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EXHIBIT 10.22
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (the "Agreement") dated as of the 22nd day
of October, 1997, is between COMETRA ENERGY, L.P., a Texas limited partnership
the sole general partner of which is Aveneg, Inc., a Delaware corporation
("Seller"), and PIONEER NATURAL RESOURCES USA, INC., a Delaware corporation
("Buyer").
In consideration of the mutual promises contained herein, the benefits to
be derived by each party hereunder and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer
agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01 - PURCHASE AND SALE. Subject to the terms and conditions of the
Agreement, Seller agrees to sell and convey and Buyer agrees to purchase and pay
for the following described assets (hereinafter referred to as the "Assets"):
(a) The interests in and to the oil and gas properties (the
"Producing Properties") described as follows:
(1) all of Seller's and all of any Affiliate's right, title and
interest in and to the oil and gas leases, and oil, gas and
mineral leases described in Exhibit "A" hereto (the
"Producing Leases");
(2) all of Seller's and all of any Affiliate's rights in respect
of any pooled or unitized acreage located in whole or in
part on lands covered by or pooled or unitized with the
Producing Leases or the Other Leases as described below,
including rights to production from the pool or unit
allocated to any Producing Lease being a part thereof;
(3) all rights, options, titles, and interests of Seller or any
Affiliate granting Seller or any Affiliate the right to
obtain, or otherwise earn interests in or to any portion of
the Producing Properties, the Option Leases or the Added
Interests no matter how earned;
(4) all of Seller's and all of any Affiliate's tenements,
hereditaments, and appurtenances belonging to any of the
foregoing;
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(5) all of the right, title and interest of Seller or any
Affiliate in and to the real, personal and mixed property
used in the operation of the Assets, whether located on or
off the premises covered by any of the Assets (the
"Equipment") including, but not limited to (A) all wellhead
equipment, fixtures (including, but not limited to, field
separators and liquid extractors), pipe, casing, and tubing
in, on or appurtenant to the xxxxx ("Xxxxx") described on
Exhibit "B" attached hereto and made a part hereof; (B) all
production, gathering, treating, processing, compression,
dehydration, salt water disposal, injection, gathering line
and pipeline equipment and facilities; (C) all flow lines,
powerlines, and poles; and (D) all tanks, machines,
equipment, radio-controlled instruments, tools, dies,
vessels and other facilities;
(a) All of Seller's and all of any Affiliate's right, title and
interest in and to the oil and gas leases, oil, gas and mineral
leases, rights or options to acquire or own an interest in any
oil and gas lease, and any other oil and gas properties (the
"Other Leases") described on Exhibit "C" hereto and all lands
covered thereby;
(b) All of Seller's and all of any Affiliate's right, title and
interest under the contracts, agreements, easements, surface
rights and other instruments described on Exhibit "D" attached
hereto and made a part hereof together with all of Seller's and
all of any Affiliate's right, title and interest under any
surface leases, rights of way, farmin agreements, farmout
agreements, exploration agreements, bottom hole agreements,
acreage contribution agreements, operating agreements, unit
agreements, processing agreements, options, leases of equipment
or facilities, governmental permits and licenses and other
contracts, agreements, licenses, permits and rights that are
owned by Seller or any Affiliate in whole or in part, which are
not described on Exhibit "D" hereto, and that are appurtenant to
the Assets or used or held for use in connection with the
ownership or operation of the Assets or with the production,
treatment, sale, or disposal of water, hydrocarbons and
associated substances therefrom or thereon (in the aggregate the
"Contracts");
(c) Subject to the provisions of Section 8.06 hereof, all of the
files, records, documents, correspondence and data, including
Seller's or any Affiliate's proprietary 3D Seismic Data which
covers in whole or in part the areas shown on Exhibit "K" hereto,
and any other seismic data or information covering any of the
Assets to the extent Seller's or any Affiliate's transfer of same
is not prohibited or restricted by any obligation of
confidentiality or licensing agreement prohibiting such transfer,
now in the possession or control of Seller or any Affiliate that
relates to the
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items described in sub-paragraphs (a), (b) or (c) above, without
limitation, including, but not limited to, those items described
in Section 4.01(a)(1-11) below (the "Records");
(d) All production facilities, casing, tubing, wellheads, packers,
battery equipment, tanks, valves and any other equipment in
inventory that relates to and is used or held for use in
connection with the Assets, with said inventory covering at least
those items identified on Exhibit "E";
(e) Except for any assets excluded under Section 1.02 below, all
warranties, covenants, indemnities and representations from third
parties, claims, rights and causes of action against third
parties, asserted and unasserted, known and unknown, of or
pertaining to the Assets;
(f) All of Seller's and all of any Affiliate's right, title and
interest in oil, gas, mineral and other hydrocarbon substances
produced from the Producing Leases, Other Leases and Added
Interests on or after the Effective Time;
(g) Two seismic work stations, and the related Geoquest software;
(h) All privileges, benefits, and powers conferred upon the holder of
the Producing Leases, Other Leases and the Added Interests with
respect to the use or occupation of the surface of the lands
covered by the Assets or any lands adjacent thereto; and
(i) To the extent applicable to a Producing Lease, Prospect Tract, or
Anomaly Area, and except to the extent excluded under Section
1.02 below, all of Seller's and all of any Affiliate's right,
title and interest in and to any of the properties, assets and
interests that are similar in nature to or description of those
described or referred to in the previous provisions of this
Section 1.01, whether real, personal or mixed property, located
in Anderson, Freestone, Xxxxxxxxx or Xxxx Counties, Texas, and
all right, title and interest of Seller or any Affiliate in and
to any oil and gas lease, option, overriding royalty interest,
mineral fee, royalty interest, surface estate or other interest
in real property covering any lands or interests located in
Anderson, Freestone, Xxxxxxxxx or Xxxx Counties, Texas, and all
personal and mixed property located on or used in connection
therewith, regardless of whether any of such lands or interests
are described or referred to in the previous provisions of this
Section 1.01 or on Exhibits "X," "X," "C" or "D" attached hereto
(the "Added Interests").
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As used in this Agreement, the term "Affiliate" shall mean any corporation,
limited liability company, association, partnership or person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with Seller.
1.02 - EXCLUDED ASSETS. There is hereby excluded from the Assets and
retained by Seller the following described property:
(a) Vehicles used by Seller in the operation of the Assets;
(b) All of Seller's right, title and interest in those xxxxx and
leases described in Exhibit "F" attached hereto; and
(c) All claims for severance tax refunds for a period prior to the
Effective Time and, for a period of two years from the Closing
Date, all other claims, rights, and causes of action against
third parties of or pertaining to the Assets that relate to the
period prior to the Effective Time for which an adjustment to the
Purchase Price has not been made under Section 2.02(a)(1-10);
provided, however, that Seller shall not retain any claims,
demands or causes of actions relating to a period prior to the
Closing Date that relates to any confidentiality agreements
(express or implied), non-competition agreements (express or
implied) or claims of unlawful trade practices or improper or
unauthorized use of trade secrets, confidential information, or
proprietary data, or the misappropriation thereof, of Seller or
of any Affiliate against third parties, including present or
former officers, employees, agents or contractors of Seller or
any Affiliate, that affect the Assets or Seller's, Buyer's or any
Affiliate's interest in the Assets.
1.03 - EFFECTIVE TIME. The purchase and sale of the Assets shall be
effective as of 11:59 p.m. Central Standard Time on September 30, 1997 (herein
called the "Effective Time").
ARTICLE II
PURCHASE PRICE
2.01 - PURCHASE PRICE. The purchase price (the "Purchase Price") payable by
Buyer for the Properties shall be payable as follows:
(a) Cash. $50,000,000 cash at the Closing, inclusive of cash payments
represented by transfer of the Xxxxxxx Money to Seller.
(b) Parent's Stock. 1,750,000 newly issued shares of common stock of
Buyer's parent, Pioneer Natural Resources Company ("Parent") (the
"Parent's Stock") (par value $.01 per share).
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2.02 - ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price shall be adjusted
as follows:
(a) The Purchase Price shall be adjusted upward by the following;
provided, however Seller shall comply with Section 4.01(b) of
this Agreement:
(1) the value of all merchantable, allowable oil in storage at
the Effective Time, above the pipeline connection, which is
sold and which is credited to the Assets and paid to Buyer,
such value to be the actual price received less taxes and
applicable lease burdens deducted by the purchaser or paid
by Buyer, which adjustment, if any, shall be governed by
Section 8.01 hereunder on Post-Closing Adjustment;
(2) the amount of all verifiable expenditures incurred in the
normal course of business (including, without limitation,
expenses under applicable operating agreements or other
similar arrangements or agreements and, in the absence of
such agreements, such expenses of the sort customarily
billed thereunder) paid by Seller or an Affiliate of Seller
in connection with the operation of the Assets in accordance
with this Agreement for work actually performed subsequent
to the Effective Time and prior to the Closing Date (defined
below);
(3) an amount equal to all prepaid expenses attributable to the
Assets that are paid by Seller or any Affiliate of Seller
prior to the Closing Date that inure to the benefit of Buyer
and that are, in accordance with generally accepted
accounting principles, attributable to the period after the
Effective Time, including without limitation, prepaid ad
valorem, property, production, severance and similar taxes
(but not including income, franchise or other similar entity
level taxes) based upon or measured by the ownership of
property or the production of hydrocarbons or the receipt of
proceeds therefrom;
(4) all costs incurred by Seller or an Affiliate of Seller after
the Effective Time in acquiring or maintaining any oil and
gas lease or other oil and gas interest conveyed to Buyer
pursuant to the terms of this Agreement, including without
limitation all brokers cost and expense, bonus and delay
rental;
(5) an amount equal to $6,295, representing the value of the
volume of gas less than its ownership percentage which
Seller has produced from any of the Xxxxx ("Under
Production");
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(6) all costs incurred prior to the Effective Time in connection
with the drilling of the Braveheart well and the Wood well;
(7) the amount of $3,800 per month (pro rated for partial
months) for the period between the Effective Time and the
Closing Date (defined below) as reimbursement to Seller for
costs incurred in operating and managing the Assets after
the Effective Time;
(8) if and only if the Closing Date is subsequent to December
19, 1997, interest on the Purchase Price for the period from
the Effective Time to the Closing Date, calculated at a rate
per annum equal to the lesser of (A) the highest rate
allowed by law, or (B) the prime rate of Texas Commerce Bank
N.A., on the Closing Date; provided, however, that this
Section 2.02(a)(8) shall not apply if Seller's obligation to
close as set forth in Section 6.02 has not been satisfied as
of December 19, 1997 or if the Closing Date is extended by
Seller according to Section 5.04(c);
(9) the value of any severance tax refunds received by Buyer
prior to Closing and attributable to the Assets prior to the
Effective Time; and
(10) any other amount agreed upon by Seller and Buyer.
(b) The Purchase Price shall be adjusted downward by the following:
(1) proceeds received by Seller from the sale of oil, gas or
other hydrocarbons attributable to the Assets and which are
produced after the Effective Time;
(2) an amount equal to all unpaid ad valorem, property,
production, severance and similar taxes and assessments (but
not including income, franchise or other similar entity
level taxes) based upon or measured by the ownership of
property or the production of hydrocarbons or the receipt of
proceeds therefrom accruing to the Assets attributable to
the period prior to the Effective Time, which amount shall
be computed in accordance with generally accepted accounting
principles;
(3) an amount equal to the aggregate sum of the Defect Value
(defined below) of all Defective Interests (defined below)
determined to exist in accordance with Article V hereof (if
the total of Defective Interests exceeds $100,000), less
(ii) an amount equal to the sum of all Upward Adjustments
(as defined in
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Section 5.07 hereof), but Upward Adjustments shall not
exceed the Defect Value;
(4) an amount equal to any costs incurred prior to the Closing
Date associated with the drilling or completion of the
Xxxxxxxx well paid by Buyer;
(5) an amount equal to $241,822, representing the value of the
Over Production liability of Seller as set forth on Exhibit
J" hereto; and
(6) any other amount agreed upon by Seller and Buyer.
2.03 - ALLOCATION OF PURCHASE PRICE. Seller and Buyer agree that the
Purchase Price will be allocated among the Assets as set forth on Exhibits "G"
attached hereto and made a part hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 - REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants the following:
(a) Seller is a duly organized, validly existing limited partnership
organized and in good standing under the laws of its state of
formation and is qualified to do business in the State of Texas.
Seller has heretofore delivered to Buyer true, correct and
complete copies of its partnership agreement and all other
formation documents, certificates and governing rules.
(b) Seller has all requisite power and authority, partnership,
corporate and otherwise, to carry on its business as presently
conducted, to enter into the Agreement, to sell and convey, free
and clear of all adverse claims, the Assets on the terms
described in the Agreement and to perform its other obligations
under the Agreement.
(c) The execution and delivery of this Agreement and the acquisition
of the Parent's Stock have been, and the execution and delivery
of all certificates, documents and instruments required to be
executed and delivered by Seller at the Closing, and the
consummation of the transactions contemplated hereby as of the
Effective Time shall have been duly authorized by all necessary
partnership and corporate action
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on the part of the Seller and its Affiliates, and no further
authorization is required by any law, statute, regulation, court
order or judgment applicable to Seller and, where applicable, to
its Affiliates. This Agreement constitutes a legal, valid and
binding obligation of Seller and, where applicable, Seller shall
cause this Agreement to constitute a legal, valid and binding
obligation of the Affiliates enforceable in accordance with its
terms, subject however, to the effects of bankruptcy, insolvency,
reorganization, moratorium and similar laws, as well as to
principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(d) The execution and delivery of the Agreement and the consummation
of the transactions contemplated hereby will not (i) violate, or
be in conflict with, any provisions of Seller's agreement of
limited partnership or other governing documents, (ii) constitute
a material breach of, or any event of default under, any contract
or agreement to which Seller is a party or by which it or its
assets are bound, or constitute the happening of an event or
condition upon which any other party to such a contract or
agreement may exercise any right or option which will materially
adversely affect any of the Assets (except any provision as to
(A) required consents to transfer and related provisions, (B)
maintenance of uniform interests provisions and (C) any other
third-party approvals contemplated herein), (iii) violate any
judgment, decree, order, statute, rule or regulation applicable
to Seller, (iv) result in any material liability to Buyer under
the terms of any contracts or agreements, except those
obligations related to the Assets after the Effective Time and
assumed by Buyer pursuant to the terms of the Agreement, (v)
conflict with, result in a breach of, constitute a default under
(without regard to requirements of notice or the lapse of time or
both), accelerate or permit the acceleration of the performance
required by, or require any consent, authorization or approval
under, (I) any mortgage, indenture, loan, credit agreement or
other agreement or instrument evidencing indebtedness for
borrowed money to which Seller is a party or by which Seller is
bound and to which any of the Assets is subject or (II) any
lease, license, contract or other agreement or instrument to
which Seller is a party or by which it is bound and to which any
of the Assets is subject; or (vi) result in the creation or
imposition of a lien, charge or other encumbrance upon the
Assets.
(e) Except as shown on Exhibit "H" attached hereto and made a part
hereof, no suit, action or other proceeding is pending before any
court or governmental agency as of the date of this Agreement to
which Seller or any Affiliate is a party and which relates to the
Assets and to the knowledge of Seller no such suit, action or
other proceeding is
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threatened. Seller shall promptly notify Buyer of any such suit
or proceeding arising or to which Seller has knowledge prior to
Closing. The litigation and proceedings listed on Exhibit "H"
will not result in substantial impairment or loss of Seller's
title to any material part of the Assets or that might materially
hinder or impede the operation of the Assets or the ability of
Seller to perform its obligations hereunder.
(f) During the period the Seller or any of Seller's Affiliates has
owned the Assets (the "Ownership Period") to the knowledge of
Seller all royalties (other than royalties held in suspense),
rentals and other payments due under the Producing Leases and
Other Leases have been properly and timely paid and no notices
have been received by Seller or any of Seller's Affiliates of any
claim to the contrary.
(g) During the Ownership Period all ad valorem, property, production,
severance and similar taxes and assessments based on or measured
by the ownership of property or the production of hydrocarbons or
the receipt of proceeds therefrom on the Assets have been
properly paid.
(h) Seller has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions
contemplated by this Agreement for which Buyer shall have any
responsibility whatsoever.
(i) The only material surface leases, farmin agreements, farmout
agreements, exploration agreements, bottom hole agreements,
acreage contribution agreements, operating agreements, unit
agreements, processing agreements, options, leases of equipment
or facilities, and other contracts, agreements and rights that
cover or affect the Assets, in whole or in part, are those
Contracts described on Exhibit "D" attached hereto and made a
part hereof, and all of such Contracts listed on Exhibit "D" are
valid, binding and enforceable according to their respective
terms, Seller is not in breach or default with respect thereto,
all material payments due thereunder have been paid by Seller, no
other party to such Contracts is in breach or default thereunder,
and no party to the Contract has taken action or threatened to
terminate, cancel, or rescind the Contracts or any portion
thereof.
(j) Seller is not a "foreign person" within the meaning of Section
1445 of the Internal Revenue Code of 1986, as amended.
(k) The Authorities for Expenditures (AFE's) set forth on Exhibit "I"
attached hereto constitute all of the material AFE's which have
been approved by Seller or other working interest owners
respecting operations to be conducted on the Assets after the
Effective Time.
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(l) Except as shown on Exhibit "J" attached hereto, there is no
Take-or-Pay Liability, Under Production or Over Production
liability affecting the Assets.
(m) The seismic data made available to Buyer for its evaluation of
the Assets was derived from the 3-D Seismic Data to be
transferred to Buyer hereunder, Seller's 3-D Seismic Data covers
the lands identified within the highlighted areas on the plats
attached hereto as Exhibit "K," such seismic data is proprietary
and upon Closing shall be transferred to Buyer free from
restrictions respecting Buyer's use thereof, except as set forth
in the Contracts described on Exhibit "D" hereto.
(n) To the best of Seller's knowledge, the shaded area on the plat
attached hereto as Exhibit "L" identifies the areas in which
Seller's operations on the Producing Leases or Prospect Tracts
may be precluded or prohibited by coal or lignite mining
operations.
(o) Exhibit "M" attached hereto identifies all of the Other Leases
that contain primary terms expiring on or before December 31,
1998, except for such Other Leases presently held by production
or containing options to extend the primary term thereof beyond
December 31, 1998.
(p) The Contracts described on Exhibit "D" attached hereto contain
all, if any, Preference Rights affecting the Producing Leases and
the Other Leases.
(q) The Parent's Stock to be acquired by Seller hereunder is being
acquired for its own account for investment and with no intention
of distributing or reselling the Parent's Stock or any part
thereof or interest therein in any transaction which would be in
violation of the securities laws of the United States of America
or any state or any foreign country or jurisdiction.
(r) If Seller should decide to dispose of any of the Parent's Stock
to be purchased by it, Seller understands and agrees that it may
do so only pursuant to an effective registration statement under
the Securities Act of 1933, as amended, and the rules and
regulations of the Securities and Exchange Commission promulgated
thereunder (the "Securities Act"), or pursuant to an exemption
from registration under the Securities Act. In connection with
any offer, resale, pledge or other transfer (individually and
collectively, a "Transfer") of any Parent's Stock other than
pursuant to an effective registration statement, Parent may
require that the transferor of the Parent's Stock provide to
Parent an opinion of counsel, which opinion shall be reasonably
satisfactory in form and substance to
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Parent, to the effect that such Transfer is being made pursuant
to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and any state or
foreign securities laws. Seller agrees to the imprinting, so long
as appropriate, of substantially the following legends on
certificates representing the Parent's Stock:
THE SHARES OF COMMON STOCK (THE "SHARES") EVIDENCED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER AGREES THAT IT WILL NOT OFFER, RESELL, PLEDGE
OR OTHERWISE TRANSFER (INDIVIDUALLY AND COLLECTIVELY, A
"TRANSFER") THE SHARES EVIDENCED HEREBY, EXCEPT (A) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR
(B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT SUCH AS THE EXEMPTION SET FORTH IN RULE 144 UNDER
THE SECURITIES ACT (IF APPLICABLE). IF THE PROPOSED TRANSFER IS
TO BE MADE OTHER THAN PURSUANT TO CLAUSE (A) ABOVE, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE CORPORATION AND THE
TRANSFER AGENT SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OR ANY STATE OR FOREIGN SECURITIES LAW.
The foregoing legend set forth above may be removed if and when
the Parent's Stock represented by such certificate is disposed of
pursuant to an effective registration statement under the
Securities Act or the opinion of counsel referred to above has
been provided to Parent.
(s) Seller agrees that Parent shall be entitled to make a notation on
its records and give instructions to any transfer agent for the
Parent's Stock in order to implement the restrictions on transfer
set forth in this Agreement.
(t) At the xxxx Xxxxxx was offered the Parent's Stock, Seller was,
and as of the date hereof, Seller is, and at the Closing Date,
Seller will be, an "accredited investor" as defined in Rule
501(a) under the Securities Act,
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and has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating Parent
and an investment in the Parent's Stock, and is able to bear the
economic risk of such investment.
(u) Seller acknowledges that it has received a copy of Parent's
Preliminary Proxy Statement with respect to an arrangement
involving Parent and Chauvco Resources Ltd., and that it has been
afforded: (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives
of Buyer and Parent concerning the terms and conditions of the
offering of the Parent's Stock and the merits and risks of
investing in the Parent's Stock; (ii) access to information about
Parent, Parent's financial condition, pro forma results of
operations, business properties, management and prospects
sufficient to enable it to evaluate its investment in the
Parent's Stock; and (iii) the opportunity to obtain such
additional information which Parent possesses or can acquire
without unreasonable effort or expense that is necessary to
verify the accuracy and completeness of such information.
(v) Seller also understands and acknowledges that the Parent's Stock
is being offered and sold without registration under the
Securities Act in a transaction that is exempt from the
registration provisions of the Securities Act and the
availability of such exemption depends in part on, and that Buyer
and Parent (and, for purposes of the opinion to be delivered to
Seller pursuant to Section 7.02(n) hereof, counsel to Buyer and
Parent) will rely upon, the accuracy and truthfulness of the
foregoing representations and Seller hereby consents to such
reliance.
(w) To the knowledge of Seller, all material valid laws, regulations
and orders of all governmental agencies having jurisdiction over
the Assets have been and shall continue to be complied with until
the Closing. To the best of Seller's knowledge, all material
necessary permits from governmental agencies having jurisdiction
in connection with the Assets have been obtained and have been
timely, properly and accurately made and will continue to be
timely, properly and accurately made through Closing. To the
knowledge of Seller, all plugged xxxxx located on the Assets have
been properly plugged and there are no abandoned unplugged
wellbores located on the Assets which good oil field practice
would required plugging. Seller has not been named or threatened
with being named a "potentially responsible party" under the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended. Except as disclosed on Exhibit "N"
hereto, Seller has not caused or allowed the generation,
treatment, storage, disposal or release of hazardous substances
on the Assets except in accordance with local,
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state, and federal statutes, ordinances, rules and regulations.
Except as disclosed on Exhibit "N" hereto, to the best of
Seller's knowledge no hazardous substance has ever been disposed
of on the Assets or from the Assets to locations offsite of the
Assets except in accordance with local, state, and federal
statues, ordinances, rules and regulations.
(x) Seller is not in default under, and no condition exists that with
notice or lapse of time or both would constitute a default under
(i) any order, judgment or decree of any court, commission,
board, agency or other governmental body, or (ii) any law,
statute, ordinance, decree, order, rule or regulation of any
governmental authority.
(y) There are no properties comprising the Assets with respect to
which (i) deliveries of natural gas dedicated to interstate
commerce have been terminated or diverted therefrom without there
having been obtained appropriate abandonment orders or other
required regulatory approvals, or (ii) Seller is not receiving on
a current basis the payments required under the terms of the
Contracts. During the Ownership Period, no purchaser of natural
gas under the Contracts has (i) curtailed (other than seasonal
curtailment) its takes of natural gas, or (ii) given notice
(either written or verbal) that it desires to amend any of the
Contracts with respect to price or quantity of deliveries under
take-or-pay provisions, to such extent that any such action may
materially affect the economic value of the reserves attributable
to the Assets affected by such action.
(z) Except for Permitted Encumbrances, neither Seller nor any
Affiliate of Seller has encumbered any of the Assets with any
deed of trust, security interest, indenture, mortgage or trust
agreement.
3.02 - REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller that:
(a) Buyer is a duly organized, validly existing corporation organized
and in good standing under the laws of the State of its
incorporation and is qualified to do business in the State of
Texas.
(b) Buyer has all requisite power and authority, corporate and
otherwise, to carry on its business as presently conducted, to
enter into the Agreement, and to perform its obligations under
the Agreement.
(c) The execution and delivery of this Agreement has been, and the
execution and delivery of all certificates, documents and
instruments required to be executed and delivered by Buyer at
Closing, and the
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consummation of the transactions contemplated hereby as of the
Effective Time shall have been duly authorized by all necessary
corporate action on the part of the Buyer and no further
authorization is required by any law, statute, regulation, court
order or judgment applicable to Buyer. This Agreement constitutes
a legal, valid and binding obligation of Buyer enforceable in
accordance with its terms, subject however, to the effects of
bankruptcy, insolvency, reorganization, moratorium and similar
laws, as well as to principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).
(d) The execution and delivery of the Agreement and the consummation
of the transactions contemplated hereby will not (i) violate, or
be in conflict with, any provisions of Buyer's articles of
incorporation, bylaws or governing documents, (ii) constitute a
material breach of, or any event of default under, any contract
or agreement to which Buyer is a party or by which it or its
assets are bound, or constitute the happening of an event or
condition upon which any other party to such a contract or
agreement may exercise any right or option which will materially
adversely affect the ability of Buyer to perform its obligations
hereunder, (iii) assuming expiration or termination of the
applicable waiting period under the HSR Act, violate any
judgment, decree, order, statute, rule or regulation applicable
to Buyer, or (iv) result in any material liability to Seller
under the terms of any contracts or agreements to which Buyer is
a party.
(e) No suit, action or other proceeding is pending before any court
or governmental agency as of the date of this Agreement to which
Buyer is a party and which might materially hinder or impede the
ability of Buyer to perform its obligations hereunder. Buyer
shall promptly notify Seller of any such proceeding arising prior
to the Closing with respect to which Buyer receives actual
notice.
(f) Buyer has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions
contemplated by this Agreement for which Seller shall have any
responsibility whatsoever.
(g) Buyer is a knowledgeable purchaser, owner and operator of oil and
gas properties, has the ability to evaluate (and in fact has
evaluated) the Assets for purchase, and is acquiring the Assets
for its own account and not with the intent to make a
distribution thereof within the meaning of the Securities Act of
1933 (and the rules and regulations pertaining thereto) or a
distribution thereof in violation of any other applicable
securities laws.
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(h) In entering into this Agreement, Buyer has relied solely on the
express representations warranties and covenants of Sellers in
this Agreement, its independent investigation of, and judgment
with respect to, the Assets and the advice of its own legal, tax,
economic, environmental, engineering, geological and geophysical
advisors and not on any comments or statements of Seller or any
representatives of, or consultants or advisors engaged by Seller.
(i) The Parent's Stock to be issued by Parent to Seller at Closing
has been duly authorized for such issuance and, when issued and
delivered by Parent in accordance with the provisions of this
Agreement, will be validly issued, fully paid, and nonassessable.
Once registered in accordance with the provisions of Section 8.10
hereof, the Parent's Stock shall be freely tradable by Seller
according to Section 8.10 hereof. The issuance of the Parent's
Stock under this Agreement is not subject to any preemptive or
similar rights.
(j) Parent is current in its obligations to file all periodic reports
and proxy statements with the Securities and Exchange Commission
required to be filed under the Securities Exchange Act of 1934,
as amended, and applicable rules and regulations promulgated
thereunder. Parent's Annual Report on Form-10K for the year ended
December 31, 1996 and all subsequent filings (the "SEC
Documents") do not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Since
December 31, 1996, there have been no material developments,
transactions or events affecting Parent (other than developments
or events affecting the oil and gas exploration and production
industry generally) other than as disclosed by Parent in the SEC
Documents or to Seller in writing. There are no material
liabilities of Parent (contingent or otherwise), other than as
disclosed in the SEC Documents and the final statements included
therein.
(k) The authorized and outstanding capital stock of Parent as of
September 30, 1997 consists solely of (a) 500,000,000 shares of
Parent's common stock par value $.01 per share, of which
74,449,446 shares were duly authorized, validly issued and
outstanding, fully paid and non-assessable, and (b) 100,000,000
shares of preferred stock, par value $.01 per share.
(l) To Parent's knowledge, there are no facts or circumstances that
exist as of the Closing Date that would prevent or preclude
Parent from complying with its obligations under Section 8.10
hereof.
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ARTICLE IV
COVENANTS
4.01 - COVENANTS OF SELLER. Seller covenants and agrees with Buyer that:
(a) Commencing with the execution date of this Agreement, Seller will
make available to Buyer for examination at Seller's office in
Fort Worth, Texas, all title and other information relating to
the Assets insofar as the same are in Seller's possession and
will cooperate with Buyer in Buyer's efforts to obtain, at
Buyer's expense, such additional information relating to the
Assets as Buyer may reasonably desire, to the extent in each case
that Seller may do so without violating legal constraints or any
obligation of confidence or other contractual commitment of
Seller to a third party. Such information shall include:
(1) Title opinions, runsheets, abstracts, mineral take-offs,
ownership reports, and title status reports pertaining to
the Assets;
(2) Copies of the Producing Leases, Other Leases, instruments
evidencing the Added Interests, prior conveyances of the
Assets, unitization, pooling and operating agreements,
division and transfer orders, mortgages, deeds of trust,
security agreements, chattel mortgages, financing statements
and other encumbrances not discharged and affecting the
title to or the value of the Assets and all other
information contained in the land files of Seller and
relating to the Assets;
(3) Records relating to the payment of rentals, royalties and
other payments due under the Producing Leases, Other Leases
and Added Interests;
(4) Records relating to the payment of ad valorem, property,
production, severance, excise and similar taxes and
assessments based on or measured by the ownership of
property or the production of hydrocarbons or the receipt of
proceeds therefrom on the Assets;
(5) Ownership maps, surveys, logs and seismic information
relating to the Assets;
(6) Copies of all purchase, sale, processing and transportation
agreements relating to the Assets;
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(7) Copies of all agreements including the leases, permits,
easements, licenses and orders relating to the Assets;
(8) Production and operational records relating to the Assets,
including filings made with regulatory agencies;
(9) Inventories of personal property and fixtures included in
the Assets;
(10) Accounting records, and engineering and technical data, and
geological and geophysical data, relating to the Assets; and
(11) Any other files, data, records and materials in Seller's
possession or custody which relate to or pertain to the
Assets.
Seller shall permit Buyer, at Buyer's expense, to inspect and
photocopy such information and records at any reasonable time
during the term of this Agreement but only to the extent, in each
case, that Seller may do so without violating any obligation of
confidence or contractual commitment to a third party. Seller
shall not be obligated to acquire any other or additional updated
abstracts, title opinions or additional title information not
otherwise described above, but shall cooperate with Buyer in
Buyer's efforts to obtain, at Buyer's expense, such additional
title information as Buyer may reasonably deem prudent.
(b) From the date of this Agreement until Closing, Seller (i) will
cause the Assets to be operated and maintained in a good and
workmanlike manner consistent with prior practices, and will pay
or cause to be paid all costs and expenses in connection
therewith, (ii) will not abandon any Assets, (iii) will maintain
insurance now in force with respect to the Assets, (iv) will
comply with all the rules, regulations and orders of the Texas
Railroad Commission which are applicable to Seller and the
Assets, and will timely, properly and accurately make all reports
required to be filed with the Texas Railroad Commission, (v) will
perform and comply with all of the material covenants and
conditions contained in the agreements relating to the Assets,
and (vi) will pay all taxes and assessments with respect to the
Assets which become due and payable prior to the Closing Date;
provided however, in the absence of Buyer's written consent, from
the date of this Agreement until the Closing, Seller shall not
conduct or authorize any operation on the Assets requiring
Authority for Expenditure (AFE) approval by working interest
owners under applicable operating agreements, or an expenditure
of $100,000.00 or more for the entire 100% of any single project
(except for emergency operations); provided, further, that Seller
is authorized to incur the expenditures set
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forth on Exhibit "I" attached hereto without the prior consent of
Buyer. With regard to any single activity or matter other than
those specifically set forth above in this Section 4.01(b), the
expenditure of which by Seller is reasonably expected to exceed
$25,000, Seller shall consult with Buyer and consider Buyer's
comments and considerations regarding such activities or matters
before undertaking such activities or matters.
(c) Without the prior written consent of Buyer, from the date of this
Agreement until Closing, Seller shall not enter into any new
agreements or commitments with respect to the Assets, will not
modify or terminate any of the agreements relating to the Assets,
shall not encumber, sell, transfer, assign, convey, or otherwise
dispose of any of the Assets other than personal property which
is replaced by equivalent property or consumed in the operation
of the Assets, and will not voluntarily compromise any amounts
payable to Seller due to any casualty loss or any pending or
threatened taking related to the Assets; provided, however, that
prior to Closing Seller or any Affiliate of Seller may execute
and deliver to applicable third parties assignments of interests
in the Producing Leases and Other Leases that are required under
the terms of the Contracts as described on Exhibit "D."
(d) Seller shall use all reasonable efforts to maintain its
partnership status and to assure that as of the Closing it shall
not be under any material corporate, legal or contractual
restriction that would prohibit or delay the timely consummation
of this transaction.
(e) Seller shall permit Buyer's authorized representatives to consult
with Seller and/or such third-party operator's agents and
employees during reasonable business hours and to conduct, at
Buyer's sole risk and expense, on-site inspections, environmental
assessments, reasonable tests and inventories of the Assets as
provided in Section 5.03 hereof.
(f) During the period from the date of this Agreement to the Closing
Date, Seller shall use its best efforts to maintain its
relationships with all suppliers, customers and others having
business relationships with Seller with respect to the Assets so
that such relationships will be preserved for Buyer on and after
the Closing Date.
(g) Seller shall give Buyer notice of any litigation initiated
against Seller, of which Seller has notice, and which relates to
the Assets or the ability of Seller to proceed to Closing.
(h) Promptly after execution of this Agreement, Seller shall initiate
the procedures necessary to comply with the terms of any
Preference Rights
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or Transfer Requirement. As used herein the term "Preference
Rights" means any preferential right to purchase, right of first
refusal, or other agreement which grants to any person the right
to acquire any of the Assets or an interest in any of the Assets
as a result of or in connection with (i) the sale, assignment,
encumbrance or other transfer of any of the Assets or any
interest therein or portion thereof, or (ii) the execution or
delivery of this Agreement or the consummation or performance of
the terms and conditions contemplated by this agreement. As used
herein the term "Transfer Requirement" means any consent,
approval, waiver, authorization, filing or notification with,
from or to any person which must be obtained made or complied
with in connection with the transactions contemplated by this
Agreement in order for (1) such transactions to be effective, or
(2) to prevent any termination of any interest in any of the
Assets; provided however, the term "Transfer Requirements" shall
not include any required consents or approvals of any
governmental agency in connection with the assignment of any of
the Assets if such consents or approvals are customarily obtained
after closings of transactions of this nature.
(i) From the date of this Agreement until Closing, Seller shall not
create any Title Defect against any of the Assets.
(j) Prior to Closing, Seller, at Buyer's expense, shall cooperate
with and assist Buyer in enforcing all confidentiality
agreements, non-competition agreements and violations of unlawful
trade practices, whether contractual or otherwise, as well as
improper or unauthorized use of trade secrets, confidential
information, or proprietary data, or the misappropriation thereof
of Seller or of any Affiliate, against third parties (including
present or former officers, employees, agents and contractors of
Seller or an Affiliate) that adversely affect the Assets or
Buyer's, Seller's or any Affiliate's interest therein, including,
if requested by Buyer, the instigation of legal proceedings for
such purposes if Seller believes in its discretion that such
proceedings are meritorious and can be asserted in good faith.
(k) Prior to Closing, Seller shall use its best efforts to obtain
renewals and extensions to, or new leases covering, those
Producing Leases or Other Leases described on Exhibit "M"
attached hereto that contain primary terms expiring before July
1, 1998, and any renewals and extensions to, or new leases
obtained by Seller shall be deemed Producing Leases or Other
Leases (as the case may be) and conveyed to Buyer at Closing.
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4.02 - COVENANTS OF BUYER. Buyer covenants and agrees with Seller that:
(a) Buyer shall use all reasonable efforts to maintain its corporate
status and to assure that as of the Closing, it will not be under
any material corporate, legal or contractual restriction that
would prohibit or delay the timely consummation of this
transaction.
(b) Prior to Closing Buyer shall exercise all reasonable diligence in
safeguarding and maintaining secure all engineering, geological
and geophysical data, reports and maps, accounting records, and
all other confidential data or information relating to the Assets
in the possession of Buyer. If the transaction contemplated by
this Agreement is not consummated, Buyer shall return to Seller
all information which Seller has delivered to Buyer which relate
to the Assets.
(c) Buyer shall give Seller notice of any litigation initiated
against Buyer, of which Buyer has notice, and which relates to
the Assets or the ability of Buyer to proceed to Closing.
ARTICLE V
TITLE MATTERS AND DEFECTIVE INTERESTS
5.01 - DEFENSIBLE TITLE, PERMITTED ENCUMBRANCES AND TITLE DEFECT.
(a) As used herein, the term "Defensible Title" shall have the
following meaning:
(1) With respect to the Producing Leases the term "Defensible
Title" shall mean such title, subject to the Permitted
Encumbrances to the extent that same does not constitute an
Interest Reduction, which:
(A) is free and clear of liens or encumbrances and is
otherwise only subject to contractually binding
arrangements which are contained in the Contracts
described on Exhibit "D";
(B) entitles Seller to receive and to deliver to Buyer at
Closing not less than the "Revenue Interest" set forth
on Exhibit "B" hereto for each of the Xxxxx of all oil,
gas and associated liquid and gaseous hydrocarbons
produced,
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saved and marketed from such Well, after deducting all
royalty, overriding royalty and other leasehold
burdens;
(C) obligates Seller to bear costs and expenses relating to
the maintenance, development and operation of each of
the Xxxxx in an amount not greater than the "Working
Interest" set forth on Exhibit "B" hereto with respect
to each of the Xxxxx, unless there is a corresponding
and proportionately equal increase in the Revenue
Interest attributable to such Well; and
(D) as to that portion of the Producing Leases that is not
included in any pooled unit, is not subject to any
royalties, overriding royalties, net profits interests,
production payments or any similar burdens except for
the lessor's royalties reserved in the Producing Leases
and the other burdens expressly contained in the
Contracts described on Exhibit "D".
(1) With respect to the Other Leases and such Producing Leases
that include lands within any Prospect Tract, the term
"Defensible Title" shall mean that in each of the Prospect
Tracts identified on Exhibit "O" hereto (A) Seller is
entitled to receive and shall deliver to Buyer at Closing
the Working Interest shown for such Prospect Tract on
Exhibit "O" hereto under the heading "Seller's Net W.I. in
Tract", (B) Seller is entitled to receive and shall deliver
to Buyer at Closing the Revenue Interest in each Prospect
Tract shown for each such Prospect Tract on Exhibit "O"
attached hereto and made a part hereof under the heading
"Seller's N.R.I. in Tract," and (C) Seller's title, subject
to the Permitted Encumbrances, in all material respects, is
free and clear of liens or encumbrances, and is otherwise
only subject to contractually binding arrangements contained
in the Contracts described on Exhibit "D".
(2) With respect to all lands covered by the Other Leases and
not included within a Prospect Tract, Defensible Title shall
mean that (A) Seller owns and shall deliver to Buyer at
Closing the number of "Net Leasehold Acres" or "Net Acres,"
as the case may be, shown for each such Other Lease on
Exhibit "O" attached hereto and made a part hereof, (B)
except for the lessor's royalties reserved in such Other
Leases, such Other Leases as to such lands are not subject
to any overriding royalties, net profits interests,
production payments or any similar burdens, unless expressly
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contained in the Contracts described on Exhibit "D," and (C)
Seller's title, subject to the Permitted Encumbrances, is
free and clear of liens and encumbrances and is otherwise
subject only to contractually binding arrangements which are
contained in the Contracts described on Exhibit "D."
(3) With respect to the Contracts, Defensible Title means that
subject to the Permitted Encumbrances (A) either (i) Seller
was an original signatory to the contract, or (ii) Seller
has acquired the rights of an original signatory to the
contract through a chain of one or more assignments, and (B)
the rights of Seller under the Contracts are free and clear
of mortgages, liens, security interests, pledges, charges,
encumbrances, claims, limitations, irregularities, burdens
or defects, and is otherwise only subject to their terms.
(4) The term "Prospect Tract" as used herein shall mean each
separate tract of land identified by the areas colored in
blue, red, yellow, green, purple, gray, brown, orange, pink,
and other colors on each of the plats attached hereto on
Exhibit "O," with each such "Prospect Tract" being
designated by the "Tract Number" and "Lease Number" set
forth in the schedule of Seller's ownership interest for
each Anomaly Area on Exhibit "O" attached hereto.
(b) The term "Permitted Encumbrances" as used herein shall mean:
(1) lessors' royalties, overriding royalties and other burdens,
reversionary interests and similar burdens if the net
cumulative effect of such burdens does not operate at
Closing or thereafter to reduce (i) the Revenue Interest of
any of the Xxxxx to less than the Revenue Interest for such
Well as set forth in Xxxxxxx "X" xxxxxx, (xx) the Working
Interest of any of the Xxxxx to less than the Working
Interest for such Well set forth in Exhibit "B" without a
corresponding and proportionate reduction in the Revenue
Interest in such Well, (iii) the Net Revenue Interest in or
respecting each Prospect Tract to less than that shown on
Exhibit "O" attached hereto, or (iv) the Working Interest in
or respecting each Prospect Tract to less than the Working
Interest for such Prospect Tract as shown on Exhibit "O"
attached hereto without a corresponding and proportionate
reduction in the Revenue Interest for such Prospect Tract
(any of the reductions in interest set forth above is herein
called an "Interest Reduction");
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(2) Preference Rights and Transfer Requirements, including
consents to assign, with respect to which prior to Closing
(i) waivers or consents are obtained from the appropriate
parties, (ii) the prescribed time period for asserting or
exercising such rights has expired without an exercise of
such rights, or (iii) arrangements can be made by Buyer or
Seller to allow Buyer to receive substantially the same
economic benefit as if all such waivers and consents had
been obtained;
(3) to the extent same does not cause an Interest Reduction,
liens for taxes or assessments by a governmental body of
competent jurisdiction not yet due or not yet delinquent or,
if delinquent, that are being contested in good faith in the
normal course of business;
(4) all inchoate liens and liens of operators under existing
operating agreements identified in Exhibit "D" relating to
obligations not yet due or pursuant to which Seller is not
in default that are not such as to interfere materially with
the operation, value or use of the particular Asset affected
by such lien;
(5) all rights to consent by, required notices to, filings with,
or other actions by governmental bodies of competent
jurisdiction in connection with the sale or conveyance of
the Assets, if same are customarily obtained subsequent to
the transfer of title;
(6) to the extent same does not cause an Interest Reduction, the
terms and conditions of the Producing Leases, the Other
Leases, the instruments of conveyance evidencing the Added
Interests, and the Contracts set forth in Exhibit "D";
(7) to the extent same does not cause an Interest Reduction, if
applicable, existing rights of re-assignments in the event
of intended release or surrender of an interest to the
extent the same are contained in the Contracts set forth in
Exhibit "D";
(8) to the extent same does not cause an Interest Reduction,
easements, rights-of-way, servitudes, permits, surface
leases and other rights in respect of surface operations,
pipelines, grazing, logging, canals, ditches, reservoirs or
the like; and easements for streets, alleys, highways,
pipelines, telephone lines, power lines, railways and other
easements and rights-of-way, on, over or in respect of any
of the Assets to the extent such are of record as of the
Effective Time;
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(9) to the extent same does not cause an Interest Reduction,
rights reserved to or vested in any municipality or
governmental, statutory or public authority of competent
jurisdiction to control or regulate any of the Assets in any
manner, and all applicable laws, rules and orders of
governmental authority of competent jurisdiction to the
extent such do not prevent reasonable use by Buyer of the
Assets for the purposes herein intended;
(10) to the extent same does not cause an Interest Reduction, the
lack of a recordable assignment conveying to Seller or
American Cometra, Inc., its interest in the Producing Leases
for the Xxxxxx No. 2 well;
(11) top leases acquired by third parties which (i) are not
effective until the termination of an oil and gas lease
owned by Seller, and (ii) do not preclude Seller's right to
extend any such oil and gas lease; and
(12) such Title Defects or other defects as Buyer has waived
pursuant to this Agreement.
(c) The term "Title Defect" as used herein shall mean any
encumbrance, encroachment, irregularity, defect in or objection
to Seller's title to the Assets (expressly excluding Permitted
Encumbrances), that alone or in combination with other defects
renders Seller's title to the Assets or any portion thereof less
than Defensible Title.
5.02 - DEFECTIVE INTERESTS.
(a) As used herein the term "Defective Interest" shall mean:
(1) That portion of the Assets affected by a Title Defect;
(2) That portion of the Assets (a) that has a condition or that
contains substances or materials of environmental concern
which may result in a risk of third party tort claims or
action by governmental authority, or (b) adversely affected
by noncompliance with the laws, rules, regulations,
ordinances or orders of any governmental agency or authority
having jurisdiction over any portion of the Assets,
including without limitation Environmental Laws (defined
below) as may be reasonably determined in accordance with
generally accepted industry practices and standards;
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(3) That portion of the Assets adversely affected by the default
of Seller, or any other party, under an obligation under the
Contracts (other than Title Defects affecting the status of
Seller's title to the Assets);
(4) That portion of the Assets with respect to which any
Preference Right is exercised unless Buyer elects to receive
the consideration received from the exercise of such
Preference Right;
(5) To the extent an adjustment to the Purchase Price has not
been made according to Section 2.02(b)(5), that portion of
the Assets with respect to which (i) Seller is obligated by
virtue of any pre-payment arrangements under any contract
for the sale of hydrocarbons and containing a "take or pay"
or similar provision or a production payment or any other
arrangement to deliver hydrocarbons produced from the Assets
at some future time without then or thereafter receiving
full payment therefor ("Take-or-Pay Liability"), or (ii)
Seller has produced a share of gas in excess of its
ownership percentage and Seller is obligated to reduce its
share of production under a gas balancing agreement or
similar arrangement to allow under-produced parties to come
back into balance ("Over Production"). The volumes of
Take-or-Pay Liability and Over Production currently known to
Seller are described on Exhibit "I" attached hereto and made
a part hereof;
(6) That portion of the Equipment which has a defect, (resulting
from design, construction, wear or other reason) which will
prevent the continued operation of that portion of the
Equipment in accordance with prior practice;
(7) That portion of the Assets destroyed by fire or other
casualty, or with respect to which there is a taking or
threatened taking in condemnation or under the right of
eminent domain; and
(8) That portion of the Assets affected by any suit, action or
other proceeding before any court or government agency that
would result in a material loss or impairment of Seller's
title to any portion of the Assets, or a portion of the
value thereof, including but not limited to suits, actions
or other proceedings described on Exhibit "H" hereto.
(b) As used herein the term "Defect Value" shall mean:
(1) for Defective Interests under Section 5.02(a)(1) or (a)(4):
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(i) with respect to a Title Defect affecting an interest in
a Well, the Defect Value shall be the product of the
Allocated Value for the Well affected by the Defective
Interest as set forth on Exhibit "G" times the interest
in the Well that is affected by the Defective Interest;
(ii) with respect to a Title Defect on a Prospect Tract
(whether such Prospect Tract includes part of a
Producing Lease or includes part of an Other Lease) the
Defect Value shall be as follows:
(A) to the extent the Title Defect relates to that
part of a Prospect Tract that lies within an
Anomaly Area (defined below) and the Title
Defect is not a Non-Value Defect (defined below)
the Defect Value for such Title Defect shall be
calculated according to the formula provided
in Section 5.02(b)(5) for the type of Title
Defect being valued;
(B) to the extent the Title Defect relates to an
interest in an Anomaly Area and the Title Defect
is a Non-Value Defect the Defect Value shall be
the value, at $1,000 per acre per "Seller's Net
Acres in Tract" as shown for that Prospect Tract
on Exhibit "O" hereto for such Anomaly Area,
of that interest in the Prospect Tract which is
affected by the Defective Interest;
(C) to the extent the Title Defect relates to an
interest outside an Anomaly Area the Defect
Value shall be the value, at three hundred
twenty dollars ($320) per acre per "Seller's Net
Acres in Tract" as shown for that Prospect
Tract on Exhibit "O" hereto for such Anomaly
Area, of the interest in the Prospect Tract which
is affected by the Defective Interest;
(D) as used herein the term "Anomaly Area" shall mean
the lands which lie within the area delineated
by the heavy red lines on the maps included within
Exhibit "O" attached hereto and
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made a part hereof and designated as "Anomaly
Area" on Exhibit "O" hereto; and
(E) As used herein the term "Non-Value Defect" shall
mean a Title Defect affecting an interest within
an Anomaly Area, which, due to the location and
size of such Defective Interest will not prevent
Buyer from drilling any well it reasonably wishes
to drill on such Anomaly Area without reduction
as to such well in the total of "Seller's G.W.I.
in Anomaly" and the total of "Seller's N.R.I. in
Anomaly" to less than that shown on Exhibit "O"
hereto for such Anomaly Area (the "Represented
Interest"). If the Anomaly Area is of a size
sufficient to drill more than one well, then the
average of the working interests and the average
of the net revenue interests of the xxxxx Buyer
could reasonably drill on the Anomaly Area shall
not be less than the Represented Interest for
such Anomaly Area. For purposes of this section,
it shall be deemed reasonable to drill one well
for each 160 acres in the Anomaly Area, with one
additional well for excess acreage, if over 80
acres;
(2) for Defective Interests under Section 5.02(a)(5), the Defect
Value shall be computed on the basis of the price received
by Seller; and
(3) for Defective Interests under Section 5.02(a)(2), the Defect
Value shall be computed on the basis of the cost of curing,
correcting and/or remediating such Defective Interest.
(4) for all other Defective Interests as to the Assets under
Section 5.02(a) which are not provided for above in Section
5.02(b)(1)- (3), the lesser of (i) the reduction in value of
the Asset(s) caused by a Defective Interest, or (ii) the
cost of curing, correcting and/or remediating such Defective
Interests.
(5) For purposes of this Agreement,
(i) If there is a Title Defect resulting in a decrease in
Working Interest in a Prospect Tract as set forth under
the heading "Seller's Net W.I. in Tract" as shown on
Exhibit "O" hereto (with a proportionate reduction in
"Seller's Net
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N.R.I. in Tract" for such Prospect Tract as shown on
Exhibit "O" hereto), and the Title Defect is not a
Non-Value Defect, then it is the intent of the parties
hereto to calculate Defect Value by multiplying the
Allocated Value of the Anomaly Area affected by such
Title Defect as shown on Exhibit "G" hereto by (A) a
fraction the numerator of which is the gross number of
acres in the Anomaly Area affected by the Title Defect
as set forth under the heading "Acres in Tract" as
shown on Exhibit "O" hereto and the denominator of
which is the total of "Seller's Net Acres in Tract" in
such Anomaly Area, and (B) a fraction the numerator of
which is the "Seller's Net W.I. in Tract" actually
conveyed by the Seller in the affected acreage if
greater than zero and the denominator of which is the
"Seller's Net W.I. in Tract" as shown on Exhibit "O"
for the affected acreage on Exhibit "O" hereto. This
is expressed algebraically as follows:
Allocated Value "Acres in Tract" affected by Title Defect "Seller's Net W.I. in Tract" delivered
of Anomaly X ---------------------------------------- X -------------------------------------
Total of "Seller's Net Acres in Tract" "Seller's Net W.I. in Tract"
(ii) If there is a Title Defect resulting in a decrease in
Revenue Interest in a Prospect Tract as set forth under
the heading "Seller's Net N.R.I. in Tract" on Exhibit
"O" attached hereto (without a proportionate reduction
in "Seller's Net W.I. in Tract" as shown on Exhibit "O"
hereto), and the Title Defect is not a Non-Value
Defect, then it is the intent of the parties hereto to
calculate Defect Value by multiplying the Allocated
Value of the Anomaly Area affected by such Title Defect
as shown on Exhibit "G" hereto by (A) a fraction the
numerator of which is the gross number of acres in the
Anomaly Area affected by the Title Defect as set forth
under the heading "Acres in Tract" as shown on Exhibit
"O" hereto and the denominator of which is the total of
"Seller's Net Acres in Tract" in such Anomaly Area as
shown on Exhibit "O" hereto, and (B) a fraction the
numerator of which is the "Seller's Net N.R.I. in
Tract" actually conveyed by Seller in the affected
acreage if greater than zero and the denominator of
which is the "Seller's Net N.R.I. in Tract" as shown on
Exhibit "O" attached hereto for the affected acreage.
This is expressed algebraically as follows:
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Allocated Value "Acres in Tract" affected by Title Defect "Seller's Net N.R.I. in Tract" delivered
of Anomaly X ---------------------------------------- X -------------------------------------
Total of "Seller's Net Acres in Tract" "Seller's Net N.R.I. in Tract"
(iii) If there is a Title Defect resulting in a decrease in
Working Interest in a Prospect Tract as set forth under
the heading "Seller's Net W.I. in Tract" as shown on
Exhibit "O" attached hereto (without a proportionate
reduction in "Seller's Net W.I. in Tract" as shown on
Exhibit "O" attached hereto), and the Title Defect is
not a Non-Value Defect, then it is the intent of the
parties hereto to calculate Defect Value by multiplying
the Allocated Value of the Anomaly Area affected by
Title Defect as shown on Exhibit "G" hereof by (A) a
fraction the numerator of which is the gross number of
acres in the Anomaly Area affected by the Title Defect
as set forth under the heading "Acres in Tract" as
shown on Exhibit "O" attached hereto and the
denominator of which is the total of "Seller's Net
Acres in Tract" in such Anomaly Area as shown on
Exhibit "O" attached hereto, and (B) a fraction the
numerator of which is the "Seller's Net W.I. in Tract"
actually conveyed by Seller in the affected acreage if
greater than zero and the denominator of which is the
"Seller's Net W.I. in Tract" as shown on Exhibit "O"
attached hereto for the affected acreage if greater
than zero, and (C) a fraction the numerator of which is
the "Seller's Net N.R.I. in Tract" as shown on Exhibit
"O" attached hereto for the affected acreage if greater
than zero and the denominator of which is the "Seller's
Net N.R.I. in Tract" actually conveyed by the Seller in
the affected acreage if greater than zero. This is
expressed algebraically as follows:
Allocated Value "Acres in Tract" affected by Title Defect "Seller's Net W.I. in Tract" delivered
of Anomaly X ----------------------------------------- X --------------------------------------
Gross Acres in Anomaly "Seller's Net W.I. in Tract"
"Seller's Net N.R.I. in Tract"
X ---------------------------------------
"Seller's Net N.R.I. in Tract" delivered
(iv) If, in determining the Defect Value according to any
formula set forth in Section 5.02(b)(5) above, the
denominator or numerator of any of the fractions in any
of such formula is zero, then such formula shall be
calculated as if such fraction is one (1).
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5.03 - BUYER'S RIGHT OF INSPECTION. Seller grants Buyer and its duly
authorized representatives, contractors and subcontractors (collectively
"Representatives") the limited right of entry to the Assets for the purpose of,
inspecting the Assets in accordance with the terms of Section 4.01(e) hereof,
("Permitted Activities"), subject however, to the following conditions:
(a) Buyer shall notify Seller of its desire to enter the Assets to
conduct Permitted Activities at least 48 hours prior to such
entry.
(b) Upon receipt of such notice, Seller shall allow Buyer and its
Representatives to enter the Assets during normal business hours
to conduct Permitted Activities. The Permitted Activities of
Buyer and its Representatives shall not unreasonably interfere
with Seller's operations or business, and Buyer and its
Representatives shall not remain on the Assets subsequent to the
completion of their Permitted Activities.
(c) The Permitted Activities shall be conducted in accordance with
all applicable environmental and regulatory laws, rules and
regulations, and commonly accepted standards for conducting such
activities. Upon completion of its activity, Buyer and its
Representatives shall restore (as far as reasonably possible) the
Property to its condition existing as of Buyer's entry thereon
and remove all equipment and materials that were brought onto the
Assets by Buyer and its Representatives. As soon as reasonably
possible, Buyer shall provide Seller with a copy of all reports
prepared for Buyer as a result of conducting Permitted
Activities.
(d) Buyer will be responsible for the conduct and protection of all
persons involved in the Permitted Activities. Seller shall not
have any right to control and shall not exercise any
responsibility with respect to the Permitted Activities conducted
by Buyer on the Assets, except that Seller shall have the right
(but not the obligation) to prevent any damage to its property or
disruption to its business. Buyer and its Representatives will
undertake all measures reasonably necessary to protect all
persons conducting the Permitted Activities on the Assets and any
other persons who may enter the Assets during or after completion
of the Permitted Activities.
(e) Neither Buyer nor its Representatives shall contact any federal,
state, or local agency with respect to environmental conditions
discovered on the Assets without the prior written permission and
consent of Seller, except as may be otherwise required by
applicable law, rule or regulation. Any proposal of Buyer or its
Representatives to contact any federal, state, or local agency
shall be delivered in writing to Seller for review and approval.
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(f) BUYER AGREES TO FULLY INDEMNIFY, DEFEND, AND HOLD SELLER, ITS
AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS AND CONTRACTORS HARMLESS FROM AND AGAINST ANY ALL CLAIMS,
LIABILITIES, CAUSES OF ACTIONS, JUDGMENTS OR DEFENSE EXPENSES
(INCLUDING ATTORNEYS FEES AND EXPERT EXPENSES) OF ANY PERSON,
INCLUDING BUYER, ITS AFFILIATES AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS AND CONTRACTORS, FOR (I) PERSONAL
INJURY OR DEATH OF ANY PERSON, (II) DAMAGE TO THE PROPERTY OF
SELLER, BUYER OR ANY OTHER PERSON, OR (III) ALL OTHER DAMAGES OR
ECONOMIC LOSSES [INCLUDING PUNITIVE, INDIRECT OR CONSEQUENTIAL
DAMAGES (SUBJECT TO SECTION 9.02 HEREIN)], ATTRIBUTABLE TO OR
ARISING FROM THE ACTIONS OR OMISSIONS OF BUYER AND ITS
REPRESENTATIVES IN PERFORMING THE PERMITTED ACTIVITIES, EXCEPT
ONLY TO THE EXTENT ANY SUCH INJURY, DAMAGE, OR LOSS IS CAUSED BY
THE GROSS NEGLIGENCE OR STRICT LIABILITY OF SELLER.
5.04 - NOTICE OF DEFECTIVE INTERESTS.
(a) Buyer shall give Seller notice(s) of Defective Interests not
later than December 5, 1997. Such notice(s) shall be in writing
and shall include (i) a description of the Defective Interest
(ii) the reason Buyer believes such Assets to be a Defective
Interest, and (iii) the Defect Value asserted by Buyer with
respect to the asserted Defective Interest. Buyer may not give
notice(s) of Defective Interests unless (i) the Defect Value for
a singular or specific Title Defect or Defective Interest exceeds
$5,000 and (ii) the total of the asserted Defect Values for
asserted Defective Interests exceeds $100,000. Buyer shall be
deemed to have waived all Defective Interests of which Seller has
not been given such notice.
(b) Upon being notified by Buyer pursuant to Section 5.04(a) of any
asserted Defective Interest the Seller shall give written
counter-notice to Buyer within five (5) days (i) that it either
(A) will attempt to correct the asserted Defective Interest, or
(B) does not intend to attempt to correct the Defective Interest;
and (ii) whether it agrees or disagrees that the asserted
Defective Interest exist, and (iii) whether it agrees or
disagrees with the Defect Value asserted by the Buyer. If Buyer
asserts as a Defective Interest that the interest of Seller in a
Prospect Tract is less than that set forth on Exhibit "O" hereto,
then Seller may cure or partially cure such Defective Interest by
acquiring, at Seller's expense,
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additional interests within the Prospect Tract which increase the
ownership of Seller within the Prospect Tract to that interest
for such Prospect Tract that is set forth on Exhibit "O."
(c) If Seller gives counter-notice of intent to attempt to correct
any asserted Defective Interest, it shall have a period of thirty
(30) days from the receipt of the Buyer's notice (the "Cure
Period") to attempt to correct such asserted Defective Interest
at its own expense, and if applicable, the Closing Date shall be
extended until the third business day after the earliest to occur
of the following: (A) the Defective Interests set forth by
Seller's counter-notice are corrected, (B) Seller notifies Buyer
it cannot correct such Defective Interests, or (C) the expiration
of the Cure Period. If Seller fails to cure any asserted
Defective Interest which it attempts to cure, Buyer shall have
the rights set forth elsewhere in this Agreement, but such
failure shall not create any additional obligation of Seller to
Buyer.
(d) If Seller gives counter-notice that it disagrees there is a
Defective Interest, then the existence thereof (and if it exists,
the Defect Value) will be determined by arbitration pursuant to
Section 5.05 hereof.
(e) If Seller gives counter-notice that it disagrees with the Defect
Value asserted by Buyer in connection with a Defective Interest,
then the amount of the Defect Value will be determined by
arbitration pursuant to Section 5.05 hereof.
(f) The failure of Seller to deliver written counter-notice as
provided herein shall be deemed to be notice that Seller (i) will
not attempt to correct that asserted Defective Interest, (ii)
disagrees that there is a Defective Interest and (iii) disagrees
with the Defect Value asserted by the Buyer.
(g) In determining which portions of the Assets are Defective
Interests, it is the intent of the parties to include, when
possible, only that portion of the Assets affected by the defect.
(h) If Seller gives timely counter-notice to Buyer according to this
Agreement of its intent to correct any asserted Defective
Interest according to Section 5.04(c) but Seller is unable to
correct such Defective Interest before the expiration of the Cure
Period and Closing occurs with a reduction to the Purchase Price
equal to the Defect Value asserted for such Defective Interest,
Seller shall be entitled to a post- closing adjustment to the
Purchase Price in an amount equal to the Defect Value of such
Defective Interest if after Closing, but before the Final
Settlement Date, Seller corrects such Defective Interest. After
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Closing, without the prior consent of Buyer, Seller shall not
attempt to cure any Defective Interests other than those set
forth in Seller's counter-notice that Seller intends to cure. At
least thirty (30) days prior to the Final Settlement Date, but
not later than ninety (90) days after the Closing Date, Seller
shall provide Buyer with copies of all title curative materials
that Seller has obtained after the Closing in connection with the
Defective Interests that Seller cures after Closing pursuant to
this Section 5.04(h), and thereafter Seller shall provide Buyer
copies of such additional title curative materials for such
Defective Interests that Seller obtains up to the Final
Settlement Date as promptly as possible after such materials
become available to Seller.
5.05 - ARBITRATION PROCEDURES. If any matter is required by this Article,
Section 8.11 or Section 8.09 of the Plant Agreement to be arbitrated, such
arbitration shall be conducted as set forth in this Section 5.05.
(a) For each matter submitted for arbitration, the parties shall
jointly select a mutually acceptable person as the sole
arbitrator under this Agreement for such matter. If the parties
are unable to agree upon the designation of a person as
arbitrator within five (5) days from the proposal of either party
of a person to act as arbitrator, then either Seller or Buyer, or
both such parties, may in writing request the American
Arbitration Association to appoint a qualified arbitrator.
(b) Any arbitration hearing shall be held at a place in Dallas or
Fort Worth, Texas acceptable to the arbitrator.
(c) The arbitrator shall settle disputes regarding (i) the existence
of Defective Interests and/or the Defect Value thereof and
Seller's attempts to correct any Title Defects, as to arbitration
proceedings brought concerning Defective Interests and (ii) the
existence and scope of either parties post- Closing obligations
under Article VIII hereof or Article VIII of the Plant Agreement
and the award or damages to be paid by either party who fails to
perform its obligations under Article VIII hereof or Article VIII
of the Plant Agreement, as to arbitration proceedings brought
under Section 8.11 or Section 8.09 of the Plant Agreement. The
arbitration shall be in accordance with the Texas General
Arbitration Act and the Rules of the American Arbitration
Association, to the extent such rules do not conflict with the
terms of such act and the terms hereof. Such arbitrator shall
hear all arbitration matters arising under this Article V,
Section 8.11 or Section 8.09 of the Plant Agreement. The decision
of the arbitrator shall be binding upon the parties, and may be
enforced in any court of competent jurisdiction. The parties and
the arbitrator shall proceed diligently and in good faith in
order that the arbitrator's decision
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shall be made as promptly as possible. Seller and Buyer,
respectively, shall bear their own legal fees and other costs
incurred in presenting their respective cases. The charges and
expenses of the arbitrator shall be shared equally by Seller and
Buyer.
(d) The arbitration shall commence within ten days after the
arbitrator is selected as set forth in Section 5.05(a) above. In
fulfilling his duties hereunder, the arbitrator shall be bound by
the terms of this Agreement. In fulfilling any of his arbitration
duties, the arbitrator may consider such other matters as in the
opinion of the arbitrator are necessary or helpful to make a
proper evaluation. Additionally, the arbitrator may consult with
and engage disinterested third parties, including, without
limitation, petroleum engineers, environmental engineers,
attorneys and consultants, to advise the arbitrator.
(e) If any arbitrator selected hereunder should die, resign or be
unable to perform his duties hereunder, the parties, or if the
parties are unable to agree, the American Arbitration Association
shall select a replacement arbitrator. The aforesaid procedure
shall be followed from time to time as necessary.
(f) The foregoing arbitration procedures shall also apply according
to Section 8.11.
5.06 - EFFECT OF DEFECTIVE INTERESTS ON CLOSING. If Buyer asserts any
Defective Interests the following shall apply:
(a) The parties shall proceed to Closing as provided in this
Agreement if (i) Seller cures the asserted defect, (ii) Buyer
agrees to waive the relevant Defective Interest and purchase the
Defective Interest notwithstanding the asserted Defective
Interest, or (iii) Buyer and Seller agree to a Defect Value and
the Purchase Price is reduced by such amount in accordance with
Section 2.02 hereof.
(b) If any matter is referred to arbitration under Section 5.05 of
this Agreement and the Defect Value or Values asserted by Buyer
would not permit either party to terminate this Agreement
according to Section 9.01(c) or (d) hereof, then the parties
shall proceed to Closing, the asserted Defective Interests shall
be conveyed to Buyer, and the Closing Amount (defined below)
shall be reduced by an amount equal to the asserted Defect Values
of the asserted Defective Interests (the "Withheld Payment"). The
Withheld Payment shall be placed in escrow with the same entity
under essentially the same terms as the Xxxxxxx Money (defined
below). The Withheld Payment shall be paid as follows:
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(i) If the arbitrator decides that any Defective Interest
asserted by the Buyer is not a Defective Interest, then
the Withheld Payment with respect to the asserted
Defective Interest shall be paid to the Seller.
(ii) If the arbitrator decides that any one or more of the
Defective Interests asserted by the Buyer is in fact a
Defective Interest, then, if the total Defect Value for
all Defective Interests that have been determined to
exist, exceed $100,000, the Withheld Payment, up to the
amount of the Defect Value, as determined by the
arbitrator, shall be distributed to the Buyer, and the
remainder, if any, shall be distributed to the Seller.
(c) If any matter is referred to arbitration under Section 5.05 of
this Agreement and the Defect Value or Values asserted by Buyer
with respect to the matters under arbitration together with the
Defect Value of any other Defective Interests previously agreed
to by Seller could, if determined by the arbitrator to be in the
amount asserted by Buyer, permit either party to terminate this
Agreement according to Section 9.01(c) or (d) hereof, then,
unless this Agreement is terminated by Seller pursuant to Article
IX hereof, Closing shall be postponed until the arbitrator
renders his final decisions. After the arbitrator renders his
decision the parties shall proceed to Closing, the Assets,
including any Defective Interests, shall be conveyed to the Buyer
and the Purchase Price will be reduced by the Defect Value found
by the arbitrator, if such Defect Value or Values exceeds
$100,000; provided, however, nothing contained in this Section
5.06(c) shall be deemed to in any way modify or terminate
Seller's or Buyer's right to terminate under Section 9.01 hereof
or conditions to Closing under Section 6.01(d) and Section
6.02(d) hereof after the arbitrator renders his decision.
5.07 - IDENTIFICATION OF UPWARD ADJUSTMENT. If it is determined prior to
the Closing Date that Seller owns a greater undivided interest in the Assets
than reflected in the Exhibits hereto which results in an increase in value of a
portion of the Assets, the party discovering such inaccuracy shall immediately
notify the other party and Buyer and Seller shall endeavor to agree upon an
amount by which the Defect Value of all Defect Interests determined to exist in
accordance with Article V shall be set-off (but not to exceed the Defect Value)
in accordance with Section 2.02(b)(3) (the "Upward Adjustment"). If Buyer and
Seller fail to agree to the Upward Adjustment, then the amount or such Upward
Adjustment shall be determined by arbitration pursuant to Section 5.05 hereof.
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ARTICLE VI
CONDITIONS TO CLOSING
6.01 - SELLER'S CONDITIONS. The obligations of Seller at the Closing are
subject, at the option of Seller, to the satisfaction at or prior to the Closing
of the following conditions:
(a) All representations and warranties of Buyer contained in this
Agreement shall be true in all material respects at and as of the
Closing as if such representations and warranties were made at
and as of the Closing; and Buyer shall have performed and
satisfied all material obligations in all material respects
required by this Agreement to be performed and satisfied by Buyer
at or prior to the Closing.
(b) No suit or other proceeding shall be pending before any court or
governmental agency seeking to restrain or prohibit or declare
illegal, or seeking substantial damages in connection with, the
purchase and sale contemplated by this Agreement.
(c) All transactions contemplated by that certain Purchase and Sale
Agreement (the "Plant Agreement") of even date herewith between
Plum Creek Pipeline Company, L.P.. and Buyer shall have closed
pursuant to the terms of such agreement.
(d) Neither Seller nor Buyer has terminated this Agreement pursuant
to Section 9.01(c) or (d).
6.02 - BUYER'S CONDITIONS. The obligations of Buyer at the Closing are
subject, at the option of Buyer, to the satisfaction at or prior to the Closing
of the following conditions:
(a) All representations and warranties of Seller contained in this
Agreement shall be true in all material respects at and as of the
Closing as if such representations and warranties were made at
and as of the Closing; and Seller shall have performed and
satisfied all material agreements in all material respects
required by this Agreement to be performed and satisfied by
Seller at or prior to the Closing.
(b) No suit or other proceeding shall be pending before any court or
governmental agency seeking to restrain or prohibit or declare
illegal, or seeking substantial damages in connection with, the
purchase and sale contemplated by this Agreement.
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(c) All transactions contemplated by the Plant Agreement shall have
closed pursuant to the terms of such agreement.
(d) Neither Seller nor Buyer has terminated this Agreement pursuant
to Section 9.01(c) or (d).
ARTICLE VII
CLOSING
7.01 - DATE OF CLOSING. Unless the parties hereto mutually agree otherwise
and subject to the conditions stated in this Agreement, the consummation of the
transactions contemplated hereby (herein called the "Closing") shall be held at
the offices of Seller in Fort Worth, Texas, on the latest of
(i) December 19, 1997;
(ii) The day provided in Section 5.04(c);
(iii) Three (3) business days following the decision
rendered in any arbitration conducted pursuant to
Section 5.06(c) hereof; or
(iv) the date of closing under the Plant Agreement.
The date on which closing occurs is referred to herein as the "Closing Date."
7.02 - CLOSING OBLIGATIONS. At the Closing, the following events shall
occur, each being a condition precedent to the others and each being deemed to
have occurred simultaneously with the others:
(a) Seller shall execute, acknowledge and deliver an assignment, xxxx
of sale, and conveyance in recordable form (in sufficient
counterparts to facilitate recording) sufficient to convey to
Buyer the Assets with covenants of special warranty as to all
Assets, such conveyance to be substantially in the form attached
hereto as Exhibit "P."
(b) At Buyer's request, Seller shall execute and deliver to Buyer an
Assignment and Xxxx of Sale, in a form reasonably acceptable to
Buyer and Seller, transferring to Buyer any proprietary 3-D
Seismic Data of Seller covering the Assets.
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(c) Seller shall execute and deliver to Buyer, in a form reasonably
acceptable to Seller and Buyer, an assignment of Seller's right
to receive a recordable assignment of the Producing Leases on
which the Xxxxxx No. 2 Well is located. Such assignment shall be
with special warranty of title only, and shall contain the same
disclaimers as to the condition of personal property as are
contained in the form of assignment attached hereto as Exhibit
"P."
(d) Seller shall execute and deliver to Buyer an assignment or xxxx
of sale, in a form reasonably acceptable to Seller and Buyer,
transferring to Buyer any of the Assets not otherwise conveyed to
it.
(e) Seller and Buyer shall execute and deliver a settlement statement
(herein called the "Preliminary Settlement Statement") that shall
set forth the Closing Amount (as hereinafter defined) and each
adjustment and the calculation of such adjustments used to
determine such amount. The term "Closing Amount" shall mean the
Purchase Price adjusted as provided in Section 2.02, using for
such adjustments the best information then available.
(f) Buyer shall pay the Closing Amount, other than the Xxxxxxx Money,
to Seller by wire transfer in immediately available funds.
(g) The Escrow Agent shall deliver the Xxxxxxx Money plus interest
earned thereon to Seller.
(h) Parent shall deliver to Seller the original stock certificates
evidencing Parent's Stock.
(i) Seller and Buyer (or an affiliate of Buyer who is authorized to
operate properties according to rules and regulations of the
Railroad Commission of the State of Texas) shall execute Texas
Railroad Commission Forms P-4 designating Buyer operator of the
Assets previously operated by Seller or an Affiliate, subject
however to the rights of third parties under applicable operating
agreements, and Seller shall file such forms with the Texas
Railroad Commission.
(j) Seller shall deliver to Buyer, (1) a certificate signed by a
responsible officer of the General Partner of Seller certifying
that all of the representations and warranties of Seller made
hereunder are true and correct at and as of Closing, as if made
on the Closing Date, (2) a certified copy of the Executive
Committee of the Board of Directors of the General Partner of
Seller authorizing the transaction contemplated by the Agreement,
such certified copy to show the dates of adoption and
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that on the Closing Date the resolutions have not been rescinded
or modified, and (3) a Certificate of the Secretary of Seller
showing the incumbency of the officers of the General Partner of
Seller executing instruments on behalf of the General Partner of
Seller.
(k) Buyer shall deliver to Seller (1) a certificate signed by a
responsible officer of Buyer certifying that all of the
representations and warranties of Buyer made hereunder are true
and correct at and as of Closing, as if made on the Closing Date,
(2) a certified copy of a resolution of the Board of Directors of
Buyer authorizing the transaction contemplated by the Agreement,
such certified copy to show the date of adoption and that on the
Closing Date it has not been rescinded or modified, (3) a
Certificate of the Secretary of Buyer showing the incumbency of
the officers of Buyer executing instruments on behalf of Buyer,
and (4) such documents as may be reasonably requested by Seller
demonstrating that Buyer is a qualified operator with the Texas
Railroad Commission and has posted all bonds required by it.
(l) Seller shall deliver to Buyer all funds held in suspense by
Seller with respect to the Assets together with a report in
reasonable detail setting forth the reasons such funds are held
in suspense.
(m) Seller and Buyer shall execute, acknowledge and deliver such
transfer orders or letters in lieu thereof, as may be reasonably
requested and prepared by Buyer, directing all purchasers of
production to make payment to Buyer of proceeds attributable to
production from the Assets assigned to Buyer.
(n) Seller shall have delivered to Buyer a favorable opinion of
Xxxxxx Xxxxx Xxxxxxx & Farrier, L.L.P., counsel to Seller, dated
the Closing Date, substantially in the form of Exhibit "Q"
hereof.
(o) Buyer shall have delivered to Seller a favorable opinion of
counsel to Buyer and Parent, which shall be reasonably acceptable
to Seller, dated the Closing Date, substantially in the form of
Exhibit "R" hereof.
(p) In order to secure the performance of Seller's post Closing
obligations and the post-Closing obligations of Plum Creek
Pipeline Company ("Plum Creek") according to Article VIII of the
Plant Agreement, Buyer, Seller and Plum Creek shall enter into an
escrow agreement similar in form and substance to the escrow
agreement established hereunder with respect to the Xxxxxxx
Money. The Seller shall deposit fifteen million dollars
($15,000,000.00) into escrow under such escrow agreement
("Escrowed Funds"). The Buyer shall be authorized to withdraw
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Escrowed Funds upon the delivery to the escrow agent of an
affidavit signed by a responsible officer of Buyer (with copy to
Seller) to the effect that (i) Seller or Plum Creek (as the case
may be) has defaulted on one or more of its obligations under
this Agreement or the Plant Agreement which survive Closing, (ii)
Buyer has given Seller or Plum Creek (as the case may be) not
less than 10 days prior written notice of such default and Seller
or Plum Creek (as the case may be) has failed to cure its
default, and (iii) either Seller or Plum Creek (as the case may
be) has agreed with Buyer's assertion of default and/or the
damages asserted by Buyer's on account of such default, or the
existence of such default and/or the damages asserted by Buyer's
on account of such default has been finally determined by under
the arbitration provisions set forth in the Agreement. Such
escrow agreement shall also provide that (i) if the existence of
Seller's or Plum Creek's default and/or the damages asserted by
Buyer on account of such default is submitted for determination
through arbitration, the amount asserted by Buyer as damages on
account of such default shall be paid to Buyer from the Escrowed
Funds if the arbitrator's determination is not final within 90
days after the date that an arbitrator is selected according to
Section 5.05 hereof; provided, however, that if the arbitrator
determines that the award of damages payable to Buyer is less
than the amount withdrawn by Buyer from the Escrowed Funds, Buyer
shall repay the amount of such excess to Seller, plus that
portion of the interest thereon that was withdrawn by Buyer,
within five (5) business days after receipt of written demand
from Buyer, and (ii) if Buyer withdraws any of the Escrowed
Funds, either by Seller's or Plum Creek's (as the case may be)
agreement or following the arbitrator's final decision, Buyer
shall also be entitled to one-half (1/2) of the interest that
accrues on the amount withdrawn by Buyer from the Closing Date to
the date of withdrawal. Such escrow agreement shall continue in
effect until the later to occur of (A) two years from the Closing
Date, and (B) 30 days subsequent to the final determination by an
arbitrator of any assertion by Buyer, made within two years from
the Closing Date, of Seller's or Plum Creek's default of a post
Closing obligation. Upon termination of the escrow agreement all
funds remaining in escrow shall be returned to Seller. If
requested by Seller, Buyer shall cooperate with Seller in
substituting a irrevocable standby letter of credit as security
for Seller's and Plum Creek's post-Closing obligations, but such
letter of credit shall be in form and substance acceptable to
Buyer.
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ARTICLE VIII
OBLIGATIONS AFTER CLOSING
8.01 - POST-CLOSING ADJUSTMENTS.
(a) As soon as practicable after the Closing, but not later than 90
days after the Closing, Seller shall prepare and deliver to
Buyer, in accordance with this Agreement and generally accepted
accounting principles, a statement ("Seller's Final Settlement
Statement") setting forth each adjustment to Purchase Price that
was not finally determined as of the Closing and any adjustment
to which Seller is entitled to according to Section 5.04(h) and
showing the calculation of such adjustments. As soon as
practicable after receipt of Seller's Final Settlement Statement,
and no later than 120 days after the Closing Date, Buyer shall
deliver to the Seller a written report containing any changes
that Buyer proposes be made to Seller's Final Settlement
Statement. The parties shall undertake to agree with respect to
the amounts due pursuant to such Post-Closing adjustment not
later than 150 days after the Closing Date. If Buyer fails to
propose any changes to the accounting set forth in the Seller's
Final Settlement Statement, it shall be deemed that Buyer agrees
with Seller's Final Settlement Statement. The final agreed price
paid by Buyer to Seller for the Assets after all adjustments is
hereinafter referred to as the "Final Purchase Price." The date
upon which such agreement is reached or upon which the Final
Purchase Price is established, shall be herein called the "Final
Settlement Date".
(b) If Seller and Buyer are unable to agree upon the Final Purchase
Price within 150 days from the Closing Date, the Dallas office of
Xxxxxx Xxxxxxxx, independent public accountants, is designated to
act as an arbitrator and to decide all points of disagreement
with respect to the Final Purchase Price, such decision to be
binding upon both parties. If such firm is unwilling or unable to
serve in such capacity, Seller and Buyer shall attempt to, in
good faith, designate another acceptable person as the sole
arbitrator under this Section. If the parties are unable to agree
upon the designation of a person as substitute arbitrator, then
Seller or Buyer, or both of them, may in writing request the
American Arbitration Association to appoint the substitute
arbitrator. The arbitration shall be conducted under the Texas
General Arbitration Act and the rules of the American Arbitration
Association to the extent such rules do not conflict with the
terms of such Act and terms hereof. The costs and expenses of the
arbitrator, whether the firm designated above, or a third party
appointed pursuant to the preceding sentence shall be shared
equally by
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Seller and Buyer. Within five (5) days after the decision of the
arbitrator, the Buyer or Seller, as the case may be, shall
promptly make a cash payment to the other equal to the sum as may
be found to be due as the Final Purchase Price. Notwithstanding
the foregoing provisions of this Section 8.01(b), any questions
with respect to a Defective Interest or Defect Value shall be
resolved pursuant to the terms of Article V hereof.
8.02 - SALES TAXES AND RECORDING FEES. Buyer shall pay all sales taxes
occasioned by the sale of the Assets and all documentary, filing and recording
fees required in connection with the filing and recording of any assignments.
8.03 - FURTHER ASSURANCES. After Closing, Seller and Buyer shall execute,
acknowledge and deliver or cause to be executed, acknowledged and delivered such
instruments and take such other action including payment of monies as may be
necessary or advisable to carry out their obligations under this Agreement and
under any document, certificate or other instrument delivered pursuant hereto or
required by law.
8.04 - BUYER'S POST-CLOSING OBLIGATIONS.
(a) If at any time subsequent to the Closing, Buyer comes into
possession of money or property belonging to the Seller such
money or other property shall be promptly delivered to the
Seller.
(b) Upon Closing, Buyer assumes all liabilities attributable to the
Assets arising from, attributable to, or alleged to be arising
from or attributable to a violation of, or the failure to perform
any obligation imposed by any and all laws, statutes, ordinances,
rules, regulations, orders or determinations of any governmental
authority pertaining to health or environment, including
Environmental Laws, in effect where the Assets are located, which
accrue or arise from and after the Effective Time. In connection
with this assumption of liability by Buyer, Buyer agrees that
prior to Closing it will conduct such inspections of the Assets
as deemed necessary by it to fully evaluate the condition of the
Assets. As used in this Agreement "Environmental Laws" means all
laws, rules, and regulations, whether federal, state or local, as
they exist on the date hereof, relating to (a) the control of any
pollutant or potential pollutant or protection of the air, water,
land or the environment, (b) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or
transportation, or (c) exposure to hazardous, toxic, explosive,
corrosive or other substances alleged to be harmful.
"Environmental Laws" shall include, but not be limited to, the
Clean Air Act, 42 U.S.C.ss.7401 et seq., the Clean Water Act 33
U.S.C.ss.1251 et seq., the Resource Conservation Recovery Act, 42
U.S.C.ss.6901 et seq., the Superfund
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Amendments and Reauthorization Act, 42 U.S.C. ss.11001 et seq.,
the Water Pollution Control Act, 33 U.S.C. ss.1251 et seq., the
Safe Drinking Water Act, 42 U.S.C. ss.300f et seq., and the
Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss.9601 et seq.
(c) Upon Closing, Buyer assumes all duties and obligations of the
owner of the Assets which accrue or arise from and after the
Effective Time. Without limitation of the foregoing, Buyer
assumes (i) all obligations of Seller under the Contracts arising
after the Effective Time, including any obligation of Seller
under any of the Contracts to assign any interest in the Other
Leases to other parties entitled to such an assignment under the
terms of the Contracts, (ii) all accounts payable and contractual
obligations incurred by Seller in accordance with this Agreement
with respect to the Assets attributable to periods on or after
the Effective Time, (iii) the obligation to make proper
distribution of any suspense accounts transferred to Buyer in
accordance with standard industry practice, regardless of whether
the suspense funds accrued prior or subsequent to the Effective
Time, (iv) all obligations to properly remove all pipe and
equipment, close pits and to cleanup and restore any property
included in or affected by the Assets which was in compliance
with Environmental Laws at the Effective Time, and (v) all
liabilities and obligations resulting from injury or death to
persons and damage to property arising from or attributable to
the ownership or operation of the Assets after the Effective
Time.
(d) If, pursuant to Section 4.01(i), Seller does not provide notice
to any third parties under Preference Rights contained in the
Contracts listed on Exhibit "D" requesting waiver of such
provisions, or if such request for waiver is made by Seller prior
to Closing, but the third party's waiver of or election to
exercise the Preference Right is not due under the applicable
agreement until after Closing, the affected Property shall be
conveyed to and purchased by Buyer at Closing pursuant to the
terms of this Agreement subject to the terms of the applicable
Preference Right. After Closing, Buyer shall, if necessary,
provide notice to the appropriate third parties requesting waiver
of the applicable Preference Right and/or comply with the terms
of the Preference Right that are properly exercised after
Closing, with Buyer receiving all consideration payable upon the
exercise of such Preference Right.
(e) UPON CLOSING, BUYER AGREES TO INDEMNIFY, RELEASE, DEFEND AND HOLD
HARMLESS SELLER, ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
REPRESENTATIVES, AFFILIATES, SUBSIDIARIES, SUCCESSORS AND ASSIGNS
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FROM AND AGAINST ANY CLAIMS, LIABILITIES, LOSSES, DAMAGES, COSTS
AND EXPENSES (INCLUDING WITHOUT LIMITATION, DAMAGE TO PROPERTY,
OR INJURY OR DEATH OF PERSONS, COURT COSTS, REASONABLE ATTORNEY'S
FEES AND EXPENSES OF EXPERTS) CAUSED BY, ARISING FROM OR
ATTRIBUTABLE TO THE OWNERSHIP OR OPERATION OF THE ASSETS AFTER
THE EFFECTIVE TIME, OR THE BREACH BY BUYER OF ANY OF ITS
OBLIGATIONS UNDER THIS AGREEMENT.
8.05 - SELLER'S POST-CLOSING OBLIGATIONS.
(a) If at any time subsequent to the Closing, Seller comes into
possession of money or property belonging to the Buyer such money
or other property shall be promptly delivered to the Buyer.
(b) Upon Closing, Seller assumes all liabilities attributable to the
Assets arising from, attributable to, or alleged to be arising
from or attributable to a violation of, or the failure to perform
any obligation imposed by any and all laws, statutes, ordinances,
rules, regulations, orders or determinations of any governmental
authority pertaining to health or environment, including
Environmental Laws, in effect where the Assets are located, which
accrue or arise from and before the Effective Time.
(c) Upon Closing, Seller assumes all duties and obligations of the
owner of the Assets which accrue or arise from and before the
Effective Time. Without limitation of the foregoing, Seller
assumes (i) all obligations of Seller under the Contracts arising
before the Effective Time, (ii) all accounts payable and
contractual obligations incurred by Seller in accordance with
this Agreement with respect to the Assets attributable to periods
on or before the Effective Time, and (iii) all liabilities and
obligations resulting from injury or death to persons and damage
to property arising from or attributable to the ownership or
operation of the Assets before the Effective Time.
(d) Seller shall continue its existence for a period of two years
from the Closing Date; provided, however, Seller may terminate
its existence prior to such time if an Affiliate of Seller
qualified to do business in Texas agrees to assume Seller's
obligations hereunder and maintain its existence for a period of
two years from the Closing Date. Seller (or such Affiliate of
Seller which expressly assumes Seller's obligations hereunder)
shall maintain a net worth in the amount of at least
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$5,000,000 in a manner or form reasonably satisfactory to Buyer
for at least two years from and after Closing.
(e) Notwithstanding any other provision of this Agreements, Seller
agrees that Buyer will not incur any liability of any kind
whatsoever with respect to employment matters of Seller of any
Affiliate of Seller, including, but not limited to, any liability
for compensation, savings plans, severance, pensions, the
Employee Retirement Income Security Act of 1974, or other
benefits, as a consequence of consummating the transactions
contemplated by this Agreement, nor will the Assets, or any part
thereof, be subject to any kind of lien or claim in connection
with such employment matters and Seller shall defend, indemnify
and hold harmless Buyer from any and all claims, lawsuits, costs,
or expenses, including attorney's fees, regarding same.
(f) After Closing Seller shall request its lease brokers to provide
Seller with copies of all title information in their possession
not previously furnished to Seller. Upon receipt of such title
information Seller shall provide same to Buyer.
(g) Seller agrees to defend and indemnify Buyer and hold it harmless
from any and all liability arising out of or related to the
litigation described on Exhibit "H" attached hereto and made a
part hereof. In addition, at such time as the litigation
identified as item 1 on Exhibit "H" hereto is concluded by a
final non-appealable order of a court with jurisdiction or by
binding settlement of the parties, Seller shall assign to Buyer
all of Seller's or Affiliate's right, title and interest in the
oil and gas leases described as items 1 through 9 on Exhibit "F"
attached hereto, provided such leases are not required to be
assigned to a third-party in connection with the settlement of
such litigation.
(h) UPON CLOSING, SELLER AGREES TO INDEMNIFY, RELEASE, DEFEND AND
HOLD HARMLESS BUYER, ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
REPRESENTATIVES, AFFILIATES, SUBSIDIARIES, SUCCESSORS AND ASSIGNS
FROM AND AGAINST ANY CLAIMS, LIABILITIES, LOSSES, DAMAGES, COSTS
AND EXPENSES (INCLUDING WITHOUT LIMITATION, DAMAGE TO PROPERTY,
OR INJURY OR DEATH OF PERSONS, COURT COSTS, REASONABLE ATTORNEY'S
FEES AND EXPENSES OF EXPERTS) CAUSED BY, ARISING FROM OR
ATTRIBUTABLE TO THE OWNERSHIP OR OPERATION OF THE ASSETS PRIOR TO
THE EFFECTIVE TIME, OR THE BREACH BY SELLER OF ANY OF ITS
OBLIGATIONS UNDER THIS AGREEMENT.
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8.06 - DELIVERY OF RECORDS. Within ten (10) days after Closing, Seller
shall deliver the Records to Buyer. For a period of two years after the Closing
Date Buyer shall allow Seller reasonable access to the necessary Records during
Buyer's normal business hours after Closing for the purpose of complying with
its post-closing obligations hereunder, filing or amending a tax return,
participating in litigation related to the Assets, or for any other similar
legitimate business purpose; provided that any copies of Records made by Seller
shall be at the sole expense of Seller.
8.07 - DISCLAIMERS OF REPRESENTATIONS AND WARRANTIES. The express
representation and warranties of Seller contained in this Agreement are
exclusive and are in lieu of all other representations and warranties, express,
implied or statutory. BUYER ACKNOWLEDGES THAT, EXCEPT FOR SELLER'S EXPRESS
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, SELLER HAS NOT MADE,
AND SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES, AND BUYER HEREBY EXPRESSLY
WAIVES ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY
STATUTE OR OTHERWISE RELATING TO (I) THE ENVIRONMENTAL CONDITION OF THE ASSETS,
(II) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (III) ANY IMPLIED OR
EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (IV) ANY IMPLIED OR
EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, (V) ANY RIGHTS
OF PURCHASERS UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION,
(VI) ANY AND ALL IMPLIED WARRANTIES EXISTING UNDER APPLICABLE LAW AND (VII) THE
QUALITY, QUANTITY OR VOLUME OF ANY OIL, AND GAS RESERVES; IT BEING THE EXPRESS
INTENTION OF BOTH BUYER AND SELLER THAT THE PERSONAL PROPERTY, EQUIPMENT AND
FIXTURES INCLUDED WITHIN THE ASSETS ARE TO BE CONVEYED TO BUYER IN THEIR PRESENT
CONDITION AND STATE OF REPAIR, "AS IS" AND "WHERE IS" WITH ALL FAULTS, AND THAT
BUYER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS BUYER DEEMS APPROPRIATE.
SELLER AND BUYER AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE
EFFECTIVE, THE DISCLAIMERS OF CERTAIN WARRANTIES CONTAINED IN THIS SECTION ARE
"CONSPICUOUS" DISCLAIMERS FOR THE PURPOSES OF ANY APPLICABLE LAW, RULE OR ORDER.
8.08 - WAIVER OF DTPA. It is the intent of the parties that Buyer'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. & Xxx. ss.17.41 et seq.
(Xxxxxx 1987 and Supp. 1994) (the "DTPA") or any similar statute of any
jurisdiction that may be applicable to the transactions contemplated hereby. As
such, Buyer hereby waives the applicability of the DTPA or any similar statute
to this transaction and any and all duties, rights or remedies that might be
imposed by the DTPA or any similar statute; provided, however, Buyer does not
waive Section 17.555 of the DTPA. Buyer acknowledges, represents and
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warrants that it is purchasing the assets covered by this Agreement for
commercial or business matters; that it is able 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. Buyer expressly recognizes that the price for
which Seller has agreed to sell the assets and perform its obligations under
this Agreement has been predicated upon the inapplicability of the DTPA or any
similar statute and this waiver of the DTPA and any similar statute. Buyer
further recognizes that Seller, in determining to proceed with the entering into
of this Agreement has expressly relied on the provisions of this Section 8.08.
8.09 - RESIGNATION OF OPERATOR. On the Closing Date, Seller or its
Affiliate, if applicable, shall resign as operator of all of the Assets it
operates, as provided in any applicable operating agreement, and shall use
reasonable efforts to secure the consents necessary for Buyer to become operator
of the Assets previously operated by Seller or its Affiliate, if applicable,
and, if requested by Buyer, Seller or its Affiliate, if applicable, shall notify
non-operators of the Assets it operates recommending that Buyer be elected as
successor operator. With respect to those Assets as to which Buyer becomes
operator, Seller or its Affiliate, if applicable, shall relinquish operations to
Buyer on the Closing Date. At the xxxx Xxxxxx relinquishes operations to Buyer,
Seller shall deliver to Buyer all amounts payable to third parties out of
production attributable to the Assets and held in suspense by Seller.
8.10 - REGISTRATION OBLIGATIONS OF PARENT.
(a) Registration Obligation. Within thirty (30) days from the Closing
Date, Parent shall prepare and file with the Securities and
Exchange Commission, or any successor body thereto (the
"Commission"), a registration statement on Form S-3 or other
appropriate form (the "Registration Statement") pursuant to Rule
415 under the Securities Act of 1933, as amended, and all rules
and regulations under such Act (the "Securities Act") covering
the resale by Seller of Parent's Stock. Parent shall use its
reasonable best efforts to keep the Registration Statement
continuously effective under the Securities Act until the date
which is 24 months from the Closing Date, or such shorter period
ending when (i) all shares of Parent Stock covered by the
Registration Statement have been sold in the manner set forth and
as contemplated in the Registration Statement, or (ii) in the
opinion of counsel to Parent, which opinion shall be satisfactory
in form, scope and substance to Seller, registration of the
Parent Stock is (A) no longer required under the Securities Act,
and (B) Seller may sell all remaining shares of Parent Stock in
the open market without limitations as to volume and without
being required to file any forms or reports with the Commission
under the Securities Act.
(b) Registration Procedures. In connection with the Registration
Statement, Parent shall use its reasonable best efforts to effect
the registration of the resale by Seller of the Parent's Stock,
and pursuant thereto, Parent shall as expeditiously as possible:
(i) prepare and file with the Commission the Registration
Statement on the appropriate form with respect to such
Parent's Stock and use all reasonable efforts to cause
the Registration Statement to become effective as soon
as legally practicable following
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its filing (provided that before filing a Registration
Statement or prospectus or any amendments or
supplements thereto, Parent will furnish to the
counsel selected by Seller copies of all such
documents proposed to be filed, which documents will
be subject to the review of such counsel);
(ii) subject to Section 8.10(a) hereof, prepare and file
with the Commission such amendments and supplements to
the Registration Statement and the prospectus used in
connection therewith as may be necessary to comply with
the provisions of the Securities Act with respect to
the disposition of all securities covered by the
Registration Statement in accordance with the intended
methods of disposition by Sellers set forth in the
Registration Statement;
(iii) furnish to Seller such number of copies of the
Registration Statement, each amendment and supplement
thereto, the prospectus included in the Registration
Statement (including each preliminary prospectus) and
such other documents as Seller may reasonably request
in order to facilitate the disposition of the Parent's
Stock;
(iv) use its reasonable best efforts to register or qualify
the Parent's Stock under such other securities or blue
sky laws of such jurisdictions within the United States
as Seller reasonably requests and do any and all other
acts and things which may be reasonably necessary or
advisable to enable Seller to consummate the
disposition in such jurisdictions of the Parent's Stock
(provided that Parent will not be required to qualify
generally to do business, file any general consent to
service of process, or subject itself to taxation in
any jurisdiction where it would not otherwise be
required to qualify, file, or subject itself to
taxation but for this subparagraph);
(v) notify Seller, at any time when a prospectus relating
thereto is required to be delivered under the
Securities Act, of the happening of any event as a
result of which the prospectus included in the
Registration Statement contains an untrue statement of
a material fact or omits to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading, and, at the request
of Seller, Parent will immediately prepare a supplement
or amendment to such prospectus so that, as thereafter
delivered to the purchasers of the Parent's Stock, such
prospectus will not contain an untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading; provided, however,
that Parent's obligation under this paragraph (v) to
effect any such supplement, amendment or filing may be
suspended for a period not exceeding ten (10)
consecutive days that shares are traded on the New York
Stock Exchange in the event Parent or any of its
affiliates are at the time engaged in confidential
negotiations or other confidential business activities,
the disclosure of which would be required in such
supplement, amendment or filing (but would not be
required if such supplement, amendment or filing were
not filed), and the Board of Directors of Parent
determines in good faith that such disclosure would be
materially detrimental to Parent and its stockholders
or would have a material adverse effect on any such
confidential negotiations or other confidential
business activities, except that in no event shall
Parent suspend its obligation
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under this paragraph (v) on more than one (1) occasion
during any ninety (90) consecutive day period
following the Closing Date.
(vi) use its reasonable efforts to cause all of the Parent's
Stock to be listed on each securities exchange on which
similar securities issued by Parent are then listed;
(vii) provide a transfer agent and registrar (which may be
Parent) for all of the Parent's Stock not later than
the effective date of the Registration Statement;
(viii) enter into such customary agreements and take all
such other actions as Seller reasonably requests in
order to expedite or facilitate the disposition of the
Parent's Stock (including, without limitation,
effecting a stock split or a combination of shares);
(ix) make available for inspection by Seller, any
underwriter participating in any disposition pursuant
to the Registration Statement and any attorney,
accountant or other agent retained by Seller or
underwriter, at the offices where normally kept, during
reasonable business hours, all financial and other
records (as may be reasonably requested), pertinent
corporate documents and properties of Parent
(collectively, the "Parent Records") as shall be
reasonably necessary to enable them to exercise their
due diligence responsibility, and cause Parent's
officers, directors,, employees and independent
accountants to supply all information reasonably
requested by Seller, underwriter, attorney, accountant
or agent in connection with the Registration Statement.
Parent Records which Parent determines, in good faith,
to be confidential and any Parent Records which it
notifies Seller are confidential shall not be disclosed
by Seller or any such underwriter, attorney, accountant
or other agent unless (A) the disclosure of such Parent
Records is necessary to avoid or correct a misstatement
or omission in the Registration Statement and Parent's
obligation to amend or supplement the Registration
Statement is not then suspended under the proviso to
Section 8.10(b)(v), (B) the release of such Parent
Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction, or (C)
the information in such Parent Records has been made
generally available to the public. Seller agrees that
information obtained by it as a result of such
inspections shall be deemed confidential and shall not
be used by it as the basis for any market transaction
in securities of Parent unless and until such
information is made generally available to the public
and Seller shall cause any attorney, accountant or
agent retained by Seller to keep confidential any such
information;
(x) otherwise use reasonable efforts to comply with all
applicable rules and regulations of the Commission, and
make available to its security holders, as soon as
reasonably practicable, an earnings statement covering
the period of at least 12 months beginning with the
first day of Parent's first full calendar quarter after
the effective date of the Registration Statement, which
earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158
thereunder;
(xi) in the event of the issuance of any stop order
suspending the effectiveness of the Registration
Statement, or of any order suspending or preventing the
use
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of any related prospectus or suspending the
qualification of any common stock included in the
Registration Statement for sale in any jurisdiction,
Parent will use reasonable efforts promptly to obtain
the withdrawal of such order; and
(xii) use reasonable efforts to cause the Parent's Stock
covered by the Registration Statement to be registered
with or approved by such other governmental agencies or
authorities as may be necessary to enable Seller to
consummate the disposition of the Parent's Stock except
as may be required solely as a consequence of the
nature of Seller's business.
(c) Certain Obligations of Seller. Prior to making a sale of Parent
Stock pursuant to the Registration Statement, Seller shall notify
Parent in writing of its intention to sell Parent Stock pursuant
to the Registration Statement. Upon receipt of such notice,
Parent shall advise Seller, within two (2) business days
following receipt of such notice in writing, of the existence of
any condition described in paragraph (v) of Section 8.10(b).
Seller agrees by acquisition of Parent Stock that, upon receipt
of such written notice from Parent of the happening of any event
of the kind described in paragraph (v) of Section 8.10(b) or
paragraph (xi) of Section 8.10(b), or of Parent's reasonable
determination that a post-effective amendment to the Registration
Statement would be appropriate, Seller shall forthwith
discontinue disposition of Parent Stock covered by the
Registration Statement until Seller's receipt of the copies of
the supplemented or amended prospectus contemplated by paragraph
(v) of Section 8.10(b), which supplemented or amended prospectus
shall be delivered to Seller not later than the date that is 10
days that shares are traded in the New York Stock Exchange
following the date of Parent's written notice referred to herein,
and Seller's discontinuance of the disposition of Parent Stock
shall terminate at the end of such 10-day period regardless of
whether such supplemented or amended prospectus is delivered to
Seller within such 10-day period.
The "Plan of Distribution" contained in the Registration
Statement shall not provide for any firm commitment underwriting
of the Parent Stock, and the distribution of the Parent Stock
under the Registration Statement shall not be effected through
any underwriters on a firm commitment basis.
(d) Registration Expenses. Parent shall bear and pay all expenses in
connection with the registration effected pursuant to this
Section 8.10, including, without limitation, (i) all expenses
incident to Parent's performance of or compliance with the
registration rights granted hereunder, including (without
limitation) all registration and filing fees, fees and expenses
of compliance with securities and blue sky laws, printing and
engraving expenses, messenger, telephone and delivery expenses,
and fees and disbursements of counsel for Parent and all
independent certified public accountants, and (ii) the expense of
any annual audit and the fees and expenses incurred in connection
with the listing of the securities to be registered on each of
the securities exchange on which similar securities issued by
Parent are then listed. Notwithstanding the foregoing, Seller
shall pay all underwriting discounts and commissions or broker's
commissions incurred in connection with the sale or other
disposition
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of Parent's Stock for or on behalf of Seller's account and,
except as provided in Section 8.10(d) hereof, all fees and
expenses of legal counsel for Seller.
(e) INDEMNIFICATION. BUYER AND PARENT SHALL INDEMNIFY AND HOLD
HARMLESS, WITH RESPECT TO THE REGISTRATION STATEMENT FILED BY IT,
TO THE FULL EXTENT PERMITTED BY LAW, SELLER AND EACH OTHER PERSON
OR ENTITY, IF ANY, WHO CONTROLS SELLER WITHIN THE MEANING OF
SECTION 15 OF THE SECURITIES ACT (COLLECTIVELY, "HOLDER
INDEMNIFIED PARTIES") AGAINST ALL LOSSES, CLAIMS, DAMAGES,
LIABILITIES AND EXPENSES, JOINT OR SEVERAL, TO WHICH ANY SUCH
HOLDER INDEMNIFIED PARTY MAY BECOME SUBJECT UNDER THE SECURITIES
ACT, THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED, AND ALL
RULES AND REGULATIONS UNDER SUCH ACT, AT COMMON LAW OR OTHERWISE,
INSOFAR AS SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR EXPENSES
(OR ACTIONS OR PROCEEDINGS, WHETHER COMMENCED OR THREATENED, IN
RESPECT THEREOF) ARISE OUT OF OR ARE BASED UPON (I) ANY UNTRUE
STATEMENT OR ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT
CONTAINED IN THE REGISTRATION STATEMENT AS CONTEMPLATED HEREBY OR
ANY OMISSION OR ALLEGED OMISSION TO STATE THEREIN A MATERIAL FACT
REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS
THEREIN NOT MISLEADING, (II) ANY UNTRUE STATEMENT OR ALLEGED
UNTRUE STATEMENT OF A MATERIAL FACT CONTAINED IN ANY PRELIMINARY,
FINAL OR SUMMARY PROSPECTUS, TOGETHER WITH THE DOCUMENTS
INCORPORATED BY REFERENCE THEREIN (AS AMENDED OR SUPPLEMENTED IF
PARENT SHALL HAVE FILED WITH THE COMMISSION ANY AMENDMENT THEREOF
OR SUPPLEMENT THERETO), OR ANY OMISSION OR ALLEGED OMISSION TO
STATE THEREIN A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR
NECESSARY IN ORDER TO MAKE THE STATEMENTS THEREIN, IN THE LIGHT
OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING,
OR (III) ANY VIOLATION BY PARENT OF ANY FEDERAL, STATE OR COMMON
LAW RULE OR REGULATION APPLICABLE TO PARENT AND RELATING TO
ACTION OF OR INACTION BY PARENT IN CONNECTION WITH ANY SUCH
REGISTRATION; AND IN EACH SUCH CASE, PARENT SHALL REIMBURSE EACH
SUCH HOLDER INDEMNIFIED PARTY FOR ANY REASONABLE LEGAL OR OTHER
EXPENSES INCURRED BY ANY OF THEM IN CONNECTION WITH INVESTIGATING
OR DEFENDING ANY SUCH LOSS, CLAIM, DAMAGE, LIABILITY, EXPENSE,
ACTION OR PROCEEDING; PROVIDED, HOWEVER, THAT PARENT SHALL NOT BE
LIABLE TO ANY SUCH HOLDER INDEMNIFIED PARTY IN ANY SUCH CASE TO
THE EXTENT, THAT ANY SUCH LOSS, CLAIM, DAMAGE, LIABILITY OR
EXPENSE (OR ACTION OR PROCEEDING, WHETHER COMMENCED OR
THREATENED, IN RESPECT THEREOF) ARISES OUT OF OR IS BASED UPON
ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OR OMISSION OR
ALLEGED
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OMISSION MADE IN THE REGISTRATION STATEMENT OR AMENDMENT THEREOF
OR SUPPLEMENT THERETO OR IN ANY SUCH PRELIMINARY, FINAL OR
SUMMARY PROSPECTUS IN RELIANCE UPON AND IN CONFORMITY WITH
WRITTEN INFORMATION FURNISHED TO PARENT BY OR ON BEHALF OF ANY
SUCH HOLDER INDEMNIFIED PARTY FOR USE IN THE PREPARATION THEREOF.
SUCH INDEMNITY AND REIMBURSEMENT OF EXPENSES AND OTHER
OBLIGATIONS SHALL REMAIN IN FULL FORCE AND EFFECT REGARDLESS OF
ANY INVESTIGATION MADE BY OR ON BEHALF OF THE HOLDER INDEMNIFIED
PARTIES AND SHALL SURVIVE THE TRANSFER OF SUCH SECURITIES BY SUCH
HOLDER INDEMNIFIED PARTIES.
In connection with the Registration Statement, Seller
shall furnish Parent in writing such information as Parent
reasonably requests for use in connection with the Registration
Statement or any prospectus relating thereto. SELLER SHALL
INDEMNIFY AND HOLD HARMLESS, WITH RESPECT TO THE REGISTRATION
STATEMENT FILED BY PARENT, TO THE FULL EXTENT PERMITTED BY LAW,
PARENT AND EACH OTHER PERSON OR ENTITY, IF ANY, WHO CONTROLS
PARENT WITHIN THE MEANING OF SECTION 15 OF THE SECURITIES ACT
(COLLECTIVELY, "PARENT INDEMNIFIED PARTIES") AGAINST ALL LOSSES,
CLAIMS, DAMAGES, LIABILITIES AND EXPENSES, JOINT OR SEVERAL, TO
WHICH ANY SUCH PARENT INDEMNIFIED PARTY MAY BECOME SUBJECT UNDER
THE SECURITIES ACT, THE SECURITIES AND EXCHANGE ACT OF 1934, AS
AMENDED, AND ALL RULES AND REGULATIONS UNDER SUCH ACT, AT COMMON
LAW OR OTHERWISE, INSOFAR AS SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR EXPENSES (OR ACTIONS OR PROCEEDINGS, WHETHER
COMMENCED OR THREATENED, IN RESPECT THEREOF) ARISE OUT OF OR ARE
BASED UPON (I) ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT
OF A MATERIAL FACT CONTAINED IN ANY INFORMATION PROVIDED TO
PARENT BY SELLER HEREUNDER OR ANY OMISSION OR ALLEGED OMISSION
TO STATE IN ANY OF SUCH INFORMATION A MATERIAL FACT REQUIRED TO
BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS IN ANY OF
SUCH INFORMATION NOT MISLEADING, OR (II) ANY UNTRUE STATEMENT OR
ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT CONTAINED IN ANY
INFORMATION PROVIDED TO PARENT BY SELLER HEREUNDER, TOGETHER
WITH THE DOCUMENTS INCORPORATED BY REFERENCE THEREIN (AS AMENDED
OR SUPPLEMENTED IF SELLER SHALL HAVE PROVIDED PARENT ANY
AMENDMENT THEREOF OR SUPPLEMENT THERETO), OR ANY OMISSION OR
ALLEGED OMISSION TO STATE THEREIN A MATERIAL FACT REQUIRED TO BE
STATED THEREIN OR NECESSARY IN ORDER TO MAKE THE STATEMENTS IN
SUCH INFORMATION, IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH
THEY WERE MADE, NOT MISLEADING; AND IN EACH SUCH CASE, SELLER
SHALL REIMBURSE EACH SUCH PARENT INDEMNIFIED PARTY FOR ANY
REASONABLE LEGAL OR OTHER EXPENSES INCURRED BY ANY OF
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THEM IN CONNECTION WITH INVESTIGATING OR DEFENDING ANY SUCH
LOSS, CLAIM, DAMAGE, LIABILITY, EXPENSE, ACTION OR PROCEEDING.
SUCH INDEMNITY AND REIMBURSEMENT OF EXPENSES AND OTHER
OBLIGATIONS SHALL REMAIN IN FULL FORCE AND EFFECT REGARDLESS OF
ANY INVESTIGATION MADE BY OR ON BEHALF OF THE PARENT INDEMNIFIED
PARTIES AND SHALL SURVIVE THE TRANSFER OF SUCH SECURITIES BY
SELLER.
(f) Representations, Warranties and Covenants of Seller. In
connection with the transactions contemplated by this Section
8.10, Seller hereby covenants to Buyer and Parent that (i)
neither Seller nor any of its affiliates (as defined in the
Securities Act) will take, directly or indirectly, any action
designed to stabilize (except as may be permitted by applicable
law) or manipulate the price of any security of Parent, and (ii)
Seller shall promptly furnish to Parent any and all information
available to Seller and not otherwise publicly available to
Parent as may be reasonably required by, or as may be necessary
or advisable to comply with the provisions of, the Securities Act
and the Exchange Act, and the rules and regulations promulgated
thereunder, in connection with the preparation and filing of the
Registration Statement pursuant hereto, or any amendment or
supplement thereto, or any preliminary prospectus included
therein. All information to be furnished to Parent by or on
behalf of Seller expressly for use in connection with the
preparation of any preliminary prospectus, any prospectus, the
Registration Statement, or any amendment or supplement thereto,
will not include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(g) Registration Rights Not Assignable. Notwithstanding anything else
contain in this Agreement to the contrary, the registration
rights set forth in and contemplated by this Section 8.10 shall
not be assignable, in whole or in part, by Seller without the
prior written consent of Parent.
8.11 - ARBITRATION. If any party disputes or questions its obligations to
perform under this Article VIII, including the application of any indemnities
set forth herein, then such disputes or questions shall be determined through
arbitration proceedings according to Section 5.05 hereof.
8.12 - SURVIVAL. The representations, warranties, covenants, agreements and
indemnities included or provided in Sections 5.03(f) and 5.04(h), this Article
VIII, in Article X, in Article XI, in Article XII, and in the assignments and
agreements to be delivered at the Closing shall survive the Closing. All other
representations, warranties, covenants, certificates, instruments and agreements
contained in or referred to in this Agreement shall terminate at Closing.
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ARTICLE IX
TERMINATION OF AGREEMENT
9.01 - TERMINATION. This Agreement and the transactions contemplated hereby
may be terminated in the following instances:
(a) by Seller if the conditions set forth in Section 6.01 are not
satisfied in all material respects or waived prior to the Closing
Date;
(b) by Buyer if the conditions set forth in Section 6.02 are not
satisfied in all material respects or waived prior to the Closing
Date;
(c) by Seller if at any time prior to the Closing Date (i) the
aggregate of the Defect Value asserted by Buyer for all then
uncured Defective Interests set forth in Sections 5.02(a)(1) and
(3) equals or exceeds $5,000,000 or (ii) the aggregate of the
Defect Value asserted by Buyer for those then uncured Defective
Interests set forth in Sections 5.02(a)(2), (4), (5), (6), (7)
and (8) equals or exceeds Section $5,000,000;
(d) by Buyer if at any time prior to the Closing Date (i) the
aggregate of the Defect Value asserted by Buyer, agreed to by
Seller and/or finally determined by arbitration for all then
uncured Defective Interests set forth in Sections 5.02(a)(1) and
(3) equals or exceeds $5,000,000 or (ii) the aggregate of the
Defect Value asserted by Buyer, agreed to by Seller and/or
finally determined by arbitration for those then uncured
Defective Interests set forth in Sections 5.02(a)(2), (4), (5),
(6), (7) and (8) equals or exceeds $5,000,000;
(e) at any time by the mutual written agreement of Buyer and Seller;
(f) by Buyer if Buyer is not in default under this Agreement if
Closing does not occur for any reason by 5:00 p.m. on March 31,
1998; or
(g) by Seller if Seller is not in default under this Agreement if
Closing does not occur for any reason by 5:00 p.m. on March 31,
1998.
9.02 - LIABILITIES. Nothing contained in this Agreement shall limit
Seller's or Buyer's legal or equitable remedies including, without limitation,
damages for the breach or failure of any representation, warranty, covenant or
agreement contained herein and the right to enforce specific performance of this
Agreement; provided however, (i) neither party hereto shall be liable to the
other for indirect, punitive or consequential damages; (ii) if all conditions
precedent to the obligation of Buyer to close have been satisfied, but Buyer
refuses to close, Seller shall have the option to either pursue specific
performance or receive the Xxxxxxx Money
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as liquidated damages, and if Seller receives the Xxxxxxx Money as liquidated
damages pursuant to Article X hereof, then Seller shall have no further recourse
against Buyer; (iii) if all conditions precedent to the obligation of Seller to
close have been satisfied, but Seller refuses to close, Buyer's sole remedy
shall be to either (A) enforce specific performance or (B)(1) have the Xxxxxxx
Money returned, (2) receive within five (5) business days from termination, as
liquidated damages from Seller, the sum of $6,100,000, and (3) terminate this
Agreement; and (iv) Seller shall have no liability to Buyer if Buyer terminates
this Agreement because any representation or warranty made by Seller herein is
incorrect.
ARTICLE X
XXXXXXX MONEY
Upon the execution of this Agreement, Buyer has deposited into escrow with
Bank One, N.A. in Fort Worth, Texas (the "Escrow Agent"), Six Million One
Hundred Thousand and No/100 Dollars ($6,100,000.00) as xxxxxxx money (the
"Xxxxxxx Money"). At closing, the Xxxxxxx Money, less any costs or fees
incurred, plus any interest earned thereon shall be applied against the Purchase
Price. If this transaction fails to close due to any breach by Buyer of the
terms, conditions, representations and warranties found in this Agreement, then
at the election of Seller, the Xxxxxxx Money and all interest earned thereon may
be delivered to Seller as liquidated damages. If this transaction fails to
close, due to any breach by Seller of the terms, conditions, representations and
warranties found in this Agreement, then the Xxxxxxx Money and all interest
earned thereon shall be delivered to Buyer. If this transaction fails to close
for any other reason whatsoever, then the Xxxxxxx Money and all interest earned
thereon shall be delivered to Buyer. Seller and Buyer agree to give the Escrow
Agent joint instructions for the delivery of the Xxxxxxx Money, together with
any interest earned thereon, in accordance with the terms of this Agreement
ARTICLE XI
INDEMNIFICATION
11.01 - RIGHT TO EMPLOY COUNSEL.
(a) When any claim, action, or suit shall be filed or asserted in
writing against any party which is indemnifiable under the terms
of this Agreement, the indemnified party shall promptly notify
the indemnifying party of the same in writing, specifying in
detail the basis of such claim and the facts pertaining thereto,
and the indemnifying party shall, at its option, have the right
to assume the defense thereof or participate in the defense
thereof and to employ its own legal counsel in connection with
such defense. Failure of the indemnified party to notify the
indemnifying party of such claim, action, or suit within twenty
(20) calendar days after
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notice to the indemnified party of such claim, action, or suit
shall constitute a waiver of its rights under this Article,
unless such failure to notify within such time period shall not
prejudice the rights of the indemnifying party in respect of such
claim, action or suit, in which case prompt notification as
provided above shall be sufficient.
(b) The indemnified party shall have the right to employ counsel
separate from counsel employed by the indemnifying party in any
such action and to participate in the defense thereof, but the
fees and expenses of such counsel employed by the indemnified
party shall be at the sole expense of the indemnified party
unless (i) the indemnifying party shall have elected not or shall
have failed to assume or participate in the defense thereof, (ii)
the employment thereof has been specifically authorized by the
indemnifying party in writing, or (iii) the parties to any such
action (including any impleaded parties) include both the
indemnifying and indemnified party, and the indemnified party
shall have been advised by its counsel that there may be one or
more legal defenses available to it which are different from or
additional to those available to the indemnifying party (in any
which case (i), (ii) or (iii) above the indemnifying party shall
not have the right to assume the defense of such action on behalf
of the indemnified party and the fees and expenses of such
counsel employed by the indemnified party shall be at the sole
expense of the indemnifying party).
(c) Prior to effectuating any settlement of any such action or
proceeding, the indemnified party shall furnish the indemnifying
party with written notice of any proposed settlement in
sufficient time to allow the indemnifying party to act thereon.
The indemnifying party shall not be liable for any settlement of
any such action or proceeding effected without the written
consent of the indemnifying party. The indemnifying party shall
not effect a settlement of any claim without the written consent
of the indemnified party unless the indemnifying party secures
the complete release of the indemnified party as a part of such
settlement.
11.02 - CLAIM REIMBURSEMENT AND REDUCTION.
(a) Should the indemnified party realize any benefit, including any
tax benefit, resulting from any loss, liability, cost or damage
for which such indemnified party has been indemnified under this
Article, such indemnified party shall reimburse the indemnifying
party, at the time such benefit is realized, an amount equal to
the dollar amount of such benefit so realized.
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(b) Any claim shall be reduced to the extent of any third party
insurance or condemnation payment actually received by the
indemnified party or, alternatively, at the option of the
indemnified party, the rights of the indemnified party against
any insurer or governmental unit with respect to such claim shall
be assigned to the indemnifying party.
ARTICLE XII
GENERAL
12.01 - EXHIBITS. All Exhibits are hereby incorporated in this Agreement by
reference and constitute a part of this Agreement. Each party to this Agreement
and its counsel has received a complete set of Exhibits prior to and as of the
execution of this Agreement.
12.02 - EXPENSES. All fees, costs and expenses incurred by Buyer or Seller
in negotiating this Agreement or in consummating the transactions contemplated
by this Agreement shall be paid by the party incurring the same including,
without limitation, legal and accounting fees, costs and expenses.
12.03 - NOTICES. All notices or communications required or permitted under
this Agreement shall be in writing, and any notices or communications hereunder
shall be deemed to have been duly made if delivered by (i) hand, (ii) overnight
delivery service, (iii) telecopy, or (iv) three days after being placed in first
class certified mail, postage prepaid, with return receipt requested to the
following addresses:
All notices to Seller shall be delivered to:
Cometra Energy, L.P.
000 Xxxxxxxxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Telecopy: 000-000-0000
All notices to Buyer shall be delivered to:
Pioneer Natural Resources USA, Inc.
0000 Xxxxxxxx Xxxxxx Xxxx
0000 X. X'Xxxxxx Xxxx.
Xxxxxx, Xxxxx 00000-0000
Telecopy: 000-000-0000
The address at which any party hereto is to receive notice may be changed from
time to time by such party by giving notice of the new address to all other
parties hereto. Any notice or
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communication given by telecopy shall be promptly confirmed by delivery of a
copy of such notice or communication by hand or overnight delivery service.
12.04 - AMENDMENTS. This Agreement may not be amended nor any rights
hereunder waived except by an instrument in writing signed by the party to be
charged with such amendment or waiver and delivered by such party to the party
claiming the benefit of such amendment or waiver.
12.05 - HEADINGS. The headings of the articles and sections of this
Agreement are for guidance and convenience of reference only and shall not limit
or otherwise affect any of the terms or provisions of this Agreement.
12.06 - COUNTERPARTS. This Agreement may be executed by Buyer and Seller in
any number of counterparts, each of which shall be deemed an original
instrument, but all of which together shall constitute but one and the same
instrument.
12.07 - REFERENCES. References made in this Agreement, including use of a
pronoun, shall be deemed to include where applicable, masculine, feminine,
singular or plural, individuals, partnerships or corporations. As used in this
Agreement, "person" shall mean any natural person, corporation, partnership,
trust, estate or other entity.
12.08 - GOVERNING LAW. This Agreement and the transactions contemplated
hereby shall be construed in accordance with, and governed by, the laws of the
State of Texas.
12.09 - ENTIRE AGREEMENT. This Agreement (including the Exhibits hereto)
constitutes the entire understanding among the parties with respect to the
subject matter hereof, superseding all negotiations, prior discussions and prior
agreements and understandings relating to such subject matter.
12.10 - PARTIES IN INTEREST. This Agreement shall be binding upon and shall
inure to the benefit of, the parties hereto and, except as otherwise prohibited,
their respective successors and assigns; and except as otherwise stated herein,
nothing contained in this Agreement, or implied herefrom, is intended to confer
upon any other person or entity any benefits, rights or remedies.
12.11 - ASSIGNMENTS. Neither Buyer nor Seller may assign all or any portion
of their respective rights or delegate any portion of their duties hereunder
without the prior written consent of the other, which consent shall not be
unreasonably withheld; provided, however, Buyer, at any time up to and including
two (2) business days prior to Closing, may provide notice in writing to Seller
of the party or parties to receive title to the Assets or any part thereof and
the documents conveying title or ownership interest to said Assets shall be
accordingly modified prior to Closing, and provided further that after Closing,
Buyer's interests in the Assets which are conveyed hereunder are freely
assignable by Buyer without any written consent by Seller.
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12.12 - PUBLIC ANNOUNCEMENTS. The parties hereto agree that prior to making
any public announcement or statement with respect to the transactions
contemplated by this Agreement, the party desiring to make such public
announcement or statement shall consult with the other party hereto and exercise
their best efforts to agree upon the text of a joint public announcement or
statement to be made solely by Seller or Buyer, as the case may be; provided,
however, if Seller or Buyer is required by law to make such public announcement
or statement, then the same may be made without the approval of the other party.
The opinion of counsel of either party shall be conclusive evidence of such
requirement by law. Buyer may issue a press release similar in content to that
attached as Exhibit "S" hereto and made a part hereof and Buyer may discuss the
contents of same and the contemplated transaction with analysts, investors and
interested parties as is customary in transactions of this kind.
12.13 - NOTICES AFTER CLOSING. Buyer and Seller hereby agree that each
party shall notify the other of its receipt, after the Closing Date, of any
instrument, notification or other document affecting the Assets while owned by
such other party.
12.14 - SEVERABILITY. If a court of competent jurisdiction determines that
any clause or provision of this agreement is void, illegal or unenforceable, the
other clauses and provisions of the Agreement shall remain in full force and
effect and the clauses and provisions that are determined to be void, illegal or
unenforceable shall be limited so that they shall remain in effect to the extent
permissible by law.
12.15 - TIME IS OF THE ESSENCE. It is understood and agreed that time is of
the essence in this Agreement.
IN WITNESS WHEREOF, the parties have executed or caused the Agreement to be
executed as of the day and year first above written.
COMETRA ENERGY, L.P.
By: AVENEG, INC., Its General Partner
By:
------------------------------------
Xxxx X. Xxxxx,
Chief Executive Officer
SELLER
PIONEER NATURAL RESOURCES USA, INC.
By:
------------------------------------
Xxxxxxx X. Xxxx, Executive Vice
President, Business Development
BUYER
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CONFIRMATIONS
American Cometra, Inc. joins in the execution of this Agreement to confirm
its agreement to perform those obligations of this Agreement that are to be
performed by an Affiliate of Seller, but only to the extent that the context any
of such obligations requires performance by American Cometra, Inc. as an
Affiliate of Seller.
AMERICAN COMETRA, INC.
By:
------------------------------------
Xxxx X. Xxxxx, Chief Executive Officer
Pioneer Natural Resources Company joins in the execution of this Agreement
to confirm its obligations under Section 8.10 of this Agreement.
PIONEER NATURAL RESOURCES COMPANY
By:
------------------------------------
Xxxxxxx X. Xxxx, Executive Vice
President, Business Development
