Exhibit 10.1
AGREEMENT AND PLAN OF MERGER
among
DORCHESTER MINERALS, L.P.,
DORCHESTER MINERALS ACQUISITION LP
and
XXXXXXX ROYALTY PARTNERS, LLC
September 24, 2004
TABLE OF CONTENTS
ARTICLE 1 THE MERGER...........................................................1
1.1 Merger; Effective Time of the Merger.........................1
1.2 Closing......................................................1
1.3 Effects of the Merger........................................2
1.4 Surviving Entity.............................................2
1.5 Merger Consideration and Conversion of Securities............2
1.6 Exchange Agent; Payment......................................2
1.7 Dissenting Members...........................................3
1.8 Tax Consequences.............................................4
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP....................4
2.1 Organization.................................................4
2.2 Governing Documents..........................................4
2.3 Capitalization of the Partnership............................4
2.4 Authority Relative to This Agreement.........................5
2.5 Noncontravention.............................................6
2.6 Governmental Approvals.......................................6
2.7 Financial Statements.........................................6
2.8 Absence of Undisclosed Liabilities...........................7
2.9 Absence of Certain Changes...................................7
2.10 Compliance With Laws.........................................7
2.11 Brokerage Fees...............................................8
2.12 Listing......................................................8
2.13 SEC Filings..................................................8
2.14 Ownership....................................................8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF XXXXXXX............................9
3.1 Organization and Existence...................................9
3.2 Authority Relative to This Agreement.........................9
3.3 Noncontravention.............................................9
3.4 Governmental Approvals......................................10
3.5 Capitalization..............................................10
3.6 Title to Properties.........................................10
3.7 Financial Statements........................................11
3.8 Absence of Undisclosed Liabilities..........................11
3.9 Absence of Certain Changes..................................11
3.10 Tax Matters.................................................12
3.11 Compliance with Laws........................................12
3.12 Legal Proceedings...........................................12
3.13 Permits.....................................................13
3.14 Environmental Matters.......................................13
3.15 Revenue and Expense Information; Records....................13
3.16 Commitments.................................................13
3.17 No Alienation...............................................14
3.18 Make-Up Rights..............................................14
3.19 Imbalance...................................................14
3.20 Preferential Rights and Consents to Assign..................14
3.21 No Participating Minerals...................................14
3.22 Brokerage Fees..............................................14
3.23 Investment Intent...........................................15
3.24 Disclosure..................................................15
3.25 Insurance...................................................15
3.26 Employees...................................................15
3.27 Agreements, Contracts and Commitments.......................15
ARTICLE 4 CONDUCT OF XXXXXXX PENDING MERGER; CERTAIN ACTIONS
RELATING TO CLOSING................................................16
4.1 Conduct and Preservation of Business of Xxxxxxx.............16
4.2 Restrictions on Certain Actions of Xxxxxxx..................16
ARTICLE 5 ADDITIONAL AGREEMENTS...............................................18
5.1 Access to Information; Confidentiality......................18
5.2 Notification of Certain Matters.............................19
5.3 Reasonable Best Efforts.....................................19
5.4 Public Announcements........................................19
5.5 Amendment of Schedules......................................20
5.6 Fees and Expenses...........................................20
5.7 Tax Reporting...............................................20
5.8 Listing of Units............................................21
5.9 Post-Closing Assurances and Access to Records...............21
5.10 Management Contract.........................................21
5.11 Xxxxxxx Members.............................................21
ARTICLE 6 CONDITIONS..........................................................22
6.1 Conditions to Obligations of the Parties....................22
6.2 Conditions to Obligation of Xxxxxxx.........................22
6.3 Conditions to Obligation of the Partnership and Sub.........23
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER...................................24
7.1 Termination.................................................24
7.2 Effect of Termination.......................................25
7.3 Amendment...................................................25
7.4 Waiver......................................................25
ARTICLE 8 SURVIVAL MATTERS....................................................26
8.1 Survival of Representations and Warranties..................26
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ARTICLE 9 MISCELLANEOUS.......................................................26
9.1 Notices.....................................................26
9.2 Entire Agreement............................................27
9.3 Binding Effect; Assignment; Third Party Benefit.............28
9.4 Severability................................................28
9.5 Governing Law; Consent to Jurisdiction......................28
9.6 Descriptive Headings........................................28
9.7 Disclosure..................................................28
9.8 Gender......................................................29
9.9 References..................................................29
9.10 Counterparts................................................29
9.11 Injunctive Relief...........................................29
ARTICLE 10 DEFINITIONS........................................................30
10.1 Certain Defined Terms.......................................30
10.2 Certain Additional Defined Terms............................34
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INDEX TO EXHIBITS AND SCHEDULES
Exhibits
Exhibit 3.23 Investor Questionnaire
Exhibit 6.2(f) Registration Rights Agreement
Schedules
Partnership Schedules
Schedule 2.3(c) Capitalization
Schedule 2.5 Noncontravention
Schedule 2.7 Financial Statements
Schedule 2.8 Absence of Undisclosed Liabilities
Schedule 2.9 Absence of Certain Changes
Schedule 2.10 Compliance With Laws
Bradley Schedules
Schedule A Properties
Schedule 3.3 Noncontravention
Schedule 3.4 Governmental Approvals
Schedule 3.5 Capitalization
Schedule 3.6 Encumbrances
Schedule 3.7 Financial Statements
Schedule 3.8 Absence of Undisclosed Liabilities
Schedule 3.9 Absence of Certain Changes
Schedule 3.10 Tax Matters
Schedule 3.11 Compliance With Laws
Schedule 3.12 Legal Proceedings
Schedule 3.13 Permits
Schedule 3.14 Environmental Matters
Schedule 3.15 Revenue and Expense Information
Schedule 3.26 Employee Benefit Plans
Schedule 3.27 Agreements, Contracts and Commitments
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of September 24, 2004,
and effective as of the Effective Time (as hereinafter defined), among
Dorchester Minerals, L.P., a Delaware limited partnership (the "Partnership"),
Dorchester Minerals Acquisition LP, an Oklahoma limited partnership ("Sub") and
Xxxxxxx Royalty Partners, LLC, a Florida limited liability company ("Xxxxxxx").
W I T N E S S E T H:
WHEREAS, management of each of Xxxxxxx, the Partnership and Sub have
determined to engage in a business combination, whereby Xxxxxxx shall be merged
with and into Sub (the "Merger").
WHEREAS, subject to the approval of the members of Xxxxxxx, and further
subject to the terms and conditions set forth herein, management of each of the
parties hereto has determined to enter into the Merger in accordance with this
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
1.1. Merger; Effective Time of the Merger.
Upon the terms and subject to the conditions of this Agreement, at the
Effective Time, Xxxxxxx shall be merged with and into Sub in accordance with the
Oklahoma Revised Uniform Limited Partnership Act (the "ORLPA") and the Florida
Limited Liability Company Act ("FLLCA"), and Sub shall continue its existence as
the surviving entity in the Merger (the "Surviving Entity"). At the closing of
the Merger (the "Closing"), certificates of merger, prepared and executed in
accordance with the relevant provisions of the ORLPA and the FLLCA, with respect
to the Merger (the "Certificates of Merger") shall be filed with the Oklahoma
Secretary of State and the Florida Secretary of State. The Merger shall become
effective at such time as the Certificates of Merger are duly filed with the
Oklahoma Secretary of State or at such later time on the day of the Closing as
is specified in the Certificates of Merger pursuant to the mutual agreement of
the Partnership and Xxxxxxx (the "Effective Time").
1.2 Closing.
The Closing shall take place (i) at the offices of Xxxxxxxx & Knight
L.L.P., 0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, at 9:00 a.m.,
local time, on the day which is five (5) consecutive Business Days after the day
on which the last of the conditions to the obligations of the parties set forth
in Article 6 is fulfilled or waived (subject to Applicable Law) or is capable of
being fulfilled at the Closing, or (ii) at such other time or place or on such
other date as the parties hereto shall agree; provided, however, that the
parties shall use their
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reasonable best efforts to cause the closing to occur prior to or on September
30, 2004. The date on which the Closing is required to take place is herein
referred to as the "Closing Date."
1.3 Effects of the Merger.
The Merger shall have the effects specified in the ORLPA and FLLCA, each as
amended. This Agreement shall constitute a plan of merger with respect to the
Merger.
1.4 Surviving Entity.
The Certificate of Limited Partnership of Sub, as in effect immediately
prior to the Effective Time, shall be the Certificate of Limited Partnership of
the Surviving Entity, until thereafter amended in accordance with the terms and
as provided by the ORLPA. The Agreement of Limited Partnership of Sub shall be
the limited partnership agreement of the Surviving Entity, until thereafter
amended in accordance with its terms and as provided by the ORLPA. The general
partner of the Surviving Entity is Dorchester Minerals Acquisition GP, Inc. and
its address is 0000 Xxx Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000.
1.5 Merger Consideration and Conversion of Securities.
At the Effective Time, by virtue of the Merger and without any action on
the part of the Partnership, Sub, Xxxxxxx or any holder of the following
interests, the membership interests in Xxxxxxx shall be converted into and
become an aggregate number of Common Units equal to 1,200,000 Common Units (the
"Merger Consideration"). Each member of Xxxxxxx at the Effective Time shall
receive a proportionate share of such Common Units, in the same respective
percentages as the membership interests of such member bears to the aggregate
membership interests of all of the members of Xxxxxxx. For the purposes of the
preceding sentence, "membership interests" shall have the meaning assigned to
such term in the Regulations of Xxxxxxx Royalty Partners, L.L.C. dated as of
January 1, 1999, as amended, and in effect immediately prior to the Effective
Time, and shall be determined as of immediately prior to the Effective Time. All
membership interests in Xxxxxxx (the "Converted Securities"), when converted as
provided herein, shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist.
1.6 Exchange Agent; Payment.
(a) Prior to the Closing Date, the Partnership shall designate EquiServe
Trust Company, N.A. (the "Exchange Agent") for the purpose of payment of the
Merger Consideration.
(b) As soon as practicable after the Effective Time, the Partnership will
make available to the Exchange Agent, for the benefit of the members of Xxxxxxx,
for exchange in accordance with Section 1.6, certificates representing the
number of whole Common Units issuable pursuant to Section 1.5 in exchange for
the Converted Securities. Promptly after the Effective Time, the Partnership
will send, or will cause the Exchange Agent to send, to each member of Xxxxxxx
at the Effective Time (i) a certificate representing that number of whole Common
Units that such member has a right to
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receive pursuant to the provisions of this Article 1 and (ii) a Transfer
Application for use in admission of such members as limited partners in the
Partnership.
(c) Each holder of Converted Securities that have been converted into the
Merger Consideration, upon delivery to the Partnership of a properly completed
Transfer Application, will be admitted into the Partnership as a limited partner
in accordance with the Partnership Agreement. Prior to such time, each such
party shall have the rights of an "Assignee" under the Partnership Agreement.
(d) All Common Units issued as Merger Consideration in accordance with the
terms hereof shall be deemed to have been issued in full satisfaction of all
rights pertaining to such exchanged Converted Securities.
(e) None of the Partnership, Sub, Xxxxxxx, their general partners, their
managers or their transfer agents shall be liable to a member of Xxxxxxx for any
amount paid in good faith to a public official pursuant to applicable property,
escheat or similar laws.
(f) No certificates or scrip evidencing fractional Common Units shall be
issued upon the Merger, and such fractional interests shall not entitle the
owner thereof to any rights of a limited partner of the Partnership. In lieu of
fractional interests, each member of Xxxxxxx shall receive a number of Common
Units rounded to the nearest whole Common Unit, with half Common Units being
rounded up to the nearest whole Common Unit.
(g) Promptly following the date which is six months after the Effective
Time, the Exchange Agent shall deliver to the Surviving Entity all cash,
certificates and other documents and instruments in its possession relating to
the transactions described in this Agreement, and the Exchange Agent's duties
shall terminate. Thereafter, each holder of a Converted Security shall (subject
to applicable abandoned property, escheat, and similar laws) look only to the
Surviving Entity for payment of the applicable Merger Consideration, but such
holder shall have no greater rights against the Surviving Entity than may be
accorded to general creditors of the Surviving Entity under Applicable Law.
1.7 Dissenting Members.
Notwithstanding anything in this Agreement to the contrary, in the event
that dissenters' rights are available in connection with the Merger pursuant to
the FLLCA, each membership interest of Xxxxxxx immediately prior to the
Effective Time and held by a member who has not voted in favor of the Merger and
this Agreement and who complies with all of the relevant provisions of the FLLCA
for the exercise of dissenters' rights shall not be convertible into or
exchangeable for the right to receive the Merger Consideration. If such member
fails to perfect or effectively withdraws or loses such dissenters' rights, such
holder's membership interests shall thereupon be deemed to have been converted
into and exchangeable for the right to receive, as of the Effective Time, the
Merger Consideration.
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1.8 Tax Consequences.
Xxxxxxx, the Partnership, and Sub agree that for federal income tax
purposes the Merger will be treated as a contribution of all of Xxxxxxx'x assets
and liabilities to the Partnership in exchange for the Merger Consideration,
followed by a liquidating distribution of the Merger Consideration to the
members of Xxxxxxx. Xxxxxxx will terminate under Section 708 of the Code as a
result of the liquidating distribution.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP
The Partnership represents and warrants to Xxxxxxx that:
2.1 Organization.
The Partnership is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware. Sub is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Oklahoma. The Partnership has full power and authority to own,
lease or otherwise hold and operate its properties and assets and to carry on
its business as presently conducted. The Partnership is duly qualified and in
good standing to do business as a foreign limited partnership in each
jurisdiction in which the conduct or nature of its business or the ownership,
leasing, holding or operating of its properties makes such qualification
necessary, except such jurisdictions where the failure to be so qualified or in
good standing, individually or in the aggregate, would not have a Material
Adverse Effect.
2.2 Governing Documents.
The Partnership Agreement has been, and prior to the Closing the
Partnership Agreement will be, duly authorized, executed and delivered by the
Partnership and is, and will be, a valid and legally binding agreement,
enforceable against the Partnership in accordance with its terms; provided,
however, that the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws
relating to or affecting creditors' rights generally and by general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
2.3 Capitalization of the Partnership.
(a) All of the outstanding Common Units have been duly authorized and
validly issued in accordance with the Partnership Agreement, are fully paid and
nonassessable, and, as of the respective dates of the SEC Filings and the
Partnership Financial Statements, were issued and held as described therein.
Dorchester Minerals Management LP (the "Partnership GP"), a Delaware limited
partnership, is the sole general partner of the Partnership. On the date hereof,
the issued and outstanding limited partner interests of the Partnership consist
of 27,040,431 Common Units.
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(b) The Common Units to be issued pursuant to this Agreement (and the
limited partner interests represented thereby), will be duly authorized in
accordance with the Partnership Agreement, and, when issued and delivered
pursuant to this Agreement in accordance with the terms hereof, will be validly
issued, fully paid (to the extent required under the Partnership Agreement) and
nonassessable and will be issued free and clear of any lien, claim or
Encumbrance.
(c) Except for the Common Units to be issued pursuant to this Agreement, as
described in the Partnership Agreement or as set forth on Schedule 2.3(c), there
are no preemptive rights or other rights to subscribe for or to purchase, nor
any restriction upon the voting or transfer of, any interests in the Partnership
pursuant to the Partnership Agreement or any other agreement or instrument to
which the Partnership is a party or by which it may be bound. Neither the
offering nor the sale of the Common Units, as contemplated by this Agreement,
gives rise to any rights for or relating to the registration of any Common Units
or other securities of the Partnership. Except for the Common Units to be issued
pursuant to this Agreement or as described in the Partnership Agreement, no
options, warrants or other rights to purchase, agreements or other obligations
to issue, or rights to convert any obligations into or exchange any securities
for, Common Units or other securities of the Partnership are outstanding.
(d) The Common Units when issued and delivered against payment therefor as
provided herein, will conform in all material respects to the description
thereof contained in the Partnership Agreement. The Partnership has all
requisite power and authority to issue, sell and deliver the Common Units in
accordance with and upon the terms and conditions set forth in this Agreement
and the Partnership Agreement. As of the Closing Date, all partnership action
for the authorization, issuance, sale and delivery of the Common Units shall
have been validly taken, and no other authorization by any of such parties is
required therefore.
2.4 Authority Relative to This Agreement.
The Partnership and Sub have full partnership power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by the Partnership
and Sub of this Agreement, and the consummation by them of the transactions
contemplated hereby, have been duly authorized by the Partnership GP (for itself
in its capacity as the general partner of Partnership, for itself or on behalf
of Sub), and no other partnership proceedings on the part of the Partnership and
Sub are necessary to authorize the execution, delivery and performance by the
Partnership and Sub of this Agreement and the consummation by it of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Partnership and Sub and constitutes, and each other agreement,
instrument or document executed or to be executed by the Partnership and Sub in
connection with the transactions contemplated hereby has been, or when executed
will be, duly executed and delivered by the Partnership or Sub and constitutes,
or when executed and delivered will constitute, a valid and legally binding
obligation of the Partnership or Sub enforceable against the Partnership or Sub
in accordance with their respective terms, except that such enforceability may
be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights generally and (ii) equitable
principles
5
which may limit the availability of certain equitable remedies (such
as specific performance) in certain instances
2.5 Noncontravention.
Except as otherwise indicated on Schedule 2.5, the execution, delivery and
performance by the Partnership or the Sub of this Agreement and the consummation
by it of the transactions contemplated hereby do not and will not (i) conflict
with or result in a violation of any provision of the Partnership Agreement or
the certificate of limited partnership of the Partnership, (ii) conflict with or
result in a violation of any provision of, or constitute (with or without the
giving of notice or the passage of time or both) a default under, or give rise
(with or without the giving of notice or the passage of time or both) to any
right of termination, cancellation or acceleration under, any bond, debenture,
note, mortgage, indenture, lease, contract, agreement or other instrument or
obligation to which the Partnership or Sub is a party or by which the
Partnership or Sub or any of their properties may be bound, (iii) result in the
creation or imposition of any Encumbrance upon the properties of the Partnership
or Sub or (iv) assuming compliance with the matters referred to in Section 2.6,
violate any Applicable Law binding upon the Partnership or Sub, except, in the
case of clauses (ii), (iii) and (iv) above, for any such conflicts, violations,
defaults, terminations, cancellations, accelerations or Encumbrances which would
not, individually or in the aggregate, have a Material Adverse Effect on the
Partnership or Sub.
2.6 Governmental Approvals.
To the Knowledge of the Partnership, no consent, approval, order or
authorization of, or declaration, filing or registration with, any Governmental
Entity is required to be obtained or made by the Partnership or Sub in
connection with the execution, delivery or performance by the Partnership of
this Agreement or the consummation by it of the transactions contemplated
hereby, other than (i) compliance with any applicable federal or state
securities or takeover laws, (ii) filings of the Certificates of Merger and
filings with Governmental Entities to occur in the ordinary course following the
consummation of the transactions contemplated hereby, and (iii) such consents,
approvals, orders or authorizations which, if not obtained, and such
declarations, filings or registrations which, if not made, would not,
individually or in the aggregate, have a Material Adverse Effect on the
Partnership.
2.7 Financial Statements.
Attached as Schedule 2.7 or filed with the SEC Filings are copies of (i)
the Partnership's unaudited consolidated balance sheet as of June 30, 2004 (the
"Partnership Latest Balance Sheet"), and the related unaudited consolidated
statements of income, partners' equity and cash flows for the six-month period
then ended (the "Partnership Unaudited Financial Statements"), and (ii) the
Partnership's audited consolidated balance sheet as of December 31, 2003, and
the related audited consolidated statements of income, stockholders' equity and
cash flows for the year then ended, and the notes and schedules thereto,
together with the report thereon of Xxxxx Xxxxxxxx LLP, independent certified
public accountants (the "Partnership Audited Financial Statements")
(collectively, the "Partnership Financial Statements"). The Partnership
Financial Statements (A) have been prepared from the books and records of the
6
Partnership in conformity with generally accepted accounting principles applied
on a basis consistent with preceding years throughout the periods involved, and
(B) accurately and fairly present the Partnership's consolidated financial
position as of the respective dates thereof and its consolidated results of
operations and cash flows for the periods then ended, except that the
Partnership Unaudited Financial Statements are subject to audit adjustments,
which in the Partnership's reasonable judgment should not be material in the
aggregate.
2.8 Absence of Undisclosed Liabilities.
To the Knowledge of the Partnership, as of the date of this Agreement, the
Partnership does not have any liability or obligation (whether accrued,
absolute, contingent, unliquidated or otherwise), except (i) liabilities
reflected on the Partnership Latest Balance Sheet, (ii) liabilities described in
the notes accompanying the Partnership Audited Financial Statements,
(iii) liabilities which have arisen since the date of the Partnership Latest
Balance Sheet in the ordinary course of business (none of which is a material
liability for breach of contract, tort or infringement), (iv) liabilities
arising under executory provisions of contracts entered into in the ordinary
course of business (none of which is a material liability for breach of
contract), (v) liabilities disclosed on Schedule 2.8 and (vi) other liabilities
which, in the aggregate, are not material to the Partnership.
2.9 Absence of Certain Changes.
As of the date of this Agreement, except as disclosed on Schedule 2.9,
since the date of the Partnership Unaudited Financial Statements, (i) there has
not been any material adverse change in, or any event or condition that might
reasonably be expected to result in any Material Adverse Effect in, the assets
or financial condition of the Partnership, (ii) the businesses of the
Partnership have been conducted only in the ordinary course consistent with past
practice, (iii) the Partnership has not incurred any material liability, engaged
in any material transaction or entered into any material agreement outside the
ordinary course of business consistent with past practice, and (iv) the
Partnership has not suffered any material loss, damage, destruction or other
casualty to any of its assets (whether or not covered by insurance).
2.10 Compliance With Laws.
Except as disclosed on Schedule 2.10, to the Knowledge of the Partnership,
the Partnership has complied in all material respects with all Applicable Laws,
except for noncompliance with such Applicable Laws which, individually or in the
aggregate, does not and will not have a Material Adverse Effect on the
Partnership. Except as disclosed on Schedule 2.10, the Partnership has not
received any written notice from any Governmental Entity, which has not been
dismissed or otherwise disposed of, that the Partnership has not so complied.
The Partnership is not charged or, to the Knowledge of the Partnership,
threatened with, or under investigation with respect to, any violation of any
Applicable Law relating to any aspect of the business of the Partnership, other
than violations which, individually or in the aggregate, do not and in the
reasonable judgment of the Partnership will not have a Material Adverse Effect
on the Partnership.
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2.11 Brokerage Fees.
Neither the Partnership nor Sub has retained any financial advisor, broker,
agent or finder or paid or agreed to pay any financial advisor, broker, agent or
finder on account of this Agreement or any transaction contemplated hereby.
2.12 Listing.
The outstanding Common Units are listed for trading on the NASDAQ National
Market System.
2.13 SEC Filings.
The Partnership has filed with the Securities and Exchange Commission all
forms, reports, schedules, statements, and other documents required to be filed
by it since October 31, 2002 under the Securities Act, the Exchange Act, and all
other federal securities laws. All forms, reports, schedules, statements, and
other documents (including all amendments thereto) filed by the Partnership with
the Securities and Exchange Commission since such date are herein collectively
referred to as the "SEC Filings." The Partnership has delivered or made
available to Xxxxxxx accurate and complete copies of all the SEC Filings in the
form filed by the Partnership with the Securities and Exchange Commission. The
SEC Filings, at the time filed, complied in all material respects with all
applicable requirements of federal securities laws. To the Knowledge of the
Partnership, none of the SEC Filings, including, without limitation, any
financial statements or schedules included therein, at the time filed, contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading. All material contracts of the Partnership have been included in the
SEC Filings, except for those contracts not required to be filed pursuant to the
rules and regulations of the Securities and Exchange Commission. The Partnership
shall deliver or make available to Xxxxxxx as soon as they become available
accurate and complete copies of all forms, reports, and other documents
furnished by it to its limited partners generally or filed by it with the
Securities and Exchange Commission subsequent to the date hereof and prior to
the Closing Date.
2.14 Ownership.
All of the ownership interests of Sub are held, directly and indirectly, by
the Partnership and Sub will be treated as a disregarded entity for federal
income tax purposes.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF XXXXXXX
Xxxxxxx represents and warrants to the Partnership and Sub that:
3.1 Organization and Existence.
Xxxxxxx is a limited liability company, duly organized, validly existing
and in good standing under the laws of the State of Florida. Xxxxxxx has full
power and authority to own, lease or otherwise hold and operate its properties
and assets and to carry on its business as presently conducted. Xxxxxxx is duly
qualified and in good standing to do business as a foreign limited liability
company in each jurisdiction in which the conduct or nature of its business or
the ownership, leasing, holding or operating of its properties makes such
qualification necessary.
3.2 Authority Relative to This Agreement.
Xxxxxxx has full power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance by Xxxxxxx of this Agreement, and the consummation by it of the
transactions contemplated hereby, have been duly authorized by all necessary
action. The managers of Xxxxxxx have approved the Merger and this Agreement, and
declared the Merger and this Agreement to be in the best interests of the
members of Xxxxxxx. Xxxxxxx has obtained approval of the Merger and this
Agreement by at least ninety-five percent (95%) of the outstanding membership
interests of Xxxxxxx, entitled to vote upon such matters, by means a Consent and
First Amendment to the Regulations of Xxxxxxx Royalty Partners, L.L.C.,
effective as of July 1, 2004. This Agreement has been duly executed and
delivered by Xxxxxxx and constitutes, and each other agreement, instrument or
document executed or to be executed by Xxxxxxx in connection with the
transactions contemplated hereby has been, or when executed will be, duly
executed and delivered by Xxxxxxx and constitutes, or when executed and
delivered will constitute, a valid and legally binding obligation of Xxxxxxx
enforceable against Xxxxxxx in accordance with their respective terms, except
that such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights generally and (ii) equitable principles which may limit the availability
of certain equitable remedies (such as specific performance) in certain
instances.
3.3 Noncontravention.
Except as otherwise indicated on Schedule 3.3, the execution, delivery and
performance by Xxxxxxx of this Agreement and the consummation by it of the
transactions contemplated hereby, do not and will not (i) conflict with or
result in a violation of any provision of the respective charter or other
governing instruments of Xxxxxxx, (ii) conflict with or result in a violation of
any provision of, or constitute (with or without the giving of notice or the
passage of time or both) a default under, or give rise (with or without the
giving of notice or the passage of time or both) to any right of termination,
cancellation or acceleration under, any bond,
9
debenture, note, mortgage, indenture, lease, contract, agreement or other
instrument or obligation to which Xxxxxxx is a party or by which Xxxxxxx or any
of the Properties may be bound, (iii) result in the creation or imposition of
any Encumbrance upon the Properties or (iv) assuming compliance with the matters
referred to in Section 3.4, violate any Applicable Law binding upon Xxxxxxx.
3.4 Governmental Approvals.
No consent, approval, order or authorization of, or declaration, filing or
registration with, any Governmental Entity is required to be obtained or made by
Xxxxxxx in connection with the execution, delivery or performance by Xxxxxxx of
this Agreement or the consummation by it of the transactions contemplated
hereby, other than (i) compliance with any applicable state securities or
takeover laws, and (ii) filings of the Certificates of Merger or filings with
Governmental Entities to occur in the ordinary course following the consummation
of the transactions contemplated hereby.
3.5 Capitalization.
The issued and outstanding membership interests of Xxxxxxx are held of
record by those persons listed in Schedule 3.5 and are all of the issued and
outstanding interests in Xxxxxxx. All outstanding membership interests of
Xxxxxxx are validly issued, fully paid and non-assessable, and are not subject
to preemptive rights. Except as set forth in this Section 3.5 or in Schedule
3.5, there are outstanding: (i) no membership interests, voting debt or other
voting securities of Xxxxxxx; (ii) no securities of Xxxxxxx convertible into or
exchangeable for membership interests, or other voting securities of Xxxxxxx;
and (iii) no options, warrants, calls, rights (including preemptive rights),
commitments or agreements to which Xxxxxxx is a party or by which it is bound in
any case obligating Xxxxxxx to issue, deliver, sell, purchase, redeem or
acquire, or cause to be issued, delivered, sold, purchased, redeemed or
acquired, additional membership interests or any or other securities of either
Xxxxxxx or any other person or obligating Xxxxxxx to xxxxx, extend or enter into
any such option, warrant, call, right, commitment or agreement. There are no
outstanding options, warrants or other rights to subscribe for or to purchase
from Xxxxxxx any security of Xxxxxxx or securities convertible into or
exchangeable for membership interests or other voting securities of Xxxxxxx.
There are not as of the date hereof and there will not be at the Effective Time
any stockholder agreements, voting trusts or other agreements or understandings
to which Xxxxxxx is a party or by which it is bound relating to the voting of
any membership interests or voting securities of Xxxxxxx from, or the casting of
votes by, the members of Xxxxxxx with respect to the Merger.
3.16 Title to Properties.
Xxxxxxx has one hundred percent (100%) of the beneficial interest in the
Properties and Xxxxxxx Nominee Corporation, a New York corporation, has one
hundred percent (100%) of the legal title to the Properties. At the Closing, by
virtue of the merger of Xxxxxxx Nominee Corporation with and into Xxxxxxx
between the date of this Agreement and the Closing, Xxxxxxx will have one
hundred percent (100%) of both the legal title to and the beneficial interest in
the Properties. At the Closing, Xxxxxxx will have good and marketable title to,
or valid
10
leasehold and right-of-way interests in, all of the Properties, free
and clear of all Encumbrances other than Encumbrances set forth on Schedule 3.6.
3.7 Financial Statements.
Xxxxxxx has delivered to the Partnership accurate and complete copies of
(i) an unaudited consolidated balance sheet as of June 30, 2004 (the "Xxxxxxx
Latest Balance Sheet"), and the related unaudited consolidated statements of
income and members' equity for the seven-month period then ended (the "Xxxxxxx
Latest Financial Statements"), and (ii) an unaudited consolidated balance sheet
as of November 30, 2003, and the related consolidated statements of income and
members' equity for the year then ended, (the "Xxxxxxx Annual Financial
Statements") (collectively, the "Xxxxxxx Financial Statements"). The Xxxxxxx
Financial Statements (A) have been prepared from the books and records of
Xxxxxxx in conformity with generally accepted accounting principles applied on a
basis consistent with preceding years throughout the periods involved, except
that the Xxxxxxx Latest Financial Statements are not accompanied by notes or
other textual disclosures required by generally accepted accounting principles,
and (B) accurately and fairly present Xxxxxxx consolidated financial position as
of the respective dates thereof and its consolidated results of operations and
cash flows for the periods then ended, except that the Xxxxxxx Latest Financial
Statements are subject to audit adjustments, which in Xxxxxxx'x reasonable
judgment should not be material in the aggregate.
3.8 Absence of Undisclosed Liabilities.
To the Knowledge of Xxxxxxx, as of the date of this Agreement, Xxxxxxx has
no liability or obligation with respect to the Properties (whether accrued,
absolute, contingent, unliquidated or otherwise), except (i)liabilities
reflected on Xxxxxxx Latest Balance Sheet, (ii) liabilities described in the
notes accompanying Xxxxxxx Annual Financial Statements, (iii) liabilities which
have arisen since the date of the Xxxxxxx Latest Balance Sheet in the ordinary
course of business (none of which is a material liability for breach of
contract, tort or infringement), (iv) liabilities arising under executory
provisions of contracts entered into in the ordinary course of business (none of
which is a material liability for breach of contract), (v) liabilities disclosed
on Schedule 3.8.
3.9 Absence of Certain Changes.
As of the date of this Agreement, except as disclosed on Schedule 3.9,
since the date of the Xxxxxxx Latest Balance Sheet, (i) there has not been any
material adverse change in, or any event or condition that might reasonably be
expected to result in any material adverse change in, the assets or financial
condition of Xxxxxxx or any of the Properties, (ii) the business of Xxxxxxx has
been conducted only in the ordinary course consistent with past practice,
(iii) Xxxxxxx has not incurred any material liability, engaged in any material
transaction or entered into any material agreement outside the ordinary course
of business consistent with past practice with respect to the Properties,
(iv) Xxxxxxx has not suffered any material loss, damage, destruction or other
casualty to any of the Properties (whether or not covered by insurance) and
(v) Xxxxxxx has not taken any of the actions set forth in Section 4.2 except as
permitted thereunder.
11
3.10 Tax Matters.
Xxxxxxx has filed all federal, state and local Tax Returns required to be
filed by it, including those relating to real and personal property taxes, ad
valorem taxes, severance taxes and any other Taxes imposed on or with respect to
the Properties and any production therefrom. All Tax Returns have been timely
filed with the applicable taxing authority, except as set forth on Schedule
3.10, and all Taxes required to be shown thereon have been paid. There are no
liens for Taxes (other than for taxes not yet due and payable) upon Xxxxxxx or
any of the Properties. There has been no issue raised or adjustment proposed
(and to the Knowledge of Xxxxxxx, none is pending) by the IRS or any other
taxing authority in connection with any of such Tax Returns, nor has Xxxxxxx
received any written notice from the IRS or any such other taxing authority that
any such Tax Return is being audited or may be audited or examined. Xxxxxxx has
not received a written notice of a claim made by any Taxing authority in a
jurisdiction where Xxxxxxx does not file Tax Returns that it is or may be
subject to Tax in such jurisdiction. Xxxxxxx has not agreed to the extension of
any statute of limitations on the assessment or collection of any such Tax or
with respect to any such Tax Return. There are no Tax rulings, requests for
rulings or closing agreements with any taxing authority with respect to Xxxxxxx.
Xxxxxxx has no current or potential contractual obligation, through Tax sharing
agreement or otherwise, to indemnify any other person with respect to Taxes or
to make any distribution to its members with respect to any current or future
tax liability of such members. Neither Xxxxxxx nor any of its members has filed
an election on IRS Form 8832, Entity Classification Election, causing Xxxxxxx to
be classified as an association taxable as a corporation for U.S. federal income
tax purposes. No direct or indirect member of Xxxxxxx is a "foreign person" as
defined in Section 1445 of the Code. Xxxxxxx has delivered to the Partnership a
Form W-9 completed and executed by each Xxxxxxx Member.
3.11 Compliance with Laws.
Except as disclosed on Schedule 3.11, Xxxxxxx has complied in all material
respects with all Applicable Laws relating to the ownership or operation of the
Properties, except for noncompliance with such Applicable Laws which,
individually or in the aggregate, do not and will not have a Material Adverse
Effect on Xxxxxxx or the Properties. Except as disclosed on Schedule 3.11,
Xxxxxxx has not received any written notice from any Governmental Entity, which
has not been dismissed or otherwise disposed of, that Xxxxxxx has not so
complied. Xxxxxxx has not been charged or, threatened with, or under
investigation with respect to, any violation of any Applicable Law relating to
any aspect of the ownership or operation of the Properties.
3.12 Legal Proceedings.
Except for the Lawsuits and as set forth on Schedule 3.12, there are no
Proceedings pending or, to the Knowledge of Xxxxxxx, threatened against or
involving Xxxxxxx or rights of Xxxxxxx with respect to the Properties. Xxxxxxx
is not subject to any judgment, order, writ, injunction, or decree of any
Governmental Entity which has had or is reasonably likely to materially affect
title to or the value of any of the Properties. There are no Proceedings pending
or, to the Knowledge of Xxxxxxx, threatened against Xxxxxxx or the Properties,
seeking to restrain, prohibit, or obtain damages or other relief in connection
with this Agreement or the
12
transactions contemplated hereby or which could reasonably be expected to affect
Xxxxxxx'x ability to consummate the transactions contemplated hereby.
3.13 Permits.
Xxxxxxx holds all Permits necessary or required for the conduct of its
business as currently conducted, except for Permits the absence of which do not
and will not have a Material Adverse Effect on Xxxxxxx or the Properties. Each
of such Permits is in full force and effect and Xxxxxxx is in compliance with
each such Permit, except in such respects as would not reasonably be expected to
have a Material Adverse Effect on Xxxxxxx or the Properties. Except as disclosed
on Schedule 3.13, Xxxxxxx has not received any written notice from any
Governmental Entity and no Proceeding is pending or, to the Knowledge of
Xxxxxxx, threatened with respect to any alleged failure by Xxxxxxx to have any
Permit the absence of which would have a Material Adverse Effect on Xxxxxxx or
the Properties.
3.14 Environmental Matters.
Except as disclosed on Schedule 3.14, Xxxxxxx has not received any written
notice of any investigation or inquiry regarding the Properties from any
Governmental Entity under any Applicable Law pertaining to the environment,
Hazardous Substances or Hazardous Wastes ("Applicable Environmental Laws"),
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by, inter alia, the
Superfund Amendments and Reauthorization Act of 1986 ("CERCLA"), and the
Resource Conservation and Recovery Act of 1976, as amended by, inter alia, the
Used Oil Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980,
and the Hazardous and Solid Waste Amendments of 1984 ("RCRA"). To the Knowledge
of Xxxxxxx, as of the date hereof, the Properties have not been used for
Disposal of any Hazardous Substance and no condition otherwise exists on any
such property, such that such property would be subject to any material remedial
obligations under any Applicable Environmental Laws which obligations would have
a Material Adverse Effect on Xxxxxxx or the Properties. The term "Hazardous
Substance" as used herein shall have the meaning specified in CERCLA, and the
terms "Hazardous Waste" and "Disposal" shall have the meanings specified in
RCRA.
3.15 Revenue and Expense Information; Records.
The property list, cash receipts, disbursements and production volumes with
respect to the Properties described on Schedule 3.15 are true and correct and
Xxxxxxx has good and marketable title to the Properties to which such receipts,
disbursements and production volumes relate. Xxxxxxx has not received any
written notice of and does not have knowledge of any adverse claim against
Xxxxxxx'x title to the Properties. The Records are true and correct in all
material respects and accurately reflect the ownership and operation of the
Properties by Xxxxxxx. Xxxxxxx has not distributed to the Xxxxxxx Members any
cash received by Xxxxxxx on or after July 1, 2004.
3.16 Commitments.
To Xxxxxxx'x Knowledge, Xxxxxxx has incurred no expenses, and has made no
commitments to make expenditures (and Xxxxxxx has not entered into any
agreements that would
13
obligate Partnership to make expenditures), in connection with (and no other
obligations or liabilities have been incurred which would adversely affect) the
ownership or operation of the Properties after the Effective Time.
3.17 No Alienation.
Within 120 days of the date hereof, Xxxxxxx has not sold, assigned,
conveyed, or transferred or contracted to sell, assign, convey or transfer any
right or title to, or interest in, the Properties.
3.18 Make-Up Rights.
To Xxxxxxx'x Knowledge, Xxxxxxx has not, nor has any other party, received
prepayments (including but not limited to, payments for gas not taken pursuant
to "take-or-pay" or similar arrangements) for any oil or gas produced from the
Properties as a result of which the obligation does or may exist to deliver oil
or gas produced from the Properties after the Effective Time without then
receiving payment (or without then receiving full payment) therefor or to make
repayments in cash, and the working interest owners have not so delivered any
oil or gas from the Properties or so made any such repayment in cash.
3.19 Imbalance.
To Xxxxxxx'x Knowledge, any imbalance among the owners of the interests in
the xxxxx and units included in the Properties are consistent with those that
are normal and customary in the oil and gas industry.
3.20 Preferential Rights and Consents to Assign.
To Xxxxxxx'x Knowledge, there are no consents to assignment or waivers of
preferential rights to purchase that must be obtained from third parties in
order for Xxxxxxx to consummate the transactions contemplated by this Agreement
without violating or breaching a duty or obligation of Xxxxxxx.
3.21 No Participating Minerals.
To Xxxxxxx'x Knowledge, the Properties do not include any unleased mineral
interest where Xxxxxxx has agreed to bear a share of drilling, operating or
other costs as a participating mineral owner.
3.22 Brokerage Fees.
Xxxxxxx has not retained any financial advisor, broker, agent or finder or
paid or agreed to pay any financial advisor, broker, agent or finder on account
of this Agreement or any transaction contemplated hereby.
14
3.23 Investment Intent.
Xxxxxxx has delivered to the Partnership an Investor Questionnaire in the
form attached as Exhibit 3.23 completed and executed by each member of Xxxxxxx.
3.24 Disclosure.
(a) No representation or warranty of Xxxxxxx in this Agreement and no
statement in the Schedules hereto omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they were made, not misleading.
(b) There is no fact known to Xxxxxxx that has specific application to
Xxxxxxx or the Properties (other than general economic or industry conditions)
as far as Xxxxxxx can reasonably foresee, that materially threatens, the assets,
business, prospects, financial condition, or results of operations of Xxxxxxx or
the Properties that has not been set forth in this Agreement or the Schedules
hereto.
3.25 Insurance.
Xxxxxxx has insurance in such amounts and against such risks and losses as
are customary for companies engaged in the business of the ownership of mineral
and royalty interests.
3.26 Employees.
Xxxxxxx does not have and never has had any employees or employee benefit
plans.
3.27 Agreements, Contracts and Commitments.
Schedule 3.27 lists all leases, contracts, agreements and instruments to
which it is a party as of the date hereof and which are in any single case of
material importance to the conduct of the business of Xxxxxxx (true and correct
copies of each such document requested by the Partnership have been previously
delivered to the Partnership and a written description of each oral arrangement
so listed). Except as set forth in Schedule 3.27, Xxxxxxx does not have as of
the date hereof (i) any collective bargaining agreements or any agreements that
contain any severance pay liabilities or obligations, (ii) any bonus, deferred
compensation, pension, profit-sharing or retirement plans, programs or other
similar employee benefit arrangements, (iii) any employment agreement, contract
or commitment with an employee, or agreements to pay severance, (iv) any
agreement of guarantee or indemnification running from Xxxxxxx to any person or
entity, (v) any agreement, indenture or other instrument for borrowed money and
any agreement or other instrument which contains restrictions with respect to
payment of dividends or any other distribution in respect of the Converted
Securities or any other outstanding securities, (vi) any agreement, contract or
commitment containing any covenant limiting the freedom of Xxxxxxx to engage in
any line of business or compete with any person, (vii) any agreement, contract
or commitment relating to capital expenditures in excess of $25,000 and
involving future payments, (viii) xxx agreement, contract or commitment relating
to the
15
acquisition of assets or capital stock of any business enterprise, or
(ix) any agreement, contract or commitment not made in the ordinary course of
business. Except as set forth in Schedule 3.27, Xxxxxxx has not breached, nor to
Xxxxxxx'x Knowledge is there any claim or any legal basis for a claim that
Xxxxxxx has breached, any of the terms or conditions of any agreement, contract
or commitment set forth in the Schedules or of any other agreement, contract or
commitment, which breach would have a Material Adverse Effect on Xxxxxxx or the
Properties.
ARTICLE 4
CONDUCT OF XXXXXXX PENDING MERGER;
CERTAIN ACTIONS RELATING TO CLOSING
4.1 Conduct and Preservation of Business of Xxxxxxx.
Xxxxxxx hereby covenants and agrees with the Partnership that, except as
contemplated by this Agreement, during the period from the date hereof to the
Effective Time, Xxxxxxx (i) shall conduct its operations according to the
ordinary course of business consistent with past practice and in material
compliance with all Applicable Laws, (ii) shall use its reasonable best efforts
to preserve, maintain and protect its Properties and business organizations,
keep available the services of its current officers and employees, and endeavor
to preserve its relationship with customers, suppliers and others having
business dealings with it to the end that its goodwill and ongoing business
shall not be impaired in any material respect at the Effective Time.
4.2 Restrictions on Certain Actions of Xxxxxxx.
Except as otherwise expressly provided in this Agreement, prior to the
Effective Time, Xxxxxxx shall not, without the consent of the Partnership (which
consent shall not be unreasonably withheld):
(a) amend its certificate of formation, limited liability company agreement
or similar governing documents;
(b) (i) create, incur, guarantee or assume any indebtedness for borrowed
money or otherwise become liable or responsible for the obligations of any other
person, (ii) make any loans, advances or capital contributions to, or
investments in, any other person, or (iii) mortgage or pledge any of the
Properties or any interests therein or any of its material assets, tangible or
intangible, or create any material lien thereupon (except for statutory liens
(including materialmen's, mechanic's, repairmen's, landlord's and other similar
liens) arising in connection with the ordinary course of business securing
payments not yet due and payable or, if due and payable, the validity of which
is being contested in good faith by appropriate legal proceedings and for which
adequate reserves have been set aside);
(c) (i) enter into, adopt or (except as may be required by law) amend or
terminate any bonus, profit sharing, compensation, severance, termination, stock
appreciation right, restricted stock, performance unit, stock equivalent, stock
purchase, pension, retirement, deferred compensation, employment, severance or
other employee
16
benefit agreement, trust, plan, fund or other arrangement for the benefit or
welfare of any director, officer or employee, (ii) except for normal
increases in the ordinary course of business consistent with past practice that,
in the aggregate, do not result in a material increase in benefits or
compensation expense to Xxxxxxx, increase in any manner the compensation or
fringe benefits of any manager, officer or employee of Xxxxxxx or (iii) pay to
any manager, officer or employee of Xxxxxxx any benefit not required by any
employee benefit agreement, trust, plan, fund or other arrangement as in effect
on the date hereof;
(d) acquire, sell, lease, transfer or otherwise dispose of, directly or
indirectly, any assets or any of the Properties or any interests therein or;
(d) amend, modify or change any existing lease, contract or other
agreement, other than in the ordinary course of the business consistent with
past practice;
(f) waive, release, grant or transfer any rights of value, other than in
the ordinary course of business consistent with past practice;
(g) delay payment of any account payable or any known or accrued liability
beyond the earlier of thirty (30) days or its due date or the date when such
liability would have been paid in the ordinary course of business consistent
with past practice, unless such delay is due to a good faith dispute as to
liability or amount;
(h) permit any current insurance or reinsurance or continuation coverage to
lapse if such policy insures risks, contingencies or liabilities (including
product liability) related to the Properties other than in connection with any
advance renewal or replacement of an existing insurance policy;
(i) make any capital expenditure;
(j) pay, discharge or satisfy any claims, liabilities or obligations
(whether accrued, absolute, contingent, unliquidated or otherwise, and whether
asserted or unasserted), other than the payment, discharge or satisfaction in
the ordinary course of business consistent with past practice, or in accordance
with their terms, of liabilities reflected or reserved against in the Xxxxxxx
Financial Statements, or incurred since the date of the Xxxxxxx Latest Balance
Sheet in the ordinary course of business consistent with past practice;
provided, however, that expenses incurred in connection with the transactions
contemplated by this Agreement shall not be deemed to be in the ordinary course
of business and shall be borne by the members of Xxxxxxx in accordance with
Section 5.6 of this Agreement;
(k) enter into any material lease, contract, agreement, commitment,
arrangement or transaction;
(l) change any of the accounting principles or practices used by it, except
for any change required by reason of a concurrent change in GAAP and notice of
which is given in writing to the Partnership;
17
(m) enter into any hedging, swap, fixed price sale or purchase or other
derivative contract;
(n) accelerate collection of any notes or accounts receivable generated by
Xxxxxxx or its business by using collections efforts beyond what would have been
used in the ordinary course of business;
(o) (i) declare or pay any dividends on or make other distributions in
respect of any of its membership interests, other than dividends or
distributions of cash received or royalty payment checks received on or prior to
June 30, 2004 (it being the intention of the parties that at Closing Xxxxxxx
will have all cash relating to receipts since July 1, 2004 less any allowable
disbursements made in accordance with this Section 4.2 (the "Contributed
Cash")); (ii) split, combine or reclassify any of its membership interests or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for such membership interests; (iii)
repurchase, redeem or otherwise acquire, any of its securities;
(p) issue, deliver or sell, or authorize or propose to issue, deliver or
sell, any of its securities of any class, any voting debt or other securities or
any securities convertible into, or any rights, warrants or options to acquire,
any such securities, voting debt, other securities or convertible securities;
(q) authorize, recommend, propose or announce an intention to adopt a plan
of complete or partial liquidation or dissolution of Xxxxxxx;
(r) merge into or with or consolidate with any other corporation or acquire
all or substantially all of the business or assets of any corporation or other
Person;
(s) except as set forth in this Section 4.2, take any action which would
make any of the representations or warranties of Xxxxxxx untrue as of any time
from the date of this Agreement to the date of the Closing, or would result in
any of the conditions set forth in this Agreement not being satisfied; or
(t) agree in writing or otherwise take any of the actions described in this
Section 4.2.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Access to Information; Confidentiality.
From the date hereof through the Effective Time, Xxxxxxx shall afford the
Partnership and their representatives reasonable access to the offices and
personnel of Xxxxxxx, and to the Properties and the books and records relating
to Xxxxxxx and the Properties during normal business hours, in order that the
Partnership may have a full opportunity to make such investigations as it
desires with respect to Xxxxxxx and the Properties; provided, however, that such
investigation shall be upon reasonable notice and shall not unreasonably disrupt
the
18
personnel and operations of Xxxxxxx or impede the efforts of Xxxxxxx to comply
with their other obligations under this Agreement. Such books and records
shall include all books, contracts, commitments, files and Records, including
but not limited to, all abstracts of title, title opinions, title files,
ownership maps, lease files, assignments, division orders, operating records and
agreements, well files, minute books, financial and accounting records,
geological, geophysical and engineering records, in each case pertaining to
Xxxxxxx and the Properties insofar as same may now be in existence and in the
possession of Xxxxxxx or their affiliates, excluding, however, any information
that Xxxxxxx or its affiliates are prohibited from disclosing by third party
confidentiality restrictions. Each party shall hold in confidence all such
information on the terms and subject to the conditions contained in the
Confidentiality Agreement dated November 17, 2003 (the "Confidentiality
Agreement").
5.2 Notification of Certain Matters.
Each party shall give prompt notice to the other party of (i) the discovery
of any fact or circumstance which would be likely to cause any representation or
warranty of such party contained in this Agreement to be untrue or inaccurate in
any material respect and (ii) any material failure of such party to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder. The delivery of any notice pursuant to this Section 5.2 shall
not be deemed to (i) modify the representations or warranties hereunder of the
party delivering such notice, (ii) modify the conditions set forth in Article 6
or (iii) limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
5.3 Reasonable Best Efforts.
Each party hereto agrees that it will not voluntarily undertake any course
of action inconsistent with the provisions or intent of this Agreement and will
use its reasonable best efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things reasonably necessary, proper or advisable
under Applicable Laws to consummate the transactions contemplated by this
Agreement, including, without limitation, (i) cooperation in determining whether
any other consents, approvals, orders, authorizations, waivers, declarations,
filings or registrations of or with any Governmental Entity or third party are
required in connection with the consummation of the transactions contemplated
hereby, (ii) using its reasonable best efforts to obtain any such consents,
approvals, orders, authorizations and waivers and to effect any such
declarations, filings and registrations, (iii) using its reasonable best efforts
to cause to be lifted or rescinded any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, (iv) using its reasonable best efforts to
defend, and to cooperate in defending, all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby and (v) the execution of any additional instruments necessary to
consummate the transactions contemplated hereby.
2.4 Public Announcements.
Except as may be required by Applicable Law or by obligations pursuant to
any listing agreement with any national securities exchange or interdealer
quotation system, no party shall issue any press release or otherwise make any
public statement with respect to this
19
Agreement or the transactions contemplated hereby without the prior written
consent of the other party. Any such press release or public statement required
by Applicable Law or any such listing agreement shall only be made after
reasonable notice to the other party.
5.5 Amendment of Schedules.
Each party hereto agrees that, with respect to the representations and
warranties of such party contained in this Agreement, such party shall have the
continuing obligation until the Closing to supplement or amend the Schedules
hereto with respect to any matter hereafter discovered which, if known at the
date of this Agreement, would have been required to be set forth or described in
the Schedules. For all purposes of this Agreement, including without limitation
for purposes of determining whether the conditions set forth in Sections 6.2(a)
and 6.3(a) have been fulfilled, the Schedules hereto shall be deemed to include
only that information contained therein on the date of this Agreement and shall
be deemed to exclude all information contained in any supplement or amendment
thereto.
5.6 Fees and Expenses.
Except as otherwise expressly provided in this Agreement, all fees and
expenses, including fees and expenses of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby ("Closing Costs") shall be paid by the party incurring such
fee or expense, whether or not the Closing shall have occurred; provided,
however, that the Closing Costs of Xxxxxxx shall be borne and paid by the
members of Xxxxxxx (or out of cash receipts of Xxxxxxx received prior to June
30, 2004). The Partnership shall pay all costs of recording and filing (i) the
Certificates of Merger, (ii) all state, federal and Indian transfer and
assignment documents, (iii) all applications and other documents required for
the transfer of permits and operatorship of the Properties, and (iv) all other
instruments.
5.7 Tax Reporting.
(a) Pre-Closing Tax Periods. Xxxxxxx and the Partnership agree that for
U.S. federal income tax purposes the merger of Xxxxxxx with and into the Sub
will result in the termination of Xxxxxxx under Section 708 of the Code as of
the Effective Time. The members of Xxxxxxx shall be solely liable for and shall
pay all federal, state and local income taxes and any franchise or excise taxes
based on net income, including any interest, penalties or additions attributable
thereto of Xxxxxxx (and any costs or expenses connected therewith) due for all
Pre-Closing Tax Periods. The managers of Xxxxxxx will prepare and file or cause
to be prepared and filed all Tax Returns for Xxxxxxx that are required to be
filed with the appropriate Governmental Entities for any Pre-Closing Tax Period,
including the final federal income tax return on IRS Form 1065 for the
Pre-Closing Tax Period that ends as of the Effective Time.
(b) Post-Closing Tax Periods. Except as provided in Section 5.7(a), Xxxxxxx
shall have no liability for, and the Partnership and Sub shall be solely liable
for and shall pay, all Taxes of Xxxxxxx (and any costs or expenses connected
therewith) due for any taxable year or taxable period.
20
(c) Cooperation on Tax Matters. The Partnership, Sub, Xxxxxxx, and the
members of Xxxxxxx shall cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the filing of Tax Returns
pursuant to this Section 5.7 and in connection with any audit, litigation or
other proceeding with respect to Taxes. Such cooperation shall include the
retention, and (upon the other party's request) the provision, of records and
information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. The Partnership, Xxxxxxx and members of Xxxxxxx further agree, upon
request, to use, or cause to be used, commercially reasonable efforts to obtain
any certificate or other document from any Taxing authority or any other person
as may be necessary to mitigate, reduce or eliminate any Tax that could be
imposed.
5.8 Listing of Units.
The Partnership shall use its reasonable efforts to cause the Common Units
to be issued pursuant to this Agreement to be approved for listing on the NASDAQ
National Market.
5.9 Post-Closing Assurances and Access to Records.
After the Closing, Xxxxxxx, Sub and the Partnership shall execute,
acknowledge and deliver or cause to be executed, acknowledged and delivered such
instruments and take such other action as may be necessary or advisable to carry
out their obligations under this Agreement and under any exhibit, document,
certificate or other instrument delivered pursuant hereunto. After the Closing,
the Partnership and its authorized representatives shall have reasonable access
(including copying privileges at Xxxxxxx'x sole cost and expense) during
Xxxxxxx'x normal business hours to all Records of Xxxxxxx pertaining to the
Properties and not included in the Properties, wheresoever such Records may be
located for the purpose of prosecuting or defending claims, lawsuits or other
proceedings, for audit purposes, or to comply with legal process, rules,
regulations or orders of any board, agency, tribunal or government.
5.10 Management Contract.
On or prior to the Closing, Xxxxxxx shall terminate the Management Contract
dated April 1, 1999 between Xxxxxxx and Xxxxx X. XxXxxxxx as amended by
amendment dated April 1, 2002 (the "Management Contract").
5.11 Xxxxxxx Members.
Following the Closing, the Partnership shall indemnify, save and hold
harmless each of the Xxxxxxx Members from, against and in respect of and will
pay to such Persons, whether or not involving a third party claim, any and all
losses suffered or incurred by the Xxxxxxx Members by reason of any untrue
representation or breach of warranty contained in Section 2.14 of this
Agreement. It is expressly understood that each of the Xxxxxxx Members is
intended to be a third party beneficiary of the provisions of this Section 5.11.
21
ARTICLE 6
CONDITIONS
6.1 Conditions to Obligations of the Parties.
The obligations of the parties to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
(a) Legal Proceedings. No preliminary or permanent injunction or other
order, decree, or ruling issued by a Governmental Entity, and no statute, rule,
regulation, or executive order promulgated or enacted by a Governmental Entity,
shall be in effect which restrains, enjoins, prohibits, or otherwise makes
illegal the consummation of the transactions contemplated hereby; and no
Proceeding by a Governmental Entity shall have been commenced or threatened (and
be pending or threatened on the Closing Date) against the Partnership, Xxxxxxx
or the Properties, or any of their respective affiliates, associates, directors,
or officers seeking to prevent or challenging the transactions contemplated
hereby.
(b) Consents. All consents, approvals, orders, authorizations and waivers
of, and all declarations, filings and registrations with, third parties
(including Governmental Entities) required to be obtained or made by or on the
part of the parties hereto, or otherwise reasonably necessary for the
consummation of the transactions contemplated hereby, shall have been obtained
or made, and all thereof shall be in full force and effect at the time of
Closing, unless the failure to obtain or make any such consent, approval, order,
authorization, waiver, declaration, filing or registration would not have a
Material Adverse Effect on the Partnership.
6.2 Conditions to Obligation of Xxxxxxx.
The obligation of Xxxxxxx to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
(a) Representations and Warranties. All the representations and warranties
of the Partnership contained in this Agreement and in any agreement, instrument
or document delivered pursuant hereto or in connection herewith on or prior to
the Closing Date, shall be true and correct in all material respects on and as
of the Closing Date as if made on and as of such date, except as affected by
transactions permitted by this Agreement and except to the extent that any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct in all material
respects as of such specified date.
(b) Covenants and Agreements. The Partnership and Sub shall have performed
and complied with in all material respects all covenants and agreements required
by this Agreement to be performed or complied with by it on or prior to the
Closing Date.
22
(c) No Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred any Material Adverse Effect with respect to the
Partnership, and Xxxxxxx shall have received a certificate signed by an officer
of the Partnership GP, in each case to his Knowledge, to such effect.
(d) Certificates. Xxxxxxx shall have received a certificate from the
Partnership, in form and substance mutually acceptable to Xxxxxxx and the
Partnership, dated the Closing Date, representing and certifying that the
conditions set forth in Sections 6.1 and 6.2 have been fulfilled and a
certificate as to the incumbency of the officers executing this Agreement
on behalf of the Partnership.
(e) Opinion of Counsel. Xxxxxxx shall have received an opinion of counsel
for the Partnership in form and substance mutually acceptable to Xxxxxxx and
the Partnership.
(f) Registration Rights Agreement. The Partnership shall have executed and
delivered the Registration Rights Agreement, in substantially the form set
forth as Exhibit 6.2(f).
6.3 Conditions to Obligation of the Partnership and Sub. The obligation of
the Partnership and Sub to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
(a) Representations and Warranties. All the representations and warranties
of Xxxxxxx contained in this Agreement and in any agreement, instrument or
document delivered pursuant hereto or in connection herewith on or prior to
the Closing Date, shall be true and correct in all material respects (other
than any representation or warranty that is qualified by materiality or a
Material Adverse Effect, which shall be true and correct in all respects)
on and as of the Closing Date as if made on and as of such date, except as
affected by transactions permitted by this Agreement and except to the
extent that any such representation or warranty is made as of a specified
date, in which case such representation or warranty shall have been true
and correct in all material respects as of such specified date.
(b) Covenants and Agreements. Xxxxxxx shall have performed and complied
with in all material respects all covenants and agreements required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date.
(c) No Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred any Material Adverse Effect with respect to Xxxxxxx or
the Properties, and the Partnership shall have received a certificate
signed by an officer of Xxxxxxx, in each case to his Knowledge, to such
effect.
(d) Certificates. The Partnership shall have received a certificate from
Xxxxxxx, in form and substance mutually acceptable to the Partnership and
Xxxxxxx, dated the Closing Date, representing and certifying that the
conditions set forth in Sections 6.1
23
and 6.3 have been fulfilled, a certificate as to the incumbency of the officers
executing this Agreement on behalf of Xxxxxxx and a certificate that the
Contributed Cash constitutes all cash received by Xxxxxxx with respect to the
Properties, less any disbursements with respect to the Properties, on or after
July 1, 2004 through the Closing Date.
(e) Due Diligence. The due diligence investigation of Partnership with
respect to Xxxxxxx and the Properties shall have been completed to the
satisfaction of the Partnership, including but not limited to confirmation of
the accuracy of information described in Section 3.14 of this Agreement.
(f) Opinion of Counsel. The Partnership shall have received an opinion of
counsel for Xxxxxxx in form and substance mutually acceptable to the
Partnership and Xxxxxxx.
(g) Dissenters' Rights. Xxxxxxx shall have fully complied with the
applicable provisions of the FLLCA with respect to dissenters' rights and no
members of Xxxxxxx shall have perfected dissenters' rights, and the Partnership
shall have received a certificate signed by an officer of Xxxxxxx, in each
case to his Knowledge, to such effect.
(h) Management Contract.The Management Contract shall have been terminated.
(i) Record Title. Xxxxxxx shall have good and marketable title to, or valid
leasehold and right of way interests in, all of the Properties, free and
clear of all Encumbrances other than the Encumbrances set forth on Schedule 3.6.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination.
This Agreement may be terminated and the transactions contemplated hereby
abandoned at any time prior to the Effective Time, whether before or after
the approval of the Merger and this Agreement by the members of Xxxxxxx in
the following manner:
(a) By mutual written consent of the parties hereto;
(b) By Xxxxxxx, the Partnership or Sub, if:
(i) The Merger shall not have been consummated on or before December 31,
2004, unless such failure to close shall be due to a material breach of
this Agreement by the party seeking to terminate this Agreement pursuant to
this clause (i);
(ii) There shall be any Applicable Law that makes consummation of the
transactions contemplated hereby illegal or otherwise prohibited or a
24
Governmental Entity shall have issued an order, decree or ruling or taken
any other action permanently restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated hereby, and
such order, decree, ruling or other action shall have become final and
nonappealable;
(c) By Xxxxxxx, if (i) any of the representations and warranties of the
Partnership contained in this Agreement shall not be true and correct such
that the condition set forth in Section 6.2(a) would not be satisfied, or
(ii) the Partnership shall have failed to fulfill in any material respect
any of its material obligations under this Agreement, which failure is
material to the obligations of such party under this Agreement, and, in the
case of each of clauses (i) and (ii), such misrepresentation, breach of
warranty or failure (provided it can be cured) has not been cured within 30
days of notice thereof by Xxxxxxx.
(d) By the Partnership and Sub, if (i) any of the representations and
warranties of any of Xxxxxxx contained in this Agreement shall not be true
and correct such that the condition set forth in Section 6.3(a) would not
be satisfied or (ii) Xxxxxxx shall have failed to fulfill in any material
respect any of their material obligations under this Agreement, which
failure is material to the obligations of such party under this Agreement,
and, in the case of each of clauses (i) and (ii), such misrepresentation,
breach of warranty or failure (provided it can be cured) has not been cured
within 30 days of notice thereof by the Partnership.
7.2 Effect of Termination.
In the event of the termination of this Agreement pursuant to Section 7.1
by any party, written notice thereof shall forthwith be given to the other
parties specifying the provision hereof pursuant to which such termination
is made, and this Agreement shall become void and have no effect, and there
shall be no liability hereunder on the part of any party hereto or the
general partner of the Partnership, or any of their respective directors,
officers, employees, unitholders or representatives, except that the
agreements contained in this Section 7.2, in Sections 5.1 and 5.6, Article
8 and in Article 9 shall survive the termination hereof. Nothing contained
in this Section 7.2 shall otherwise relieve any party from liability for
damages actually incurred as a result of any breach of this Agreement. No
termination of this Agreement shall affect the obligations of the parties
pursuant to the Confidentiality Agreements referred to in Section 5.1.
7.3 Amendment.
Any provision of this Agreement (including the Exhibits hereto) may be
amended, to the extent permitted by law, prior to the Effective Time if,
and only if, such amendment is in writing and signed, in the case of an
amendment, by the parties hereto.
7.4 Waiver.
Each of the parties to this Agreement may (i) waive any inaccuracies in the
representations and warranties of the other contained herein or in any
document, certificate or writing delivered pursuant hereto or (ii) waive
compliance by the other with any of the other's
25
agreements or fulfillment of any conditions to its own obligations contained
herein. Any agreement on the part of a party hereto to any such waiver shall be
valid only if set forth in an instrument in writing signed by or on behalf of
such party. No failure or delay by a party hereto in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
ARTICLE 8
SURVIVAL MATTERS
8.1 Survival of Representations and Warranties.
The representations and warranties contained in this Agreement shall expire
with, and be extinguished by, the Closing, and thereafter no party hereto
or any shareholder, director, officer, employee or affiliate of such party
shall have any liability whatsoever (whether pursuant to this Agreement or
otherwise) with respect to any such representation or warranty. This
Section 8.1 shall have no effect upon any other obligations of the parties
hereto under this Agreement, whether to be performed before, at or after
the Closing. This Section 8.1 shall have no effect upon any other
obligations of the parties hereto under this Agreement, whether to be
performed before, at or after the Closing.
ARTICLE 9
MISCELLANEOUS
9.1 Notices.
All notices, requests, demands and other communications required or
permitted to be given or made hereunder by any party hereto shall be in
writing and shall be deemed to have been duly given or made if
(i) delivered personally, (ii) transmitted by first class registered or
certified mail, postage prepaid, return receipt requested, (iii) sent by
prepaid overnight courier service or (iv) sent by telecopy or facsimile
transmission, answer back requested, to the parties at the following
addresses (or at such other addresses as shall be specified by the parties
by like notice):
26
(a) If to Xxxxxxx or to the Members:
Xxxxxxx Royalty Partners, LLC
c/o Xxxxx X. XxXxxxxx
000 XX Xxxxxx Xxx Xxxxx
Xxxx Xxxx, Xxxxxxx 00000-0000
with a copy to:
Xxxxxxx Xxxx LLP
0000 Xxx X&X Xxxxx, Xxxxx 0000
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telefax: (000) 000-0000
and to:
Xxxxxx X. Xxxxxxx
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
(b) If to the Partnership or Sub:
0000 Xxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxx McManemin
Telefax: (000) 000-0000
with a copy to:
Xxxxxxxx & Knight LLP
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxxxxxxx
Telefax: (000) 000-0000
Such notices, requests, demands and other communications shall be effective
(i) if delivered personally or sent by courier service, upon actual receipt by
the intended recipient, (ii) if mailed, the date of delivery as shown by the
return receipt therefor or (iii) if sent by telecopy or facsimile transmission,
when the answer back is received.
9.2 Entire Agreement.
This Agreement, together with the Schedules, Exhibits and other writings
referred to herein or delivered pursuant hereto, including the
Confidentiality Agreement referenced in Section 5.1, constitute the entire
agreement between the parties hereto with respect to the subject
27
matter hereof and supersede all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
9.3 Binding Effect; Assignment; Third Party Benefit.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns;
provided, however, that neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (by operation of law or otherwise) without the prior written consent
of the other parties. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any person other than the parties hereto
any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
9.4 Severability.
If any provision of this Agreement is held to be unenforceable, this
Agreement shall be considered divisible and such provision shall be deemed
inoperative to the extent it is deemed unenforceable, and in all other
respects this Agreement shall remain in full force and effect; provided,
however, that if any such provision may be made enforceable by limitation
thereof, then such provision shall be deemed to be so limited and shall be
enforceable to the maximum extent permitted by Applicable Law.
9.5 Governing Law; Consent to Jurisdiction.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Texas. Each of the parties submits
to the jurisdiction of any state or federal court sitting in the State of
Texas, County of Dallas, or, if it has or can acquire jurisdiction, in the
United States District Court for the Northern District of Texas, in any
action or proceeding arising out of or relating to this Agreement, agrees
that all claims in respect of the action or proceeding shall be heard and
determined only in any such court, and agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court.
Each of the parties waives any defense of inconvenient forum to maintenance
of any action or proceeding so brought.
9.6 Descriptive Headings.
The descriptive headings herein are inserted for convenience of reference
only, do not constitute a part of this Agreement and shall not affect in
any manner the meaning or interpretation of this Agreement.
9.7 Disclosure.
Each of the Schedules to this Agreement shall be deemed to include and
incorporate all disclosures made on the other Schedules to this Agreement.
Certain information set forth in the Schedules is included solely for
informational purposes and may not be required to be disclosed pursuant to
this Agreement. It is understood and agreed that the specification of any
dollar amount in the representations and warranties contained in this
Agreement or the inclusion of any specific item in the Schedules is not
intended to imply that such amounts or
28
higher or lower amounts, or the items so included or other items, are or are not
material, and no party shall use the fact of the setting of such amounts or the
fact of the inclusion of any such item in the Schedules in any dispute or
controversy between the parties as to whether any obligation, item or matter not
described herein or included in a Schedule is or is not material for
purposes of this Agreement.
9.8 Gender.
Pronouns in masculine, feminine and neuter genders shall be construed to
include any other gender, and words in the singular form shall be construed
to include the plural and vice versa, unless the context otherwise
requires.
9.9 References.
All references in this Agreement to Articles, Sections and other
subdivisions refer to the Articles, Sections and other subdivisions of this
Agreement unless expressly provided otherwise. The words "this Agreement,"
"herein," "hereof," "hereby," "hereunder" and words of similar import refer
to this Agreement as a whole and not to any particular subdivision unless
expressly so limited. Whenever the words "include," "includes" and
"including" are used in this Agreement, such words shall be deemed to be
followed by the words "without limitation." Each reference herein to a
Schedule or Exhibit refers to the item identified separately in writing by
the parties hereto as the described Schedule or Exhibit to this Agreement.
All Schedules and Exhibits are hereby incorporated in and made a part of
this Agreement as if set forth in full herein.
9.10 Counterparts.
This Agreement may be executed by the parties hereto in any number of
counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same agreement. Each counterpart may consist
of a number of copies hereof each signed by less than all, but together
signed by all, the parties hereto.
9.11 Injunctive Relief.
The parties hereto acknowledge and agree that irreparable damage would
occur in the event any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement, and shall be entitled to enforce specifically the provisions of
this Agreement, in any court of the United States or any state thereof
having jurisdiction, in addition to any other remedy to which the parties
may be entitled under this Agreement or at law or in equity.
29
ARTICLE 10
DEFINITIONS
10.1 Certain Defined Terms.
As used in this Agreement, each of the following terms has the meaning
given it below:
"Affiliate" shall mean, with respect to any person, any other person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with, such person.
"Applicable Law" shall mean any statute, law, rule or regulation or any
judgment, order, writ, injunction or decree of any Governmental Entity to
which a specified person or property is subject.
"Xxxxxxx Members" shall mean those members of Xxxxxxx identified in
Schedule 3.5.
"Business Day" shall mean a day on which banks are open for the transaction
of business in Dallas, Texas.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Unit" shall mean a Common Unit, as defined in the Partnership
Agreement.
"Encumbrances" shall mean liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions (whether on
voting, sale, transfer, disposition or otherwise), easements and other
encumbrances of every type and description, whether imposed by law,
agreement, understanding or otherwise.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Governmental Entity" shall mean any court or tribunal in any jurisdiction
(domestic or foreign) or any public, governmental, or regulatory body,
agency, department, commission, board, bureau or other authority or
instrumentality (domestic or foreign).
"IRS" shall mean the Internal Revenue Service.
"Knowledge" shall mean that an individual will be deemed to have
"Knowledge" of a particular fact or other matter if such individual is
actually aware of such
30
fact or other matter; or a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of conducting
a reasonably comprehensive investigation concerning the existence of such fact
or other matter. The Partnership will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving as chief
executive officer or chief operating officer of such Person (or in any similar
capacity) has, or at any time had, Knowledge of such fact or other matter. Any
person other than an individual or the Partnership will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving, or who has at any time served as a director, officer, partner,
executor, or trustee of such Person (or in any similar capacity) has, or at any
time had, Knowledge of such fact or other matter.
"Lawsuits" shall mean Case Nos. CJ-93-348 (Dist. Court for Xxxxx County,
Oklahoma) and CJ-97-68 (Dist. Court for Washita County, Oklahoma) in which
Xxxxxxx Nominee Corporation is a class action plaintiff the details of
which have been previously delivered to the Partnership and any other class
action lawsuit that may arise which similarly relate to improperly
calculated royalty payments made prior to June 30, 2004.
"Material Adverse Effect" shall mean with respect to any person, property
or asset any adverse change or adverse condition in or relating to the
financial condition of such person, including its subsidiaries, property or
asset that is material to such person, its subsidiaries, property or asset
taken as a whole; provided, however, that any prospective change or changes
in the conditions listed above or relating to or resulting from (i) the
transactions contemplated by this Agreement (or the announcement of such
transactions), (ii) any change or changes in the prices of oil, gas,
natural gas liquids or other hydrocarbon products or (iii) general economic
conditions or local, regional, national or international industry
conditions, shall not be deemed to constitute a Material Adverse Effect.
"Oil and Gas" shall mean oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate and all other liquid hydrocarbons,
associated gases, vaporous substances or minerals produced from a well
bore.
"Other Minerals" shall mean sulphur, lignite, coal, uranium, thorium, iron,
geothermal steam, water, carbon dioxide, helium and all other minerals,
ores or substances of value which are not generally produced from a
wellbore in conjunction with the production of Oil and Gas.
"Partnership Agreement" shall mean the Amended and Restated Partnership
Agreement of the Partnership, as currently in effect.
"Permits" shall mean licenses, permits, franchises, consents, approvals and
other authorizations of or from Governmental Entities.
"Permitted Encumbrances" means (i) Encumbrances created by Xxxxxxx, (ii)
liens for Taxes not yet due and payable, (iii) statutory liens (including
materialmen's, mechanic's, repairmen's landlord's, and other similar liens)
arising in connection with the ordinary course of business securing
payments not yet due and payable and (iv) such defects, imperfections or
irregularities of title, if any, as are not substantial in character,
amount or extent and do not materially impair the conduct of normal
operations of the Properties.
31
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
enterprise, unincorporated organization or Governmental Entity.
"Pre-Closing Tax Period" shall mean all taxable periods (or portions
thereof) ending on or before the Effective Time.
"Proceedings" shall mean all proceedings, actions, claims, suits,
investigations and inquiries by or before any arbitrator or Governmental
Entity.
"Properties" shall mean:
(a) All of Xxxxxxx'x interest in and to the Oil and Gas and Other Minerals
in, under and that may be produced from (or pursuant to the terms of) the
properties, rights and interests described in Schedule A;
(b) All other right, title and interest of Xxxxxxx, of whatever kind or
character, in and to (i) the Oil and Gas and Other Minerals in, under and
that may be produced from the lands described in Schedule A (including
without limitation interests in oil, gas and mineral leases, overriding
royalty interests, fee royalty interests, fee mineral interests and other
interests) and (ii) any other oil, gas and/or mineral property, right,
interest or license, whether real/immovable, personal/movable, vested,
contingent or otherwise, to the extent any such property, right, interest
or license is located, or relates to lands located, anywhere in the states
referenced in Schedule A;
(c) All of Xxxxxxx'x interests in and to all Oil and Gas and/or Other
Mineral unitization, pooling and/or communitization agreements, declarations
and/or orders, and in and to the properties, rights and interests covered and
the Units created thereby, which cover, affect or otherwise relate to the
properties, rights and interests described in clause (a) or (b) above;
(d) All of Xxxxxxx'x interest in and rights under all operating agreements,
production sales contracts, processing agreements, transportation
agreements, gas balancing agreements, farm-out and/or farm-in agreements,
salt water disposal agreements, area of mutual interest agreements and
other contracts and/or agreements which cover, affect, or otherwise relate
to the properties, rights and interests described in clause (a), (b), or
(c) above or to the operation of such properties, rights and interests or
to the treating, handling, storing, processing, transporting or marketing
of Oil and Gas or Other Minerals produced from (or allocated to) such
properties, rights and interests, as same may be amended or supplemented
from time to time;
(e) all of Xxxxxxx'x interest in and to all improvements, fixtures, movable
or immovable property and other real and/or personal property (including,
without limitation, all xxxxx, pumping units, wellhead equipment, tanks,
pipelines, flow lines, gathering lines, compressors, dehydration units,
separators, meters, buildings, injection facilities, salt water disposal
facilities, and power, telephone and telegraph lines), and all easements,
servitudes, rights-of-way, surface leases, licenses, permits and other
surface rights, which are now or hereafter used, or held for use, in
connection with the properties,
32
rights and interests described in clause (a), (b) or (c) above, or in connection
with the operation of such properties, rights and interests, or in connection
with the treating, handling, storing, processing, transporting or marketing of
Oil and Gas or Other Minerals produced from (or allocated to) such properties,
rights and interests;
(f) all Oil and Gas and Other Minerals produced from or allocated to the
properties, rights and interests described in clauses (a), (b) and/or (c)
above, and any products processed or obtained therefrom (herein
collectively called the "Production"), together with (i) all proceeds of
Production (regardless of whether the severance of the Production to which
such proceeds relates occurred on, before or after the Effective Time
hereof), and (ii) all liens and security interests securing payment of the
proceeds from the sale of such Production, including, but not limited to,
those liens and security interests provided for under statutes enacted in
the jurisdiction in which the Properties are located, or statutes made
applicable to the Properties under federal law (or some combination of
federal and state law);
(g) all payments received in lieu of production from the properties, rights
and interests described in clauses (a), (b) and/or (c) above (regardless of
whether such payments accrued, and/or the events which gave rise to such
payments occurred, on, before or after the Effective Time hereof,
including, without limitation, (i) "take or pay" payments and similar
payments, (ii) payments received in settlement of or pursuant to a judgment
rendered with respect to take or pay or similar obligations or other
obligations under a production sales contract, (iv) payments received under
a gas balancing agreement or similar written or oral arrangement, as a
result of (or received otherwise in settlement of or pursuant to judgment
rendered with respect to) rights held by Xxxxxxx as a result of Xxxxxxx
(and/or its predecessors in title) taking or having taken less gas from
lands covered by a property right or interest described in clauses (a), (b)
and/or (c) above, than their ownership of such property right or interest
would entitle them to receive and (v) shut-in rental or royalty payments
(the payments described in this clause (g) being herein called "Payments in
Lieu of Production");
(h) to the extent legally transferable, all favorable contract rights and
choses in action (i.e. rights to enforce contracts or to bring claims
thereunder) related to the properties, rights and interests described in
clauses (a) through (g) above (regardless of whether the same arose, and/or
the events which gave rise to the same occurred on, before or after the
Effective Time hereof, and further regardless of whether same arise under
contract, the law or in equity); and
(i) all rights, estates, powers and privileges appurtenant to the foregoing
rights, interests and properties, including without limitation executive
rights (i.e. rights to execute leases), rights to receive bonuses and delay
rentals and rights to grant pooling authority.
"Reasonable Best Efforts" shall mean a party's best efforts in
accordance with reasonable commercial practice and without the incurrence of
unreasonable expense.
33
"Records" means all data, files or records in Xxxxxxx'x control or
possession pertaining to the ownership and operation of the Properties,
including but not limited to all abstracts of title, accounting records,
property tax records, financial reports and projections, escrow reports,
books, contract files, division order files, documents evidencing the
prices currently being paid for production, engineering data, geological
and geophysical reports, lease files, logs, maps, pressure data, production
records, supplemental abstracts of title, title curative materials, title
opinions, title reports and other data useful to or used in connection with
the development, exploration or operation of the Properties.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Tax" shall mean any income taxes or similar assessments or any sales,
excise, occupation, use, ad valorem, property, production, severance,
transportation, employment, payroll, franchise or other tax imposed by any
United States federal, state or local (or any foreign or provincial) taxing
authority, including any interest, penalties or additions attributable
thereto.
"Tax Return" means any return or report, including any related or
supporting information, with respect to Taxes.
"Transfer Application" shall have the meaning assigned to it in the
Partnership Agreement.
"Unit" means, collectively, a drilling, spacing, proration, production or
enhanced recovery unit formed pursuant to a voluntary unitization,
communitization or pooling agreement, or a drilling, spacing, proration,
production or enhanced recovery unit formed under or pursuant to law, rule
or regulation or other action of a regulatory body having jurisdiction.
10.2 Certain Additional Defined Terms.
In addition to such terms as are defined in the opening paragraph of and
the recitals to this Agreement and in Section 10.1, the following terms are
used in this Agreement as defined in the Sections set forth opposite such
terms:
Defined Term Section Reference
Agreement Introduction
Applicable Environmental Laws 3.13
Xxxxxxx Introduction
Xxxxxxx Annual Financial Statements 3.7
Xxxxxxx Financial Statements 3.7
Xxxxxxx Latest Balance Sheet 3.7
Xxxxxxx Latest Financial Statements 3.7
CERCLA 3.13
Certificates of Merger 1.1
Closing 1.1
Closing Costs 5.6
34
Closing Date 1.1
Confidentiality Agreement 5.1
Contributed Cash 4.2(o)
Effective Time 1.1
FLLCA 1.1
Management Contract 5.10
Merger Recitals
Merger Consideration 1.5
ORLPA 1.1
Partnership Introduction
Partnership GP 2.3(a)
Partnership Audited Financial Statements 2.7
Partnership Financial Statements 2.7
Partnership Latest Balance Sheet 2.7
Partnership Unaudited Financial Statements 2.7
Payments in Lieu of Production
Definition of Properties
Production
Definition of Properties
RCRA 3.13
SEC Filings 2.13
Sub Introduction
[remainder of page intentionally blank]
35
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its representative thereunto duly authorized, all as
of the date first above written.
PARTNERSHIP:
DORCHESTER MINERALS, L.P.
BY: Dorchester Minerals Management LP,
General Partner
BY: Dorchester Minerals Management GP LLC,
General Partner
By: /s/ Xxxxxxx Xxxxx XxXxxxxxx
-----------------------------
Name: Xxxxxxx Xxxxx XxXxxxxxx
Title: Chief Executive Officer
SUB:
DORCHESTER MINERALS ACQUISTION GP, INC.
BY: Dorchester Minerals Acquisition GP, Inc.,
General Partner
By: /s/ Xxxxxxx Xxxxx XxXxxxxxx
-----------------------------
Name: Xxxxxxx Xxxxx XxXxxxxxx
Title: President
XXXXXXX:
XXXXXXX ROYALTY PARTNERS, LLC
By: /s/ Xxxxx X. XxXxxxxx
-----------------------------
Xxxxx X. XxXxxxxx, President
36
