PURCHASE AND SALE AGREEMENT
This
Agreement is executed on September 6, 2007, by and between Anadarko Petroleum
Corporation, a Delaware Corporation (“Seller”), and Ignis Louisiana Salt Basin,
LLC, a Delaware Limited Liability Company (“Purchaser”).
ARTICLE
I
DESCRIPTION
OF THE ASSETS
Section
1.1. Assets.
As
used
herein, the term “Assets” means, subject to the terms and conditions of this
Purchase and Sale Agreement, all of Seller’s right, title, interest and estate,
real or personal, recorded or unrecorded, movable or immovable, tangible or
intangible, in and to the following:
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(a)
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All
leasehold interests on and to the oil and gas leases, including working
interests, reversionary interests, overriding royalties, net profits
interests, carried interests, and other properties and interests
described
on Exhibit A (collectively, the “Leasehold
Interests”);
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(b)
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Each
and every kind and character of right, title, claim, and interest
that
Seller has in and to the lands covered by the Leasehold Interests,
assignments and other documents of title described or referred to
in
Exhibit A, or the lands currently pooled, unitized,
communitized or consolidated therewith (together the
“Lands”);
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(c)
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All
oil, gas and all other hydrocarbons (collectively “Hydrocarbons”) in, on
or under or that may be produced from the Lands and/or Leasehold
Interests;
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(d)
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All
oil, gas, water or injection xxxxx located on the Lands identified
on
Exhibit B (the
“Xxxxx”);
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(e)
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All
leasehold interests of Seller in or to any currently existing pools
or
units which include any Lands or all or a part of any Leasehold Interests
or include any Xxxxx, including those pools or units shown on
Exhibit B (the “Units”; the Units, together with the
Leasehold Interests, Lands and Xxxxx being hereinafter referred
to as the “Property” or “Properties”), and including all leasehold
interest of Seller in production of hydrocarbons from any such Unit,
whether such Unit production of hydrocarbons comes from Xxxxx located
on
or off of a Leasehold Interest, and all tenements, hereditaments
and
appurtenances belonging to the Leasehold Interests, and
Units;
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(f)
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All
equipment, machinery, fixtures flow lines, pipelines, gathering systems
and appurtenances thereto and other tangible personal property and
improvements located on the Properties or used or held for use primarily
in connection with the operation of the Properties
(“Equipment”);
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(g)
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All
contracts, agreements and instruments described or referred to on
Exhibit C by which the Properties are bound, or that
relate to or are otherwise applicable to the Properties
(“Contracts”);
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(h)
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All
rights-of-way, easements, surface leases and other surface rights
described or referred to on Exhibit D (“Surface
Contracts”);
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(i)
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Copies
of the files, records, data and information relating to the items
described in items (a) through (h) above maintained by Seller to
the
extent that such files, records, data and information are not subject
to
restrictions on assignment or copying (the “Records”); provided, however,
that Seller may retain the originals of such files and other records
as
Seller has determined may be required for litigation, tax, accounting,
and
auditing purposes and provide Purchaser with copies thereof at Seller’s
cost, excluding, however, the Excluded Assets (as defined in Section
1.2)
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Section
1.2. Excluded Assets.
Notwithstanding
the foregoing, the Assets shall not include, and there is excepted, reserved
and
excluded from the transaction contemplated hereby (collectively, the “Excluded
Assets”):
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(a)
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all
corporate, financial, income and franchise tax and legal records
of Seller
that relate to Seller’s business generally (whether or not relating to the
Assets), and all books, records and files that relate to the Excluded
Assets;
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(b)
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all
geological and geophysical data (including all seismic data, including
reprocessed data), all interpretive data, technical evaluations,
technical
outputs, reserve estimates and economic estimates related to the
Assets;
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(c)
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all
rights to any refund of taxes or other costs or expenses borne by
Seller
or Seller’s predecessors in interest and title attributable to periods
prior to the Effective Date;
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(d)
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Seller’s
area-wide bonds, permits and licenses or other permits, licenses
or
authorizations used in the conduct of Seller’s business
generally;
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(e)
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all
trade credits, account receivables, note receivables, take-or-pay
amounts
receivable, and other receivables attributable to the Assets with
respect
to any period of time prior to the Effective
Date;
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(f)
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all
right, title and interest of Seller in and to vehicles or vessels
used in
connection with the Assets;
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(g)
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any
patent, patent application, logo, service xxxx, copyright, trade
name or
trademark of or associated with Seller or any affiliate of Seller
or any
business of Seller or of any affiliate of Seller;
and
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(h)
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a
nonexclusive right until the 2 year anniversary of the Closing Date
to
freely use and copy any logs, maps, engineering data and reports,
and any
other data or information being transferred as a part of the Assets
at
reasonable times and reasonable places, provided that any such copying
will be done at Seller’s expense. The 2 year period shall be extended if
access is required by law or
litigation.
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Section
1.3 Effective Time; Proration of Costs and
Revenues.
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(a)
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Possession
of the Assets shall be transferred from Seller to Purchaser at the
Closing, but certain financial benefits and burdens of the Assets
shall be
transferred effective as of April 1, 2007 (the “Effective
Date”).
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(b)
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Purchaser
shall be entitled to all hydrocarbon production from or attributable
to
the Leases, Units and Xxxxx at and after the Effective Date (and
all
products and proceeds attributable thereto), and to all other income,
proceeds, receipts and credits earned with respect to the Assets
at or
after the Effective Date, and shall be responsible for (and entitled
to
any refunds with respect to) all Property Costs incurred at and after
the
Effective Date. Seller shall be entitled to all Hydrocarbon production
from or attributable to Leases, Units and Xxxxx prior to the Effective
Date (and all products and proceeds attributable thereto), and to
all
other income, proceeds, receipts and credits earned with respect
to the
Assets prior to the Effective Date, and shall be responsible for
(and
entitled to any refunds with respect to) all Property Costs incurred
prior
to the Effective Date. “Earned” and "incurred”, as used in this
Agreement, shall be interpreted in accordance with generally accepted
accounting principles and Council of Petroleum Accountants Society
(XXXXX)
standards. “Property Costs” means all costs attributable to the ownership
and operation of the Assets (including without limitation costs of
insurance and ad valorem, property, severance, hydrocarbon production
and
similar taxes based upon or measured by the ownership or operation
of the
Assets or the production of hydrocarbons therefrom, but excluding
any
other taxes) and capital expenditures incurred in the ownership and
operation of the Assets in the ordinary course of business and, where
applicable, in accordance with the relevant operating or unit agreement,
if any, and customary and usual overhead costs for similar operations
in
the area charged to the Assets under the relevant operating agreement
or
unit agreement, if any, but excluding any costs incurred to cure
any Title
Defects pursuant to Section 3.5 (b) below. Taxes, right-of-way
fees, insurance premiums and other Property Costs that are paid
periodically shall be prorated based on the number of days in the
applicable period falling before and the number of days in the applicable
period falling at or after the Effective Date, except that hydrocarbon
production, severance and similar taxes shall be prorated based on
the
number of units actually produced, purchased or sold or proceeds
of sale,
as applicable, before, and at or after, the Effective Date. For clarification,
the date an item or work is ordered is not the date of a pre-Effective
Date transaction for settlement purposes, but rather the date on
which the
item ordered is delivered to the job site, or the date on which the
work
ordered is performed, shall be the relevant date. In each case,
Purchaser shall be responsible for the portion allocated to the period
at
and after the Effective Date and Seller shall be responsible for
the
portion allocated to the period before the Effective
Date.
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ARTICLE
II
PURCHASE
PRICE
Section
2.1. Purchase Price.
The
purchase price for the Assets (the “Purchase Price”) shall be Three Million
Dollars ($3,000,000.00) This amount will may be changed to reflect
the actual dollar amount at closing adjusted as provided in
Sections 2.3 and 2.4.
Section
2.2. Allocation of Purchase Price for Tax
Purposes.
Purchaser
and Seller will use commercially reasonable efforts to agree within thirty
(30)
days of Closing upon an allocation of the unadjusted Purchase Price among the
Assets, in compliance with the principles of Section 1060 of the Internal
Revenue Code of 1986, as amended (the “Code”), and the treasury regulations
thereunder. The “Tax Allocated Value” for any Asset shall equal the portion of
the unadjusted Purchase Price allocated to such Asset by the parties, increased
or reduced as described in this Article 2. Any adjustments to the
Purchase Price other than the adjustments provided for in Sections 2.4(b) and
2.4(e) shall be applied on a pro rata basis to the amounts agreed to by the
parties pursuant to this Section 2.2 for all Assets. After all such
adjustments are made, any adjustments to the Purchase Price pursuant to Sections
2.3(b) and 2.3(e) shall be applied to the amounts agreed to by the parties
pursuant to this Section 2.2 for the particular affected
Assets.
Section
2.3. Purchase Price Adjustments.
The
Purchase Price for the Assets shall be adjusted as follows with all such amounts
being determined in accordance with generally accepted accounting principles
and
Council of Petroleum Accountants Society (XXXXX) standards:
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(a)
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Reduced
by the aggregate amount of the following proceeds received by Seller
between the Effective Date and Closing (with the period between the
Effective Date and Closing referred to as the “Adjustment Period”): (i)
proceeds from the sale of hydrocarbons (net of any royalties, overriding
royalties or other burdens on or payable out of hydrocarbon production,
gathering, processing and transportation costs and any hydrocarbon
production, severance, sales or excise taxes not reimbursed to Seller
by
the purchaser of hydrocarbon production) produced from or attributable
to
the Properties during the Adjustment Period, and (ii) other proceeds
earned with respect to the Assets during the Adjustment
Period;
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(b)
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If
Seller makes the election under Section 3.5(c)(i) with respect to
a Title
Defect, subject to the Individual Title Deductible and the Aggregate
Title
Deductible, the Purchase Price shall be reduced by the Title Defect
Amount
with respect to such Title Defect if the Title Defect Amount has
been
determined prior to Closing;
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(c)
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Increased
by the amount of all Property Costs attributable to the ownership
and
operation of the Assets which are paid by Seller or incurred at or
after
the Effective Date, including, but not limited to, lease extension
and
lease option costs;
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(d)
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Reduced
to the extent provided in Section 3.5(c)(ii) with
respect to Property subject to Title Defects and retained by
Seller;
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(e)
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Reduced
to the extent provided in Section 3.6(b) with respect to Preference
Rights; and
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(f)
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Increased
or reduced as agreed upon in writing by Seller and
Purchaser.
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The
Purchase Price as adjusted after calculating and applying the adjustments set
forth in this Section 2.3 is the adjusted purchase price (the “Adjusted Purchase
Price”).
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Section
2.4. Closing Payment & Post-Closing Purchase Price
Adjustments.
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(a)
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Not
later than three (3) Business Days (“Business Days” means each calendar
day except Saturdays, Sundays, and federal holidays) prior to the
Closing,
Seller shall prepare and deliver to Purchaser, based upon the best
information available to Seller, a preliminary settlement statement
estimating the Adjusted Purchase Price after giving effect to all
Purchase
Price adjustments provided for in this Agreement. The estimate delivered
in accordance with this Section 2.4(a) shall constitute the dollar
amount
to be paid by Purchaser to Seller at the Closing (the “Closing
Payment”).
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(b)
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As
soon as reasonably practicable after the Closing but not later than
one
hundred and twenty (120) days following the Closing, Seller shall
prepare
and deliver to Purchaser a statement setting forth the final calculation
of the Adjusted Purchase Price and showing the calculation of each
adjustment, based, to the extent possible, on actual credits, charges,
receipts and other items before and after the Effective Date and
taking
into account all adjustments provided for in this Agreement. Seller
shall
at Purchaser’s request supply reasonable documentation available to
support any credit, charge, receipt or other item. As soon as
reasonably practicable but not later than the 30th day following
receipt
of Seller’s statement hereunder, Purchaser shall deliver to Seller a
written report containing any changes that Purchaser proposes be
made to
such Statement. The parties shall undertake to agree on the final
statement of the Adjusted Purchase Price no later than one hundred
eighty
(180) days after the Closing. In the event that the parties cannot
reach
agreement within such period of time, either party may refer the
remaining
matters in dispute to a nationally-recognized independent accounting
firm
not currently representing either party as may be accepted by Purchaser
and Seller, for review and final determination. The accounting firm
shall
conduct the arbitration proceedings in Houston, Texas in accordance
with
the Commercial Arbitration Rules of the American Arbitration Association,
to the extent such rules do not conflict with the terms of this Section
2.4. Seller and Purchaser shall each bear its own legal fees and
other
costs of presenting its case. Each party shall bear one-half of the
costs
and expenses of the accounting
firm.
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Section
2.5. Payments Required.
All
payments made or to be made hereunder to Seller shall be by electronic transfer
of immediately available funds to the account of Anadarko Petroleum Corporation,
[Account No. 0000000 at Mellon Bank, Pittsburgh, PA, ABA No.
000-000-000] for the credit of Seller or to such other bank and
account as may be specified by Seller in writing.
ARTICLE
III
SELLER’S
TITLE
Section
3.1 Access and Review.
Between
the date of execution of this Agreement by both Purchaser and Seller and
continuing until three (3) Business Days prior to the Closing, Seller will
give
Purchaser and its representatives access to the Assets, to the extent Seller
can
grant such access, and access to the Records in Seller’s possession, for the
purpose of conducting an investigation of the Assets, including an environmental
assessment of the Properties, but only to the extent that Seller may do so
without violating any obligations to any third party and to the extent that
Seller has authority to grant such access without breaching any restriction
binding on Seller. Such access by Purchaser shall be limited to Seller’s normal
business hours, and any weekends and after hours requested by Purchaser that
can
be reasonably accommodated by Seller, and Purchaser’s investigation shall be
conducted in a manner that minimizes interference with the operation of the
Assets. Any assessment shall be conducted at the sole cost and
expense of Purchaser. Prior to conducting any physical examination of
the Properties, including sampling, boring, drilling or other invasive activity
with respect to the Properties, Purchaser shall furnish for Seller’s review a
proposed scope of such invasive activity, including a description of the
activities to be conducted and a description of the approximate locations of
such activities. Seller may request an appropriate modification of
the proposed invasive activity. All information obtained by Purchaser
and its representatives under this Section shall be subject to the terms of
that
certain confidentiality agreement between Seller and Purchaser dated March
8,
2007 (the "Confidentiality Agreement"). PURCHASER HEREBY
AGREES TO DEFEND, INDEMNIFY, RELEASE, PROTECT, SAVE AND HOLD HARMLESS THE
SELLER, ITS PARENT, SUBSIDIARIES AND AFFILIATES AND ALL OF THEIR DIRECTORS,
OFFICERS, EMPLOYEES, REPRESENTATIVES, SUCCESSORS AND ASSIGNS FROM AND AGAINST
ANY AND ALL LOSSES AND CLAIMS ARISING OUT OF OR RELATING TO ANY DUE DILIGENCE
ACTIVITY, CONDUCTED BY PURCHASER OR ITS AGENTS, WHETHER BEFORE OR AFTER THE
EXECUTION OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY LOSSES
RESULTING, IN WHOLE OR IN PART, FROM THE NEGLIGENCE OR STRICT LIABILITY OF
SELLER, BUT EXCLUDING ANY LOSSES RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SELLER.
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Section
3.2. Defensible Title.
As
used
in this Agreement, the term “Defensible Title” means that title of Seller with
respect to the Units, Xxxxx, or Leasehold Interests that, except for and subject
to Permitted Encumbrances:
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(a)
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Entitles
Seller to receive not less than the percentage set forth in
Exhibit A as Seller’s “Net Revenue Interest” of all
Hydrocarbons produced, saved and marketed from the Leasehold Interests
as
set forth in Exhibit A, all without reduction, suspension
or termination of such interest throughout the productive life of
such
well, except decreases in connection with those operations in which
Seller
may after the Effective Date be a non-consenting co-owner, decreases
resulting from the establishment or amendment after the Effective
Date of
pools or units, and except for carried interests, production payments,
reversionary interest or other changes in interest in time as specifically
set forth in Exhibit A
;
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(b)
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Obligates
Seller to bear not greater than the percentage set forth in
Exhibit B as Seller’s “Working Interest” of the
costs and expenses relating to the maintenance, development and operation
of each Well or Unit as set forth in
ExhibitB, all without increase
throughout the productive life of such well, except increases resulting
from contribution requirements with respect to non-consenting co-owners
under applicable operating agreements, and except for carried interests,
production payments, reversionary interest or other changes in interest
in
time as specifically set forth in
ExhibitB;
and
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(c)
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Is
free and clear of liens, encumbrances, obligations, security interests,
irregularities, pledges, mortgages, or other
defects;
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(d)
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Entitles
Purchaser to receive not less than the net leasehold acreage described
on
Exhibit A ; and
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(e)
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There
are no contracts which materially detract from the value of or materially
interfere with the use or ownership of the Units, Xxxxx, or Leasehold
Interest.
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Section
3.3. Title Defect.
As
used
in this Agreement, the term “Title Defect” means any lien, charge, encumbrance,
obligation (including contract obligation), defect, or other matter (including
without limitation a material discrepancy in the net leasehold acreage) that,
alone or in combination with other Title Defects, causes Purchaser not to have
Defensible Title in and to the Units, Xxxxx, or Leasehold Interest shown in
Exhibits A and B. Notwithstanding the foregoing, the
following shall not be considered Title Defects:
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1.
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defects
based solely on (i) lack of information in the Seller’s files, or (ii)
references to a document(s) if such document(s) is not in Seller’s
files;
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2.
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defects
in the chain of title prior to January 1,
1950;
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3.
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defects
arising out of lack of corporate or other entity authorization unless
Purchaser provides affirmative evidence that the action was not authorized
and results in another party’s actual and superior claim of title to the
relevant Property;
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4.
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defects
based on failure to record oil and gas leases issued by any state,
or any
assignments of record title or operating rights in such leases, in
the
real property, conveyance or other records of the county in which
such
Property is located;
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5.
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defects
based on a gap in Seller’s chain of title in the county records as to fee
oil and gas leases, unless such gap is affirmatively shown to exist
in
such records by an abstract of title, title opinion or xxxxxxx’x title
chain which documents shall be included in a Title Defect
Notice;
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6.
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defects
that have been cured by applicable laws of limitations or
prescription;
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7.
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any
delay in delivering an assignment earned under a farmout, participation
or
similar agreement unless Purchaser provides affirmative evidence
that the
farmor or other third party record title holder has refused to deliver
such assignment; and
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8.
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defects
disclosed to or known by Purchaser and/or its affiliates prior to
the
execution of this Agreement.
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Notwithstanding
anything in this Agreement to the contrary, the failure of title with regard
to
any particular lease shall not be deemed a Title Defect, if the Assets include
Seller’s interest in one or more protection leases covering all of the same
mineral rights as the failed lease that would otherwise constitute a Title
Defect.
Section
3.4. Definition of Permitted Encumbrances.
As
used
herein, the term “Permitted Encumbrances” means any or all of the following
provided that such matters do not operate to reduce directly the Net Revenue
Interests of Seller below those set forth in Exhibits A and
B or increase directly the Working Interests
of Seller above
those set forth in Exhibit B without a corresponding increase
in the Net Revenue Interests;
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(a)
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All royalties,
overriding royalties, reversionary interests and other burdens in
existence as of the Effective Date to the extent that the net cumulative
effect of such burdens does not materially reduce Seller’s net leasehold
acreage below that shown in Exhibit
A;
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(b)
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All
leases, unit agreements, pooling agreements, operating agreements,
Hydrocarbon production sales contracts, division orders and other
contracts, agreements and instruments applicable to the Assets, to
the
extent that the net cumulative effect of such instruments does not
materially reduce Seller’s net leasehold acreage below that shown in
Exhibit A;
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(c)
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Preference
Rights applicable to the Assets with respect to which (A) waivers
or
consents are obtained from the appropriate parties for the transaction
contemplated hereby, or (B) required notices have been given for
the
transaction contemplated hereby to the holders of such rights and
the
appropriate period for asserting such rights has expired without
an
exercise of such rights.
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(d)
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Transfer
Requirements, third-party consent requirements and other similar
restrictions or waivers with respect to which (A) waivers or consents
are
obtained from the appropriate parties for the transaction contemplated
hereby, or (B) required notices have been given for the transaction
contemplated hereby to the holders of such rights and the appropriate
period for asserting such rights has expired without an exercise
of such
rights;
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(e)
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Liens
for current taxes or assessments not yet delinquent or, if delinquent,
being contested in good faith by appropriate actions and for which
any
Seller has agreed to pay any final settlement related to periods
prior to
the Effective Date;
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(f)
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Materialman’s,
mechanic’s, repairman’s, employee’s, contractor’s, operator’s and other
similar liens or charges arising in the ordinary course of business
for
amounts not yet delinquent (including any amounts being withheld
as
provided by Law), or if delinquent, being contested in good faith
by
appropriate actions and for which any Seller has agreed to pay any
final
settlement related to periods prior to the Effective
Date;
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(g)
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All
rights to consent by, required notices to, filings with, or other
actions
by governmental bodies in connection with the sale or conveyance
of the
Assets or interests therein if they are not required or customarily
obtained prior to the sale or
conveyance;
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(h)
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Any
other liens, charges, encumbrances, defects or irregularities which
do
not, individually or in the aggregate, materially interfere
with the use or ownership of the Assets subject thereto or affected
thereby (as currently used or owned), which would be accepted by
a
reasonably prudent purchaser engaged in the business of owning and
operating oil and gas properties, and which do not reduce Seller’s net
leasehold acreage below that shown in Exhibit
A;
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(i)
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Matters
that would otherwise be considered Title Defects but that do not
meet the
Individual Title Deductible set forth in Section
3.5(g);
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(j)
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Imbalances
associated with the Assets;
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(k)
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Rights
of reassignment arising upon final intention to abandon or release
the
Assets, or any of them;
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(l)
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Easements,
rights-of-way, servitudes, permits, surface leases and other rights
in
respect of surface operations to the extent that they do not individually
reduce Seller’s net leasehold acreage below that shown in Exhibit
A; and
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(m)
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Calls
on Hydrocarbon production under existing
Contracts.
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Section
3.5. Notice of Title Defect Adjustments.
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(a)
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To
assert a claim of a Title Defect, Purchaser must deliver claim notices
to
Seller (each a “Title Defect Notice”) on or before three (3) days prior to
Closing (the “Title Claim Date”). Each Title Defect Notice
shall be in writing and shall include (i) a description of the alleged
Title Defect(s), (ii) the Unit, Well, or Leasehold Interest affected
by
the Title Defect (each a “Title Defect Property”), (iii) supporting
documents reasonably necessary for Seller (as well as any title attorney
or examiner hired by Seller) to verify the existence of the alleged
Title
Defect(s), and (iv) the amount by which Purchaser reasonably believes
the
value of each Title Defect Property is reduced by the alleged Title
Defect(s) and the computations and information upon which Purchaser’s
belief is based. Notwithstanding any other provision of this Agreement
to
the contrary, Purchaser shall be deemed to have waived its right
to assert
Title Defects that Seller has not been given notice on or before
the Title
Claim Date. For purposes of this Agreement, the term “Allocated
Value” with respect to a particular Property shall mean the portion of the
Purchase Price that has been allocated to such Property on
Exhibits A and B (as
appropriate).
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(b)
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Seller
shall have the right, but not the obligation, to attempt, at its
sole
cost, to cure or remove at any time prior to Closing (the “Cure Period”),
unless the parties otherwise agree, any Title Defects of which it
has been
advised by Purchaser.
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(c)
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Remedies
for Title Defects - Seller.
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In
the event that any Title Defect is
not waived by Purchaser or cured on or before Closing, Seller shall, at its
sole
election, elect to:
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(i)
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subject
to the Individual Title Deductible and the Aggregate Title Deductible,
reduce the Purchase Price by an amount agreed upon ("Title Defect
Amount")
pursuant to Section 3.5(e) or 3.5(f) by Purchaser and Seller as being
the
value of such Title Defect, taking into consideration the Allocated
Value
of the Property subject to such Title Defect, the portion of the
Property
subject to such Title Defect and the legal effect of such Title Defect
on
the Property affected thereby; provided, however, that the methodology,
terms and conditions of Section 3.5(f) shall control any such
determination; or
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(ii)
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retain
the entirety of the Property that is subject to such Title Defect,
together with all associated Assets, in which event the Purchase
Price
shall be reduced by an amount equal to the Allocated Value of such
Property;
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(d)
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Section
3.5(c) shall be the exclusive right and remedy of Purchaser with
respect
to Title Defects asserted by Purchaser pursuant to Section
3.5.
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(e)
|
The
Title Defect Amount resulting from a Title Defect shall be the amount
by
which the Allocated Value of the Title Defect Property affected by
such
Title Defect is reduced as a result of the existence of such Title
Defect
and shall be determined in accordance with the following methodology,
terms and conditions:
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(i)
|
if
Purchaser and Seller agree on the Title Defect Amount, that amount
shall
be the Title Defect Amount;
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Page
7 of 19
|
(ii)
|
if
the Title Defect is a lien, encumbrance or other charge which is
undisputed and liquidated in amount, then the Title Defect Amount
shall be
the amount necessary to be paid to remove the Title Defect from the
Title
Defect Property;
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(iii)
|
if
the Title Defect represents an obligation, encumbrance, burden or
charge
upon or other defect in title to the Title Defect Property of a type
not
described in subsections (i) or (ii) above, the Title Defect Amount
shall
be determined by taking into account the Allocated Value of the Title
Defect Property, the portion of the Title Defect Property affected
by the
Title Defect, the legal effect of the Title Defect, the potential
economic
effect of the Title Defect over the life of the Title Defect Property,
the
values placed upon the Title Defect by Purchaser and Seller and such
other
factors as are necessary to make a proper evaluation;
and
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|
(iv)
|
notwithstanding
anything to the contrary in this Article 3, the aggregate Title Defect
Amounts attributable to the effects of all Title Defects upon any
Title
Defect Property shall not exceed the Allocated Value of the Title
Defect
Property.
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|
(f)
|
Seller
and Purchaser shall attempt to agree on all Title Defect Amounts
prior to
Closing. If Seller and Purchaser are unable to agree by
Closing, the Title Defect Amounts in dispute shall be exclusively
and
finally resolved by arbitration pursuant to this Section 3.5(f).
There
shall be a single arbitrator, who shall be a title attorney with
at least
ten (10) years experience in oil and gas titles involving properties
in
the regional area in which the Properties are located, as selected
by
mutual agreement of Purchaser and Seller within fifteen (15) Business
Days
after the end of the Cure Period, and absent such agreement, by the
Houston office of the American Arbitration Association (the “Title
Arbitrator”). The arbitration proceeding shall be held in Houston, Texas
and shall be conducted in accordance with the Commercial Arbitration
Rules
of the American Arbitration Association, to the extent such rules
do not
conflict with the terms of this Section. In making his
determination, the Title Arbitrator shall be bound by the rules set
forth
in Section 3.5(e) and may consider such other matters as in the opinion
of
the Title Arbitrator are necessary or helpful to make a proper
determination. Seller and Purchaser shall each bear its own
legal fees and other costs of presenting its case. Each party shall
bear
one-half of the costs and expenses of the Title Arbitrator, including
any
costs incurred by the Title Arbitrator that are attributable to third
party consultation.
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(g)
|
Notwithstanding
anything to the contrary, (i) in no event shall there be any
adjustments to the Purchase Price or other remedies provided by Seller
for
individual Title Defects that do not exceed $50,000.00 (“Individual Title
Deductible”); and (ii) in no event shall there be any adjustments to
the Purchase Price or other remedies provided by Seller for Title
Defects
unless the amount of all such Title Defects, in the aggregate, excluding
any Title Defects cured by Seller, exceeds a deductible in an amount
equal
to ten percent (10%) of the value attributed to the leases in
Exhibit A (“Aggregate Title Deductible”), after which
point Purchaser shall be entitled to adjustments to the Purchase
Price or
other remedies only with respect to Title Defects in excess of such
Aggregate Title Deductible.
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Section
3.6.Preference Rights and Transfer Requirements.
|
(a)
|
Purchaser’s
purchase of the Assets is expressly subject to all validly existing
and
applicable Preference Rights and Transfer
Requirements. “Preference Right” means any right or agreement
that enables any person or entity to purchase or acquire any Asset
or any
interest therein or portion thereof as a result of or in connection
with
the sale, assignment or other transfer of any Asset or any interest
therein or portion thereof as contemplated in this
document. “Transfer Requirement” means any consent, approval,
authorization or permit of, or filing with or notification to, any
person
which is required to be obtained, made or complied with for or in
connection with any sale, assignment or transfer of any Asset or
any
interest therein, other than any consent of, notice to, filing with,
or
other action by governmental bodies in connection with the sale or
conveyance of oil and/or gas leases or interests therein or Surface
Contracts or interests therein, if they are not required prior to
the
assignment of such oil and/or gas leases, Surface Contracts or interests
or they are customarily obtained subsequent to the sale or conveyance
(including consents from state agencies). To the knowledge of the
officers
of Seller, none of the Assets, or any portion thereof, is subject
to any
Preference Right or Transfer Requirement which may be applicable
to the
acquisition contemplated by this Agreement, except for (i) Preference
Rights and Transfer Requirements contained in easements, rights-of-way
or
equipment leases and (ii) Preference Rights and Transfer Requirements
as
are set forth on Exhibit E. Within 10 Business
Days of execution of this Agreement, Seller shall initiate all procedures
which in Seller’s good faith judgment are reasonably required to comply
with or obtain the waiver of all Preference Rights and Transfer
Requirements set forth in Exhibit E with respect to the
acquisition contemplated by this Agreement. Seller shall not be
obligated to pay any consideration to (or incur any cost or expense
for
the benefit of) the holder of any Preference Right or Transfer Requirement
in order to obtain the waiver thereof or compliance
therewith.
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Page
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(b)
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The
portion of the Purchase Price to be allocated to any Asset or portion
thereof affected by a Preference Right (a “Preference Property”) shall be
the Allocated Value for the Property set forth in Exhibits A or B
(as appropriate). If a Preference Property affects
only a portion of a Property and a portion of the Purchase Price
has not
been allocated specifically to such portion of a Property in
Exhibits A or B (as appropriate), then the portion of the
Purchase Price to be allocated to such Preference Property shall
be
determined in a reasonable manner taking into account the net acreage
(or
net acre feet, as appropriate) that the portion of such Property
affected
by such Preference Property bears to the net acreage (or net acre
feet, as
appropriate) in the entire Property. Any Preference Property
that is a Property shall include a pro rata share of all of Seller’s
right, title and interest in, to and under all Contracts, Surface
Contracts, Equipment, hydrocarbon production and Records included
in the
Assets that are directly related or attributable to such Preference
Property.
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(c)
|
If
the holder of a Preference Right who has been offered a Preference
Property pursuant to Section 3.6(a) elects prior to Closing to purchase
such Preference Property in accordance with the terms of such Preference
Right, and Seller and Purchaser receive written notice of such election
prior to the Closing, such Preference Property will be eliminated
from the
Assets and the Purchase Price shall be reduced by the portion of
the
Allocated Value of the Preference Property pursuant to Section
3.6(b). If the holder of a Preference Right who has been
offered a Preference Property or who has been requested to waive
its
Preference Right pursuant to Section 3.6(a) does not elect to purchase
such Preference Property or waive such Preference Right with respect
to
the acquisitions contemplated by this Agreement prior to the Closing
and
the time in which the Preference Right may be exercised has not expired,
such Preference Property shall be conveyed to Purchaser at Closing
subject
to the rights, if any, of the holder of such Preference
Right. In such event, Seller shall continue its efforts to
obtain the waiver of such Preference Rights to the extent provided
in
Section 3.6(a) and Purchaser shall cooperate with such
efforts. If the holder of a Preference Right elects to purchase
a Preference Property subject to its Preference Right and Closing
has
already occurred with respect to such Preference Property, Purchaser
shall
be obligated to comply with such Preference Right to the extent,
if any,
that the same remains valid and enforceable with respect to this
acquisition and Purchaser shall be entitled to the consideration
for the
sale of such Preference Property from Purchaser to such Preference
Right
holder. If a Transfer Requirement that has been requested prior
to Closing has not been granted prior to Closing and the time in
which to
respond has not expired (to the extent there is a time period to
respond),
Purchaser shall have the option to: (i) delay the Closing until such
Transfer Requirement has been satisfied, or (ii) proceed to Closing,
but
with an Adjustment to the Purchase Price by the Allocated Value of
the
Transfer Requirement Property. If Purchaser selects option (ii)
in the previous sentence, Seller shall continue commercial reasonable
best
efforts to obtain the consent from the Transfer Requirement holder
within
a reasonable period of time after Closing. If such consent is
obtained within a reasonable time after Closing, Seller shall convey
such
property to Purchaser and the Purchaser shall pay the amount of the
corresponding Purchase Price Adjustment to
Seller.
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|
(d)
|
Purchaser
acknowledges that Seller desires to sell all of the Assets and would
not
have entered into this Agreement but for Purchaser’s agreement to purchase
all of the Assets as herein provided. Accordingly, it is
expressly understood and agreed that Seller does not desire to sell
any
Preference Property unless the sale of all of the Assets is consummated
by
the Closing in accordance with the terms of this Agreement. In
furtherance of the foregoing, Seller’s obligation hereunder to sell the
Preference Properties to Purchaser is expressly conditioned upon
the
consummation by the Closing of the sale of all of the Assets in accordance
with the terms of this Agreement, either by conveyance to Purchaser
or
conveyance pursuant to an applicable Preference Right; provided that,
nothing herein is intended or shall operate to extend or apply any
Preference Right to any portion of the Assets which is not otherwise
burdened thereby. Time is of the essence with respect to the
parties’ agreement to consummate the sale of the Assets by the
Closing.
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Page
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ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF SELLER
Section
4.1 Generally.
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(a)
|
Any
representation “to the knowledge of Seller” or “to Seller’s knowledge” or
“to the knowledge of Purchaser” or “to Purchaser’s knowledge” is limited
to matters within the actual knowledge of (i) the respective land,
legal,
accounting and health, safety and environmental managers of Seller
or
Purchaser and (ii) the general manager responsible for the operations
as
the case may be.
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(b)
|
Subject
to the foregoing provisions of this Section 4.1, the disclaimers
and
waivers contained in Sections 6.4 and 6.5 and the other terms and
conditions of this Agreement, Seller represents and warrants to Purchaser
the matters set out in Sections 4.2 through 4.8. The
representations and warranties of Seller set forth herein shall terminate
upon Closing.
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Section
4.2 Existence and
Qualification.
Seller
is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and is duly qualified to do business as a foreign
corporation where the Assets are located, except where the failure to
so qualify would not have a material adverse effect.
Section
4.3 Power.
Seller
has the corporate power to enter into and perform this Agreement and consummate
the transactions contemplated by this Agreement.
Section
4.4 Authorization and Enforceability.
The
execution, delivery and performance of this Agreement, and the performance
of
the transactions contemplated hereby, have been duly and validly authorized
by
all necessary corporate action on the part of Seller. This Agreement has been
duly executed and delivered by Seller (and all documents required hereunder
to
be executed and delivered by Seller at Closing will be duly executed and
delivered by Seller) and this Agreement constitutes, and at the Closing such
documents will constitute, the valid and binding obligations of Seller,
enforceable in accordance with their terms except as such enforceability may
be
limited by applicable bankruptcy or other similar laws affecting the rights
and
remedies of creditors generally as well as to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Page
10 of 19
Section
4.5 No Conflicts.
The
execution, delivery and performance of this Agreement by Seller, and the
transactions contemplated by this Agreement will not (i) violate any provision
of the certificate of incorporation or bylaws of Seller, (ii) result in default
(with due notice or lapse of time or both) or the creation of any lien or
encumbrance or give rise to any right of termination, cancellation or
acceleration under any of the terms, conditions or provisions of any note,
bond,
mortgage, indenture, license or agreement to which Seller is a party or which
affect the Assets, (iii) violate any judgment, order, ruling, or decree
applicable to Seller as a party in interest, (iv) violate any laws applicable
to
Seller or any of the Assets, except for rights to consent by, required notices
to, and filings with or other actions by governmental bodies where the same
are
not required prior to the assignment of oil and gas interests, or (v) require
any filing with, notification of or consent, approval or authorization of any
governmental body except any matters described in clauses (ii), (iii) or (iv)
above which would not have a material adverse effect.
Section
4.6 Condemnation.
To
Seller’s knowledge, there is no actual or threatened taking (whether permanent,
temporary, whole or partial) of any part of the Properties by reason of
condemnation or the threat of condemnation.
Section
4.7
Bankruptcy.
There
are
no bankruptcy, reorganization, or similar arrangement proceedings pending,
being
contemplated by or, to Seller’s knowledge, threatened against Seller or any
Affiliate.
Section
4.8 Investment Company.
Seller
is
not (a) an investment company or a company controlled by an investment company
within the meaning of the Investment Company Act of 1940, as amended or (b)
subject in any respect to the provisions of said act.
The
representations and warranties of Seller set forth herein shall terminate upon
Closing.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
Purchaser
represents and warrants to Seller the following:
Section
5.1 Existence and Qualification.
Purchaser
is a limited liability company organized, validly existing and in good standing
under the laws of the state of its formation; and Purchaser is duly qualified
to
do business as a foreign entity in every jurisdiction in which it is required
to
qualify in order to conduct its business except where the failure to so qualify
would not have a material adverse effect on Purchaser or its properties; and
Purchaser is duly qualified to do business as a foreign corporation in the
respective jurisdictions where the Assets to be transferred to it are
located.
Section
5.2 Power.
Purchaser
has the company power to enter into and perform this Agreement and consummate
the transactions contemplated by this Agreement.
Section
5.3 Authorization and Enforceability.
The
execution, delivery and performance of this Agreement, and the performance
of
the transaction contemplated hereby, have been duly and validly authorized
by
all necessary company action on the part of Purchaser. This Agreement has been
duly executed and delivered by Purchaser (and all documents required hereunder
to be executed and delivered by Purchaser at Closing will be duly executed
and
delivered by Purchaser) and this Agreement constitutes, and at the Closing
such
documents will constitute, the valid and binding obligations of Purchaser,
enforceable in accordance with their terms except as such enforceability may
be
limited by applicable bankruptcy or other similar laws affecting the rights
and
remedies of creditors generally as well as to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
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Section
5.4 No Conflicts.
The
execution, delivery and performance of this Agreement by Purchaser, and
the transactions contemplated by this Agreement will not (i) violate
any provision of the certificate of incorporation or bylaws of
Purchaser, (ii) result in a material default (with due notice or lapse of time
or both) or the creation of any lien or encumbrance or give rise to any right
of
termination, cancellation or acceleration under any of the terms, conditions
or
provisions of any note, bond, mortgage, indenture, license or agreement to
which
Purchaser is a party, (iii) violate any judgment, order, ruling, or regulation
applicable to Purchaser as a party in interest, or (iv) violate any law, rule
or
decree applicable to Purchaser or any of its assets, or (v) require any filing
with, notification of or consent, approval or authorization of any governmental
body or authority, except any matters described in clauses (ii), (iii), (iv)
or
(v) above which would not have a material adverse effect on
Purchaser.
Section
5.5 Financing.
Purchaser
has sufficient cash, available lines of credit or other sources of immediately
available funds (in United States dollars) to enable it to pay the Closing
Payment to Seller at the Closing.
Section
5.6 Performance Assurances.
Purchaser
has the authority and ability to provide financial and performance assurances
to
Seller to enable Purchaser to meet the obligations contained in this
Agreement.
Section
5.7 SEC Disclosure.
Purchaser
is acquiring the Assets for its own account for use in its trade or business,
and not with a view toward or for sale associated with any distribution thereof,
nor with any present intention of making a distribution thereof within the
meaning of the Securities Act of 1933, as amended and applicable state
securities laws.
Section
5.8 Bankruptcy.
There
are
no bankruptcy, reorganization or receivership proceedings pending against,
or,
to Purchasers knowledge being contemplated by, or threatened against
Purchaser.
The
representations and warranties of Purchaser set forth herein shall terminate
upon Closing.
ARTICLE
VI
POST-CLOSING
OBLIGATIONS; INDEMNIFICATION; RELEASE; DISCLAIMERS; AND
WAIVERS
Section
6.1 Obligations.
Effective
as of the Closing Date, Purchaser shall assume and hereby agrees to fulfill,
perform, pay and discharge (or cause to be fulfilled, performed, paid or
discharged) all of the obligations and liabilities of Seller, known or unknown,
with respect to the Assets, regardless of whether such obligations or
liabilities arose prior to, on or after the Effective Date, including but not
limited to obligations to (i) furnish makeup gas according to the terms of
applicable gas sales, gathering or transportation contracts, and to satisfy
all
other gas balancing obligations, if any, (ii) pay working interests, royalties,
overriding royalties and other interests held in suspense, (iii) properly plug
and abandon any and all xxxxx, including inactive xxxxx or temporarily abandoned
xxxxx, drilled on the Properties or otherwise pursuant to the Assets, (iv)
replug any well, wellbore, or previously plugged well on the Properties to
the
extent required by governmental body, (v) dismantle, salvage and remove any
equipment, structures, materials, platforms, flowlines, and property of whatever
kind related to or associated with operations and activities conducted on the
Properties or otherwise pursuant to the Assets, (vi) clean up, restore and/or
remediate the premises covered by or related to the Assets in accordance with
applicable agreements and laws, and (vii) perform all obligations applicable
to
or imposed on the lessee, owner, or operator under the Leasehold Interests
and
related contracts, or as required by applicable laws (all of said obligations
and liabilities, subject to the exclusions below); provided, however, that
Purchaser does not accrue any rights or assume any obligations or liabilities
of
Seller to the extent that they are attributable to or arise out of the Excluded
Assets; provided further, that this Section shall not affect Seller’s
responsibility under Section 1.3(b) for Property Costs incurred prior to the
Effective date or Seller’s responsibility to make purchase price adjustments, if
any, in accordance Section 2.4.
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Section
6.2 Indemnities.
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(a)
|
PURCHASER
FURTHER AGREES TO DEFEND (INCLUDING BUT NOT LIMITED TO PAYMENT OF
REASONABLE ATTORNEYS’ FEES AND COSTS OF LITIGATION), INDEMNIFY AND HOLD
HARMLESS Seller from and against any and all demands, damages, debts,
liabilities, lawsuits, fines, penalties, liens, encumbrances, judgments,
interest, causes of action or claims for relief of any kind or character,
known or unknown, at law or in equity, in contract, in tort, under
statute, or otherwise, (including but not limited to those for property
damage, personal injury, mental or emotional distress, medical monitoring,
or death [including loss of parental or spousal consortium and wrongful
death]), which any entity or individual ever had or now has or may
in the
future have against Seller (collectively “Claims”) in any way connected
with, arising out of, or related in any manner to the Assets to the
extent
such Claims arise after the Effective Date, including but not limited
to:
(i) the failure, or alleged failure, to properly drill, complete,
operate
and plug and abandon any wellbores, production related equipment
and/or
complete any cleanup, reclamation or restoration of the surface and
wellsite(s) as may be required; (ii) the ownership, use or operation
of
the Assets, (iii) the potential presence of NORM, asbestos and any
other
environmental contaminants or pollutants which may be in, on, under
or
near the Assetsincluding releases of materials into the
environment or any other environmental condition arising from the
Assets,;
and (iv) the personal injury, death or property damage of third parties,
Purchaser’s employees, its contractors and subcontractors and their
employees, or any of their invitees; REGARDLESS OF WHETHER
CAUSED BY THE SOLE OR CONCURRENT NEGLIGENCE, FAULT, OMISSION, OR
STRICT OR
STATUTORY LIABILITY OF SELLER, AND WHETHER CAUSED BY A PRE-EXISTING
CONDITION, and regardless of whether the law, rule, or judgment related
to
the Claim is in existence on the Effective Date, but excluding any
Claims
arising out of Seller’s own gross negligence or willful
misconduct.
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|
(b)
|
SELLER
AGREES TO DEFEND (INCLUDING BUT NOT LIMITED TO PAYMENT OF REASONABLE
ATTORNEYS’ FEES AND COSTS OF LITIGATION), INDEMNIFY AND HOLD HARMLESS
Purchaser from and against any and all Claims in any way connected
with,
arising out of, or related in any manner to the Assets, or the ownership,
use or operation thereof, to the extent such Claims arise before
the
Effective Date or relate to the Excluded Assets (arising at any time);
REGARDLESS OF WHETHER CAUSED BY THE SOLE OR CONCURRENT NEGLIGENCE,
FAULT,
OMISSION, OR STRICT OR STATUTORY LIABILITY OF PURCHASER, AND WHETHER
CAUSED BY A PRE-EXISTING CONDITION, and regardless of whether the
law,
rule, or judgment related to the Claim is in existence on the Effective
Date, but excluding any Claims arising out of Purchaser’s own gross
negligence or willful
misconduct.
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Page
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Section
6.3 Release.
PURCHASER
HEREBY AGREES TO RELEASE, ACQUIT AND FOREVER DISCHARGE SELLER from any and
all
Claims, in any way connected with, arising out of, or related in any manner
to
(i) the Assets or (ii) any actions taken by or omitted to be taken by Seller
on,
under, near, or connected to the Assets or regarding the operations thereof,
but
excluding any Claims in connection with, arising out of, or related in any
manner to (i) the Excluded Assets, (ii) Property Costs incurred prior to the
Effective Date, or (iii) Seller’s responsibility to make purchase price
adjustments, if any, in accordance Section 2.4.
The
foregoing release shall include, without limitation, any and all Claims relating
to or arising out of any alleged contamination, whether of land, soil, subsoil,
ambient air, surface water, and/or groundwater, watercourses, wetlands, publicly
owned treatment works, drains, sewer systems or septic systems on or under
or
near the Assets. PURCHASER COVENANTS AND AGREES THAT IT WILL NOT ATTEMPT
TO AVOID THE EFFECT OF THIS RELEASE BY LATER ARGUING THAT AT THE TIME OF THE
RELEASE IT DID NOT FULLY APPRECIATE THE EXTENT OF CONTAMINATION, IF ANY, ON
THE
ASSETS.
Section
6.4 Disclaimers.
|
(a)
|
EXCEPT
AS AND TO THE EXTENT EXPRESSLY SET FORTH HEREIN OR IN THE CONVEYANCE
INSTRUMENTS TO BE DELIVERED BY SELLER TO PURCHASER HEREUNDER, (I)
SELLER
MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS, STATUTORY OR IMPLIED,
AND
(II) SELLER EXPRESSLY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY
FOR ANY
REPRESENTATION, WARRANTY, STATEMENT OR INFORMATION MADE OR COMMUNICATED
(ORALLY OR IN WRITING) TO PURCHASER OR ANY OF ITS AFFILIATES, EMPLOYEES,
AGENTS, CONSULTANTS OR
REPRESENTATIVES.
|
|
(b)
|
EXCEPT
AS EXPRESSLY REPRESENTED OTHERWISE HEREIN OR IN THE CONVEYANCE INSTRUMENTS
TO BE DELIVERED BY SELLER TO PURCHASER HEREUNDER, AND WITHOUT LIMITING
THE
GENERALITY OF THE FOREGOING, SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION
OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, AS TO (I) TITLE TO ANY
OF THE
ASSETS, (II) THE QUANTITY, QUALITY OR RECOVERABILITY OF
PETROLEUM SUBSTANCES IN OR FROM THE ASSETS, (III) ANY ESTIMATES OF
THE
VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE ASSETS, (IV)
THE
PRODUCTION OF HYDROCARBONS FROM THE ASSETS, (V) THE MAINTENANCE,
REPAIR,
CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS,
(VI) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE
OR COMMUNICATED TO PURCHASER OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES,
AGENTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR
PRESENTATION RELATING THERETO, AND FURTHER DISCLAIMS ANY REPRESENTATION
OR
WARRANTY, EXPRESS, STATUTORY OR IMPLIED, OF FREEDOM FROM PATENT OR
TRADEMARK INFRINGEMENT, MERCHANTABILITY, FREEDOM FROM REDHIBITORY
VICES OR
DEFECTS (INCLUDING THOSE CONTEMPLATED IN LOUISIANA CIVIL CODE ARTICLES
2475, AND 2520 THROUGH 2548), FITNESS FOR A PARTICULAR PURPOSE OR
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY EQUIPMENT IT
BEING
EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT PURCHASER
SHALL
BE DEEMED TO BE OBTAINING THE ASSETS IN THEIR PRESENT STATUS, CONDITION
AND STATE OF REPAIR, “AS IS” AND “WHERE IS” WITH ALL FAULTS AND THAT
PURCHASER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS
PURCHASER DEEMS
APPROPRIATE.
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Page
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|
(c)
|
SELLER
HAS NOT AND WILL NOT MAKE ANY REPRESENTATION OR WARRANTY REGARDING
ANY
MATTER OR CIRCUMSTANCE RELATING TO ENVIRONMENTAL LAWS, ENVIRONMENTAL
LIABILITIES, THE RELEASE OF MATERIALS INTO THE ENVIRONMENT OR THE
PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL RESOURCES OR THE ENVIRONMENT,
OR ANY OTHER ENVIRONMENTAL CONDITION OF THE ASSETS, AND NOTHING IN
THIS
AGREEMENT OR OTHERWISE SHALL BE CONSTRUED AS SUCH A REPRESENTATION
OR
WARRANTY, AND PURCHASER SHALL BE DEEMED TO BE TAKING THE ASSETS “AS IS”
AND “WHERE IS” FOR PURPOSES OF THEIR ENVIRONMENTAL
CONDITION.
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Section
6.5 Waivers.
Section
6.5.1 Waiver of Trade Practices Acts.
|
(a)
|
It
is the intention of the parties that Purchaser's rights and remedies
with
respect to this transaction and with respect to all acts or practices
of
Seller, past, present or future, in connection with this transaction
shall
be governed by legal principles other than the Texas Deceptive Trade
Practices--Consumer Protection Act, Tex. Bus. & Com. Code Xxx.
§ 17.41 et seq. (the "DTPA") or the Louisiana unfair trade
practices and consumer protection law, La. R.S. 51:1402, et seq.
(the “UTPCPL”). As such, Purchaser hereby waives the
applicability of the DTPA and the UTPCPL to this transaction and
any and
all duties, rights or remedies that might be imposed by the DTPA
and/or
the UTPCPL, whether such duties, rights and remedies are applied
directly
by the DTPA or the UTPCPL itself or indirectly in connection with
other
statutes; provided, however, Purchaser does not waive
§ 17.555 of the DTPA. Purchaser acknowledges, represents
and warrants that it is purchasing the goods and/or services covered
by
this Agreement for commercial or business use;; that it has knowledge
and
experience in financial and business matters that enable it to evaluate
the merits and risks of a transaction such as this; and that it is
not in
a significantly disparate bargaining position with
Seller.
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(b)
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Purchaser
expressly recognizes that the price for which Seller has agreed to
perform
its obligations under this Agreement has been predicated upon the
inapplicability of the DTPA and the UTPCPL and this waiver of the
DTPA and
the UTPCPL. Purchaser further recognizes that Seller, in
determining to proceed with the entering into of this Agreement,
has
expressly relied on this waiver and the inapplicability of the DTPA
and
the UTPCPL.
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Section
6.5.2 Redhibition Waiver.
Purchaser
waives all rights in redhibition pursuant to Louisiana Civil Code Articles
2475
and 2520 through 2548, and acknowledges that this express waiver shall be
considered a material and integral part of this sale and the consideration
thereof. Purchaser acknowledges that this waiver has been brought to
its attention and has been explained in detail and that Purchaser has
voluntarily and knowingly consented to this waiver of warranty of fitness and
warranty against redhibitory vices and defects for the Assets.
Section
6.5.3 UTPCPL Waiver.
To
the
extent applicable to the Properties or any portion thereof, Purchaser hereby
waives the provisions of the Louisiana unfair trade practices and consumer
protection law (La. R.S. 51:1402, et seq.). Purchaser warrants and
represents that it: (i) is experienced and
knowledgeable with respect to the oil and gas industry generally and
with transactions of this type specifically;(ii) possesses ample knowledge,
experience and expertise to evaluate independently the merits and risks of
the
transactions herein contemplated; and (iii) is not in a significantly disparate
bargaining position.
Page
15 of 19
ARTICLE
VII
CLOSING
Section
7.1. Time and Place of Closing
Unless
otherwise agreed to in writing by Seller and Purchaser, consummation of the
acquisition contemplated by this Agreement (the “Closing”) shall take place at
the offices of Seller located at 0000 Xxxx Xxxxxxx Xxxxx, Xxx Xxxxxxxxx, Xxxxx,
at 10:00 a.m., central standard time, on September 12, 2007 (the “Closing Date”)
or if all conditions to Closing have not yet been satisfied or waived, as soon
thereafter as such conditions have been satisfied or waived, subject to the
rights of the parties under Section 7.2; provided, however that neither
Purchaser nor Seller shall be under any obligation to close the
acquisition contemplated herein if the adjustment to the Purchase Price on
account of the sum of (i) all Title Defect Amounts for Title Defects determined
under Section 3.5(e) prior to the Closing, (ii) all outstanding Preference
Rights under Section 3.6(c), and (iii) the value of any casualty losses on
the
Assets incurred between the Effective Date and the Closing Date, is greater
than
ten percent (10%) of the unadjusted Purchase Price.
Section
7.2. Failure to Close.
The
acquisition must close no later than September 28, 2007, subject to Section
7.1,
unless the parties mutually agree to an extension of such
date. Failure to close the acquisition on or before September 28,
2007 will result in the termination of this Agreement, at which time neither
Purchase nor Seller shall have any further obligations or liability to one
another or any other third party under this Agreement.
Section
7.3. Actions to be Taken at Closing.
At
the
Closing, (i) Purchaser will wire transfer the Closing Payment to Seller; and
(ii) both parties will execute the following documents, after adjusting the
exhibits attached thereto to reflect any Assets excluded from the acquisition
in
accordance with Sections 3.5(c) (ii) and 3.6(c), in sufficient duplicate
originals to allow for recording in all jurisdictions and offices: the
Assignment and Xxxx of Sale (“Assignments”) attached hereto as Exhibits
F,
Section
7.4 Effect of Termination.
If
this
Agreement is terminated, this Agreement shall become void and of no further
force or effect (except for the provisions of Sections 6.4, 6.5, 8.7, 8.8,
8.9
and 8.10 of this Agreement all of which shall continue in full force and effect)
and Seller shall be free immediately to enjoy all rights of ownership of the
Assets and to sell, transfer, encumber or otherwise dispose of the Assets to
any
party without any restriction under this Agreement.
ARTICLE
VIII
OTHER
PROVISIONS
Section
8.1. Delivery of Records.
Following
Closing, but in no event later than thirty (30) Business Days following Closing,
Seller, at Seller’s cost, shall deliver the Records to Purchaser.
Section
8.2. Recording and Filing of Assignments.
As
soon
as practicable after Closing, Purchaser shall (i) record the Assignments in
the
appropriate counties, and (ii) all other assignment documents and other state
and federal transfer documents required to effectuate the transfer of the
Assets. Purchaser further agrees promptly after Closing to take all
other actions reasonably required of it by federal or state agencies having
jurisdiction to obtain all requisite regulatory approvals with respect to this
acquisition, and to use its reasonable commercial efforts to obtain the approval
by such federal or state agencies, as applicable, of Seller’s assignment
documents requiring federal or state approval in order for Purchaser to be
recognized by the federal or state agencies as the owner of the
Assets. As soon as they are available, Purchaser shall promptly
provide Seller with recorded copies of the Assignments and other state and
federal transfer documents.
Page
16 of 19
Section
8.3. Assignment.
No
party
shall assign all or any part of this Agreement, nor shall any party assign
or
delegate any of its rights or duties hereunder, without the prior written
consent of the other party and any assignment or delegation made without such
consent shall be void. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
Section
8.4. Amendment.
This
Agreement may be amended or modified only by an agreement in writing executed
by
both parties. No waiver of any right under this Agreement shall be
binding unless executed in writing by the party to be bound
thereby.
Section
8.5 Further Assurances.
After
Closing, Seller and Purchaser each agrees to take such further actions and
to
execute, acknowledge and deliver all such further documents as are reasonably
requested by the other party for carrying out the purposes of this Agreement
or
of any document delivered pursuant to this Agreement.
Section
8.6 Governing Law and Venue.
This
Agreement and the legal relations between the parties shall be governed by
and
construed in accordance with the laws of the State of Texas without regard
to
principles of conflicts of laws otherwise applicable to such
determinations.
Section
8.7 No Third-Party
Beneficiaries.
Nothing
in this Agreement shall entitle any person other than Purchaser and Seller
to
any Claims, remedy or right of any kind.
Section
8.8 Limitation on Damages.
Notwithstanding
any other provision contained elsewhere in this Agreement to the contrary,
the
parties acknowledge that this Agreement does not authorize one party to xxx
for
or collect from the other party its own punitive damages, or its own
consequential or indirect damages in connection with this Agreement and the
transactions contemplated hereby and each party expressly waives for itself
and
on behalf of its affiliates, any and all Claims it may have against the other
party for its own such damages in connection with this Agreement and the
transactions contemplated hereby.
Section
8.9 Not to be Construed Against Drafter.
Each
party has had an adequate opportunity to review each and every provision of
this
Agreement and to submit the same to legal counsel for review and
advice. Based on the foregoing, the rule of construction, if any,
that a contract be construed against the drafter shall not apply to
interpretation or construction of this Agreement.
Section
8.10 No Partnership.
This
Agreement shall not be construed to create a partnership, principal/agency
relationship or other relationship among the parties comprising the Purchaser
such that one party would be liable for the actions or omissions of another
party. The obligations under this Agreement of the parties comprising
the Purchaser shall be several and not joint or collective.
Section
8.11 Operation of the Assets
The
parties agree to enter into a Transition Agreeement substantially in the form
attached as Exhibit G.
Page
17 of 19
IN
WITNESS WHEREOF, this Agreement has been signed by each of the parties hereto
on
the date first above written.
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SELLER:
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PURCHASER:
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ANADARKO
PETROLEUM CORPORATION
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IGNIS
LOUISIANA SALT BASIN, LLC
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/s/
Xxxxx X. Xxxxxxx
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/s/
Xxxxxxx X. Xxxxxx
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|||
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By:
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Xxxxx
X. Xxxxxxx
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By:
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Xxxxxxx
X. Xxxxxx
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Title:
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Agent
and Attorney-in-Fact
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Title:
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President
and CEO
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Page
18 of 19
EXHIBITS
AND SCHEDULES
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EXHIBIT
A
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LEASEHOLD
INTERESTS
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EXHIBIT
B
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XXXXX
AND UNITS
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EXHIBIT
C
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CONTRACTS
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EXHIBIT
D
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SURFACE
AGREEMENTS
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EXHIBIT
E
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PREFERENCE
RIGHTS AND TRANSFER REQUIREMENTS
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EXHIBIT
F
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ASSIGNMENTS
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EXHIBIT
G
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Transition
Agreement
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Page
19 of
19
