Exhibit 2.1
AGREEMENT FOR PURCHASE AND SALE
INTERNATIONAL PAPER COMPANY,
INTERNATIONAL PAPER REALTY CORPORATION, IP FARMS, INC.,
IP PETROLEUM COMPANY, INC., IP TIMBERLANDS OPERATING COMPANY, LTD.,
GCO MINERALS COMPANY, THE XXXX-XXXX PETROLEUM COMPANY, INC.,
AMERICAN CENTRAL CORPORATION, CHAMPION REALTY CORPORATION, and
SUSTAINABLE FORESTS L.L.C.
AS SELLERS
AND
PURE RESOURCES, L.P.
AS BUYER
TABLE OF CONTENTS
ARTICLE I Assets
Section 1.01 Agreement to Sell and Purchase......................... 1
Section 1.02 Assets................................................. 1
Section 1.03 Excluded Assets........................................ 3
Section 1.04 Several Obligations of Sellers......................... 5
Section 1.05 Joint and Several Obligations of Sellers............... 5
Section 1.06 Transfer of Geophysical Data........................... 5
ARTICLE II Purchase Price
Section 2.01 Purchase Price......................................... 5
Section 2.02 Deposit................................................ 5
ARTICLE III Effective Time
Section 3.01 Ownership of Assets.................................... 7
ARTICLE IV Title Matters
Section 4.01 Access................................................. 7
Section 4.02 Certain Title Definitions.............................. 7
Section 4.03 Title Defect Notices................................... 12
Section 4.04 Remedies for Title Defects............................. 13
Section 4.05 No Warranty of Title................................... 13
Section 4.06 Limitation of Remedies for Title Defects............... 13
Section 4.07 Preferential Rights to Purchase........................ 13
Section 4.08 Consents to Assign..................................... 14
ARTICLE V Representations and Warranties of Sellers
Section 5.01 Existence.............................................. 15
Section 5.02 Legal Power............................................ 15
Section 5.03 Execution.............................................. 15
Section 5.04 Brokers................................................ 16
Section 5.05 Bankruptcy............................................. 16
Section 5.06 Suits.................................................. 16
Section 5.07 Taxes.................................................. 16
Section 5.08 Title.................................................. 16
Section 5.09 No Participating Minerals.............................. 16
Section 5.10 Compliance with Laws................................... 16
Section 5.11 Records................................................ 16
Section 5.12 Basic Documents........................................ 17
Section 5.13 Commitments............................................ 17
Section 5.14 Production Sales Contracts; Calls of Production........ 17
Section 5.15 Reserve Report Information............................. 17
Section 5.16 Area of Mutual Interest Agreements..................... 17
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Section 5.17 Limited Partner Interest and Program Interests......... 18
Section 5.18 No Oral Contracts...................................... 18
Section 5.19 Exempt Assets.......................................... 18
Section 5.20 Plugging Obligations................................... 18
Section 5.21 Operations after Effective Time........................ 18
Section 5.22 Preferential Rights to Purchase........................ 18
ARTICLE VI Representations and Warranties of Buyer
Section 6.01 Existence.............................................. 18
Section 6.02 Legal Power............................................ 19
Section 6.03 Execution.............................................. 19
Section 6.04 Brokers................................................ 19
Section 6.05 Bankruptcy............................................. 19
Section 6.06 Suits.................................................. 19
Section 6.07 Qualifications......................................... 19
Section 6.08 Investment............................................. 19
Section 6.09 Funds.................................................. 20
Section 6.10 Xxxx-Xxxxx-Xxxxxx...................................... 20
ARTICLE VII Operation of the Assets
Section 7.01 Operation of the Assets Prior to Closing............... 20
Section 7.02 Operation of the Assets After Closing.................. 21
Section 7.03 Correction of Exhibits................................. 21
Section 7.04 Mineral Servitudes..................................... 22
ARTICLE VIII Conditions to Obligations of Sellers
Section 8.01 Representations........................................ 23
Section 8.02 Performance............................................ 23
Section 8.03 Pending Matters........................................ 23
Section 8.04 Purchase Price......................................... 23
Section 8.05 Execution and Delivery of Closing Documents............ 23
Section 8.06 Closing Under Contribution Agreement................... 23
ARTICLE IX Conditions to Obligations of Buyer
Section 9.01 Performance............................................ 23
Section 9.02 Pending Matters........................................ 23
Section 9.03 Execution and Delivery of Closing Documents............ 24
Section 9.04 Closing Under Contribution Agreement................... 24
Section 9.05 Material Adverse Change in Value....................... 24
ARTICLE X Closing
Section 10.01 Time and Place of Closing.............................. 24
Section 10.02 Intentionally Omitted.................................. 24
Section 10.03 Adjustments to Purchase Price at Closing............... 24
Section 10.04 Pre-Closing Allocations/Statement...................... 26
Section 10.05 Post-Closing Adjustments to Purchase Price............. 26
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Section 10.06 Ad Valorem and Similar Taxes.......................... 27
Section 10.07 Actions of Sellers at Closing......................... 27
Section 10.08 Actions of Buyer at Closing........................... 27
Section 10.09 Further Cooperation................................... 28
Section 10.10 Confidentiality Agreement............................. 29
ARTICLE XI Termination
Section 11.01 Right of Termination.................................. 30
Section 11.02 Effect of Termination................................. 30
Section 11.03 Attorney Fees, Etc.................................... 30
ARTICLE XII Assumption, Indemnification and Survival
Section 12.01 Retained Obligations.................................. 31
Section 12.02 Assumption............................................ 32
Section 12.03 Buyer's Indemnification............................... 32
Section 12.04 Sellers' Indemnification.............................. 32
Section 12.05 Indemnification Procedures............................ 33
Section 12.06 Survival.............................................. 35
Section 12.07 Limitations on Liabilities............................ 35
Section 12.08 Exclusive Remedy...................................... 36
Section 12.09 No Punitives.......................................... 36
ARTICLE XIII Limitations on Representations and Warranties
Section 13.01 Disclaimers of Representations and Warranties......... 37
Section 13.02 Casualty Loss......................................... 37
ARTICLE XIV Dispute Resolution
Section 14.01 General............................................... 38
Section 14.02 Senior Management..................................... 38
Section 14.03 Independent Experts................................... 38
Section 14.04 Binding Arbitration................................... 39
ARTICLE XV Miscellaneous
Section 15.01 Names................................................. 40
Section 15.02 Taxes, Expenses and Recording......................... 40
Section 15.03 Independent Investigation............................. 41
Section 15.04 Document Retention.................................... 42
Section 15.05 Entire Agreement...................................... 42
Section 15.06 Waiver................................................ 42
Section 15.07 Publicity............................................. 42
Section 15.08 Construction.......................................... 42
Section 15.09 No Third Party Beneficiaries.......................... 43
Section 15.10 Assignment............................................ 43
Section 15.11 Governing Law......................................... 43
Section 15.12 Notices............................................... 43
Section 15.13 Severability.......................................... 44
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Section 15.14 Time of the Essence................................... 44
Section 15.15 Authority of IPP...................................... 44
Section 15.16 Definitions........................................... 44
Section 15.17 Counterpart Execution................................. 44
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LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Specified Mineral Interests/Tracts
Exhibit B Subject Area
Exhibit C Lease Properties
Exhibit D Limited Partner Interest and Program Interests
Exhibit E Excepted Tracts
Exhibit F Escrow Agreement
Exhibit G Producing Mineral Properties
Exhibit H-1 Mineral and Royalty Deed
Exhibit H-2 Mineral Servitude and Royalty Deed
Exhibit I Assignment and Conveyance
Exhibit J Surface Use Restrictions Agreements
Exhibit K Transition Services Agreement
Exhibit L Interruption of Prescription Acknowledgment
SCHEDULES
Schedule 1.06 List of Geophysical Data
Schedule 4.02 Drilled and Abandoned Well List
Schedule 4.08 Consents
Schedule 5.06 Litigation
Schedule 5.09 Participating Minerals
Schedule 5.13 Commitments
Schedule 5.14 Scheduled Production Sales Contracts
Schedule 5.16 Area of Mutual Interest Agreements
Schedule 5.18 Oral Contracts
Schedule 5.20 Plugging Obligations
Schedule 5.21 Operations Since the Effective Time
Schedule 5.22 Preferential Rights
Schedule 10.03(a)(ii) Overhead Expense Categories
Schedule 15.16(i) Seller Personnel
Schedule 15.16(ii) Buyer Personnel
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SCHEDULE OF DEFINED TERMS
Term Defined In
---- ----------
Acknowledgment ................................................... Section 7.04
Adjoining Lands.................................................Section 1.02(f)
Adjustment Values..................................................Section 4.02
Affiliate ........................................................ Section 5.04
Agreement ........................................................ Introduction
AMI Agreement .................................................... Section 5.16
Assets ........................................................... Section 1.01
Assumed Obligations ............................................. Section 12.02
Audited Financial Statements ................................. Section 10.09(c)
Basic Documents .................................................. Section 5.12
Buyer ............................................................ Introduction
Buyer Indemnitees ............................................... Section 12.04
Buyer's Benefit Plans ........................................ Section 10.11(c)
Cause ........................................................ Section 10.11(d)
Claim Notice ................................................. Section 12.05(b)
Closing ......................................................... Section 10.01
Closing Date .................................................... Section 10.01
Confidentiality Agreement ....................................... Section 10.10
Consent Agreement Deadline ....................................... Section 4.08
Contribution Agreement ........................................... Section 8.06
Conveyance ....................................................... Section 4.05
Customary Post Closing Consents .................................. Section 4.08
Deeds ............................................................ Section 4.05
Defensible Title ................................................. Section 4.02
Deposit ...........................................................Section 2.02
Designated Representatives ....................................... Section 4.01
Direct Claim ................................................. Section 12.05(b)
Disputes ........................................................ Section 14.01
Documents ....................................................... Section 15.04
Effective Time ....................................................Section 3.01
Environmental Defect ............................................ Section 12.04
Environmental Laws .............................................. Section 12.04
Escrow Agent ......................................................Section 2.02
Escrow Agreement ..................................................Section 2.02
Excepted Minerals ..............................................Section 1.03(a)
Excepted Tracts ................................................Section 1.03(d)
Exchange Act ................................................. Section 10.09(c)
Excluded Assets .................................................. Section 1.03
Exempt Assets .................................................... Section 6.10
Final Settlement Date ........................................ Section 10.05(a)
Final Statement .............................................. Section 10.05(b)
Governmental Authority ........................................... Section 4.02
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Hazardous Materials ............................................. Section 12.04
Holdback Value.................................................... Section 4.08
Indemnified Party ............................................ Section 12.05(a)
Indemnifying Party ........................................... Section 12.05(a)
Independent Expert ........................................... Section 14.03(a)
Interest Rate ................................................ Section 10.05(b)
IPP .............................................................. Introduction
Knowledge ....................................................... Section 15.16
Lease Contracts ............................................... Section 1.02(i)
Lease Easements ............................................... Section 1.02(g)
Lease Property ................................................ Section 1.02(c)
Limited Partner Interest ...................................... Section 1.02(j)
Losses .......................................................... Section 12.03
Mineral Contracts ............................................. Section 1.02(h)
Mineral Interest and Mineral Interests ........................ Section 1.02(a)
Net Lease Acre ................................................... Section 4.02
Net Mineral Acre ................................................. Section 4.02
Net Revenue Interest ............................................. Section 4.02
Nonproducing Mineral Property .................................... Section 4.02
Non Surface Tract ............................................. Section 1.02(e)
Notice of Disagreement ....................................... Section 10.05(a)
Offshore Confidentiality Agreement .............................. Section 15.05
Oil and Gas ................................................... Section 1.02(a)
Oil and Gas Property .......................................... Section 1.02(d)
Party and Parties ................................................ Introduction
Permitted Encumbrances ........................................... Section 4.02
Plan ......................................................... Section 12.01(d)
Post Closing Consent Period ...................................... Section 4.08
Prime Rate ................................................... Section 10.05(b)
Producing Mineral Property ....................................... Section 4.02
Program Interest .............................................. Section 1.02(j)
Purchase Price ....................................................Section 2.01
Purchase Price Adjustments ................................... Section 10.03(c)
Pure Parent .................................................. Section 10.09(d)
Quarterly Overhead Payment .................................... Section 4.08(b)
Records ....................................................... Section 1.02(k)
Required Financial Statements................................. Section 10.09(c)
Retained Obligations ............................................ Section 12.01
Rules ........................................................ Section 14.04(a)
Scheduled Production Sales Contracts ............................. Section 5.14
SEC........................................................... Section 10.09(c)
Securities Act ............................................... Section 10.09(c)
Seller and Sellers ............................................... Introduction
Seller Indemnitees .............................................. Section 12.03
Specified Mineral Interest .................................... Section 1.02(a)
Statement .................................................... Section 10.04(b)
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Subject Area .................................................. Section 1.02(b)
Subject Servitudes ............................................... Section 7.04
Surface Tract ................................................. Section 1.02(e)
Surface Use Restriction Agreement ............................ Section 10.07(a)
Survival Period .................................................. Section 4.03
T3D Program Agreement ......................................... Section 4.08(b)
T3D Program Interest .......................................... Section 4.08(b)
Third Party Claim ............................................ Section 12.05(b)
Title Defect ..................................................... Section 4.02
Title Defect Amount .............................................. Section 4.02
Title Defect Notice .............................................. Section 4.03
Tracts ...............................................Sections 1.02(a), 1.02(b)
Transaction.......................................................Section 15.02
Transition Services Agreement ................................ Section 10.07(a)
Uncapped Obligations...........................................Section 12.07(b)
Working Interest ................................................. Section 4.02
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AGREEMENT FOR PURCHASE AND SALE
This Agreement for Purchase and Sale (this "Agreement") is made and
entered into this 29th day of January 2001, by and among International Paper
Company, International Paper Realty Corporation, IP Farms, Inc., IP Petroleum
Company, Inc. ("IPP"), IP Timberlands Operating Company, Ltd., GCO Minerals
Company, The Xxxx-Xxxx Petroleum Company, Inc., American Central Corporation,
Champion Realty Corporation and Sustainable Forests L.L.C. (each individually a
"Seller" and collectively the "Sellers") and Pure Resources, L.P., a Texas
limited partnership ("Buyer"). Buyer and Sellers are collectively referred to
herein as the "Parties," and Buyer and each Seller are sometimes referred to
herein as a "Party."
W I T N E S S E T H:
-------------------
WHEREAS, Sellers are willing to sell to Buyer, and Buyer is willing to
purchase from Sellers, the Assets (as hereinafter defined), all upon the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual benefits derived and to
be derived from this Agreement by each Party, Sellers and Buyer hereby agree as
follows:
ARTICLE I
Assets
Section 1.01 Agreement to Sell and Purchase. Subject to and in
accordance with the terms and conditions of this Agreement, Buyer agrees to
purchase the Assets from Sellers, and Sellers agree to sell the Assets to Buyer.
Section 1.02 Assets. Subject to Section 1.03, the term "Assets"
shall mean all of the right, title and interest of Sellers in and to:
(a) (i) the interest specified in Exhibit A (the "Specified Mineral
Interest") in all oil, liquid hydrocarbons, gas, coal seam gas, coal bed methane
(including specifically all coal seam gas and coal bed methane in and under and
that may be produced from any Tracts located inside the State of Alabama,
whether contained with the coal seam or otherwise) and any and all other liquid
or gaseous hydrocarbons, as well as their respective constituent products
(including, without limitation, condensate, casinghead gas, distillate and
natural gas liquids), and any other minerals produced in association therewith
(including elemental sulfur, helium, carbon dioxide and other non-hydrocarbon
substances produced in association with any of the above-described items, as
hereinafter defined) (all such substances are defined for purposes of this
Agreement as "Oil and Gas") in and under those certain tracts of land described
in Exhibit A (collectively, the "Tracts") and all additional interests of
Sellers in the Oil and Gas in and under the Tracts, or any of them, and all
executive rights and other rights whatsoever, including without limitation the
right to convey or the right to execute leases, presently owned or held by
Sellers or any of them with respect to the interests of any other parties in any
or all of the Oil and Gas in and under any of the Tracts; and (ii) all of
Sellers' mineral servitude and royalty interests in Oil and Gas in and under the
Tracts;
(b) all Oil and Gas, and royalty interests in Oil and Gas, owned or
claimed by any of the Sellers as of the date of execution of this Agreement (as
hereinafter defined) in and under the area identified on Exhibit B (the "Subject
Area"), irrespective of whether such rights or lands are adjacent, adjoining,
contiguous or in the vicinity of the lands particularly described in Exhibit A
(Sellers' right, title and interest in and to the Oil and Gas and royalty
interests described in parts (a) and (b) above in and under each such Tract,
subject to Section 1.03, is called a "Mineral Interest" and in and under all
such Tracts is collectively called the "Mineral Interests"). The term "Tracts"
shall also include for purposes of this Agreement all of the lands in the
Subject Area in which Sellers own or claim Oil and Gas interests, Oil and Gas
mineral servitude interests or Oil and Gas royalty interests as of the date of
execution of this Agreement to the same extent as if such lands had been
described in Exhibit A; it being the intent hereby to sell and convey all of
Sellers' right, title and interest in and to all Oil and Gas in and under and
royalty interests in Oil and Gas owned by or claimed by any of the Sellers in
the Subject Area in which they own or claim the ownership of any Mineral
Interest or Mineral Interests herein as of the date of execution of this
Agreement, subject in all cases to the retention by Sellers of the Excluded
Assets;
(c) the oil, gas and mineral leases and the leasehold estates created
thereby, the overriding royalty interests, the net profits interests, the
payments out of production and other rights all as described in Part I of
Exhibit C (each such lease and interest being herein called a "Lease Property"
and all of the same being herein collectively called the "Lease Properties");
(d) with respect to any Mineral Interest or Lease Property (each
herein called an "Oil and Gas Property"), all rights with respect to any pooled,
communitized or unitized acreage by virtue of such Oil and Gas Property being a
part thereof, including all production of Oil and Gas from such pool or unit
allocated to such Oil and Gas Property;
(e) (i) with respect to any Tract in which one or more of the Sellers
own all or part of the surface estate as of the Closing ("Surface Tract"), a
non-exclusive easement upon such Surface Tract at all times for the purpose of
conducting any exploration (including, without limitation, by means of seismic
survey), development, storage, treatment, production or transportation
activities in respect of Oil and Gas on such Surface Tract, including, without
limitation, the right to: ingress and egress in, on and across such Surface
Tract, drill water xxxxx and utilize water produced therefrom on such Surface
Tract; use roads now existing or hereinafter constructed on such Surface Tract;
use sand and gravel for the purposes of constructing and maintaining roads and
locations on such Surface Tract; construct and use drilling and producing
locations, pipelines, gathering lines, facilities, treating, processing and
storage facilities or plants and surface structures; and Sellers' rights (if
any) to use the subsurface depths under such Surface Tract for the disposal of
produced brine, water and drilling fluids generated from such Surface Tract in
such manner as may be required or permitted by applicable law, (ii) all Sellers'
rights (if any) with respect to the use and occupation of the surface of and the
subsurface depths under any Tract that is not a Surface Tract ("Non Surface
Tract") or any Lease Property, and (iii) all rights with respect to the use and
occupation of the surface of and the subsurface depths under any Lease Property
that is not on or under a Surface Tract;
(f) with respect to any Tract that as of the Closing has no existing
right of access to a public road (either directly or through one or more other
Tracts), a non-exclusive easement or right-of-way for ingress and egress across
any other land owned as of the Closing or thereafter acquired
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by any Sellers that adjoins such Tract, but only to the extent necessary to give
such Tract access, either directly or through one or more easements or
rights-of-ways, to a public road and, in the case of after acquired property,
only if requested during Sellers' ownership of such after acquired property
(such other land being herein called the "Adjoining Land");
(g) all easements, rights-of-way, servitudes, permits, licenses,
franchises and other estates or similar rights and privileges related to or used
solely in connection with the Lease Properties ("Lease Easements");
(h) all rights in, to or derived from contracts, agreements, Oil
and Gas leases and other arrangements to the extent the same relate to the
Mineral Interests (the "Mineral Contracts").
(i) all rights in, to or derived from contracts, agreements,
assignments, leases and other arrangements that relate to the Lease Properties
and Lease Easements, including without limitation production sales contracts,
operating agreements, service agreements and, to the extent assignable, licenses
relating to geophysical data or the rights to acquire such licenses or data, and
the contracts, agreements, leases and other arrangements described in Part II of
Exhibit C (the "Lease Contracts");
(j) the limited partner interest in Texas 3D, L.P. described in
Exhibit D (the "Limited Partner Interest") and the program agreement interests
described in Exhibit D (each, a "Program Interest"); and
(k) all contract and accounting files, books, records, files, well
files, muniments of title, reports and similar documents and materials of
Sellers that relate to the Lease Properties and copies of all contract and
accounting files, books, records, files, muniments of title, reports and similar
documents and materials of Seller that relate to the Assets other than the Lease
Properties (collectively, the "Records").
Section 1.03 Excluded Assets. Notwithstanding the foregoing, the
Assets shall not include, and there is excepted, reserved and excluded from the
sale contemplated hereby (collectively, the "Excluded Assets"):
(a) With respect to any Tract, (i) all industrial minerals, precious
and semi-precious gems and minerals, lead, zinc, copper, coal, lignite, peat,
sulfur (but excluding elemental sulfur, helium, carbon dioxide and other non-
hydrocarbon substances produced in association with Oil and Gas), phosphate,
iron ore, sodium, salt, uranium, thorium, and other fissionable materials,
molybdenum, vanadium, titanium, rutile ilmenite, leucoxene, zircon, monazite,
gold, silver, bauxite, limestone, granite, saprolite, kaolin (and other forms of
clay), sand, gravel, aggregate and other mined or quarried stone, bedrock and
other rock materials, and geothermal energy (including entrained methane,
hydrostatic pressure and thermal energy), (ii) all coal bed methane and coal
seam gas in and under and that may be produced from Tracts located outside the
State of Alabama, and (iii) all other substances and ore deposits of any kind or
character, whether solid, liquid or gaseous, and without limitation by
enumeration of the minerals and substances expressly mentioned above, presently
owned by Sellers in, on or under any of the Tracts, other than Oil and Gas, (the
items in subsections (i), (ii) and (iii) being the "Excepted Minerals") and all
executive rights and other rights whatsoever related to the Excepted Minerals,
including, without limitation, the right to convey or
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the right to execute leases, presently owned or held by Sellers with respect to
the interests of any other parties in any or all of the Excepted Minerals, in or
under any of the Tracts, together with the rights of ingress and egress and use
of the Tracts by Sellers and their mineral lessees to the extent reasonably
necessary for exploring, drilling, mining, developing, producing, treating,
storing, removing, transporting and owning all of the Excepted Minerals;
provided, further, however, this reservation of mineral rights shall not
prohibit or restrict Buyer from using "on-site" sand or gravel as provided in
Section 1.02(e)(i);
(b) if a well capable of producing Oil and Gas is located on a
Tract, or on lands pooled or unitized therewith, the entire interest of the
original lessee in all Oil and Gas leases covering all or part of such Tract as
of the Effective Time, it being understood that any interest owned by any
Sellers as described in this clause (b) is being contributed and conveyed by
such Sellers pursuant to the Contribution Agreement;
(c) all rights to occupy, use, develop and transfer the surface of
the Surface Tracts except as provided in Section 1.02(e)(i) above;
(d) all rights and interests of Sellers in and to the properties
described in Exhibit E (including all rights and interests in Oil and Gas and
royalty interests in Oil and Gas owned or claimed by any of the Sellers in and
to such properties) (the "Excepted Tracts");
(e) all rights to use the subsurface depths of any Surface Tracts
for the storage of Oil and Gas, other than in connection with operations to
explore for, develop or produce Oil and Gas;
(f) any refund of costs, taxes or other expenses borne by Sellers
or their predecessors in title attributable to the period prior to the Effective
Time;
(g) any and all proceeds payable to any Sellers under the
Contracts including, without limitation, proceeds from the settlement of
contract disputes with lessees, purchasers or transporters of Oil and Gas or
byproducts produced from the Oil and Gas Properties, including, without
limitation, settlement of take-or-pay disputes, insofar as said proceeds are
attributable to periods of time prior to the Effective Time;
(h) all corporate, financial (but not accounting), tax, and legal
records of Sellers relating to the Assets (other than legal records relating to
title and contract matters pertaining to the Lease Properties and copies of
legal records relating to or pertaining to the Assets other than the Lease
Properties and other than any such records of Sellers that the Parties
reasonably agree are necessary to own, operate and enjoy the Assets);
(i) all non-proprietary or jointly owned geophysical data licensed
to Sellers that cannot be transferred without the consent of or payment (unless
Buyer agrees to make such payment) to any third party; and
(j) all rights against other parties under the Mineral Contracts
or otherwise to (A) enforce the obligations of such parties and (B) recover
damages therefrom, in either case, with
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respect to Environmental Defects for which Sellers have retained liability under
Section 12.01(e) hereof.
Section 1.04 Separate Interests of Sellers. The Parties acknowledge
and agree that the Assets are not owned by the parties named as Sellers in the
same proportion as to each and every component thereof and that one or more of
the parties named as Sellers may own no interest in one or more of the Assets.
Section 1.05 Joint and Several Obligations of Sellers. The
obligations of Sellers under this Agreement shall be joint and several.
Section 1.06 Transfer of Geophysical Data. To Sellers' Knowledge,
Schedule 1.06 contains a list of agreements relating to the geophysical data
excluded under Section 1.03(i), that restrict the transfer of such data to
Buyer. Sellers agree to hold all such data in their possession for a period of
one year. If during such one-year period Buyer obtains written consent for the
transfer of any such data (and it pays any required third party licensing,
consent or transfer fees in connection with such transfer), then Sellers shall
transfer such data affected thereby to Buyer. If Buyer fails to obtain the
necessary written consent for the transfer of any such data during the one year
period or if Buyer fails to pay such required fees during such one year period,
then Buyer shall have no further rights or interest in such data affected
thereby under this Agreement or otherwise.
ARTICLE II
Purchase Price
Section 2.01 Purchase Price. The total consideration for the
purchase, sale and conveyance of the Assets to Buyer is Buyer's payment to
Sellers of the sum of $30,000,000.00 (the "Purchase Price"), as adjusted in
accordance with the provisions of this Agreement.
Section 2.02 Deposit.
(a) Concurrently with the execution of the Escrow Agreement by
Buyer and Sellers, Buyer shall deliver to The Chase Manhattan Bank (the "Escrow
Agent") a performance guarantee deposit in the amount of Fifteen Million Dollars
($15,000,000.00) (the "Deposit") in accordance with the provisions of the Escrow
Agreement by and among Buyer, Sellers and the Escrow Agent in the form attached
hereto as Exhibit F (the "Escrow Agreement"). All fees payable to the Escrow
Agent under the Escrow Agreement shall be borne and paid one-half by Buyer and
one-half by Sellers.
(b) If the transactions contemplated by this Agreement are
consummated, the Deposit and any interest accrued thereon shall be distributed
to Sellers and shall be considered as payment of a portion of the Purchase
Price, and the Purchase Price payable by Buyer at Closing shall be reduced by
the amount of the Deposit and any interest accrued thereon.
(c) If (i) all conditions precedent to the obligations of Buyer
set forth in Article IX have been met; and (ii) either
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(A) the transactions contemplated by this Agreement are not consummated on or
before the Closing Date solely because of:
(1) the failure of Buyer to perform any of its material obligations
hereunder, or
(2) the failure of any of Buyer's representations or warranties
hereunder to be true and correct in all material respects as of the
Closing, or
(B) the transactions contemplated by the Contribution Agreement are not
consummated on or before the Closing Date solely because of:
(1) the failure of any of the Pure Parties or the Partnership (as
such terms are defined under the Contribution Agreement) to perform any of
its material obligations under the Contribution Agreement, or
(2) the failure of any of the Pure Parties' or the Partnership's
representations or warranties under the Contribution Agreement to be true
and correct in all material respects as of the Closing,
then, in such event, Sellers shall have the right to terminate this Agreement,
seek damages from Buyer, and receive the Deposit and the interest earned
thereon. The condition precedent to the obligations of Buyer set forth in
Section 9.04 shall be deemed to have been met for purposes of Section
2.02(c)(i), if such condition precedent is not met solely because of the failure
of the Pure Parties, as defined in the Contribution Agreement, to perform any of
its material obligations under the Contribution Agreement or the failure of any
of the Pure Parties' representations or warranties under the Contribution
Agreement to be true and correct in all material respects as of the Closing
Date. It is expressly understood that the conditions precedent to the
obligations of Buyer set forth in Article IX shall not have been met if (I) the
Contribution Agreement is terminated by the Pure Parties in accordance with the
Contribution Agreement and (II) the transactions contemplated by this Agreement
have not failed to Close because of Buyer's material breach of this Agreement.
The Deposit and the interest earned thereon, when released to IPP on
behalf of Sellers, shall be credited against Buyer's obligation to pay to
Sellers damages (as limited by the provisions of Section 12.07(c)) resulting
from the transactions not being consummated on the Closing Date. The Parties
shall execute and deliver written instructions to the Escrow Agent to accomplish
the foregoing.
(d) If this Agreement is terminated by the mutual written agreement
of Buyer and Sellers, or if the Closing does not occur on or before the Closing
Date, for any reason other than as set forth in Section 2.02(c), then Buyer
shall be entitled to the delivery of the Deposit, free of any claims by Sellers
with respect thereto. In such event, any interest earned on the Deposit shall be
paid to Buyer. Sellers and Buyer agree to execute and deliver written
instructions to the Escrow Agent for the delivery of the Escrow Funds in
accordance with the provisions of this Section 2.02. Buyer and Sellers shall
thereupon have the rights and obligations set forth elsewhere herein.
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ARTICLE III
Effective Time
Section 3.01 Ownership of Assets. If the transactions contemplated
hereby are consummated in accordance with the terms and provisions hereof, the
ownership of the Assets shall be transferred from Sellers to Buyer at the
Closing Date but effective as of 7:00 a.m. local time on October 1, 2000 (the
"Effective Time").
ARTICLE IV
Title Matters
Section 4.01 Access. From the date of this Agreement through the
Closing, Sellers shall afford to Buyer and its representatives reasonable access
to IPP's offices and personnel of Sellers (including Sellers' contractors), the
Assets and Sellers' books and records relating to the Assets during normal
business hours, in order that Buyer may have a full opportunity to make such
investigations as it desires with respect to the Assets; provided, however, that
such investigation shall be upon reasonable notice and shall not unreasonably
disrupt the personnel and operations of Sellers or impede Sellers' efforts to
comply with their other obligations under this Agreement and the Contribution
Agreement. Such books and records shall include all abstracts of title, title
opinions, title files, ownership maps, lease files, assignments, division
orders, operating records and agreements, well files, financial and accounting
records, geological, geophysical and engineering records, in each case
pertaining to the Assets insofar as same may now be in existence and in the
possession of Sellers or their Affiliates, excluding, however, any information
that Sellers are prohibited from disclosing by third party confidentiality
restrictions. All requests for access to Sellers' employees, contractors,
offices, properties, books and records relating to the Assets shall be made to
such representatives designated in writing by Sellers (the "Designated
Representatives"), which Designated Representatives shall be solely responsible
for coordinating all such requests and all access permitted hereunder. Buyer
shall not contact any of the customers or suppliers of Sellers or their working
interest co-owners or operators, in connection with the transactions
contemplated by this Agreement, whether in person or by telephone, mail or other
means of communication, without the specific prior authorization of Sellers'
Designated Representatives, which consent shall not be unreasonably withheld.
Section 4.02 Certain Title Definitions. As used in this Agreement,
the following terms shall have the respective meanings set forth below:
"Adjustment Value" means:
(i) with respect to any Producing Mineral Property, an
amount determined as follows. First, divide (A) the aggregate gross
proceeds from the sale of Oil and Gas produced from such Producing
Mineral Property for the six calendar months preceding the month in
which Sellers receive a Title Defect Notice (as defined in Section
4.03) from Buyer with respect to such Producing Mineral Property, by
(B) six. Second, multiple the result by 36. Third, subtract from the
result an amount equal to the aggregate gross proceeds from the sale of
Oil and Gas produced from such Producing Mineral Property for the
period following
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the Effective Time and either received by Buyer or credited to Buyer at Closing,
less and except any portion thereof that Buyer is obligated to refund to a third
party. The final result is the Adjustment Value for such Producing Mineral
Property.
(ii) with respect to any Nonproducing Mineral Property, $15 per Net
Mineral Acre.
(iii) with respect to any Lease Property, (A) $200 per Net Lease Acre
if such Lease Property is located on or within a prospect on which no well has
been drilled and abandoned as a dry hole on or before the Effective Time, and
(B) $25 per Net Lease Acre if such Lease Property is located on or within a
prospect on which a well has been drilled and abandoned as a dry hole on or
before the Effective Time. Exhibit C identifies the prospect for each Lease
Property. Schedule 4.02 lists the xxxxx drilled and abandoned on the Lease
Properties and the name of the applicable prospect.
"Defensible Title" means, as of the Effective Time,
(i) with respect to any Producing Mineral Property, such ownership
by Sellers in the Mineral Interest underlying the Producing Mineral Property
that, subject to and except for Permitted Encumbrances:
(A) entitles Sellers to receive not less than the
percentage set forth in Exhibit G as Sellers' "Net Revenue Interest" of
all Oil and Gas produced, saved and marketed from such Producing Mineral
Property as set forth in Exhibit G, all without reduction, suspension or
termination of such interest throughout the productive life of such
Producing Mineral Property, except as specifically set forth in Exhibit
G and except for changes or adjustments that result from the
establishment of units, changes in existing units (or the participating
areas therein), or the entry into of pooling or unitization agreements
after the date hereof unless made in breach of the provisions of Section
7.01;
(B) obligates Sellers to bear not greater than the
percentage set forth in Exhibit G as Sellers' "Working Interest" of the
costs and expenses relating to the maintenance, development and
operation of such Producing Mineral Property as set forth in Exhibit G,
all without increase throughout the productive life of such Producing
Mineral Property, except as specifically set forth in Exhibit G and
except for changes or adjustments that result from the establishment of
units, changes in existing units (or the participating areas therein),
or the entry into of pooling or unitization agreements after the date
hereof unless made in breach of the provisions of Section 7.01; and
(C) is free and clear of all liens, encumbrances and
defects in title;
(ii) with respect to a Nonproducing Mineral Property, such ownership
that entitles Sellers to the Net Mineral Acres set forth in Exhibit A with
respect to such
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Nonproducing Mineral Property and that is free and clear of all liens,
encumbrances and defects in title, subject to and except for the
Permitted Encumbrances; and
(iii) with respect to a Lease Property, such ownership that
entitles Sellers to the Net Lease Acres set forth in Exhibit C with
respect to such Lease Property and that is free and clear of all liens,
encumbrances and defects in title, subject to and except for the
Permitted Encumbrances
In evaluating the significance of any fact, circumstance, or condition
for purposes of determining Defensible Title, due consideration shall
be given to the length of time that the particular Asset has been
producing Oil and Gas and whether such fact, circumstance, or condition
is of the type expected to be encountered in the area involved and is
usual and customarily acceptable to reasonable and prudent operators,
interest owners, and/or purchasers engaged in the business of the
ownership, development, and operation of oil and gas properties with
knowledge of such facts and appreciation of their legal significance.
"Net Lease Acre" means the entire working or operating interest in an
Oil and Gas lease covering the full Oil and Gas interest in one acre of land,
determined without regard to royalty or overriding royalty burdens, reversionary
interests or depth limitations or other Permitted Encumbrances. Thus, if Sellers
own an undivided 50% working or operating interest in an Oil and Gas lease
covering all of the Oil and Gas in and under a certain 100 acre tract, Sellers
own 50 Net Lease Acres in such lease and tract. If Sellers own two or more
different working interests with respect to different depth intervals in a
leased tract, the Net Lease Acres shown on Exhibit C with respect to such lease
are the number of Net Lease Acres calculated based on the largest of such
working interests, and the lesser working interest in other depths shall not
constitute a Title Defect or otherwise entitle Buyer to recovery for breach of
warranty under this Agreement for each such lease and depth.
"Net Mineral Acre" means the full Oil and Gas interest in one acre of
land, determined without regard to whether such interest is subject to existing
leases, royalty burdens, reversionary interests or other Permitted Encumbrances.
Thus, if Sellers own an undivided 50% interest in the Oil and Gas in and under a
certain 100 acre tract, Sellers own 50 Net Mineral Acres in such tract.
"Nonproducing Mineral Property" means any Mineral Interest other than a
Producing Mineral Property.
"Permitted Encumbrances" means any of the following matters to the
extent the same are valid and subsisting and affect the Oil and Gas Properties:
(a) (i) the Oil and Gas leases covering the Producing
Mineral Properties, in each case to the extent the same do not operate
to reduce the Net Revenue Interests of Sellers as set forth in Exhibit
G or increase the Working Interests of Sellers as set forth in Exhibit
G without a corresponding increase in the Net Revenue Interests, (ii)
the Oil and Gas leases covering the Nonproducing Mineral Properties,
and (iii) the Oil and Gas leases, interests in which constitute part of
the Lease Properties ;
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(b) (i) any undetermined or inchoate liens or charges
constituting or securing the payment of expenses that were incurred
incidental to the maintenance, development, production or operation of
the Assets or for the purpose of developing, producing or processing
Oil and Gas therefrom or therein and (ii) any materialman's,
mechanics', repairman's, contractors', operators' liens or other
similar liens or charges for liquidated amounts arising in the ordinary
course of business, in each case (with respect to all of the matters
described in this clause (b)) (A) that Sellers have agreed to assume or
pay pursuant to the terms hereof, or (B) for which Sellers are
responsible for paying or releasing at Closing;
(c) any liens for taxes and assessments not yet delinquent
or, if delinquent, that are being contested in good faith in the
ordinary course of business and for which Sellers have agreed to pay
pursuant to the terms hereof or which have been prorated pursuant to
the terms hereof;
(d) the terms, conditions, restrictions, exceptions,
reservations, limitations and other matters contained in Sellers' chain
of title to (i) the Producing Mineral Properties to the extent the same
do not operate to reduce the Net Revenue Interests of Sellers as set
forth in Exhibit G or increase the Working Interests of Sellers as set
forth in Exhibit G without a corresponding increase in the Net Revenue
Interests, and, in each case, that do not interfere materially with the
operation, value or use of the Producing Mineral Properties, (ii) the
Nonproducing Mineral Properties in each case that do not reduce the
number of Net Mineral Acres of Sellers in any Nonproducing Mineral
Property below that stated in Exhibit A, or (iii) the Lease Properties
in each case that do not reduce the number of Net Lease Acres of
Sellers in any Lease Property below that stated in Exhibit C;
(e) any obligations or duties affecting the Oil and Gas
Properties to any municipality or public authority with respect to any
franchise, grant, license or permit and all applicable laws, rules,
regulations and orders of the United States and the state, county, city
and political subdivisions in which the Oil and Gas Properties are
located and that exercises jurisdiction over such Oil and Gas
Properties, and any agency, department, board or other instrumentality
thereof that exercises jurisdiction over such Oil and Gas Properties
(collectively, "Governmental Authority");
(f) any (i) easements, rights-of-way, servitudes, permits,
surface leases and other rights in respect of surface operations,
pipelines, grazing, hunting, logging, canals, ditches, reservoirs or
the like and (ii) easements for streets, alleys, highways, pipelines,
telephone lines, power lines, railways and other similar rights-of-way
on, over or in respect of property owned by Sellers or over which
Sellers own rights-of-way, easements, permits or licenses, in each case
that do not interfere materially with the operation, value or use of an
Oil and Gas Property;
(g) all lessors' royalties, overriding royalties, net
profits interests, carried interests, production payments, reversionary
interests and other burdens on or deductions from the proceeds of
production created or in existence as of the Effective Time relating to
(i) the Producing Mineral Properties to the extent the same do not
operate to reduce the Net
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Revenue Interests of Sellers as set forth in Exhibit G or increase the Working
Interests of Sellers as set forth in Exhibit G without a corresponding increase
in the Net Revenue Interests, (ii) the Nonproducing Mineral Properties or (iii)
the Lease Properties;
(h) preferential rights to purchase or similar agreements;
(i) third party consents to assignments or similar
agreements;
(j) all rights to consent by, required notices to, filings
with, or other actions by Governmental Authorities in connection with the sale
or conveyance of oil and gas leases or interests therein that are customarily
obtained subsequent to such sale or conveyance;
(k) production sales contracts; division orders; contracts
for sale, purchase, exchange, refining or processing of Oil and Gas; unitization
and pooling designations, declarations, orders and agreements; operating
agreements; agreements of development; area of mutual interest agreements; gas
balancing or deferred production agreements; processing agreements; plant
agreements; pipeline, gathering and transportation agreements; injection,
repressuring and recycling agreements; carbon dioxide purchase or sale
agreements; salt water or other disposal agreements; seismic or geophysical
permits or agreements; confidentiality agreements; and any and all other
agreements that are ordinary and customary to the Oil and Gas exploration,
development, processing or extraction business or in the business of processing
of gas and gas condensate production for the extraction of products therefrom,
in each case relating to (i) the Producing Mineral Properties to the extent the
same do not operate to reduce the Net Revenue Interests of Sellers as set forth
in Exhibit G or increase the Working Interests of Sellers as set forth in
Exhibit G without a corresponding increase in the Net Revenue Interests, or
interfere materially with the operation, value or use of an Oil and Gas
Property, (ii) the Nonproducing Mineral Properties in each case that do not
reduce the number of Net Mineral Acres of Sellers in any Nonproducing Mineral
Property below that stated in Exhibit A, or (iii) the Lease Properties in each
case that do not reduce the number of Net Lease Acres of Sellers in any Lease
Property below that stated in Exhibit C or interfere materially with the
operation or use of a Leased Property;
(l) all defects and irregularities affecting the Oil and
Gas Properties that individually or in the aggregate do not operate to reduce
the Net Revenue Interests of Sellers with respect to a Producing Mineral
Property as set forth in Exhibit G, increase the proportionate share of costs
and expenses of operations attributable to or to be borne by the Working
Interests of Sellers with respect to a Producing Mineral Property as set forth
in Exhibit G without a corresponding increase in the Net Revenue Interests, or
otherwise interfere materially with the operation, value or use of an Oil and
Gas Property;
(m) with respect to the Lease Properties, any depth
limitations in Sellers' ownership; and
(n) the Surface Use Restrictions Agreement.
"Producing Mineral Property" means any well or unit described in Part I of
Exhibit G.
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"Title Defect" shall mean, subject to Section 4.03: (i) any
encumbrance, encroachment, irregularity, defect in or objection to or failure of
Sellers' ownership of any Asset (expressly excluding Permitted Encumbrances)
that causes Sellers not to have Defensible Title to such Asset; or (ii) any
default by Sellers under a lease or other contract or agreement that would (A)
have a material adverse affect on the operation, value or use of such Asset, (B)
prevent Sellers from receiving the proceeds of production attributable to
Sellers' interest therein, or (C) result in cancellation of Sellers' interest
therein.
"Title Defect Amount" shall mean the amount by which the Adjustment
Value of an Oil and Gas Property shall be reduced as a result of a Title Defect
that is identified in a Title Defect Notice given by Buyer to Sellers pursuant
to Section 4.03 and that remains uncured. In the determination of the Title
Defect Amount, the following factors shall be taken into account: the Adjustment
Value assigned to such Oil and Gas Property, the considerations used in arriving
at such Adjustment Value, the portion of the Oil and Gas Property affected by
such Title Defect, the legal effect of the Title Defect, and the potential
economic effect of the Title Defect over the life of such Oil and Gas Property;
provided, however, that (i) if a Title Defect is in the nature of Sellers' Net
Revenue Interest in a Producing Mineral Property being less than the Net Revenue
Interest set forth in Exhibit G, then Buyer and Sellers agree that the value of
the Title Defect shall be equal to the product of the Adjustment Value of such
Producing Mineral Property and the percentage reduction in such Net Revenue
Interest as a result of such Title Defect, (ii) if a Title Defect results from a
shortage in the number of Net Mineral Acres in a Nonproducing Mineral Property,
then the Title Defect Amount shall be an amount equal to the number of Net
Mineral Acres less than the number set forth in Exhibit A for such Nonproducing
Property multiplied by the Adjustment Value per Net Mineral Acre, and (iii) if a
Title Defect results from a shortage in the number of Net Lease Acres in a Lease
Property, then the Title Defect Amount shall be an amount equal to the number of
Net Lease Acres less than the number set forth in Exhibit C for such Lease
Property multiplied by the Adjustment Value per Net Lease Acre for such Lease
Property.
Section 4.03 Title Defect Notices. If the Closing occurs and Buyer
thereafter discovers any Title Defect affecting any Oil and Gas Property, Buyer
shall notify Sellers of such alleged Title Defect during the survival period
stated in the first sentence of Section 12.06 ("Survival Period"). Such notice
("Title Defect Notice") must (i) be in writing, (ii) be received by Sellers
prior to the expiration of the Survival Period, (iii) describe the Title Defect
in reasonable detail (including where calculable any alleged variance in the Net
Revenue Interest or Working Interest with respect to a Producing Mineral
Property), (iv) identify the specific Asset or Assets affected by such Title
Defect, and (v) include the value of such Title Defect as determined by Buyer.
Any matters that may otherwise constitute Title Defects, but of which Sellers
have not been notified by Buyer in accordance with the foregoing sentence within
the Survival Period, shall be deemed to have been waived by Buyer for all
purposes. Buyer's notice shall be deemed to have complied with the requirements
for a Title Defect Notice set forth in the second sentence of this Section 4.03
unless Sellers notify Buyer of any objection and the reasons therefore to the
form of such notice within 30 days after Sellers' receipt thereof. The failure
to give an adequate Title Defect Notice does not prevent Buyer from subsequently
giving an adequate Title Defect Notice within the Survival Period.
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Section 4.04 Remedies for Title Defects. With respect to any Title
Defect identified by Buyer to Sellers during the Survival Period, Sellers shall
have a period of time terminating ninety days after the date upon which Sellers
receive the Title Defect Notice, during which to cure such Title Defect. Buyer
shall allow Sellers and their representatives such access to the Assets during
normal business hours as is necessary or reasonable for such curative efforts.
If Sellers contest the validity of the alleged Title Defect or the adequacy of
any Title Defect Notice or if Sellers have not cured such Title Defect during
such period and Buyer does not waive such Title Defect, then the Parties shall
negotiate in good faith to reach agreement with respect to the adequacy of such
Title Defect Notice, the existence of such Title Defect and the Title Defect
Amount (if any) for such Title Defect. If the Parties agree on the adequacy of
such Title Defect Notice, the existence of the Title Defect and the Title Defect
Amount, then Sellers shall pay Buyer the agreed amount within ten days, subject
to the limitations contained in Section 4.06. If, by the date ten days after the
end of the ninety day curative period referenced above, the Parties have failed
to reach agreement, then either Sellers or Buyer shall have the right to elect
to have the adequacy of such Title Defect Notice, the validity of such Title
Defect and/or such Title Defect Amount determined by an Independent Expert
pursuant to Section 14.03.
Section 4.05 No Warranty of Title. The documents to be executed and
delivered by Sellers to Buyer, transferring title to the Assets as required
hereby, including the Mineral and Royalty Deed attached hereto as Exhibit H-1
and the Mineral Servitude and Royalty Deed attached hereto as Exhibit H-2
(collectively, the "Deeds") and the Assignment and Conveyance attached hereto as
Exhibit I ("Conveyance"), shall be subject to the Permitted Encumbrances and
without warranty of title of any kind whatsoever, express, implied or statutory.
The Deeds and the Conveyance are conveyances without warranty except as provided
herein and are not intended to be a conveyance by quitclaim. The provisions of
this Agreement, including Buyer's rights with respect to Title Defects
hereunder, shall not be merged into or extinguished upon Closing and the
delivery by Sellers to Buyer of the Deeds and the Conveyance.
Section 4.06 Limitation of Remedies for Title Defects.
(a) Notwithstanding anything in this Agreement to the contrary, (i)
Sellers shall have no obligations or liability under this Agreement with respect
to a Title Defect not identified by Buyer in a Title Defect Notice delivered to
Sellers during the Survival Period, (ii) Sellers' liability with respect to all
Title Defects to any Oil and Gas Property shall in no event exceed the
Adjustment Value of such Oil and Gas Property, and (iii) Sellers' liability
shall be subject to the limitations stated in Section 12.07.
(b) Notwithstanding anything in this Agreement to the contrary, if all
Title Defects identified by Buyer pursuant to Section 4.03 with respect to
Nonproducing Mineral Properties do not cause the aggregate number of Net Mineral
Acres covered by all of the Nonproducing Mineral Properties to fall below
2,920,152 Net Mineral Acres, then Sellers shall have no obligation to Buyer for
Title Defects with respect to Nonproducing Mineral Properties under this
Agreement.
Section 4.07 Preferential Rights to Purchase. The assignment of the
Assets at the Closing shall be subject to all preferential purchase rights.
Prior to Closing, Seller shall use commercially reasonably efforts to comply
with the preferential purchase rights identified on Schedule 5.22 and
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Buyer shall provide to Seller within 10 days after the execution of this
Agreement, the value attributable to the Assets affected by the preferential
purchase rights identified on Schedule 5.22. If a third party who has been
offered an interest in any Asset pursuant to a preferential purchase right
identified on Schedule 5.22 elects prior to Closing to purchase all or part of
such Asset pursuant to the aforesaid offer, the interest or part thereof so
affected will be eliminated from the Assets and will be deemed an Excluded Asset
hereunder, and the Purchase Price shall be reduced by the value provided by
Buyer in accordance with the preceding sentence. Otherwise, the interest offered
as aforesaid shall be assigned to Buyer at Closing subject to such preferential
purchase rights for which notice has been given in accordance with the foregoing
but the time period for response by the holder of such preferential purchase
right extends beyond Closing. After the Closing, Buyer shall comply with all
preferential purchase right provisions relating to any Asset, including (without
limitation) the preferential purchase rights identified on Schedule 5.22. Buyer
shall indemnify Sellers against any and all Losses arising out of or in
connection with any claims asserted by the holder of a preferential purchase
right arising out of the transactions contemplated by this Agreement. If any
third party elects to purchase all or a part of an interest in any Asset subject
to a preferential purchase right after the Closing Date, Buyer shall be
obligated to assign said interest to such third party and shall be entitled to
the consideration from the sale of such interest or part thereof.
Section 4.08 Consents to Assign.
(a) Schedule 4.08 sets forth those consents to assignment or similar
restrictions on assignability that, to the Knowledge of Sellers, are applicable
to the transactions contemplated hereby, excluding, however, those consents and
approvals from Governmental Authorities that are customarily obtained after
closing in connection with a sale of assets similar to the Assets ("Customary
Post Closing Consents"). Buyer and Sellers shall use commercially reasonable
efforts to obtain or remove all consents to assignment or other similar
restrictions on assignability listed in Schedule 4.08, in order to assign the
Assets affected thereby to Buyer at Closing. If, at Closing, any such Asset is
subject to an un-obtained consent to assignment or other similar restriction on
assignability (other than Customary Post Closing Consents), then (i) such Asset
shall not be transferred at Closing and such Asset shall be deemed an Excluded
Asset hereunder, (ii) the Purchase Price shall be reduced at the Closing by the
value set forth on Schedule 4.08 with respect to the consent affecting such
Asset (with respect to each such Asset, the "Holdback Value"), and (iii) Buyer
and Sellers shall use commercially reasonable efforts to obtain such consent,
including any Customary Post Closing Consents, and remove any such restriction
within ninety (90) days after the Closing ("Post Closing Consent Period"). If
Sellers have not obtained such consent or removed such restriction by the end of
the Post Closing Consent Period, then Seller shall retain the affected Asset. If
Sellers obtain such consent or remove such restriction by the end of the
Post-Closing Consent Period, then (i) subject to Buyer's obligation to pay to
Sellers the Holdback Value pursuant to subsection (ii) below, Sellers shall
assign the Asset affected thereby to Buyer by an assignment in the form of the
Conveyance within ten (10) days after such consent has been obtained or
restriction is removed and (ii) Buyer shall pay to Sellers, contemporaneously
with its receipt of an assignment of such affected Asset, the Holdback Value, as
adjusted pursuant to the provisions of Section 10.03 hereof through the date of
the assignment of such affected Asset to Buyer, by means of a completed federal
funds wire transfer of same day funds to the account of IPP as designated in
Section 10.08(a) hereof.
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(b) In the event that the consent to assign Sellers' interest under
that certain Program Agreement dated effective April 1, 1995, as amended (the
"T3D Program Agreement"), between Texas 3D Ventures, L.P. and IPP et al (the
"T3D Program Interest") is not obtained prior to the expiration of the Post
Closing Consent Period, then (i) Sellers thereafter shall use their commercially
reasonable efforts to sell the T3D Program Interest to a third party, and Buyer
shall use its commercially reasonable efforts to assist Sellers in finding a
purchaser for such interest, and (ii) during the period of time that Sellers
continue to own the T3D Program Interest, Buyer shall pay to Sellers the
Quarterly Overhead Payment, in cash, within five business days after Sellers
notify Buyer that Sellers have received an invoice for the Quarterly Overhead
Payment, and Sellers shall remit such Quarterly Overhead Payment received from
Buyer to Houston Energy, Inc. pursuant to the terms of T3D Program Agreement. In
the event that Sellers sell the T3D Program Interest to a third party and
Sellers receive greater than $500,000.00 in consideration therefor, Sellers
shall pay to Buyer all amounts received in consideration for the T3D Program
Interest in excess of $500,000.00 within five business days after Sellers'
receipt thereof. The term "Quarterly Overhead Payment" shall mean the quarterly
amount payable by Sellers to Houston Energy, Inc. for overhead and general and
administrative expenses under the terms of the T3D Program Agreement.
ARTICLE V
Representations and Warranties of Sellers
Sellers represent and warrant to Buyer that:
Section 5.01 Existence. Each Seller (i) if it is a corporation, is a
corporation, duly organized, validly existing and in good standing under the
laws of the state of its incorporation, and (ii) if it is a limited liability
company or limited partnership, is a limited liability company or limited
partnership (as applicable) duly formed, validly existing and in good standing
under the laws of the state of its formation. Each Seller has full legal power,
right and authority to carry on its business as such is now being conducted and
as contemplated to be conducted.
Section 5.02 Legal Power. Each Seller has the legal power and right to
enter into and perform this Agreement and the transactions contemplated hereby.
The consummation of the transactions contemplated by this Agreement will not
violate, nor be in conflict with:
(a) any provision of such Seller's organizational documents;
(b) except for any preferential purchase rights and consents to
assignment, any material agreement or instrument to which such Seller is a party
or by which such Seller is bound; or
(c) any judgment, order, ruling or decree applicable to such Seller as
a party in interest or any law, rule or regulation applicable to such Seller.
Section 5.03 Execution. The execution, delivery and performance of
this Agreement and the transactions contemplated hereby are duly and validly
authorized by all requisite corporate action on the part of each Seller. This
Agreement constitutes the legal, valid and binding obligation of each Seller
enforceable in accordance with its terms.
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Section 5.04 Brokers. Except for Xxxxxx Xxxxxxx & Co., no broker or
finder has acted for or on behalf of each Seller or any Affiliate of such Seller
in connection with this Agreement or the transactions contemplated by this
Agreement. No broker or finder is entitled to any brokerage or finder's fee, or
to any commission, based in any way on agreements, arrangements or
understandings made by or on behalf of each Seller or any Affiliate of such
Seller for which Buyer has or will have any liabilities or obligations
(contingent or otherwise). As used in this Agreement, the term "Affiliate" means
an "affiliate" or "associate" as those terms are defined in Rule 12b-2
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended.
Section 5.05 Bankruptcy. There are no bankruptcy, reorganization or
arrangement proceedings pending, being contemplated by or to the Knowledge of
Sellers threatened against any Seller or any Affiliate of such Seller.
Section 5.06 Suits. Except as set forth in Schedule 5.06, there is no
suit, action, claim, investigation or inquiry by any person or entity or by any
administrative agency or Governmental Authority and no legal, administrative or
arbitration proceeding pending or, to Sellers' Knowledge, threatened against any
Seller or any Affiliate of such Seller or the Assets that has materially
affected or could reasonably be expected to materially affect such Seller's
ability to consummate the transactions contemplated herein or materially affect
the title to or value of any Asset.
Section 5.07 Taxes. To Sellers' Knowledge, all ad valorem, property,
production, severance, excise and similar taxes and assessments based on or
measured by the ownership of the Oil and Gas Properties or the production of Oil
and Gas or the receipt of proceeds therefrom on the Assets that have become due
and payable have been paid in all material respects.
Section 5.08 Title. Sellers own Defensible Title to the Producing
Mineral Properties.
Section 5.09 No Participating Minerals. To the Knowledge of Sellers,
except for those interests expressly identified on Schedule 5.09, the Mineral
Interests do not include any unleased mineral interest where Sellers have agreed
to bear a share of drilling, operating or other costs as a participating mineral
owner.
Section 5.10 Compliance with Laws. To the Knowledge of Sellers, the
ownership and operation of the Assets have been, and the Assets are in
conformity, in all material respects, with all applicable laws, and all
applicable rules, regulations and orders of all Governmental Authorities having
jurisdiction, including without limitation any laws, rules, regulations or
orders pertaining to health, the environment, wastes or Hazardous Materials.
Section 5.11 Records. The records furnished by Sellers to Buyer for
evaluation of the Assets in connection with the purchase thereof pursuant to
this Agreement were gathered from the business books and records of Sellers and,
to the Knowledge of Sellers, were true, correct and complete in all material
respects for the purposes for which such records were prepared at the time so
prepared. This representation shall not cover any title records or records
relating to any matter
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that would constitute a Title Defect as such records and title matters
(including Title Defects) are exclusively addressed in Article IV and Section
5.08 of this Agreement.
Section 5.12 Basic Documents. To the Knowledge of Sellers, the oil,
gas and/or mineral leases, Sellers' interests in which comprise parts of the
Lease Properties, and all other material contracts and agreements, licenses,
permits and easements, rights-of-way and other rights-of-surface use comprising
any part of or otherwise relating to the Lease Properties (such leases and such
material contracts, agreements, licenses, permits, easements, rights-of-way and
other rights-of-surface use being herein called the "Basic Documents"), are in
full force and effect and constitute valid and binding obligations of the
parties thereto. To Sellers' Knowledge, Sellers are not in breach or default
(and no situation exists which with the passing of time or giving of notice
would create a breach or default) of their obligations under the Basic
Documents, and, to Sellers' Knowledge, no breach or default by any third party
(or situation which with the passage of time or giving of notice would create a
breach or default) exists, to the extent such breach or default (whether by
Sellers or such a third party) could reasonably be expected to materially
adversely affect the ownership, operation, value or use of any Lease Property
after the Effective Time.
Section 5.13 Commitments. To the Knowledge of Sellers, the presently
approved face amount of any currently outstanding and effective authorities for
expenditure with respect to the Assets as of the date of this Agreement would
not require Buyer to incur after the Effective Time capital expenditures with
respect to any one Oil and Gas Property in excess of $100,000, other than as set
forth in Schedule 5.13.
Section 5.14 Production Sales Contracts; Calls of Production. To the
Knowledge of Sellers, there exist no agreements for the sale of production from
the Leased Properties other than (a) production sales contracts (the "Scheduled
Production Sales Contracts") disclosed in Schedule 5.14 or (b) agreements or
arrangements which are cancelable on 90 days notice or less without penalty or
detriment. To the Knowledge of Sellers, Sellers are presently receiving a price
for all production from (or attributable to) each Leased Property covered by a
Scheduled Production Sales Contract as computed in accordance with the terms of
such contract, and is not having deliveries of gas from any Leased Property
subject to a Scheduled Production Sale Contract curtailed substantially below
such property's delivery capacity. To Sellers' Knowledge, except as disclosed on
Schedule 5.14, there exist no calls to purchase production or other similar
rights or options to purchase production from the Leased Properties which
affect, individually or in the aggregate, in excess of 500 barrels of oil
equivalents (converting gas to oil at 6 MMBtu/barrel) of production as of the
date of this Agreement (net to Sellers' interest) per day.
Section 5.15 Reserve Report Information. To the Knowledge of Sellers,
all historic production and cost information furnished by Sellers, or their
representatives, to Buyer or to Xxxxx Xxxxx Company in connection with the
preparation of the reserve report with respect to the Producing Mineral
Properties dated as of July 1, 2000, was true and correct in all material
respects at the time so furnished.
Section 5.16 Area of Mutual Interest Agreements. To the Knowledge of
Sellers, no Oil and Gas Property is subject to (or has related to it) any area
of mutual interest agreement ("AMI Agreement"), except (i) an AMI Agreement that
is part of a joint operating agreement, which AMI
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Agreement covers the properties jointly owned by one or more of the Sellers and
the other parties thereto and an area extending not more than one mile beyond
the boundaries of the properties owned (or formerly owned) jointly by such
parties under such joint operating agreement, or (ii) as disclosed in Schedule
5.16.
Section 5.17 Limited Partner Interest and Program Interests. IPP has
good title to the Limited Partner Interest and the Program Interests stated in
Exhibit D, free and clear of all liens, encumbrances and defects it title,
subject to the terms of the agreements creating such interests as identified in
Exhibit D.
Section 5.18 No Oral Contracts. Except as set forth in Schedule 5.18,
to the Knowledge of Sellers, no oral contracts for drilling or completion
operations, leasing, sales of Assets or individual expenditures in excess of
$50,000 are currently in force and effect as of the date of this Agreement that
relate to any of the Assets.
Section 5.19 Exempt Assets. To Seller's Knowledge, the aggregate fair
market value of the Assets, excluding the Oil and Gas Properties, Lease
Easements, the Mineral Contracts, the Lease Contracts, the Limited Partner
Interest and the Program Interests, does not exceed $15,000,000.
Section 5.20 Plugging Obligations. Except for xxxxx listed on Schedule
5.20, to the Knowledge of Sellers, there are no dry holes or xxxxx incapable of
producing in commercial quantities that are located on the Lease Properties or
on lands pooled or unitized therewith (including, without limitation any xxxxx
which would, if located in Texas, require compliance with the Texas Railroad
Commission Rule 14(b)(2)), except for xxxxx that have been properly plugged and
abandoned, and except for xxxxx drilled to depths not included within the Lease
Properties or within units in which the Lease Properties participate.
Section 5.21 Operations after Effective Time. Except as set forth in
Schedule 5.21, from the Effective Time to the date of this Agreement, Sellers
have conducted their business with respect to the Assets in the ordinary course,
consistent, in all material respects, with past practices.
Section 5.22 Preferential Rights to Purchase. To Sellers' Knowledge,
Schedule 5.22 sets forth those preferential purchase rights that are applicable
to any Asset in connection with the transactions contemplated hereby to be
assigned to Buyer at the Closing.
ARTICLE VI
Representations and Warranties of Buyer
Buyer represents and warrants to Sellers that:
Section 6.01 Existence. Buyer is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Texas.
Buyer has full legal power, right and authority to carry on its business as such
is now being conducted and as contemplated to be conducted.
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Section 6.02 Legal Power. Buyer has the legal power and right to enter
into and to perform this Agreement and the transactions contemplated hereby. The
consummation of the transactions contemplated by this Agreement will not
violate, nor be in conflict with:
(a) any provision of Buyer's limited partnership agreement;
(b) any material agreement or instrument to which Buyer is a party or
by which Buyer is bound; or
(c) any judgment, order, ruling or decree applicable to Buyer as a
party in interest or any law, rule or regulation applicable to Buyer.
Section 6.03 Execution. The execution, delivery and performance of
this Agreement and the transactions contemplated hereby are duly and validly
authorized by all requisite action on the part of Buyer. This Agreement
constitutes the legal, valid and binding obligation of Buyer enforceable in
accordance with its terms.
Section 6.04 Brokers. Except for Credit Suisse First Boston, no broker
or finder has acted for or on behalf of Buyer or any Affiliate of Buyer in
connection with this Agreement or the transactions contemplated by this
Agreement. No broker or finder is entitled to any brokerage or finder's fee, or
to any commission, based in any way on agreements, arrangements or
understandings made by or on behalf of Buyer or any Affiliate of Buyer for which
Sellers have or will have any liabilities or obligations (contingent or
otherwise).
Section 6.05 Bankruptcy. There are no bankruptcy, reorganization or
arrangement proceedings pending, being contemplated by or to the Knowledge of
Buyer threatened against Buyer or any Affiliate of Buyer.
Section 6.06 Suits. There is no suit, action, claim, investigation or
inquiry by any person or entity or by any administrative agency or Governmental
Authority and no legal, administrative or arbitration proceeding pending or, to
Buyer's Knowledge, threatened against Buyer or any Affiliate of Buyer that has
materially affected or could reasonably be expected to materially affect Buyer's
ability to consummate the transactions contemplated herein.
Section 6.07 Qualifications. At the Closing, Buyer shall be qualified
with all applicable Governmental Authorities to the extent necessary to own and
operate the Assets, except for qualifications to operate the Assets that are
customarily obtained after the Closing, and qualifications which, if not
obtained, would not, individually or in the aggregate, have a material adverse
effect on Seller or the operation of the Assets as a whole.
Section 6.08 Investment. In connection with entering into this
Agreement, Buyer was advised by and has relied solely upon the express
representations and warranties of Sellers made in this Agreement and on Buyer's
own legal, tax and other professional counsel concerning this Agreement, the
Assets and the value thereof. Buyer is acquiring the Assets for its own account
and not for distribution or resale in any manner that would violate any state or
federal securities law, rule, regulation or order. Buyer understands and
acknowledges that if any of the Assets were held
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to be securities, they would be restricted securities and could not be
transferred without registration under applicable state and federal securities
laws or the availability of an exemption from such registration.
Section 6.09 Funds. Buyer has or will have immediately prior to and at
Closing sufficient funds to enable Buyer to pay in full the Purchase Price as
herein provided and otherwise to perform its obligations under this Agreement.
Section 6.10 Xxxx-Xxxxx-Xxxxxx. Based on the truth and accuracy of the
representations and warranties of the Sellers in Section 5.19 (without
limitation to the Knowledge of Sellers) the aggregate fair market value of the
Assets that (a) do not constitute Exempt Assets (as hereinafter defined) does
not exceed $15,000,000; and (b) do constitute Exempt Assets does not exceed
$500,000,000. For purposes of this Agreement, "Exempt Assets" shall mean (i)
reserves of oil, natural gas, shale or tar sands, (ii) rights to reserves of
oil, natural gas, shale or tar sands, or (iii) associated exploration or
production assets, each within the meaning of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the related rules, regulations and
published interpretations thereunder.
ARTICLE VII
Operation of the Assets
Section 7.01 Operation of the Assets Prior to Closing.
(a) From and after the date of the execution of this Agreement and
until Closing, and subject to the provisions of applicable operating and other
agreements, Sellers shall, and shall use their commercially reasonable efforts
to cause other operators to, operate and administer the Assets in a good and
workmanlike manner consistent with its past practices, and shall carry on their
business with respect to the Assets in substantially the same manner as before
execution of this Agreement. Sellers shall use their commercially reasonable
efforts to preserve in full force and effect all oil and gas leases, operating
agreements, easements, rights-of-way, permits, licenses and agreements that
relate to the Assets.
(b) Without the prior written consent of Buyer (which will not
unreasonably be withheld), from the date of the execution of this Agreement
until Closing, Sellers shall not:
(i) consent to the drilling of an exploratory well or the
drilling, deepening, sidetracking, completing or plugging back of any
development well with an estimated cost of $500,000 or more net to the
interest of Sellers or of one or more xxxxx with an aggregate estimated
cost of $3,000,000 or more net to the interest of Sellers in any one
month; provided, however, if Buyer reasonably withholds its consent to
any of the foregoing operations and in Sellers' reasonable judgment
such operation should be undertaken and the Asset affected thereby
would otherwise be temporarily or permanently forfeited if it non-
consented to such operation, then Sellers shall have the right to
undertake such operation and the Asset affected thereby, together with
any other Asset, Sellers' interest in which would be temporarily or
permanently forfeited if it non-consented to such operation, shall be
excluded from this Agreement and shall be "Excluded Assets" hereunder;
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(ii) encumber, sell, transfer, assign, convey, or otherwise
dispose of any of the Assets other than the sale of production in the
ordinary course of business and other personal property which is
replaced by equivalent property or consumed in the operation of the
Assets;
(iii) knowingly modify in any material respect or terminate
any Contract or enter into any new material contracts or agreements
relating to any Asset, other than periodic production purchase and sale
agreements terminable on not more than 90 days notice;
(iv) enter into Oil and Gas leases covering Mineral Interests
covering more than 640 Net Mineral Acres; or
(v) except for the Surface Use Restrictions Agreement, limit
any rights to conduct oil and gas exploration and development
activities on any Tract in which Sellers own all or part of the surface
estate as of the date of the execution of this Agreement.
(c) Buyer acknowledges that IPP owns undivided interests in the Lease
Properties, and Buyer agrees that the acts or omissions of the other working
interests owners shall not constitute a violation of the provisions of this
Article VII, nor shall any action required by a vote of working interest owners
constitute such a violation so long as IPP has voted its interests in a manner
that complies with the provisions of this Article VII. To the extent that IPP is
not the operator of any of the Assets, the obligations of IPP in this Article
VII shall be construed to require that IPP use its commercially reasonable
efforts to cause the operator of such Assets to take such actions or render such
performance within the constraints of the applicable operating agreements and
other applicable agreements.
Section 7.02 Operation of the Assets After Closing. It is expressly
understood and agreed that IPP shall not be obligated to continue operating any
of the Assets following the Closing and Buyer hereby assumes full responsibility
for operating (or causing the operation of) all Assets following the Closing.
Sellers shall use reasonable efforts to assist Buyer in becoming IPP's successor
as operator under those operating agreements under which IPP is operator as of
the Closing; provided, however, that Sellers shall not be obligated to incur any
expense or liability in connection therewith and Buyer shall and hereby does
indemnify Sellers from all costs and expenses in connection therewith. Sellers
do not warrant or guarantee that Buyer will become the operator of the Assets or
any portion thereof, as such matter will be controlled by the applicable joint
operating agreement(s). In order to assist Buyer in its ownership and operation
of the Assets during the 60-day period following the Closing, IPP, Pure
Partners, L.P. and Buyer will enter into the Transition Services Agreement in
substantially the form attached hereto as Exhibit K.
Section 7.03 Correction of Exhibits. It is the intent of Sellers to
convey, sell, grant and assign, and Buyer to purchase and receive all the
Assets, except for the Excluded Assets, without any warranty of title by Sellers
(express, implied or statutory) but subject to Buyer's remedies for Title
Defects as expressly provided in Article IV. If Buyer or Sellers discover at any
time prior to Closing that any Assets are not described on Exhibits A or C, or
not sufficiently described on any such Exhibits in order to transfer legal title
to Buyer and the other Parties hereto agree, then the
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Parties shall amend such Exhibit to include a sufficient description to assign
title to such Assets to Buyer and such Exhibit, as so amended, shall be the
Exhibit used to describe the Assets to be assigned to Buyer.
Section 7.04 Mineral Servitudes.
(a) From time to time, and upon the written request of Buyer, Sellers,
or any of them, shall interrupt by written acknowledgment in the form of Exhibit
"L" (an "Acknowledgment " or "Acknowledgments") the running of any accrued
prescription applicable to any mineral servitude in the State of Louisiana and
sold to Buyer pursuant to this Agreement (each, a "Subject Servitude" and
collectively, the "Subject Servitudes").
(b) The right of Buyer to request Acknowledgments shall terminate on
the 30th anniversary date of the Closing Date. Sellers shall have no liability
for any failure to interrupt prescription for a Subject Servitude unless Buyer
has requested in writing interruption of prescription for such Subject Servitude
on or before the period of prescription applicable to each such Subject
Servitude has expired and, in any event on or before the 30th anniversary date
of the Closing. If any Seller sells or transfers any interest in the surface of
the lands encumbered by any Subject Servitude to a third party other than an
Affiliate, the provisions of this Section shall not apply to the transferee and
such transfer shall release Sellers from any further obligations under this
Section or otherwise with regard to any prescription of the Subject Servitude
applicable to the interest in the lands to be transferred; provided that Sellers
shall endeavor in good faith to use their commercially reasonable efforts to
notify Buyer in advance of any such sale or transfer and, upon the written
request of Buyer prior to such sale or transfer, Sellers shall interrupt by an
Acknowledgment the running of any prescription applicable to the Subject
Servitude burdening the interest in the lands to be transferred. Sellers shall
have no liability for failure to notify Buyer of any such sale or transfer or to
interrupt prescription on the Subject Servitude applicable to the interest in
the lands to be transferred unless timely requested in writing by Buyer. Buyer
shall and does hereby defend, indemnify and hold the Seller Indemnitees harmless
from and against all Losses arising out of or in connection with any
interruption of prescription of the Subject Servitudes by Sellers and the making
of the covenants in this Section by Sellers. Notwithstanding anything in this
Agreement to the contrary (including the representations of Sellers in Article
V), Sellers make no representation or warranty regarding the enforceability of
its agreement to interrupt prescription of the Subject Servitudes as provided in
this Section.
(c) The right of Buyer to secure an Acknowledgment for each Subject
Servitude shall be deemed to be a continuing right, and shall not be considered
to be fully exercised or otherwise lapsed or extinguished, by virtue of any one
or more exercises thereof by Buyer.
ARTICLE VIII
Conditions to Obligations of Sellers
The obligations of Sellers to consummate the transactions provided for
herein are subject, at the option of Sellers, to the fulfillment on or prior to
the Closing Date of each of the following conditions:
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Section 8.01 Representations. The representations and warranties of
Buyer herein contained shall be true and correct in all material respects on the
Closing Date as though made on and as of such date.
Section 8.02 Performance. Buyer shall have performed all material
obligations, covenants and agreements contained in this Agreement to be
performed or complied with by it at or prior to the Closing. The matters set
forth in Section 8.01 and this Section 8.02 shall be certified by Buyer by an
officer's certificate delivered by an officer of Buyer at the Closing.
Section 8.03 Pending Matters. No suit, action or other proceeding
shall be pending or threatened that seeks to restrain, enjoin or otherwise
prohibit the consummation of the transactions contemplated by this Agreement.
Section 8.04 Purchase Price. Buyer shall have delivered to Sellers the
Purchase Price, less the Deposit and any interest accrued thereon, as the same
may be adjusted hereunder, in accordance with the provisions of Section 10.03.
Section 8.05 Execution and Delivery of Closing Documents. Buyer shall
have executed, acknowledged and delivered, as appropriate, to Sellers all
closing documents described in Section 10.08.
Section 8.06 Closing Under Contribution Agreement. The transactions
contemplated by that certain Contribution Agreement by and among IP Petroleum
Company, Inc., Southland Energy Company, International Paper Realty Corporation,
Transtates Properties Incorporated, Pure Resources, L.P., Pure Resources I,
Inc., Pure Partners, L.P., PK I, L.P., XX XX, L.P., PK III, L.P. and XX XX,
L.P., dated of even date herewith ("Contribution Agreement") shall have been
consummated at a closing contemporaneous with the Closing.
ARTICLE IX
Conditions to Obligations of Buyer
The obligations of Buyer to consummate the transactions provided for
herein are subject, at the option of Buyer, to the fulfillment on or prior to
the Closing Date of each of the following conditions:
Section 9.01 Performance. Sellers shall have performed in all material
respects all material obligations, covenants, and agreements contained in this
Agreement to be performed or complied with by them at or prior to the Closing.
The matters in this Section 9.01 and Section 9.05(i) (with inclusion of existing
knowledge and materiality qualifiers) shall be certified by Sellers by an
officer's certificate delivered by an officer of IPP at the Closing.
Section 9.02 Pending Matters. No suit, action or other proceeding
shall be pending or threatened that seeks to restrain, enjoin, or otherwise
prohibit the consummation of the transactions contemplated by this Agreement.
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Section 9.03 Execution and Delivery of Closing Documents. Sellers shall
have executed, acknowledged and delivered, as appropriate, to Buyer all closing
documents described in Section 10.07.
Section 9.04 Closing Under Contribution Agreement. The transactions
contemplated by the Contribution Agreement shall have been consummated at a
closing contemporaneous with the Closing.
Section 9.05 Material Adverse Change in Value. The value, as of the Closing
Date, of the Assets (as defined under this Agreement) and the value of the
Assets (as defined in the Contribution Agreement), collectively, shall not have
diminished by Fifteen Million Dollars ($15,000,000.00) or more in the aggregate
from the value that would otherwise be the case on the Closing Date but for the
occurrence of one or more of the following: (i) the failure of any of Sellers'
representations or warranties (without regard to any knowledge or materiality
qualifier as to any such representation or warranty) to be true and correct on
the Closing Date as though made on and as of such date; (ii) an Environmental
Defect pertaining to such Assets, or (iii) a Title Defect pertaining to such
Assets. Buyer's right to claim that there has been a material adverse change in
value of such Assets shall be strictly construed and an adverse change in the
price for Oil and Gas or other condition generally affecting the oil and gas
industry as a whole or the United States' economy shall not be considered in
determining a diminution in value of such Assets.
ARTICLE X
Closing
Section 10.01 Time and Place of Closing. If the conditions referred to in
Articles VIII and IX of this Agreement have been satisfied or waived in writing,
the transactions contemplated by this Agreement (the "Closing") shall take place
at the offices of Xxxxxx & Xxxxxx L.L.P., 0000 Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxx 00000, on January 31, 2001 (the "Closing Date").
Section 10.02 Intentionally Omitted.
Section 10.03 Adjustments to Purchase Price at Closing.
(a) At Closing, the Purchase Price shall be increased by the
following amounts:
(i) the amount as of the Effective Time of all prepaid ad valorem,
property, and similar taxes and assessments based upon or measured by
ownership of the Assets, insofar as such prepaid taxes relate to periods of
time after the Effective Time;
(ii) (A) all direct costs and expenses (excluding costs and expenses
attributable to the categories of expenses described in Schedule
10.03(a)(ii) and any costs or expenses of employee severance or termination
benefits or similar costs and expenses) incurred or accrued by Sellers,
including, but not limited to, rentals, royalties, production and severance
taxes, capital expenditures, and lease operating expenses, and (B) 10% of
the actual costs incurred or accrued by Sellers in connection with the
categories of expenses described in Schedule 10.03(a)(ii) (excluding any
cost or expense of employee severance or termination
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benefits or similar costs and expenses), in each case, that are
attributable to the Assets (excluding, however, any costs incurred by
Sellers in connection with the transactions contemplated hereby) to the
extent, in each case, that such costs and expenses are attributable to the
period of time from and after the Effective Time to the Closing Date;
(iii) the value of all Oil and Gas produced prior to the Effective
Time but in storage above the pipeline connection or upstream of the
applicable sales meter on the Effective Time; and
(iv) any other amount provided for in this Agreement or agreed upon
by Buyer and Sellers.
(b) At Closing, the Purchase Price shall be decreased by the following
amounts:
(i) an amount equal to all unpaid ad valorem, property, production,
severance and similar taxes and assessments based upon or measured by the
ownership of the Assets that are attributable to periods of time prior to
the Effective Time, which amounts shall, to the extent not actually
assessed, be computed based on such taxes and assessments for the preceding
tax year (such amount to be prorated for the period of Sellers' and Buyer's
ownership before and after the Effective Time);
(ii) an amount equal to all gross revenues (including XXXXX overhead
collected from third parties) accruing to Sellers with respect to the
Assets and attributable to the period of time after the Effective Time; and
(iii) the value provided by Buyer for any Asset elected to be
purchased by a third party prior to the Closing pursuant to a preferential
right as provided in Section 4.07;
(iv) any Holdback Amount resulting from any failure to receive a
consent to assign as provided in Section 4.08; and
(iii) any other amount provided for in this Agreement or agreed upon
by Buyer and Sellers.
(c) The adjustments described in Sections 10.03(a) and (b) are hereinafter
referred to as the "Purchase Price Adjustments."
(d) Provided that the Closing occurs, appropriate adjustments shall be
made between Buyer and Sellers so that (i) Buyer will receive all proceeds from
sales of Oil and Gas that are produced and saved from and after the Effective
Time and any other revenues arising out of the ownership or operation of the
Assets from and after the Effective Time, net of all applicable production,
severance, and similar taxes, and net of all costs and expenses that are
incurred in the ownership or administration of the Assets from and after the
Effective Time and (ii) subject to Article XII, Sellers will receive all
proceeds from sales of Oil and Gas that are produced and saved prior to the
Effective Time and any other revenues arising out of the ownership or operation
of the Assets prior to the Effective Time, net of all applicable production,
severance, and similar taxes, and
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net of all costs and expenses that are incurred in the ownership, operation or
administration of the Assets prior to the Effective Time, provided (in each
case) that such proceeds have not been accounted for as a Purchase Price
Adjustment.
Section 10.04 Pre-Closing Allocations/Statement. Not later than two
business days prior to the Closing Date, Sellers shall prepare and deliver to
Buyer a statement of the estimated Purchase Price Adjustments taking into
account the foregoing principles (the "Statement"). At Closing, Buyer shall pay
the Purchase Price, as adjusted by the estimated Purchase Price Adjustments
reflected on the Statement.
Section 10.05 Post-Closing Adjustments to Purchase Price.
(a) On or before 90 business days after the Closing Date, Sellers shall
prepare and deliver to Buyer a revised Statement setting forth the actual
Purchase Price Adjustments. To the extent reasonably required by Sellers, Buyer
shall assist in the preparation of the revised Statement. Sellers shall provide
Buyer such data and information as Buyer may reasonably request supporting the
amounts reflected on the revised Statement in order to permit Buyer to perform
or cause to be performed an audit. The revised Statement shall become final and
binding upon the parties on the 30th business day following receipt thereof by
Buyer (the "Final Settlement Date") unless Buyer gives written notice of its
disagreement (a "Notice of Disagreement") to Sellers prior to such date. Any
Notice of Disagreement shall specify in detail the dollar amount, nature and
basis of any disagreement so asserted. If a Notice of Disagreement is received
by Sellers in a timely manner, then the Parties shall resolve the Dispute
evidenced by the Notice of Disagreement in accordance with Article XIV.
(b) If the amount of the Purchase Price as set forth on the Final
Statement exceeds the amount of the estimated Purchase Price paid at Closing,
then Buyer shall pay to Sellers the amount by which the Purchase Price as set
forth on the Final Statement exceeds the amount of the estimated Purchase Price
paid at Closing within five business days after the Final Settlement Date or, if
applicable, the date such amount is determined pursuant to Article XIV, together
with interest at the Interest Rate as accrued from the Closing Date until the
date of payment. If the amount of the Purchase Price as set forth on the Final
Statement is less than the amount of the estimated Purchase Price paid at
Closing, then Sellers shall pay to Buyer the amount by which the Purchase Price
as set forth on the Final Statement is less than the amount of the estimated
Purchase Price paid at Closing within five business days after the Final
Settlement Date or, if applicable, the date such amount is determined pursuant
to Article XIV, together with interest at the Interest Rate as accrued from the
Closing Date until the date of payment. For purposes of this Agreement, (i) the
term "Final Statement" shall mean (A) if the revised Statement becomes final
pursuant to Section 10.05(a), such revised Statement or (B) upon resolution of
any Dispute regarding a Notice of Disagreement, the revised Statement reflecting
such resolutions, which the Parties shall issue, or cause the Independent Expert
or arbitrators to issue, as applicable, following such resolution, and (ii) the
term "Interest Rate" shall mean the annual rate of interest published as the
"Prime Rate" in the "Money Rates" section of The Wall Street Journal on the
Closing Date (or if not published on such date, such rate as was then last
published).
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Section 10.06 Ad Valorem and Similar Taxes. Ad valorem, property and
similar taxes and assessments based upon or measured by the value of the Assets
shall be divided or prorated between Sellers and Buyer as of the Effective Time.
Sellers shall assume responsibility for such taxes attributable to the period of
time prior to the Effective Time and Buyer shall assume responsibility for the
periods of time from and after the Effective Time.
Section 10.07 Actions of Sellers at Closing. At the Closing, Sellers shall:
(a) execute, acknowledge and deliver to Buyer (i) the Deeds, the
Conveyance and such other conveyances, assignments, transfers, bills of sale and
other instruments (in form and substance mutually agreed upon by Buyer and
Sellers) as may be necessary or desirable to convey the Assets to Buyer, (ii)
the Surface Use Restrictions Agreement in the form attached as Exhibit J (the
"Surface Use Restrictions Agreement"), and (iii) the Transition Services
Agreement in the form attached as Exhibit K (the "Transition Services
Agreement");
(b) execute, acknowledge and deliver to Buyer letters in lieu of transfer
or division orders directing all purchasers of production from the Oil and Gas
Properties to make payment of proceeds attributable to such production to Buyer
from and after the Effective Time as reasonably requested by Buyer prior to the
Closing Date;
(c) deliver to Buyer possession of the Assets;
(d) execute and deliver to Buyer an affidavit attesting to its non-foreign
status; and
(e) execute and deliver a notice directing the Escrow Agent to release
from escrow to IPP, on behalf of Sellers, the Deposit plus all interest accrued
on the Deposit to the Closing Date; and
(f) execute and deliver any document necessary to effect a change of
operator in any state or any offshore area over which the United States of
America or any state asserts jurisdiction where Seller is the operator as of the
Closing;
(g) deliver powers of attorney wherein Sellers appointed individuals to
execute the documents to be delivered at Closing, together with copies of
unanimous consents of the directors of Sellers that are corporate entities
authorizing the transactions contemplated hereby; and
(h) execute, acknowledge and deliver any other agreements provided for
herein or necessary or desirable to effectuate the transactions contemplated
hereby.
Section 10.08 Actions of Buyer at Closing. At the Closing, Buyer shall:
(a) deliver to IPP, on behalf of Sellers, the Purchase Price, as adjusted
pursuant to the provisions hereof, less the Deposit previously paid by Buyer to
the Escrow Agent and all accrued interest thereon, but without any other
deduction, by means of a completed federal funds transfer of same day funds to
the account of IPP designated by IPP in writing at least two days prior to the
Closing;
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(b) take possession of the Assets; and
(c) execute and deliver a notice directing the Escrow Agent to release
from escrow to IPP, on behalf of Sellers, the Deposit plus all interest accrued
on the Deposit to the Closing Date; and
(d) execute, acknowledge and deliver the documents described in Section
10.07(a) and any other agreements provided for herein or necessary or desirable
to effectuate the transactions contemplated hereby.
Section 10.09 Further Cooperation.
(a) Except as necessary for Sellers to perform under the Transition
Services Agreement, Sellers shall make the Records available to be picked up by
Buyer at the offices of IPP during normal business hours within five days after
the Closing. Sellers shall have the right to retain copies of any of the
Records.
(b) It is the intent of Sellers to sell and assign to Buyer pursuant to
the terms of this Agreement all of their undivided right, title and interest in
and to all oil, gas and mineral leases that they currently own as of the date
hereof in the areas described in Exhibit B attached hereto, except to the extent
that any such oil, gas and mineral leases are contributed to the Partnership
under the Contribution Agreement or any such oil, gas and mineral leases are
specifically described as Excluded Assets hereunder or under the Contribution
Agreement. After the Closing, Sellers agree that, at the request of Buyer,
Sellers, without additional consideration, shall execute and deliver or cause to
be executed and delivered from time to time to Buyer a Conveyance covering any
such oil, gas and mineral leases to the extent such oil, gas and mineral leases
(i) were not previously assigned to Buyer pursuant to the terms of this
Agreement, (ii) were not contributed to the Partnership under the terms of the
Contribution Agreement, and (iii) were not specifically described as Excluded
Assets hereunder or under the terms of the Contribution Agreement.
(c) After the Closing Date, each Party at the request of the other and
without additional consideration, shall execute and deliver, or shall cause to
be executed and delivered from time to time such further instruments of
conveyance and transfer and shall take such other action as the other Party may
reasonably request to convey and deliver the Assets to Buyer and to accomplish
the orderly transfer of the Assets to Buyer in the manner contemplated by this
Agreement. To effect the foregoing with respect to corrections of the
descriptions of the Assets to be sold and conveyed hereby, Buyer shall provide
Sellers with a written request for a corrective instrument together with Buyer's
available title information and a form of Conveyance with the corrected
description. Sellers shall use their commercially reasonable efforts to execute
and return such Conveyance within ninety (90) days of receipt of Buyer's written
request; provided that if Buyer requests the return of the Conveyance within
forty-five (45) days of receipt of Buyer's written request, then Buyer shall pay
Sellers' reasonable third-party costs and expenses therewith. After the Closing,
the Parties will cooperate to have all proceeds received attributable to the
Assets to be paid to the proper Party hereunder and to have all expenditures to
be made with respect to the Assets to be made by the proper Party hereunder.
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(d) Prior to the execution of this Agreement, Buyer's parent, Pure
Resources, Inc. ("Pure Parent") has consulted with the U.S. Securities and
Exchange Commission (the "SEC") to determine the type of financial statements
("Required Financial Statements") pertaining to the Assets that will be required
of Pure Parent in connection with reports, registration statements and other
filings to be made by Pure Parent related to the transactions contemplated by
this Agreement and the Contribution Agreement with the SEC pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Seller shall use its best
efforts to prepare, at Buyer's sole cost and expense, the Required Financial
Statements in such form that the Required Financial Statements can be audited.
If the Required Financial Statements consist only of statements of revenues and
direct expenses related to the Assets, such Required Financial Statements shall
be audited by KPMG, LLP, Pure Parent's independent certified public accountants.
If, however, the Required Financial Statements consist of full audited financial
statements of IPP and statements of revenues and direct expenses of the Assets
acquired from other Sellers, the Required Financial Statements shall be audited
by Xxxxxx Xxxxxxxx LLP, Seller's independent certified public accountants, and
Seller shall use its best efforts to cause Xxxxxx Xxxxxxxx LLP to (1) issue to
Seller an unqualified opinion with respect to the Required Financial Statements
(the Required Financial Statements and related opinions being hereinafter
referred to as the "Audited Financial Statements") and (2) provide its written
consent for the use of its audit reports of the Audited Financial Statements to
prepare and file reports under the Exchange Act and the Securities Act, as
needed. Seller shall complete the Required Financial Statements as soon as
reasonably practicable and if required to deliver the Audited Financial
Statements to Pure Parent, Seller shall complete and deliver the Audited
Financial Statements not later than ten days prior to the date that such Audited
Financial Statements would be required to be filed by Pure Parent with a report
on Form 8-K under the Exchange Act. In the event that Xxxxxx Xxxxxxxx LLP
conducts the audit of the Required Financial Statements, Buyer may, at its
option and expense, engage KPMG, LLP to monitor and review the progress of the
production of the Audited Financial Statements. Buyer shall bear all reasonable
and customary costs and expenses involved in the preparation and audit of any
financial statements required pursuant to this subsection and shall be entitled
to review and copy any work papers or other records used by Xxxxxx Xxxxxxxx LLP
or necessary for Pure Parent to prepare pro forma financial statements.
(e) Buyer shall assist Sellers in enforcing their respective rights
against third parties with respect to Environmental Defects, the liability for
which Sellers have retained under Section 12.01(e) hereof. Sellers shall pay all
third party costs incurred by Buyer in providing such assistance.
Section 10.10 Confidentiality Agreement. If the Closing occurs, the
confidentiality agreement dated September 18, 2000 executed by Xxxxxx Xxxxxxx &
Co., on behalf of Sellers, and Pure Resources, L.P. (the "Confidentiality
Agreement") shall terminate and be of no further force or effect insofar as the
Confidentiality Agreement relates to the Assets.
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ARTICLE XI
Termination
Section 11.01 Right of Termination. This Agreement may be terminated at
any time at or prior to Closing:
(a) by mutual written consent of the Parties;
(b) by Sellers on the Closing Date if by the Closing Date (i) the
conditions set forth in Section 8.01, 8.02, 8.04 or 8.06 have not been fully
satisfied by Buyer or waived by Seller in writing or (ii) any of the other
conditions in Article VIII have not been satisfied in all material respects by
Buyer or waived by Sellers in writing;
(c) by Buyer on the Closing Date if by the Closing Date (i) the conditions
set forth in Sections 9.01, 9.04, or 9.05 have not been fully satisfied by
Sellers or waived by Buyer in writing or (ii) any of the other conditions in
Article IX have not been satisfied in all material respects by Sellers or waived
by Buyer in writing;
(d) by either Party if the Closing shall not have occurred on or before
January 31, 2001;
(e) by any Party if any Governmental Authority shall have issued an order,
judgment or decree or taken any other action challenging, restraining,
enjoining, prohibiting or invalidating the consummation of any of the
transactions contemplated herein; or
(f) as otherwise provided herein;
provided, however, that no Party shall have the right to terminate this
Agreement pursuant to clause (b), (c) or (d) above if such Party or its
Affiliates are at such time in material breach of any provision of this
Agreement or the Contribution Agreement.
Section 11.02 Effect of Termination. In the event that Closing does not
occur as a result of any Party exercising its right to terminate pursuant to
Section 11.01, then except as set forth in Section 2.02, this Agreement shall be
null and void and no Party shall have any further rights or obligations under
this Agreement, except that nothing herein shall relieve any Party from any
liability for any breach hereof or any liability that has accrued prior to the
date of such termination.
Section 11.03 Attorney Fees, Etc. If either Party to this Agreement resorts
to legal proceedings to enforce this Agreement, the prevailing Party in such
proceedings shall be entitled to recover all costs incurred by such Party
including reasonable attorney's fees, in addition to any other relief to which
such Party may be entitled.
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ARTICLE XII
Assumption, Indemnification and Survival
Section 12.01 Retained Obligations. Provided that the Closing occurs,
Sellers hereby retain all obligations and liabilities for the following
(collectively the "Retained Obligations"):
(a) the payment of any tax owed by Sellers attributable to the
ownership or operation of the Assets prior to the Effective Time, including
(i) Sellers' pro rata share of ad valorem taxes under Section 10.03, but in
any event only to the extent attributable to the taxable periods or
portions thereof ending before the Effective Time, (ii) severance or
production taxes relating to Oil and Gas produced from the Assets prior to
the Effective Time and (iii) the federal and state income tax obligations
of Sellers,
(b) any suit, or action against any Seller pending by or before any
Governmental Authority, on or before the Effective Time, including without
limitation those described in Schedule 5.06;
(c) any liability for criminal penalties attributable to the
ownership or operation of the Assets occurring prior to the Effective Time;
(d) subject to Buyer's obligations to make payments pursuant to
Sections 11.12(b)(iv) and 11.12(d) under the Contribution Agreement, (i)
any liability for claims asserted by any employees of Sellers or for claims
arising out of or related in any way to (A) the employment, termination of
employment or terms or conditions of employment of employees or applicants
of Sellers or their affiliates (or employees or applicants otherwise
relating to the operation of the Assets) or (B) the failure by Sellers or
their affiliates to comply with any law, order, decree, or ordinance
relating to employment, in each of (A) and (B) to the extent arising or
occurring on or before the Closing Date, and (ii) without limiting the
generality of the foregoing, any liability arising under (1) any employee
benefit plan, program, arrangement or agreement (each, a "Plan") of Sellers
or their affiliates, (2) any Plan for the benefit of or that benefits the
employees of Sellers or Sellers' affiliates, or (3) the Employee Retirement
Income Security Act of 1974, as amended, or the Internal Revenue Code of
1986, as amended, based upon any such Plans (where an "affiliate" of
Sellers means any Person which, together with any of Sellers, would be
treated as a single employer under Section 414 of such Internal Revenue
Code); and
(e) Environmental Defects arising out of Oil and Gas operations or
activities on the Producing Mineral Properties to the extent such Oil and
Gas operations or activities (i) were conducted prior to the Effective Time
or (ii) are conducted from and after the Effective Time pursuant to or
under existing Mineral Contracts as in effect as of the date of this
Agreement; provided, however, if the existing Mineral Contracts are amended
or modified by Buyer or its successors or assigns for ministerial purposes
or to change the royalty or bonus payments thereunder and such modification
or amendment does not have the effect of expanding, increasing or extending
Sellers' liability under this Agreement for its Retained Obligations, then
such modification or amendment shall not relieve Sellers from their
liability under this Section 12.01(e)(ii).
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Section 12.02 Assumption. Provided that the Closing occurs, Buyer hereby
assumes all of Sellers' duties, obligations and liabilities of every kind and
character with respect to the Assets or the ownership or operation thereof,
whether or not attributable to periods before or after the Effective Time,
including, without limitation, those arising out of (a) the terms of the
Contracts or leases constituting part of the Assets, (b) ad valorem, property,
production severance and other similar taxes or assessments based upon or
measured by the ownership of the Assets or the production therefrom insofar, and
only insofar as such taxes relate to periods from and after the Effective Time,
(c) the condition of the Oil and Gas Properties on the Closing Date, (d)
obligations to properly plug and abandon or re-plug or re-abandon xxxxx located
on the Lease Properties, and (e) obligations to restore the surface of the Oil
and Gas Properties and obligations to bring the Oil and Gas Properties into
compliance with applicable Environmental Laws (including, without limitation,
conducting any investigation, remediation or monitoring activities that may be
required on or otherwise in connection with activities on the Oil and Gas
Properties), regardless of whether such obligations or conditions or events
giving rise to such obligations, arose, occurred or accrued before or after the
Closing Date; provided, however, that Buyer does not assume liability for (i)
the Retained Obligations or (ii) the liabilities and obligations of Sellers as
owners of Mineral Interests underlying the Producing Mineral Properties under
and pursuant to the terms of Existing Use Restrictions (as defined in the Deed)
or any other similar agreements between or among Sellers and/or their
Affiliates. The duties, obligations and liabilities assumed by Buyer under this
Section 12.02 are herein called the "Assumed Obligations".
Section 12.03 Buyer's Indemnification. Provided that the Closing occurs,
Buyer shall release, defend, indemnify and hold harmless Sellers and their
shareholders, officers, directors, employees, agents, representatives,
Affiliates, subsidiaries, successors and assigns (collectively, the "Seller
Indemnitees") from and against any and all claims, liabilities, losses, damages,
causes of actions, penalties, judgments, settlements, costs and expenses
(including, without limitation, involving theories of negligence or strict
liability and including court costs and attorneys' fees) ("Losses") as a result
of, arising out of, or related to the breach of any of the representations,
warranties, covenants or agreements of Buyer contained in this Agreement, or as
a result of, arising out of, or relating to the Assumed Obligations, REGARDLESS
OF WHETHER CAUSED OR CONTRIBUTED TO BY THE JOINT OR CONCURRENT NEGLIGENCE (IN
ANY DEGREE, ACTIVE OR PASSIVE) OR STRICT LIABILITY OF ANY OF THE SELLER
INDEMNITEES.
Section 12.04 Sellers' Indemnification. Provided that the Closing occurs,
Sellers shall release, defend, indemnify and hold harmless Buyer and its
shareholders, officers, directors, employees, agents, representatives,
Affiliates, subsidiaries, successors and assigns (collectively, the "Buyer
Indemnitees") from and against any and all Losses as a result of, arising out
of, or related to the following:
(a) the Retained Obligations,
(b) Environmental Defects resulting from Sellers' or Sellers' Affiliates'
ownership or operations on the surface, including operations by
Sellers or Sellers' Affiliates at any surface facilities or any
activities by Sellers or Sellers' Affiliates on any Tract (other than
Oil and Gas operations or activities) prior to the Effective Time
(for the
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purposes of this Section 12.04(b), the term "Assets" as used in the
definition of "Environmental Defects" means all the assets and
properties of Sellers or Sellers' Affiliates), or
(c) the breach of any of the representations, warranties, covenants or
agreements of Sellers contained in this Agreement,
IN EACH CASE REGARDLESS OF WHETHER CAUSED OR CONTRIBUTED TO BY THE JOINT OR
CONCURRENT NEGLIGENCE (IN ANY DEGREE, ACTIVE OR PASSIVE) OR STRICT LIABILITY OF
ANY OF THE BUYER INDEMNITEES.
For purposes of this Agreement: (i) subject to the immediately following
sentence, the term "Environmental Defect" shall mean and be limited to, with
respect to any given Asset: (A) a material violation of Environmental Laws in
effect as of the Effective Time in the jurisdiction in which such Asset is
located; provided, however, that the term Environmental Defect shall not include
violations related solely to the presence or existence of encapsulated asbestos
containing materials or lead-based paints being used for their intended purpose
and in a manner consistent with typical industry operations; (B) any
investigation, remediation, or monitoring required by applicable Environmental
Law in effect as of the Effective Time in the jurisdiction in which such asset
is located in response to finding any Hazardous Materials in, on, under or
migrating from any such Asset, and (C) any final, non-appealable legal judgment
issued by an applicable court of law with proper jurisdiction over the Asset
that is the subject matter of the dispute and pertaining specifically to a
release of Hazardous Materials in, on, under or migrating from any such Asset;
(ii) the term "Environmental Laws" shall mean all applicable federal, state, and
local laws, statutes, ordinances, court decisions, rules, regulations or orders
pertaining to health or the environment as may be interpreted by applicable
court decisions or administrative orders; and (iii) the term "Hazardous
Materials" shall mean all hazardous substances or solid wastes that are
regulated under or pursuant to any applicable Environmental Laws. The term
"Environmental Defect" shall not include those matters that are disclosed in the
following reports in sufficient detail such that a knowledgeable buyer who reads
the reports would be put on notice that such matters constitute an Environmental
Defect, but any such matters that would otherwise constitute an Environmental
Defect shall not be excluded from the definition of the term "Environmental
Defect" if such matters are materially different than described in such reports:
Highlander Environmental Corp. Environmental Site Assessment of IP Petroleum
Company, Inc. Operated Properties Located in Texas and Oklahoma dated August 9,
2000, Xxxx Environmental Group, Inc. Phase I Environmental Assessment of the
Xxxxxx Brothers lease in the Bowie Creek Field in Xxxxxxxxx County, Mississippi
dated June 2000, and COMM Engineering Due Diligence Site Assessment of the
Galveston Block 394-A Platform and other properties dated August, 2000.
Section 12.05 Indemnification Procedure.
(a) All claims for indemnification under this Agreement shall be asserted
and resolved pursuant to this Section 12.05 and Article XIV. Any person or
entity claiming indemnification hereunder is hereinafter referred to as the
"Indemnified Party" and any person or entity against whom such claims are
asserted hereunder is hereinafter referred to as the "Indemnifying Party."
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(b) In the event that (i) any claim, demand or proceeding is asserted or
instituted in writing by any Person other than the parties to this Agreement or
their Affiliates which could give rise to Losses for which an Indemnifying Party
could be liable to an Indemnified Party under this Agreement (such claim, demand
or proceeding, a "Third Party Claim") or (ii) any Indemnified Party shall have a
claim to be indemnified by any Indemnifying Party under this Agreement which
does not involve a Third Party Claim (such claim, a "Direct Claim"), the
Indemnified Party shall promptly send to the Indemnifying Party a written notice
specifying the nature of such claim, together with information reasonably
available to the Indemnified Party with respect to such claim (a "Claim
Notice"), provided that a delay in notifying the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations under this Agreement except to
the extent that such failure shall have caused actual prejudice to the
Indemnifying Party.
(c) In the event of a Third Party Claim, the Indemnifying Party shall have
30 days after receipt of the Claim Notice relating to such Third Party Claim to
elect to undertake, conduct and control, through counsel of its own choosing
(provided that such counsel is reasonably acceptable to the Indemnified Party)
and at its own expense, the settlement or defense of such Third Party Claim (in
which case the Indemnifying Party shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by any Indemnified Party
except as set forth below). If the Indemnifying Party elects to undertake such
defense, it shall promptly assume and hold such Indemnified Party harmless from
and against the full amount of any Damages resulting from such Third Party Claim
to the extent provided herein. Notwithstanding an Indemnifying Party's election
to undertake, conduct and control such Third Party Claim, the Indemnified Party
shall have the right to employ separate counsel at its cost, and the
Indemnifying Party shall not bear the fees, costs and expenses of such separate
counsel. If the Indemnifying Party elects to undertake such defense, (i) the
Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting such Third Party Claim, and, if appropriate and related to
such Third Party Claim, the parties will reasonably cooperate with each other in
connection with making any counterclaim against the person asserting the Third
Party Claim, or any cross-complaint against any Person, (ii) such Third Party
Claim may not be settled or compromised by the Indemnified Party without the
prior written consent of the Indemnifying Party; provided that in the event any
Indemnified Party settles or compromises or consents to the entry of any
judgment with respect to any Third Party Claim without the prior written consent
of the Indemnifying Party, such Indemnified Party shall be deemed to have waived
all rights against the Indemnifying Party for indemnification under this Article
XII, and (iii) the Indemnifying Party shall not, except with the consent of the
Indemnified Party, enter into any settlement that does not include as an
unconditional term thereof the giving by the third party asserting such claim to
all Indemnified Parties of (A) unconditional release from all liability with
respect to such Third Party Claim or (B) consent to entry of any judgment. If
the Indemnifying Party does not notify the Indemnified Party of its election to
undertake the defense of such Third Party Claim within 30 days after receipt of
the Claim Notice relating to such Third Party Claim, the Indemnified Party shall
have the right to contest, settle, compromise or consent to the entry of any
judgment with respect to such Third Party Claim and in doing so shall not
thereby waive any right to indemnity therefor pursuant to this Article XII,
provided that at any time thereafter the Indemnifying Party may assume the
defense of such Third Party Claim.
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(d) In the event of a Direct Claim, the Indemnifying Party shall notify
the Indemnified Party within 30 days of receipt of a Claim Notice whether or not
the Indemnifying Party disputes such claim.
(e) From and after the delivery of a Claim Notice under this Agreement,
at the reasonable request of the Indemnifying Party the Indemnified Party shall
grant the Indemnifying Party and its representatives all reasonable access to
the books, records and properties of such Indemnified Party to the extent
reasonably related to the matters to which the Claim Notice relates. All such
access shall be granted during normal business hours and shall be granted under
conditions which will not unreasonably interfere with the business and
operations of such Indemnified Party. The Indemnifying Party will not, and shall
cause its representatives not to, use (except in connection with such Claim
Notice) or disclose to any third Person other than the Indemnifying Party's
representatives (except as may be required by applicable law) any information
obtained pursuant to this Section 12.05, which is designated as confidential by
the Indemnified Party.
Section 12.06 Survival. The representations and warranties of the Parties
contained in this Agreement and in the officers' certificates delivered by the
Parties pursuant to Sections 8.02 and 9.01 shall survive the Closing and remain
enforceable for 36 months from the Closing Date. No claim for indemnity under
this Article XII for any breach of a representation or warranty may be brought
unless the appropriate Claim Notice shall have been delivered to the
Indemnifying Party prior to expiration of the survival period. Except as
otherwise provided in this Agreement, the covenants contained in this Agreement
shall terminate at the Closing; provided, however, there shall be no termination
of the covenant in Section 12.04(c) with respect to any bona fide claim that is
made in a Claim Notice given prior to the expiration of the survival period with
respect to the representation, warranty, covenant or agreement giving rise to
such bona fide claim and there shall be no termination of the covenants in
Section 4.04 with respect to any Title Defect described in a Title Defect Notice
given prior to the expiration of the Survival Period. The following covenants
contained in this Agreement shall survive the Closing for the following periods
after the Closing Date: (i) for all covenants in Article IV, 36 months, (ii) for
the covenants in Sections 7.02, 10.09, 12.02, 12.03, 12.04(a), 12.04(b), and
Article XIV, no time limit, (iii) for the covenants in Sections 1.06, 7.04,
10.05, 10.06, 15.01, 15.02, 15.04 and 15.07, the time period in which the
covenants in such Sections and Article are to be performed, and (iv) for the
covenants in Section 7.01, one year. All provisions regarding any limitation of
(x) any Party's liability or (y) any Party's remedies for any breach of or
otherwise under this Agreement or in connection with the transactions
contemplated hereby, shall survive the Closing without time limit.
Section 12.07 Limitations on Liabilities. Notwithstanding anything to the
contrary in this Agreement, the liability of Sellers or the Buyer (as
applicable) under this Agreement and any documents delivered in connection
herewith or contemplated hereby shall be limited as follows:
(a) IN NO EVENT SHALL THE SELLERS BE LIABLE IN ANY WAY WHATSOEVER TO THE
BUYER WITH RESPECT TO A BREACH OF THE WARRANTY OF TITLE GIVEN IN SECTION 5.08
WITH RESPECT TO ANY PROPERTY IN EXCESS OF THE ADJUSTMENT VALUE OF SUCH PROPERTY,
AND THE PARTIES AGREE THAT THE PROCEDURES STATED IN SECTION 4.04 (AND THE
INDEMNIFICATION
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PROVISIONS IN SECTION 12.04(c) APPLICABLE TO A BREACH OF SECTION 4.04) ARE THE
EXCLUSIVE REMEDIES FOR SUCH BREACH.
(b) the aggregate amount of all Losses (including, without limitation,
title defects) for which Sellers are liable to Buyer under this Agreement when
aggregated with any "losses", including, without limitation, "Title Defects",
but excluding the "uNcapped obligations" (in this case, as the terms "Losses,"
"Title Defects" and "uNcapped Obligations" are defined under the contribution
agreement) for which the ipp parties are responsible under the terms of the
Contribution Agreement shall not exceed $5,000,000.00. THE LIMITATION CONTAINED
IN THIS SECTION 12.07(b) SHALL NOT APPLY TO SELLERS' OBLIGATIONS IN SECTIONS
10.05, 12.01 AND 12.04(a) AND (b) HEREOF (COLLECTIVELY, THE "UNCAPPED
OBLIGATIONS").
(c) the aggregate amount of all Losses for which Buyer is liable to Seller
under this Agreement AND THE CONTRIBUTION AGREEMENT by virtue of any breach of
Buyer's obligation to Close shall not exceed $30,000,000.00, which sum includes
the Deposit, plus any interest accrued thereon.
(d) For the first 33 months from the Closing Date, no Title Defect Notice
or Claim Notice shall be given by Buyer to SellerS until the aggregate of such
claims (or Losses alleged in such claims) at SUCH time exceed $50,000.
Section 12.08 Exclusive Remedy. EXCEPT AS SET FORTH IN THE SURFACE USE
RESTRICTIONS AGREEMENT AND THE TRANSITION SERVICES AGREEMENT, EACH OF THE
PARTIES ACKNOWLEDGES AND AGREES THAT ITS SOLE AND EXCLUSIVE REMEDY WITH RESPECT
TO ANY AND ALL LOSSES PURSUANT TO OR IN CONNECTION WITH THIS AGREEMENT OR
ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE LIMITED (i) TO THE
INDEMNIFICATION PROVISIONS SET FORTH IN THIS AGREEMENT, (ii) IN THE EVENT THAT
CLOSING DOES NOT OCCUR ON ACCOUNT OF SELLERS' BREACH OF THIS AGREEMENT, TO THE
RIGHT OF BUYER TO SEEK SPECIFIC PERFORMANCE OF THE TRANSFER OF THE ASSETS AS
PROVIDED UNDER THIS AGREEMENT AND (iii) IN THE EVENT THAT CLOSING DOES NOT OCCUR
ON ACCOUNT OF BUYER'S BREACH OF THIS AGREEMENT, AS PROVIDED IN SECTION 2.02(c).
Section 12.09 No Punitives. Notwithstanding anything to the contrary in
this Agreement, in no event shall either Party be entitled to receive any
consequential, incidental, special, treble, exemplary or punitive damages unless
such damages are a part of a third party claim for which a Party is seeking
indemnification hereunder, REGARDLESS OF WHETHER CAUSED OR CONTRIBUTED TO BY THE
SOLE, JOINT OR CONCURRENT NEGLIGENCE (IN ANY DEGREE) OR STRICT LIABILITY OF THE
OTHER PARTY.
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ARTICLE XIII
Limitations on Representations and Warranties
Section 13.01 Disclaimers of Representations and Warranties. The express
representations and warranties of Sellers contained in this Agreement are
exclusive and are in lieu of all other representations and warranties, express,
implied or statutory. EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES OF
SELLERS MADE IN THIS AGREEMENT, BUYER ACKNOWLEDGES THAT SELLERS HAVE NOT MADE,
AND SELLERS HEREBY EXPRESSLY DISCLAIM AND NEGATE, AND BUYER HEREBY EXPRESSLY
WAIVES, ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY
STATUTE OR OTHERWISE RELATING TO (a) PRODUCTION RATES, RECOMPLETION
OPPORTUNITIES, DECLINE RATES, GAS BALANCING INFORMATION OR THE QUALITY, QUANTITY
OR VOLUME OF THE RESERVES OF OIL AND GAS, IF ANY, ATTRIBUTABLE TO THE ASSETS,
(b) THE ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR OTHER
MATERIALS (WRITTEN OR ORAL) NOW, HERETOFORE OR HEREAFTER FURNISHED TO BUYER BY
OR ON BEHALF OF SELLERS, EXCEPT AS SPECIFICALLY REPRESENTED BY SELLERS IN
ARTICLE V AND (c) THE ENVIRONMENTAL CONDITION OF THE ASSETS. SELLERS AND BUYER
AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE, THE
DISCLAIMERS OF CERTAIN WARRANTIES CONTAINED IN THIS SECTION ARE "CONSPICUOUS"
DISCLAIMERS FOR THE PURPOSES OF ANY APPLICABLE LAW, RULE OR ORDER.
Section 13.02 Casualty Loss.
(a) Buyer shall assume all risk of loss with respect to, and any change
in the condition of, the Assets from the Effective Time until Closing, including
with respect to the depletion of Oil and Gas, the watering-out of any well, the
collapse of casing, sand infiltration of xxxxx, and the depreciation of personal
property.
(b) If after the Effective Time and prior to the Closing any part of the
Assets shall be damaged or destroyed by fire or other casualty or if any part of
the Assets shall be taken in condemnation or under the right of eminent domain
or if proceedings for such purposes shall be pending or threatened, this
Agreement shall remain in full force and effect notwithstanding any such
destruction, taking or proceeding, or the threat thereof and the Parties shall
proceed with the transactions contemplated by this Agreement notwithstanding
such destruction or taking (without reduction of the Purchase Price).
(c) Notwithstanding Section 13.02(a), in the event of any loss described
in Section 13.02(b), at the Closing Sellers shall pay to Buyer all sums paid to
Sellers by third parties by reason of the destruction or taking of such Assets
and shall assign, transfer and set over unto Buyer all of the rights, title and
interest of Sellers in and to any claims, causes of action, unpaid proceeds or
other payments from third parties arising out of such destruction or taking.
From the
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date of this Agreement until the Closing, each Seller shall use its commercially
reasonable efforts to maintain in force insurance coverage with respect to the
Assets in amounts and scope of coverage substantially similar to the amounts and
scope of coverage currently in force with respect to the Assets.
ARTICLE XIV
Dispute Resolution
Section 14.01 General. Any and all claims, counterclaims, demands, causes
of action, disputes, controversies or other matters in question arising out of
or relating to this Agreement, any provision hereof, the alleged breach of any
such provision, or in any way relating to the subject matter of this Agreement
or the relationship among the Parties created by this Agreement, involving the
Parties, their Affiliates and/or their respective representatives (all of which
are referred to herein as "Disputes"), even though some or all of such Disputes
allegedly are extra-contractual in nature, whether such Disputes sound in
contract, tort, or otherwise, at law or in equity, under state or federal law,
whether provided by statute or the common law, for damages or any other relief,
shall be resolved solely in accordance with this Article XIV.
Section 14.02 Senior Management. If a Dispute occurs that the senior
representatives of the Parties responsible for the transaction contemplated by
this Agreement have been unable to settle or agree upon within a period of 15
days after such Dispute arose, Sellers shall nominate and commit a senior
officer of IPP, and Buyer shall nominate and commit one of its senior officers,
to meet at a mutually agreed time and place not later than 30 days after the
Dispute has arisen to attempt to resolve same. If such senior management have
been unable to resolve such Dispute within a period of 15 days after such
meeting, or if such meeting has not occurred within 45 days following such
Dispute arising, then either Party shall have the right, by written notice to
the other, to resolve the Dispute (i) through the relevant Independent Expert
pursuant to Section 14.03, or (ii) by arbitration in accordance with the
provisions of Section 14.04.
Section 14.03 Independent Experts.
(a) Each Party shall have the right to submit Disputes regarding title
issues or calculation of the Statement or revisions thereto, to an independent
expert appointed in accordance with this Section 14.03 (each, an "Independent
Expert"), who shall serve as sole arbitrator. With respect to Disputes regarding
title issues, including without limitation Disputes regarding Title Defects or
Title Defect Amounts, the Parties hereby appoint Xxxx Xxxxxxxx as the
Independent Expert; provided that, if Xxxx Xxxxxxxx is not available then the
Parties hereby appoint Xxxxxx Xxxxx as the Independent Expert; provided further
that, if Xxxxxx Xxxxx is not available then the Parties appoint Xxxx Xxxx as the
Independent Expert. With respect to Disputes regarding calculation of the
Statement or revisions thereto, the Parties will appoint a mutually agreeable
nationally renowned accounting firm as the Independent Expert. If the foregoing
listed Independent Expert fails or refuses to serve in such capacity then the
Independent Expert shall be appointed by mutual agreement of the Parties from
among candidates with experience and expertise in the area that is the subject
of such Dispute, and failing such agreement, such Independent Expert for such
Dispute shall be selected in accordance with the Rules (as hereinafter defined).
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(b) Disputes to be resolved by an Independent Expert shall be resolved in
accordance with mutually agreed procedures and rules and failing such agreement,
in accordance with the rules and procedures for arbitration provided in Section
14.04. The Independent Expert shall be instructed by the Parties to resolve such
Dispute as soon as reasonably practicable in light of the circumstances. The
decision and award of the Independent Expert shall be binding upon the Parties
as an award under the Federal Arbitration Act and final and nonappealable to the
maximum extent permitted by law, and judgment thereon may be entered in a court
of competent jurisdiction and enforced by any Party as a final judgment of such
court.
Section 14.04 Binding Arbitration. Any Dispute that is not resolved
pursuant to the foregoing Sections of this Article XIV, shall be settled
exclusively and finally by arbitration in accordance with this Section 14.04.
(a) Rules and Procedures. Such arbitration shall be governed by and
conducted pursuant to the Federal Arbitration Act (including case law), except
as expressly provided otherwise in this Agreement. The making, validity,
construction, and interpretation of this Section 14.04, and all procedural
aspects of the arbitration conducted pursuant hereto, shall be decided by the
arbitrators. Except as modified by this Agreement, the arbitration shall be
conducted in accordance with the rules of arbitration of the Federal Arbitration
Act and, to the extent an issue is not addressed by the federal law of
arbitration, by the Commercial Arbitration Rules of the American Arbitration
Association (collectively, the "Rules").
(b) Discovery. The arbitrators shall permit discovery and rule on matters
of confidentiality as they determine is appropriate in the circumstances.
(c) Venue. All arbitration proceedings hereunder shall be conducted in
Houston, Texas or such other location as the Parties shall mutually agree.
(d) Arbitrators. All arbitration proceedings hereunder shall be before a
panel of three arbitrators consisting of persons having at least 10 years of
experience in or relating to the oil and gas industry (which can include
lawyers). Within 30 days of the notice of initiation of the arbitration
procedure, Sellers shall select one arbitrator and Buyer shall select one
arbitrator. If Sellers or Buyer shall fail to select their or its arbitrator
within the required time, the other Party or Parties shall select two
arbitrators. The two arbitrators so selected shall select a third arbitrator,
failing agreement on which within 60 days of the original notice, the Parties
(or any of them) shall apply to any United States District Judge for the
Southern District of Texas, Houston Division, who shall appoint the third
arbitrator.
(e) Substantive Law. In deciding the substance of the Dispute, the
arbitrators shall refer to the substantive laws of the State of Texas for
guidance (excluding Texas choice-of-law principles that might call for the
application of the laws of another jurisdiction).
(f) Timing. The arbitrators shall conduct a hearing as soon as reasonably
practicable but in no event later than 30 days after appointment of the third
arbitrator, and render a final decision completely disposing of the Dispute that
is the subject of such proceedings as soon as reasonably practicable but in no
event later than 15 days after the final hearing.
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(g) Waiver of Certain Damages. Notwithstanding any other provision in this
Agreement to the contrary, the Parties expressly agree that the arbitrators
shall have absolutely no authority to award consequential, incidental, special,
treble, exemplary or punitive damages of any type under any circumstances
regardless of whether such damages may be available under Texas law, or any
other laws, or under the Federal Arbitration Act or the Rules, unless such
damages are a part of a third party claim for which a Party is entitled to
indemnification hereunder.
(h) Transcripts and Decisions. The Parties agree that there shall be no
transcript of any hearing before the arbitrators. The Parties shall request that
final decision of the arbitrators be in writing, be as brief as possible, set
forth the reasons for such final decision, and if the arbitrators award monetary
damages to either Party, contain a certification by the arbitrators that, except
as permitted by Section 14.04(g), they have not included any consequential,
incidental, special, treble, exemplary or punitive damages. To the fullest
extent permitted by law, the arbitration proceeding and the arbitrators'
decision and award shall be maintained in confidence by the Parties and the
Parties shall instruct the arbitrators to likewise maintain such matters in
confidence.
(i) Fees and Awards. The fees and expenses of the arbitrators shall be
borne equally by the Parties, but the decision of the arbitrators may include
such award of the arbitrators' fees and expenses and of other costs and
attorneys' fees as the arbitrators determine to be appropriate.
(j) Binding Nature. The decision and award of the arbitrators shall be
binding upon the Parties and final and nonappealable to the maximum extent
permitted by law, and judgment thereon may be entered in a court of competent
jurisdiction and enforced by any Party as a final judgment of such court.
ARTICLE XV
Miscellaneous
Section 15.01 Names. As soon as reasonably possible after Closing, but in
no event later than 60 days after Closing, Buyer shall remove the name of
Sellers, and all variations thereof, from all of the Assets and make the
requisite filings with, and provide the requisite notices to, the appropriate
federal, state or local agencies to place the title or other indicia of
ownership, including operation of the Assets, in a name other than any name of
Sellers or any of their Affiliates, or any variations thereof.
Section 15.02 Taxes, Expenses and Recording. (a) Buyer shall be liable for
all sales, use, documentary, recording, stamp, transfer or similar taxes,
assessments or fees arising from the transactions contemplated by this
Agreement. Buyer shall be responsible for reimbursing Sellers at Closing for
one-half of Sellers' costs in copying those Records pertaining to the Mineral
Properties. Except as provided in the preceding sentences, each Party shall be
solely responsible for all expenses and taxes, including but not limited to
federal, state and local income taxes and due diligence expenses, incurred by it
in connection with this transaction, and neither Party shall be entitled to any
reimbursement for such expenses from the other Party.
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(b) Following the Closing, Buyer shall promptly file and record, at its
sole cost and expense, (i) the Deeds and the Conveyance in all counties and
parishes where the properties covered thereby are located and thereafter provide
to Sellers recording information and references regarding such filings as
provided in Section 15.12, and (ii) the Surface Use Restrictions Agreement, in
those parishes in Louisiana where the Mineral Interests are located and in all
counties and parishes where the Restricted Tracts (as defined in the Surface Use
Restrictions Agreement) are located and shall thereafter provide to Sellers
recording information and references regarding such filings as provided in
Section 15.12. From and after the Closing if Buyer contemplates entering into
any Transaction (as hereinafter defined) with respect to any Mineral Interest,
then Buyer shall file and record, at its sole cost and expense, prior to the
consummation of such Transaction, the Surface Use Restrictions Agreement in each
of those counties where the Mineral Interests related to such Transaction are
located to the extent such agreement has not previously been recorded by Buyer
in such counties and provide to Sellers recording information and reference
regarding such filing as provided in Section 15.12. In the event that Buyer
desires to mortgage any of the Mineral Interests, then if the Surface Use
Restrictions Agreement has not been required to be filed and recorded in
accordance with the foregoing provisions, Buyer shall either (i) prior to such
mortgage, file and record, at its sole cost and expense, the Surface Use
Restrictions Agreement in all counties where the Mineral Interests to be
mortgaged are located to the extent such agreement has not previously been
recorded in such counties or (ii) provide to Sellers, on or before the date such
Mineral Interests are mortgaged, legal opinions addressed to Sellers prepared by
reputable counsel licensed in each of the states where such Mineral Interests to
be mortgaged are located opining, in a form reasonably acceptable to Sellers,
that the reference to the Surface Use Restrictions Agreement in the Deed
recorded in such counties where such Mineral Interests are located is sufficient
to place all third parties on notice of the terms of such Surface Use
Restrictions Agreement as if such agreement had been recorded. To the extent
that the Surface Use Restrictions Agreement has not been required to be filed
and recorded in accordance with the foregoing provisions, then Buyer shall
either (A) file and record, at is sole cost and expense, the Surface Use
Restrictions Agreement in all counties where the Mineral Interests are located
to the extent not previously recorded in such counties by January 31, 2006 or
(B) provide to Sellers, on or before January 31, 2006, legal opinions addressed
to Sellers prepared by reputable counsel licensed in each of the states where
the Surface Use Restriction Agreement is not recorded opining, in a form
reasonably acceptable to Sellers, that the reference to the Surface Use
Restrictions Agreement in the recorded Deed is sufficient to place all third
parties on notice of the terms of such agreement as if such agreement had been
recorded. Sellers shall have the right, at their cost and expense, to record the
Surface Use Restrictions Agreement at any time in the counties and parishes
where the Mineral Interests are located. The term "Transaction" shall mean any
transfer, sale, or lease of, or any exploration or development operation on, any
Mineral Interests.
Section 15.03 Independent Investigation. Buyer represents and acknowledges
that it is knowledgeable of the oil and gas business and of the usual and
customary practices of producers such as Sellers and that it has had or will be
given access to the Assets, the officers and employees of Sellers, and the
books, records and files of Sellers relating to the Assets, and in making the
decision to enter into this Agreement and consummate the transactions
contemplated hereby, Buyer has relied and will rely solely on its own
independent due diligence investigation of the Assets and upon the
representations and warranties made in Article V, and not on any other
representations or warranties of Sellers.
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Section 15.04 Document Retention. As used in this Section 15.04, the term
"Documents" shall mean all files, documents, books, records and other data
delivered to Buyer by Sellers pursuant to the provisions of this Agreement
(other than those that Sellers have retained either the original or a copy of),
including, but not limited to: financial and tax accounting records; land, title
and division of interest files; contracts; engineering and well files; and books
and records related to the operation of the Assets prior to the Closing Date.
Buyer shall retain and preserve the Documents for a period of no less than seven
years following the Closing Date (or for such longer period as may be required
by law or governmental regulation), and shall allow Sellers or their
representatives to inspect the Documents at reasonable times and upon reasonable
notice during regular business hours during such time period. Sellers shall have
the right during such period to make copies of the Documents at their expense.
Section 15.05 Entire Agreement. This Agreement, the Confidentiality
Agreement, the Confidentiality Agreement between Pure Resources, L.P. and IPP
dated December 15, 2000 relating to IPP's offshore Lease Properties (the
"Offshore Confidentiality Agreement"), the documents to be executed hereunder,
and the exhibits attached hereto constitute the entire agreement between the
Parties hereto pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties pertaining to the subject matter hereof; provided,
however, that this Agreement does not supersede the Confidentiality Agreement
(except as provided in Section 10.10) or the Offshore Confidentiality Agreement.
No supplement, amendment, alteration, modification, waiver or termination of
this Agreement shall be binding unless executed in writing by the Parties hereto
and specifically referencing this Agreement.
Section 15.06 Waiver. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
Section 15.07 Publicity. During the period commencing on date of this
Agreement and ending ninety days after Closing, Sellers and Buyer shall consult
with each other with regard to all publicity and other releases concerning this
Agreement and the transactions contemplated hereby and, except as required by
applicable law or the applicable rules or regulations of any Governmental
Authority or by obligations pursuant to any listing or other agreement with any
national securities exchange, during such ninety day period, neither Party shall
issue any such publicity or other release without the prior written consent of
the other Party hereto, which consents shall not be unreasonably withheld. Any
press release required by law or by any such listing or other agreement shall
only be made after reasonable notice to the other Party. Pure Parent may attach
this Agreement to any necessary SEC filing.
Section 15.08 Construction. The captions in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement. The Parties
acknowledge that they have participated jointly in the negotiation and drafting
of this Agreement and as such the Parties agree that if an ambiguity or question
of intent or interpretation arises hereunder, this Agreement shall not be
construed more strictly against one Party than another on the grounds of
authorship.
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Section 15.09 No Third Party Beneficiaries. Except as provided in Section
12.02, nothing in this Agreement shall provide any benefit to any third party or
entitle any thirty party to any claim, cause of action, remedy or right of any
kind, it being the intent of the Parties that this Agreement shall otherwise not
be construed as a third party beneficiary contract.
Section 15.10 Assignment. No Party may assign or delegate any of its rights
or duties under this Agreement, without the prior written consent of the other
Parties and any such assignment made without such consent shall be void. Except
as otherwise provided herein, this Agreement shall be binding upon and inure to
the benefit of the Parties hereto and their respective permitted successors,
assigns and legal representatives.
Section 15.11 Governing Law. This Agreement, other documents delivered
pursuant hereto and the legal relations between the Parties shall be governed
and construed in accordance with the laws of the State of Texas, without giving
effect to principles of conflicts of laws that would result in the application
of the laws of another jurisdiction.
Section 15.12 Notices. Any notice, communication, request, instruction or
other document required or permitted hereunder shall be given in writing and
delivered in person or sent by U.S. Mail postage prepaid, return receipt
requested or facsimile to the addresses of Sellers and Buyer set forth below.
Any such notice shall be effective only upon receipt.
Sellers:
c/o International Paper Company
(Forest Resources Group)
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxx 00000
Attention: Mineral Resources Administrator
Fax No. (000) 000-0000
With a copy to:
International Paper Company
Xxxxx 000
0000 XXX Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Legal Department
Fax No.: (000) 000-0000
Buyer:
Pure Resources, L.P.
000 Xxxx Xxxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Vice President of Land
Fax No.: 000-000-0000
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Either Party may, by written notice so delivered, change its address for notice
purposes hereunder.
Section 15.13 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect and the Parties shall negotiate in
good faith to modify this Agreement so as to effect their original intent as
closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
Section 15.14 Time of the Essence. Time shall be of the essence with
respect to all time periods and notice periods set forth in this Agreement.
Section 15.15 Authority of IPP. Each Seller hereby authorizes IPP to make
and receive payments hereunder on behalf of such Seller, to give and receive
notices on behalf of such Seller hereunder, to agree upon any adjustments to the
Purchase Price hereunder on behalf of such Seller, to agree on any extensions to
the Closing Date on behalf of such Seller, to agree to and make minor amendments
and modifications to this Agreement and its exhibits as IPP shall deem to be in
the best interests of Sellers, and to take any and all action as may be
necessary or appropriate to enforce the terms of this Agreement and to defend
the rights of each Seller hereunder. Buyer may rely upon any instrument executed
or other action taken by IPP on behalf of any Seller pursuant to this Section
15.15 to the same extent as if such instrument had been executed or action had
been taken by such Seller.
Section 15.16 Definitions. As used in this Agreement, the following terms
are defined as follows:
"Knowledge" means (i) in the case of any Seller, the actual knowledge of
any of the individuals listed on Schedule 15.16(i) hereto without independent
investigation or inquiry, and (ii) in the case of Buyer, the actual knowledge of
the individuals listed on Schedule 15.16(ii) hereto without independent
investigation or inquiry.
Section 15.17 Counterpart Execution. This Agreement may be executed in any
number of counterparts, and each counterpart hereof shall be effective as to
each party that executes the same whether or not all of such parties execute the
same counterpart. If counterparts of this Agreement are executed, the signature
pages from various counterparts may be combined into one composite instrument
for all purposes. All counterparts together shall constitute only one Agreement,
but each counterpart shall be considered an original.
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IN WITNESS WHEREOF, Sellers and Buyer have executed and delivered this
Agreement as of the date first set forth above.
SELLERS:
-------
INTERNATIONAL PAPER COMPANY, INTERNATIONAL
PAPER REALTY CORPORATION, IP FARMS, INC., IP
PETROLEUM COMPANY, INC., IP TIMBERLANDS
OPERATING COMPANY, LTD., GCO MINERALS COMPANY,
THE XXXX-XXXX PETROLEUM COMPANY, INC.,
AMERICAN CENTRAL CORPORATION, CHAMPION REALTY
CORPORATION and SUSTAINABLE FORESTS L.L.C.
By: /s/ XXXXX X. XXXXXXXX
---------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Agent and Attorney-in-Fact
BUYER:
-----
PURE RESOURCES, L.P., BY ITS GENERAL PARTNER,
PURE RESOURCES I, INC.
By: /s/ XXXX XXXXXXXXX
----------------------------------------
Name: Xxxx Xxxxxxxxx
Title: President
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