EX-2.1 2 dex21.htm AGREEMENT FOR PURCHASE AND SALE EXECUTION VERSION AGREEMENT FOR PURCHASE AND SALE among CoLa Resources LLC as Seller and CEP Mid-Continent LLC as Buyer February 19, 2008 Page
Exhibit 2.1
EXECUTION VERSION
AGREEMENT FOR PURCHASE AND SALE
among
CoLa Resources LLC
as Seller
and
CEP Mid-Continent LLC
as Buyer
February 19, 2008
TABLE OF CONTENTS
Page | ||||||
1. | Sale and Purchase of the Properties | 1 | ||||
1.1. | Wellbores | 1 | ||||
1.2. | Equipment | 1 | ||||
1.3. | Substances | 1 | ||||
1.4. | Surface Contracts | 2 | ||||
1.5. | Information and Data | 2 | ||||
1.6. | Contracts | 2 | ||||
1.7. | Permits | 2 | ||||
1.8. | Payment Rights | 2 | ||||
1.9. | Excluded Assets | 3 | ||||
1.10. | Data Agreement | 4 | ||||
2. | Purchase Price | 4 | ||||
2.1. | Basic Amount | 4 | ||||
2.2. | Adjustments to Purchase Price | 4 | ||||
2.3. | Closing Statement | 6 | ||||
2.4. | Allocation of Purchase Price | 6 | ||||
3. | Representations and Warranties of Seller | 7 | ||||
3.1. | Organization | 7 | ||||
3.2. | Authority and Authorization | 7 | ||||
3.3. | Enforceability | 7 | ||||
3.4. | Conflicts | 7 | ||||
3.5. | Contracts | 8 | ||||
3.6. | Litigation and Claims | 8 | ||||
3.7. | Compliance with Law and Permits | 8 | ||||
3.8. | Status of Contracts | 9 | ||||
3.9. | Production Burdens, Taxes, Expenses and Revenues | 9 | ||||
3.10. | Production Balances and Penalties; Other Production Sales Matters | 9 | ||||
3.11. | Operations | 10 | ||||
3.12. | Wellbore Locations and Operations | 10 | ||||
3.13. | Wellbore Abandonment | 10 | ||||
3.14. | Planned Future Commitments | 10 | ||||
3.15. | Preferential Rights and Required Consents | 10 | ||||
3.16. | Broker | 11 | ||||
3.17. | Disclaimers | 11 | ||||
4. | Representations and Warranties of Buyer | 11 | ||||
4.1. | Organization | 11 | ||||
4.2. | Authorization and Authority | 11 | ||||
4.3. | Enforceability | 12 | ||||
4.4. | Conflicts | 12 |
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TABLE OF CONTENTS
(continued)
Page | ||||||
4.5. | Reliance | 12 | ||||
4.6. | Broker | 12 | ||||
4.7. | Approvals | 12 | ||||
4.8. | Litigation | 12 | ||||
4.9. | Qualified Purchaser | 13 | ||||
5. | Covenants of Seller Pending Closing | 13 | ||||
5.1. | Conduct of Business Pending Closing | 13 | ||||
5.2. | Access | 13 | ||||
5.3. | No Negotiations | 14 | ||||
5.4. | Environmental Review | 14 | ||||
5.5. | Cooperation | 14 | ||||
6. | Covenants of Buyer Pending Closing | 14 | ||||
6.1. | Cooperation | 14 | ||||
6.2. | Financing | 14 | ||||
7. | Conditions Precedent to the Obligations of Buyer | 14 | ||||
7.1. | Representations and Warranties | 14 | ||||
7.2. | Compliance | 15 | ||||
7.3. | No Injunctions | 15 | ||||
7.4. | Financing | 15 | ||||
7.5. | Seller’s Deliveries | 15 | ||||
8. | Conditions Precedent to the Obligations of Seller | 15 | ||||
8.1. | Representations and Warranties | 15 | ||||
8.2. | Compliance | 15 | ||||
8.3. | No Injunctions | 15 | ||||
8.4. | Buyer’s Deliveries | 15 | ||||
9. | Closing | 15 | ||||
9.1. | The Closing | 15 | ||||
9.2. | Documents to be Delivered at Closing | 16 | ||||
9.3. | Possession | 17 | ||||
9.4. | Payment of Purchase Price | 17 | ||||
10. | Casualty Loss | 17 | ||||
11. | Termination | 18 | ||||
11.1. | Termination Events | 18 | ||||
11.2. | Effect of Termination | 18 | ||||
11.3. | Specific Performance | 18 |
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TABLE OF CONTENTS
(continued)
Page | ||||||
12. | Taxes, Prorations and Assumption of Obligations | 19 | ||||
12.1. | Tax Prorations | 19 | ||||
12.2. | Tax Returns | 19 | ||||
12.3. | Assumption of Obligations | 19 | ||||
13. | Final Accounting | 19 | ||||
13.1. | Settlement Statement | 19 | ||||
13.2. | Payments | 21 | ||||
13.3. | No Duplicative Effect; Methodologies | 21 | ||||
13.4. | Respective Ownership | 22 | ||||
14. | Survival and Indemnification | 22 | ||||
14.1. | Survival | 22 | ||||
14.2. | Liabilities | 22 | ||||
14.3. | Indemnification by Seller | 23 | ||||
14.4. | Indemnification by Buyer | 23 | ||||
14.5. | Liability Limitations | 23 | ||||
14.6. | Waiver of Consumer Rights | 26 | ||||
15. | Further Assurances | 26 | ||||
15.1. | General | 26 | ||||
15.2. | Filings, Notices and Certain Governmental Approvals | 26 | ||||
15.3. | Logos and Names | 27 | ||||
15.4. | Financial Information | 27 | ||||
16. | Notices | 27 | ||||
17. | Assignment | 28 | ||||
18. | Governing Law | 28 | ||||
19. | Expenses and Fees | 28 | ||||
20. | Integration | 28 | ||||
21. | Waiver or Modification | 28 | ||||
22. | Bold and/or Capitalized Letters | 29 | ||||
23. | Headings | 29 | ||||
24. | Invalid Provisions | 29 | ||||
25. | Multiple Counterparts | 29 | ||||
26. | Third Parties | 29 | ||||
27. | Waiver of Jury Trial | 29 | ||||
28. | Public Announcements | 29 | ||||
29. | Additional Defined Terms | 30 |
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TABLE OF DEFINED TERMS
Page | ||
“AAA” | Annex I | |
“Adjusted Purchase Price” | 4 | |
“Adverse Environmental Condition” | 30 | |
“Adverse Environmental Condition Notice” | Annex II | |
“AFE’s” | 10 | |
“Affiliate” | 30 | |
“Agreement” | 1 | |
“Allocated Value” | Annex I | |
“Assignment” | 16 | |
“Assumed Obligations” | 19 | |
“Audit Firm” | 27 | |
“BofA” | 30 | |
“BofA Credit Facility” | 30 | |
“Business Day” | 30 | |
“Buyer” | 1 | |
“Buyer Indemnified Parties” | 23 | |
“Buyer’s Credits” | 5 | |
“Buyer’s Title Review” | Annex I | |
“Casualty Loss” | 17 | |
“Claim Period” | 24 | |
“Claim Threshold” | 24 | |
“Closing” | 16 | |
“Closing Amount” | 17 | |
“Closing Date” | 16 | |
“Closing Period” | 5 | |
“Closing Period Expenses” | 5 | |
“Closing Statement” | 6 | |
“Code” | 6 | |
“Consents” | 11 | |
“Control” | 31 | |
“Data” | 2 | |
“Data Agreement” | 16 | |
“Defect Notification Deadline” | Annex II | |
“Defensible Title” | Annex I | |
“Disputes” | Annex I | |
“Division of Interest Spreadsheet | Annex I | |
“XXXX Wellbores” | Annex I | |
“DOTOs” | Annex I | |
“DTPA” | 26 | |
“Effective Time” | 1 | |
“Environmental Laws” | 31 | |
“Environmental Review” | 14 | |
“Equipment” | 1 |
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“Equitable Limitations” | 7 | |
“Environmental Review” | Annex II | |
“Examination Period “ | Annex I | |
“Excluded Assets” | 3 | |
“Executive Rights” | 1 | |
“Final Notice Date” | Annex I | |
“Financial Statements” | 27 | |
“Final Settlement Statement” | 20 | |
“GAAP” | 5 | |
“Guaranty” | 16 | |
“Independent Expert” | Annex I | |
“Leases “ | Page 1 | |
“Liabilities” | 23 | |
“Liens” | 31 | |
“Maximum Guaranty Amount” | 31 | |
“Newfield” | Annex I | |
“NORM” | 11 | |
“Objection Notice” | 20 | |
“Organizational Documents” | 31 | |
“Payment Rights” | 3 | |
“Permits” | 2 | |
“Permitted Encumbrances” | Annex I | |
“Person” | 32 | |
“Preferential Rights” | 10 | |
“Properties” | 1 | |
“Purchase Price” | 4 | |
“Referee” | 20 | |
“Remediation Value” | Annex II | |
“Restricted Transaction” | 14 | |
“Rules” | Annex I | |
“Seller Indemnified Parties” | 23 | |
“Seller” | 1 | |
“Seller’s Credits” | 4 | |
“Seller’s Knowledge” | 32 | |
“Seller’s Substances” | 3 | |
“Seller’s Warranties” | 11 | |
“Substances” | 2 | |
“Surface Contracts” | 2 | |
“Termination Date” | 18 | |
“Third Party” | 14 | |
“Title Adjustment Amount” | Annex I | |
“Title Curative Period” | Annex I | |
“Title Defect” | Annex I | |
“Title Defect Notice” | Annex I | |
“Transaction Documents” | 16 | |
“Wellbores” | 1 |
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SCHEDULE OF EXHIBITS AND ANNEXES
Exhibit 1.1 | Wellbores, WI, NRI, Allocated Values | |
Exhibit 3.5 | Contracts | |
Exhibit 3.6 | Litigation and Claims | |
Exhibit 3.7.2 | Environmental Matters | |
Exhibit 3.9 | Production Burdens, Taxes, Expenses and Revenues | |
Exhibit 3.10 | Calls on Production; Imbalances | |
Exhibit 3.14(a) | AFE’s | |
Exhibit 3.14(b) | AFE’s Under Consideration | |
Exhibit 3.15 | Consents and Preferential Rights to Purchase | |
Annex I | Title to Properties | |
Annex II | Environmental Matters | |
Annex III | Seller’s Certificate | |
Annex IV | Buyer’s Certificate | |
Annex V | Form of Assignment and Xxxx of Sale | |
Annex VI | FIRPTA Affidavit | |
Annex VII | Guaranty |
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AGREEMENT FOR PURCHASE AND SALE
This Agreement for Purchase and Sale (“Agreement”) is made and entered into on this the 19th day of February, 2008, among COLA RESOURCES LLC, a Delaware limited liability company (the “Seller”), and CEP MID-CONTINENT LLC, a Delaware limited liability company (“Buyer”).
1. Sale and Purchase of the Properties. Subject to the terms and conditions and for the consideration herein set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller agrees to sell, assign, convey and deliver to Buyer, and Buyer agrees to purchase and acquire from Seller at Closing, effective as of 7:00 a.m. at the location of each of the Wellbores on January 1, 2008 (the “Effective Time”), the properties and interests described in Sections 1.1 through 1.8 (collectively, the “Properties”):
1.1. Wellbores. All of Seller’s right, title and interest in and to the oil and gas leases, oil, gas and mineral leases, subleases, leasehold estates, forced pooling interests, licenses, concessions, working interests, farmout rights, or other carried interests, operating rights or other mineral rights of every nature (other than fee interests and royalty and overriding royalty interests) (the “Leases”), INSOFAR AND ONLY INSOFAR AS the Leases cover or pertain to the wellbore of each of those existing xxxxx specifically described on Exhibit 1.1 and the oil and gas that may be produced therefrom (such right, title and interest, the “Wellbores”). The Wellbores are limited to the wellbores described on Exhibit 1.1 as each is physically configured as of the Effective Time and shall include such rights as are necessary to the continued production of hydrocarbons from such Wellbores but shall not include the right to deepen any Wellbore, to any sidetracking from the Wellbore (except as provided below), or to any horizontal drilling through or from the Wellbore, but shall include the right to plug-back, rework or recomplete the Wellbore so long as such plugging-back, reworking or recompletion does not involve any sidetracking (except as provided below), deepening or horizontal drilling through or from the Wellbore. Notwithstanding the foregoing, in the event of mechanical failure in any Wellbore that permanently disrupts the production of hydrocarbons from the Wellbore, should Buyer elect to attempt to reestablish production from the same or shallower stratigraphic interval that the Wellbore was producing from prior to such mechanical failure through sidetracking from the Wellbore, Buyer shall have the right to do so provided that the bottom hole location of such sidetracking is (a) no deeper than and (b) no more than 100 feet from, the bottom hole location of the Wellbore prior to mechanical failure. Seller retains any and all executive rights related to the Wellbores, including all rights, if any, to negotiate with lessors, to grant leases or to rental or bonus payments (“Executive Rights”) and Buyer hereby waives any and all such rights as well as any right to protest any down-spacing xxxxx, increased density xxxxx, or exception location xxxxx Seller, or its successors and assigns, may choose to drill.
1.2. Equipment. All of Seller’s interest in all casing pipe, downhole equipment and any additional equipment, fixtures or physical facilities attached to or a part of the Wellbores (“Equipment”).
1.3. Substances. All of Seller’s interest in all crude oil, natural gas, casinghead gas, drip gasoline, natural gasoline, petroleum, natural gas liquids, condensate, products, liquids and other hydrocarbons and other minerals or materials of every kind and description produced
through the Wellbores and not yet past a measuring point at the Effective Time or produced from the Wellbores during the period from and after the Effective Time (such interest, the “Substances”) and all proceeds attributable thereto.
1.4. Surface Contracts. A concurrent interest with Seller in any right-of-way agreements or other agreements held by Seller to the extent such agreements extend rights-of-way or easements on surface properties that are used or held for use as of the Effective Time for flow lines in connection with the production of Substances or are otherwise used in connection with the operation of the Properties described in Sections 1.1 through 1.3 (such interest, the “Surface Contracts”).
1.5. Information and Data. Copies of the following to the extent the following relate to the Wellbores: (a) abstracts, title opinions, title reports, title policies, lease and land files, surveys, analyses, compilations, correspondence, and filings with and reports to regulatory agencies; (b) geophysical, geological, engineering, exploration, production and other technical data, magnetic field recordings, digital processing tapes, field prints, summaries, reports and maps, whether written or in electronically reproducible form; and (c) all other books, records, files and magnetic tapes containing financial, title or other information (the “Data”); provided, however, that Buyer’s right with respect to Data acquired pursuant to this Section 1.5 shall be limited, in each case to the extent such Data is in the possession of Seller and to the extent the disclosure of such Data is not restricted by the terms of any confidentiality, license or similar agreement; provided, however, that Seller will, upon Buyer’s request and at no cost or expense to Seller, request waivers of such restrictions.
1.6. Contracts. All of Seller’s interest in those contracts, commitments, agreements, and arrangements relating to the Properties described in Sections 1.1 through 1.5, and Sections 1.7 and 1.8, including, without limitation, the contracts described on Exhibit 3.5, but only to the extent related to the Properties, and any and all amendments, ratifications or extensions of the foregoing, together with (a) all rights, privileges, and benefits of Seller thereunder arising on or after the Effective Time to the extent related to periods after the Effective Time and (b) all rights of Seller thereunder to audit the records of any party thereto and to receive refunds of any nature thereunder to the extent relating to periods after the Effective Time.
1.7. Permits. To the extent assignable, all of Seller’s interest in all franchises, licenses, permits, approvals, consents, certificates and other authorizations and other rights granted by governmental authorities and all certificates of convenience or necessity, immunities, privileges, grants and other rights, that relate to the Wellbores or the ownership or operation of any thereof (the “Permits”), provided, however, that Buyer’s right with respect to Permits acquired pursuant to this Section 1.7 shall be limited to the receipt, by Buyer, of the benefit of the rights and privileges of Seller with respect to such Permits as an owner of the Wellbores, in each case only to the extent related to the Wellbores.
1.8. Payment Rights. All of Seller’s interest in all (a) accounts, instruments and general intangibles (as such terms are defined in the Uniform Commercial Code of Oklahoma) attributable to the Properties with respect to any period of time after the Effective Time; (b) liens and security interests in favor of Seller, whether xxxxxx or inchoate, under any law, rule or
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regulation or under any of the Contracts arising from the ownership or sale or other disposition after the Effective Time of any of the Properties; and (c) any claim of indemnity, contribution, or reimbursement relating to Assumed Obligations (such interest, the “Payment Rights”).
1.9. Excluded Assets. Notwithstanding the foregoing provisions of this Section 1, the following assets shall not constitute Properties and shall not be sold, assigned or conveyed to Buyer pursuant to Section 1 (such assets as described herein below, the “Excluded Assets”):
(a) all Permits that are not assignable in connection with the transactions contemplated by this Agreement;
(b) all crude oil, natural gas, casinghead gas, drip gasoline, natural gasoline, petroleum, natural gas liquids, condensate, products, liquids and other hydrocarbons and other minerals or materials of every kind and description produced from the Wellbores and disposed of, or in storage tanks or in pipelines past a measuring point, prior to the Effective Time (the “Seller’s Substances”), and all proceeds attributable thereto;
(c) all rights and causes of action, arising, occurring or existing in favor of Seller and attributable to the period prior to the Effective Time or arising out of the operation of or production from the Wellbores prior to the Effective Time (including, but not limited to, any and all contract rights, claims, receivables, revenues, recoupment rights, recovery rights, accounting adjustments, mispayments, erroneous payments or other claims of any nature in favor of Seller and relating and accruing to the period prior to the Effective Time);
(d) all fee interests, overriding royalty interests and royalty interests, and all Executive Rights related to the Wellbores, and any and all right to protest any down-spacing xxxxx, increased density xxxxx, or exception location xxxxx Seller, or its successors and assigns, may choose to drill;
(e) all rights under the contracts identified in Section 1.6 to the extent relating to any properties outside of the Properties described in Sections 1.1 through 1.5, and Sections 1.7 and 1.8, and specifically to the extent any such contracts relate to any additional xxxxx or drilling activities outside of the Wellbores;
(f) all corporate, financial, tax and legal records of Seller; provided, however, Buyer will be entitled to copies of any such records and rights to audit such records as may reasonably be necessary to comply with reporting obligations imposed upon Buyer as a publicly traded entity, subject to such confidentiality requirements as Seller may reasonably require;
(g) all contracts of insurance or indemnity, subject to Section 10;
(h) any refund of costs, taxes or expenses borne by Seller attributable to the period prior to the Effective Time;
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(i) any other right or interest in and to the Properties to the extent attributable to the period prior to the Effective Time, and any right or interest in the properties described in Sections 1.1 through 1.8 to the extent not applicable to the Wellbores;
(j) all deposits, cash, checks, funds and accounts receivable attributable to Seller’s interests in the Properties with respect to any period of time prior to the Effective Time;
(k) all computer or communications software or intellectual property (including tapes, data and program documentation and all tangible manifestations and technical information relating thereto) owned, licensed or used by Seller, other than the Data;
(l) any logo, service xxxx, copyright, trade name or trademark of or associated with Seller; and
(m) motor vehicles and other rolling stock.
1.10. Data Agreement. Seller may continue to receive from the operator of each of the Wellbores, copies of each of the following relating to the Wellbores: all daily and monthly production reports, all Lease operating expense reports, all revenue statements, capital expenditure statements and authority for expenditures, that the operator of each of the Wellbores may provide to Buyer or Seller following the Closing Date; subject to the terms of the Data Agreement to be executed at Closing and any existing confidentiality obligations owed to operator or other third parties. Such confidentiality agreement shall provide, among other provisions, that Buyer is an intended third party beneficiary thereof, that the disclosed data may include material nonpublic information of Buyer and its affiliates, and that the party to whom such data is disclosed shall be restricted from trading in Buyer’s or its affiliates’ securities or otherwise disclosing or using the data, other than use for the purpose of evaluating a potential transaction with Seller.
2. | Purchase Price. |
2.1. Basic Amount. The purchase price for the Properties, subject to adjustment as provided in Section 2.2, shall be Fifty-Three Million Three Hundred Twenty–Four Thousand Five Hundred Dollars ($53,324,500) (the “Purchase Price”). The Purchase Price as adjusted pursuant to Section 2.2 is referred to in this Agreement as the “Adjusted Purchase Price.”
2.2. Adjustments to Purchase Price. The Purchase Price shall be adjusted as provided in this Section 2.2.
2.2.1 The Purchase Price shall be increased by the following amounts (without duplication) (“Seller’s Credits”):
(a) An amount equal to the production, development, operating, overhead and other costs, determined in accordance with generally accepted accounting principles, consistently applied (“GAAP”), incurred, charged or allocable to the
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Properties in the ordinary course of business with respect to the period commencing at the Effective Time and ending at 7:00 a.m. on the Closing Date (the “Closing Period”) (collectively, “Closing Period Expenses”), and actually paid by Seller, whether before or after the Effective Time, and expressly including the following (with any such Closing Period Expenses attributable to any partial period occurring during the Closing Period to be prorated based on the portion of such period falling within the Closing Period):
(i) lease operating expenses, including bond and insurance premiums;
(ii) all overhead or other charges paid to any operator in connection with the operation of the Wellbores, all capital expenditures, including drilling costs, reworking costs, and all other capital expenditures incurred in connection with the development, exploration, or operation of the Wellbores during the Closing Period; and
(iii) amounts paid under the Surface Contracts to the extent related to the Wellbores.
(b) An amount equal to the value of all Substances produced from the Wellbores and in pipelines at the Effective Time, calculated at the sales price received by Seller for such Substance as of the Effective Time, and for which Seller has not yet received payment.
(c) Any upward adjustments attributable to Title Adjustment Amounts determined in accordance with Annex I up to but not in excess of $10,000,000 in the aggregate, after deducting any downward adjustments attributable to Title Adjustment Amounts determined in accordance with Annex I.
(d) An amount equal to the price for “Prices of Spot Gas Delivered to Pipelines” reported in Inside FERC Gas Market Report (published by Xxxxx’x) for the month of March 2008, under the column marked “Index” for the “CenterPoint Energy Gas Transmission Co.—East” delivery point, multiplied by the volume of any underproduction attributable to Seller’s interest in the Wellbores as of the Effective Time under any operating agreement, gas balancing and storage agreement, gas processing or dehydration agreement or similar agreement.
2.2.2 The Purchase Price shall be decreased by the following amounts (without duplication) (“Buyer’s Credits”):
(a) An amount equal to the proceeds received by Seller from the sale of Substances produced during the Closing Period, net of all applicable taxes not reimbursed to Seller by a purchaser of Substances.
(b) An amount equal to all proceeds received by Seller from whatever source derived that relate to the Properties and are attributable to periods after the Effective Time.
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(c) Any downward adjustments attributable to Title Adjustment Amounts determined in accordance with Annex I.
(d) An amount equal to the Remediation Value attributable to any Adverse Environmental Condition as determined in accordance with Annex II to the extent the aggregate of all Remediation Values in excess of $50,000 exceeds one and one-half percent (1.5%) of the Purchase Price.
(e) The amount of all taxes prorated to Buyer in accordance with Section 12.1.
(f) An amount equal to the value of the Wellbores excluded from the Properties because of a Casualty Loss affecting such Properties or, in the alternative, the insurance proceeds received by Seller for such Casualty Loss, all as provided in Section 10.
(g) An amount equal to the price for “Prices of Spot Gas Delivered to Pipelines” reported in Inside FERC Gas Market Report (published by Xxxxx’x) for the month of March 2008, under the column marked “Index” for the “CenterPoint Energy Gas Transmission Co.—East” delivery point, multiplied by the volume of any overproduction attributable to Seller’s interest in the Wellbores as of the Effective Time under any operating agreement, gas balancing and storage agreement, gas processing or dehydration agreement or similar agreement.
2.3. Closing Statement. No later than three (3) Business Days prior to the Closing Date Seller shall deliver to Buyer a statement (the “Closing Statement”) setting forth the adjustments to the Purchase Price provided in Section 2.2, using estimates where actual amounts are not known at the Closing, and Seller’s calculation of the estimated Adjusted Purchase Price. The Closing Statement shall be prepared in accordance with GAAP as applied on a basis consistent with past practices of Seller.
2.4. Allocation of Purchase Price. Buyer and Seller agree that within thirty (30) days after the Closing they shall mutually agree in writing upon an allocation of the Purchase Price among the Properties using the methodology required by Section 1060 of the Internal revenue Code of 1986, as amended, and any regulations or other agency releases promulgated thereunder (the “Code”). Buyer and Seller shall each report the transactions contemplated under this Agreement on all tax returns, including IRS Form 8594, in a manner consistent with the allocation of Purchase Price mutually agreed upon by Buyer and Seller. If any taxing authority makes or proposes an allocation different from the allocation determined by the parties under this Section 2.4, either party may contest such allocation (or proposed allocation), provided such party asserts that the allocation mutually agreed upon by the Buyer and Seller is correct, and shall provide written notice to the other parties of such fact and shall provide such additional written notices as are reasonable to the other parties to make them aware of the status and final disposition of such contest of the allocation made or proposed by such taxing authority. Further, after providing written notice to the party adversely affected by such allocation (or proposed allocation) by a taxing authority, the other party hereto may file such protective claims or tax returns as may be reasonably required to protect its interests.
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3. Representations and Warranties of Seller. Seller represents and warrants to Buyer as follows:
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3.7. Compliance with Law and Permits.
3.7.1 To Seller’s knowledge, (a) the Properties have been and currently are operated, and Seller and the Properties are, in compliance with the provisions and requirements of all laws, rules, regulations, ordinances, orders, decisions and decrees of all governmental authorities having jurisdiction with respect to the Properties or the ownership or operation of any thereof; (b) all necessary governmental permits, licenses, approvals, consents, certificates and other authorizations with regard to the ownership or operation of the Properties have been obtained and maintained in effect and no violations exist in respect of such permits, licenses, approvals, consents, certificates or authorizations; and (c) there are no facts, conditions or circumstances in connection with, related to or associated with the Properties or the ownership or operation of any thereof that could reasonably be expected to give rise to any claim or assertion that Seller, the Properties or the ownership or operation of any thereof is not in compliance in all material respects with any applicable law, rule, regulation, ordinance, order, decision or decree of any governmental authority or with any term or conditions of any applicable permit, license,
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approval, consent, certificate or other authorization except, in the case of each of clause (a), (b) and (c), for such non-compliance, failure to obtain or maintain, and such facts, conditions or circumstances, the existence of which has not had and could not reasonably be expected to have a material adverse effect on Buyer’s ability to own and produce hydrocarbons from the Wellbores, taken as a whole, after Closing.
3.7.2 To Seller’s Knowledge, except as set forth on Exhibit 3.7.2, no pollutant, waste, contaminant, or hazardous, extremely hazardous, or toxic material, substance, chemical or waste identified, defined or regulated as such under any Environmental Law has been handled, managed, stored, transported, processed, treated, disposed of, released, migrated or has escaped on, in, from, under or in connection with the Properties or the ownership or operation thereof such as to cause a condition or circumstance that could reasonably be expected to result in a violation of any Environmental Law or in a remediation, removal, response, restoration, abatement, investigative or monitoring obligation, other than violations or obligations that would not reasonably be expected to have a material adverse effect on Buyer’s ability to own and produce hydrocarbons from the Wellbores, taken as a whole, after Closing.
3.9. Production Burdens, Taxes, Expenses and Revenues. Except as set forth on Exhibit 3.9, to Seller’s Knowledge (a) all rentals, royalties, excess royalty, overriding royalty interests and other payments due under or with respect to the Wellbores have been properly and timely paid and no royalties are currently being held in suspense; (b) (i) all ad valorem, property, production, severance and other taxes based on or measured by the ownership of the Properties or the production of hydrocarbons from the Wellbores and that have become due have been properly and timely paid, (ii) there is no pending action, proceeding, or investigation for assessment or collection of taxes, and no tax assessment, deficiency or adjustment has been asserted or propped with respect to the Properties and (iii) none of the Properties is subject to a tax partnership agreement pursuant to Section 761(a)(2) of the Code; (c) all expenses payable under the terms of the Surface Contracts have been properly and timely paid except for such expenses not yet due or as are being currently paid prior to delinquency in the ordinary course of business; and (d) all of the proceeds from the sale of hydrocarbons produced from the Wellbores are being properly and timely paid to Seller by the purchasers of production without suspension or indemnity other than standard division order indemnities.
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purchasers under any production sales contracts related to the Wellbores has curtailed its takes of natural gas in violation of such contracts; (d) none of the purchasers under any production sales contracts related to the Wellbores has given notice that it desires to amend the production sales contracts with respect to price or quantity of deliveries; (e) Seller is not obligated to pay any penalties or other payments under any gas transportation or other agreement as a result of the delivery of quantities of gas from the Wellbores in excess of the contract requirements; (f) except as set forth on Exhibit 3.10, no person has any call upon, option to purchase, or similar rights with respect to the production from the Wellbores; and (g) except as disclosed on Exhibit 3.10, there are no production, pipeline, storage, processing or other imbalances attributable to the Properties.
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4. Representations and Warranties of Buyer. Buyer represents and warrants to Seller that:
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5. Covenants of Seller Pending Closing.
5.1.1 Not (a) deal with, incur obligations with respect to, or undertake any transactions relating to, the Properties other than transactions (i) in Seller’s normal, usual and customary manner, (ii) of a nature and in an amount consistent with prior practice, and (iii) in the ordinary and regular course of business of owning and operating the Properties; (b) enter into any contract, agreement or commitment that, if in effect on the date of this Agreement would have been required to be disclosed on Exhibit 3.5, other than contracts, agreements and commitments entered into in the ordinary course of business, customary in the oil and gas industry; (c) acquire, dispose of, encumber or relinquish any of the Properties (other than (x) relinquishments resulting from the expiration of leases that Seller has no right or option to renew, (y) Substances sold in the ordinary course and (z) materials, supplies, machinery, equipment, improvements, or other personal property or fixtures, which have been sold or otherwise disposed of and replaced with an item of substantially equal suitability and which, for purposes of this Agreement, have become part of the Properties); or (d) waive, compromise or settle any right or claim that would materially and adversely affect the ownership of any of the Properties after the Effective Time.
5.1.2 Make or give all notifications, filings, consents or approvals, from, to or with all governmental authorities as may be required to be made or given prior to Closing for Seller to convey and for Buyer to own the Properties following the consummation of the transaction contemplated in this Agreement.
5.1.3 Maintain in effect insurance providing substantially the same type of coverage, in substantially the same amounts with substantially the same deductibles as the insurance maintained in effect by Seller or its Affiliates with respect to the Properties as of the date of this Agreement.
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6. Covenants of Buyer Pending Closing.
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9.1. The Closing. The assignment and purchase of the Properties pursuant to this Agreement shall be consummated (the “Closing”) in Houston, Texas at the offices of Bracewell & Xxxxxxxx LLP on (a) the sooner to occur of (i) the seventh (7th) Business Day following the date upon which all conditions to Closing set forth in Sections 7.1 through 7.4 and 8.1 through
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8.3 hereof have been satisfied, but in no event prior to March 17, 2008, and (ii) March 31, 2008, if all conditions to Closing set forth in Sections 7 and 8 hereof have been satisfied as of March 31, 2008 or (b) if all such conditions shall not have been satisfied on March 31, 2008, the earlier of the seventh (7th) Business Day after all such conditions shall have been satisfied or the Termination Date if all such conditions shall have been satisfied as of the Termination Date (the date on which Closing occurs, the “Closing Date”).
9.2. Documents to be Delivered at Closing.
9.2.1 At the Closing, Seller shall deliver to Buyer, or cause to be delivered, the following instruments, dated the Closing Date, properly executed by authorized officers of Seller (or, in the case of the Guaranty, of Constellation Energy Commodities Group, Inc.) and, where appropriate, acknowledged:
(a) Counterparts of an Assignment and Xxxx of Sale from Seller in the form of Annex V sufficient to convey to Buyer the Properties (the “Assignment) “;
(b) A Guaranty Agreement from Constellation Energy Commodities Group, Inc. in the form of Annex VII, up to a maximum amount not to exceed the Maximum Guaranty Amount (the “Guaranty “; and collectively, with this Agreement, the Assignment, the Data Agreement and any other agreement between Seller and Buyer that expressly states that it constitutes a Transaction Document for purposes of this Agreement, and all other agreements, documents, and instruments entered into as of or after the date hereof and at or prior to Closing in connection with the transactions contemplated hereby and all certificates delivered by the parties hereto at the Closing, the “Transaction Documents”);
(c) A certificate in the form attached as Annex VI (i) stating that Seller (or the applicable transferor for federal income tax purposes) is not a foreign corporation, foreign partnership, foreign trust or foreign estate, (ii) stating that it is not a disregarded entity, (iii) providing its U.S. Employer Identification Numbers and (iv) providing its addresses, all pursuant to the Code;
(d) An agreement with regard to all data to which Seller may receive copies pursuant to Section 1.10, in form and content mutually acceptable to Seller and Buyer (the “Data Agreement”), pursuant to which Seller shall agree to maintain such data as confidential and not to share such data with third parties; provided, however, that the Seller shall have the right to disclose such data to prospective purchasers of Seller’s membership interests or Seller’s retained interest in the oil and gas leases relating to the Wellbores if such third parties shall have executed a confidentiality agreement with regard to such data.
(e) Such other instruments as are necessary to effectuate the conveyance of the Properties to Buyer;
(f) Letters in lieu of division orders addressed to each purchaser of the Substances;
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(g) Written and recordable releases of all liens and security interests held by BofA, pursuant to the BofA Credit Facility, in the Properties, and terminations of related financing statements, in form and content reasonably satisfactory to Buyer, and in sufficient counterparts to facilitate recording; and
(h) A certificate in the form of Annex III.
9.2.2 At the Closing Buyer shall deliver to Seller, or cause to be delivered, the following instruments, dated the Closing Date, properly executed by authorized officers of Buyer and, where appropriate, acknowledged:
(a) A certificate in the form of Annex IV,
(b) The Data Agreement; and
(c) Executed counterparts of the Assignment dated the Closing Date but effective as of the Effective Date.
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11.1. Termination Events. Prior to Closing, this Agreement may be terminated as follows:
(a) By the mutual written consent of Buyer and Seller;
(b) By Seller in the event any condition to Seller’s obligations set forth in Section 8 hereof is not satisfied and such condition is not waived by Seller at or prior to the Termination Date; provided that Seller shall have given written notice to Buyer of the failure of any such condition to have been satisfied and Buyer shall not have caused such condition to have been satisfied prior to the earlier of ten (10) days following such notice or the Termination Date; or
(c) By Buyer in the event any condition to Buyer’s obligations set forth in Section 7 hereof is not satisfied and such condition is not waived by Buyer at or prior to the Termination Date; provided that Buyer shall have given written notice to Seller of the failure of any such condition to have been satisfied and Seller shall not have caused such condition to have been satisfied prior to the earlier of ten (10) days following such notice or the Termination Date; or
(d) By either Seller or Buyer if for any reason the Closing has not occurred by April 30, 2008 (the “Termination Date”).
Notwithstanding the foregoing, a party to this Agreement that is in material breach of or default under this Agreement or any other Transaction Document, or that is in breach of this Agreement or any other Transaction Document in any respect and such breach caused one or more of the Closing conditions of Buyer or Seller contained herein to not be satisfied, shall not be entitled to terminate this Agreement except, in the case of a breach or default by Buyer, with the consent of Seller, or in the case of a breach or default by Seller, with the consent of Buyer.
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12. Taxes, Prorations and Assumption of Obligations.
12.1. Tax Prorations. Real and personal property taxes for the Properties shall be prorated between Buyer and Seller as of the Effective Time. If the actual taxes are not known on the Closing Date, Seller’s share of such taxes shall be determined by using (a) the rates and millage for the year prior to the year in which the Closing occurs, with appropriate adjustments for any known and verifiable changes thereto, and (b) the assessed values for the year in which Closing occurs. When Buyer receives the actual tax statements for the Properties from the appropriate taxing authorities, Buyer shall deliver to Seller a copy of such statements, together with the amount, if any, by which Seller’s proration exceeds or is less than the proration that would have been made had actual tax statements been used to calculate Seller’s proration. If the proration for Seller that would have been made using actual tax statements exceeds that made at Closing, Seller shall pay to Buyer such difference within three (3) Business Days of receipt of such statement. If the proration for Seller that would have been made using actual tax statements is less than that made at Closing, Buyer shall pay to Seller such difference within three (3) Business Days of receipt of such statement.
12.2. Tax Returns. Seller shall cause to be included in its income tax return for all periods ending at the Effective Time, all of the items of income, gain, loss, deduction and credit with respect to the Properties which are required to be included therein, shall cause such tax returns to be filed with the appropriate taxing authorities, and shall be responsible for the timely payment (and entitled to any refund) of all taxes due with respect to the periods covered by such tax returns.
12.3. Assumption of Obligations. At Closing, Buyer shall assume the following (“Assumed Obligations”): (1) the obligation to (i) plug and abandon the Wellbores, (ii) remove and dispose of all structures and equipment constituting a part of the Wellbores, and (iii) dispose of all NORM and all other pollutants, wastes, contaminants, or hazardous, extremely hazardous, or toxic materials, substances, chemicals or wastes generated by the production of Substances or used in connection therewith, whether before or after the Effective Time; (2) all obligations and liabilities arising from or in connection with any gas production, pipeline, storage, processing or other imbalance attributable to Substances, whether before or after the Effective Time; and (3) all other costs, obligations and liabilities that relate to the operation of the Wellbores or the production of Substances, or that otherwise relate to the Properties and, in each case, arise from or relate to events occurring or conditions existing after the Effective Time or which accrue after the Effective Time. All such plugging, replugging, abandonment, removal, disposal, and restoration operations shall be in compliance with applicable laws and regulations and contracts, and shall be conducted in a good and workmanlike manner.
(a) As soon as practical and, in any event, no later than one hundred and twenty (120) calendar days after the Closing Date, Seller shall prepare and deliver to Buyer a statement (the “Final Settlement Statement”) setting forth the adjustments to the Purchase Price in accordance with Section 2.2, other than Title Adjustment Amounts not
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yet determined pursuant to Annex I. The Final Settlement Statement shall be prepared in accordance with this Agreement and on a basis consistent with the preparation of the Closing Statement as described in Section 2.3, and shall set forth Seller’s calculation of the Seller’s Credits, Buyer’s Credits and the Adjusted Purchase Price.
(b) Following the delivery of the Final Settlement Statement, Seller shall afford Buyer the opportunity to examine the Final Settlement Statement and Seller’s calculation of the Seller’s Credits, Buyer’s Credits and the Adjusted Purchase Price, and such supporting schedules, analyses, workpapers, including the audit workpapers and other underlying records or documentation, as are reasonably necessary and appropriate in connection with such review. Seller shall cooperate fully and promptly with the Buyer in such examination, including responding to questions asked by Buyer, and Seller shall make available to Buyer any records under Seller’s reasonable control that are requested by the Buyer in connection with such review.
(c) If, within 30 days following delivery of the Final Settlement Statement to Buyer, Buyer has not delivered to Seller written notice (the “Objection Notice”) of Buyer’s objections to the Final Settlement Statement or Seller’s calculation of Seller’s Credits, Buyer’s Credits and/or the Adjusted Purchase Price (which Objection Notice must contain a statement describing in reasonable detail the basis of such objections), then Seller’s Credits, Buyer’s Credits and/or the Adjusted Purchase Price as set forth in such Final Settlement Statement shall be deemed final and conclusive. In addition, any of Seller’s calculations of Seller’s Credits, Buyer’s Credits and/or the Adjusted Purchase Price as set forth in the Final Settlement Statement which are not objected to in the Objection Notice shall be deemed final and conclusive.
(d) If Buyer delivers the Objection Notice within such 30-day period, then Seller and Buyer shall endeavor in good faith to resolve the objections of Buyer set forth in the Objection Notice for a period not to exceed 15 days from the date of delivery of the Objection Notice. If at the end of the 15-day period there are any objections that remain in dispute, then the remaining objections in dispute shall be submitted for resolution to a “big four” accounting firm to be selected jointly by the Seller and Buyer within the following five days or, if the Seller and Buyer are unable to mutually agree within such five-day period, such accounting firm shall be Ernst & Young (such jointly selected accounting firm or Ernst & Young, the “Referee”). In connection with the engagement of the Referee, each of Buyer and Seller shall execute any engagement, indemnity, and other agreement as the Referee shall require as a condition to such engagement. If Ernst & Young is unable or unwilling to serve as the Referee and the parties are unable to agree upon the designation of a person as substitute arbitrator, then Seller or Buyer, or both of them, may in writing request the Judge of the United States District Court for the Southern District of Texas senior in term of service to appoint the substitute arbitrator. Notwithstanding the foregoing, any dispute regarding the existence of a Title Defect or any Title Adjustment Amount shall be determined in accordance with the procedures set forth in Annex I and any dispute regarding the existence of an Adverse Environmental Condition or any Remediation Value shall be determined in accordance with the procedures set forth in Annex II.
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(e) The Referee shall determine such items of Seller’s Credits, Buyer’s Credits and the calculation of the Adjusted Purchase Price as are disputed within 30 days after the objections that remain in dispute are submitted to it.
(f) If any objections are submitted to the Referee for resolution, (A) each of Buyer and Seller shall furnish to the Referee such workpapers and other documents and information relating to such objections as the Referee may request and are available to that party or its Affiliates (or its independent public accountants) and will be afforded the opportunity to present to the Referee any material relating to the determination of the matters in dispute and to discuss such determination with the Referee prior to any written notice of determination hereunder being delivered by the Referee; (B) to the extent that a value has been assigned by Buyer or Seller to any item subject to Buyer’s objection that is submitted to the Referee, the Referee shall not assign a value to such objection that is greater than the greatest value for such objection claimed by either party or less than the smallest value for such objection claimed by either party; (C) the determination by the Referee of items of Seller’s Credits, Buyer’s Credits and the calculation of the Adjusted Purchase Price, as applicable, as set forth in a written notice delivered to Seller and Buyer by the Referee, shall be made in accordance with this Agreement and shall be binding and conclusive on the parties and shall constitute an arbitral award that is final, binding and unappealable and upon which a judgment may be entered by a court having jurisdiction thereof; (D) the fees and expenses of the Referee shall be paid by and apportioned between Buyer and Seller based on the aggregate dollar amount in dispute and the relative recovery as determined by the Referee of Seller and Buyer, respectively; and (E) notwithstanding anything in this Agreement to the contrary, each Party hereto shall bear its own costs and expenses in connection with the resolution of any objections to the calculations set forth in the Final Settlement Statement.
13.2.1 If the Closing Amount is greater than the final Adjusted Purchase Price, then Seller shall pay to Buyer the amount of such excess within five (5) Business Days of the determination of the final Adjusted Purchase Price in accordance with Section 13.1.
13.2.2 If the final Adjusted Purchase Price is greater than the Closing Amount, then Buyer shall pay such difference to Seller within five (5) Business Days of the determination of the final Adjusted Purchase Price in accordance with Section 13.1.
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definitions contained in this Agreement, as applicable, on the one hand, and those provided by GAAP, on the other hand, (a) the determination, calculation or methodology set forth in the Closing Statement or the definitions contained in this Agreement, as applicable, shall control to the extent that the matter is included in the Closing Statement or the definitions contained in this Agreement, as applicable, as a line item or specific adjustment and (b) the determination, calculation or methodology prescribed by GAAP shall control to the extent the matter is not so addressed in the Closing Statement or the definitions contained in this Agreement, as applicable, or requires reclassification as an asset or liability to be included in a line item or specific adjustment.
14. Survival and Indemnification.
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14.5.1 The liability of Seller (i) for the inaccuracy of any representation or warranty, (ii) for the breach of any covenant, (iii) for indemnity under the terms of this Agreement or (iv) otherwise in connection with the transactions contemplated in this Agreement, shall be limited to claims for indemnification pursuant to Section 14.3 for which a Buyer Indemnified Party delivers written notice to Seller on or before the date that ends 6 months following the Closing Date (the “Claim Period”); provided, however, that a Buyer Indemnified Party may deliver notice to Seller (x) at any time after Closing with respect to a breach of Seller’s representations and warranties in Sections 3.1 through 3.3; and (y) at any time during the applicable statute of limitations period with respect to a breach of Seller’s representations and
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warranties in Section 3.9(b), in which case any liability of Seller for any of the foregoing shall only survive beyond the Claim Period to the extent asserted in a notice delivered during the Claim Period. Furthermore, and notwithstanding anything contained herein to the contrary, any claims for a breach of any of Seller’s representations and warranties in Sections 3.11 through 3.14 must be asserted by Buyer prior to Closing and Buyer’s sole recourse with regard thereto shall be to terminate this Agreement pursuant to Section 11.1(c). In no event shall any claims for a breach of any of Seller’s representations and warranties in Sections 3.11 through 3.14 survive Closing. Any notice under this Section 14.5.1 shall state the facts known to the Buyer Indemnified Party that give rise to such notice in sufficient detail to allow Seller to evaluate the assertion.
14.5.2
(a) None of the Buyer Indemnified Parties shall be entitled to assert any claim for indemnification hereunder, or to otherwise seek any damages or other remedies for or in connection therewith, unless the Liability attributable to the claim is in excess of $50,000 (“Claim Threshold”). The limitations in this Section shall not apply, however, to the obligations of Seller under Sections 12.1, 13.1, 13.2, 13.4 and 19 or to claims for indemnification with respect to a breach of Seller’s representations and warranties under Section 3.9(b).
(b) Additionally, none of the Buyer Indemnified Parties shall be entitled to assert any claim for indemnification hereunder, or to otherwise seek any damages or other remedies for or in connection therewith, until the aggregate amount of all Liabilities in excess of the Claim Threshold exceeds one and one-half percent (1.5%) of the Purchase Price, and then only to the extent of such excess. The limitations in this Section shall not apply, however, to the obligations of Seller under Sections 12.1, 13.1, 13.2, 13.4 and 19 or to claims for indemnification with respect to a breach of Seller’s representations and warranties under Section 3.9(b).
(c) Seller shall not be liable for any claims for indemnification hereunder in any amount exceeding in the aggregate twenty percent (20%) of the Purchase Price; provided, however, that as to claims for indemnification with respect to breaches of Seller’s representations and warranties in Sections 3.1 through 3.3 and Section 3.9(b), Seller shall not be liable for any amount exceeding the Purchase Price and for claims for breach of Seller’s special warranty of title in the Assignment Seller shall not be liable for any amount exceeding the Allocated Value of the Wellbore affected by such breach.
14.5.3 The amount of any Liabilities for which any of the Buyer Indemnified Parties or Seller Indemnified Parties is entitled to indemnification or other compensation under this Agreement or in connection with or with respect to the transactions contemplated in this Agreement shall be reduced by any corresponding (i) tax benefit created or generated or (ii) insurance proceeds realized or that could reasonably be expected to be realized by such party if a claim were properly pursued under the relevant insurance arrangements.
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14.5.4 None of the Buyer Indemnified Parties nor the Seller Indemnified Parties shall be entitled to recover from Seller or Buyer, respectively, for any losses, costs, expenses, or damages arising under this Agreement or in connection with or with respect to the transactions contemplated in this Agreement, any amount in excess of the actual compensatory damages, court costs and reasonable attorney fees, suffered by such party. Buyer on behalf of each of the Buyer Indemnified Parties and Seller on behalf of each of the Seller Indemnified Parties waives any right to recover consequential, incidental, special, treble, exemplary or punitive damages or Liabilities arising in connection with or with respect to the transactions contemplated in this Agreement. For the avoidance of doubt, this Section 14.5.4 does not diminish or otherwise affect the parties’ rights and obligations to be indemnified against, and provide indemnity for, indirect, consequential, punitive or exemplary damages awarded to any third party for which indemnification is provided in this Agreement.
14.5.5 If the Closing occurs, except as provided in Sections 12.1, 13.1, 13.2, 13.4 and 19, the sole and exclusive remedy of each of the Buyer Indemnified Parties and the Seller Indemnified Parties with respect to the purchase and sale of the Properties shall be pursuant to the express indemnification provisions of this Section 14. Any and all (i) claims relating to the representations, warranties, covenants and agreements contained in this Agreement, (ii) other claims pursuant to or in connection with this Agreement or (iii) other claims relating to the Properties and the purchase and sale thereof shall be subject to the provisions set forth in this Section 14, except for claims in connection with Sections 12.1, 13.1, 13.2, 13.4 and 19. Except for claims made pursuant to the express indemnification provisions of this Section 14, Buyer on behalf of each of the Buyer Indemnified Parties and Seller on behalf of each of the Seller Indemnified Parties shall be deemed to have waived, to the fullest extent permitted under applicable law, any right of contribution against Seller or any of its affiliates and any and all rights, claims and causes of action it may have against Seller or any of its affiliates or Buyer or any of its affiliates, respectively, arising under or based on any federal, state or local statute, law, ordinance, rule or regulation or common law or otherwise.
14.5.6 No person entitled to indemnification hereunder or otherwise to damages in connection with or with respect to the transactions contemplated in this Agreement shall settle, compromise or take any other action with respect to any claim, demand, assertion of liability or legal proceeding that could prejudice or otherwise adversely impact the ability of the person providing such indemnification or potentially liable for such damages to defend or otherwise settle or compromise with respect to such claim, demand, assertion of liability or legal proceeding.
14.5.7 Seller and Buyer acknowledge that the payment of money, as limited by the terms of this Agreement, shall be adequate compensation for breach of any representation, warranty, covenant or agreement contained herein or for any other claim arising in connection with or with respect to the transactions contemplated in this Agreement which is not asserted by Buyer prior to the Closing. As the payment of money shall be adequate compensation, Buyer and Seller waive any right to rescind this Agreement or any of the transactions contemplated hereby.
14.5.8 Each person entitled to indemnification hereunder or otherwise to damages in connection with the transactions contemplated in this Agreement shall take all
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reasonable steps to mitigate all losses, costs, expenses and damages after becoming aware of any event or circumstance that could reasonably be expected to give rise to any losses, costs, expenses and damages that are indemnifiable or recoverable hereunder or in connection herewith.
14.5.9 THE INDEMNIFICATION, RELEASE AND ASSUMPTION PROVISIONS PROVIDED FOR IN THIS AGREEMENT SHALL BE APPLICABLE WHETHER OR NOT THE LOSSES, COSTS, EXPENSES AND DAMAGES IN QUESTION AROSE SOLELY OR IN PART FROM THE GROSS, ACTIVE, PASSIVE OR CONCURRENT NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OF ANY INDEMNIFIED PARTY. BUYER AND SELLER ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.
14.5.10 Seller shall not have any obligation or liability under this Agreement or in connection with or with respect to the transactions contemplated in this Agreement for any breach, misrepresentation or noncompliance with respect to any representation, warranty, covenant, indemnity or obligation (i) if such breach, misrepresentation or noncompliance shall have been waived in writing by Buyer or (ii) if Buyer had actual knowledge of the relevant facts at or before Closing.
14.6. Waiver of Consumer Rights. BUYER HEREBY WAIVES THE PROVISIONS OF THE TEXAS DECEPTIVE TRADE PRACTICES ACT, CHAPTER 17, SUBCHAPTER E, SECTIONS 17.41 THROUGH 17.63, INCLUSIVE (OTHER THAN SECTION 17.555, WHICH IS NOT WAIVED), OF THE TEXAS BUSINESS AND COMMERCE CODE (“DTPA”), A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF ITS OWN SELECTION, BUYER VOLUNTARILY CONSENTS TO THIS WAIVER. TO EVIDENCE ITS ABILITY TO GRANT SUCH WAIVER, BUYER REPRESENTS TO SELLER THAT (I) IT IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION; (II) IT IS REPRESENTED BY LEGAL COUNSEL IN ENTERING INTO THIS AGREEMENT; AND (III) SUCH LEGAL COUNSEL WAS NOT DIRECTLY OR INDIRECTLY IDENTIFIED, SUGGESTED, OR SELECTED BY SELLER OR AN AGENT OF SELLER.
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15.4.1 Prior to and following Closing, Seller shall and shall use its reasonable best efforts to cause its accountants, counsel, agents and other third parties to cooperate with Buyer and its representatives in connection with the preparation by Buyer of financial statements and other financial data relating to the Properties (collectively, the “Financial Statements”) that are required to be included in any filing by Buyer or its affiliates with the Securities and Exchange Commission.
15.4.2 .Prior to and following Closing, Seller shall give Buyer and its representatives reasonable access during normal business hours to the Properties, Records, and other financial data necessary for the preparation of the Financial Statements. If requested, Seller shall execute and deliver to the external audit firm that audits the Financial Statements (the “Audit Firm”) such representation letters, in form and substance customary for representation letters provided to external audit firms by management of the company whose financial statements are the subject of an audit or are the subject of a review pursuant to Statement of Accounting Standards 100 (Interim Financial Information), as may be reasonably requested by the Audit Firm, with respect to the Financial Statements, including, as requested, representations regarding internal accounting controls and disclosure controls. As used in this Section 15.4, the term “Records” means all ledgers, books, records, data, files, and accounting and financial records, in each case to the extent related primarily to the Properties, or used or held for use primarily in connection with the maintenance or operation thereof.
If to Buyer: | CEP Mid-Continent LLC | |
One Xxxxx Center | ||
000 Xxxxxx Xxxxxx, Xxxxx 0000 | ||
Xxxxxxx, Xxxxx 00000 | ||
Attention: Xxxx X. Xxxxxxxxxx | ||
Telephone: (000) 000-0000 | ||
Facsimile: (000) 000-0000 | ||
with a copy to: | Xxxxxxx Xxxxx LLP | |
000 Xxxxxx, Xxxxx 0000 | ||
Xxxxxxx, XX 00000 | ||
Attention: Xxxxxx Xxxxxxxx | ||
Telephone: (000)000-0000 | ||
Facsimile: (000) 000-0000 |
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If to Seller: | CoLa Resources LLC | |
One Xxxxx Center | ||
000 Xxxxxx Xxxxxx, Xxxxx 0000 | ||
Xxxxxxx, Xxxxx 7700 | ||
Attention: Xxxxxxxxx X. Xxxxx | ||
Telephone: (000) 000-0000 | ||
Facsimile: (000) 000-0000 | ||
with a copy to: | Bracewell & Xxxxxxxx LLP | |
000 Xxxxxxxxx, Xxxxx 0000 | ||
Xxxxxxx, Xxxxx 00000 | ||
Attention: Xxxx X. Xxxxx | ||
Facsimile: 713.221.2109 |
18. Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Texas without giving effect to any principles of conflicts of laws. The validity of the various conveyances affecting the title to real property shall be governed by and construed in accordance with the laws of the jurisdiction in which such property is situated. The representations and warranties contained in such conveyances and the remedies available prior to Closing as a result of any breach of such representations and warranties shall be governed by and construed in accordance with the laws of the State of Texas without giving effect to the principles of conflicts of laws.
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Seller, or, in the case of a waiver or consent, by or on behalf of the party or parties waiving compliance or giving such consent. The failure of any party at any time or times to require performance of any provision of this Agreement shall not affect its right at a later time to enforce such provision. No waiver by any party of any condition, or of any breach of any covenant, agreement, representation or warranty contained in this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or breach or waiver of any other condition or of any breach of any other covenant, agreement, representation or warranty.
22. Bold and/or Capitalized Letters. THE PARTIES AGREE THAT THE BOLD AND/OR CAPITALIZED LETTERS IN THIS AGREEMENT CONSTITUTE CONSPICUOUS LEGENDS.
28. Public Announcements. No party hereto (nor its Affiliates) shall issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior written approval of the other parties hereto, which approval shall not be unreasonably
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withheld; provided that any party may make any public disclosure it believes in good faith is required by applicable Law or any listing or trading agreement concerning its publicly traded securities (in which case the disclosing party will advise the other parties hereto before making the disclosure).
“Adverse Environmental Condition” means any violation of Environmental Laws applicable to the Properties including, without limitation, contamination or condition exceeding regulatory limits and not otherwise authorized by permit or law, resulting from any discharge, release, production, storage, treatment, seepage, escape, leakage, emission, emptying, leaching or any other activities on, in or from any Property, or the migration or transportation from other lands to any Property, of any wastes, pollutants, contaminants, hazardous materials or other materials or substances subject to regulation relating to the protection of the environment that require remediation pursuant to any current federal, state or local laws or statutes, including Environmental Laws. Neither the foregoing definition nor any provision of this Agreement that incorporates this defined term shall abrogate or limit Buyer’s indemnity and hold harmless obligations under Article 14.
“Affiliate” means, with respect to any Person, any other Person who, directly or indirectly, Controls or is Controlled by or is under common Control with such first Person.
“BofA” means Bank of America, N.A.
“BofA Credit Facility”means the Credit Agreement, dated May 17, 2007, among Seller and BofA.
“Business Day” or “business day” shall mean a day other than Saturday or Sunday or any legal holiday for commercial banking institutions under the laws of the State of Texas.
“Control” as used in this Agreement (including, with their correlative meanings, the terms “controlling”, “controlled by” and “under common control with”) shall mean (1) with respect to a corporation, the ownership of voting securities or other equity interest in such corporation entitling the holder thereof to elect a majority of the board of directors of such corporation, (2) in the case of a limited partnership, the ownership of a majority of the voting equity interests of the general partner of such limited partnership, (3) in the case of a limited liability company, the ownership of a majority of the outstanding voting securities, membership interest or other equity interest (however characterized) of such limited liability company, and (4) in the case of any other entity, the ownership of voting securities or other equity interest in such entity entitling the holder thereof to elect a majority of, or otherwise control, the governing body of such entity.
“Environmental Laws” means all applicable laws and regulations concerning or relating to the pollution or protection of the environment, including the Clean Air Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Federal Water Pollution Control Act, the Safe Drinking Water Act, the Toxic Substance
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Control Act, the Hazardous and Solid Waste Amendments Act of 1984, the Superfund Amendments and Reauthorization Act of 1986, the Hazardous Materials Transportation Act, the Clean Water Act, the National Environmental Policy Act, the Endangered Species Act, the Fish and Wildlife Coordination Act, the National Historic Preservation Act and the Oil Pollution Act of 1990, as such laws may be amended from time to time and all regulations, orders, rulings, directives, requirements and ordinances promulgated thereunder.
“Liens” means any encumbrance, lien, claim, easement, right, agreement, instrument, obligation, burden or defect.
“Maximum Guaranty Amount” means (i) with regard to any indemnity claims of Buyer pursuant to Section 14.3 (subject to the limitations of Section 14.5) an amount not to exceed twenty percent (20%) of the Purchase Price and (ii) with regard to any payments due by Seller to Buyer pursuant to Annex I, an amount equal to the aggregate of that portion, if any, of the Allocated Value of each Wellbore allocable to any Lease as to which Seller has not received recorded assignments of its interest as of the Closing Date, less the estimated sum of proceeds due Seller for periods prior to the Effective Time attributable to Wellbores which are not on pay status as of the Closing Date; provided that the Maximum Guaranty Amount under this clause (ii) shall adjust proportionately over time as Seller receives and records assignments of its interests or receives proceeds for Wellbores previously not on pay status.
“Organizational Documents” shall mean with respect to any particular entity: (a) if a corporation, its articles or certificate of incorporation and its bylaws; (b) if a limited partnership, its limited partnership agreement and its articles or certificate of limited partnership; (c) if a limited liability company, its articles of organization or certificate of formation and its limited liability company agreement or operating agreement; (d) all related equity holders’ agreements, voting agreements, voting trust agreements, joint venture agreements or registration rights agreements; and (e) any amendment or supplement to any of the foregoing.
“Person” shall mean an individual, corporation, limited liability company, partnership, limited liability partnership, joint venture, trust, unincorporated organization or any other entity, including any United States, foreign, state or local governmental entity or municipality or any authority, department, commission, board, bureau, agency, court, instrumentality or subdivision thereof.
“Seller’s Knowledge” shall mean the actual knowledge of any of the following individuals: Xxxxxx X. Xxxxx, Xxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxx Xxxxxxx and Xxxxxx Xxxxxx.
[SIGNATURE PAGES FOLLOW]
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[SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT – PAGE 1 OF 2]
BUYER: | ||
CEP MID-CONTINENT LLC, a Delaware limited liability company | ||
By: | /s/ Xxxxx Xxxxxx | |
Xxxxx Xxxxxx | ||
President & Chief Executive Officer |
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[SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT – PAGE 2 OF 2]
SELLER: | ||
COLA RESOURCES LLC a Delaware limited liability company | ||
By: CEU CoLa LLC, | ||
a Delaware limited liability company, as Sole Manager | ||
By: | /s/ Xxxxxx Xxxxxx | |
Xxxxxx Xxxxxx | ||
Vice President for Tax and Treasury |
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