ASSET PURCHASE AND SALE AGREEMENT between Plantation Operating, LLC as "Seller" and EV Properties, L.P. as "Buyer" Dated as of July 17, 2007
Exhibit
2.5
between
Plantation
Operating, LLC
as
"Seller"
and
EV
Properties, L.P.
as
"Buyer"
Dated
as of July 17, 2007
TABLE
OF CONTENTS
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Page
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ARTICLE
I PROPERTIES TO BE SOLD AND PURCHASED
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1
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Section
1.1.
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Assets
Included.
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1
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Section
1.2.
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Assets
Excluded.
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2
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ARTICLE
II PURCHASE PRICE
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4
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Section
2.1.
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Purchase
Price.
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4
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Section
2.2.
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Accounting
Adjustments.
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4
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Section
2.3.
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Closing
and Post-Closing Accounting Settlements.
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5
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Section
2.4.
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Payment
of Adjusted Purchase Price.
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6
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Section
2.5.
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Allocation
of Purchase Price.
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6
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ARTICLE
III THE CLOSING
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6
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ARTICLE
IV REPRESENTATIONS AND WARRANTIES OF SELLER
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7
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Section
4.1.
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Organization
and Existence.
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7
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Section
4.2.
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Power
and Authority.
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7
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Section
4.3.
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Valid
and Binding Agreement.
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7
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Section
4.4.
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Non-Contravention.
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7
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Section
4.5.
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Approvals.
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8
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Section
4.6.
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Pending
Litigation.
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8
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Section
4.7.
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Contracts.
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8
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Section
4.8.
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Commitments,
Abandonments or Proposals.
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8
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Section
4.9.
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Production
Sales Contracts.
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9
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Section
4.10.
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Plugging
and Abandonment.
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9
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Section
4.11.
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Permits.
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9
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Section
4.12.
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Payment
of Expenses.
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9
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Section
4.13.
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Compliance
with Laws.
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9
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Section
4.14.
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Imbalances;
Prepayments.
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10
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Section
4.15.
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Intellectual
Property.
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10
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Section
4.16.
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Taxes.
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10
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Section
4.17.
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Fees
and Commissions.
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10
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Section
4.18.
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Disclaimer
of Warranties.
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11
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ARTICLE
V REPRESENTATIONS AND WARRANTIES OF BUYER
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11
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Section
5.1.
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Organization
and Existence.
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11
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Section
5.2.
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Power
and Authority.
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12
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Section
5.3.
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Valid
and Binding Agreement.
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12
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Section
5.4.
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Non-Contravention.
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12
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Section
5.5.
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Approvals.
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12
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Section
5.6.
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Pending
Litigation.
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13
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Section
5.7.
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Knowledgeable
Purchaser.
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13
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Section
5.8.
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Funds.
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13
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Section
5.9.
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Fees
and Commissions.
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13
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-i-
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ARTICLE
VI Certain Covenants of Seller Pending Closing
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13
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Section
6.1.
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Access
to Files.
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13
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Section
6.2.
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Conduct
of Operations.
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13
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Section
6.3.
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Restrictions
on Certain Actions.
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14
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Section
6.4.
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Payment
of Expenses.
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14
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Section
6.5.
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Preferential
Rights and Third Party Consents.
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14
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ARTICLE
VII ADDITIONAL PRE-CLOSING AND POST-CLOSING AGREEMENTS OF BOTH
PARTIES
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15
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Section
7.1.
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Reasonable
Best Efforts.
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15
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Section
7.2.
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Notice
of Litigation.
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15
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Section
7.3.
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Notification
of Certain Matters.
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15
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Section
7.4.
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Fees
and Expenses.
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16
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Section
7.5.
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Public
Announcements.
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16
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Section
7.6.
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Casualty
Loss Prior to Closing.
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16
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Section
7.7.
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Governmental
Bonds.
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16
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Section
7.8.
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Assumed
Obligations.
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17
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Section
7.9.
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Operational
Transition.
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17
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Section
7.10.
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Books
and Records.
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17
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Section
7.11.
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Suspended
Funds.
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17
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Section
7.12.
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Letters-in-Lieu.
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17
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Section
7.13.
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Logos
and Names.
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17
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Section
7.14.
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▇▇▇▇▇▇.
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17
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Section
7.15.
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Further
Assurances.
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18
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ARTICLE
VIII DUE DILIGENCE EXAMINATION
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18
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Section
8.1.
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Title
Due Diligence Examination.
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18
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Section
8.2.
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Environmental
Due Diligence Examination.
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21
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Section
8.3.
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Disputes
Regarding Title Defects or Environmental Defects.
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24
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Section
8.4.
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Adjustments
to Purchase Price for Defects.
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24
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Section
8.5.
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Buyer
Indemnification.
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25
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ARTICLE
IX CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES
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26
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Section
9.1.
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Conditions
Precedent to the Obligations of Buyer.
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26
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Section
9.2.
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Conditions
Precedent to the Obligations of Seller.
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26
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ARTICLE
X TERMINATION, AMENDMENT AND WAIVER
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27
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Section
10.1.
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Termination.
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27
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Section
10.2.
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Effect
of Termination.
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28
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Section
10.3.
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Amendment.
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28
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Section
10.4.
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Waiver.
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28
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ARTICLE
XI SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
INDEMNIFICATION
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28
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Section
11.1.
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Survival.
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28
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Section
11.2.
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Seller's
Indemnification Obligations.
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29
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Section
11.3.
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Buyer's
Indemnification Obligations.
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29
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Section
11.4.
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Net
Amounts.
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30
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Section
11.5.
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Indemnification
Proceedings.
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30
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Section
11.6.
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Indemnification
Exclusive Remedy.
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31
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-ii-
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Section
11.7.
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Limited
to Actual Damages.
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31
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Section
11.8.
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Indemnification
Despite Negligence.
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31
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Section
11.9.
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Post-Closing
Indemnification Support.
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31
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ARTICLE
XII MISCELLANEOUS MATTERS
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32
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Section
12.1.
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Notices.
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32
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Section
12.2.
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State
Taxes.
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33
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Section
12.3.
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Entire
Agreement.
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33
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Section
12.4.
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Injunctive
Relief.
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34
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Section
12.5.
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Binding
Effect; Assignment; No Third Party Benefit.
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34
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Section
12.6.
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Severability.
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34
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Section
12.7.
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Governing
Law.
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34
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Section
12.8.
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Counterparts.
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34
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Section
12.9.
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Waiver
of Consumer Rights.
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34
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Section
12.10.
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Further
Agreements Regarding the Joint Account.
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35
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ARTICLE
XIII DEFINITIONS AND REFERENCES
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35
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Section
13.1.
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Certain
Defined Terms.
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35
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Section
13.2.
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Certain
Additional Defined Terms.
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39
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Section
13.3.
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References,
Titles and Construction.
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40
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-iii-
THIS
ASSET PURCHASE AND SALE AGREEMENT
dated
July 17, 2007, is made by and between Plantation Operating, LLC, a Delaware
limited liability company ("Seller"),
and
EV Properties, L.P., a Delaware limited partnership ("Buyer").
RECITALS:
A. Seller
desires to sell, assign and convey to Buyer, and Buyer desires to purchase
and
accept from Seller, certain oil and gas properties and related assets located
in
the counties of Lea and Eddy, State of New Mexico, and the counties of ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇, State of Texas.
B. Seller
and Buyer deem it in their mutual best interests to execute and deliver this
Agreement.
NOW,
THEREFORE,
in
consideration of the foregoing Recitals and the mutual covenants and agreements
contained herein, Seller and Buyer do hereby agree as follows:
AGREEMENT:
ARTICLE
I
Properties
To Be Sold and Purchased
Section
1.1. Assets
Included. Subject
to Section 1.2,
Seller
agrees to sell and Buyer agrees to purchase, for the consideration hereinafter
set forth, and subject to the terms and provisions herein contained, the
following described properties, rights and interests:
(a) All
right, title and interest of Seller in and to the Leases described on
Exhibit I
attached
hereto and made a part hereof for all purposes (and any ratifications and/or
amendments to such Leases, whether or not such ratifications or amendments
are
described on such Exhibit I;
(b) Without
limitation of the foregoing but subject to Section 1.2,
all
other right, title and interest (of whatever kind or character, whether legal
or
equitable, and whether vested or contingent) of Seller in and to the oil, gas
and other minerals in and under or that may be produced from the lands described
in Exhibit I
hereto
or described in any of the Leases described on such Exhibit
I
(including interests in Leases, overriding royalties, production payments and
net profits interests in such lands or such Leases, and fee mineral interests,
fee royalty interests and other interests in so far as they cover such lands),
even though Seller's interest therein may be incorrectly described in, or
omitted from, such Exhibit
I;
(c) All
rights, titles and interests of Seller in and to, or otherwise derived from,
all
presently existing and valid oil, gas or mineral unitization, pooling, or
communitization agreements, declarations and/or orders and in and to the
properties covered and the units created thereby (including all units formed
under orders, rules, regulations, or other official acts of any federal, state,
or other authority having jurisdiction, voluntary unitization agreements,
designations and/or declarations) relating to the properties described in
paragraphs (a)
and
(b)
above;
(d) All
rights, titles and interests of Seller in and to all presently existing and
valid production sales (and sales related) contracts, operating agreements,
and
other agreements and contracts which relate to any of the properties described
in paragraphs (a),
(b)
and
(c)
above,
or which relate to the exploration, development, operation, or maintenance
thereof or the treatment, storage, transportation or marketing of production
therefrom (or allocated thereto);
(e) All
rights, titles and interests of Seller in and to all materials, supplies,
machinery, equipment, improvements and other personal property and fixtures
(including all ▇▇▇▇▇, wellhead equipment, pumping units, flowlines, tanks,
buildings, injection facilities, saltwater disposal facilities, compression
facilities, gathering systems, and other equipment), and all easements,
rights-of-way, surface leases and other surface rights, all Permits and
licenses, and all other appurtenances being used or held for use in connection
with, or otherwise related to, the exploration, development, operation or
maintenance of any of the properties described in paragraphs (a),
(b)
and
(c)
above,
or the treatment, storage, transportation or marketing of production therefrom
(or allocated thereto);
(f) All
of
Seller's lease files, abstracts and title opinions, production records, well
files, accounting records (but not including general financial and accounting
records attributable to Seller or Seller's business), seismic records and
surveys, gravity maps, electric logs, geological or geophysical data and
records, and other files, documents and records of every kind and description
which relate to the properties described above; and
(g) All
of
Seller's rights, title and interests in its office building and premises located
in Jal, New Mexico, as more particularly described in Exhibit II attached hereto
and made a part hereof for all purposes, and all furniture, fixtures and
equipment located thereat, including computers, telephone equipment and other
similar items of tangible personal property.
As
used
herein: (i) "Oil
and Gas Properties"
means
the properties and interests described in paragraphs (a),
(b)
and
(c)
above,
save and except for any such properties or assets that are Excluded Assets;
and
(ii) "Properties"
means
the Oil and Gas Properties plus the properties and interests described in
paragraphs (d),
(e),
(f)
and
(g)
above,
save and except for any such properties or assets that are Excluded
Assets.
Section
1.2. Assets
Excluded. Notwithstanding
anything herein contained to the contrary, the Properties do not include, and
there is hereby excepted and reserved unto Seller all other assets, properties,
and business of Seller, including the following:
(a) Any
accounts receivable or accounts payable accruing before the Effective
Date;
(b) All
of
Seller's right, title, and interest in any oil, gas, or mineral Leases,
overriding royalties, production payments, net profits interests, fee mineral
interests, fee royalty interests and other interests in oil, gas, and other
minerals not expressly included in the definition of Oil and Gas Properties and
all oil, gas or other hydrocarbon production from or attributable to the
Properties with respect to all periods prior to the Effective Date, all proceeds
attributable thereto, and all Hydrocarbons that, at the Effective Date, are
owned by Seller and are in storage or within processing plants;
-2-
(c) Any
refund of costs, Taxes or expenses borne by Seller or Seller's predecessors
in
title attributable to periods prior to the Effective Date;
(d) Any
and
all proceeds from the settlements of contract disputes with purchasers of
Hydrocarbons from the Properties, including settlement of take-or-pay disputes,
insofar as said proceeds are attributable to periods of time prior to the
Effective Date;
(e) Any
and
all proceeds from settlements with regard to reclassification of oil or gas
produced from the Properties, insofar as said proceeds are attributable to
periods of time prior to the Effective Date;
(f) All
contracts of insurance or indemnity and all production related
bonds;
(g) All
claims (including insurance claims) and causes of action of Seller against
one
or more third parties arising from acts, omission or events occurring prior
to
the Effective Date and all claims under any joint interest audit attributable
to
any period prior to the Effective Date;
(h) All
limited liability company, financial, tax and legal (other than title) books
and
records of Seller;
(i) Any
geological, geophysical or seismic data, materials or information, including
maps, interpretations records or other technical information related to or
based
upon any such data, materials or information, and any other asset, data,
materials or information, the transfer of which is restricted or prohibited
under the terms of any third party license, confidentiality agreement or other
agreement or the transfer of which would require the payment of a fee or other
consideration to any third party; provided, however, that if any such data,
materials or information is transferable upon payment of a fee or other
consideration, and if Buyer has paid such fee or other consideration prior
to
the Closing Date, then such data, materials or information shall be transferred
to Buyer;
(j) All
leases for office premises in The Woodlands, Texas, used by Seller, and all
furniture, fixtures and equipment located thereat, including computers,
telephone equipment and other similar items of tangible personal
property;
(k) All
of
Seller's accounting or other administrative systems, computer software, patents,
trade secrets, copyrights, names, trademarks, logos and other intellectual
property;
(l) All
documents and instruments of Seller that may be protected by an attorney-client
privilege (exclusive of title opinions in respect of the Oil and Gas Properties
and all documents and instruments related to any matters constituting Assumed
Obligations);
(m) All
of
the other properties, interests and assets described on Exhibit 1.2,
together with any rights, liabilities, or obligations associated with such
assets;
(n) The
Existing ▇▇▇▇▇▇ and any gains or losses attributable thereto;
(o) Any
other
right or interest in and to the Properties to the extent attributable to the
period prior to the Effective Date; and
-3-
(p) All
(i)
correspondence or other documents or instruments of Seller relating to the
transactions contemplated hereby, (ii) lists of other prospective purchasers
of
Seller or the Properties compiled by Seller, (iii) bids submitted to Seller
by
other prospective purchasers of Seller or the Properties, (iv) analyses by
Seller or any Affiliates thereof submitted by other prospective purchasers
of
Seller or the Properties, and (v) correspondence between or among Seller or
its
Affiliates or their respective representatives with respect to, or with, any
other prospective purchasers of Seller or the Properties.
The
properties and interests specified in the foregoing paragraphs (a)
through
(p)
of this
Section 1.2
are
herein collectively called the "Excluded
Assets".
It is
understood that certain of the Excluded Assets may not be embraced by the term
"Properties". The fact that certain assets have been expressly excluded in
not
intended to suggest that had they not been excluded they would have constituted
Properties and may not be used to interpret the meaning of any word or phrase
used in describing the Properties.
ARTICLE
II
Purchase
Price
Section
2.1. Purchase
Price. In
consideration of the sale of the Properties by Seller to Buyer, Buyer shall
pay
to Seller cash in the amount of One Hundred Sixty Million Dollars ($160,000,000)
(the "Purchase
Price").
The
Purchase Price, as adjusted pursuant to this Article II
and the
other applicable provisions hereof, is herein called the "Adjusted
Purchase Price".
Section
2.2. Accounting
Adjustments.
(a) Subject
to Section
2.2(b),
appropriate adjustments shall be made between Buyer and Seller so
that:
(i) all
expenses (including all drilling costs, all capital expenditures, and all
overhead charges under applicable operating agreements, and all other overhead
charges actually charged by third parties) for work done in the operation of
the
Properties after the Effective Date will be borne by Buyer, and all proceeds
(net of applicable production, severance, and similar Taxes) from the sale
of
oil, gas or other minerals produced from the Oil and Gas Properties after the
Effective Date will be received by Buyer, and
(ii) all
expenses for work done in the operation of the Properties before the Effective
Date will be borne by Seller and all proceeds (net of applicable production,
severance, and similar Taxes) from the sale of oil, gas or other minerals
produced therefrom before the Effective Date will be received by Seller.
(b) It
is
agreed that, in making the adjustments contemplated by Section
2.2(a):
(i) oil
which
was produced from the Oil and Gas Properties and which was, on the Effective
Date, stored in tanks located on the Oil and Gas Properties (or located
elsewhere but used to store oil produced from the Oil and Gas Properties prior
to delivery to oil purchasers) and above pipeline connections shall be deemed
to
have been produced before the Effective Date,
-4-
(ii) ad
valorem Taxes assessed with respect to a period which the Effective Date splits
shall be prorated based on the number of days in such period which fall on
each
side of the Effective Date (with the day on which the Effective Date falls
being
counted in the period after the Effective Date), and
(iii) no
consideration shall be given to the local, state or federal income tax
liabilities of any party.
Section
2.3. Closing
and Post-Closing Accounting Settlements.
(a) No
later
than five Business Days prior to the Closing Date,
Seller
shall prepare and submit to Buyer a settlement statement setting forth, in
reasonable detail, Seller’s good faith computation of the adjustments provided
for in Section 2.2
(which
computation shall be based on actual amounts (rather than estimated amounts)
in
Seller's possession. No later than three business days prior to the Closing
Date, the parties shall determine, based upon the best information reasonably
available to them, the amount of the adjustments provided for in Section 2.2. If
the
amount of adjustments so determined which would result in a credit to Buyer
exceed the amount of adjustments so determined which would result in a credit
to
Seller, Buyer shall receive a credit, for the amount of such excess, against
the
Purchase Price to be paid at Closing, and, if the converse is true, Buyer shall
pay to Seller, at Closing (in addition to amounts otherwise then owed), the
amount of such excess.
(b) After
the
Closing, Seller shall review the computation of the adjustments provided for
in
Section
2.2
which
was made at Closing and shall submit an updated settlement statement to Buyer
within 90 days after the Closing Date. Seller and Buyer shall thereafter meet
at
a mutually agreeable time (but no later than 120 days after
the
Closing Date) to (i) review the updated settlement statement submitted by
Seller, (ii) determine in good faith whether any additional revisions are
necessary and (iii) make any adjustments by appropriate payments from Seller
to
Buyer or from Buyer to Seller. Following
such additional adjustments, no further adjustments to the Purchase Price shall
be made under this Section 2.3.
(c) If
a
dispute arises under Section 2.3(b)
with
respect to any additional adjustments (an "Accounting
Dispute")
that
the parties have been unable to resolve, then, at the written request of either
Seller or Buyer (the "Request
Date"),
each
of Seller and Buyer shall nominate and commit one of its senior officers to
meet
at a mutually agreed time and place not later than ten days after the Request
Date to attempt to resolve same. If such senior officers have been unable to
resolve such Accounting Dispute within a period of 30 days after the Request
Date, any party shall have the right, by written notice to the other specifying
in reasonable detail the basis for the Accounting Dispute, to resolve the
Accounting Dispute by submission thereof to Price Waterhouse Coopers or, if
Price Waterhouse Coopers declines to accept the engagement contemplated hereby,
a independent public accounting firm mutually agreeable to the Parties, (Price
Waterhouse Coopers or such other agreed upon firm, the "Accounting
Referee").
The
scope of the Accounting Referee's engagement shall be limited to the resolution
of the items described in the notice of the Accounting Dispute given in
accordance with the foregoing and the corresponding calculation of the
adjustments pursuant to Section
2.2.
The
Accounting Referee shall be instructed by the parties to resolve the Accounting
Dispute as soon as reasonably practicable in light of the circumstances but
in
no event in excess of 15 days following the submission of the Accounting Dispute
to the Accounting Referee. The decision and award of the Accounting Referee
shall be binding upon the parties as an award under the Federal Arbitration
Act
and final and nonappealable to the maximum extent permitted by law, and judgment
thereon may be entered in a court of competent jurisdiction and enforced by
any
party as a final judgment of such court. The fees and expenses of the Accounting
Referee shall be borne equally by Seller and Buyer.
-5-
Section
2.4. Payment
of Adjusted Purchase Price.
The
Adjusted Purchase Price shall be paid to Seller as follows:
(a) Contemporaneously
with the execution and delivery of this Agreement, Buyer shall tender to the
Joint Account cash equal to ten percent (10%) of the Purchase Price (Sixteen
Million Dollars ($16,000,000)) as a deposit (such amount, together with all
interest earned thereon, the "Deposit").
The
Deposit shall (i) be distributed to Seller and applied against the Adjusted
Purchase Price owing by Buyer at the Closing pursuant to Section 2.4(b),
(ii) distributed to Seller pursuant to Section 10.2
or
(iii) returned to Buyer pursuant to Section 10.2,
as
applicable.
(b) At
the
Closing, Buyer shall pay to Seller cash equal to the Adjusted Purchase Price
less
the
Deposit.
(c) All
cash
payments by Buyer pursuant to this Section 2.4
shall be
made in immediately available funds by confirmed wire transfer to a bank account
or accounts designated by Seller or the Joint Account Holder, as
applicable.
(d) For
federal income tax purposes, Buyer shall report the interest earned on the
Deposit if it is applied against the Adjusted Purchase Price or returned to
Buyer, and Seller shall report such interest if it is distributed to Seller
pursuant to Section
10.2.
Section
2.5. Allocation
of Purchase Price. On
or
before the Closing Date, the Buyer and Seller shall agree in writing as to
the
allocation of the Adjusted Purchase Price (plus any fixed liabilities assumed
by
the Seller or to which the Properties are subject) among the Properties under
the methodology required by Section 1060 of the Code. The Buyer and Seller
shall report the transactions contemplated hereby on all Tax Returns, including,
but not limited to Form 8594, in a manner consistent with such allocation.
If,
contrary to the intent of the parties hereto as expressed in this Section 2.5,
any
taxing authority makes or proposes an allocation different from the allocation
determined under this Section 2.5,
Buyer
and Seller shall cooperate with each other in good faith to contest such taxing
authority's allocation (or proposed allocation), provided, however, that, after
consultation with the party adversely affected by such allocation (or proposed
allocation), the other party hereto may file such protective claims or Tax
Returns as may be reasonably required to protect its interests.
ARTICLE
III
THE
CLOSING
The
closing of the transactions contemplated hereby (the "Closing")
shall
take place (i) at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, Houston, Texas,
at 10:00 a.m. (local Houston, Texas time) on September 4, 2007, or (ii) at
such other time or place or on such other date as the parties hereto shall
agree. The date on which the Closing is required to take place is herein
referred to as the "Closing
Date".
All
Closing transactions shall be deemed to have occurred
simultaneously.
-6-
ARTICLE
IV
Representations
and Warranties of Seller
Except
as
provided in the Seller Disclosure Schedule, Seller hereby represents and
warrants to Buyer as follows:
Section
4.1. Organization
and Existence. Seller
is
a limited liability company duly formed and validly existing under the laws
of
the State of Delaware.
Section
4.2. Power
and Authority. Seller
has all requisite limited liability company power and authority to execute,
deliver, and perform this Agreement and each other agreement, instrument, or
document executed or to be executed by Seller 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 Seller of this Agreement and each other agreement, instrument,
or
document executed or to be executed by Seller 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 action of Seller.
Section
4.3. Valid
and Binding Agreement. This
Agreement has been duly executed and delivered by Seller and constitutes, and
each other agreement, instrument, or document executed or to be executed by
Seller 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 Seller
and constitutes, or when executed and delivered will constitute, a valid and
legally binding obligation of Seller, 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, neither the
execution, delivery, and performance by Seller of this Agreement and each other
agreement, instrument, or document executed or to be executed by Seller 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 Seller's Governing
Documents, (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 or indenture, or any
material lease, contract, agreement, or other instrument or obligation to which
Seller is a party or by which Seller 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 Seller, or (d) violate any Applicable Law binding
upon Seller.
-7-
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, to Seller's Knowledge, 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
Seller in connection with the execution, delivery, or performance by Seller
of
this Agreement, each other agreement, instrument, or document executed or to
be
executed by Seller 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. Pending
Litigation. Except
as
listed on Section 4.6 of the Seller Disclosure Schedule, there
are
no Proceedings pending or, to Seller's Knowledge, threatened, against or
affecting Seller or the Properties (including any actions challenging or
pertaining to Seller's title to any of the Properties), or affecting the
execution and delivery of this Agreement by Seller or the consummation of the
transactions contemplated hereby by Seller.
Section
4.7. Contracts.
(a) The
Leases, Seller's interests in which comprise parts of the Oil and Gas
Properties, and all other material contracts and agreements, licenses, Permits
and easements, rights-of-way and other rights-of-surface use comprising any
part
of or otherwise relating to the Properties (such Leases and such material
contracts, agreements, licenses, Permits, easements, rights-of-way and other
rights-of-surface use being herein called the "Basic
Documents"),
are,
in all material respects, in full force and effect and constitute valid and
binding obligations of the parties thereto. Seller is not in breach or default
(and no situation exists which with the passing of time or giving of notice
would create a breach or default) of its obligations under the Basic Documents,
and no breach or default by any third party (or situation which with the passage
of time or giving of notice would create a breach or default) exists. All
payments (including all delay rentals, royalties, shut-in royalties and valid
calls for payment or prepayment under operating agreements) owing under Basic
Documents have been and are being made (timely, and before the same became
delinquent) by Seller by such third parties).
(b) Section 4.7
of the Seller Disclosure Schedule is a list of all material contracts and
agreements to which any of the Oil and Gas Properties are bound (other than
the
Existing ▇▇▇▇▇▇), including (i) joint operating agreements,
(ii) agreements with any Affiliate of Seller, (iii) any Production
Sales Contracts, (iv) any agreement of Seller to sell, lease, farmout or
otherwise dispose of any of its interests in the Oil and Gas Properties other
than conventional rights of reassignment, (v) gas balancing agreements,
(vi) exploration agreements, (vii) pooling, unitization or
communitization agreement, (viii) area of mutual interest agreements, and
(ix) agreements containing seismic licenses, Permits and other rights to
geological or geophysical data and information directly or indirectly relating
to the Oil and Gas Properties.
Section
4.8. Commitments,
Abandonments or Proposals. Seller
(i) has incurred no expenses, and has made no commitments to make expenditures
in connection with the ownership or operation of the Properties after the
Effective Date, other than routine expenses incurred in the normal operation
of
existing ▇▇▇▇▇ on the Oil and Gas Properties in accordance with generally
accepted practices in the oil and gas industry, and (ii) has not abandoned
any
▇▇▇▇▇ (or removed any material items of equipment, except those replaced by
items of materially equal suitability and value) on the Oil and Gas Properties
since the Effective Date. No proposals are currently outstanding by Seller
or
other working interest owners to drill additional ▇▇▇▇▇, or to deepen, plug
back, or rework existing ▇▇▇▇▇, or to conduct other operations for which consent
is required under the applicable operating agreement, or to conduct any other
operations other than normal operation of existing ▇▇▇▇▇ on the Oil and Gas
Properties, or to abandon any ▇▇▇▇▇, on the Oil and Gas Properties.
-8-
Section
4.9. Production
Sales Contracts. There
exist no agreements or arrangements for the sale of Hydrocarbons from the Oil
and Gas Properties (including calls on, or other rights to purchase, production,
whether or not the same are currently being exercised) other than
(a) production sales contracts (in this Section, the "Scheduled
Production Sales Contracts")
disclosed in Section 4.9 of the Seller Disclosure Schedule or
(b) agreements or arrangements which are cancelable on 90 days notice or
less without penalty or detriment. Seller is presently receiving a price for
all
production from (or attributable to) each Oil and Gas Property covered by a
Scheduled Production Sales Contract as computed in accordance with the terms
of
such contract, and is not having deliveries of gas from any Oil and Gas Property
subject to a Scheduled Production Sale Contract curtailed substantially below
such property's delivery capacity.
Section
4.10. Plugging
and Abandonment. Except
for ▇▇▇▇▇ listed in Section 4.10 of the Seller Disclosure Schedule, there
are no dry holes, or shut in or otherwise inactive ▇▇▇▇▇, located on the Oil
and
Gas Properties or on lands pooled or unitized therewith, except for ▇▇▇▇▇ that
have been plugged and abandoned, and except for ▇▇▇▇▇ drilled to depths not
included within the Oil and Gas Properties or within units in which the Oil
and
Gas Properties participate which have never been completed in such
depths.
Section
4.11. Permits.
Seller
has all Permits necessary or appropriate to own and operate the Properties
as
presently being owned and operated, and such Permits are in full force and
effect (and are transferable to Buyer or are subject to being routinely replaced
by a license or Permit issued to Buyer as a successor owner of the Properties).
Seller has not received written notice of any violations in respect of any
Permits, and there are no violations in respect of any Permit and no one has
communicated to Seller that there are any violations in respect of any
Permit.
Section
4.12. Payment
of Expenses. All
expenses (including all bills for labor, materials and supplies used or
furnished for use in connection with the Properties, and all severance,
production, ad valorem and other similar Taxes) relating to the ownership or
operation by Seller of the Properties, have been, and are being, paid (timely,
and before the same become delinquent) by Seller, except such expenses and
Taxes
as are disputed in good faith by Seller and for which an adequate accounting
reserve has been established by Seller. Seller is not delinquent with respect
to
its obligations to bear costs and expenses relating to the development and
operation of the Oil and Gas Properties.
Section
4.13. Compliance
with Laws.
The
ownership and operation of the Properties by Seller have been in compliance
with
all Applicable Laws. Notwithstanding the foregoing, this Section
4.13
does not
relate to environmental matters (including compliance with Environmental Laws
or
matters that would constitute Environmental Defects), it being agreed that
such
matters are covered by and dealt with in Article
VIII
exclusively.
-9-
Section
4.14. Imbalances;
Prepayments. Section
4.14 of the Seller Disclosure Schedule sets forth all Imbalances as of the
date
set forth in such Section with respect to the Oil and Gas Properties. Seller
is
not obligated by virtue of a take or pay payment, advance payment or other
similar payment (other than royalties, overriding royalties and similar
arrangements reflected in Exhibit
8.1(c)),
to
deliver Hydrocarbons, or proceeds from the sale thereof, attributable to the
Oil
and Gas Properties at some future time without receiving payment therefor at
or
after the time of delivery.
Section
4.15. Intellectual
Property. Seller
owns or has valid licenses or other rights to use all patents, copyrights,
trademarks, software, databases, geological data, geophysical data, engineering
data, maps, interpretations and other technical information used by Seller
in
connection with its ownership and operation of the Properties as presently
conducted, subject to the limitations contained in the agreements governing
the
use of the same, which limitations are customary for companies engaged in the
business of the exploration and production of Hydrocarbons.
Section
4.16. Taxes.
(a) All
ad
valorem and severance Taxes due and payable for the Properties through the
year
2006 have been paid.
(b) With
respect to all Taxes related to the Properties, (i) all Tax Returns
relating to the Properties required to be filed on or before the date hereof
by
Seller with respect to any Taxes for any period ending on or before the date
hereof have been timely filed with the appropriate Governmental Entity,
(ii) such Tax Returns are true and correct in all respects, and
(iii) all Taxes reported on such Tax Returns have been paid, except those
being contested in good faith.
(c) With
respect to all Taxes related to the Properties (i) there are not currently
in effect any extension or waiver by Seller of any statute of limitations of
any
jurisdiction regarding the assessment or collection of any Tax related to the
Properties and (ii) there are no administrative Proceedings or lawsuits
pending against the Properties or Seller with respect to the Properties by
any
taxing authority.
(d) None
of
the Properties were bound as of the Effective Date or will be bound at Closing
by any tax partnership agreement binding upon Seller.
Section
4.17. Fees
and Commissions. Except
for the amounts due to ▇▇▇▇▇▇▇ and Company International and ▇▇▇▇▇▇▇ and
Associates, LLC by Seller in respect of the transactions contemplated hereby,
no
broker, investment banker, financial advisor or other Person is entitled to
any
broker's, finder's, financial advisor's or other similar fee or commission
in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Seller.
-10-
Section
4.18. Disclaimer
of Warranties. Other
than those expressly set out in this Article IV
or in
the Assignment, Seller hereby expressly disclaims any and all representations
or
warranties with respect to the Properties or the transactions contemplated
hereby, and Buyer agrees that the Properties are being sold by Seller "where
is"
and "as is", with all faults. Specifically as a part of (but not in limitation
of) the foregoing, Buyer acknowledges that Seller has not made, and Seller
hereby expressly disclaims, any representation or warranty (express, implied,
under common law, by statute or otherwise) as to the title or condition of
the
Properties (INCLUDING
ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS).
OTHER
THAN THOSE EXPRESSLY SET OUT IN THIS ARTICLE IV,
SELLER MAKES NO REPRESENTATION OR WARRANTY AS TO (I) THE AMOUNT, VALUE,
QUALITY, QUANTITY, VOLUME, OR DELIVERABILITY OF ANY OIL, GAS, OR OTHER MINERALS
OR RESERVES (IF ANY) IN, UNDER, OR ATTRIBUTABLE TO THE PROPERTIES, (II) THE
PHYSICAL, OPERATING, REGULATORY COMPLIANCE, SAFETY, OR ENVIRONMENTAL CONDITION
OF THE PROPERTIES, BOTH SURFACE AND SUBSURFACE, INCLUDING MATTERS RELATED TO
THE
PRESENCE, RELEASE OR DISPOSAL OF HAZARDOUS MATERIALS, SOLID WASTES, ASBESTOS
OR
NATURALLY OCCURRING RADIOACTIVE MATERIALS ("NORM"),
OR (III) THE GEOLOGICAL OR ENGINEERING CONDITION OF THE PROPERTIES OR ANY
VALUE THEREOF. SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS, STATUTORY,
OR IMPLIED, AS TO (A) THE ACCURACY, COMPLETENESS, OR MATERIALITY OF ANY
DATA, INFORMATION, OR RECORDS FURNISHED TO BUYER IN CONNECTION WITH THE
PROPERTIES OR OTHERWISE CONSTITUTING A PORTION OF THE PROPERTIES; (B) THE
PRESENCE, QUALITY, AND QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE
TO
THE PROPERTIES; (C) THE ABILITY OF THE PROPERTIES TO PRODUCE HYDROCARBONS,
INCLUDING PRODUCTION RATES, DECLINE RATES, AND RECOMPLETION OPPORTUNITIES;
(D) IMBALANCE OR PAYOUT ACCOUNT INFORMATION, ALLOWABLES, OR OTHER
REGULATORY MATTERS, (E) THE PRESENT OR FUTURE VALUE OF THE ANTICIPATED
INCOME, COSTS, OR PROFITS, IF ANY, TO BE DERIVED FROM THE PROPERTIES,
(F) THE ENVIRONMENTAL CONDITION OF THE PROPERTIES, (G) ANY PROJECTIONS
AS TO EVENTS THAT COULD OR COULD NOT OCCUR, AND (H) ANY OTHER MATTERS
CONTAINED IN OR OMITTED FROM ANY INFORMATION OR MATERIAL FURNISHED TO BUYER
BY
SELLER OR OTHERWISE CONSTITUTING A PORTION OF THE PROPERTIES. ANY DATA,
INFORMATION, OR OTHER RECORDS FURNISHED BY SELLER ARE PROVIDED TO BUYER AS
A
CONVENIENCE AND BUYER'S RELIANCE ON OR USE OF THE SAME IS AT BUYER'S SOLE
RISK.
ARTICLE
V
Representations
and Warranties of Buyer
Section
5.1. Organization
and Existence. Buyer
is
a limited partnership duly organized, legally existing and in good standing
under the laws of the State of Delaware and is qualified to do business and
in
good standing in each of the states in which Oil and Gas Properties are located
where the laws of such state would require a limited partnership owning the
Oil
and Gas Properties located in such state to so qualify. Buyer is also qualified
to own and operate oil and gas properties with all applicable governmental
agencies having jurisdiction over the Properties, to the extent such
qualification is necessary or appropriate or will be necessary or appropriate
upon consummation of the transactions contemplated hereby.
-11-
Section
5.2. Power
and Authority. Buyer
has
full limited partnership power and authority to execute, deliver, and perform
this Agreement and each other agreement, instrument, or document executed or
to
be executed by Buyer 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 Buyer of this Agreement
and
each other agreement, instrument, or document executed or to be executed by
Buyer 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 limited partnership action
of Buyer.
Section
5.3. Valid
and Binding Agreement. This
Agreement has been duly executed and delivered by Buyer and constitutes, and
each other agreement, instrument, or document executed or to be executed by
Buyer 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 Buyer
and constitutes, or when executed and delivered will constitute, a valid and
legally binding obligation of Buyer, 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 Buyer of this Agreement and each other
agreement, instrument, or document executed or to be executed by Buyer 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 (i) conflict with or result in a violation of any
provision of Buyer's Governing Documents, (ii) 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 Buyer is a party or by which Buyer or any of its properties
may be bound, (iii) result in the creation or imposition of any lien or
other encumbrance upon the properties of Buyer, or (iv) violate any
Applicable Law binding upon Buyer.
Section
5.5. Approvals.
Other
than requirements (if any) that there be obtained consents to assignment (or
waivers of preferential rights to purchase) from third parties, 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 Buyer in connection with the execution, delivery, or
performance by Buyer of this Agreement and each other agreement, instrument,
or
document executed or to be executed by Buyer 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.
-12-
Section
5.6. Pending
Litigation. There
are
no Proceedings pending or, to Buyer's Knowledge, threatened against or affecting
the execution and delivery of this Agreement by Buyer or the consummation of
the
transactions contemplated hereby by Buyer.
Section
5.7. Knowledgeable
Purchaser. Buyer
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.
Buyer is an "accredited investor," as defined in Regulation D promulgated
pursuant to the Securities Act, 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 (and the rules and regulations pertaining thereto) or a
distribution thereof in violation of any other applicable securities laws.
Buyer
has had access to the Properties, the officers and consultants of Seller, and
the books, records, and files of Seller relating to the Properties. In making
the decision to enter into this Agreement and to consummate the transactions
contemplated hereby, Buyer has relied on its own independent due diligence
investigation of the Properties and has been advised by and has relied solely
on
its own expertise and legal, land, tax, reservoir engineering, and other
professional counsel concerning this transaction, the Properties and the value
thereof.
Section
5.8. Funds. Buyer
has, and at the Closing will have, sufficient cash and other sources of
immediately available funds, as are necessary in order to pay the Adjusted
Purchase Price to Seller at the Closing and otherwise consummate the
transactions contemplated hereby.
Section
5.9. Fees
and Commissions. No
broker, investment banker, financial advisor or other Person is entitled to
any
broker's, finder's, financial advisor's or other similar fee or commission
in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Buyer.
ARTICLE
VI
Certain
Covenants of Seller Pending Closing
Section
6.1. Access
to Files. Subject
to the terms of the Confidentiality Agreement and Article
IX,
from
the date hereof until Closing, Seller will give Buyer, and its attorneys,
accountants, and other authorized representatives, access at all reasonable
times to the Properties and to any contract files, lease or other title files,
production files, well files and other files of Seller pertaining to the
ownership or operation of the Properties, and Seller will use its Reasonable
Best Efforts to arrange for Buyer, and its attorneys, accountants, and other
representatives, to have access to any such files in the office of Seller and
to
assist Buyer in obtaining the financial data necessary to prepare its required
filings with the SEC.
Section
6.2. Conduct
of Operations. From
the
date hereof until Closing, Seller will (i) continue the routine operation
of the Properties in the ordinary course of business; and (ii) operate the
Properties in compliance with all Applicable Laws and Environmental Laws and
in
compliance with all Basic Documents. Without expanding any obligations that
Seller may have to Buyer, it is expressly agreed that Seller shall never have
any liability to Buyer which respect to operation of a Property greater than
that which it might have as the operator to a non-operator under the standard
of
care (including any exculpatory clauses) contained in the applicable operating
agreement (or, in the absence of such an agreement, under the AAPL 610 (1989
Revision) form Operating Agreement)
-13-
Section
6.3. Restrictions
on Certain Actions. From
the
date hereof until Closing, except as set forth in Seller's development plan
attached as Section 6.3 of the Seller Disclosure Schedule, Seller will not,
without Buyer's prior consent in connection with the Properties:
(a) expend
any funds, or make any commitments to expend funds (including entering into
new
agreements which would obligate Seller to expend funds), or otherwise incur
any
other obligations or liabilities, other than to pay expenses or to incur
liabilities in connection with routine operation of the Properties after the
Effective Date and except in the event of an emergency requiring immediate
action to protect life or preserve the Properties;
(b) except
where necessary to prevent the termination of a Lease or other material
agreement governing Seller's interest in the Properties, propose the drilling
of
any additional ▇▇▇▇▇, or propose the deepening, plugging back or reworking
of
any existing ▇▇▇▇▇, or propose the conducting of any other operations which
require consent under the applicable operating agreement, or propose the
conducting of any other operations other than the normal operation of the
existing ▇▇▇▇▇ on the Oil and Gas Properties, or propose the abandonment of
any
▇▇▇▇▇ on the Oil and Gas Properties (and Seller agrees that it will advise
Buyer
of any such proposals made by third parties and will respond to each such
proposal made by a third party in the manner requested by Buyer);
(c) sell,
transfer or abandon any portion of the Properties other than items of materials,
supplies, machinery, equipment, improvements or other personal property or
fixtures forming a part of the Properties (and then only if the same is replaced
with an item of substantially equal suitability, free of liens and security
interests, which replacement item will then, for the purposes of this Agreement,
become part of the Properties); or
(d) release
(or permit to terminate), or modify or reduce its rights under, any oil, gas
or
mineral lease forming a part of the Oil and Gas Properties, or any other Basic
Document, or enter into any new agreements which would be Basic Documents,
or
modify any existing production sales contracts or enter into any new production
sales contracts, except contracts terminable by Seller with notice of 60 days
or
less.
Section
6.4. Payment
of Expenses. Seller
will cause all expenses (including all bills for labor, materials and supplies
used or furnished for use in connection with the Properties and all severance,
production, and similar Taxes) relating to the ownership or operation of the
Properties prior to the date of Closing to be promptly paid and discharged,
except for expenses disputed in good faith.
Section
6.5. Preferential
Rights and Third Party Consents. Seller
will request, from the appropriate parties (and in accordance with the documents
creating such rights or requirements), waivers of the preferential rights to
purchase, or requirements that consent to assignment be obtained, which are
identified in Section 6.5 of the Seller Disclosure Schedule. Seller shall
have no obligation hereunder other than to so request such waivers (i.e.,
Seller
shall have no obligation to assure that such waivers are obtained), and if
all
such waivers (or any other waivers of preferential rights to purchase or
requirements that consent be obtained to assignment, even if the same are not
listed on such Section 6.5) are not obtained, Buyer may treat any waiver
which is not obtained as a matter which causes Seller's title to not be
sufficient to meet the standards set forth in Article VIII
(exclusive of the requirements that a Title Defect must have a Title Defect
Amount attributable thereto in excess of $15,000 and that the aggregate of
the
Title Defect Amounts exceeds one percent of the Purchase Price); provided,
however, that if the unobtained waiver is a waiver of a preferential right
to
purchase, and if both Buyer and Seller agree to this treatment of such matter
(and agree upon an appropriate allocation of the Purchase Price), Seller will
tender (at the agreed allocated portion of the Purchase Price) the required
interest in the Property affected by such unwaived preferential right to
purchase to the holder, or holders, of such right who have elected not to waive
such preferential right to purchase, and if, and to the extent that, such
preferential right to purchase is exercised by such party or parties, such
interest in such Property will be excluded from the transaction contemplated
hereby and the Purchase Price will be reduced by the amount paid, or to be
paid,
by the party exercising such preferential right to purchase (and Seller shall
collect such amount from such purchaser).
-14-
ARTICLE
VII
ADDITIONAL
PRE-CLOSING AND POST-CLOSING AGREEMENTS OF BOTH
PARTIES
Section
7.1. Reasonable
Best Efforts. Each
party hereto agrees that it will not voluntarily undertake any course of action
inconsistent with the provisions or intent of this Agreement and will use its
Reasonable Best Efforts to take, or cause to be taken, all action and to do,
or
cause to be done, all things reasonably necessary, proper, or advisable under
Applicable Law to consummate the transactions contemplated by this Agreement,
including (i) cooperation in determining whether any consents, approvals,
orders, authorizations, waivers, declarations, filings, or registrations of
or
with any Governmental Entity or third party are required in connection with
the
consummation of the transactions contemplated hereby; (ii) Reasonable Best
Efforts to obtain any such consents approvals, orders, authorizations, and
waivers and to effect any such declarations, filings, and registrations;
(iii) Reasonable Best Efforts to cause to be lifted or rescinded any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby;
(iv) Reasonable Best Efforts to defend, and cooperation in defending, all
Proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby; and (v) the execution of any additional instruments
necessary to consummate the transactions contemplated hereby.
Section
7.2. Notice
of Litigation. Until
the
Closing, (i) Buyer, upon learning of the same, shall promptly notify Seller
of any Proceeding which is commenced or threatened against Buyer and which
affects this Agreement or the transactions contemplated hereby and (ii)
Seller, upon learning of the same, shall promptly notify Buyer of any Proceeding
which is commenced or threatened against Seller which affects this Agreement
or
the transactions contemplated hereby.
Section
7.3. Notification
of Certain Matters. Until
the
Closing, Seller
shall
give
prompt
notice to Buyer of: (i) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which, to Seller's Knowledge, would be likely
to
cause any representation or warranty made by Seller in Article IV
to be
untrue or inaccurate at or prior to the Closing and (ii) any failure of
Seller
to
comply
with or satisfy any covenant, condition, or agreement to be complied with or
satisfied by Seller
hereunder
prior to Closing.
Until
the Closing, Buyer shall give prompt notice to Seller of: (i) the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which, to Buyer's Knowledge, would be likely to cause any representation or
warranty contained in Article V
to be
untrue or inaccurate at or prior to the Closing, and (ii) any failure of
Buyer to comply with or satisfy any covenant, condition, or agreement to be
complied with or satisfied by Buyer hereunder prior to Closing. The delivery
of
any notice pursuant to this Section
7.3
shall
not be deemed to (x) modify the representations or warranties hereunder of
the party delivering such notice, (y) modify the conditions set forth in
Article IX,
or
(z) limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
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Section
7.4. Fees
and Expenses.
(a) Except
as
otherwise provided herein, (i) all fee and expenses incurred in connection
with
this Agreement by Seller will be borne by and paid by Seller
and (ii) all
fees and
expenses incurred in connection with this Agreement by Buyer will be borne
by
and paid by Buyer.
(b) All
required documentary, filing and recording fees and expenses in connection
with
the filing and recording of the Assignment and other instruments required to
convey title to the Properties to Buyer shall be borne by Buyer. Buyer shall
assume responsibility for, and shall bear and pay, all state sales and use
Taxes
(including any applicable interest or penalties) incurred or imposed with
respect to the transactions contemplated by this Agreement.
Section
7.5. Public
Announcements. Except
as
may be required by Applicable Law, neither Buyer, on the one hand, nor Seller,
on the
other
hand, shall issue any press release or otherwise make any statement to the
public generally with respect to this Agreement or the transactions contemplated
hereby without the prior consent of the other party (which consent shall not
be
unreasonably withheld and which consent, if given verbally, shall be confirmed
in writing within one Business Day thereafter). Any such press release or
statement required by Applicable Law shall only be made after reasonable notice
to the other parties.
Section
7.6. Casualty
Loss Prior to Closing.
Seller
shall use its Reasonable Best Efforts to cause Buyer to be named as an
additional insured during the period between the Effective Date and the Closing
Date on all of its liability insurance policies covering the Properties.
In
the
event of damage by fire or other casualty to the Properties after the Effective
Date and prior to the Closing, then this Agreement shall remain in full force
and effect, and (unless Buyer and Seller shall otherwise agree) in such
event:
(a) as
to
each such Property so damaged which is an Oil and Gas Property, then, at Buyer's
election, either (i) such Property shall be treated as if it had an
asserted Title Defect associated with it and the procedure provided for in
Article VIII
shall be
applicable thereto, or (ii) the Purchase Price will not be adjusted, and if
Seller should be entitled to make any claims under any insurance policy with
respect to such damage, Seller shall, at Seller's election, either collect
(and
when collected pay over to Buyer), or assign to Buyer, such claims,
and
(b) as
to
each such Property which is other than an Oil and Gas Property, Seller shall,
at
Seller's election, either collect (and when collected pay over to Buyer), or
assign to Buyer, any and all insurance claims relating to such loss, and Buyer
shall take title to the Property affected by such loss without reduction of
the
Purchase Price.
Section
7.7. Governmental
Bonds. At
or
prior to Closing, Buyer shall deliver to Seller evidence that Buyer has
completed all action necessary to permit Buyer to post bonds or other security
immediately following the Closing with all applicable Governmental Entities
meeting the requirements of such Governmental Entities to own, and where
appropriate, operate, the Properties.
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Section
7.8. Assumed
Obligations.
At
Closing, Buyer shall assume and agree to pay, perform and discharge the Assumed
Obligations.
Section
7.9. Operational
Transition. For
a
reasonable period of time after Closing, Buyer and Seller shall cooperate with
respect to transition activities as to Properties where Buyer succeeds Seller
as
operator. Seller agrees to use its Reasonable Best Efforts to cause Buyer to
be
named successor operator of any Property where other parties own interests
in
the ▇▇▇▇▇ located thereon; HOWEVER,
IT IS RECOGNIZED THAT NO ASSURANCE CAN BE GIVEN BY SELLER THAT BUYER SHALL
SUCCEED SELLER AS OPERATOR OF ANY SUCH PROPERTY.
Section
7.10. Books
and Records. At
or
promptly after Closing, but in no event later than 5 Business Days after the
Closing, Seller will deliver to Buyer in electronic and hard copy format all
relating books and records that are a part of the Properties to a location
designated by Buyer. Buyer will promptly reimburse Seller for all reasonable
costs of shipping or transporting such books and records. Seller (or its
Affiliates) shall have the right to have reasonable access during Buyer's
reasonable and customary business hours to inspect and copy (at Seller's or
such
Affiliate's expense) the books and records so delivered under this Section
7.9
for the
six-year period commencing on the Closing Date.
Section
7.11. Suspended
Funds. On
or
prior to Closing, Seller shall provide to Buyer a listing showing all proceeds
from production attributable to the ▇▇▇▇▇ which are currently held in suspense
by Seller (the "Suspended
Proceeds").
With
respect to those Properties for which Buyer will become successor operator
on
the Closing Date, Seller shall transfer to Buyer all Suspended Proceeds
attributable thereto at Closing. With respect to those Properties for which
Buyer becomes successor operator after the Closing Date, Seller shall transfer
to Buyer all Suspended Proceeds attributable thereto on the succession date
or
as soon as reasonably practicable after such date. Upon receipt of Suspended
Proceeds pursuant to this Section
7.11,
Buyer
shall be responsible for proper distribution of such Suspended Proceeds to
the
parties lawfully entitled to them to the extent and only to the extent of such
Suspended Proceeds.
Section
7.12. Letters-in-Lieu.
Either
at
or after Closing (provided Buyer has given five Business Days advance request
for same) Seller shall execute and deliver letters in lieu of transfer orders
(or similar documentation) in form reasonably acceptable to Buyer and
Seller.
Section
7.13. Logos
and Names.
As
soon
as practicable after the Closing, Buyer will remove or cause to be removed
the
names and marks used by Seller and all variations and derivatives thereof and
logos relating thereto from the Properties.
Section
7.14. ▇▇▇▇▇▇.
(a) Seller
will (i) cause the termination of the Existing ▇▇▇▇▇▇ at or prior to
Closing and pay (at Seller's sole cost and expense) all amounts owed by Seller
under the Existing Hedge and (B) cause to be delivered at Closing executed
releases by the counterparty to the Existing Hedge (in a form satisfactory
to
the counterparty and reasonably satisfactory to Buyer) of all Liens existing
on
collateral pledged by Seller as security under the Existing ▇▇▇▇▇▇.
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(b) Subject
to the provisions of this Section
7.14(b),
Seller
covenants and agrees that, upon written request from Buyer during the period
commencing the date hereof and expiring five Business Days prior to the Closing
Date (the "Buyer Hedge
Period"),
Seller will enter into one or more ▇▇▇▇▇▇ on terms and with counterparties
determined by Buyer with respect to a percentage of Seller's forecast production
from proved producing oil and gas reserves attributable to the Properties as
determined by Buyer. In connection with the foregoing, Buyer will give
reasonable advance notice to Seller of any Hedge request made under this
Section 7.14(b)
during
the Buyer Hedge Period, and the parties agree to cooperate and act in good
faith
in documenting and effecting such Hedge. Buyer agrees to pay promptly all fees,
costs and expenses incurred by Seller or its Affiliates in performing its
obligations under this Section 7.14(b).
Further, Buyer agrees to indemnify and hold harmless Seller, its Affiliates,
and
its and their respective officers, partners, employees and agents from and
against any claims, losses, damages, suits, proceedings, fees, costs and
expenses (including attorneys', consultants' and experts' fees and expenses)
incurred by Seller in connection with any Hedge effected pursuant to this
Section
7.14(b),
including the costs of terminating such Hedge in the event that the transactions
contemplated by this Agreement are not consummated for any reason.
Section
7.15. Further
Assurances.
From
time
to time following the Closing, at the request of any party hereto and without
further consideration, the other party or parties hereto shall execute and
deliver to such 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.
ARTICLE
VIII
Due
Diligence Examination
Section
8.1. Title
Due Diligence Examination.
(a) From
the
date of this Agreement until 5:00 p.m. (local time in Houston, Texas) five
Business Days prior to the Closing Date (the
"Examination
Period"),
Seller
shall afford to Buyer and its authorized representatives reasonable access
during normal business hours to the office, personnel and books and records
of
Seller in
order
for Buyer to conduct a title examination as it may in its sole discretion choose
to conduct with respect to the Oil and Gas Properties in order to determine
whether Title Defects (as defined below) exist ("Buyer's
Title Review").
Such
books and records shall include all abstracts of title, title opinions, title
files, ownership maps, lease files, assignments, division orders, operating
records and agreements, well files, financial and accounting records,
geological, geophysical and engineering records, in each case insofar as same
may now be in existence and in the possession of Seller,
excluding, however, any information that Seller is prohibited from disclosing
by
bona fide, third party confidentiality restrictions; provided, that if requested
by Buyer, Seller shall use its Reasonable Best Efforts to obtain a waiver of
any
such restrictions in favor of Buyer. The cost and expense of Buyer's Title
Review, if any, shall be borne solely by Buyer.
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(b) If
Buyer
discovers any Title Defect affecting any of the Oil and Gas Properties, Buyer
shall notify Seller prior to the expiration of the Examination Period of such
alleged Title Defect. To be effective, such notice ("Title
Defect Notice")
must
(i) be in writing, (ii) be received by Seller prior to the expiration
of the Examination Period, (iii) describe the Title Defect in reasonable
detail (including any alleged variance in the Net Revenue Interest),
(iv) identify the specific Oil and Gas Property affected by such Title
Defect, and (v) include the value of such Title Defect as determined by
Buyer in good faith. Any matters that may otherwise constitute Title Defects,
but of which Seller has not been specifically notified by Buyer in accordance
with the foregoing, shall be deemed to have been waived by Buyer for all
purposes. Upon the receipt of such effective Title Defect Notice from Buyer,
Seller shall have the option, in addition to the remedies set forth in
Section 8.1(c)
(the
"Remedies
for Title Defects"),
but
not the obligation, to attempt to cure such Title Defect at any time prior
to
the Closing. The Oil and Gas Property affected by such uncured Title Defect
shall be a "Title
Defect Property".
(c) With
respect to each Title Defect that is not cured on or before the Closing, the
Purchase Price shall be reduced, subject to this Article VIII,
by the
Title Defect Amount with respect to such Title Defect Property. The
"Title
Defect Amount"
shall
mean, with respect to a Title Defect Property, the amount by which such Title
Defect Property is impaired as a result of the existence of one or more Title
Defects, which amount shall be determined as follows:
(i) The
Title
Defect Amount with respect to a Title Defect Property shall be determined by
taking into consideration the "Allocated
Value"
(as set
forth in Exhibit 8.1(c)
attached
hereto) of the Oil and Gas Property subject to such Title Defect, the portion
of
the Oil and Gas Property subject to such Title Defect, and the legal effect
of
such Title Defect on the Oil and Gas Property affected thereby; provided,
however, that: (A) if such Title Defect is in the nature of Seller's Net
Revenue Interest in an Oil and Gas Property being less than the Net Revenue
Interest set forth in Exhibit 8.1(c)
hereto
and the Working Interest remains the same, then the Title Defect Amount shall
equal the Allocated Value for the relevant Oil and Gas Property multiplied
by
the percentage reduction in such Net Revenue Interest as a result of such Title
Defect or (B) if such Title Defect is in the nature of a Lien, then the
Title Defect Amount shall equal the amount required to fully discharge such
Lien; and
(ii) If
the
Title Defect results from any matter not described in Section 8.1(c)(i),
the
Title Defect Amount shall be an amount equal to the difference between the
value
of the Title Defect Property affected by such Title Defect with such Title
Defect and the value of such Title Defect Property without such Title Defect
(taking into account the portion of the Allocated Value of the Title Defect
Property).
(d) As
used
in this Section 8.1:
(i) "Defensible
Title"
means,
as of
the date
of this Agreement and
the
Closing Date (and the period in between), with respect to the Oil and Gas
Properties, such record title
and
ownership by Seller that:
(A) entitles
Seller to receive and retain, without reduction, suspension or termination,
not
less than the percentage set forth in Exhibit 8.1(c)
as
Seller's Net Revenue Interest of all Hydrocarbons produced, saved and marketed
from each Lease comprising such Oil and Gas Property as set forth in
Exhibit 8.1(c),
through
plugging, abandonment and salvage of all ▇▇▇▇▇ comprising or included in such
Oil and Gas Property, and except for changes or adjustments that result from
the
establishment of units, changes in existing units (or the participating areas
therein), or the entry into of pooling or unitization agreements after the
date
hereof unless made in breach of the provisions of Section 6.3;
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(B) obligates
Seller to bear not greater than the percentage set forth in Exhibit 8.1(c)
as
Seller's Working Interest of the costs and expenses relating to the maintenance,
development and operation of each Lease comprising such Oil and Gas
Property,
through
plugging, abandonment and salvage of all ▇▇▇▇▇ comprising or included in such
Oil and Gas Property, and except for changes or adjustments that result from
the
establishment of units, changes in existing units (or the participating areas
therein), or the entry into of pooling or unitization agreements after the
date
hereof unless made in breach of the provisions of Section 6.3;
(C) is
free
and clear of all Liens, except Permitted Encumbrances;
(D) reflects
that all consents to assignment, notices of assignment or preferential purchase
rights which are applicable to or must be complied with in connection with
the
transaction contemplated by this Agreement, or any prior sale, assignment or
the
transfer of such Oil and Gas Property, have been obtained and complied with
to
the extent the failure to obtain or comply with the same could render this
transaction or any such sale, assignment or transfer (or any right or interest
affected thereby) void or voidable or could result in Buyer or Seller incurring
any liability.
(ii) "Permitted
Encumbrances"
shall
mean (A) Liens for Taxes which are not yet delinquent or which are being
contested in good faith and for which adequate reserves have been established;
(B) normal and customary Liens of co-owners under operating agreements,
unitization agreements, and pooling orders relating to the Oil and Gas
Properties, which obligations are not yet due and pursuant to which Seller
is
not in default; (C) mechanic's and materialman's Liens relating to the Oil
and Gas Properties, which obligations are not yet due and pursuant to which
Seller is not in default; (D) Liens in the ordinary course of business
consisting of minor defects and irregularities in title or other restrictions
(whether created by or arising out of joint operating agreements, farm-out
agreements, leases and assignments, contracts for purchases of Hydrocarbons
or
similar agreements, or otherwise in the ordinary course of business) that are
of
the nature customarily accepted by prudent purchasers of oil and gas properties
and do not decrease
the Net Revenue Interest, increase the Working Interest (without a proportionate
increase in the Net Revenue Interest) or materially
affect the value of any property encumbered thereby; (E) all approvals
required to be obtained from Governmental Entities that 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;
(F) preferential rights to purchase and consent to transfer requirements of
any Person (to
the
extent same
have
been complied with in connection with the prior sale, assignment or the transfer
of such Oil and Gas Property and are not
triggered by the consummation of the transactions contemplated
herein);
(G) Liens
under the Senior Credit Facility
(provided such Liens are released at Closing); (H) Liens under the Existing
▇▇▇▇▇▇ (provided such Liens are released at Closing); and (I) conventional
rights of reassignment normally actuated by an intent to abandon or release
a
lease and requiring notice to the holders of
such
rights.
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(iii) "Title
Defect"
shall
mean any particular defect in or failure of Seller's ownership of any Property:
(A) that causes Seller to not have Defensible Title to such Oil and Gas
Property, (B) that has attributable thereto a Title Defect Amount in excess
of
$15,000 and (C) regarding which a Title Defect Notice has been timely and
otherwise validly delivered. Notwithstanding any other provision in this
Agreement to the contrary, the following matters shall not constitute, and
shall
not be asserted as, a Title Defect: (A) defects or irregularities arising
out of lack of corporate authorization
unless
Buyer has a bona fide, independent reason to believe that such lack of corporate
authorization will result in a claim against Buyer's title; (B) defects or
irregularities that have been cured or remedied by the applicable
statutes of limitation or statutes for prescription; (C) defects or
irregularities in the chain of title consisting of the failure to recite marital
status in documents or omissions of heirship Proceedings;
(D) minor defects or irregularities in title which for a period of five
years or more have not delayed or prevented Seller (or Seller's predecessor)
from receiving its Net Revenue Interest share of the proceeds of production
and
have not caused Seller to bear a share of expenses and costs greater than its
Working Interest share from each Lease, unit or Well; and
(E) defects or irregularities resulting
from or related to probate Proceedings or the lack thereof which defects or
irregularities have been outstanding for five years or more.
(e) If
Seller
and Buyer are unable to reach an agreement as to whether a Title Defect exists
or, if it does exist, the Title Defect Amount attributable such Title Defect,
the provisions of Section 8.3
shall be
applicable.
Section
8.2. Environmental
Due Diligence Examination.
(a) Buyer
shall have the right, or the right to cause an environmental consultant
reasonably acceptable to Seller ("Buyer's
Environmental Consultant"),
to
conduct a Phase I environmental assessment of the Properties and to conduct
any
further Phase I or other non-invasive environmental assessment of the Properties
it deems appropriate, to the extent Seller has the authority to grant such
right
to Buyer. ("Buyer's
Environmental Review").
No
less than three Business Days prior to the proposed commencement date of Buyer's
Environmental Review, Buyer shall furnish Seller with an outline of the proposed
scope of such review, including the locations of such activities. The cost
and
expense of Buyer's Environmental Review, if any, shall be borne solely by Buyer.
No Person, other than Buyer's Environmental Consultant and Buyer's employees
may
conduct Buyer's Environmental Review. Seller shall have the right to have
representatives thereof present to observe Buyer's Environmental Review
conducted in Seller's offices or on Seller's properties. Buyer agrees to conduct
Buyer's Environmental Review in a manner so as not to unduly interfere with
the
business operations of Seller and in compliance with all Applicable Laws, and
Buyer shall exercise due care with respect to Seller's properties and their
condition.
-21-
(b) Prior
to
the Closing, unless otherwise required by Applicable Law, Buyer shall (and
shall
cause Buyer's Environmental Consultant, if applicable, to) treat confidentially
any matters revealed by Buyer's Environmental Review and any reports or data
generated from such review (the "Environmental
Information"),
and
Buyer shall not (and shall cause Buyer's Environmental Consultant, if
applicable, to not) disclose any Environmental Information to any Governmental
Entity or other third party without the prior written consent of Seller, unless
so required by Applicable Law). Prior to the Closing, unless otherwise required
by Applicable Law, Buyer may use the Environmental Information only in
connection with the transactions contemplated by this Agreement. If Buyer,
Buyer's Environmental Consultant, if applicable, or any third party to whom
Buyer has provided any Environmental Information become legally compelled to
disclose any of the Environmental Information, Buyer shall provide Seller with
prompt notice and Seller, at Seller's expense, may file any protective order,
or
seek any other remedy, as it deems appropriate under the circumstances. If
this
Agreement is terminated prior to the Closing, Buyer shall deliver the
Environmental Information to Seller, which Environmental Information shall
become the sole property of Seller. Upon Seller's written request to Buyer,
Buyer shall provide copies of the Environmental Information to Seller without
charge.
(c) If
Buyer
or Buyer's Environmental Consultant, if applicable, discovers any Environmental
Defect (as herein defined) prior to the expiration of the Examination Period,
Buyer shall notify Seller prior to the expiration of the Examination
Period of
such
alleged Environmental Defect. To be effective, such notice (an "Environmental
Defect Notice")
must
(i) be in writing; (ii) be received by Seller prior to the expiration
of the Examination Period; (iii) describe the Environmental Defect in
reasonable detail, including (A) the specific Properties affected by or
associated with such Environmental Defect, (B) if applicable, a site plan
showing the location of all field notes and the field conditions observed,
(C) the written conclusion of Buyer's Environmental Consultant, if
applicable, that an Environmental Defect is believed to exist, which conclusion
shall be reasonably substantiated by the factual data gathered in Buyer's
Environmental Review, and (D) if feasible and applicable, a separate,
reasonably specific citation of the provisions of the Environmental Laws alleged
to be violated and the related facts that substantiate such violation; (iv)
describe the procedures recommended to correct, eliminate or pay the
Environmental Defect, together with any related recommendations from Buyer's
Environmental Consultant, if applicable; and (v) set forth Buyer's good
faith estimate of the Environmental Defect Value, including the basis for such
estimate. Any matters that may otherwise constitute Environmental Defects,
but
of which Seller has not been specifically notified by Buyer in accordance with
the foregoing, together with any environmental matter that does not constitute
an Environmental Defect, shall be deemed to have been waived by Buyer for
purposes of this Section 8.2.
Upon
the receipt of such effective notice from Buyer, Seller shall have the option,
in addition to the remedy set forth in Section 8.4(c),
but not
the obligation, to attempt to cure such Environmental Defect at any time prior
to the Closing, at the sole cost and expense of Seller. If Seller and Buyer
are
unable to reach an agreement as to whether an Environmental Defect exists or,
if
it does exist, the amount of the Environmental Defect Value attributable
thereto, the provisions of Section 8.3
shall be
applicable.
(d) If
any
Environmental Defect described in a notice delivered in accordance with
Section 8.2
is not
cured on or before the Closing, then the Purchase Price shall be reduced,
subject to Section
8.4,
by the
Environmental Defect Value of such Environmental Defect.
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(e) As
used
in this Section 8.2:
(i) "Environmental
Defect"
shall
mean, with respect to any given Property,
a violation of Environmental Laws in effect as of the date hereof in the
jurisdiction in which such Property is located, an obligation under
Environmental Laws to complete immediately or promptly after the Closing any
corrective action at the Property, or any Environmental Liability arising from
or attributable to any condition, event, circumstance, activity, practice,
incident, action, or omission existing or occurring prior to the Closing Date,
or the use, release, storage, treatment, transportation, or disposal of
Hazardous Materials prior to the Closing Date, (A) regarding
which an Environmental Defect Notice has been timely and otherwise validly
delivered, (B) that has an Environmental Defect Value attributable thereto
in excess of $50,000, and (C) is not otherwise disclosed in the Executive
Summary included with that certain report of White Buffalo Environmental
Services dated as of December 13, 2005, a copy of which has heretofore been
provided by Seller to Buyer.
(ii) "Environmental
Defect Value"
shall
mean, (A) the
net present value of the reasonably estimated costs and expenses to correct
such
Environmental Defect in the most cost effective manner reasonably available,
consistent with Environmental Laws, or (B) the net present value of the
amount of Environmental Liabilities reasonably believed will be incurred or
required to be paid by Seller with respect thereto. The parties recognize that
the calculation of an Environmental Defect Value may require the use of
assumptions and extrapolations; however, it is acknowledged and agreed that
any
such assumptions and extrapolations will be consistent with the known factual
information and reasonable in nature.
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Section
8.3. Disputes
Regarding Title Defects or Environmental Defects.If
Seller
and Buyer are unable to reach an agreement as to whether a Title Defect or
an
Environmental Defect exists, or if it does exist, the Title Defect Amount or
Environmental Defect Value attributable to such Title Defect or Environmental
Defect, or disputes relating to Post-Closing Defects pursuant to Section
8.4(c)
(a
"Defect
Dispute"),
each
party shall have the right to submit a Defect Dispute to an independent expert
(the "Independent
Expert"),
who
shall serve as sole arbitrator. The Independent Expert shall be appointed by
mutual agreement of Seller and Buyer from among candidates (including lawyers)
with experience and expertise in the area that is the subject of such Defect
Dispute, and failing such agreement, such Independent Expert for such Defect
Dispute shall be selected in accordance with the Commercial Arbitration Rules
of
the AAA (the "Rules").
Defect Disputes to be resolved by an Independent Expert shall be resolved in
accordance with mutually agreed procedures and rules and failing such agreement,
in accordance with the Rules. The Independent Expert shall be instructed by
the
parties to resolve such Defect Dispute as soon as reasonably practicable in
light of the circumstances. The decision and award of the Independent Expert
shall be binding upon the parties as an award under the Federal Arbitration
Act
and final and nonappealable to the maximum extent permitted by law, and judgment
thereon may be entered in a court of competent jurisdiction and enforced by
any
party as a final judgment of such court.
Section
8.4. Adjustments
to Purchase Price for Defects.
(a) Notwithstanding
anything to the contrary contained in this Agreement, no adjustment of the
Purchase Price shall be made for Title Defects unless the aggregate of the
Title
Defect Amounts, as determined in accordance with this Agreement, equals or
exceeds one percent of the Purchase Price, in which event the Purchase Price
shall be adjusted downward by the amount such Title Defect Amounts exceed one
percent of the Purchase Price in the aggregate.
(b) Notwithstanding
anything to the contrary contained in this Agreement, no adjustment of the
Purchase Price shall be made for Environmental Defects unless the aggregate
of
the Environmental Defect Values, as determined in accordance with this
Agreement, equals or exceeds one percent of the Purchase Price, in which event
the Purchase Price shall be adjusted downward by the amount such Environmental
Defect Values exceed one percent of the Purchase Price in the
aggregate.
(c) Notwithstanding
anything herein to the contrary, if Seller is unable to cure a Title Defect
or
an Environmental Defect (a "Post-Closing
Defect")
on or
prior to Closing, Seller shall have the option, by notice in writing to Buyer
on
or before Closing, to attempt to cure such Post-Closing Defect within the 90-day
period commencing the Closing Date (the "Cure
Period").
In
such
event, the transactions contemplated hereby will close as provided herein,
but
an amount equal to the applicable Title Defect Amount or Environmental Defect
Value to which the Post-Closing Defect pertains shall be deducted from the
Adjusted Purchase Price otherwise payable at Closing and paid into the Joint
Account. The amount deposited into the Joint Account with respect to a
Post-Closing Defect will remain therein until released as provided in
Section 8.4(d).
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(d) Buyer
will act in good faith and reasonably cooperate with the Seller after the
Closing to cure a Post-Closing Defect (provided, that Buyer shall not be
required to expend any monies in connection therewith and Seller shall conduct
its curative activities in a manner so as to not unreasonably interfere with
Buyer's operations). If Seller and Buyer mutually agree that a Post-Closing
Defect has been cured, then within two Business Days after such determination,
the amount withheld in the Joint Account with respect thereto (together with
any
interest earned thereon) shall be released to Seller. If Seller and Buyer
mutually agree that a Post-Closing Defect has been partially cured, then Seller
and Buyer shall mutually determine the portion of the amount retained in the
Joint Account with respect thereto (together with any interest earned thereon)
that should be paid to Buyer to compensate it for the uncured portion thereof
(together with interest earned thereon), and the remaining portion of such
amount shall be released to Seller (together with any interest earned thereon).
If Seller and Buyer mutually agree that a Post-Closing Defect has not been
cured, then within two Business Days after such determination, the amount
withheld in the Joint Account with respect thereto (together with any interest
earned thereon) shall be released to Buyer. If, at the end of the Cure Period,
Seller has been unable to cure a Post-Closing Defect (and there is no dispute
as
to whether or not it has been cured), the amount withheld in the Joint Account
with respect thereto (together with any interest earned thereon) shall be
released to Buyer. If, at the end of the Cure Period, Seller and Buyer are
unable to agree whether there has been a satisfactory resolution of a
Post-Closing Defect, then such disagreement shall be resolved as provided in
Section 8.3.
Section
8.5. Buyer
Indemnification. BUYER
HEREBY INDEMNIFIES AND SHALL DEFEND AND HOLD SELLER, AFFILIATES THEREOF, AND
ITS
AND THEIR RESPECTIVE OWNERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
REPRESENTATIVES, CONTRACTORS, SUCCESSORS, AND ASSIGNS HARMLESS FROM AND AGAINST
ANY AND ALL OF
THE FOLLOWING CLAIMS
ARISING FROM BUYER'S INSPECTING AND OBSERVING THE
PROPERTIES:
(I) CLAIMS
FOR PERSONAL INJURIES TO OR DEATH OF EMPLOYEES OF BUYER, ITS CONTRACTORS,
AGENTS, CONSULTANTS, AND REPRESENTATIVES, AND DAMAGE TO THE PROPERTY OF BUYER
OR
OTHERS ACTING ON BEHALF OF BUYER, EXCEPT FOR INJURIES OR DEATH CAUSED BY THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SELLER, AFFILIATES THEREOF OR ITS
OR
THEIR RESPECTIVE EMPLOYEES, CONTRACTORS, AGENTS, CONSULTANTS, OR
REPRESENTATIVES; AND (II) CLAIMS
FOR PERSONAL INJURIES TO OR DEATH OF EMPLOYEES OF SELLER OR THIRD PARTIES,
AND
DAMAGE TO THE PROPERTY OF SELLER OR THIRD PARTIES, TO THE EXTENT CAUSED BY
THE
NEGLIGENCE, GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT OF BUYER.
TO
THE EXTENT PROVIDED ABOVE, THE
FOREGOING INDEMNITY INCLUDES, AND THE PARTIES INTEND IT TO INCLUDE, AN
INDEMNIFICATION OF THE INDEMNIFIED PARTIES FROM AND AGAINST CLAIMS ARISING
OUT
OF OR RESULTING, IN WHOLE OR PART, FROM THE CONDITION OF THE PROPERTY OR THE
SOLE, JOINT, COMPARATIVE, OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY OF ANY
OF
THE INDEMNIFIED PARTIES.
THE PARTIES HERETO AGREE THAT THE FOREGOING COMPLIES WITH THE EXPRESS NEGLIGENCE
RULE AND IS CONSPICUOUS.
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ARTICLE
IX
Conditions
Precedent to the Obligations of the Parties
Section
9.1. Conditions
Precedent to the Obligations of Buyer. The
obligations of Buyer under this Agreement are subject to each of the following
conditions being met:
(a) Each
of
the representations and warranties of Seller contained in Article IV
shall be
true and correct as of the date made and (having been deemed to have been made
again on and as of the Closing Date in the same language) shall be true and
correct on and as of the Closing Date, except (i) to the extent that any
such representation or warranty is made as of a specified date, in which case
such representation or warranty shall have been true and correct in all material
respects (or, to the extent that such representations or warranties are
qualified by materiality, in all respects) as of such specified date,
(ii) as affected by transactions contemplated or permitted by this
Agreement, and (iii) any such inaccuracies or breaches which, individually
or in the aggregate, would not reasonably be expected to result in Buyer's
Losses in excess of $5,000,000.
(b) Seller
shall have performed and complied in all material respects with (or compliance
therewith shall have been waived by Buyer) each and every covenant, agreement
and condition required by this Agreement to be performed or complied with by
Seller prior to or at the Closing.
(c) Seller
shall have delivered a certificate executed by the president or chief executive
officer of Seller dated the Closing Date, representing and certifying in such
detail as Buyer may reasonably request that the conditions set forth in
subsections (a)
and
(b)
above
have been fulfilled.
(d) No
Proceeding (excluding any Proceeding initiated by Buyer or any of its
affiliates) shall, on the Closing Date, be pending or threatened before any
Governmental Entity seeking to restrain, prohibit, or obtain damages or other
relief in connection with the consummation of the transactions contemplated
by
this Agreement.
(e) Buyer
shall have received a release of Liens with respect to the Properties, executed
in recordable form by the Senior Lender, and in form and substance agreeable
to
Buyer.
(f) Buyer
shall have received an assignment of the Properties executed and delivered
by
Seller, which assignment shall be substantially in the form of the instrument
attached hereto as Exhibit 9.1(f)
in all
material respects (the "Assignment").
(g) Buyer
shall have received a certificate of non-foreign status in form, date and
content reasonably acceptable to Buyer, executed and delivered by Seller
pursuant to Section 1445 of the Code and the regulations promulgated
thereunder.
(h) Buyer
shall have received all other agreements, instruments and documents which are
required by other terms of this Agreement to be executed or delivered by Seller
or any other party to Buyer prior to or in connection with the
Closing.
Section
9.2. Conditions
Precedent to the Obligations of Seller. The
obligations of Seller under this Agreement are subject to each of the following
conditions being met:
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(a) Each
of
the representations and warranties of Buyer contained in this Agreement shall
be
true and correct in all material respects as of the date made and (having been
deemed to have been made again on and as of the Closing Date in the same
language) shall be true and correct in all material respects on and as of the
Closing Date, except as affected by transactions permitted by this Agreement
and
except to the extent that any such representation or warranty is made as of
a
specified date, in which case such representation or warranty shall have been
true and correct in all material respects as of such specified
date.
(b) Buyer
shall have performed and complied in all material respects with (or compliance
therewith shall have been waived by Seller) each and every covenant, agreement
and condition required by this Agreement to be performed or complied with by
Buyer prior to or at the Closing.
(c) No
Proceeding (excluding any Proceeding initiated by Seller or any of its
affiliates) shall, on the Closing Date, be pending or threatened before any
Governmental Entity seeking to restrain, prohibit, or obtain damages or other
relief in connection with the consummation of the transactions contemplated
by
this Agreement.
(d) Seller
shall have received all other agreements, instruments and documents which are
required by other terms of this Agreement to be executed or delivered by Buyer
or any other party to Seller prior to or in connection with the
Closing.
(e) Seller
shall have received an instrument evidencing the assumption by Buyer of the
Assumed Obligations, in form and substance agreeable to Seller.
ARTICLE
X
Termination,
Amendment and Waiver
Section
10.1. Termination.
This
Agreement may be terminated and the transactions contemplated hereby abandoned
at any time prior to the Closing in the following manner:
(a) by
mutual
written consent of Seller and Buyer; or
(b) by
either
Seller or Buyer, if:
(i) the
Closing shall not have occurred on or before 5:00 p.m., local Houston, Texas
time, on October 1, 2007, unless such failure to close shall be due to a breach
of this Agreement by the party seeking to terminate this Agreement pursuant
to
this clause (i);
or
(ii) there
shall be any statute, rule, or regulation that makes consummation of the
transactions contemplated hereby illegal or otherwise prohibited or a
Governmental Entity shall have issued an order, decree, or ruling or taken
any
other action permanently restraining, enjoining, or otherwise prohibiting the
consummation of the transactions contemplated hereby, and such order, decree,
ruling, or other action shall have become final and nonappealable;
or
(c) by
Buyer
or Seller, if the aggregate amount of the Title Defect Amounts and the
Environmental Defect Values exceeds fifteen percent of the Purchase Price;
or
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(d) by
Seller, if (i) there shall be a material breach of any representation and
warranty of Buyer contained in Article
V,
or (ii)
there shall be a material breach by Buyer of any of its covenants and agreements
contained in this Agreement, which breach, in the case of clause (i)
or
clause
(ii),
is not
capable of being cured or, if it is capable of being cured, has not been cured
by the 10th
Business
Day following written notice to Buyer from the Seller of such breach;
or
(e) by
Buyer,
if (i) there shall be a breach of any representation and warranty of Seller
contained in Article
IV,
other
than any such breaches which, individually or in the aggregate, would not
reasonably be expected to result in Buyer's Losses in excess of $5,000,000
or
(ii) there shall be a material breach by Seller of any of its covenants and
agreements contained in this Agreement, which breach, in the case of
clause (i)
or
clause
(ii),
is not
capable of being cured or, if it is capable of being cured, has not been cured
by the 10th
Business
Day following written notice to Seller from Buyer of such breach.
Section
10.2. Effect
of Termination. In
the
event of the termination of this Agreement pursuant to Section 10.1
by
Seller, on the one hand, or Buyer, on the other, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement shall become
void
and have no effect, except that the agreements contained in this Article X,
in
Sections 7.4,
7.5
and
8.5
and in
Articles XII
and
XIII shall
survive the termination hereof. Nothing contained in this Section
10.2
shall
relieve any party from liability for damages actually incurred as a result
of
any breach of this Agreement. If this Agreement is terminated by Seller pursuant
to (i) Section 10.1(b)(i)
(and
Buyer is in material breach of this Agreement) or (ii) Section 10.1(d),
Seller
shall be entitled to the Deposit. If this Agreement is terminated under
Section 10.1
for any
other reason, the Deposit
shall be
returned to Buyer.
Section
10.3. Amendment. This
Agreement may not be amended except by an instrument in writing signed by or
on
behalf of all the parties hereto.
Section
10.4. Waiver. Seller,
on the
one hand, or Buyer, on the other, may: (i) waive any inaccuracies in the
representations and warranties of the other contained herein or in any document,
certificate, or writing delivered pursuant hereto, or (ii) waive compliance
by the other with any of the other's agreements or fulfillment of any conditions
to its own obligations contained herein. Any agreement on the part of a party
hereto to any such waiver shall be valid only if set forth in an instrument
in
writing signed by or on behalf of such party. No failure or delay by a party
hereto in exercising any right, power, or privilege hereunder shall operate
as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power,
or
privilege.
ARTICLE
XI
Survival
of Representations, Warranties and Covenants;
Indemnification
Section
11.1. Survival.
(a) The
representations and warranties of the parties hereto contained in this Agreement
shall terminate at Closing except that the representations made by Seller
pursuant to Sections
4.1,
4.2,
4.3,
4.4,
4.5,
and
4.17,
and the
representations and warranties made by Buyer shall survive the Closing and
shall
remain in effect thereafter for the period that an Indemnified Party is entitled
to indemnification based on a breach of such representation or warranty
contained in this Article
XI.
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(b) No
party
hereto shall have any indemnification obligation pursuant to this Article XI
or
otherwise in respect of any representation, warranty or covenant unless
(i) it shall have received from the party seeking indemnification written
notice of the existence of the claim for or in respect of which indemnification
in respect of such representation, warranty or covenant is being sought and
(ii) such notice is received on or before the Survival Date. Such notice
shall set forth with reasonable specificity (i) the basis under this
Agreement, and the facts that otherwise form the basis of such claim,
(ii) the estimate of the amount of such claim (which estimate shall not be
conclusive of the final amount of such claim) and an explanation of the
calculation of such estimate, including a statement of any significant
assumptions employed therein, and (iii) the date on and manner in which the
party delivering such notice became aware of the existence of such
claim.
Section
11.2. Seller's
Indemnification Obligations.
Seller
shall, on the date of Closing, agree (and, upon delivery to Buyer of the
Assignment, shall be deemed to have agreed), subject to the limitations and
procedures contained in this Article XI, following the Closing, to
indemnify and hold Buyer, its Affiliates and its and their respective successors
and permitted assigns and all of their respective stockholders, partners,
members, managers, directors, officers, employees, agents and representatives
harmless from and against any and all claims, obligations, actions, liabilities,
damages or expenses (collectively, "Buyer's
Losses"):
(a) resulting
from any a breach of the representations made by Seller in Sections
4.1,
4.2,
4.3,
4.4,
4.5,
4.17
or in
any certificate delivered at Closing; or
(b) relating
to the Retained Obligations.
Seller's
indemnification obligations for Buyer's Losses under this Section
11.2
shall
expire on the one-year anniversary of the Closing Date (the "Survival
Date"),
except as follows:
(i) Buyer's
Losses for which a notice is received by Seller as provided in this Agreement
prior to such date; and
(ii) Buyer's
Losses relating to those items referenced in clauses
(i),
(ii),
and
(iii)
of the
Retained Obligations.
Section
11.3. Buyer's
Indemnification Obligations.
Buyer
shall, on the date of Closing, agree (and, upon delivery to Buyer of the
Assignment, shall be deemed to have agreed), subject to the limitations and
procedures contained in this Article XI, following the Closing, to
indemnify and hold Seller, its Affiliates and its and their respective
successors and permitted assigns and all of their respective stockholders,
partners, members, managers, directors, officer, employees, agents and
representatives harmless from and against any and all claims, obligations,
actions, liabilities, damages, costs or expenses, (collectively,
"Seller's Losses"):
(a) resulting
from any misrepresentation or breach of any warranty, covenant or agreement
of
Buyer contained in this Agreement or any certificate delivered by Buyer at
the
Closing; or
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(b) relating
to the Assumed Obligations;
provided,
however, that Buyer's indemnification obligations for Seller's Losses under
Section
11.3(a)
shall
expire on the Survival Date, except for Seller's Losses for which a notice
is
received by Buyer as provided in this Agreement prior to such date; and further
provided, however, provided, that Buyer's indemnification obligations for
Seller's Losses under Section 11.3(b)
shall
not expire but shall remain in effect until such Assumed Obligations are fully
satisfied.
Section
11.4. Net
Amounts.
Any
amounts recoverable by any party pursuant to this Article XI with
respect to any Buyer's Losses or Seller's Losses, as the case may be, shall
be
increased by any net tax costs to the Indemnified Party (Taxes incurred with
respect to any indemnity payment less tax benefits resulting from the
circumstances serving as the basis for such Buyer's Loss or Seller's Loss,
as
the case may be) and shall be decreased by (i) any net tax benefit to the
Indemnified Party (tax benefits less Taxes incurred, as calculated above),
and
(ii) insurance proceeds or other amounts relating to such Buyer's Loss or
Seller's Loss, as the case may be, paid to such Indemnified Party by any Person
(other than any Affiliate of such Indemnified Party) not a party to this
Agreement.
Section
11.5. Indemnification
Proceedings.
In the
event that any claim or demand for which a party (an "Indemnifying
Party"),
would
be liable to the another party under Section 11.2 or
Section 11.3 (an "Indemnified
Party")
is
asserted against or sought to be collected from an Indemnified Party by a third
party, the Indemnified Party shall with reasonable promptness notify the
Indemnifying Party of such claim or demand, but the failure so to notify the
Indemnifying Party shall not relieve the Indemnifying Party of its obligations
under this Article XI, except to the extent the Indemnifying Party
demonstrates that the defense of such claim or demand is materially prejudiced
thereby. The Indemnifying Party shall have 30 days from receipt of the above
notice from the Indemnified Party (in this Section 11.5, the "Notice
Period") to notify the Indemnified Party whether or not the Indemnifying Party
desires, at the Indemnifying Party's sole cost and expense, to defend the
Indemnified Party against such claim or demand; provided, that the Indemnified
Party is hereby authorized prior to and during the Notice Period to file any
motion, answer or other pleading that it shall deem necessary or appropriate
to
protect its interests or those of the Indemnifying Party and not prejudicial
to
the Indemnifying Party. If the Indemnifying Party elects to assume the defense
of any such claim or demand, the Indemnified Party shall have the right to
employ separate counsel at its own expense and to participate in the defense
thereof. If the Indemnifying Party elects not to assume the defense of such
claim or demand (or fails to give notice to the Indemnified Party during the
Notice Period), the Indemnified Party shall be entitled to assume the defense
of
such claim or demand with counsel of its own choice, at the expense of the
Indemnifying Party. If the claim or demand is asserted against both the
Indemnifying Party and the Indemnified Party and based on the advice of counsel
reasonably satisfactory to the Indemnifying Party it is determined that there
is
a conflict of interest which renders it inappropriate for the same counsel
to
represent both the Indemnifying Party and the Indemnified Party, the
Indemnifying Party shall be responsible for paying separate counsel for the
Indemnified Party; provided, however, that the Indemnifying Party shall not
be
responsible for paying for more than one separate firm of attorneys to represent
all of the Indemnified Parties, regardless of the number of Indemnified Parties.
If the Indemnifying Party elects to assume the defense of such claim or demand,
(i) no compromise or settlement thereof may be effected by the Indemnifying
Party without the Indemnified Party's written consent (which shall not be
unreasonably withheld) unless the sole relief provided is monetary damages
that
are paid in full by the Indemnifying Party and (ii) the Indemnifying Party
shall have no liability with respect to any compromise or settlement thereof
effected without its written consent (which shall not be unreasonably
withheld).
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Section
11.6. Indemnification
Exclusive Remedy.
Indemnification pursuant to the provisions of this Article XI shall
be the exclusive remedy of the parties hereto for any misrepresentation or
breach of any warranty, covenant or agreement contained in this Agreement or
in
any closing document executed and delivered pursuant to the provisions hereof
or
thereof, or any other claim arising out of the transactions contemplated by
this
Agreement.
Section
11.7. Limited
to Actual Damages.
The
indemnification obligations of the parties pursuant to this
Article XI shall be limited to actual Buyer's Losses or Seller's
Losses, as the case may be, and shall not include incidental, consequential,
indirect, punitive, or exemplary damages, provided that any incidental,
consequential, indirect, punitive, or exemplary damages recovered by a third
party (including a Governmental Entity,
but
excluding any Affiliate of any party)
against
a party entitled to indemnity pursuant to this Article XI shall be included
in the damages recoverable under such indemnity.
Section
11.8. Indemnification
Despite Negligence. It
is the express intention of the parties hereto that each party to be indemnified
pursuant to this Article XI shall be indemnified and held harmless from and
against all Buyer's Losses or Seller's Losses, as the case may be, as to which
indemnity is provided for under this Article XI, notwithstanding that any
such damages arise out of or result from the ordinary, strict, sole, or
contributory negligence of such party and regardless of whether any other party
(including the other parties to this Agreement) is or is not also negligent;
provided, however, nothing herein is intended or shall be construed as requiring
indemnification by one part for the gross negligence or willful misconduct
of
the other party. The parties hereto acknowledge that the foregoing complies
with
the express negligence rule and is conspicuous.
Section
11.9. Post-Closing
Indemnification Support.
(a) Subject
to the terms and conditions set forth in Section 11.9(b), Buyer shall cause
Five Million Dollars ($5,000,000) of the Adjusted Purchase Price (such amount,
together with any interest or proceeds earned thereon, the "Indemnification
Support Deposit")
to be
deposited on the Closing Date in the Joint Account.
(b) The
Indemnification Support Deposit will be utilized solely to satisfy any
indemnification obligations of Seller as described in Section 11.2
and
shall, subject to Section 11.9(c),
have a
term of one-year commencing on the Closing Date (the "Indemnification
Support Term").
(c) If
Buyer
asserts a claim against the Indemnification Support Deposit under Article XI
and
Seller does not dispute such claim, Buyer shall be entitled to indemnification
by Seller in accordance with Section
11.2,
including the right to receive from the Indemnification Support Deposit funds
in
an amount equal to the amount of Buyer's Losses for which Buyer is entitled
under Article
XI.
If,
however, Seller disputes such claim, Buyer shall receive the undisputed portion
thereof, if any, but shall not be entitled to receive any such disputed portion
thereof from the Indemnification Support Deposit with respect to such claim
prior to resolution of such dispute in accordance with this Agreement and,
if
such dispute extends beyond the expiration of the Indemnification Support Term,
the Indemnification Support Term will be automatically extended as provided
in
subsection
(d)
below.
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(d) Provided
the indemnification obligations (including the obligation to pay Buyer's Losses)
of Seller to Buyer relating to all claims for indemnification under Article
XI
notified
to Seller hereunder prior to the expiration of the Indemnification Support
Term
have been satisfied and no dispute then exists as to any claim for
indemnification notified by Buyer to Seller hereunder prior to the expiration
of
the Indemnification Support Term, the remaining Indemnification Support Deposit
will be released to Seller on the first Business Day immediately following
the
expiration of the Indemnification Support Term. To the extent there exists
a
claim for indemnification that has been notified by Buyer to Seller hereunder,
but not satisfied in full in accordance herewith prior to the expiration of
the
Indemnification Support Term, an amount equal to the maximum possible amount
of
such claim or claims reasonably believed to be due or likely to be due hereunder
by the parties hereto (or, in the event of a dispute between the parties with
respect thereto, the higher of the two estimates) will be withheld from such
remaining Indemnification Support Deposit and will continue to be held in the
Joint Account until such claim or claims have been fully resolved.
(e) Notwithstanding
anything else herein to the contrary, in no event shall Sellers' indemnification
obligations under (i) Section
11.2(a) and
(ii)
Section
11.2(b),
with
respect to the items described in clauses
(iii), (iv)
and
(v)
of the
Retained Obligations, exceed $5,000,000 in the aggregate .
ARTICLE
XII
Miscellaneous
Matters
Section
12.1. Notices.
All
notices, requests, demands, and other communications required or permitted
to be
given or made hereunder by any party hereto shall be in writing and shall be
deemed to have been duly given or made if (i) delivered personally,
(ii) transmitted by first class registered or certified mail, postage
prepaid, return receipt requested, (iii) sent by a recognized prepaid
overnight courier service (which provides a receipt), or (iv) sent by
facsimile transmission, with receipt acknowledged, to the parties at the
following addresses (or at such other addresses as shall be specified by the
parties by like notice):
If
to
Seller:
Plantation
Operating, LLC
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax
No.:
(▇▇▇) ▇▇▇-▇▇▇▇
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With
,
prior to Closing, a copy to (which shall not constitute notice to
Seller):
▇▇▇▇▇▇▇▇
& Knight LLP
▇▇▇
▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax
No.:
▇▇▇▇▇▇ — (▇▇▇) ▇▇▇-▇▇▇▇ and ▇▇▇▇▇▇▇▇ — (▇▇▇) ▇▇▇-▇▇▇▇
and
EnCap
Investments, L.P.
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax
No:
(▇▇▇) ▇▇▇-▇▇▇▇
If
to
Buyer:
EV
Properties, L.P.
▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇. ▇▇▇▇▇▇▇ ▇. McAskie
Fax
No.:
(▇▇▇) ▇▇▇-▇▇▇▇
With,
prior to Closing, a copy to (which shall not constitute notice to
Buyer):
▇▇▇▇▇▇
and ▇▇▇▇▇, LLP
▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax
No.:
(▇▇▇) ▇▇▇-▇▇▇▇
Such
notices, requests, demands, and other communications shall be effective upon
receipt.
Section
12.2. State
Taxes. Buyer
agrees to bear the burden of the New Mexico Gross Receipts Tax and any Transfer
Taxes (including related penalty, interest or legal costs) due as a result
of
the sale of the Properties under this Agreement and shall indemnify and hold
Seller and its affiliates, and its and their directors, officers, employees,
attorneys, contractors and agents harmless, for any and all such taxes
(including related penalty, interest or legal costs). Seller and Buyer agree
to
cooperate with each other in demonstrating that the requirements for any
exemption from such taxes have been met.
Section
12.3. Entire
Agreement. This
Agreement, the Seller Disclosure Schedule, together with the Exhibits, and
other
writings referred to herein or delivered pursuant hereto, constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersede all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof; provided that
any
Confidentiality Agreement executed by Buyer and Seller, in connection with
the
transaction contemplated hereby remains in full force and effect and is not
superseded or modified by this Agreement.
-33-
Section
12.4. 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
12.5. Binding
Effect; Assignment; No Third Party Benefit. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, legal representatives, successors, and permitted
assigns. Except as otherwise expressly provided in this Agreement, neither
this
Agreement nor any of the rights, interests, or obligations hereunder shall
be
assigned by any of the parties hereto without the prior written consent of
the
other parties. Except as provided in Section 8.5
and
Article XI,
nothing
in this Agreement, express or implied, is intended to or shall confer upon
any
Person other than the parties hereto, and their respective heirs, legal
representatives, successors, and permitted assigns, any rights, benefits, or
remedies of any nature whatsoever under or by reason of this
Agreement.
Section
12.6. Severability.
If
any
provision of this Agreement is held to be unenforceable, this Agreement shall
be
considered divisible and such provision shall be deemed inoperative to the
extent it is deemed unenforceable, and in all other respects this Agreement
shall remain in full force and effect; provided, however, that if any such
provision may be made enforceable by limitation thereof, then such provision
shall be deemed to be so limited and shall be enforceable to the maximum extent
permitted by Applicable Law.
Section
12.7. GOVERNING
LAW. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE
INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAWS THEREOF.
Section
12.8. Counterparts.
This
instrument may be executed in any number of identical counterparts, each of
which for all purposes shall be deemed an original, and all of which shall
constitute collectively, one instrument. It is not necessary that each party
hereto execute the same counterpart so long as identical counterparts are
executed by each such party hereto. This instrument may be validly executed
and
delivered by facsimile or other electronic transmission.
Section
12.9. WAIVER
OF CONSUMER RIGHTS.
BUYER HEREBY WAIVES ITS RIGHTS UNDER THE TEXAS DECEPTIVE TRADE
PRACTICES-CONSUMER PROTECTION ACT, SECTION 17.41 ET SEQ., BUSINESS AND
COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS, AND
ANY SIMILAR LAW IN ANY OTHER STATE TO THE EXTENT SUCH ACT OR SIMILAR LAW WOULD
OTHERWISE APPLY. AFTER CONSULTATION WITH AN ATTORNEY OF BUYER'S OWN SELECTION,
BUYER VOLUNTARILY CONSENTS TO THIS WAIVER.
-34-
Section
12.10. Further
Agreements Regarding the Joint Account. Without
limiting its covenants and agreements regarding the Joint Account hereunder
(including Sections
8.4(d), 10.2
and
11.9),
if,
under the terms and provisions of this Agreement, funds held in the Joint
Account are required to be disbursed therefrom and paid to Buyer or Seller,
as
applicable (such payee, the "Required
Payee"),
(i)
Buyer covenants and agrees that it will cause the Authorized Buyer
Representative to execute such instructions and to take such other reasonable
actions, in the name and on behalf Buyer, to implement the terms hereof and
to
cause such funds to be disbursed and paid to the Required Payee, and (ii) Seller
covenants and agrees that it will cause the Authorized Seller Representative
to
execute such instructions and to take such other reasonable actions, in the
name
and on behalf Seller, to implement the terms hereof and to cause such funds
to
be disbursed and paid to the Required Payee.
ARTICLE
XIII
Definitions
and References
Section
13.1. Certain
Defined Terms. When
used
in this Agreement, the following terms shall have the respective meanings
assigned to them in this Section 13.1:
"AAA"
means
the American Arbitration Association.
"Authorized
Buyer Representative"
means
any of (i) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or (ii) any other individual designated in a
writing from Buyer to the Joint Account Holder and Seller.
"Authorized
Seller Representative"
means
(i) ▇▇▇▇ ▇. ▇▇▇▇▇ or (ii) any other individual designated in a writing from
Seller to the Joint Account Holder and Buyer.
"Affiliate"
means
any Person directly or indirectly controlling, controlled by or under common
control with a Person.
"Agreement"
means
this Asset Purchase and Sale Agreement, as hereafter amended or modified in
accordance with the terms hereof.
"Applicable
Law"
means
any statute, law, principle of common law, rule, regulation, judgment, order,
ordinance, requirement, code, writ, injunction, or decree of any Governmental
Entity, exclusive of Environmental Laws.
"Assumed
Obligations"
means
(i) the obligation to (x) plug and abandon or remove and dispose of
all ▇▇▇▇▇, platforms, structures, flow lines, pipelines and other equipment,
hits and holding ponds now or hereafter located on the Oil and Gas Properties,
(y) cap and bury all flow lines and other pipelines now or hereafter
located on the Oil and Gas Properties, and (z) remedy all Environmental
Liabilities with respect to the Properties, including any actual or potential
NORM contamination or chloride or other contamination of groundwater;
(ii) all obligations and liabilities arising from or in connection with any
Imbalances, whether before, on or after the Effective Date; and
(iii) without limiting the foregoing, all costs, obligations, and
liabilities that arise under or otherwise relate to the Properties, whether
before, on or after the Effective Date; provided, that Assumed Obligations
does
not mean or include Seller's obligations and liabilities with respect to the
Retained Obligations.
-35-
"Business
Day"
means a
day other than a Saturday, Sunday or day on which commercial
banks in
the State of Texas are authorized or required to be closed for
business.
"Code"
means
the Internal Revenue Code of 1986, or any comparable successor statute thereto,
as amended.
"Confidentiality
Agreement"
means
that certain Confidentiality Agreement by and between Seller and Buyer dated
June 11, 2007.
"Dollars"
or "$"
means
U.S. Dollars.
"Effective
Date"
means
7:00 a.m., local time at the location of the Properties, on July 1,
2007.
"Environmental
Laws"
means
all national, state, municipal or local laws, rules, regulations, statutes,
ordinances or orders of any Governmental Entity pertaining to the protection
of
human health or the environment, including the Comprehensive Environmental
Response, Compensation and Liability Act, as amended by the Superfund Amendments
and Reauthorization Act, 42 U.S.C. § 9601 et seq. ("CERCLA"),
the
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act, 42 U.S.C. § 6901 et seq., the Federal Water Pollution Control Act, as
amended by the Clean Water Act, 33 U.S.C. § 1251 et seq., the Clean Air Act,
42 U.S.C. §7401 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601
et seq., and any similar state or local statutes.
"Environmental
Liabilities"
means
any and all damages (including any remedial, removal, response, abatement,
clean-up, investigation and/or monitoring costs and associated legal costs)
incurred or imposed (a) pursuant to any agreement order, notice of
responsibility, directive (including directives embodied in Environmental Laws),
injunctions, judgment or similar documents (including settlements) arising
out
of, in connection with, or under Environmental Laws, or (b) pursuant to any
claim by a Governmental Entity or any other Person for personal injury, property
damage, damage to natural resources, remediation, or payment or reimbursement
of
response costs incurred or expended by such Governmental Entity or other Person
pursuant to common law or statute and related to the use or release of Hazardous
Materials.
"Existing
▇▇▇▇▇▇"
mean
any ▇▇▇▇▇▇ affecting the Properties on the date hereof.
"Governing
Documents"
means,
when used with respect to an entity, the documents governing the formation
and
operation of such entity, including (i) in the instance of a corporation,
the articles or incorporation and bylaws of such corporation, (ii) in the
instance of a partnership, the partnership agreement, and (iii) in the
instance of a limited liability company, the certificate of formation and
limited liability company agreement.
"Governmental
Entity"
means
any court or tribunal in any jurisdiction (domestic or foreign) or any federal,
state, county, municipal or other governmental or quasi-governmental body,
agency, authority, department, board, commission, bureau or
instrumentality.
-36-
"Hazardous
Materials"
means
(i) any substance or material that is listed, defined or otherwise
designated as a "hazardous substance" under Section 101(14) of CERCLA,
(ii) any petroleum or petroleum products, (iii) radioactive materials,
urea formaldehyde, asbestos and PCBs and (iv) any other chemical substance
or waste that is regulated by any Governmental Entity under any Environmental
Law.
"Hedge"
means
any
future derivative, swap, collar, put, call, cap, option or other contract that
is intended to benefit from, relate to, or reduce or eliminate the risk of
fluctuations in interest rates, basis risk or the price of commodities,
including Hydrocarbons.
"Hydrocarbons"
means
oil, gas, other liquid or gaseous hydrocarbons, or any of them or any
combination
thereof,
and all
products and substances extracted, separated, processed and produced
therefrom.
"Imbalances"
means
gas
production, pipeline, storage, processing or other imbalance attributable to
substances produced from the Oil and Gas Properties.
"Joint
Account"
means
one or more (as determined by Buyer and Seller) interest bearing accounts to
be
established and maintained with the Joint Account Holder, which account shall
require the signatures of both (i) an Authorized Buyer Representative and (ii)
an Authorized Seller Representative in order to transfer therefrom any of the
funds held therein.
"Joint
Account Holder"
means
(i) Bank of Texas, N.A., Houston, Texas, (ii) such other bank as shall be
mutually agreed upon by Buyer and Seller in writing or (iii) any successor
to
the bank referenced in either clause
(i)
or
clause
(ii).
"Knowledge"
of
Seller (or similar references to Seller's knowledge) means all information
of
which either ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, the officers of Seller, or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, field
superintendent, has actual knowledge or should have as a result of the normal
performance of such individual's duties and responsibilities as an officer
or
field superintendent (as applicable) in the ordinary course.
"Leases"
means
oil, gas or mineral leases, leasehold estates, operating rights and other rights
authorizing the owner thereof to explore or drill for and produce Hydrocarbons
and other minerals, contractual rights to acquire any such of the foregoing
interest, which have been earned by performance, and fee mineral, royalty and
overriding royalty interest,
net
profits interest, production payments and other interest payable out of
Hydrocarbon production,
in each
case, in which Seller has an interest.
"Lien"
means
any claim, lien, mortgage, security interest, pledge, charge, option,
right-of-way, easement, encroachment, or encumbrance of any kind.
"Net
Revenue Interest"
means
an interest (expressed as a percentage or decimal fraction) in and to all
Hydrocarbons produced and saved from or attributable to an Oil and Gas
Property.
"Permits"
means
licenses, permits, franchises, consents, approvals, variances, exemptions,
and
other authorizations of or from Governmental Entities.
-37-
"Person"
means
any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, enterprise, unincorporated organization, or
Governmental Entity.
"Proceedings"
means
all proceedings, actions, claims, suits, investigations, and inquiries by or
before any arbitrator or Governmental Entity.
"Reasonable
Best Efforts"
means a
party's reasonable best efforts in accordance with reasonable
commercial practice.
"Retained
Obligations"
means
Seller's obligations and liabilities (i) under the Senior Credit Facility or
any
amounts that may be due and owing Seller's officers, employees or owners, (ii)
with respect to the Excluded Assets, (iii) with respect to the Rice Operating
Company New Mexico Taxation and Revenue Department Tax Audit described in
Section 4.6 of the Seller Disclosure Schedule for all periods prior to the
Effective Date, (iv) with respect to the ▇▇▇▇▇▇ Lawsuit described in Section
4.6
of the Seller Disclosure Schedule and (v) with respect to royalties, taxes
and
contractual monetary obligations attributable to the Properties for all periods
prior to the Effective Date.
"Securities
Act"
shall
mean the Securities Act of 1933, as amended, and all rules and regulations
under
such Act.
"Seller
Disclosure Schedule"
shall
mean a schedule delivered by Seller to Buyer on the date hereof which sets
forth
additional information regarding the representations and warranties of Seller
contained herein and information called for hereby.
"Senior
Credit Facility"
means
that certain credit facility dated December 15, 2005, by and between Seller
and
Bank Paribas.
"Senior
Lender"
means
the lenders party to the Senior Credit Facility.
"Tax
Returns"
mean
any return, report, statement, form or similar statement required to be filed
with respect to any Taxes (including any attached schedules), including, without
limitation, any information return, claim for refund, amended return or
declaration of estimated Taxes.
"Taxes"
means
any
income taxes or similar assessments or any sales, excise, occupation, use,
ad
valorem, property, production, severance, transportation, employment, payroll,
franchise, or other tax imposed by any United States federal, state, or local
(or any foreign or provincial) taxing authority, including any interest,
penalties, or additions attributable thereto.
"Transfer Taxes"
shall
mean any real property transfer, stamp, documentary, recording, registration,
conveyance, stock transfer, intangible property transfer, personal property
transfer, gross receipts, registration, duty, securities transactions or similar
fees or taxes or governmental charges other than sales tax (together with any
interest or penalty, addition to tax or additional amount imposed) as levied
by
any governmental body in connection with the transaction contemplated by this
Agreement, including without limitation, any payments made in lieu of such
taxes
or governmental charges which become payable in connection with the transaction
contemplated by this Agreement.
-38-
"Working
Interest"
means
the percentage of costs and expenses attributable to the maintenance,
development and operation of an Oil and Gas Property.
Section
13.2. Certain
Additional Defined Terms. In
addition to such terms as are defined in the preamble to this Agreement and
in
Section 13.1,
the
following terms are used in this Agreement as defined in the Articles or
Sections set forth opposite such terms:
|
Defined
Term
|
Reference
|
|
Accounting
Dispute
|
Section
2.3(c)
|
|
Accounting
Referee
|
Section
2.3(c)
|
|
Adjusted
Purchase Price
|
Section
2.1
|
|
Allocated
Value
|
Section
8.1(c)(i)
|
|
Assignment
|
Section
9.1(f)
|
|
Basic
Documents
|
Section
4.7
|
|
Buyer
Hedge Period
|
Section
7.14(b)
|
|
Buyer's
Environmental Consultant
|
Section
8.2(a)
|
|
Buyer's
Environmental Review
|
Section
8.2(a)
|
|
Buyer's
Losses
|
Section
11.2
|
|
Buyer's
Title Review
|
Section
8.1(a)
|
|
Closing
|
Article
III
|
|
Closing
Date
|
Article
III
|
|
Cure
Period
|
Section
8.4(c)
|
|
Defect
Dispute
|
Section
8.3
|
|
Defects
Escrow
|
Section
8.4(c)
|
|
Defects
Escrow Agent
|
Section
8.4(c)
|
|
Defects
Escrow Agreement
|
Section
8.4(c)
|
|
Defensible
Title
|
Section
8.1(d)(i)
|
|
Deposit
|
Section
2.4(c)
|
|
Environmental
Defect
|
Section
8.2(e)(i)
|
|
Environmental
Defect Notice
|
Section
8.2(c)
|
|
Environmental
Defect Value
|
Section
8.2(e)(ii)
|
|
Environmental
Information
|
Section
8.2(b)
|
|
Examination
Period
|
Section
8.1(a)
|
|
Excluded
Assets
|
Section
1.2
|
|
Indemnification
Support Deposit
|
Section
11.9(a)
|
|
Indemnification
Support Term
|
Section
11.9(b)
|
|
Indemnified
Party
|
Section
11.5
|
|
Indemnifying
Party
|
Section
11.5
|
|
Independent
Expert
|
Section
8.3
|
|
Notice
Period
|
Section
11.5
|
|
Oil
and Gas Properties
|
Section
1.1
|
|
Permitted
Encumbrances
|
Section
8.1(d)(ii)
|
|
Post-Closing
Defect
|
Section
8.4(c)
|
|
Properties
|
Section
1.1
|
|
Purchase
Price
|
Section
2.1
|
|
Remedies
for Title Defects
|
Section
8.1(b)
|
|
Request
Date
|
Section
2.3(c)
|
|
Required
Payee
|
Section
12.11
|
-39-
|
Defined
Term
|
Reference
|
|
Rules
|
Section
8.3
|
|
Scheduled
Production Sales Contracts
|
Section
4.9
|
|
Seller's
Losses
|
Section
11.3
|
|
Suspended
Proceeds
|
Section
7.11
|
|
Survival
Date
|
Section
11.2
|
|
Title
Defect
|
Section
8.1(d)(iii)
|
|
Title
Defect Amount
|
Section
8.1(c)
|
|
Title
Defect Notice
|
Section
8.1(b)
|
|
Title
Defect Property
|
Section
8.1(b)
|
Section
13.3. References,
Titles and Construction.
(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
"or" is not intended to be exclusive and 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) All
references herein to "$" or "dollars" shall refer to U.S. Dollars.
(j) Exhibits I,
1.2,
8.1(c)
and
9.1(f)
are
attached hereto. Seller covenants and agrees to furnish Buyer Exhibit
II
to
this Agreement (in a form reasonably acceptable to Buyer) within five Business
Days after the date hereof. 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.
[REMAINDER
OF PAGE INTENTIONALLY LEFT
BLANK]
-40-
IN
WITNESS WHEREOF,
this
Agreement is executed by the parties hereto on the date set forth
above.
| SELLER: | |
| PLANTATION OPERATING, LLC | |
|
By:
|
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
|
|
Name:
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
|
Title:
|
President
|
|
and
|
|
|
By:
|
/s/
▇▇▇▇ ▇. ▇▇▇▇▇
|
|
Name:
|
▇▇▇▇
▇. ▇▇▇▇▇
|
|
Title:
|
CEO
and Secretary
|
|
BUYER:
|
|
|
EV
PROPERTIES, L.P.,
|
|
|
a
Delaware limited partnership
|
|
|
By:
|
EV
Properties GP, LLC,
|
|
Its
general partner
|
|
|
By:
|
EV
Energy Partners, L.P.,
|
|
Its
sole member
|
|
|
By:
|
EV
Energy GP, L.P.,
|
|
Its
general partner
|
|
|
By:
|
EV
Management, LLC,
|
|
Its
general partner
|
|
|
By:
|
/s/
▇▇▇▇▇▇▇ ▇. McAskie
|
|
Name:
|
▇▇▇▇▇▇▇
▇. McAskie
|
|
Title:
|
Senior Vice President of Acquisitions And Divestitures
|
SIGNATURE
PAGE TO ASSET PURCHASE AND SALE AGREEMENT
EXHIBIT
I
EXHIBIT
1.2
EXHIBIT
8.1(c)
EXHIBIT
9.1(f)
FORM
OF
ASSIGNMENT
NOTICE
OF
CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE
ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR
RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S
LICENSE NUMBER.
ASSIGNMENT
AND ▇▇▇▇ OF SALE
Plantation
Petroleum Operating, LLC (herein called "Grantor"), for Ten Dollars and other
good and valuable consideration (the receipt and sufficiency of which are hereby
acknowledge), does hereby GRANT, BARGAIN, SELL, CONVEY, ASSIGN, TRANSFER, SET
OVER, AND DELIVER unto _____________ (herein called "Grantee"), whose address
is
__________________________, the
following described properties, rights and interests:
(a) All
rights, titles and interest of Grantor in and to oil, gas and/or mineral leases
described on Exhibit A hereto (and any ratifications and/or amendments to such
leases, whether or not such ratifications or amendments are described on such
Exhibit A), insofar as such leases (and such ratifications and amendments)
cover
the lands and depths described on Exhibit A; and
(b) All
other
right, title and interest (of whatever kind or character, whether legal or
equitable, and whether vested or contingent) of Assignor in and to the oil,
gas
and other minerals in and under or that may be produced from the lands described
in Exhibit A hereto or described in any of the Leases described on such
Exhibit A (including interests in Leases, overriding royalties, production
payments and net profits interests in such lands or such Leases, and fee mineral
interests, fee royalty interests and other interests in so far as they cover
such lands), even though Assignor's interest therein may be incorrectly
described in, or omitted from, such Exhibit A;
(c) All
rights, titles and interests of Grantor in and to, or otherwise derived from,
all presently existing and valid oil, gas or mineral unitization, pooling,
or
communitization agreements, declarations and/or orders and in and to the
properties covered and the units created thereby (including all units formed
under orders, rules, regulations, or other official acts of any federal, state,
or other authority having jurisdiction, voluntary unitization agreements,
designations and/or declarations) relating to the properties described in
paragraphs (a) and (b) above; and
(d) All
rights, titles and interests of Grantor in and to all presently existing and
valid production sales (and sales related) contracts, operating agreements,
and
other agreements and contracts which relate to any of the properties described
in paragraphs (a), (b) and (c) above, or which relate to the exploration,
development, operation, or maintenance thereof or the treatment, storage,
transportation or marketing of production therefrom (or allocated thereto);
and
(e) All
rights, titles and interests of Grantor in and to all materials, supplies,
machinery, equipment, improvements and other personal property and fixtures
(including all ▇▇▇▇▇, wellhead equipment, pumping units, flowlines, tanks,
buildings, injection facilities, saltwater disposal facilities, compression
facilities, gathering systems, and other equipment), and all easements,
rights-of-way, surface leases and other surface rights, all permits and
licenses, and all other appurtenances being used or held for use in connection
with, or otherwise related to, the exploration, development, operation or
maintenance of any of the properties described in paragraphs (a), (b), (c)
and (d) above, or the treatment, storage, transportation or marketing of
production therefrom (or allocated thereto);
(f) All
of
Grantor's lease files, abstracts and title opinions, production records, well
files, and accounting records (but not including general financial and
accounting records attributable to Grantor or Grantor's business) seismic
records and surveys, gravity maps, electric logs, geological or geophysical
data
and records, and other files , documents and records of every kind and
description which relate to the properties described above; and
(g) All
rights, titles and interest of Grantor in and to that certain office building
and premises located in Jal, New Mexico as more particularly described in
Exhibit B hereto and all furniture and equipment located thereat, including
computers, telephone equipment and other similar items of tangible personal
property.
(h) The
properties, rights and interests specified in the foregoing paragraphs (a),
(b),
(c), (d), (e), (f) and (g) exclusive of the properties, rights and interests
excluded below, are herein sometimes collectively called the "Subject
Properties."
(i) The
Subject Properties do not include, and there is hereby expressly excepted and
excluded therefrom and reserved to Grantor, all other assets, properties, and
business of Grantor, including the following:
(1) All
trade
credits attributable to the Subject Properties with respect to all periods
prior
to the Effective Date (as hereinafter defined);
(2) All
of
Grantor's right, title, and interest in any oil, gas, or mineral leases,
overriding royalties, production payments, net profits interests, fee mineral
interests, fee royalty interests and other interests in oil, gas, and other
minerals not expressly included in Subject Properties and all oil, gas or other
hydrocarbon production from or attributable to the Subject Properties with
respect to all periods prior to the Effective Date, all proceeds attributable
thereto, and all hydrocarbons that, at the Effective Date, are owned by Grantor
and are in storage or within processing plants;
(3) Any
refund of costs, taxes or expenses borne by Grantor or Grantor's predecessors
in
title attributable to periods prior to the Effective Date;
(4) Any
and
all proceeds from the settlements of contract disputes with purchasers of
hydrocarbons from the Subject Properties, including settlement of take-or-pay
disputes, insofar as said proceeds are attributable to periods of time prior
to
the Effective Date;
(5) Any
and
all proceeds from settlements with regard to reclassification of gas produced
from the Subject Properties, insofar as said proceeds are attributable to
periods of time prior to the Effective Date;
(6) All
claims (including insurance claims) and causes of action of Grantor against
one
or more third parties arising from acts, omission or events occurring prior
to
the Effective Date and all claims under any joint interest audit attributable
to
any period prior to the Effective Date;
(7) All
limited liability company, financial, tax and legal (other than title) books
and
records of Grantor;
(8) Any
geological, geophysical or seismic data, materials or information, including
maps, interpretations records or other technical information related to or
based
upon any such data, materials or information, and any other asset, data,
materials or information, the transfer of which is restricted or prohibited
under the terms of any third party license, confidentiality agreement or other
agreement or the transfer of which would require the payment of a fee or other
consideration to any third party;
(9) All
leases for office premises in The Woodlands, Texas used by Grantor, and all
furniture, fixtures and equipment located thereat, including computers,
telephone equipment and other similar items of tangible personal
property;
(10) All
of
Grantor's accounting or other administrative systems, computer software,
patents, trade secrets, copyrights, names, trademarks, logos and other
intellectual property;
(11) All
documents and instruments of Grantor that may be protected by an attorney-client
privilege (exclusive of title opinions in respect of the Subject Properties);
(12) All
of
the other assets described on Exhibit 1.2, together with any rights,
liabilities, or obligations associated with such assets;
(13) All
hedging transactions affecting the Subject Properties as of the date of the
Purchase Agreement (as hereinafter defined) and any gains or losses attributable
thereto; and
(14) All
(i)
correspondence or other documents or instruments of Grantor relating to the
transactions contemplated hereby, (ii) lists of other prospective purchasers
of
Grantor or the Subject Properties compiled by Grantor, (iii) bids submitted
to
Grantor by other prospective purchasers of Grantor or the Subject Properties,
(iv) analyses by Grantor or any Affiliates thereof submitted by other
prospective purchasers of Grantor or the Subject Properties, and (v)
correspondence between or among Grantor or its affiliates or their respective
representatives with respect to, or with, any other prospective purchasers
of
Grantor or the Subject Properties.
(j) This
Assignment shall become effective at 7:00 a.m., local time, at the location
of
the Subject Properties, on July 1, 2007, referred to in this Assignment as
the
"Effective Date".
TO
HAVE
AND TO HOLD the Subject Properties unto Grantee, and its successors and assigns,
forever.
GRANTOR
AGREES TO WARRANT AND FOREVER DEFEND TITLE TO THE SUBJECT PROPERTIES UNTO
GRANTEE AND ITS SUCCESSORS AND ASSIGNS, AGAINST THE CLAIMS AND DEMANDS OF ALL
PERSONS CLAIMING, OR TO CLAIM THE SAME, OR ANY PART THEREOF BY, THROUGH OR
UNDER
GRANTOR, BUT NOT OTHERWISE. THE EXPRESS WARRANTY OF TITLE SET FORTH ABOVE IS
EXCLUSIVE, AND IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, AND GRANTOR EXPRESSLY DISCLAIMS ANY AND ALL
SUCH OTHER REPRESENTATIONS AND WARRANTIES. WITHOUT LIMITATION OF THE FOREGOING,
THE SUBJECT PROPERTIES ARE CONVEYED PURSUANT HERETO WITHOUT ANY WARRANTY OR
REPRESENTATION WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, RELATING TO
THE
CONDITION, QUANTITY, QUALITY, FITNESS FOR A PARTICULAR PURPOSE, CONFORMITY
TO
THE MODELS OR SAMPLES OF MATERIALS OR MERCHANTABILITY OF ANY EQUIPMENT OR ITS
FITNESS FOR ANY PURPOSE, AND, EXCEPT AS PROVIDED OTHERWISE IN THE FIRST SENTENCE
OF THIS PARAGRAPH, WITHOUT ANY OTHER EXPRESS, IMPLIED, STATUTORY OR OTHER
WARRANTY OR REPRESENTATION WHATSOEVER. GRANTEE HAS INSPECTED, OR WAIVED
GRANTEE'S RIGHT TO INSPECT, THE SUBJECT PROPERTIES FOR ALL PURPOSES AND
SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION, BOTH SURFACE
AND SUBSURFACE, INCLUDING BUT NOT LIMITED TO CONDITIONS SPECIFICALLY RELATED
TO
THE PRESENCE, RELEASE OR DISPOSAL OF HAZARDOUS SUBSTANCES, SOLID WASTES OR
NATURALLY OCCURRING RADIOACTIVE MATERIALS ("NORM"). GRANTEE IS RELYING SOLELY
UPON ITS OWN INSPECTION OF THE SUBJECT PROPERTIES, AND GRANTEE SHALL ACCEPT
ALL
OF THE SAME IN THEIR "AS IS, WHERE IS" CONDITION. ALSO WITHOUT LIMITATION OF
THE
FOREGOING, GRANTOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS, IMPLIED,
STATUTORY OR OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF ANY DATA, REPORTS,
RECORDS, PROJECTIONS, INFORMATION OR MATERIALS NOW, HERETOFORE OR HEREAFTER
FURNISHED OR MADE AVAILABLE TO GRANTEE IN CONNECTION WITH THIS ASSIGNMENT
INCLUDING, WITHOUT LIMITATION, RELATIVE TO PRICING ASSUMPTIONS, OR QUALITY
OR
QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE SUBJECT PROPERTIES
OR THE ABILITY OR POTENTIAL OF THE SUBJECT PROPERTIES TO PRODUCE HYDROCARBONS
OR
THE ENVIRONMENTAL CONDITION OF THE SUBJECT PROPERTIES OR ANY OTHER MATTERS
CONTAINED IN THE MATERIALS FURNISHED OR MADE AVAILABLE TO GRANTEE BY GRANTOR
OR
BY GRANTOR'S AGENTS OR REPRESENTATIVES. ANY AND ALL SUCH DATA, RECORDS, REPORTS,
PROJECTIONS, INFORMATION AND OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED BY
GRANTOR OR OTHERWISE MADE AVAILABLE OR DISCLOSED TO GRANTEE ARE PROVIDED AS
A
CONVENIENCE AND SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST
GRANTOR AND ANY RELIANCE ON OR USE OF THE SAME SHALL BE AT GRANTEE'S SOLE RISK
TO THE MAXIMUM EXTENT PERMITTED BY LAW.
By
acceptance of this Assignment, Grantee has agreed (i) to assume, and to timely
pay and perform, certain duties, obligations and liabilities relating to the
ownership and/or operation of the Subject Properties regardless of whether
the
same accrued or otherwise arose before or after the effective date hereof and
(ii) to indemnify and hold Grantor, its affiliates, and its and their
respective directors, officers, employees, attorneys, contractors and agents
harmless from and against any and all claims, actions, causes of action,
liabilities, damages, losses, costs or expenses (including, without limitation,
court costs and attorneys' fees) of any kind or character arising out of or
otherwise relating to said assumed obligations as more particularly described
in
the Purchase Agreement.
This
Assignment is made subject to that certain Agreement of Sale and Purchase
between Grantor and Grantee dated July ____, 2007 (the "Purchase Agreement").
Such Agreement contains certain representations, warranties, covenants,
indemnities and agreements between the parties, some of which may survive the
delivery of this Assignment, as more particular provided for therein, but third
parties may conclusively rely on this Assignment to vest title to the Subject
Properties in Grantee.
Grantor
agrees to execute and deliver to Grantee, from time to time, such other and
additional instruments, notices, division orders, transfer orders and other
documents, and to do all such other and further acts and things as may be
necessary to more fully and effectively grant, convey and assign to Grantee
the
Subject Properties.
This
Assignment is being executed in several counterparts all of which are identical,
except that, to facilitate recordation, certain counterparts hereof may contain
only that portion of Exhibit A which contains specific descriptions of
properties located in the recording jurisdiction in which the particular
counterpart is to be recorded. All of such counterparts together shall
constitute one and the same instrument. Complete copies of this Assignment
containing the entire Exhibit A have been recorded in
County,
and
retained by Grantor and Grantee.
IN
WITNESS WHEREOF this Assignment has been executed by the parties hereto on
the
dates of their respective acknowledgments effective as to runs of oil and
deliveries of gas, and for all other purposes, as of 7:00 a.m. local time at
the
locations of the Subject Properties, respectively, on July 1, 2007.
[acknowledgments]