Exhibit 10.15
TERMINATION AGREEMENT
This Termination Agreement (the "Agreement") is made and
entered into this 25th day of January, 2002, by and between
Halliburton Company ("Halliburton"), a Delaware corporation, its
subsidiary, Halliburton Energy Services, Inc. ("HES"), a Delaware
corporation, and McMoRan Oil & Gas LLC, a Delaware limited
liability company ("MOXY"). Halliburton, HES and MOXY are
sometimes hereinafter referred to individually as "Party" and/or
collectively as "Parties."
WITNESSETH:
WHEREAS, the Parties entered into that certain Participation
Agreement dated the 15th day of June, 2000, pursuant to which the
Parties established terms and conditions pursuant to which (i)
MOXY would engage the services of HES in connection with its oil
and gas drilling and exploration activities, (ii) HES would
provide to MOXY certain technical personnel in connection with
such activities, (iii) HES was given the right to elect to
participate in certain development prospects identified by MOXY,
and (iv) Halliburton would provide a guaranty for a revolving
credit facility for MOXY (the "Participation Agreement");
WHEREAS, in accordance with that certain letter and Term
Sheet dated December 21, 2001 (the "Term Sheet"), HES and MOXY
have negotiated and entered into that certain Purchase and Sale
Agreement of even date herewith which provides for a future
Closing (the "Closing") and pursuant to which MOXY has agreed to
sell and assign to HES and HES has agreed to purchase and pay for
certain oil and gas properties (the "Purchase and Sale
Agreement");
WHEREAS, in accordance with the Purchase and Sale Agreement,
the Parties have agreed that the Purchase Price, as defined in
the Purchase and Sale Agreement, shall be used to satisfy MOXY's
outstanding obligations under its revolving credit facility, to
terminate the Tranche B Credit Facility thereunder and to
release and discharge Halliburton from the guaranty made in
connection with the Participation Agreement; and
WHEREAS, the Parties also desire to terminate the
Participation Agreement except to the extent same governs HES'
participation in The North Tern Deep Prospect (as described in
Section 2.2 below), all in accordance with the terms and
conditions hereafter provided.
NOW, THEREFORE, for good and valuable consideration and for
the mutual covenants herein contained, the receipt and
sufficiency of which is hereby acknowledged, the Parties agree as
follows:
1. Repayment/Termination of the Tranche B Credit Facility and
Release of Mortgages and
Guaranty
At Closing, MOXY shall repay all borrowings and outstanding
obligations under Annex I Terms, Conditions and Provisions
relating to the Tranche B Credit Facility (the "Tranche B Credit
Facility") to its Amended and Restated Credit Agreement (the
"Credit Agreement") dated as of the date of the Participation
Agreement among MOXY, XX Xxxxxx Xxxxx Bank (formerly Chase Bank
of Texas, National Association) ("Chase") and the lenders (the
"Lenders") signatory thereto, and obtain and deliver to HES (a)
releases, in the forms attached hereto as Exhibits X-0, X-0, X-0
and A-4 (the "Mortgage Releases") of all mortgages given by MOXY
to secure MOXY's obligations under the Tranche B Credit Facility,
(b) appropriate documentation signed by Chase, the Lenders and
MOXY evidencing the repayment and termination of the Tranche B
Credit Facility, which documentation shall be in the form
attached hereto as Exhibit B-1 (the "Termination"), and (c) a
full release of Halliburton from any liability under the Tranche
B Credit Facility, including without limitation any liability
under the Guaranty Agreement dated June 15, 2000, executed by
Halliburton in favor of Chase, as Agent, which release shall be
in the form attached hereto as Exhibit B-2 (the "Release") and
(d) documentation in form and substance reasonably acceptable to
Halliburton evidencing that the outstanding balance of borrowed
money under the "Tranche A Credit Facility" (as defined in the
Credit Agreement) is zero on the date thereof, following the
application of monies paid to MOXY under the Purchase and Sale
Agreement.
2. Termination of the Participation Agreement:
Upon Closing and subject to the other provisions of this
Agreement, the Participation Agreement shall terminate effective
as of Closing except as follows:
2.1 Payment by MOXY of Balance Due HES
Upon Closing, MOXY shall pay HES by wire transfer or
certified funds, all amounts then unpaid to HES with respect to
those invoices set forth in Exhibit C attached hereto (the
"Current Invoices"), subject however to a credit in favor of MOXY
in the amount of Three Hundred and Twenty Five Thousand and
no/100 ($325,000.00) (the "Credit") reflecting the settlement of
all disputes as contemplated by Article 3 below. The Credit
shall be deducted by MOXY in making the foregoing payment at
Closing (i.e., MOXY shall pay the total unpaid amount shown by
Exhibit C net of the Credit). Prior to Closing, HES and MOXY will
endeavor in good faith to amend Exhibit C to include any
additional invoices received after the date hereof by MOXY for
services performed and/or products delivered by HES or its
affiliates, but failure to agree upon any such amendment shall
not affect the Parties rights and obligations as set forth in
this Section 2.1 and Article 3 below.
2.2 Right to Participate in Deep Tern Prospect:
Notwithstanding anything to the contrary recited in this
Article, the Parties acknowledge that prior to the execution of
this Agreement, HES exercised its option and elected to
participate in The North Tern Deep Prospect pursuant to the terms
of Article 5 of the Participation Agreement. Accordingly, HES
and MOXY agree that the terms and conditions of the Participation
Agreement insofar as they cover The North Tern Deep Prospect will
survive the Closing and will govern and apply to HES's
participation in The North Tern Deep Prospect. The North Tern
Deep Prospect is identified by that certain Election Point
Notification given by MOXY to HES dated March 23, 2001. The
Mortgage encumbering MOXY's interest in North Tern Deep Prospect
dated April 16, 2001, executed by MOXY in favor of HES, recorded
at CB 44E, Folio 100, Entry 273760, and MB871, Folio 601, Entry
245212 in the real property records of St. Mary's Parish,
Louisiana, on May 14, 2001, securing MOXY's obligations to pay
HES amounts due and owing under the Participation Agreement,
attributable to HES's participation in North Tern Deep Prospect
is expressly not released or waived by the execution of this
Agreement, and is expressly reaffirmed and ratified by MOXY.
2.3 Confidentiality Obligations:
The Confidentiality Obligations of Article 8 of the
Participation Agreement shall survive the termination of the
Participation Agreement.
2.4 Indemnity Obligations:
The Indemnity Obligation of Article 13 of the Participation
Agreement shall survive the termination of the Participation
Agreement.
2.5 Related Agreements:
For the avoidance of doubt, the termination of the
Participation Agreement will not terminate (a) the Indemnity
Agreement referenced in Section 6.3 of the Participation
Agreement, (b) the Master Service Contract (as defined in the
Participation Agreement) except with respect to the pricing of
HES's services, or (c) the Master Consulting Agreement (as
defined in the Participation Agreement) except with respect to
the pricing of HES's services; the agreement to continue the
Master Services Contract and Master Consulting Agreement is
subject to the parties agreeing on pricing terms under such
contracts which are based upon mutually acceptable competitive
pricing (the Parties agreeing to endeavor in good faith to
conclude such a new pricing agreement prior to Closing or as soon
thereafter as possible).
3. Settlement and Waiver of Claims and Rights:
In connection with the termination of the Participation
Agreement, subject only to the occurrence of Closing and the
exclusions set forth on Sections 2.1, 2.2, 2.3, 2.4 and 2.5
above, at Closing the Parties will enter into an agreement in the
form attached hereto as Exhibit D to expressly compromise,
settle, waive and relinquish any disputes or claims arising prior
to Closing out of or in connection with the Participation
Agreement with respect to the pricing, quality and/or
effectiveness of, and/or the accuracy or correctness of xxxxxxxx,
discounts and invoices for, work, services, products and/or
materials provided by HES and/or its affiliates; subject,
however, to excluding from such compromise any breach of warranty
claims MOXY may have under the Master Services Contract related
to the completion and testing of MOXY's S.L. 340 #2 well which is
in process and as to which the parties shall promptly following
such activities resolve any claims which may exist. Subject to
the occurrence of Closing and the exclusions set forth on
Sections 2.1, 2.2, 2.3, 2.4 and 2.5 above, HES waives and
relinquishes any rights it may have to participate with MOXY in
any Prospects, as defined in the Participation Agreement, from
and after the Effective Time (whether or not such Prospects are
identified or were identifiable prior to Closing).
4. New Service Agreements:
HES and MOXY shall endeavor to negotiate new service
agreements reflective of the revised relationship of the Parties
to apply to the period subsequent to Closing through December 31,
2003 to replace the agreements referred to in (b) and (c) of
Section 2.5 above.
5. Return of Data and Information:
Within thirty (30) days after Closing, HES shall deliver,
and shall cause HES's consultants, experts and advisers to
deliver to MOXY, or to certify in writing the destruction of, in
each case to the extent provided by HES' existing written
confidentiality obligations to MOXY, all geological, geophysical,
engineering and other data and information provided to them or
any of them under the Participation Agreement except as same may
apply to the The North Tern Deep Prospect or as may be covered by
any new service agreement between the Parties and except as same
may be pertinent to HES's ownership and/or operation of the
Subject Interests (as defined in the Purchase and Sale
Agreement).
6. Further Actions and Public Announcements:
The Parties further agree that each will, from time to time
and upon reasonable request, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, such
instruments, and take such other action as may be necessary, or
advisable, to carry out their obligations under this Agreement.
No press release or other public announcement shall be
made with respect to this Agreement except in accordance with the
terms of Article 9.3 of the Purchase and Sale Agreement.
7. Applicable Law:
The provisions of this Agreement and the relationship of the
Parties shall be governed and interpreted according to the laws
of the State of New York without giving effect to principles of
conflicts of laws.
8. Severance of Invalid Provisions:
In case of a conflict between the provisions of this
Agreement and the provisions of any applicable laws or
regulations, the provisions of the laws or regulations shall
govern over the provisions of this Agreement. If, for any reason
and for so long as, any clause or provision of this Agreement is
held by a court of competent jurisdiction to be illegal, invalid,
unenforceable or unconscionable under any present or future law
(or interpretation thereof), the remainder of this Agreement
shall not be affected by such illegality or invalidity. Any such
invalid provision shall be deemed severed from this Agreement as
if this Agreement had been executed with the invalid provision
eliminated.
9. Integrated Agreement:
Upon execution of this Agreement by all Parties, this
Agreement and the Purchase and Sale Agreement and the instruments
contemplated thereby shall supersede and replace all previous
negotiations, understandings or promises, whether written or
oral, relative to the subject matter of said agreements. Each of
the Parties acknowledges that no other Party has made any
promise, representation or warranty that is not expressly stated
in the aforedescribed agreements. This Agreement shall not be
modified or changed (nor any provision of this Agreement waived)
except by a written instrument signed by all the affected
Parties.
MOXY acknowledges that HES has entered into the Purchase and
Sale Agreement in consideration of, among other things, MOXY
entering into this Agreement. Article 4 of the Purchase and Sale
Agreement (i) provides that MOXY will prepare and send forms of
notices and requests for waivers to all holders of preferential
purchase rights or consent rights in the Subject Interests
(referred to in the Purchase and Sale Agreement as "Rights") and
(ii) describes the effect on Closing and the Purchase Price (both
as defined in the Purchase and Sale Agreement) if any third party
exercises the Rights. MOXY agrees that it will perform its
obligations under this Agreement notwithstanding any reduction of
the Purchase Price by virtue of the exercise of the Rights, even
if the Rights are exercised to the extent that the Purchase Price
is reduced to zero. MOXY agrees that it will use the aggregate
proceeds from (a) the exercise of the Rights, if any, and (b) the
Purchase Price, if any, to perform its obligations under this
Agreement to terminate the Tranche B Credit Facility and have the
Guaranty Agreement released.
10. Conditions; Binding Effect:
The obligations of the Parties set forth in this Agreement
which are due "at Closing" or "upon Closing" shall be conditioned
upon the occurrence of Closing. For the avoidance of doubt, HES's
obligation to purchase and pay for the oil and gas properties
under the Purchase and Sale Agreement shall be contingent,
without limitation, upon the delivery at Closing of the
Termination and the Release and the concurrent payment required
by Section 2.1 hereof.
This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and
assigns.
11. Multiple Counterparts:
This Agreement may be executed by signing the original or a
counterpart hereof. If this Agreement is executed in multiple
counterparts, each counterpart shall be deemed an original, and
all of which when taken together shall constitute but one and the
same agreement with the same effect as if all Parties had signed
the same instrument.
12. Dispute Resolution:
Notwithstanding anything contained heretofore in this
Agreement to the contrary, the Parties specifically acknowledge
and agree that any claim, controversy or dispute arising out of,
relating to, or in connection with this Agreement, including the
interpretation, validity, termination or breach thereof, shall be
resolved solely in accordance with the following Dispute
Resolution Procedure which shall constitute a condition precedent
to any Party seeking judicial enforcement of any provisions of
this Agreement. Any dispute, controversy or claim concerning this
Agreement (other than claims by a third party under which a Party
hereto is claiming indemnity, and such third party claim is in
litigation) shall be resolved under the mediation and binding
arbitration procedures of this Article. The Parties will first
attempt in good faith to resolve all disputes by negotiations
between management level persons who have authority to settle the
controversy. If any Party believes further negotiations are
futile, such Party may initiate the mediation process by so
notifying the other Party to the dispute ("Disputing Parties") in
writing. The Disputing Parties shall then attempt in good faith
to resolve the dispute by mediation in New Orleans, Louisiana, in
accordance with the Center for Public Resources Model Procedure
for Mediation of Business Disputes, as such procedure may be
modified by agreement of the Disputing Parties. The Disputing
Parties shall share the costs of mediation services equally and
shall each have present at the mediation at least one individual
who has authority to settle the dispute. If the dispute has not
been resolved pursuant to mediation within sixty (60) days after
initiating the mediation process, the dispute shall be resolved
through binding arbitration, as follows:
12.1.1 Selection of Arbitrators:
If any dispute or controversy arises between the Parties out
of this Agreement, the alleged breach thereof, or any tort in
connection therewith, or out of the refusal to perform the whole
or any part thereof, and the Parties are unable to agree with
respect to the matter or matters in dispute or controversy, the
same shall be submitted to arbitration before a panel of three
(3) arbitrators in accordance with the Center for Public Resource
Rules for Non-Administered Arbitration of Business Disputes and
the provisions in this Article. The panel of arbitrators shall
be chosen as set forth herein. If the dispute or controversy
involves more than two Parties Halliburton and HES will be deemed
to be and treated collectively as a single Party. The
arbitrators selected to act hereunder shall be qualified by
education, experience, and training to pass upon the particular
matter or matters in dispute.Upon the written demand of either of
the Disputing Parties and within fifteen (15) days from the date
of such demand, each Disputing Party shall name an arbitrator and
these two (2) so named shall promptly thereafter choose a third.
If a Disputing Party fails to name an arbitrator within fifteen
(15) days from such demand, the other Disputing Party shall name
the second arbitrator as well as the first, or if the two
arbitrators fail within fifteen (15) days from their appointment
to agree upon and appoint the third arbitrator, then upon written
application by either Disputing Party, such third arbitrator may
be appointed by the President of the Center for Public Resources,
Inc.
12.1.2 Arbitration:
The panel of arbitrators so chosen shall proceed promptly to
hear and determine the matter or matters in dispute, after giving
the Disputing Parties due notice of hearing and a reasonable
opportunity to be heard. The procedure of the arbitration
proceedings shall be in accordance with the Center for Public
Resources Rules for Non-Administered Arbitration of Business
Disputes, as may be modified by the panel of arbitrators. Unless
otherwise determined by the arbitrators, the hearing and
presentations of the Parties shall not exceed two days
cumulative. All arbitration proceedings hereunder shall be held
in Lafayette, Louisiana, unless the panel of arbitrators
determines that another venue is more appropriate. The award of
the panel of arbitrators or a majority thereof shall be made
within forty-five (45) days after the appointment of all the
arbitrators, subject to any reasonable delay due to unforeseen
circumstances. In the event the panel or a majority thereof fail
to make an award within sixty (60) days after the appointment of
all the arbitrators, new arbitrators may, at the election of any
Disputing Party, be chosen in like manner as if none had been
previously selected.
12.1.3 Award and Arbitration Expenses:
The award of the arbitrators, or a majority thereof, shall
be in writing, determined in accordance with the substantive law
of the State of New York, and shall be final and binding on the
Parties as to the question or questions submitted and the Parties
shall abide by such award and perform the conditions thereof.
The award of the arbitrators shall be based on the applicable law
and facts, the merits of the parties' positions in the
controversy or dispute, and the arbitrators' assessment of the
fairness and reasonableness of any settlement proposal of any
Party. The arbitrators may not award any punitive or exemplary
damages. The award shall not provide or create any rights or
benefits in any person or entity which is not a Party to this
Agreement, as this Agreement and any arbitration thereunder shall
not be construed as a third party beneficiary contract. Unless
otherwise determined by the arbitrators, all expenses in
connection with such arbitration shall be divided equally between
the Disputing Parties, except that the expenses of counsel,
witnesses, employees, or other representatives of each Party
shall be borne solely by the Party incurring them, and the
compensation of any arbitrator named by a Party or group of
Parties shall be borne solely by such Party or group of Parties;
provided that if court proceedings to stay litigation or compel
arbitration are necessary, the Party who unsuccessfully opposes
such proceedings shall pay all reasonable associated costs,
expenses, and attorneys' fees of such court proceedings. Except
as otherwise provided in the immediately preceding sentence, each
Party shall bear its own attorneys' fees in connection with any
appeal of an arbitration award, or in any other court litigation
arising out of this Agreement.
12.1.4 Confidentiality:
The arbitrators may, but shall not be required, to explain
reasons for the award. No transcript or other recording shall be
made of the arbitration proceedings. Except (i) in connection
with a suit for enforcement of the award, (ii) as required by
law, court order, or regulation, (iii) when reasonably necessary
to explain the terms and conditions of the award to outside
attorneys, auditors, and insurers, or (iv) as part of good faith
compliance with disclosure obligations under applicable law, the
arbitration proceedings, the award, and the Parties' actions in
connection with the arbitration are confidential and shall not be
disclosed to third parties, and no disclosure of or reference to
the arbitration, the award, or of the Parties' statements or
actions in connection with the arbitration shall be made to any
third party. All offers, promises, conduct, statements, and
evidence, whether oral or written, made in the course of the
arbitration by any of the Parties, their agents, employees,
experts, or attorneys are confidential. Such offers, promises,
conduct, statements, and evidence shall be considered
inadmissible under Rule 408 of the Federal Rules of Evidence and
any similar state-law provisions, and shall be inadmissible for
any purpose, including impeachment. However, evidence that is
otherwise admissible shall not be rendered inadmissible as a
result of its use in the arbitration.
12.1.5 Indemnification:
The provisions of this Article shall not limit the
obligation of a Party to defend, indemnify or hold harmless
another Party against court proceedings or other claims, loss,
damages or expenses as provided elsewhere in the Agreement.
12.1.6 Preservation of Rights:
Notwithstanding the above, any Party may file a complaint for
statute of limitations or venue reasons, or seek a preliminary
injunction or other provisional judicial relief, if in its sole
judgment such action is necessary to avoid irreparable damage or
to preserve the status quo. Despite such actions, the Parties
shall continue to try to resolve the dispute by negotiation,
mediation, or arbitration as necessary.
IN WITNESS WHEREOF, this Agreement is executed by the duly
authorized representatives of the Parties on the date first above
written.
Halliburton Energy Services, Inc.
By: ______________________________
Name:
Title:
Halliburton Company
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
McMoRan Oil & Gas LLC
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President
