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EXHIBIT 4.7
ACQUISITION AND DISTRIBUTION AGREEMENT
THIS ACQUISITION AND DISTRIBUTION AGREEMENT (this "AGREEMENT") is made
and entered into as of this 4th day of May 1998, by and between Texoil, Inc., a
Nevada corporation ("TEXOIL"), Cliffwood Oil & Gas Corp., a Texas corporation
(the "GENERAL PARTNER"), and Cliffwood Acquisition - 1996 Limited Partnership,
a Texas limited partnership (the "PARTNERSHIP").
RECITALS:
A. The Partnership was formed in 1996 and is governed by that
certain Agreement of Limited Partnership dated as of September 27, 1996, as
amended (the "PARTNERSHIP AGREEMENT"). The General Partner is the sole general
partner of the Partnership. The limited partners of the Partnership are EnCap
Equity 1996 Limited Partnership, a Texas limited partnership ("ENCAP LP"), and
Energy Capital Investment Company PLC, an English investment company ("ECIC")
(individually, a "LIMITED PARTNER" and collectively, the "LIMITED PARTNERS").
B. Texoil, the General Partner and the Partnership deem in it in
their mutual best interests to enter into the transaction contemplated hereby.
As provided more particularly herein, the transaction contemplated hereby
essentially has two components: (i) an in-kind distribution to the General
Partner by the Partnership of the General Partner's interest in the
Partnership's oil and gas properties and related assets; and (ii) a sale by the
Partnership to Texoil of the remaining portion of the Partnership's interest in
such oil and gas properties and related assets.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual covenants and agreements contained herein, the parties hereto do hereby
agree as follows:
ARTICLE I
DEFINITIONS AND REFERENCES
SECTION 1.1. CERTAIN DEFINED TERMS. When used in this Agreement,
the following terms shall have the respective meanings assigned to them in this
Section 1.1 or in the sections, subsections or other subdivisions referred to
below:
"AGREEMENT" shall mean this Agreement, as hereafter changed, amended
or modified in accordance with the terms hereof.
"CASH PORTION" shall have the meaning assigned to such term in Article
III.
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"CLOSING" and "CLOSING DATE" shall have the respective meanings
assigned to such terms in Section 6.1.
"COMMON STOCK" shall mean shares of Texoil common stock, $.01 par
value per share.
"ECIC" shall have the meaning assigned to such term in Paragraph A of
the Recitals hereto.
"EFFECTIVE DATE" shall have the meaning assigned to such term in
Section 6.2(a).
"ENCAP LP" shall have the meaning assigned to it in Paragraph A of the
Recitals hereto.
"EXCHANGE SHARES" shall have the meaning assigned to it in Section
9.13.
"GENERAL PARTNER"shall have the meaning assigned to such term in the
introductory paragraph to this Agreement.
"LIMITED PARTNERS" shall have the meaning assigned to such term in
Paragraph A of the Recitals hereto.
"OIL AND PROPERTIES" shall have the meaning assigned to such term in
Article II.
"PARTNERSHIP" shall have the meaning assigned to such term in the
introductory paragraph to this Agreement.
"PROPERTIES" shall have the meaning assigned to such term in Article
II.
"PURCHASE SHARES" shall have the meaning assigned to it in Article
III.
"PURCHASED PORTION" shall have the meaning assigned to such term in
Article II.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and all rules and regulations under such Act.
"STOCK AUTHORIZATION APPROVAL" shall have the meaning assigned to it
in Section 9.13.
"TEXOIL" shall have the meaning assigned to such term in the
introductory paragraph to this Agreement.
SECTION 1.2. REFERENCES AND CONSTRUCTION.
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(a) All references in this Agreement to articles, sections,
subsections and other subdivisions refer to corresponding articles, sections,
subsections and other subdivisions of this Agreement unless expressly provided
otherwise.
(b) Titles appearing at the beginning of any of such subdivisions
are for convenience only and shall not constitute part of such subdivisions and
shall be disregarded in construing the language contained in such subdivisions.
(c) The words "this Agreement", "this instrument", "herein",
"hereof", "hereby", "hereunder" and words of similar import refer to this
Agreement as a whole and not to any particular subdivision unless expressly so
limited.
(d) Words in the singular form shall be construed to include the
plural and vice versa, unless the context otherwise requires. Pronouns in
masculine, feminine and neuter genders shall be construed to include any other
gender.
(e) Unless the context otherwise requires or unless otherwise
provided herein, the terms defined in this Agreement which refer to a
particular agreement, instrument or document also refer to and include all
renewals, extensions, modifications, amendments or restatements of such
agreement, instrument or document, provided that nothing contained in this
subsection shall be construed to authorize such renewal, extension,
modification, amendment or restatement.
(f) Examples shall not be construed to limit, expressly or by
implication, the matter they illustrate.
(g) The word "includes" and its derivatives means "includes, but
is not limited to" and corresponding derivative expressions.
(h) No consideration shall be given to the fact or presumption
that one party had a greater or lesser hand in drafting this Agreement.
(i) Unless otherwise indicated, all references herein to "$" or
"dollars" shall refer to U.S. Dollars.
(j) Exhibits II, 6.2(a), 6.3(c) and 6.3(d) are attached hereto.
Each such Exhibit is incorporated herein by reference for all purposes and
references to this Agreement shall also include such Exhibit unless the context
in which used shall otherwise require.
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ARTICLE II
PROPERTY TO BE TRANSFERRED
The Partnership agrees to transfer and assign, and the General Partner
agrees to receive, subject to the terms and provisions herein contained
(including the last full paragraph of this Article II), the following described
properties, rights and interests:
(a) All right, title and interest of the Partnership in
and to the oil, gas and/or mineral leases described in Exhibit II
hereto (and any ratification and/or amendments to such leases, whether
or not such ratifications or amendments are described on Exhibit II)
insofar as such leases (and such ratifications and amendments ) cover
the lands and depths described on such Exhibit II; and
(b) Without limiting the foregoing, all other right,
title and interest (of whatever kind or character, whether legal or
equitable, and whether vested or contingent) of the Partnership in and
to the oil, gas and other minerals in and under or that may be
produced from the lands and depths described on Exhibit II (including
interests in oil, gas and/or mineral leases covering such lands and
depths, overriding royalties, production payments and net profits
interests in such lands or such leases, and fee mineral interests, fee
royalty interests and all other interests of any kind or character in
such oil, gas and other minerals); and
(c) All rights, titles and interests of the Partnership
in and to all permits; licenses; servitudes; easements; rights-of-way;
orders; farm-in and farm-out agreements; bottom hole agreements; crude
oil, condensate and natural gas purchase and sale, gathering,
transportation and marketing agreements; hydrocarbon storage
agreements; acreage contribution agreements; operating agreements;
balancing agreements; pooling agreements; unitization agreements;
processing agreements; saltwater disposal agreements; options;
facility ore equipment leases; and other contracts, agreements, and
rights owned by the Partnership, in whole or in part, to the extent
that they are (i) appurtenant to or affect the properties described in
subsections (a) and (b) above or (ii) used or held for use in
connection with the ownership or operation of the properties described
in subsections (a) and (b) above or the production or treatment of
oil, gas, and other hydrocarbons and associated products on or
produced from the properties described in subsections (a) and (b)
above, or the sale or disposal of water, oil, gas and other
hydrocarbons and associated products; and
(d) All rights, titles and interests of the Partnership
in and to all materials, supplies, machinery, equipment, improvements
and other personal property and fixtures (including, but not by way of
limitation, all xxxxx, saltwater disposal xxxxx, wellhead equipment,
compression equipment, flow lines, pipelines, gathering systems,
processing and separation systems, and other equipment) whether or not
located on the properties described in subsections (a), (b) and (c)
above and used in connection with the exploration, development,
operation or maintenance thereof and all oil, gas and other
hydrocarbons produced from or allocated thereto; and
(e) All of the files, records, information, and data,
whether written or electronically stored, relating to the interests of
the Partnership in the properties
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described in subsections (a), (b) and (c) above, including without
limitation: (i) land and title records (including abstracts of title,
title opinions, and title curative documents); (ii) contract files;
(iii) correspondence; (iv) operations, environmental, production and
accounting records (but not including general financial accounting or
tax accounting records); (v) facility and well records; and (vi)
geological, geophysical and other scientific and technical data and
information relating to the properties described in subsections (a),
(b) and (c) above that is nonproprietary and that the Partnership has
the unencumbered right to transfer.
The properties and interests specified in the foregoing subsections (a), (b)
and (c) are herein sometimes collectively called the "OIL AND GAS PROPERTIES,"
and the properties and interests specified in the foregoing subsections
(a),(b),(c), (d) and (e) are herein sometimes collectively called the
"PROPERTIES".
It is specifically agreed that the transfer contemplated by this
Article II shall be deemed to constitute (x) an in-kind distribution to the
General Partner by the Partnership of the General Partner's interest in the
Properties (which, for purposes hereof, shall constitute 10% of the
Partnership's interest in the Properties) and (y) a sale by the Partnership to
Texoil, and a purchase by Texoil from the Partnership, of the Partnership's
entire interest in the Properties less the interest described in clause (x)
above. The portion of the Partnership's interest in the Properties described
in clause (y) of the immediately preceding sentence shall be herein called the
"PURCHASED PORTION". It is hereby acknowledged and affirmed that Texoil has
directed the Partnership to convey and assign to the General Partner, a
wholly-owned subsidiary of Texoil, the Purchased Portion.
ARTICLE III
PURCHASE PRICE FOR PURCHASED PORTION
In consideration of the sale by the Partnership to Texoil of the
Purchased Portion, as provided in the last full paragraph of Article II, Texoil
shall pay to the Partnership an aggregate purchase price consisting of the
following: (a) $4,465,000 cash (the "CASH PORTION"); and (b) 898,000 shares of
Common Stock (the "PURCHASE SHARES").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP
The Partnership hereby represents and warrants to Texoil as follows:
SECTION 4.1. ORGANIZATION AND EXISTENCE. The Partnership is a
limited partnership duly formed and validly existing under the laws of the
State of Texas.
SECTION 4.2. POWER AND AUTHORITY. The Partnership has full
partnership power and partnership authority to execute, deliver, and perform
this Agreement and each other
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agreement, instrument, or document executed or to be executed by the
Partnership in connection with the transactions contemplated hereby to which it
is a party and to consummate the transactions contemplated hereby and thereby.
The execution, delivery, and performance by the Partnership of this Agreement
and each other agreement, instrument, or document executed or to be executed by
the Partnership in connection with the transactions contemplated hereby to
which it is a party, and the consummation by it of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
partnership action of the Partnership.
SECTION 4.3. VALID AND BINDING AGREEMENT. This Agreement has been
duly executed and delivered by the Partnership and constitutes, and each other
agreement, instrument, or document executed or to be executed by the
Partnership in connection with the transactions contemplated hereby to which it
is a party has been, or when executed will be, duly executed and delivered by
the Partnership and constitutes, or when executed and delivered will
constitute, a valid and legally binding obligation of the Partnership,
enforceable against it in accordance with their respective terms, except that
such enforceability may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting creditors' rights
generally and (b) equitable principles which may limit the availability of
certain equitable remedies (such as specific performance) in certain instances.
SECTION 4.4. NON-CONTRAVENTION. Other than requirements (if any)
that there be obtained consents to assignment (or waivers of preferential
rights to purchase) from third parties, and except for approvals required to be
obtained from governmental entities who are lessors under leases forming a part
of the Oil and Gas Properties (or who administer such leases on behalf of such
lessors) which are customarily obtained post-closing, neither the execution,
delivery, and performance by the Partnership of this Agreement and each other
agreement, instrument, or document executed or to be executed by the
Partnership in connection with the transactions contemplated hereby to which it
is a party nor the consummation by it of the transactions contemplated hereby
and thereby do and will (a) conflict with or result in a violation of any
provision of the partnership agreement or other governing instruments of the
Partnership, (b) conflict with or result in a violation of any provision of, or
constitute (with or without the giving of notice or the passage of time or
both) a default under, or give rise (with or without the giving of notice or
the passage of time or both) to any right of termination, cancellation, or
acceleration under, any bond, debenture, note, mortgage, indenture, lease,
contract, agreement, or other instrument or obligation to which the Partnership
is a party or by which the Partnership or any of its properties may be bound,
(c) result in the creation or imposition of any lien or other encumbrance upon
the properties of the Partnership, or (d) violate any applicable law, rule or
regulation binding upon the Partnership.
SECTION 4.5. APPROVALS. Other than requirements (if any) that there
be obtained consents to assignment (or waivers of preferential rights to
purchase) from third parties, and except for approvals required to be obtained
from governmental entities who are lessors under leases forming a part of the
Oil and Gas Properties (or who administer such leases on behalf of such
lessors) which are customarily obtained post-closing, no consent, approval,
order, or
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authorization of, or declaration, filing, or registration with, any court or
governmental agency or of any third party is required to be obtained or made by
the Partnership in connection with the execution, delivery, or performance by
the Partnership of this Agreement and each other agreement, instrument, or
document executed or to be executed by the Partnership in connection with the
transactions contemplated hereby to which it is a party or the consummation by
it of the transactions contemplated hereby and thereby.
SECTION 4.6. INVESTMENT INTENT. The Partnership is acquiring the
Purchase Shares to be acquired by it hereunder for its own account for
investment and not with a view to, or for sale or other disposition in
connection with, any distribution of all or any part thereof, except (i) in an
offering covered by a registration statement filed with the Securities and
Exchange Commission under the Securities Act covering the Purchase Shares, or
(ii) pursuant to an applicable exemption under the Securities Act; provided,
however, that it is specifically acknowledged and agreed that the Partnership
shall be permitted to make a distribution of the Purchase Shares to the Limited
Partners immediately after receipt by the Partnership of such shares.
SECTION 4.7. INVESTMENT EXPERIENCE. The Partnership acknowledges
that it is able to fend for itself, can bear the economic risk of its
investment in the Purchase Shares to be acquired by it hereunder, and has such
knowledge and experience in financial and business matters that it is capable
of evaluating the merits and risks of an investment in the Purchase Shares.
The Partnership represents that it has not been organized for the purpose of
acquiring the Purchase Shares to be acquired by it hereunder.
SECTION 4.8. RESTRICTED SECURITIES. The Partnership understands that
the Purchase Shares will not have been registered pursuant to the Securities
Act or any applicable state securities laws, that such Purchase Shares will be
characterized as "restricted securities" under federal securities laws, and
that under such laws and applicable regulations such Purchase Shares cannot be
sold or otherwise disposed of without registration under the Securities Act or
an exemption therefrom.
SECTION 4.9. LEGEND. It is agreed and understood by the Partnership
that the certificates representing the Purchase Shares shall each conspicuously
set forth on the face or back thereof, in addition to any legends required by
applicable law or other agreement, a legend in substantially the following
form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
UNLESS THEY ARE FIRST REGISTERED PURSUANT TO THAT ACT AND APPLICABLE
STATE SECURITIES LAWS OR UNLESS THE CORPORATION RECEIVES A WRITTEN
OPINION OF COUNSEL, WHICH OPINION AND COUNSEL ARE SATISFACTORY TO THE
CORPORATION, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
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SECTION 4.10. DISCLAIMER OF WARRANTIES. Other than those expressly
set out in this Article IV, the Partnership hereby expressly disclaims any and
all representations or warranties with respect to the Properties or the
transaction contemplated hereby, and Texoil agrees that the Properties are
being sold or otherwise transferred by the Partnership "where is" and "as is".
Specifically as a part of (but not in limitation of) the foregoing, Texoil
acknowledges that the Partnership has not made, and the Partnership hereby
expressly disclaims, any representation or warranty (express, implied, under
common law, by statute or otherwise) as to the condition of the Properties
(INCLUDING WITHOUT LIMITATION, THE PARTNERSHIP DISCLAIMS ANY IMPLIED OR EXPRESS
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS), status of title to the Properties, the
compliance by the Partnership with environmental or other laws, rules,
regulations and/or orders, the extent of oil, gas and/or other mineral
reserves, the recoverability of or the cost of recovering any of such reserves,
the value of reserves, prices (or anticipated prices) at which production has
been or will be sold and the ability to sell oil or gas production from the
Properties.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TEXOIL ENTITIES
Texoil and the General Partner (in this Article V, a "TEXOIL ENTITY")
hereby jointly and severally represent and warrant to the Partnership and for
the benefit of the Limited Partners as follows:
SECTION 5.1. ORGANIZATION AND EXISTENCE. Each Texoil Entity is a
corporation duly organized, legally existing and in good standing under the
laws of its state of incorporation, and, in the instance of Texoil, is
qualified to do business in the State of Texas.
SECTION 5.2. POWER AND AUTHORITY. Subject to the Stock Authorization
Approval, each Texoil Entity has full corporate power and corporate authority
to execute, deliver, and perform this Agreement and each other agreement,
instrument, or document executed or to be executed by such Texoil Entity in
connection with the transactions contemplated hereby to which it is a party and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery, and performance by each Texoil Entity of this Agreement and each
other agreement, instrument, or document executed or to be executed by such
Texoil Entity in connection with the transactions contemplated hereby to which
it is a party, and the consummation by it of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate action
of such Texoil Entity except for the Stock Authorization Approval.
SECTION 5.3. VALID AND BINDING AGREEMENT. This Agreement has been
duly executed and delivered by each Texoil Entity and constitutes, and each
other agreement, instrument, or document executed or to be executed by such
Texoil Entity in connection with the transactions contemplated hereby to which
it is a party has been, or when executed will be, duly executed
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and delivered by such Texoil Entity and constitutes, or when executed and
delivered will constitute, a valid and legally binding obligation of such
Texoil Entity, enforceable against it in accordance with their respective
terms, except that such enforceability may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting
creditors' rights generally and (b) equitable principles which may limit the
availability of certain equitable remedies (such as specific performance) in
certain instances.
SECTION 5.4. NON-CONTRAVENTION. The execution, delivery, and
performance by each Texoil Entity of this Agreement and each other agreement,
instrument, or document executed or to be executed by such Texoil Entity in
connection with the transactions contemplated hereby to which it is a party and
the consummation by it of the transactions contemplated hereby and thereby do
not and will not (a) conflict with or result in a violation of any provision of
the charter or bylaws or other governing instruments of such Texoil Entity, (b)
conflict with or result in a violation of any provision of, or constitute (with
or without the giving of notice or the passage of time or both) a default
under, or give rise (with or without the giving of notice or the passage of
time or both) to any right of termination, cancellation, or acceleration under,
any bond, debenture, note, mortgage, indenture, lease, contract, agreement, or
other instrument or obligation to which such Texoil Entity is a party or by
which such Texoil Entity or any of its properties may be bound, (c) result in
the creation or imposition of any lien or other encumbrance upon the properties
of such Texoil Entity, or (d) violate any applicable law, rule or regulation
binding upon such Texoil Entity.
SECTION 5.5. APPROVALS. No consent, approval, order, or
authorization of, or declaration, filing, or registration with, any court or
governmental agency or of any third party is required to be obtained or made by
each Texoil Entity in connection with the execution, delivery, or performance
by such Texoil Entity of this Agreement and each other agreement, instrument,
or document executed or to be executed by such Texoil Entity in connection with
the transactions contemplated hereby to which it is a party or the consummation
by it of the transactions contemplated hereby and thereby, other than the Stock
Authorization Approval and compliance with any applicable requirements of the
Securities Act and any applicable state securities laws.
SECTION 5.6. PENDING LITIGATION. There are no pending suits,
actions, or other proceedings in which any Texoil Entity is a party which
affect the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
SECTION 5.7. KNOWLEDGEABLE PURCHASER. Each Texoil Entity is a
knowledgeable purchaser, owner and operator of oil and gas properties, has the
ability to evaluate (and in fact has evaluated) the Properties for purchase,
and is acquiring the Properties for its own account and not with the intent to
make a distribution 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.
SECTION 5.8. TEXOIL COMMON STOCK. Upon receipt of the Stock
Authorization Approval, the Purchase Shares and the Exchange Shares will be
duly authorized for such
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issuance and, when issued and delivered by Texoil in accordance with the
provisions of this Agreement, will be validly issued, fully paid, and
nonassessable.
SECTION 5.9. SEC FILINGS. Texoil is current in its obligations to
file all periodic report and proxy statements with the Commission required to
be filed under the Exchange Act. Texoil's Annual Report on Form-10KSB for the
year ended December 31, 1997 (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, 1997, there have been no material developments, transactions
or events affecting Texoil (other than developments or events affecting the oil
and gas exploration and production industry generally) other than as disclosed
by Texoil in the SEC Documents or to the Partnership and the Limited Partners
in writing. There are no material liabilities of Texoil (contingent or
otherwise), other than as disclosed in the SEC Documents and the financial
statements included therein.
ARTICLE VI
CLOSING OF TRANSACTION
SECTION 6.1. THE CLOSING. The closing (herein called the "CLOSING")
of the transaction contemplated hereby shall take place in the offices of
Xxxxxxxx & Xxxxxx, P.C., at 1700 Chase Tower, 000 Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxx, at 10:30 a.m. Central Standard Time, on the date hereof (such date and
time being herein called the "CLOSING DATE").
SECTION 6.2. THE PARTNERSHIP'S CLOSING OBLIGATIONS. At the Closing,
the Partnership shall:
(a) execute, acknowledge and deliver to Texoil and the
General Partner Assignments of the Properties (the "ASSIGNMENTS"), in
the form attached hereto as Exhibit 6.2(a), being effective as to runs
of oil and deliveries of gas as of 12:01 o'clock a.m., Central
Daylight Time on February 1, 1998 (the "EFFECTIVE DATE");
(b) to the extent requested by Texoil or the General
Partner, execute and deliver to Texoil or the General Partner (i)
letters in lieu of transfer orders (or similar documentation), in form
acceptable to both parties; and
(c) to the extent requested by Texoil or the General
Partner, execute and deliver an affidavit or other certification (as
permitted by such code) that the Partnership is not a "foreign Person"
within the meaning of Section 1445 (or similar provisions) of the
Internal Revenue Code of 1986 as amended (i.e., the Partnership is not
a non-resident alien, foreign corporation, foreign partnership,
foreign trust or foreign estate as those terms are defined in such
code and regulations promulgated thereunder).
SECTION 6.3. TEXOIL'S AND GENERAL PARTNER'S CLOSING OBLIGATIONS. At
the Closing:
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(a) Texoil shall deliver to the Partnership, by wire
transfer to an account or accounts designated by the Partnership in a
bank located in the United States, an amount equal to the Cash
Portion;
(b) (i) The General Partner shall furnish to the
Partnership such evidence (including, without limitation, evidence of
satisfaction of all applicable bonding requirements) as the
Partnership or the Limited Partners may require that the General
Partner is qualified with the applicable authorities to succeed the
Partnership as the owner and, where applicable, operator of the
Properties, (ii) with respect to properties operated by the
Partnership where the General Partner is to succeed the Partnership as
operator, the General Partner shall execute and deliver to the
Partnership appropriate evidence reflecting change of operator as
required by applicable authorities, and (iii) the General Partner
shall execute and deliver to the Partnership such forms as the
Partnership or the Limited Partners may reasonably request for filing
with the applicable authorities to reflect the General Partner's
assumption of plugging and abandonment liabilities with respect to the
xxxxx located on the Properties or on units in which the Properties
participate;
(c) Texoil shall execute and deliver that certain
Registration Rights Agreement substantially in the form of the
document attached hereto as Exhibit 6.3(c); and
(d) Texoil and the General Partner shall cause to be
delivered to the Partnership an opinion of counsel reasonably
acceptable to the Partnership, which opinion shall cover the matters
described in Exhibit 6.3(d) and shall be in form and scope reasonably
acceptable to the Limited Partners.
SECTION 6.4. DELIVERY OF FILES. Within 30 days after the Closing,
the Partnership shall deliver to the General Partner the files and other
materials referenced in subsection (e) of Article II. Notwithstanding the
foregoing, to the extent such files or other materials include items which the
Partnership cannot provide to the General Partner without, in the opinion of
the Partnership, breaching confidentiality agreements with other parties, the
Partnership shall have no obligation to furnish such items. The Partnership
may retain copies of all or any parts of the files or other materials so
furnished, and all costs of copying such files shall be borne by the
Partnership. So long as such files or other materials so delivered by the
Partnership to Texoil are maintained by the General Partner or an affiliate,
the General Partner shall permit the Partnership, its partners and their
respective representatives to have access to the same for a period of three
years after Closing. The General Partner shall advise the Partnership and its
partners before it destroys any such files or other materials (and will, if
requested by the Partnership or any partner thereof, deliver to the Partnership
or such partner any files or other materials it intends to destroy).
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ARTICLE VII
ASSUMPTION AND INDEMNIFICATION
The General Partner agrees, as of the date of Closing (and, upon the
execution and delivery of the Assignments by the Partnership, the General
Partner shall be deemed to have agreed), (a) to assume, and to timely pay and
perform, all duties, obligations and liabilities relating to the ownership
and/or operation of the Properties, whether arising before, on or after the
Effective Date (including, without limitation, those arising under the
contracts and agreements described in Article II(c), and (b) to indemnify and
hold the Partnership, its partners and its and such partners' parent and
subsidiary companies and other affiliates, and its and their respective
shareholders, members, owners, directors, officers, managers, employees and
agents harmless from and against any and all claims, actions, liabilities,
losses, damages, costs or expenses (including court costs and attorneys' fees)
of any kind or character arising out of or otherwise relating to the ownership
and/or operation of the Properties, whether arising before, on or after the
Effective Date. In connection with (but not in limitation of) the foregoing,
it is specifically understood and agreed that matters arising out of or
otherwise relating to the ownership and/or operation of the Properties shall
include all matters arising out of the condition of the Properties (including,
without limitation, within such matters all obligations to properly plug and
abandon, or replug and re-abandon, xxxxx located on the Properties, to restore
the surface, and to comply with, or to bring the Properties into compliance
with, applicable environmental laws including conducting any remediation
activities which may be required on, or otherwise in connection with activities
on, the Properties), regardless of when the events occurred which give rise to
such condition (AND REGARDLESS OF WHETHER THE PARTNERSHIP, ITS PARTNERS AND ITS
AND SUCH PARTNERS' PARENT AND SUBSIDIARY COMPANIES AND OTHER AFFILIATES, AND
ITS AND THEIR RESPECTIVE SHAREHOLDERS, MEMBERS, OWNERS, DIRECTORS, OFFICERS,
MANAGERS, EMPLOYEES AND AGENTS, WERE WHOLLY OR PARTIALLY NEGLIGENT OR OTHERWISE
AT FAULT), and the above provided for assumptions and indemnifications by the
General Partner shall expressly cover and include such matters so arising out
of such condition.
ARTICLE VIII
NOTICES
All notices and other communications required under this Agreement
shall (unless otherwise specifically provided herein) be in writing and be
delivered personally, by recognized commercial courier or delivery service
(which provides a receipt), by telecopier (with receipt acknowledged), or by
registered or certified mail (postage prepaid), at the following addresses:
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If to the Partnership: Cliffwood Acquisition - 1996 Limited Partnership
c/o Cliffwood Oil & Gas Corp.
000 Xxxxxxx Xxxxxxx Xx.
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Fax No.: 000-000-0000
with a copy to:
EnCap Investments, L.C.
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax No.: 000-000-0000
If to Texoil or
the General Partner: c/o Texoil, Inc.
000 Xxxxxxx Xxxxxxx Xx.
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Fax No.: 000-000-0000
and shall be considered delivered on the date of receipt. Either Texoil and
the General Partner, on the one hand, or the Partnership, on the other hand,
may specify as its proper address any other post office address within the
continental limits of the United States by giving notice to the other, in the
manner provided in this Article, at least ten (10) days prior to the effective
date of such change of address.
ARTICLE IX
MISCELLANEOUS MATTERS
SECTION 9.1. SURVIVAL OF PROVISIONS. All representations and
warranties made herein by Texoil, the General Partner and the Partnership shall
be continuing and shall be true and correct on and as of the date of Closing
with the same force and effect as if made at that time; further, all of such
representations and warranties shall survive the Closing and the delivery of
the Assignments. The provisions of, and the obligations of the parties under,
Article VI (to the extent the same are, by mutual agreement, not performed at
Closing), and Articles VII through IX inclusive shall survive the Closing and
the delivery of the Assignments.
SECTION 9.2. FURTHER ASSURANCES. From time to time after the
Closing, at the request of any party hereto and without further consideration,
the Partnership, on the one hand, and
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Texoil and the General Partner, on the other hand, shall execute and deliver to
the requesting party such instruments and documents and take such other action
(but without incurring any material financial obligation) as such requesting
party may reasonably request in order to consummate more fully and effectively
the transactions contemplated hereby.
SECTION 9.3. BINDING EFFECT; SUCCESSORS AND ASSIGNS. The Agreement
shall be binding on the parties hereto and their respective successors and
permitted assigns. No party hereto shall have the right to assign its rights
under this Agreement without the prior written consent of the other party first
having been obtained.
SECTION 9.4. COMMISSIONS. Texoil and the General Partner jointly and
severally agree to indemnify and hold harmless the Partnership and the Limited
Partners from and against any and all claims, obligations, actions,
liabilities, losses, damages, costs or expenses (including court costs and
attorneys fees) of any kind or character arising out of or resulting from any
agreement, arrangement or understanding alleged to have been made by, or on
behalf of, Texoil or the General Partner with any broker or finder in
connection with this Agreement or the transactions contemplated hereby.
SECTION 9.5. EXPENSES; SALES TAXES; FILINGS AND RECORDING FEES.
(a) Texoil and the General Partner, on the one hand, and the
Partnership, on the other hand, shall bear and pay all expenses incurred by
them or it in connection with the transaction contemplated by this Agreement.
(b) Notwithstanding anything to the contrary herein, since the
transaction contemplated hereby is an isolated transaction, no sales tax will
be collected from Texoil or the General Partner. If, however, this transaction
is later deemed to be other than an occasional sale, Texoil and the General
Partner jointly and severally agree to be solely responsible, and shall
indemnify and hold the Partnership (and their respective partners, and each of
their and each such partners' parent and subsidiary companies and other
affiliates, and shareholders, managers, owners, directors, officers, employees,
consultants, and agents, respectively) harmless, from any and all sales or
transfer taxes or fees (including related penalty, interest or legal costs) due
by virtue of this transaction on the Properties transferred pursuant hereto and
Texoil or the General Partner shall remit such sales or transfer taxes at that
time. The Partnership, the General Partner and Texoil agree to cooperate with
each other in demonstrating that the requirements for an occasional or isolated
sale or any other sales tax exemption have been met.
(c) Texoil and the General Partner shall be solely responsible for
all filings and recordings of assignments and other documents related to the
Properties and for all fees connected therewith, and Texoil or the General
Partner shall furnish the Partnership and its partners with pertinent recording
data. The Partnership (or the Limited Partners) shall not be responsible for
any loss to Texoil or the General Partner because of Texoil's or the General
Partner's failure to file or record documents correctly or promptly.
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SECTION 9.6. ENTIRE AGREEMENT. This Agreement and the documents
referred to herein to be delivered at Closing contain the entire understanding
of the parties hereto with respect to subject matter hereof and supersede all
prior agreements, understandings, negotiations, and discussions among the
parties with respect to such subject matter. Time is of the essence in this
Agreement.
SECTION 9.7. PUBLIC STATEMENTS. The Partnership, on the one hand,
and Texoil, on the other hand, shall consult with each other with regard to all
publicity and other releases at or prior to Closing concerning this Agreement
and the transactions contemplated hereby and, except as required by applicable
law or the applicable rules or regulations of any governmental body or stock
exchange, neither the Partnership, on the one hand, nor Texoil, on the other
hand, shall issue any publicity or other release without the prior consent of
the other.
SECTION 9.8. INJUNCTIVE RELIEF. The parties hereto acknowledge and
agree that irreparable damage would occur in the event any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement, and shall be entitled to enforce specifically the provisions
of this Agreement, in any court of the United States or any state thereof
having jurisdiction, in addition to any other remedy to which the parties may
be entitled under this Agreement or at law or in equity.
SECTION 9.9. DECEPTIVE TRADE PRACTICES. To the extent applicable to
the transaction contemplated hereby or any portion thereof, TEXOIL CAN AND DOES
EXPRESSLY WAIVE THE PROVISIONS OF THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER
PROTECTION ACT, SECTION 17.41 ET SEQ., TEXAS BUSINESS & COMMERCE CODE, OTHER
THAN SECTION 17.555, WHICH IS NOT WAIVED, AND ALL OTHER CONSUMER PROTECTION
LAWS OF THE STATE OF TEXAS, OR ANY OTHER STATE, APPLICABLE TO THIS TRANSACTION
THAT MAY BE WAIVED BY THE PARTIES. IN CONNECTION WITH SUCH WAIVER, TEXOIL
HEREBY REPRESENTS TO THE PARTNERSHIP THAT TEXOIL (a) IS IN THE BUSINESS OF
SEEKING OR ACQUIRING BY PURCHASE OR LEASE, GOODS OR SERVICES FOR COMMERCIAL OR
BUSINESS USE, (b) HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS
MATTERS THAT ENABLES IT TO EVALUATE THE MERITS AND RISKS OF THE TRANSACTIONS
CONTEMPLATED HEREBY, (c) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING
POSITION AND (d) HAS ASSETS OF $5,000,000 OR MORE ACCORDING TO ITS MOST RECENT
FINANCIAL STATEMENTS.
SECTION 9.10. AMENDMENTS. This Agreement may be amended, modified,
supplemented, restated or discharged (and provisions hereof may be waived) only
by an instrument in writing signed by the parties hereto.
SECTION 9.11. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
SECTION 9.12. COUNTERPARTS. This Agreement may be executed in
counterparts, all of which are identical and all of which constitute one and
the same instrument. It shall not be
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necessary for Texoil, the General Partner, the Partnership and the Limited
Partners to sign the same counterpart.
SECTION 9.13. POST-CLOSING COVENANT OF TEXOIL REGARDING STOCK
AUTHORIZATION APPROVAL. Texoil covenants and agrees with and for the benefit
of the Partnership and the Limited Partners that (a) immediately after the
Closing, it will commence to take all necessary steps to amend its charter or
other applicable documents so as to increase the number of authorized shares of
Common Stock to an amount sufficient to permit it to duly issue (i) to the
Partnership, the Purchase Shares, and (ii) to the Limited Partners, the
Exchange Shares, including, if necessary, obtaining the requisite consent or
approval of the shareholders of Texoil, and (b) it will have duly completed the
actions described in the immediately preceding clause (a) no later than May 25,
1998. The actions described in clause (a) of the immediately preceding
sentence shall be herein called the "STOCK AUTHORIZATION APPROVAL".
Immediately upon receipt of the Stock Authorization Approval, Texoil shall (A)
issue and deliver to the Partnership a certificate or certificates representing
the Purchase Shares registered in the name of the Partnership or, if requested
by the Partnership, the Limited Partners; (B) shall issue and deliver to the
Limited Partners, in consideration of and upon the delivery of the instruments
described in Section 9.14(c), a certificate or certificates representing
shares of Common Stock (the "EXCHANGE SHARES") as follows: EnCap LP - 1,251,919
shares of Common Stock; and EClC- 417,306 shares of Common Stock; and (C) shall
cause to be delivered to the Limited Partners an opinion of counsel reasonably
satisfactory to the Limited Partners to the effect that the Purchase Shares and
the Exchange Shares have been duly and validly authorized and issued and are
fully paid and non-assessable.
SECTION 9.14. JOINDER. Each Limited Partner joins in the execution
of this Agreement for the limited purposes of making the representations,
warranties and covenants below:
(a) Each Limited Partner severally (and not jointly and severally)
represents and warrants to Texoil and the General Partner that such Limited
Partner has not placed a mortgage, lien or other similar encumbrance on the
Properties.
(b) In connection with the contemplated distribution by the
Partnership to such Limited Partner of Purchase Shares and the receipt by such
Limited Partner of Exchange Shares under Section 9.13, each Limited Partner
severally (and not jointly and severally) represents and warrants to Texoil as
follows:
(i) Such Limited Partner is acquiring the Purchase Shares
to be received by it upon distribution from the Partnership and the
Exchange Shares for its own account for investment and not with a view
to, or for sale or other disposition in connection with, any
distribution of all or any part thereof, except (i) in an offering
covered by a registration statement filed with the Securities and
Exchange Commission under the Securities Act covering the Purchase
Shares and the Exchange Shares, or (ii) pursuant to an applicable
exemption under the Securities Act.
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(ii) Such Limited Partner acknowledges that it is able to
fend for itself, can bear the economic risk of its investment in the
Purchase Shares to be received from the Partnership and the Exchange
Shares, and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks
of an investment in the Purchase Shares and the Exchange Shares. Such
Limited Partner has not been organized for the purpose of acquiring
the Purchase Shares to be received by it from the Partnership or the
Exchange Shares.
(iii) Such Limited Partner understands that the Purchase
Shares and the Exchange Shares will not have been registered pursuant
to the Securities Act or any applicable state securities laws, that
such Purchase Shares and Exchange Shares will be characterized as
"restricted securities" under federal securities laws, and that under
such laws and applicable regulations such Purchase Shares and Exchange
Shares cannot be sold or otherwise disposed of without registration
under the Securities Act or an exemption therefrom.
(iv) It is agreed and understood by such Limited Partner
that the certificates representing the Purchase Shares and the
Exchange Shares shall each conspicuously set forth on the face or back
thereof, in addition to any legends required by applicable law or
other agreement, a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
UNLESS THEY ARE FIRST REGISTERED PURSUANT TO THAT ACT AND APPLICABLE
STATE SECURITIES LAWS OR UNLESS THE CORPORATION RECEIVES A WRITTEN
OPINION OF COUNSEL, WHICH OPINION AND COUNSEL ARE SATISFACTORY TO THE
CORPORATION, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
(c) In consideration of and against receipt by the Limited
Partners of the Exchange Shares as provided in Section 9.13, (i) ECIC will
transfer and assign to Texoil Stock Purchase Warrant No. 001 dated September
27, 1996, entitling ECIC to purchase 75,000 shares of the common stock of
Cliffwood Oil & Gas Corp., a Texas corporation; and (ii) EnCap LP will transfer
and assign Stock Purchase Warrant No. 002 dated September 27, 1996, entitling
EnCap LP to purchase 225,000 shares of the common stock of Cliffwood Oil & Gas
Corp., a Texas corporation.
(d) At the Closing, each Limited Partner will execute and deliver
that certain Registration Rights Agreement substantially in the form of the
document attached hereto as Exhibit 6.3(c).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement is executed by the parties hereto
on the date set forth above.
CLIFFWOOD ACQUISITION - 1996 LIMITED
PARTNERSHIP
By: CLIFFWOOD OIL & GAS CORP.,
General Partner
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxxx, President
TEXOIL, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxxx, President
CLIFFWOOD OIL & GAS CORP.
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxxx
EXECUTED FOR THE SOLE
PURPOSE OF BEING BOUND
BY SECTION 9.14:
ENCAP EQUITY 1996 LIMITED PARTNERSHIP
By: EnCap Investments L.C.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx, Managing Director
ENERGY CAPITAL INVESTMENT COMPANY PLC
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Xxxx X. Xxxxxxxx, Director
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