EXHIBIT 99.3
MEMBERSHIP INTEREST PURCHASE AGREEMENT
Dated as of December 6, 2004
by and among
AREP Oil & Gas LLC, as Purchaser
and
Arnos Corp.,
High River Limited Partnership
and
▇▇▇▇▇▇ Investments LLC, as Sellers
TABLE OF CONTENTS
PAGE
ARTICLE I
SALE OF MEMBERSHIP INTEREST AND CLOSING
1.1 Purchase and Sale....................................................................................... 1
1.2 Purchase Price.......................................................................................... 1
1.3 Closing................................................................................................. 1
1.4 Actions at the Closing.................................................................................. 2
ARTICLE II
REPRESENTATIONS AND WARRANTIES REGARDING SELLERS
2.1 Organization............................................................................................ 2
2.2 Authority............................................................................................... 2
2.3 Title................................................................................................... 2
2.4 No Conflicts............................................................................................ 2
2.5 Consents and Approvals.................................................................................. 3
2.6 Brokers................................................................................................. 3
2.7 Accuracy of Statements.................................................................................. 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
3.1 Due Incorporation of Company............................................................................ 3
3.2 Capitalization.......................................................................................... 3
3.3 Subsidiaries............................................................................................ 4
3.4 Consents and Approvals.................................................................................. 4
3.5 Financial Statements.................................................................................... 4
3.6 Company Status.......................................................................................... 4
3.7 No Adverse Effects or Changes........................................................................... 4
3.8 Credit Agreement........................................................................................ 5
3.9 Compliance with Law..................................................................................... 5
3.10 Security Interests...................................................................................... 5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
4.1 Organization of Purchaser............................................................................... 5
4.2 Authority............................................................................................... 5
i
4.3 No Conflicts............................................................................................ 6
ARTICLE V
ASSIGNMENT AND ASSUMPTION
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by Sellers.............................................................................. 6
6.2 Claims.................................................................................................. 6
6.3 Notice of Third Party Claims; Assumption of Defense..................................................... 7
6.4 Settlement or Compromise................................................................................ 8
6.5 Failure of Indemnifying Person to Act................................................................... 8
6.6 Tax Character........................................................................................... 8
ARTICLE VII
DEFINITIONS
7.1 Defined Terms........................................................................................... 8
ARTICLE VIII
MISCELLANEOUS
8.1 Investigation........................................................................................... 11
8.2 Survival of Representations and Warranties.............................................................. 11
8.3 Entire Agreement........................................................................................ 11
8.4 Waiver.................................................................................................. 11
8.5 Amendment............................................................................................... 11
8.6 No Third Party Beneficiary.............................................................................. 11
8.7 Assignment; Binding Effect.............................................................................. 11
8.8 Headings................................................................................................ 11
8.9 Invalid Provisions...................................................................................... 11
8.10 Governing Law........................................................................................... 12
8.11 Counterparts............................................................................................ 12
8.12 Waiver of Jury Trial.................................................................................... 12
8.13 Consent to Jurisdiction................................................................................. 12
8.14 Expenses................................................................................................ 12
8.15 Notices................................................................................................. 13
8.16 Further Assurances...................................................................................... 13
ii
This MEMBERSHIP INTEREST PURCHASE AGREEMENT (the or this "Agreement")
dated as of December 6, 2004 is made and entered into by and among Arnos Corp.,
a Nevada corporation ("Arnos"), High River Limited Partnership, a Delaware
limited partnership ("High River"), ▇▇▇▇▇▇ Investments, LLC, a Delaware limited
liability company ("▇▇▇▇▇▇" and together with Arnos and High River, each a
"Seller" and collectively, the "Sellers"), and AREP Oil & Gas LLC, a Delaware
limited liability company ("Purchaser"). Capitalized terms not otherwise defined
herein have the meanings set forth in Article VII.
WHEREAS, Mid River LLC, a Delaware limited liability company (the
"Company") owns $38,000,000 principal amount of term loans outstanding (the
"Panaco Debt") representing 100% of the Commitment Percentage (as such term is
defined therein) under the Term Loan and Security Agreement together with all
related agreements (the "Credit Agreement"), dated as of November 16, 2004,
among Panaco, Inc. ("Panaco"). as Borrower, the Lenders (as defined therein),
and the Company, as Administrative Agent;
WHEREAS, the members of the Company are Arnos with a membership interest
of 98% ("Arnos LLC Interest") and each of High River and ▇▇▇▇▇▇ with membership
interests of 1% (the "High River LLC Interest" and "▇▇▇▇▇▇ LLC Interest",
respectively, and collectively with the Arnos LLC Interest, the "Membership
Interests");
WHEREAS, Purchaser desires to purchase the Membership Interests from the
Company's members on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, each of Arnos, High River and ▇▇▇▇▇▇ desire to sell its
respective portion of the Membership Interests to Purchaser on the terms and
subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
SALE OF MEMBERSHIP INTEREST AND CLOSING
1.1 Purchase and Sale. Each of the Sellers hereby agrees to sell to
Purchaser its portion of the Membership Interests, and Purchaser agrees to
purchase from each Seller such Seller's portion of the Membership Interests, at
the Closing on the terms and subject to the conditions set forth in this
Agreement.
1.2 Purchase Price. The aggregate purchase price for the Membership
Interests is $38,125,998.63 (the "Purchase Price").
1.3 Closing. Upon the terms and subject to the conditions of this
Agreement, the closing of the transactions contemplated hereby (the "Closing")
shall take place simultaneously with the execution and delivery of this
Agreement. The date on which the Closing occurs is herein referred to as the
"Closing Date."
1.4 Actions at the Closing. At the Closing: (i) Purchaser shall pay the
Purchase Price to Sellers in accordance with the amounts set forth on Schedule A
attached hereto, by electronic transfer of immediately available funds to the
respective accounts of each Seller in accordance with the instructions set forth
on Schedule A, and (ii) Purchaser and Sellers shall enter into an Assignment
Agreement in the form of Exhibit A attached hereto (the "Assignment Agreement")
pursuant to which Sellers shall assign all of the limited liability company
interests in the Company to Purchaser.
ARTICLE II
REPRESENTATIONS AND WARRANTIES REGARDING SELLERS
As an inducement to Purchaser to enter into this Agreement, Sellers,
jointly and severally, hereby make the following representations and warranties
to Purchaser:
2.1 Organization. Each Seller is duly organized, validly existing and in
good standing under the Laws of its state of organization. Each Seller has full
organizational power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby, including without limitation to sell and transfer (pursuant
to this Agreement) the Membership Interests.
2.2 Authority. The execution and delivery by each Seller of this
Agreement, and the performance by each Seller of its obligations hereunder, have
been duly and validly authorized by each Seller and no other action on the part
of each Seller, its shareholders, its managing member, its general partner, its
limited partners or its board (as applicable) is necessary for such execution,
delivery or performance. This Agreement has been duly and validly executed and
delivered by each Seller and constitutes a legal, valid and binding obligation
of each Seller, enforceable against each Seller in accordance with its terms.
2.3 Title. The delivery of the Assignment Agreement and other instruments
of transfer delivered by each Seller to Purchaser at the Closing will transfer
to Purchaser good and valid title to the Membership Interests, free and clear of
all Liens other than Liens created by Purchaser.
2.4 No Conflicts. The execution and delivery by each Seller of this
Agreement do not, and the performance by each Seller of its obligations under
this Agreement and the consummation of the transactions contemplated hereby will
not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the organizational documents of any Seller;
(b) conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to any Seller or any of its Assets and
Properties; or
(c) (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require any Seller to obtain any consent, approval or action of, make any
filing with or give any notice to any Person as a result or under the terms of,
(iv) result in or give to any Person any right of termination, cancellation,
2
acceleration or modification in or with respect to, or (v) result in the
creation or imposition of any Lien upon any Seller or any of its Assets and
Properties under, any Contract or License to which any Seller is a party or by
which any of its Assets and Properties is bound.
2.5 Consents and Approvals. No consent, authorization or approval of,
filing or registration with, or cooperation from, any Governmental Authority or
any other Person not a party to this Agreement is necessary in connection with
the execution, delivery and performance by any Seller of this Agreement or the
consummation of the transactions contemplated hereby.
2.6 Brokers. Neither any Seller nor the Company has used any broker or
finder in connection with the transactions contemplated hereby, and neither
Purchaser nor any Affiliate of Purchaser has or shall have any liability or
otherwise suffer or incur any Loss as a result of or in connection with any
brokerage or finder's fee or other commission of any Person retained or
purporting to be retained by any Seller or by the Company in connection with any
of the transactions contemplated by this Agreement.
2.7 Accuracy of Statements. Neither this Agreement nor any schedule,
exhibit, statement, list, document, certificate or other information furnished
or to be furnished by or on behalf of the Company or any Seller to Purchaser or
any representative or Affiliate of Purchaser in connection with this Agreement
or any of the transactions contemplated hereby contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they are made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
As an inducement to Purchaser to enter into this Agreement, Sellers
jointly and severally hereby make the following representations to Purchaser.
3.1 Due Organization of Company.
(a) The Company is duly organized and validly existing under the
laws of the state in which it is organized, with all requisite power and
authority to own, lease and operate its properties and to carry on its business
as it is now being owned, leased, operated and conducted. The Company is
licensed or qualified to do business and is in good standing (where the concept
of "good standing" is applicable) as a foreign corporation in each jurisdiction
where the nature of the properties owned, leased or operated by it and the
business transacted by it require such licensing or qualification.
(b) The Sellers have delivered to Purchaser true, correct and
complete copies of the organizational documents of the Company and the
Subsidiaries, which organizational documents are in full force and effect.
3.2 Capitalization. Sellers own 100% of the limited liability company
interests of the Company, free and clear of all Liens. No Person holds any
option, warrant, convertible security or other right to acquire any interest in
the Company. There are no obligations, contingent or
3
otherwise, of the Company to repurchase, redeem or otherwise acquire any
ownership interests of the Company or to provide funds to or make any material
investment (in the form of a loan, capital contribution or otherwise) in any
other Person.
3.3 Subsidiaries. The Company has no subsidiaries.
3.4 Consents and Approvals. No consent, authorization or approval of,
filing or registration with, or cooperation from, any Governmental Authority or
any other Person not a party to this Agreement is necessary in connection with
the execution, delivery and performance by each Seller of its respective
obligations under this Agreement or the consummation by each Seller of its
respective transactions contemplated hereby.
3.5 Financial Statements.
(a) The Sellers have delivered to Purchaser true, correct and
complete copies of the Financial Statements of Panaco. The Financial Statements
have been prepared in accordance with GAAP consistently applied and present
fairly the financial position, assets, liabilities and retained earnings of the
respective companies as of the dates thereof and the revenues, expenses, results
of operations, and cash flows of the respective companies for the periods
covered thereby. The Financial Statements are in accordance with the books and
records of the respective companies, do not reflect any transactions which are
not bona fide transactions and do not contain any untrue statement of a material
fact (whether or not required to be disclosed under GAAP) or omit to state any
material fact necessary to make the statements contained therein, in light of
the circumstances in which they were made, not misleading.
(b) The Sellers have delivered to Purchaser true and complete copies
of all Interim 2004 Financial Statements of Panaco. The Interim 2004 Financial
Statements present fairly the financial position, assets, liabilities and
retained earnings of the respective companies as of the dates thereof and the
revenues, expenses, results of operations, and cash flows of the respective
companies for the periods covered thereby. The Interim 2004 Financial Statements
are in accordance with the books and records of the respective companies, do not
reflect any transactions which are not bona fide transactions and do not contain
any untrue statement of a material fact (whether or not required to be disclosed
under GAAP) or omit to state any material fact necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.
3.6 Company Status. The Company was formed solely for the purpose of
engaging in the transactions of owning interests in Panaco. The Company has
engaged in no other business activities other than owning debt and equity issued
by Panaco. The Company has no liabilities, contracts, debts, claims, or
obligations whether accrued, absolute, contingent or otherwise, whether due or
to become due other than under the Credit Agreement. The Company has no Assets,
Properties or operations other than under the Credit Agreement and owning the
loans and serving as Agent thereunder.
3.7 No Adverse Effects or Changes. Since December 31, 2003, (i) neither
the Company nor any of the Subsidiaries has suffered any Material Adverse
Effect; (ii) there has been no change, event, development, damage or
circumstance affecting the Company or the Subsidiaries that, individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect on
the Company or any of the Subsidiaries; (iii) there has not been any
4
change by the Company or any of the Subsidiaries in its accounting methods,
principles or practices, or any revaluation by the Company or any of the
Subsidiaries of any of its assets, including writing down the value of inventory
or writing off notes or accounts receivable; and (iv) the Company and each of
the Subsidiaries has conducted its business only in the ordinary course of
business consistent with past practice.
3.8 Credit Agreement. All of the representations and warranties of Panaco
set forth in the Credit Agreement are true and correct and Panaco is not in
breach of any term or provision of the Credit Agreement. There is no event of
default (as defined in the Credit Agreement).
3.9 Compliance with Law. The Company and the Subsidiaries are in
compliance and, at all times, have been in compliance in all respects with all
applicable Laws relating to the Company or the Subsidiaries or their respective
Assets and Properties or businesses. No investigation or review by any
governmental authority or self-regulatory authority is pending or, to the
knowledge of the Sellers, threatened, nor has any such authority indicated
orally or in writing to the Sellers, the Company or any of the Subsidiaries an
intention to conduct an investigation or review of the Company or any of the
Subsidiaries or, with respect to the Company or any of the Subsidiaries, of the
Sellers.
3.10 Security Interests As of the Closing, the Purchaser shall have a
legal, valid and enforceable, first priority perfected security interest in all
right, title and interest of Panaco in the "Collateral" described in the
Documents. All liens granted under the Credit Agreement are and will be as of
the Closing, for all purposes, valid, perfected, enforceable, non-avoidable and
effective as of the Closing without any further action by the Purchaser, the
Sellers, Panaco or any other party.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers as follows:
4.1 Organization of Purchaser. Purchaser is a limited liability company
duly formed, validly existing and in good standing under the Laws of the State
of Delaware. Purchaser has full organizational power and authority to execute
and deliver this Agreement and to perform Purchaser's obligations hereunder and
to consummate the transactions contemplated hereby, including without limitation
to buy pursuant to this Agreement the Membership Interest.
4.2 Authority. The execution and delivery by Purchaser of this Agreement,
and the performance by Purchaser of its obligations hereunder, have been duly
and validly authorized and, no other limited liability company action on the
part of Purchaser is necessary. This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes a legal, valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with its
terms.
5
4.3 No Conflicts. The execution and delivery by Purchaser of this
Agreement do not, the performance by Purchaser of its obligations under this
Agreement and the consummation of the transactions contemplated hereby, will
not:
(a) conflict with, or result in a violation or breach of, any of the
terms, conditions or provisions of the organizational documents of Purchaser;
(b) conflict with, or result in a violation or breach of, any term
or provision of any Law or Order applicable to Purchaser or any of its Assets
and Properties (other than such conflicts, violations or breaches which will not
have a Material Adverse Effect on Purchaser); or
(c) (i) conflict with, or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require Purchaser to obtain any consent, approval or action of, make any
filing with or give any notice to any Person as a result or under the terms of,
(iv) result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, or (v) result in the
creation or imposition of any Lien upon Purchaser or any of its Assets and
Properties under, any Contract or License to which Purchaser is a party or by
which any of its Assets and Properties is bound.
ARTICLE V
ASSIGNMENT AND ASSUMPTION
At the Closing, Sellers and Purchaser shall enter into the Assignment
Agreement pursuant to which Sellers will transfer, assign, convey and grant to
Purchaser, its successors and assigns forever 100% of Sellers' rights, title and
interest to the Membership Interests.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by Sellers. Sellers agree jointly and severally to
indemnify Purchaser, its Affiliates and their respective officers, directors,
employees independent contractors, stockholders, principals, partners, agents,
or representatives (each an "Indemnified Person" and collectively, the
"Indemnified Persons") against, and to hold each Indemnified Person harmless
from, any and all Losses incurred or suffered by any Indemnified Person relating
to or arising out of or in connection with (a) any breach of or any inaccuracy
in any representation or warranty made by Sellers in this Agreement, or (b) any
breach of or failure by any Sellers to perform any of its covenants or
obligations set out or contemplated in this Agreement.
6.2 Claims. As promptly as is reasonably practicable after becoming aware
of a claim for indemnification under this Agreement, the Indemnified Person
shall promptly give notice to the indemnifying Seller or Sellers ("Indemnifying
Person") of such claim and the amount the Indemnified Person will be entitled to
receive hereunder from the Indemnifying Person; provided that the failure of the
Indemnified Person to promptly give notice shall not relieve the Indemnifying
Person of its obligations except to the extent (if any) that the Indemnifying
Person
6
shall have been prejudiced thereby. If the Indemnifying Person does not object
in writing to such indemnification claim within 30 days of receiving notice
thereof, the Indemnified Person shall be entitled to recover, on the
thirty-fifth day after such notice was given, from the Indemnifying Person the
amount of such claim, and no later objection by the Indemnifying Person shall be
permitted; if the Indemnifying Person agrees that it has an indemnification
obligation but objects that it is obligated to pay only a lesser amount, the
Indemnified Person shall nevertheless be entitled to recover, on the
thirty-fifth day after such notice was given, from the Indemnifying Person the
lesser amount, without prejudice to the Indemnified Person's claim for the
difference. In addition to the amounts recoverable by the Indemnified Person
from the Indemnifying Person pursuant to the foregoing provisions, the
Indemnified Person shall also be entitled to recover from the Indemnifying
Person interest on such amounts at the rate of Two Times Prime from, and
including, the thirty-fifth day after such notice of an indemnification claim is
given to, but not including, the date such recovery is actually made by the
Indemnified Person.
6.3 Notice of Third Party Claims; Assumption of Defense. The Indemnified
Person shall give notice as promptly as is reasonably practicable to the
Indemnifying Person of the assertion of any claim, or the commencement of any
suit, action or proceeding, by any Person not a party hereto (a "Third Party
Claim") in respect of which indemnity may be sought under this Agreement;
provided that the failure of the Indemnified Person to promptly give notice
shall not relieve the Indemnifying Person of its obligations except to the
extent (if any) that the Indemnifying Person shall have been prejudiced thereby.
The Indemnifying Person may, at its own expense, participate in the defense of
any Third Party Claim, suit, action or proceeding (a) upon notice to the
Indemnified Person and (b) upon delivery by the Indemnifying Person to the
Indemnified Person a written agreement that the Indemnified Person is entitled
to indemnification for all Losses arising out of such Third Party Claim, suit,
action or proceeding and that the Indemnifying Person shall be liable for the
entire amount of any Loss, at any time during the course of any such Third Party
Claim, suit, action or proceeding, assume the defense thereof; provided,
however, that (i) the Indemnifying Person's counsel is reasonably satisfactory
to the Indemnified Person, and (ii) the Indemnifying Person shall thereafter
consult with the Indemnified Person upon the Indemnified Person's reasonable
request for such consultation from time to time with respect to such Third Party
Claim, suit, action or proceeding. If the Indemnifying Person assumes such
defense, the Indemnified Person shall have the right (but not the duty) to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnifying Person. If, however, the
Indemnified Person reasonably determines in its judgment that representation by
the Indemnifying Person's counsel of both the Indemnifying Person and the
Indemnified Person would present such counsel with a conflict of interest, then
such Indemnified Person may employ separate counsel to represent or defend it in
any such Third Party Claim, action, suit or proceeding and the Indemnifying
Person shall pay all of the fees and disbursements in connection with the
retention of such separate counsel. If the Indemnifying Person fails to promptly
notify the Indemnified Party that the Indemnifying Party desires to defend the
Third Party Claim pursuant, or if the Indemnifying Person gives such notice but
fails to prosecute vigorously and diligently or settle the Third Party Claim,
then the Indemnified Party will have the right to defend, at the sole cost and
expense of the Indemnifying Person, the Third Party Claim by all appropriate
proceedings, which proceedings will be prosecuted by the Indemnifying Person in
good faith or will be settled at the discretion of the Indemnifying Person (with
the consent of the Indemnifying Person, which consent will not be unreasonably
withheld). The Indemnifying Person will have full control of
7
such defense and proceedings, including any compromise or settlement thereof.
Whether or not the Indemnifying Person chooses to defend or prosecute any such
Third Party Claim, suit, action or proceeding, all of the parties hereto shall
cooperate in the defense or prosecution thereof.
6.4 Settlement or Compromise. Any settlement or compromise made or caused
to be made by the Indemnified Person or the Indemnifying Person, of any claim,
suit, action or proceeding shall also be binding upon the Indemnifying Person or
the Indemnified Person, as the case may be, in the same manner as if a final
judgment or decree had been entered by a court of competent jurisdiction in the
amount of such settlement or compromise thereof; provided, however, that no
obligation, restriction or Loss shall be imposed on the Indemnified Person as a
result of such settlement without its prior written consent. The Indemnified
Person will give the Indemnifying Person at least 30 days' notice of any
proposed settlement or compromise of any Third Party Claim, suit, action or
proceeding it is defending, during which time the Indemnifying Person may reject
such proposed settlement or compromise; provided, however, that from and after
such rejection, the Indemnifying Person shall be obligated to assume the defense
of and full and complete liability and responsibility for such Third Party
Claim, suit, action or proceeding and any and all Losses in connection therewith
in excess of the amount of unindemnifiable Losses which the Indemnified Person
would have been obligated to pay under the proposed settlement or compromise.
6.5 Failure of Indemnifying Person to Act. In the event that the
Indemnifying Person does not assume the defense of any Third Party Claim, suit,
action or proceeding brought against an Indemnified Person, then any failure of
the Indemnified Person to defend or to participate in the defense of any such
Third Party Claim, suit, action or proceeding or to cause the same to be done,
shall not relieve the Indemnifying Person of any of its obligations under this
Agreement.
6.6 Tax Character. Sellers and Purchaser agree that any payments pursuant
to this Article VI will be treated for federal and state income tax purposes as
adjustments to the purchase price of the Membership Interest, and that they will
report such payments on all Tax Returns consistently with such characterization.
ARTICLE VII
DEFINITIONS
7.1 Defined Terms. As used in this Agreement, the following defined terms
have the meanings indicated below:
"Affiliate" means, with respect to any specified Person, any other Person
that, directly or indirectly, owns or controls, is under common ownership or
control with, or is owned or controlled by, such specified Person.
"Agreement" has the meaning ascribed to it in the recitals.
"Assets and Properties" of any Person means all assets and properties of
every kind, nature, character and description (whether real, personal or mixed,
whether tangible or intangible, and wherever situated), including the goodwill
related thereto, operated, owned or leased by such Person.
8
"Assignment Agreement" has the meaning ascribed to it in Section 1.4.
"Audited 2003 Financial Statements" means the audited financial statements
of Panaco as of December 31, 2003, consisting of the balance sheet at such date
and the related statements of operations, statement of members' equity, and cash
flows for the year then ended, each accompanied by the audit report of its
independent public auditors.
"Business Day" means any day of the year other than (i) any Saturday or
Sunday or (ii) any other day on which commercial banks located in New York City
are generally closed for business.
"Business or Condition" of any Person means the business, condition
(financial or otherwise), properties, assets or results of operations or
prospects of such Person, taken as a whole.
"Closing" has the meaning ascribed to it in Section 1.3.
"Closing Date" means the closing date of the transactions contemplated by
Section 1.3.
"Contract" means any contract, lease, commitment, understanding, sales
order, purchase order, agreement, indenture, mortgage, note, bond, right,
warrant, instrument, plan, permit or license, whether written or oral, which is
intended or purports to be binding and enforceable.
"Dollars" or numbers proceeded by the symbol "$" means amounts in United
States Dollars.
"Financial Statements" means the Audited 2003 Financial Statements and the
Interim 2004 Financial Statements.
"GAAP" means U.S. generally accepted accounting principles at the time in
effect.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, administrative or other agency, commission, gaming
authority, licensing board official or other instrumentality of the United
States or any state, county, city or other political subdivision.
"Interim 2004 Financial Statements" means the unaudited internal financial
statements of Panaco for the nine months ended September 30, 2004, consisting of
the balance sheet at such date and the related statements of operations for the
period then ended.
"Knowledge" or "knowledge" means, with respect to the Sellers, the Company
and/or the Subsidiaries, in each case the knowledge of any director, officer,
senior executive, or member of any of Sellers.
"Laws" means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of the United States or any state,
county, city or other political subdivision or of any Governmental or Regulatory
Authority.
"License" means licenses, permits, certificates of authority,
authorizations, approvals, registrations, findings of suitability, variances,
exemptions, certificates of occupancy, orders, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
9
"Lien" means any mortgage, lien (except for any lien for Taxes not yet due
and payable), charge, restriction, pledge, security interest, option, lease or
sublease, claim, right of any third party, easement, encroachment, encumbrance
or other adverse claim of any kind or description.
"Loss" or "Losses" means any and all liabilities, losses, costs, claims,
damages (including consequential damages), penalties and expenses (including
attorneys' fees and expenses and costs of investigation and litigation).
"Material Adverse Effect" or "Material Adverse Change," as to any Person,
means a material adverse change (or circumstance involving a prospective change)
in the Business or Condition of such Person.
"Membership Interests" has the meaning ascribed to it in the Recitals of
this Agreement.
"Order" means any writ, judgment, decree, injunction or similar order of
any Governmental or Regulatory Authority (in each such case whether preliminary
or final).
"Person" means any natural person, corporation, limited liability company,
general partnership, limited partnership, proprietorship, other business
organization, trust, union, association or Governmental or Regulatory Authority.
"Purchaser" has the meaning ascribed to it in the recitals of this
Agreement.
"Seller" has the meaning ascribed to it in the recitals of this
Agreement.
"Sellers" has the meaning ascribed to it in the recitals of this
Agreement.
"Tax Return" means any report, return, document, declaration or other
information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes, including attachments
thereto and amendments thereof, and including, without limitation, information
returns, any documents with respect to or accompanying payments of estimated
Taxes, or with respect to or accompanying requests for the extension of time in
which to file any such report, return, document, declaration or other
information.
"Taxes" means any and all taxes, charges, fees, levies, duties,
liabilities, impositions or other assessments, including, without limitation,
income, gross receipts, profits, excise, real or personal property,
environmental, recapture, sales, use, value-added, withholding, social security,
retirement, employment, unemployment, occupation, service, license, net worth,
payroll, franchise, gains, stamp, transfer and recording taxes, fees and
charges, imposed by the Internal Revenue Service ("IRS") or any other taxing
authority (whether domestic or foreign including, without limitation, any state,
county, local or foreign government or any subdivision or taxing agency thereof
(including a United States possession)), whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term shall include
any interest whether paid or received, fines, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such taxes, charges,
fees, levies, duties, liabilities, impositions or other assessments.
"Tax" shall have a correlative meaning.
10
"Third Party Claim" has the meaning ascribed to it in Section 6.3.
"Two Times Prime" means two times the prime rate published by Citibank,
N.A.
ARTICLE VIII
MISCELLANEOUS
8.1 Investigation. It shall be no defense to an action for breach of this
Agreement that Purchaser or its agents have (or have not) made investigations
into the affairs of the Company or that the Company or Sellers could not have
known of the misrepresentation or breach of warranty.
8.2 Survival of Representations and Warranties. The representations and
warranties of the parties hereunder shall survive the Closing.
8.3 Entire Agreement. This Agreement, including the schedules and exhibits
hereto, which are incorporated herein and made an integrated part hereof,
constitutes the entire agreement between the parties hereto and supersedes any
and all prior discussions and agreements between the parties relating to the
subject matter hereof.
8.4 Waiver. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the party waiving such term or condition. No waiver by any party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion. All remedies, either under this
Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
8.5 Amendment. This Agreement may be amended, supplemented or modified
only by a written instrument duly executed by or on behalf of each party hereto.
8.6 No Third Party Beneficiary. The terms and provisions of this Agreement
are intended solely for the benefit of each party hereto and their respective
successors or permitted assigns, and it is not the intention of the parties to
confer third party beneficiary rights upon any other Person, except that (a)
each Indemnified Persons shall be a third party beneficiary of Article VI, and
(b) AREP shall be a third party beneficiary of Section 8.14.
8.7 Assignment; Binding Effect. No party may assign this Agreement or any
right, interest or obligation hereunder without the prior written consent of the
other Parties. This Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and assigns.
8.8 Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
8.9 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such
11
provision will be fully severable, (b) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, and (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance here from.
8.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
conflicts of laws principles thereof.
8.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
8.12 Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY OF THEM AGAINST ANY
OTHER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, OR ANY OTHER
AGREEMENTS EXECUTED IN CONNECTION HEREWITH OR THE ADMINISTRATION THEREOF OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN. No party to this Agreement
shall seek a jury trial in any lawsuit, proceeding, counterclaim, or any other
litigation procedure based upon, or arising out of, this Agreement or any
related instruments or the relationship between the parties. No party will seek
to consolidate any such action in which a jury trial has been waived with any
other action in which a jury trial cannot be or has not been waived. THE
PROVISIONS OF THIS SECTION HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND
THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY
AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS
SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
8.13 Consent to Jurisdiction. Each party irrevocably submits to the
exclusive jurisdiction of any NY State Court in the County of New York or any
courts of the United States of America located in the Southern District of New
York, and each party hereby agrees that all suits, actions and proceedings
brought by such party hereunder shall be brought in any such court. Each party
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding brought in any such court, any claim that any such suit, action or
proceeding brought in such a court has been brought in an inconvenient forum and
the right to object, with respect to any such suit, action or proceeding brought
in any such court, that such court does not have jurisdiction over such party or
the other party. In any such suit, action or proceeding, each party waives, to
the fullest extent it may effectively do so, personal service of any summons,
complaint or other process and agrees that the service thereof may be made by
any means permitted by Section 8.15 (other than facsimile transmission). Each
party agrees that a final non-appealable judgment in any such suit, action or
proceeding brought in such a court shall be conclusive and binding.
8.14 Expenses. All expenses, costs and fees in connection with the
transactions contemplated hereby (including fees and disbursements of counsel,
consultants and accountants) incurred by (a) Sellers shall be paid and borne
exclusively by Sellers, and (b) Purchaser shall be paid and borne exclusively by
Purchaser.
12
8.15 Notices. All notices, request, demands and other communications
hereunder shall be in writing and shall be delivered personally, by certified or
registered mail, return receipt requested, and postage prepaid, by courier, or
by facsimile transmission, addressed as follows:
If to Sellers:
c/o Icahn Associates Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇
If to Purchaser:
c/o American Real Estate Partners, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
Debevoise & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
or to such other address as a party may from time to time designate in writing
in accordance with this Section. Each notice or other communication given to any
party hereto in accordance with the provisions of this Agreement shall be deemed
to have been received (a) on the Business Day it is sent, if sent by personal
delivery, (b) the earlier of receipt of three Business Days after having been
sent by certified or registered mail, return receipt requested and postage
prepaid, (c) on the Business Day it is sent, if sent by facsimile transmission
and an activity report showing the correct facsimile number of the party on whom
notice is served and the correct number of pages transmitted is obtained by the
sender (provided, however, that such notice or other communication is also sent
by some other means permitted by this Section 0, or (d) on the first Business
Day after sending, if sent by courier or overnight delivery.
8.16 Further Assurances. Sellers covenant and agree that, from time to
time subsequent to Closing, any Seller will, at the request of Purchaser,
execute and deliver all such documents, including, without limitation, all such
additional conveyances, transfers, consents and other assurances and do all such
other acts and things as Purchaser may from time to time request be executed or
done in order to better evidence, perfect or effect any provision of this
Agreement, or of any agreement or other document executed pursuant to this
Agreement, or any of the respective obligations intended to be created hereby or
thereby.
[SIGNATURE PAGE FOLLOWS]
13
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officer of each party hereto as of the date first above
written.
SELLERS:
ARNOS CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
HIGH RIVER LIMITED PARTNERSHIP
By: ▇▇▇▇▇▇ Investments LLC, general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Signatory
▇▇▇▇▇▇ INVESTMENTS LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Signatory
PURCHASER:
AREP OIL & GAS LLC
By: American Real Estate Holdings Limited
Partnership, its member
By: American Property Investors, Inc.,
its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
[Signature Page to the Membership Interest Purchase Agreement]
14
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officer of each party hereto as of the date first above
written.
SELLERS:
ARNOS CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
HIGH RIVER LIMITED PARTNERSHIP
By: ▇▇▇▇▇▇ Investments LLC, general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Signatory
▇▇▇▇▇▇ INVESTMENTS LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Signatory
PURCHASER:
AREP OIL & GAS LLC
By: American Real Estate Holdings Limited
Partnership, its member
By: American Property Investors, Inc.,
its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
[Signature Page to the Membership Interest Purchase Agreement]
14
Exhibit A
Assignment and Assumption Agreement
Assignment and Assumption Agreement, dated as of
December_____________, 2004, is made and entered into by and among
Arnos Corp., a Nevada corporation ("Arnos"), High River Limited Partnership, a
Delaware limited partnership ("High River"), ▇▇▇▇▇▇ Investments, LLC, a Delaware
limited liability company ("▇▇▇▇▇▇" and together with Arnos and High River, each
a "Seller" and collectively, the "Sellers"), and AREP Oil & Gas LLC, a Delaware
limited liability company ("Purchaser"). Capitalized terms used herein shall
have the meanings attributed to them in the Membership Interest Purchase
Agreement, dated as of even date herewith, between Purchaser and Sellers (the
"Membership Interest Purchase Agreement").
In consideration of the purchase and sale of the membership interests in
accordance with the Membership Purchase Agreement, Purchaser and Sellers agree
as follows:
1. Sellers hereby transfer and convey of all of their right, title and
interest in and to the Operating Agreement of Mid River LLC (the "LLC") to
Purchaser.
2 Purchaser hereby accepts all of Sellers' right, title and interest in
and to the LLC, and agrees to be bound by all the terms and provisions of the
Third Amended and Restated Operating Agreement of the LLC.
3. As a result of the foregoing, Purchaser is the sole owner and member of
the LLC.
4. The LLC hereby acknowledges the admission of Purchaser as a member of
the LLC.
IN WITNESS WHEREOF, the parties have executed this document on
__________________________, 2004.
SELLERS:
ARNOS CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
16
HIGH RIVER LIMITED PARTNERSHIP
By: ▇▇▇▇▇▇ Investments LLC, general
partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Signatory
▇▇▇▇▇▇ INVESTMENTS LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorised Signatory
PURCHASER:
AREP OIL & GAS LLC
By: American Real Estate Holdings
Limited Partnership, its member
By: American Property Investors,
Inc., its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
17
ACKNOWLEDGED AND AGREED TO (for purposes of Section 4):
Mid River LLC
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Signatory
[signature page to Assignment with respect to Mid River sale to AREP Oil & Gas]
18