest" (without a proportionate
increase in Net Revenue Interest above that set forth on such
exhibits); or
(ii) Seller's ownership of an Oil and Gas Property
shall be subject to an outstanding mortgage, deed of trust, or
other enforceable lien or encumbrance, or other adverse claim
or imperfection in title, which if asserted would cause the
statement contained in Paragraph (d)(i) to be a correct
statement; or
(iii) An Oil and Gas Property is in violation of
Applicable Environmental Laws in any material respect; or
(iv) To the extent Seller has inaccurately
represented the amount of any gas imbalances as set forth on
Exhibit "B".
(v) The Net Lease Operating Statements presented with
the Core East Texas Package do not accurately reflect net
operating income to Seller.
(e) As used herein, the term "Permitted Encumbrance" shall
mean any and all of the following:
(i) The terms, conditions, restriction, exceptions,
reservations limitations and other matters contained in the
agreements, instruments and other documents which create or
reserve to Seller its interest in any Asset, provided that the
same do not reduce the Net Revenue Interest of Seller in the
Asset affected thereby to less than that set forth on Exhibit
B hereto;
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(ii) Royalties, overriding royalties (including,
without limitation, those specifically described on Exhibit A
hereto), division orders, reversionary interests, production
payments, net profits interests and similar burdens affecting
any Oil and Gas Property if the net cumulative effect of such
burdens does not operate to reduce the Net Revenue Interest in
the Asset affected thereby to less than the Net Revenue
Interest set forth beside the same on Exhibit B hereto;
(iii) Preferential rights to purchase and required
third party consents to assignment and similar agreements with
respect to which waivers or consents shall have been obtained
from the appropriate parties, or the appropriate time period
for asserting such rights shall have expired without an
exercise of such rights;
(iv) Liens for taxes and assessments which are not
yet delinquent or which are being contested by Seller in good
faith;
(v) Rights existing under applicable laws (including
without limitation statutory liens) or operating agreements or
similar contracts to assert liens against the Assets, but not
including liens and other rights which have actually been
asserted, unless Seller disputes the validity of such liens or
the amount claimed to be owed in connection therewith, or such
lien or other right is not enforceable against the interest of
Seller;
(vi) Conventional rights of reassignment requiring
90 days or less notice to the holder of such rights;
(vii) Easements, rights-of-way, servitudes, permits,
surface leases and other rights in respect to surface
operations, pipelines, logging, canals, ditches, reservoirs or
the like; conditions, covenants or other restrictions;
easements of streets, alleys, highways, pipelines, telephone
lines, power lines, railways and other easements or
rights-of-way on, over or with respect of any Asset which does
not materially and adversely affect the Asset affected thereby
or its current use;
(viii) Any obligations or duties affecting an Asset
to any municipality or public authority with respect to any
franchise, grant, license or permit and all applicable laws,
rules and order of any governmental authority;
(ix) All rights to consent by, required notices to,
filings with or other action by governmental entities in
connection with the sale or conveyance of oil and gas leases,
permits, or interests therein, if the same are customarily
obtained contemporaneously with or subsequent to such sale or
conveyance;
(x) Existing operating agreements, unit agreements,
gas purchase contracts and any and all other agreements which
are customary in the oil and gas exploration, development,
production or extraction business or in the business of
processing of gas and gas condensate or production for the
extraction of proper products therefrom, to the extent that
the same do not reduce the Net Revenue Interest of Seller in
the Asset affected thereby below that set forth on Exhibit B
hereto;
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(xii) Any other matter waived or deemed to be waived
by Buyer pursuant to the provisions of paragraph (a) of this
section.
(f) Should either Seller or Buyer determine that Seller is
entitled to a Net Revenue Interest in any Asset in excess of that set
forth on Exhibit B (herein called an "NRI Increase"), notice shall
promptly be given to the other party, and the adjustments to be made
under Section 7 below shall include adjustments which are the subject
of such notice.
7. CERTAIN PURCHASE PRICE ADJUSTMENTS. In the event that, as a part of
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the due diligence reviews provided for in Section 6 above, (i) Asserted Defects
are presented to Seller and Seller is unable (or unwilling) to cure such
Asserted Defects prior to the Defect Cure Date, (ii) in the event that Buyer has
elected to treat an Oil and Gas Property affected by a casualty loss as if it
was an Oil and Gas Property affected by an Asserted Defect, or (iii) should
there be a NRI Increase, then:
(a) Buyer and Seller shall, with respect to each Oil and Gas
Property affected by such matters, attempt to agree upon an appropriate
adjustment to the Purchase Price to account for such matters; and
(b) with respect to each Oil and Gas Property as to which
Buyer and Seller are unable to agree upon appropriate adjustment with
respect to all such matters affecting such Oil and Gas Property, then:
(i) If the Asserted Defect is a mortgage, lien,
encumbrance or other charge which is undisputed and liquidated
in amount, then (subject to the provisions of paragraph (iv)
below) the adjustment shall be the amount necessary to be paid
to remove the Asserted Defect from the affected Asset;
(ii) If there shall be an Asserted Defect or NRI
Increase which (a) represents a discrepancy between (1) the
Net Revenue Interest to which Seller is entitled to receive
from any Asset and (2) the Net Revenue Interest stated on
Exhibit B, and (b) there is a Operating Interest change
proportionate to the change in the Net Revenue Interest
resulting from the Asserted Defect or NRI Increase, then the
amount of the adjustment shall be the product of the value
allocated to such Asset as set forth on Exhibit B (herein
called the "Allocated Value") multiplied by a fraction, the
numerator shall be the change in the Net Revenue Interest and
the denominator of which shall be the Net Revenue Interest set
forth on Exhibit B;
(iii) If the Asserted Defect represents an
obligation, encumbrance, burden, discrepancy or charge upon or
other defect in title to the affected Asset of a type not
described in paragraphs (i) or (ii) above, the adjustment
amount shall be determined by taking into account the
Allocated Value of the Asset so affected, the portion of the
Asset affected by the Asserted Defect, the legal effect of the
Asserted Defect, the potential economic effect of the Asserted
Defect over the life of the affected Asset and such other
factors as are necessary to make a proper evaluation of the
value of the Asserted Defect;
9
(iv) Notwithstanding any other provision contained
herein, (a) the aggregate adjustment attributable to the
effect of all Asserted Defects related to a given Asset shall
not exceed the Allocated Value of such Property, provided that
if the Asserted Defects exceed the Allocated Value of such
Property, the Buyer may elect to exclude such Property and the
Purchase Price will be reduced by the Allocated Value of the
xxxxx on such Property; and (b) no adjustment shall be made
with respect to an Asserted Defect if the diminution in the
Allocated Value resulting therefrom will not exceed $1,000.00.
(v) Should the parties be unable to agree upon an
appropriate adjustment in light of the factors set forth
above, then, subject to the final two sentences of this
Section 7, Seller may elect to either (a) exclude such Oil and
Gas Property from the transaction contemplated hereby, and the
Purchase Price will be reduced by the Allocated Value of the
xxxxx located on such Oil and Gas Property and the units in
which such Oil and Gas Property participates; or (b) employ
for the purpose of Closing, an average of the Seller's and
Buyer's estimates of the value of the Asserted Defect, subject
to final resolution in the context of the final accounting
under the provisions of Section 13 hereof; or (c) indemnify
and hold Buyer harmless from and against any actual damages or
loss (but specifically excluding consequential, special or
similar damages) Buyer may suffer as a result of a third-party
claim based on such Asserted Defect.
If the Purchase Price reduction which would result from the above provided for
procedure does not exceed five percent (5%) of the Base Purchase Price, then the
Purchase Price shall not be adjusted, and none of the Oil and Gas Properties
which would be excluded by such procedure (except for those properties which
Buyer, may, nevertheless, elect to have excluded notwithstanding the fact that
no Purchase Price adjustment occurs) shall be excluded. If the Purchase Price
increase which would result from the above provided for procedure exceeds five
percent (5%) of the Base Purchase Price, the Purchase Price shall be adjusted by
the amount by which such increase exceeds five percent (5%) of the Base Purchase
Price.
8. CERTAIN COVENANTS OF BUYER PENDING CLOSING. From and after the date
------------------------------------------
of this Agreement, Buyer will give Seller and its attorneys and other
representatives access at all reasonable times and upon reasonable notice for a
period of seven (7) years from and after the Closing, to all files and records
(including all computer records) delivered by or on behalf of Seller in
connection with the transaction contemplated hereby, and shall permit Seller to
make copies of any such files and records. Should the Assets be subsequently
transferred by Buyer, Buyer agrees to take all action in its contractual
arrangements relating to such transfer necessary to allow Seller to have
continued access to all such files and records.
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER. The obligations of
------------------------------------------------
Buyer under this Agreement are subject to each of the following conditions being
met:
(a) Each and every representation of Seller under this
Agreement shall be true and accurate in all material respects as of
Closing except as to changes specifically contemplated by this
Agreement or consented to by Buyer.
(b) Seller shall have performed and complied in all material
respects with (or compliance therewith shall have been waived by Buyer)
each and every covenant, agreement and condition required by this
Agreement to be performed or complied with by Seller prior to or at the
Closing.
10
(c) On or before February 24, 1998, Buyer shall have obtained
the approval of its Board of Directors to enter into this Agreement and
to consummate the transactions contemplated by the Agreement.
(d) No suit, action or other proceedings shall, on the date of
Closing, be pending or threatened before any court or governmental
agency seeking to restrain, prohibit, or obtain damages or other relief
in connection with the consummation of the transactions contemplated by
this Agreement.
10. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER. The obligations
--------------------------------------------------
of Seller under this Agreement are subject to each of the following conditions
being met:
(a) Each and every representation of Buyer under this
Agreement shall be true and accurate in all material respects as of
Closing except as to changes specifically contemplated by this
Agreement or consented to by Seller.
(b) Buyer shall have performed and complied in all material
respects with (or compliance therewith shall have been waived by
Seller) each and every covenant, agreement and condition required by
this Agreement to be performed or complied with by Buyer prior to or at
the Closing.
(c) On or before February 24, 1998, Seller shall each have
obtained the approval of their respective Board of Directors to enter
into this Agreement and to consummate the transactions contemplated by
the Agreement.
(d) No suit, action or other proceedings shall, on the date of
Closing, be pending or threatened before any court or governmental
agency seeking to restrain, prohibit, or obtain damages or other relief
in connection with the consummation of the transactions contemplated by
this Agreement.
11. TERMINATION OF AGREEMENT.
------------------------
(a) If any condition on the obligations of Buyer as set forth
in Section 9 above is not met as of the Closing Date, or in the event
the Closing does not occur on or before May 1, 1998, the "Termination
Date", and in either case Buyer is not in breach of its obligations
hereunder, this Agreement may, at the option of Buyer, be terminated.
Upon such termination, the parties shall have no further obligations to
one another hereunder (other than the obligations under Section 16
hereof and under Section 5(a) hereof, which will survive such
termination).
(b) If any condition to the obligations of Seller as set forth
in Section 10 is not met as of the Closing Date, or in the event the
Closing does not occur on or before the Termination Date, and in either
case Seller is not in breach of its obligations hereunder (unless Buyer
shall also be in breach of its Obligations hereunder), this Agreement
may, at the option of Seller, be terminated. Thereafter, the parties
shall have no further obligations to one another hereunder (other than
the obligations under Section 16 hereof and under Section 5(a) hereof,
which will survive such termination).
(c) Upon the termination of this Agreement, whether pursuant
to paragraph (a) or (b) above, Seller shall be free to sell the Assets
(or any portion thereof) to any other party without any limitation
under or by reason of this Agreement, unless at such time a condition
of Seller Default shall exist. Buyer shall cooperate with Seller in
effectuating any such sale and shall promptly execute any instrument
evidencing the termination of Buyer's right to acquire the Assets as
may be reasonably requested by Seller. Buyer shall also immediately
return to Seller all data and other information (and all copies
thereof) furnished to Buyer by or on behalf of Seller in connection
with this transaction
11
12. THE CLOSING. The closing (herein called the "Closing") of the
------------
transaction contemplated hereby shall take place in the offices of Seller, in
Dallas, Texas, on April 24, 1998, at 10:00 a.m. Central Time, or at such other
date and time as the Buyer and Seller may mutually agree upon, being herein
called the "Closing Date"). At the Closing:
(a) Seller shall:
(i) execute, acknowledge and deliver to Buyer a
conveyance of the Assets, (herein called the "Conveyance"), in
the form attached hereto as Exhibit C (and with Exhibit A
hereto being attached thereto), effective as to runs of oil
and deliveries of gas as of 7 o'clock a.m., Central Standard
Time on January 1, 1998 (herein called the "Effective Date");
and
(ii) execute and deliver to Buyer letters in lieu of
transfer orders (or similar documentation), in form acceptable
to both parties; and
(iii) deliver to Buyer an affidavit or other
certification (as permitted by such code) that Seller is not a
"foreign person" within the meaning of Section 1445 (or
similar provisions) of the Internal Revenue Code of 1986 as
amended; and
(iv) turn over possession of the Assets; and
(v) provide Buyer with Seller's Officer Certificate
having the form and language of Exhibit "D-1", which is
attached hereto and made a part hereof for all purposes. Such
certificate shall certify that Seller has complied with and
performed or waived all provisions and conditions pertaining
to Seller, to be performed prior to the Closing.
(b) Buyer shall:
(i) deliver to the Seller, by wire transfer to an
account designated by Seller in a bank located in the United
States, an amount equal to (a) the Purchase Price, less (b)
the Deposit, less (or plus, as the case may be) (c) any
adjustments made at Closing under Section 13 hereof; and
(ii) with respect to the Assets operated by Seller,
execute and deliver to Seller appropriate evidence reflecting
change of operator as required by applicable authorities
(including, without limitation, Form P-4 for filing with the
Railroad Commission of Texas), and such evidence as Seller may
require that Buyer is qualified with such authorities to
succeed Seller as operator; and
(iii) provide Seller with Buyer's Officer Certificate
having the form and language of Exhibit "D-2" which is
attached hereto and made a part hereof for all purposes. Such
Certificate shall certify that Buyer has complied with and
performed or waived all provisions and conditions pertaining
to Buyer, to be performed prior to the Closing.
12
Within twenty (20) days after Closing, Seller will deliver to Buyer the
records and other materials described in Section 1(f) above. With
respect to each Asset with respect to which Seller is disbursing
proceeds of production attributable to other parties entitled thereto,
(i) Seller shall continue to collect proceeds of production during the
month in which Closing occurs and shall be responsible for making
disbursements, in accordance with its normal procedures (and at normal
times), of such proceeds of production so collected to the parties
entitled to same, with any proceeds of production thereafter collected
by Seller to be promptly forwarded to Buyer (who shall thereafter
account for same to the parties entitled thereto), (ii) Seller shall,
as promptly as possible after Closing, deliver to Buyer (a) a copy of
its "proceeds distribution list" for each such Asset (which proceeds
distribution list shall include the name, address, social security
number and applicable share of proceeds of production for each party to
whom Seller is disbursing proceeds of production with respect to such
Asset), (b) a list of all parties for whom it is holding in suspense
proceeds of production, (c) a list of all parties for whom it is
holding any advance payments made by other working interest owners for
operations to be conducted on the Assets, and (d) a check (which shall
be delivered within 30 days after the end of the month in which Closing
occurs) in an amount equal to all suspended funds and advance payments.
Following delivery of the materials referred to in clause (ii), Buyer
shall become responsible for all disbursements of proceeds of
production (including suspense and other disbursements attributable to
periods prior to the Effective Date) and such disbursement activities
shall be included in the matters which Buyer assumes, and indemnifies
Seller with respect to, under Section 14 below. It is understood and
agreed that Seller does not represent or warrant to Buyer the accuracy
of the "proceeds distribution lists" so delivered.
13. CERTAIN ACCOUNTING ADJUSTMENTS.
------------------------------
(a) Appropriate adjustments shall be made between Buyer and
Seller so that (i) all expenses which are incurred in the operation of
the Assets before the Effective Date will be borne by Seller and all
proceeds (net of applicable production, severance, and similar taxes)
from sale of oil, gas and/or other minerals produced therefrom before
the Effective Date will be received by Seller, and (ii) all expenses
which are incurred in the ownership and/or operation of the Assets
after the Effective Date will be borne by Buyer and all proceeds (net
of applicable production, severance, and similar taxes) from the sale
of oil, gas and/or other minerals produced therefrom after the
Effective Date will be received by Buyer. It is agreed that, in making
such adjustments: (i) oil which was produced from the Oil and Gas
Properties and which was, on the Effective Date, stored in tanks
located on the Oil and Gas Properties (or located elsewhere but used by
Seller to store oil produced from the Oil and Gas Properties prior to
delivery to oil purchasers) and above pipeline connections shall be
deemed to have been produced before the Effective Date, (ii) ad valorem
taxes assessed with respect to a period which the Effective Date
splits, regardless of the basis on which such taxes are computed, shall
be prorated based on the number of days in such period which fall on
each side of the Effective Date (with the day on which the Effective
Date falls being counted in the period after the Effective Date), and
shall, where the current year's taxes are not yet known, be based on
the previous year's taxes, and (iii) no consideration shall be given to
the local, state or federal income tax liabilities of any party.
(b) On or before five (5) days before Closing, Seller shall
prepare and submit to Buyer, in accordance with this Agreement a
proposed statement (herein called the "Closing Statement") setting
forth the amount by which the Purchase Price shall be adjusted (either
upward or downward) based upon the adjustments provided in paragraph
(a) above and
13
otherwise in this Agreement. Not later than two days prior to the
Closing Date, Buyer shall deliver to Seller a written report containing
such changes, if any, which Buyer proposes be made to the Purchase
Price Adjustment Statement. Seller and Buyer shall make every
reasonable effort to agree upon a mutually acceptable Purchase Price
prior to Closing, but if the parties fail to reach such Agreement,
Seller's estimation of the adjustments shall be employed for the
purpose of Closing.
(c) As soon as practicable after Closing, but in any event
within sixty (60) days thereafter, Seller shall prepare and submit to
Buyer, in accordance with this Agreement a proposed statement (herein
called the "Final Statement"), which shall show the final calculation
of the Purchase Price (herein called the "Final Settlement Price"). As
soon as possible after receipt of the Final Statement, but in any event
within sixty (60) days after receipt thereof, Buyer shall deliver to
Seller a written report containing the changes, if any, which Buyer
proposes being made to the Final Statement. In the event no response is
made by Buyer within such sixty (60) day period, it shall be
conclusively presumed that Buyer concurs with the Final Statement, and
such Final Statement shall be the basis for the Final Settlement Price.
In the event that Buyer submits a response, the parties shall exercise
all reasonable efforts to agree with respect to the amounts due not
later than one hundred twenty (120) days after the Closing, but in any
event prior to August 15, 1998. After agreement upon a Final Settlement
Price setting forth the amount by which the Purchase Price shall be
adjusted (either upward or downward), the amount due shall be paid
within five (5) business days thereafter by the party owing the same in
immediately available funds.
14. ASSUMPTION AND INDEMNIFICATION. Buyer shall, on the date of
--------------------------------
Closing, agree (and, upon the delivery to Buyer of the Conveyance shall be
deemed to have agreed) (a) to assume, and to timely pay and perform, all duties,
obligations and liabilities relating to the ownership and/or operation of the
Assets after the Effective Date (including, without limitation, those arising
under the contracts and agreements described in Section 1(d) above), and (b) to
release, indemnify and hold the Seller Group harmless from and against any and
all claims, actions, liabilities, losses, damages, costs or expenses (including
court costs and attorneys' fees) of any kind or character arising out of or
otherwise relating to the ownership and/or operation of the Assets after the
Effective Date. In connection with (but not in limitation of) the foregoing, it
is specifically understood and agreed that matters arising out of or otherwise
relating to the ownership and/or operation of the Assets after the Effective
Date shall be deemed to include all matters arising out of the condition of the
Assets on the Effective Date (including, without limitation, within such matters
all obligations to properly plug and abandon, or replug and re-abandon, xxxxx
located on the Assets, to restore the surface of the Assets and to comply with,
or to bring the Assets into compliance with, Applicable Environmental Laws
including all liability and expense for any restoration, clean-up, disposal, or
removal that may be incurred as a result of the existence or discovery of
Hazardous Substances or other deleterious substances in, on, or under the
Assets, regardless of when the events occurred that give rise to such condition,
and the assumptions, and indemnifications by Buyer set forth in this Section
shall expressly cover and include such matters. THE ASSUMPTIONS AND
INDEMNIFICATIONS SET FORTH IN THIS SECTION SHALL APPLY WHETHER OR NOT SUCH
DUTIES, OBLIGATIONS, OR LIABILITIES, OR SUCH CLAIMS, ACTIONS, CAUSES OF ACTION,
LIABILITIES, DAMAGES, LOSSES, COSTS, OR EXPENSES ARISE OUT OF (i) NEGLIGENCE
(INCLUDING CONCURRENT NEGLIGENCE, ACTIVE OR PASSIVE NEGLIGENCE, BUT EXPRESSLY
NOT INCLUDING SOLE NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF SELLER
OR ANY OTHER INDEMNIFIED PARTY, OR (ii) STRICT LIABILITY.
14
15. DISCLAIMER OF WARRANTIES. THE EXPRESS REPRESENTATIONS AND
--------------------------
WARRANTIES OF SELLER CONTAINED IN SECTION 3. (OR IN THE CONVEYANCE EXECUTED
PURSUANT TO THIS AGREEMENT) ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER
REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, AND
SELLER EXPRESSLY DISCLAIMS ANY AND ALL SUCH OTHER REPRESENTATIONS AND
WARRANTIES. WITHOUT LIMITATION OF THE FOREGOING, THE ASSETS SHALL BE CONVEYED
PURSUANT HERETO WITHOUT ANY WARRANTY OR REPRESENTATION, WHETHER EXPRESS,
IMPLIED, STATUTORY, OR OTHERWISE RELATING TO THE CONDITION, QUANTITY, QUALITY,
FITNESS FOR A PARTICULAR PURPOSE, CONFORMITY TO THE MODELS OR SAMPLES OF
MATERIALS, OR MERCHANTABILITY OF ANY EQUIPMENT OR ITS FITNESS FOR ANY PURPOSE,
AND, EXCEPT AS PROVIDED OTHERWISE IN THE FIRST SENTENCE OF THIS PARAGRAPH,
WITHOUT ANY OTHER EXPRESS, IMPLIED, STATUTORY, OR OTHER WARRANTY OR
REPRESENTATION WHATSOEVER. BUYER SHALL HAVE INSPECTED, OR WAIVED (AND UPON
CLOSING SHALL BE DEEMED TO HAVE WAIVED) ITS RIGHT TO INSPECT THE ASSETS FOR ALL
PURPOSES AND SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION,
BOTH SURFACE AND SUBSURFACE, INCLUDING, BUT NOT LIMITED TO, CONDITIONS
SPECIFICALLY RELATED TO THE PRESENCE, RELEASE, OR DISPOSAL OF HAZARDOUS
SUBSTANCES, SOLID WASTES, ASBESTOS OR OTHER MANMADE FIBERS OR NATURALLY
OCCURRING RADIOACTIVE MATERIALS ("NORM") IN, ON, OR UNDER THE ASSETS. BUYER IS
RELYING SOLELY UPON ITS OWN INSPECTION OF THE ASSETS, AND BUYER SHALL, EXCEPT AS
PROVIDED OTHERWISE HEREIN, ACCEPT ALL OF THE SAME "AS IS, WHERE IS". WITHOUT
LIMITATION OF THE FOREGOING, SELLER MAKES NO WARRANTY OR REPRESENTATION,
EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF
ANY DATA REPORTS, RECORDS, PROJECTIONS, INFORMATION, OR MATERIALS NOW
HERETOFORE, OR HEREAFTER FURNISHED OR MADE AVAILABLE TO BUYER IN CONNECTION WITH
THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION PRICING ASSUMPTIONS OR QUALITY OR
QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE ASSETS OR THE
ABILITY OR POTENTIAL OF THE ASSETS TO PRODUCE HYDROCARBONS OR THE ENVIRONMENTAL
CONDITION OF THE ASSETS OR ANY OTHER MATERIALS FURNISHED OR MADE AVAILABLE TO
BUYER BY SELLER OR BY SELLER'S AGENTS OR REPRESENTATIVES. ANY AND ALL SUCH DATA,
RECORDS, REPORTS, PROJECTIONS, INFORMATION, AND OTHER MATERIALS (WRITTEN OR
ORAL) FURNISHED BY SELLER OR OTHERWISE MADE AVAILABLE OR DISCLOSED TO BUYER ARE
PROVIDED TO BUYER AS A CONVENIENCE AND SHALL NOT CREATE OR GIVE RISE TO ANY
LIABILITY OF OR AGAINST SELLER, AND ANY RELIANCE ON OR USE OF THE SAME SHALL BE
AT BUYER'S SOLE RISK TO THE MAXIMUM EXTENT PERMITTED BY LAW.
16. COMMISSIONS. Seller agrees to indemnify and hold harmless Buyer
-----------
from and against any and all claims, obligations, actions, liabilities, losses,
damages, costs or expenses (including court costs and attorneys fees) of any
kind or character arising out of or resulting from any agreement, arrangement or
understanding alleged to have been made by, or on behalf of, Seller with any
broker or finder in connection with this Agreement or the transaction
contemplated hereby. Buyer agrees to indemnify and hold harmless Seller from and
against any and all claims, obligations, actions, liabilities, losses, damages,
costs or expenses (including court costs and attorneys fees) of any kind or
character arising out of or resulting from any agreement, arrangement or
understanding alleged to have been made
15
by, or on behalf of, Buyer with any broker or finder in connection with this
Agreement or the transaction contemplated hereby.
17. CASUALTY LOSS. In the event of damage by fire or other casualty to
-------------
the Assets prior to the Closing, then this Agreement shall remain in full force
and effect, and (unless Buyer and Seller shall otherwise agree) in such event:
(a) as to each such Asset so damaged which is an Oil and Gas
Property, then, at Buyer's election, either (i) such Asset shall be
treated as if it had an Asserted Defect associated with it and the
procedure provided for in Section 6 shall be applicable thereto, or
(ii) the Purchase Price will not be adjusted, and if Seller should be
entitled to make any claims under any insurance policy with respect to
such damage, Seller shall, at Seller's election, either collect (and
when collected pay over to Buyer), or assign to Buyer, such claims; and
(b) as to each such Asset which is other than an Oil and Gas
Property, Seller shall, at Seller's election, either collect for (and
when collected pay over to Buyer), or assign to Buyer, any and all
insurance claims relating to such loss, and Buyer shall take title to
the Asset affected by such loss without reduction of the Purchase
Price.
18. NOTICES. All notices and other communications required under this
-------
Agreement shall (unless otherwise specifically provided herein) be in writing
and be delivered personally, by recognized commercial courier or delivery
service (which provides a receipt), by telex or telecopier (with receipt
acknowledged), during normal business hours or by registered or certified mail
(postage prepaid), at the following addresses:
If to Seller: EEX Corporation
EEX Operating L.P.
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx Xxxxx
Fax: (000) 000-0000
If to Buyer: Cross Timbers Oil Company
000 Xxxxxxx Xx.
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxxxxx, XX
Fax: (000) 000-0000
and shall be considered delivered on the date of receipt. Either Buyer or Seller
may specify as its proper address any other post office address within the
continental limits of the United States by giving notice to the other party, in
the manner provided in this Section, at least ten (10) days prior to the
effective date of such change of address.
19. SURVIVAL OF PROVISIONS. The obligations covered by the
-------------------------
representations made herein by Seller in Section 3 and by Buyer in Section 4
shall be true and correct on the Closing Date and shall thereafter terminate two
(2) years after the Closing Date. The obligations of the parties under Section 6
16
(to the extent the same are, by mutual agreement, not performed at Closing), and
Sections 13, 14, 15, 16, 18, and 21 shall survive the Closing and the delivery
of the Conveyance.
20. OPERATIONS. Subject to the terms and provisions of any existing
----------
agreements covering the Assets, Seller agrees to turn over to Buyer, at Closing,
the operations of those Assets for which it is currently serving as operator.
Seller shall take all reasonable actions necessary to cause Buyer to become
operator as contemplated herein.
21. MISCELLANEOUS MATTERS.
---------------------
(a) After the Closing, Seller and Buyer shall execute and
deliver, and shall otherwise cause to be executed and delivered, from
time to time, such further instruments, notices, division orders,
transfer orders and other documents, and do such other and further acts
as reasonably may be necessary to more fully and effectively grant,
convey and assign the Assets to Buyer.
(b) Except as provided in the following sentence, neither
party shall have the right to assign its rights under this Agreement
and any such assignment in violation of this provision shall be void.
Without Buyer's consent, Seller may assign its rights under this
Agreement to a direct or indirect parent of Seller, to a direct or
indirect subsidiary of Seller, or to an entity that is a direct or
indirect subsidiary of a direct or indirect parent of Seller.
(c) No waiver of any provision of this Agreement shall be
deemed or shall constitute a waiver of any provision of this Agreement
(whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
(d) To the extent applicable to the transaction contemplated
hereby, or any portion thereof, Buyer waives the provisions of the
Texas Deceptive Trade Practices Act, Chapter 17, Subchapter E, Sections
17.41 through 17.63, inclusive (other than Section 17.555 which is not
waived), Texas Business and Commerce Code. In connection with such
waiver, Buyer hereby represents and warrants to Seller that Buyer (a)
is in the business of seeking or acquiring, by purchase or lease,
goods, or services, for commercial or business use, (b) has assets of
Five Million and No/100 Dollars ($5,000,000.00) or more according to
its most recent financial statement, (c) has knowledge and experience
in financial and business matters that enable it to evaluate the merits
and risks of the transaction contemplated hereby and (d) is not in a
significantly disparate bargaining position.
(e) In connection with Buyer's evaluation of the Assets,
Seller shall disclose to Buyer certain confidential information, which
is proprietary, and includes, but is not necessarily limited to,
geological and geophysical data; maps, models, and interpretations; and
commercial, contractual, and financial information. All such data
disclosed by Seller to Buyer shall hereinafter be referred to as the
"Confidential Information". If, for any reason the Closing does not
occur, Buyer agrees that the Confidential Information shall be kept
strictly confidential and shall not be sold, traded, published, or
otherwise disclosed to anyone in any manner whatsoever, including by
means of photocopy or reproduction, without Seller's prior written
consent, except as provided in Sections 21.e(i), 21.e(ii), and
21.e.(iii) below.
(i) Buyer may disclose the Confidential Information
without Seller's prior written consent only to the extent such
information:
17
(a) is already known to Buyer as of the
date of disclosure hereunder;
(b) is already in possession of the public
or becomes available to the public other than through
the act or omission of Buyer;
(c) is required to be disclosed under
applicable law or by a governmental order, decree,
regulation, or rule (provided that Buyer shall give
written notice to Seller prior to such disclosure);
or
(d) is acquired independently from a third
party that has the right to disseminate such
information at the time it is acquired by Buyer.
(ii) Buyer may disclose the Confidential Information
without Seller's prior written consent to an Affiliated
Company (as hereinafter defined), provided that Buyer
guarantees the adherence of such Affiliated Company to the
terms of this Agreement. "Affiliated Company" shall mean any
company or legal entity that (a) controls either directly or
indirectly a party, or (b) that is controlled directly or
indirectly by such party, or (c) is directly or indirectly
controlled by a company or entity that directly or indirectly
controls such party. "Control" means the right to exercise
fifty percent (50%) or more of the voting rights in the
appointment of the directors of such company.
(iii) Buyer shall be entitled to disclose the
Confidential Information without Seller's prior written
consent to such of the following persons who have a clear need
to know in order to evaluate Seller's petroleum exploration
and production rights:
(a) employees, officers, and directors
of Buyer;
(b) employees, officers, and directors
of an Affiliated Company;
(c) any professional consultant or agent
retained by Buyer for the purpose of evaluating the
Confidential Information.
(iv) Prior to making any such disclosures to persons
under subparagraph 21.e.(iii)(c) above, however, Buyer shall
obtain an undertaking of confidentiality, in the same form and
content as this Agreement, from each such person.
(v) Buyer and its Affiliated Companies, if any, shall
use, or permit the use of the Confidential Information
disclosed under Section 21.(e)(ii) or 21.(e)(iii) above, only
to evaluate petroleum exploration and production rights held
by Seller.
(vi) Buyer shall be responsible for ensuring that all
persons to whom the Confidential Information is disclosed
under this Agreement shall keep such information confidential
and shall not disclose or divulge the same to any unauthorized
person. Neither party shall be liable in an action initiated
by one against the other for special, indirect, or
consequential damages resulting from or arising out of this
Agreement, including, without limitation, loss of profit or
business interruptions, however same may be caused.
18
(vii) The Confidential Information shall remain the
property of Seller, and Seller may demand the return thereof
at any time upon giving written notice to Buyer. Within ten
(10) days of receipt of such notice, Buyer shall return all of
the original Confidential Information and shall destroy all
copies and reproductions (both written and electronic) in its
possession and in the possession of persons to whom it was
disclosed pursuant to Sections 21.(e)(ii) and 21.(e)(iii)
hereof.
(viii) The term of this Section 21.(e) and the rights
and obligations created hereunder shall commence upon the date
hereof and shall continue for a period of two (2) years
thereafter.
(ix) Seller makes no representations or warranties,
express or implied, as to the quality, accuracy, and
completeness of the Confidential Information disclosed
hereunder. Seller and its Affiliated Companies, and their
officers, directors, employees, shall have no liability
whatsoever with respect to the use of or reliance upon the
Confidential Information by Buyer.
(f) This Agreement and that certain Confidentiality Agreement
dated February 10, 1998 between Seller and Buyer contain the entire
understanding of the parties hereto with respect to the subject matter
hereof and supersede all prior agreements, understandings,
negotiations, and discussions among the parties with respect to such
subject matter between Seller and Buyer. The headings contained in this
Agreement are for convenience only and shall not control or affect the
meaning or construction of any provision of this Agreement. Within this
Agreement, words of any gender shall be held and construed to cover any
other gender, and words in the singular shall be held and construed to
cover the plural, unless the context otherwise requires. Time is of the
essence in this Agreement.
(g) This Agreement may be amended, modified, supplemented,
restated, or discharged (and provisions hereof may be waived) only by
an instrument in writing signed by the party against whom enforcement
of the amendment, modification, supplement, restatement, or discharge
(or waiver) is sought.
(h) Each party shall bear and pay all expenses it incurred in
connection with the transaction contemplated by this Agreement.
(i) This Agreement shall be binding on the parties hereto and
their respective successors and assigns.
(j) This Agreement shall not confer any rights or remedies
upon any person other than Seller and Buyer and their respective
successors and permitted assigns.
(k) All production from oil and gas xxxxx, and all proceeds
from the sale thereof, including proceeds from the sale of any oil in
storage above the pipeline connection, and any accounts receivable
balances, funds held in suspense or escrow, any of which are
attributable to production prior to the Effective Date, shall be the
property of Seller. All production from oil and gas xxxxx, and all
proceeds from the sale thereof attributable to production after the
Effective Date shall be the property of Buyer.
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(l) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument. It shall not be
necessary for both parties to sign the same counterpart.
(m) Buyer shall properly execute, acknowledge and file the
Conveyance for record immediately upon receipt thereof and will furnish
to Seller a copy of the recorded document promptly after Buyer's
receipt of such recorded instrument from the clerk in the county or
parish in which the Conveyance is recorded. In addition, where
applicable, Buyer shall execute any forms required to effect a change
of operator for all xxxxx conveyed herein.
(n) Pursuant to the Federal Arbitration Act, the parties
hereby agree that any controversy, claim, or alleged breach, including
but not limited to torts and statutory claims, arising out of or
related to this Agreement shall be settled by binding arbitration
administered by the American Arbitration Association ("AAA") in
accordance with its Commercial Arbitration Rules. Demand for
arbitration may be made no later than the time that such action would
be permitted under the applicable Texas statute of limitation. Any
disputes regarding the timeliness of the demand for arbitration shall
be decided by the arbitrator(s). Judgment upon the award rendered by
the arbitrator(s) may be entered in any Court having jurisdiction
thereof in order to obtain compliance therewith. Any case in which any
claim, or combination of claims, exceeds $500,000.00 shall be subject
to the AAA's Large, Complex Case Procedures and decided by the majority
of a panel of three (3) neutral arbitrators. In rendering the award,
the arbitrator's shall determine the rights and obligations of the
parties according to the laws of the State of Texas. The arbitration
proceedings and hearings shall be conducted at the Houston Regional
Office of the AAA or at such other place as may be selected by mutual
agreement. No party nor the arbitrator(s) may disclose the existence,
content, or results of any arbitration hereunder without the prior
written consent of all parties.
(o) Prior to and subsequent to Closing, Buyer shall not issue
any publicity or press release concerning this Agreement or the
transaction contemplated hereby without the prior written consent of
Seller, unless, in the written opinion of legal counsel acceptable to
Seller, such disclosure is required by applicable law or other
applicable rules or regulations of any governmental authority or stock
exchange and such publicity or press release contains no more than the
minimum information necessary to comply therewith. This provision shall
not replace or restrict any provision in any prior agreement between
the parties affecting confidentiality or the disclosure of information
about the Assets.
IN WITNESS WHEREOF, this Agreement is executed by the parties hereto on
the date set forth above.
SELLER: BUYER:
EEX CORPORATION CROSS TIMBERS OIL COMPANY
By: /s/ X. X. Xxxxx By: /s/ Xxx X. Xxxxxxx
--------------- ------------------
Name: X. X. Xxxxx Name: Xxx. X. Xxxxxxx
------------------
Title: Attorney-In-Fact Title: Chairman
------------------
20
EEX OPERATING L.P.
By: EEX CORPORATION
General Partner
By: /s/ X.X. Xxxxx
---------------
Name: X. X. Xxxxx
Title: Attorney-In-Fact
21
ACKNOWLEDGEMENTS
----------------
STATE OF TEXAS ss.
ss.
COUNTY OF TARRANT ss.
This instrument was acknowledged before me, Notary Public, this 16th
day of February, 1998, by X. X. Xxxxx, Attorney-In-Fact of EEX CORPORATION,
General Partner for EEX OPERATING L.P., a Texas limited liability partnership,
on behalf of the partnership.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Xxx Xxxxxx Xxxxxx
---------------------
Notary Public
My commission expires:
11/13/99
---------------------
STATE OF TEXAS (S)
(S)
COUNTY OF TARRANT (S)
This instrument was acknowledged before me, Notary Public, this 16th day of
February, 1998, by X. X. Xxxxx, Attorney-In-Fact of EEX CORPORATION, a Texas
corporation, on behalf of the corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Xxx Xxxxxx Xxxxxx
--------------------
Notary Public
My commission expires:
11/13/99
--------------------
22
STATE OF TEXAS (S)
(S)
COUNTY OF TARRANT (S)
This instrument was acknowledged before me, Notary Public, this 16th
day of February, 1998, by Xxx X. Xxxxxxx, Chairman of Cross Timbers Oil Company,
a Delaware corporation, on behalf of the corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Xxx Xxxxxx Xxxxxx
---------------------
Notary Public
My commission expires:
11/13/99
---------------------
23
EXHIBITS
Exhibit "A" - Core East Texas Package, Ownership Summary
Exhibit "A-1" - Proposed Asset Sale
Exhibit "A-2" - Cotton Valley Reef Play, East Texas Basin
Exhibit "B" - Properties and Gas Imbalances
Exhibit "C" - Conveyance
Exhibit "D-1" - Officer's Certificate
Exhibit "D-2" - Officer's Certificate
Exhibit "E" - Field Offices
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