EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
AMONG
HALEX OIL CORPORATION,
HOC OPERATING CO., INC.
AND
GEOKINETICS INC.,
THE SOLE SHAREHOLDER OF
HOC OPERATING CO., INC.
JULY 28, 1999
TABLE OF CONTENTS
Page
ARTICLE I.
GENERAL................................................................1
1.1 DEFINITIONS......................................................1
1.2 AGREEMENT TO PURCHASE AND SELL ACQUIRED SHARES...................3
1.3 CONSIDERATION....................................................3
1.4 THE CLOSING......................................................3
1.5 DELIVERIES AT THE CLOSING........................................3
1.6 PRODUCTION REVENUES..............................................4
ARTICLE II.
REPRESENTATIONS AND WARRANTIES.........................................4
2.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER.....................4
(a) ORGANIZATION OF THE SELLER.................................4
(b) AUTHORIZATION OF TRANSACTION...............................4
(c) NONCONTRAVENTION...........................................5
(d) BROKERS' FEES..............................................5
(e) ACQUIRED SHARES............................................5
(f) AGED ACCOUNTS PAYABLE......................................5
2.2 REPRESENTATIONS AND WARRANTIES OF THE BUYER......................5
(a) ORGANIZATION OF THE BUYER..................................5
(b) AUTHORIZATION OF TRANSACTION...............................5
(c) NONCONTRAVENTION...........................................6
(d) BROKERS' FEES..............................................6
(e) INVESTMENT.................................................6
2.3 REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY............6
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER...........6
(b) AUTHORIZATION OF TRANSACTION...............................6
(c) CAPITALIZATION.............................................7
(d) NONCONTRAVENTION...........................................7
(e) BROKERS' FEES..............................................7
(f) NO SUBSIDIARIES, ETC.......................................7
(g) TAX MATTERS................................................7
(h) GUARANTIES.................................................8
(i) ACCOUNTS PAYABLE...........................................8
(j) ACCOUNTS RECEIVABLE........................................8
(k) PRODUCTION ACCOUNT SHORTAGES...............................8
(l) CONTRACTS..................................................8
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TABLE OF CONTENTS (Cont'd.)
(m) LITIGATION.................................................8
(n) TITLE TO ASSETS............................................8
(o) BANK ACCOUNTS..............................................8
(p) OPERATOR BONDS.............................................8
(q) UNAUDITED BALANCE SHEET....................................8
ARTICLE III.
POST-CLOSING COVENANTS.................................................9
3.1 GENERAL..........................................................9
3.2 LITIGATION SUPPORT...............................................9
ARTICLE IV.
REMEDIES FOR BREACHES OF AGREEMENT.....................................9
4.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.......................9
4.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.............10
4.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLER............10
4.4 INDEMNIFICATION PROCEDURES......................................11
4.5 MATTERS INVOLVING THIRD PARTIES.................................11
4.6 OTHER INDEMNIFICATION PROVISIONS................................12
ARTICLE V.
MISCELLANEOUS.........................................................12
5.1 NO THIRD-PARTY BENEFICIARIES....................................12
5.2 ENTIRE AGREEMENT................................................12
5.3 COUNTERPARTS....................................................12
5.4 HEADINGS........................................................12
5.5 NOTICES.........................................................12
5.6 GOVERNING LAW...................................................13
5.7 AMENDMENTS AND WAIVERS..........................................13
5.8 SEVERABILITY....................................................13
5.9 EXPENSES........................................................14
5.10 CONSTRUCTION....................................................14
5.11 INCORPORATION OF EXHIBITS AND SCHEDULES.........................14
5.12 ATTORNEYS' FEES.......................................................14
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DISCLOSURE SCHEDULES
2.3 (h Guaranties
2.3 (i) Accounts Payable
2.3 (j) Accounts Receivable
2.3 (k) Production Account Shortages
2.3 (l) Contracts
2.3 (m) Litigation
2.3 (n) Title to Assets
2.3 (o) Bank Accounts
2.3 (p) Operator Bonds
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "AGREEMENT") is made and entered into
as of July 1, 1999, by and among Halex Oil Corporation, a Texas corporation (the
"BUYER"), HOC Operating Co., Inc., a Texas corporation (the "COMPANY"), and
Geokinetics Inc., a Delaware corporation and the holder of all of the
outstanding capital stock of the Company (the "SELLER"). The Buyer, the Seller
and the Company are sometimes referred to collectively herein as the "PARTIES."
The Seller owns 1,000 shares of the issued and outstanding common stock of
the Company, $1.00 par value per share (the "COMMON STOCK"), representing all of
the issued and outstanding capital stock of the Company.
This Agreement contemplates a transaction in which the Buyer will purchase
from the Seller, and the Seller will sell to the Buyer, all of the shares of the
Common Stock in return for good and valid consideration as set forth in Section
1.3 herein.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
ARTICLE I.
GENERAL
1.1 DEFINITIONS. Unless otherwise stated in this Agreement, capitalized
terms shall have the following meanings:
"ACQUIRED SHARES" means 1,000 shares of Common Stock of the Company owned
by the Seller, representing one hundred percent (100%) of the issued and
outstanding shares of the capital stock of the Company.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and attorneys' fees and expenses.
"AGREEMENT" has the meaning set forth in the first paragraph above.
"BUYER" has the meaning set forth in the first paragraph above.
"CLOSING" has the meaning set forth in Section 1.4 below.
"CLOSING DATE" has the meaning set forth in Section 1.4 below.
"CODE" means the Internal Revenue Code of 1986, as amended.
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"COMMON STOCK" means the common stock, $1.00 par value per share, of the
Company.
"COMPANY" has the meaning set forth in the first paragraph above.
"CONSIDERATION" has the meaning set forth in Section 1.3 below.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 2.3 below.
"EFFECTIVE DATE" means July 1, 1999.
"GPCI" means Geokinetics Production Company, Inc., a Texas corporation and
wholly-owned subsidiary of Seller.
"INDEMNIFIED PARTY" has the meaning set forth in Section 4.4 below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 4.4 below.
"KNOWN" OR "KNOWLEDGE" means that whenever a statement regarding the
existence or absence of facts in this Agreement is qualified by a phrase such as
"to such person's knowledge" or "known by such person," the parties intend that
the information to be attributed to such person is information that is actually
known to (a) the person in the case of an individual, or (b) in the case of a
corporation or other entity, an officer or an employee who devoted substantive
attention to matters of such nature during the ordinary course of his
employment, and in the case of the Company, including Xxxx Xxxx.
"LIABILITY" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PARTY" has the meaning set forth in the first paragraph above.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"PROPERTIES" has the meaning ascribed in that certain Assignment, Xxxx of
Sale and Conveyance between GPCI and the Company (attached hereto as Exhibit B.)
"SECURITIES ACT" means the Securities Act of 1933, as amended.
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"SECURITY INTEREST" means any mortgage, deed of trust, pledge, lien,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) liens for Taxes not yet due and payable,
(c) purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"SELLER" has the meaning set forth in the first paragraph above.
"TAX" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"THIRD PARTY CLAIM" has the meaning set forth in Section 4.5(a) below.
1.2 AGREEMENT TO PURCHASE AND SELL ACQUIRED SHARES. On and subject to the
terms and conditions of this Agreement, the Buyer agrees to purchase from the
Seller, and the Seller agree to sell to the Buyer, all of the Acquired Shares
for the consideration specified below in Section 1.3.
1.3 CONSIDERATION. In consideration for the delivery of the Acquired
Shares, Buyer agrees to assume: (i) the Seller's obligations under that certain
Lease Bank Facility Promissory Note in the original principal amount of $75,000
payable by GPCI to the Xxx X. Xxxx and Xxxxx Xxxx Xxxx Trust dated January 17,
1995 at the Closing; and (ii) the Company's outstanding accounts payable as of
the Effective Date, except as set forth in Section 2.1(f) below. The foregoing
together with other mutual benefits to Buyer and Seller shall be referred to
herein as the "CONSIDERATION".
1.4 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of Chamberlain,
Hrdlicka, White, Xxxxxxxx & Xxxxxx in Houston, Texas, commencing at 9:00 a.m.
local time on July 28, 1999 or such other date as the Buyer and the Seller may
mutually determine (the "CLOSING DATE"); and shall be effective for accounting
purposes as of 12:01 a.m., Central Daylight Time, on the Effective Date.
1.5 DELIVERIES AT THE CLOSING. At the Closing, (i) the Seller will deliver
to the Buyer stock certificates representing all of the Acquired Shares,
endorsed in blank or accompanied by duly executed assignment documents, and (ii)
the Buyer will deliver to the Seller the Consideration as specified in Section
1.3 above. At Closing, the following documents shall also be executed and
delivered:
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(a) Severance Agreement and Release of Xxxxxxx Xxxx (attached hereto as
Exhibit A);
(b) Stock Option Agreements between Seller and Xxxxxxx Xxxx;
(c) Assignment, Xxxx of Sale and Conveyance between GPCI and the Company
effective as of July 1, 1999 (attached hereto as Exhibit B);
(d) Release of the Company from liability and obligations under Sellers
$40,000,000 of Senior Subordinated Notes Due 2005;
(e) Cancellation and Release of Guaranteed Promissory Notes and Guaranty
Agreement (attached hereto as Exhibit C);
(f) Promissory Note in the original amount of $35,000 payable to the Xxx
X. Xxxx and Xxxxx Xxxx Xxxx Trust payable by Seller (attached hereto
as Exhibit D);
(g) Common Stock Purchase Warrant from Seller to the Xxx X. Xxxx and
Xxxxx Xxxx Xxxx Trust (attached hereto as Exhibit E);
(h) Resignations or terminations of all officers, directors and
employees of the Company, (excluding Xxxxxxx Xxxx) as of the
Effective Date;
(i) Payment of interest accrued as of the Effective Date and owed by
GPCI to the Xxx X. Xxxx and Xxxxx Xxxx Xxxx Trust pursuant to that
certain Lease Bank Facility described in Section 1.3 hereof; and
(j) Certificate of Good Standing for the Company issued by the
Comptroller of Public Accounts of Texas.
1.6 PRODUCTION REVENUES. All production revenues of the Company
attributable to the Properties from and after June 1, 1999 or those being held
by the Company attributable to (x) minimum suspense or (y) working interest
owners who have failed to pay lease operating expenses, shall be accounted for
and retained by the Company.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants to the Buyer that the statements contained in this Section 2.1 are
correct and complete as of the Closing Date:
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(a) ORGANIZATION OF THE SELLER. The Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Texas.
(b) AUTHORIZATION OF TRANSACTION. The Seller has full corporate
power and authority to execute and deliver this Agreement and to perform
his obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Seller, enforceable in accordance with
its terms and conditions. The Seller does not need to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Seller is subject
or any provision of its charter or bylaws, or (B) conflict with, result in
a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Seller is a party or by
which it is bound or to which any of Seller's assets is subject.
(d) BROKERS' FEES. The Seller has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Buyer could
become liable or obligated.
(e) ACQUIRED SHARES. The Seller holds of record and owns
beneficially the Acquired Shares, free and clear of any restrictions on
transfer (other than any restrictions under the Securities Act and state
securities laws), Taxes, Security Interests, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands. The Seller
is not a party to any option, warrant, purchase right, or other contract
or commitment that could require the Seller to sell, transfer, or
otherwise dispose of any capital stock of the Company (other than as
contemplated in this Agreement). The Seller is not a party to any voting
trust, proxy, or other agreement or understanding with respect to the
voting of any capital stock of the Company.
(f) AGED ACCOUNTS PAYABLE. On or before the Closing Date, Seller
shall have paid and satisfied all accounts payable of the Company which
were ninety (90) or more days old as of the Closing Date, up to $22,500.
2.2 REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants to the Seller that the statements contained in this Section 2.2 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date:
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(a) ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Texas.
(b) AUTHORIZATION OF TRANSACTION. Buyer has full corporate power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of the Buyer, enforceable in accordance with its terms
and conditions. The Buyer does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will in any material respect (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or court to
which the Buyer is subject or any provision of its charter or bylaws or
(B) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to
which the Buyer is a party or by which any of Buyer's assets is subject.
(d) BROKERS' FEES. The Buyer has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Seller could
become liable or obligated.
(e) INVESTMENT. The president of Buyer is the principal operating
officer of the Company and is familiar with the Company's operations,
management, assets and liabilities. Buyer is purchasing the Acquired
Shares for its own account, with the present intention of holding the
Acquired Shares for investment purposes and not with a view to or for sale
in connection with any distribution of the Acquired Shares in violation of
any applicable securities law. Buyer will refrain from transferring or
otherwise disposing of any of the Acquired Shares, or any interest
therein, in such manner as to cause Seller to be in violation of the
registration requirements of the Securities Act, or applicable state
securities or state blue sky law.
2.3 REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY. The Seller and
the Company, jointly and severally, represent and warrant to the Buyer that the
statements contained in this Section 2.3 are correct and complete as of the date
of this Agreement, except as set forth in the disclosure schedule delivered by
the Seller to the Buyer on the date hereof and initialed by the Parties (the
"DISCLOSURE SCHEDULE"). The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
2.3.
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(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. The Company is
a corporation duly organized, validly existing, and in good standing under
the laws of the State of Texas. The Seller has delivered to the Buyer
correct and complete copies of the charter and bylaws of the Company, as
amended to date. The minute book (containing the records of meetings of
the shareholders, the board of directors, and any committees of the board
of directors), the stock certificate books, and the stock record books of
the Company are correct and complete in all material respects.
(b) AUTHORIZATION OF TRANSACTION. The Company has full corporate
power and authority to execute and deliver this Agreement and to perform
its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Company, enforceable in accordance with
its terms and conditions. The Company does not need to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(c) CAPITALIZATION. The authorized capital stock of the Company
consists of 10,000 shares of Common Stock, $1.00 par value per share, of
which 1,000 shares are issued and outstanding. No shares of its capital
stock are held in treasury. All of the issued and outstanding shares of
the Company's capital stock, including the Acquired Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, and are
held of record by the Seller. There are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could
require the Company to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There are no voting trusts, proxies,
or other agreements or understandings with respect to the voting of the
capital stock of the Company.
(d) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Company is subject
or any provision of the charter or bylaws of the Company, or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which the Company is a
party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets).
To the best of Seller's knowledge, the Company is not in breach of any
material provision, obligation, contract or agreement to which it is a
party or of any regulation to which its business, operation or financial
condition is subject.
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(e) BROKERS' FEES. The Company has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
(f) NO SUBSIDIARIES, ETC. The Company does not own of record or
beneficially, directly or indirectly, (i) any shares of outstanding
capital stock or securities convertible into capital stock of any other
corporation or (ii) any interest in any partnership, joint venture,
limited liability company, or other non-corporate business enterprise.
(g) TAX MATTERS.
(i) The Company has filed all Tax Returns that it was required
to file. All such Tax Returns were materially correct and complete
in all respects. All Taxes owed by the Company (whether or not shown
on any Tax Return) have been paid.
(ii) The Company has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder, or
other third party.
(h) GUARANTIES. Except as set forth in Section 2.3(h) of the
Disclosure Schedule, the Company is not a guarantor or otherwise liable
for any Liability or obligation (including indebtedness) of any other
Person.
(i) ACCOUNTS PAYABLE. Section 2.3(i) of the Disclosure Schedule sets
forth a correct and complete list, to best of Seller's knowledge, of the
accounts payable of the Company as of the Closing Date.
(j) ACCOUNTS RECEIVABLE. Section 2.3 (j) of the Disclosure Schedule
sets forth a correct and complete list, to the best of Seller's knowledge,
of the accounts receivable of the Company, excluding those of GPCI, as of
the Closing Date.
(k) PRODUCTION ACCOUNT SHORTAGES. Section 2.3(k) of the Disclosure
Schedule sets forth a correct and complete list, to the best of Seller's
knowledge, of all production account shortages of the Company as of the
Closing Date (the "Production Account Shortages").
(l) CONTRACTS. Section 2.3(l) of the Disclosure Schedule sets forth
a list of all non- oil and gas contracts and other agreements to which
Company is a party, to the best of Seller's knowledge.
(m) LITIGATION. Section 2.3(m) of the Disclosure Schedule sets forth
each instance in which the Company (i) is subject to any outstanding
injunction, judgment, order, decree, ruling or charge or (ii) is a party
or, to the best of Seller's knowledge, is threatened to be made a party to
any action, suit, proceeding, hearing or investing action of, in, or
before any
8
court or quasi-judicial or administrative agency of any federal, state,
local or foreign jurisdiction or before any arbitrator.
(n) TITLE TO ASSETS. The Company has good and marketable title to,
or a valid leasehold interest in, its assets free and clear, to the best
of Seller's knowledge, of all liens and encumbrances. The Company's
equipment, furniture, fixtures and machinery, to the best of Seller's
knowledge, are listed in Section 2.3(n) of the Disclosure Schedule.
(o) BANK ACCOUNTS. Section 2.3(o) of the Disclosure Schedule sets
forth a list of bank accounts of the Company, setting forth the type of
account, bank and account number.
(p) OPERATOR BONDS. Section 2.3(p) of the Disclosure Schedule sets
forth a list of any operator bonds held by the Company.
(q) UNAUDITED BALANCE SHEET. Attached hereto is Exhibit G is an
unaudited balance sheet of the Company as of June 30, 1999 (the "Unaudited
Balance Sheet"). The Unaudited Balance Sheet has been prepared from the
Company's books and records, is true and complete in all material
respects, and fairly presents the financial condition of the Company. The
Unaudited Balance Sheet, to the best of Seller's knowledge, reflects, to
the best of Seller's knowledge, all of the Company's liabilities. There
has not been any material adverse change in the Company's financial
condition or results of operations since the date of the Unaudited Balance
Sheet.
ARTICLE III.
POST-CLOSING COVENANTS
3.1 GENERAL. If, at any time after the Closing, any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Article IV
below). The Seller acknowledges and agrees that from and after the Closing, the
Buyer will be entitled to possession of all documents, books, records (including
Tax records), well files, logs, seismic data, agreements, and financial data of
any sort relating to the Company and the Seller shall have reasonable access to
such financial documents, books, records (including Tax records), agreements,
and financial data of any sort relating to the Company, during normal business
hours.
3.2 LITIGATION SUPPORT. In the event and for so long as any Party actively
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action,
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failure to act, or transaction on or prior to the Closing Date involving the
Company, each of the other Parties will cooperate with it and its counsel in the
contest or defense, make available their personnel, and provide such testimony
and access to their books and records as shall be necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Article IV below).
ARTICLE IV.
REMEDIES FOR BREACHES OF AGREEMENT
4.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Parties contained in this Agreement shall survive the Closing
hereunder, except for representations regarding the Company's Tax Liabilities
which representations will expire and be terminated on the date of expiration of
the statute of limitations for collection of such Tax Liability in question.
4.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
(a) The Seller agrees to indemnify the Buyer from and against the
entirety of any Adverse Consequences the Buyer may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any Liability
of the Company for the following:
(i) unpaid Taxes of any Person (other than the Company) under
Treas. Reg. Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor,
by contract, or otherwise due or accrued prior to the Closing
Date;
(ii) that certain Promissory Note made by the Company on January 1,
1991 to Lexington Oil Company, Inc. in the original principal
amount of $25,000;
(iii) any liability with respect to any guaranty listed on
Section 2.3(h) of the Disclosure Schedule; and
(iv) any liability arising or accruing prior to the Effective Date
with respect to the Production Account Shortages, including
those set forth in Section 2.3(k) of the Disclosure Schedule.
4.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLER.
(a) The Buyer agrees to indemnify the Seller from and against the
entirety of any Adverse Consequences the Seller may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any Liability
of the Company for the following:
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(i) Section 16.1 of that certain Agreement and Plan of Merger
dated as of July 30, 1994 by and between HOC Acquisition
Corp., HLX Acquisition Corp., the Company and Xxxx Exploration
Corporation prior to or after July 1, 1999 except those, if
any, attributable to the oil and gas leasehold interests now
owned by Quantum Geophysical Services, Inc., a subsidiary of
Seller, acquired pursuant to Assignment of Interest in Oil,
Gas and Mineral Leases dated February 10, 1996, from GPCI and
the Company, to Quantum Geophysical, Inc., recorded in Volume
540, Page 755 of the Official Records of Bee County, Texas;
Volume 186, Page 805 of the Official Records of Colorado
County, Texas; and in Volume 404, Page 462 of the Oil, Gas and
Mineral Lease Records of Live Oak County, Texas.;
(ii) expenses or amounts payable incurred for services rendered to
the Company as operator of the Properties prior to or after
July 1, 1999;
(iii) the ownership, condition or operation of the Properties,
including the environmental condition and plugging
requirements of the Properties; and
(iv) any and all production proceeds held by the Company and
payable to parties attributable to production proceeds
received by the Company prior to or after July 1, 1999, except
for the Production Account Shortages, including those set
forth on Section 2.3k of the Disclosure Schedule.
4.4 INDEMNIFICATION PROCEDURES. In the event that a Party breaches (or in
the event any third party alleges facts that, if true, would mean that a Party
has breached) any of its representations, warranties, and covenants contained
herein (the "INDEMNIFYING PARTY"), provided that the other Party (the
"INDEMNIFIED PARTY") makes a written claim for indemnification against the
Indemnifying Party pursuant to Section 5.5 below within the survival period
specified in Section 4.1 hereof, then the Indemnifying Party agrees to indemnify
the Indemnified Party from and against the entirety of any Adverse Consequences
the Indemnified Party may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Indemnified Party may
suffer after the end of the survival period) resulting from, arising out of,
relating to, in the nature of, or caused by the breach (or the alleged breach).
4.5 MATTERS INVOLVING THIRD PARTIES.
(a) If any third party shall notify an Indemnified Party with
respect to any matter (a "THIRD PARTY CLAIM") which may give rise to a
claim for indemnification against an Indemnifying Party under this Article
IV, then the Indemnified Party shall promptly notify each Indemnifying
Party thereof in writing; provided, however, that no delay on the part of
the Indemnified Party in notifying any Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
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(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing within
fifteen (15) days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from, arising out
of, relating to, in the nature of, or caused by the Third Party Claim, (B)
the Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the Indemnifying Party
will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (C) the Third Party
Claim involves only money damages and does not seek an injunction or other
equitable relief, (D) settlement of, or an adverse judgment with respect
to, the Third Party Claim is not, in the good faith judgment of the
Indemnified Party, likely to establish a precedential custom or practice
materially adverse to the continuing business interests of the Indemnified
Party, and (E) the Indemnifying Party conducts the defense of the Third
Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 4.4(b) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section 4.4(b) above is or
becomes unsatisfied, however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Parties will reimburse the
Indemnified Party promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys' fees and
expenses), and (C) the Indemnifying Parties will remain responsible for
any Adverse Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Third
Party Claim to the fullest extent provided in this Article IV.
4.6 OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for breach of representation,
warranty, or covenant.
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ARTICLE V.
MISCELLANEOUS
5.1 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
5.2 ENTIRE AGREEMENT. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
5.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
5.4 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
5.5 NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
IF TO THE SELLER OR THE COMPANY: GEOKINETICS INC.
0000 XXX XXXXXX, XXXXX 000
XXXXXXX, XXXXX 00000
ATTENTION: XXXXXX X. XXXXXXXXX
CHAMBERLAIN, HRDLICKA, WHITE,
XXXXXXXX & XXXXXX
0000 XXXXX XXXXXX, XXXXX 0000
XXXXXXX, XXXXX 00000
ATTENTION: XXXXX X. SPRING, III
IF TO BUYER: HALEX OIL CORPORATION
0000 XXXXXXXX
XXXXXXX, XXXXX 00000
ATTENTION: XXXXXXX XXXX
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such
13
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Parties notice in the manner herein set forth.
5.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without giving effect to any
choice or conflict of law provision or rule that would cause the application of
the laws of any jurisdiction other than the State of Texas.
5.7 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and Seller. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
5.8 SEVERABILITY. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
5.9 EXPENSES. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
5.10 CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
5.11 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
5.12 ATTORNEYS' FEES. In the event that the employment of counsel by any
party becomes necessary to enforce this Agreement, the non-prevailing party
agrees to pay the prevailing party's reasonable attorneys' fees, court costs,
and all other reasonable costs and expenses incurred by the prevailing party as
a result of enforcing its rights under this Agreement.
14
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as
of the date first above written.
BUYER:
HALEX OIL CORPORATION
/s/ XXXXXXX XXXX
XXXXXXX XXXX, PRESIDENT
SELLER:
GEOKINETICS INC.
BY: /s/ XXXX X. XXXXXX
NAME: XXXX X. XXXXXX
TITLE: PRESIDENT
COMPANY:
HOC OPERATING CO., INC.
BY: /s/ XXXXXX X. XXXXXXXXX
NAME: XXXXXX X. XXXXXXXXX
TITLE: TREASURER
15
EXHIBIT A
SEVERANCE AGREEMENT
EXHIBIT B
ASSIGNMENT, XXXX OF SALE & CONVEYANCE
FROM GPCI TO HOC
EXHIBIT C
CANCELLATION AND RELEASE OF GUARANTEED PROMISSORY NOTES
AND GUARANTY AGREEMENT
EXHIBIT D
PROMISSORY NOTE
EXHIBIT E
COMMON STOCK PURCHASE WARRANT
DISCLOSURE SCHEDULE
Section 2.3(h)
Guaranties: -none-
