SHARE AND PIPELINE PURCHASE AGREEMENT
by and between
CONOCO INC.
(formerly Continental Oil Company)
Charter Number 0917525
and CONOCO OFFSHORE PIPE LINE COMPANY
(SELLER)
and
STONE ENERGY CORPORATION
(BUYER)
---------------------
ALL SHARES OF CONOCO OFFSHORE INC.
and
SOUTH PASS 49 PIPELINE SYSTEM
Offshore, Louisiana
---------------------
Dated October 8, 2001
Effective December 31, 2001
SHARE AND PIPELINE PURCHASE AGREEMENT
TABLE OF CONTENTS Page
ARTICLE 1. PROPERTY DESCRIPTION...........................................1
1.1 The Property and the Assets..................................1
1.2 Exclusions from the Property.................................2
1.3 Ownership of Production from the Property....................4
1.4 Hydrocarbon Imbalances.......................................5
ARTICLE 2. CONSIDERATION..................................................5
2.1 Purchase Price...............................................5
2.2 Adjustments at Closing.......................................6
2.3 Adjustments after Closing....................................7
2.4 Payment Method...............................................8
2.5 Principles of Accounting.....................................8
2.6 Reporting Value of the Property..............................8
2.7 Section 1031 Exchange........................................8
ARTICLE 3. REPRESENTATIONS AND WARRANTIES.................................8
3.1 Reciprocal Representations and Warranties....................8
3.2 SELLER's Representations and Warranties......................9
3.3 BUYER's Representations and Warranties.......................11
3.4 Limitation as to Environmental Matters.......................12
3.5 Notice of Changes............................................12
3.6 Representations and Warranties Exclusive.....................12
ARTICLE 4. DISCLAIMER OF WARRANTIES.......................................12
4.1 Title; Encumbrances..........................................12
4.2 Condition and Fitness of the Property........................13
4.3 Information About the Property...............................13
4.4 Information in Exhibits......................................14
4.5 Subrogation of Warranties....................................14
4.6 Disclaimers Deemed Conspicuous...............................14
ARTICLE 5. DUE DILIGENCE REVIEW OF THE PROPERTY...........................14
5.1 Records Review and Confidentiality...........................14
5.2 Physical Inspection..........................................15
5.3 Environmental Assessment.....................................15
5.4 Government Approvals.........................................17
5.5 Preferential Rights and Consents to Assign...................18
5.6 Title Defects................................................20
5.7 Casualty Losses and Government Takings.......................21
5.8 Termination Due to Impairments to the Property...............22
ARTICLE 6. CLOSING AND POST-CLOSING OBLIGATIONS...........................22
6.1 Closing Date.................................................22
6.2 Conditions to Closing........................................23
6.3 Closing......................................................25
6.4 Post-Closing Obligations.....................................26
ARTICLE 7. ASSUMED AND RETAINED RIGHTS AND OBLIGATIONS....................27
7.1 BUYER's Rights After Closing.................................27
7.2 BUYER's Obligations After Closing............................27
7.3 SELLER's Obligations After Closing...........................28
7.4 Plugging and Abandonment Obligations.........................29
7.5 Environmental Obligations....................................30
ARTICLE 8. INDEMNITIES....................................................31
8.1 Definition of Claims.........................................31
8.2 Application of Indemnities...................................31
8.3 BUYER's Indemnity............................................32
8.4 SELLER's Indemnity...........................................32
8.5 Notices and Defense of Indemnified Claims....................33
8.6 SELLER's Indemnity Limit.....................................33
8.7 NORM.........................................................33
8.8 Pending Litigation and Claims................................33
8.9 Waiver of Consequential and Punitive Damages;
Data Room Matters..........................................33
ARTICLE 9. TAXES AND EXPENSES............................................34
9.1 Recording Expenses..........................................34
9.2 Ad Valorem, Real Property and Personal Property Taxes.......34
9.3 Severance Taxes.............................................34
9.4 Tax and Financial Reporting.................................34
9.5 Sales and Use Taxes.........................................35
9.6 Income Taxes................................................35
9.7 Incidental Expenses.........................................35
9.8 Indemnity...................................................35
9.9 Cooperation.................................................35
9.10 Section 333(h)(10)Election..................................35
ARTICLE 10. (left blank intentionally)...................................35
ARTICLE 11. MISCELLANEOUS................................................35
11.1 Preferential Right to Purchase and Process Production......35
11.2 Dispute Resolution.........................................37
11.3 Suspense Accounts..........................................37
11.4 SELLER's Marks and Logos...................................37
11.5 Survival of Representations and Warranties.................37
11.6 Public Announcements.......................................37
11.7 Notices....................................................37
11.8 Effective Date.............................................38
11.9 Binding Effect; Assignment.................................38
11.10 Entire Agreement and Amendment............................38
11.11 Interpretation............................................38
11.12 Third-Party Beneficiaries.................................39
11.13 Successors and Assigns....................................39
11.14 Severability..............................................39
11.15 Counterparts..............................................40
11.16 Governing Law.............................................40
11.17 Exhibits..................................................40
11.18 Waiver....................................................40
11.19 Default and Remedies......................................40
11.20 SELLER's Audit Rights.....................................41
INDEX OF DEFINED TERMS
Page
Adverse Environmental Condition...........................................16
Agreement.................................................................1
Allocated Value...........................................................8
Asset Records.............................................................2
Assets....................................................................1
Assignment Documents......................................................25
BUYER.....................................................................1
BUYER's Assumed Obligations...............................................27
Casualty Loss.............................................................21
Claims....................................................................31
Closing...................................................................22
Closing Date..............................................................22
Code......................................................................8
COI.......................................................................1
Conoco....................................................................1
Consents..................................................................18
COPL......................................................................1
Corporation...............................................................1
Downstream Pipeline.......................................................1
Effective Date............................................................1
Environmental Defect Value................................................16
Environmental Laws........................................................16
Environmental Obligations.................................................30
Final Settlement Statement................................................7
Gaseous Hydrocarbons......................................................36
Government Taking.........................................................21
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.....................................................18
Hydrocarbons..............................................................4
Includes..................................................................39
Inspector.................................................................15
Knowledge.................................................................39
Lease Property and Equipment..............................................2
Leases....................................................................2
Liquid Hydrocarbons.......................................................35
Miscellaneous Personal Property...........................................2
NORM......................................................................29
Performance Deposit.......................................................5
Permits and Easements.....................................................2
Pipeline Inventory........................................................4
Plugging and Abandonment Obligations......................................29
Post-Sale Hydrocarbon Imbalances..........................................2
Pre-closing Periods.......................................................35
Pre-Sale Hydrocarbon Imbalances...........................................4
Preferential Rights.......................................................18
Preliminary Settlement Statement..........................................6
Property..................................................................1
Property Taxes............................................................34
Purchase Price............................................................5
Purchased Shares..........................................................1
Related Contracts.........................................................2
SELLER....................................................................1
SELLER's Responsibility...................................................4
SELLER's Retained Obligations.............................................28
Stock Tank Oil............................................................4
STONE.....................................................................1
Title Defect..............................................................20
▇▇▇▇▇.....................................................................2
SHARE AND PIPELINE PURCHASE AGREEMENT
LIST OF EXHIBITS
A Schedule 1 - Oil and Gas Leasehold Interests and Units
Schedule 2 - ▇▇▇▇▇
Schedule 3 - Platforms, Pipelines, Other Immovables and Equipment, and
Miscellaneous Personal Property
Schedule 4 - Easements, Surface Leases, and Permits
Schedule 5 - Related Contracts
Schedule 6 - Allocation of Purchase Price
B B-1 - SELLER's Assignment Notice
B-2 - BUYER's Assignment Notice
C Pending Litigation and Claims Affecting the Assets
D Schedule 1 - Form of Stock Power
Schedule 2 - ▇▇▇▇ of Sale
E Assignment of Contracts
F Nonforeign Affidavit
G Production, Transportation and Processing Imbalances
H Dispute Resolution Procedures
I Performance Bond
SHARE AND PIPELINE PURCHASE AGREEMENT
(All Shares Of Conoco Offshore Inc.
And
South Pass 49 Pipeline System)
This Share and Pipeline Purchase Agreement (the "Agreement"), executed on
October 8, 2001, and effective as of 11:59 p.m. CST, December 31, 2001 (the
"Effective Date"), is between CONOCO INC.(formerly Continental Oil Company,
Charter Number 0917525, "Conoco"), a Delaware corporation, with offices at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, CONOCO OFFSHORE PIPE LINE COMPANY
("COPL"), a Delaware corporation, with offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and STONE ENERGY CORPORATION ("STONE"), a Delaware
corporation with offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇. As used in this Agreement, the term "SELLER" means Conoco and (to the
extent of the Downstream Pipeline) COPL, and the term "BUYER" means Stone.
Notwithstanding any other provision to the contrary, but subject to Section
6.2.8, the representations, warranties, covenants, obligations, liabilities and
indemnities of Conoco and COPL under this Agreement are several and not joint.
RECITALS:
Conoco owns 100% of the shares of Conoco Offshore Inc. which in turn owns
certain producing oil and gas properties in the Mississippi Canyon Area situated
in the Gulf of Mexico, offshore the state of Louisiana, together with related
facilities and contractual rights, and desires to assign and deliver 100% of the
shares of Conoco Offshore Inc. to Stone.
COPL owns an interest in a certain common carrier pipeline system associated
with the producing oil and gas properties owned by Conoco Offshore Inc. and
desires to assign its interest in this property, together with related
facilities and contractual rights.
Stone desires to acquire Conoco's and COPL's interests in Conoco Offshore Inc.
and the pipeline system.
Therefore, Conoco, COPL and Stone agree to the sale of Conoco's and COPL's
interests in these shares, properties, facilities and contractual rights to
Stone on the terms and conditions set forth in this Agreement.
ARTICLE 1. PROPERTY AND ASSETS DESCRIPTION
-------------------------------
1.1 The Property and the Assets. Subject to the terms of this Agreement and
except for the excluded items described under Section 1.2, SELLER shall
sell, convey, and assign to BUYER and BUYER shall purchase, pay for, and
accept all of SELLER's right and title to, and interest in, the following
(collectively the "Property"): (i) one hundred percent (100 %) of the
shares of Conoco Offshore Inc., a Delaware corporation ("COI" or the
"Corporation", which was formerly called Continental Alaska Pipe Line
Company) being 1000 shares represented by Certificate No. 3 issued on May
8, 1996 to Conoco (the "Purchased Shares"), and (ii) the pipeline system
described in Exhibit A, Schedule 3, together with all permits, licenses,
easements, rights-of-way, servitudes, land, surface leases, surface use
agreements, and similar rights and interests applicable to or used in
operating the pipeline system, and to the extent assignable or
transferable, all contracts and contractual rights, obligations and
interests INSOFAR ONLY as they cover and are attributable to the pipeline
system (collectively the "Downstream Pipeline"). The assets and obligations
of the Corporation include (collectively the "Assets"):
1.1.1 The oil, gas and mineral lease(s), operating rights and other
interests in oil and gas described in Exhibit A, Schedule 1, and
all rights, privileges and obligations appurtenant to those
interests and leases, together with all rights and interest in
any unit in which such leases are included (to the extent that
such rights and interests arise from and are associated with such
leases and operating rights), INSOFAR AND ONLY INSOFAR AS those
interests, rights and leases cover and include the lands, depths
and rights described in Exhibit A, Schedule 1 (the "Leases");
1.1.2 All oil, gas and condensate ▇▇▇▇▇ (whether producing, not
producing or abandoned), water source, water injection and other
injection or disposal ▇▇▇▇▇ and systems located on the Leases,
including those described in Exhibit A, Schedule 2 (the "▇▇▇▇▇"),
together with all equipment, facilities, pipelines, flow lines,
gathering systems (other than gas plant gathering systems),
platforms, caissons, subsea equipment, tank batteries,
improvements, fixtures, inventory, spare parts, tools, movables,
immovables, abandoned property and junk, and other personal
property on the Leases or the sea floor covered by the Leases, or
directly used held for use in developing or operating the Leases
and ▇▇▇▇▇, or producing, treating, storing, compressing,
processing or transporting Hydrocarbons on the Leases and ▇▇▇▇▇,
including those items described in Exhibit A, Schedule 3 (the
"Lease Property and Equipment");
1.1.3 All permits, licenses, easements, rights-of-way, servitudes,
land, surface leases, surface use agreements, and similar rights
and interests applicable to or used in operating the Leases,
▇▇▇▇▇, and Lease Property and Equipment, as described in Exhibit
A, Schedule 4 (the "Permits and Easements", which also includes
the same for COPL and the Downstream Pipeline);
1.1.4 All contracts and contractual rights, obligations and interests
INSOFAR ONLY as they cover and are attributable to the Leases,
▇▇▇▇▇, or Lease Property and Equipment, including without
limitation unit agreements (and any declaration or order of any
governmental authority associated therewith), farmout agreements,
farmin agreements, operating agreements, and hydrocarbon sales,
purchase, gathering, transportation, treating, marketing,
exchange, processing and fractionating agreements, which include
those described in Exhibit A, Schedule 5 (the "Related
Contracts", which also includes the same for COPL and the
Downstream Pipeline);
1.1.5 All rights against and obligations to third parties with respect
to any production, transportation and processing imbalances
attributable to Hydrocarbons produced from the Leases on and
after the Effective Date (the "Post-Sale Hydrocarbon
Imbalances"); and
1.1.6 All other tangibles, miscellaneous interests or other assets on
or directly used in connection with the Leases, ▇▇▇▇▇, Lease
Property and Equipment, Permits and Easements, and Related
Contracts (the "Miscellaneous Personal Property"), including
copies of all lease files, land files, well files, geologic and
interpretive maps, well logs, the right to use and analyze cores
and other physical samples or materials from the ▇▇▇▇▇, core
analyses and other well test results, production records,
division order files, abstracts, title opinions, and contract
files, insofar as they are directly related to the Leases (the
"Asset Records").
1.2 Exclusions from the Property. The Property to be conveyed and assigned
under this Agreement does not include:
1.2.1 Unless the parties otherwise agree in writing and enter into a
separate data license agreement and except as expressly provided
in Section 1.1.6 as property of COI, (i) seismic, geological,
geochemical, or geophysical data (including cores and other
physical samples or materials from ▇▇▇▇▇ or tests) belonging to
SELLER or licensed from third parties, and (ii) interpretations
of seismic, geological, geochemical or geophysical data belonging
to SELLER or licensed from third parties;
1.2.2 SELLER's intellectual property, including proprietary computer
software, computer software licensed from third parties, patents,
pending patent applications, trade secrets, copyrights, and
names, marks and logos;
1.2.3 SELLER's corporate, financial and tax records, and legal files,
except that SELLER will provide BUYER with copies of any tax
records that are necessary for BUYER's ownership, administration
or operation of the Property or COI's ownership, administration
or operation of the Leases, ▇▇▇▇▇, Lease Property and Equipment,
or Related Contracts;
1.2.4 Notwithstanding any other provision of this Agreement to the
contrary, any records or information that SELLER considers
proprietary or confidential (including employee information and
internal valuation data regarding its ownership of COI), or which
SELLER cannot legally provide to BUYER because of third-party
restrictions;
1.2.5 Trade credits and rebates from contractors and vendors, and
adjustments or refunds attributable to any period before the
Effective Date relative to the Property and Assets, including
transportation tax credits and refunds, tariff refunds,
take-or-pay claims, insurance premium adjustments, and audit
adjustments under the Related Contracts, which BUYER will assign,
convey and pay over, or ensure that COI assigns, conveys and pays
over to SELLER;
1.2.6 Claims of SELLER or COI for refund of or loss carry forwards
with respect to (i) production, windfall profit, severance, ad
valorem or any other taxes attributable to any period prior to
the Effective Date relative to the Property and Assets, (ii)
income or franchise taxes, or (iii) any taxes attributable to the
excluded items described in this Section 1.2, which BUYER will
assign, convey and pay over, or ensure that COI assigns, conveys
and pays over to SELLER;
1.2.7 (i) All deposits, cash, checks in process of collection, cash
equivalents and funds attributable to any period prior to the
Effective Date, (ii) all accounts and notes receivable
attributable to any period prior to the Effective Date, and (iii)
any security or other deposits made by Seller or COI with third
parties prior to the Effective Date relative to the Property or
Assets, which BUYER will assign, convey and pay over, or ensure
that COI assigns, conveys and pays over to SELLER;
1.2.8 Claims and causes of action of SELLER or COI arising from acts,
omissions or events, or damage or destruction of the Property or
Assets before the Effective Date, and all rights, titles, claims
and interests of SELLER or COI (i) under any policy or agreement
of insurance or indemnity, (ii) under any bond or letter of
credit, or (iii) to any insurance or condemnation proceeds or
awards, which BUYER will assign, convey and pay over, or ensure
that COI assigns, conveys and pays over to SELLER;
1.2.9 All rights, obligations, benefits, awards, judgments, and
settlements, if any, applicable to the pending and potential
litigation, Claims and proceedings listed under the section of
Exhibit C entitled "SELLER's Responsibility";
1.2.10 Any production sales contracts between SELLER and SELLER's
affiliates or subsidiaries, and all swap, futures, or derivative
contracts backed by or related to the Hydrocarbons;
1.2.11 SELLER's or COI's rights under any existing contracts providing
for the gathering, compression, treating, transportation or
processing of oil or gas produced from the Leases or ▇▇▇▇▇, other
than those contracts listed on Exhibit A, Schedule 5 (BUYER will
need to make its own arrangements for these matters with respect
to its production from the Leases, and if COI is a party to such
contracts, BUYER and SELLER will arrange for COI to assign such
contracts to SELLER at Closing);
1.2.12 COI's interest in all rights against and obligations to third
parties with respect to any production, transportation and
processing imbalances which exist and are attributable to
Hydrocarbons produced from the Leases prior to the Effective Date
(the "Pre-Sale Hydrocarbon Imbalances"), which shall be handled
pursuant to Section 1.4.
1.3 Ownership of Production from the Property.
1.3.1 Production Before the Effective Date.
(i) SELLER will receive the benefit of all merchantable oil,
gas, condensate and gas liquids ("Hydrocarbons") produced
from the Assets before the Effective Date. If, on the
Effective Date, Hydrocarbons produced from the Assets before
the Effective Date are stored in the Lease or unit stock
tanks (the "Stock Tank Oil"), or in Lease or unit gathering
lines or production facilities upstream of the sale or
custody transfer meters of the purchaser or processor of
Hydrocarbon production from the Assets (the "Pipeline
Inventory"), BUYER shall pay to SELLER the value of the
merchantable Stock Tank Oil above pipeline connections in
the stock tanks and the Pipeline Inventory for the market
value which shall be based upon (1) for oil, SELLER's posted
price for South Louisiana Sweet (Onshore) crude oil at
Empire, Louisiana, less taxes and transportation fees
deducted by the purchaser of such oil, and (2) for gas plant
products, if any, the market value of the unsold inventory
at the point of sale. BUYER will pay SELLER for the value of
Stock Tank Oil and Pipeline Inventory as an adjustment to
the Purchase Price at Closing, as provided in Section 2.2.
(ii) The Stock Tank Oil and the Pipeline Inventory will be gauged
and measured as of 7:00 a.m. Central Standard Time on
January 1, 2002. SELLER and BUYER will accept the Lease or
unit operator's tank gauge readings, meter tickets or other
inventory records of the Stock Tank Oil and Pipeline
Inventory.
1.3.2 Production After the Effective Date. COI will own and receive the
benefit of all Hydrocarbons produced from the Assets after the
Effective Date. Subject to any continuing sale obligations under
the Related Contracts, and SELLER's preferential right to
purchase Hydrocarbons from the Assets, as provided in Section
11.1, COI may sell Hydrocarbons produced from the Assets on and
after the Closing Date as it deems appropriate.
1.4 Hydrocarbon Imbalances. SELLER represents to BUYER that, although SELLER
will make a good faith attempt to cause COI to balance the Assets to zero
as of the Effective Date, as indicated in Exhibit G, certain imbalances may
exist with third parties as a result of production, transportation,
processing or sales of Hydrocarbons attributable to COI's ownership of
Hydrocarbons produced from the Assets prior to the Effective Date. The
imbalances are such that COI is either entitled to make up or receive
delivery of Hydrocarbons, or payments in lieu thereof, in accordance with
the provisions of certain applicable gas balancing and other agreements.
BUYER and SELLER agree that all liabilities, duties, obligations, benefits
and entitlements with respect to all such imbalances are specifically
reserved by SELLER (and shall, if necessary, be assigned to SELLER by COI
at Closing), and that SELLER shall have all of its or COI's contractual
rights with third parties as a result of such imbalances, but retains no
right to balance any such Hydrocarbons in kind from COI's share of
production from the Leases. BUYER and SELLER further agree that the
existence of such imbalances owed by or to COI or SELLER shall not be
deemed to be a Title Defect, and that BUYER (and COI after Closing) shall
have no liabilities, duties, obligations, benefits or entitlements
whatsoever to any such imbalances. To the extent COI or BUYER are requested
to deliver Hydrocarbons from the Leases after the Effective Date to any
third party as a result of any imbalance in existence as of the Effective
Date, SELLER hereby covenants and further agrees promptly to deliver to
BUYER or COI, upon BUYER's written demand, a like quantity and quality of
Hydrocarbons. Said Hydrocarbons will be delivered by SELLER to BUYER or COI
at a mutually acceptable location whereby BUYER or COI receives the same
value, giving consideration to all relevant factors, including location,
transportation costs, pipeline fuel charges, and differences in pipeline
fuel charges and quality and heating content. To the extent COI or SELLER
is entitled to make up or receive delivery of Hydrocarbons from other
co-owners in the Leases after the Effective Date as a result of any
imbalance in existence as of the Effective Date, and COI or SELLER is
unable to secure a payment or other delivery of the imbalance elsewhere
than at the Leases, BUYER hereby covenants and further agrees to receive
such Hydrocarbons for the account of COI or SELLER, upon COI's or SELLER's
written request, and to redeliver such Hydrocarbons to COI or SELLER. If
SELLER and BUYER determine no later than one (1) year after Closing that
the Pre-Sale Hydrocarbon Imbalances stated in Exhibit G are inaccurate, the
parties agree that the remedies provided in this Section 1.4 are their sole
remedies for any difference between the Pre-Sale Hydrocarbon Imbalances set
forth in Exhibit G and the correct Pre-Sale Hydrocarbon Imbalances
determined by the parties, all other remedies as between SELLER and BUYER
being waived and released regardless of when any inaccuracy may be
discovered or adjustments in balancing accounts may be made.
ARTICLE 2. CONSIDERATION
-------------
2.1 Purchase Price.
2.1.1 Amount Due at Closing. At Closing, BUYER will pay SELLER
Fifty-Three Million, Seven Hundred Thousand dollars (U.S. $
53,700,000) for the Property (the "Purchase Price"), adjusted by
the Closing adjustments specified in Section 2.2. The Purchase
Price will be subject to the further post-Closing adjustments
specified in Section 2.3. For purposes of this Agreement and for
federal income tax purposes, the Purchase Price will be allocated
among the Purchased Shares and Downstream Pipeline, and among
depreciable assets and nondepreciable (or depletable) assets as
provided in Exhibit A, Schedule 6.
2.1.2 Performance Deposit. Upon execution of this Agreement, BUYER
shall pay to SELLER ten percent (10%) of the Purchase Price (U.S.
$ 5,370,000) as a performance deposit ("Performance Deposit") on
the Property to be transferred to BUYER to assure BUYER's
performance under this Agreement. The Performance Deposit is
solely to assure the performance of BUYER pursuant to the terms
and conditions of this Agreement. If BUYER refuses or is unable
for any reason (including failure to obtain financing) to close
the transaction in accordance with the terms of this Agreement,
SELLER may, at its sole option, retain the Performance Deposit as
agreed liquidated damages and not as a penalty. However, if this
Agreement is terminated pursuant to the provisions of Sections
5.3 (Environmental Assessment), 5.4 (Governmental Approvals), 5.6
(Title Defects), 5.7 (Casualty Loss), 5.8 (Termination Due to
Impairments to the Property) or 11.19.2 (BUYER's Remedies) of
this Agreement, the Performance Deposit shall be returned without
interest as provided in this Agreement. If Closing occurs, SELLER
at its sole option may either (i) return the Performance Deposit
to BUYER, without interest, at Closing, in which case BUYER must
pay SELLER the full amount of the Purchase Price at Closing,
adjusted as provided in Section 2.2, or (ii) retain and credit
the Performance Deposit against the Purchase Price at Closing, in
which case BUYER must pay SELLER an amount equal to the Purchase
Price, adjusted as provided in Section 2.2, less the Performance
Deposit.
2.2 Adjustments at Closing.
2.2.1 Preliminary Settlement Statement. At Closing, the Purchase Price
will be adjusted as set forth in Sections 2.2.2 and 2.2.3. No
later than five (5) business days prior to Closing, SELLER will
provide BUYER a Preliminary Settlement Statement identifying all
adjustments to the Purchase Price to be made at Closing (the
"Preliminary Settlement Statement"). SELLER and BUYER acknowledge
that some items in the Preliminary Settlement Statement may be
estimates or otherwise subject to change in the Final Settlement
Statement for the Property, to be prepared pursuant to Section
2.3.
2.2.2 Upward Adjustments. The Purchase Price will be increased by the
following expenses and revenues:
(i) SELLER's and COI's share of all actual production expenses,
operating expenses, overhead charges under applicable
operating agreements and capital expenditures paid or
incurred by SELLER or COI in connection with the Assets and
Downstream Pipeline (including without limitation royalties,
minimum royalties, rentals, and prepaid charges), to the
extent they are attributable to the ownership or operation
of the Assets and Downstream Pipeline after the Effective
Date;
(ii) SELLER's and COI's share of any proceeds from the sale of
Hydrocarbon production and other income from the Assets and
Downstream Pipeline received by BUYER or COI, to the extent
they are attributable to the ownership or operation of the
Assets and Downstream Pipeline before the Effective Date,
and the value of the Stock Tank Oil and the Pipeline
Inventory; and
(iii)Any other increases in the Purchase Price specified in this
Agreement or otherwise agreed in writing between SELLER and
BUYER prior to or at Closing.
2.2.3 Downward Adjustments. The Purchase Price will be decreased by the
following expenses and revenues:
(i) SELLER's and COI's share of all actual production expenses,
operating expenses, overhead charges under applicable
operating agreements and capital expenditures paid or
incurred by BUYER or COI in connection with the Assets and
Downstream Pipeline (including without limitation royalties,
minimum royalties, rentals, and prepaid charges), to the
extent they are attributable to the ownership or operation
of the Assets and Downstream Pipeline before the Effective
Date;
(ii) SELLER's and COI's share of any proceeds from the sale of
Hydrocarbon production (before deduction of any royalties
under the applicable pricing provisions of any oil, gas and
gas plant liquids sales and processing agreements) and other
income received by SELLER or COI from the Assets and
Downstream Pipeline, to the extent they are attributable to
the ownership or operation of the Assets and Downstream
Pipeline after the Effective Date; and
(iii)Any other decreases in the Purchase Price specified in this
Agreement or otherwise agreed in writing between SELLER and
BUYER prior to or at Closing.
2.3 Adjustments after Closing.
2.3.1 Final Settlement Statement. Within 120 days after Closing, SELLER
will prepare a final settlement statement for the Property
containing a final reconciliation of the adjustments to the
Purchase Price specified in Section 2.2 (the "Final Settlement
Statement"). (However, failure of SELLER to complete the Final
Settlement Statement within 120 days after Closing will not
constitute a waiver of any right to an adjustment otherwise due.)
BUYER will have 30 days after receiving the Final Settlement
Statement to provide SELLER with written exceptions to any items
in the Final Settlement Statement that BUYER believes in good
faith to be questionable. All items in the Final Settlement
Statement to which BUYER does not except within the 30-day review
period will be deemed correct.
2.3.2 Payment of Post-Closing Adjustments. Any additional adjustments
to the Purchase Price (including disputed items) will be offset
against each other so that only one payment is required. The
party owing payment will pay the other party the net post-closing
adjustment to the Purchase Price within 10 days after the
expiration of BUYER's 30-day review period for the Final
Settlement Statement. However, the payment of any disputed items
will be subject to the further rights of the parties under
Section 2.3.3.
2.3.3 Resolution of Disputed Items. After the completion and delivery
of the Final Settlement Statement, the parties agree to negotiate
in good faith to attempt to reach agreement on the amount due
with respect to any disputed items in the Final Settlement
Statement. If the parties reach agreement on the amount due with
respect to any disputed items, and a payment adjustment is
required, the party owing payment will pay the other party within
10 days after the parties reach agreement. If the parties are
unable to agree on the amount due with respect to any disputed
items within 60 days after SELLER receives BUYER's written
exceptions to the Final Settlement Statement, then the dispute
shall be resolved under the dispute resolution provisions of
Exhibit H.
2.3.4 Further Revenues and Expenses. After the completion of the
post-Closing adjustments under this Section 2.3, (i) if either
party receives revenues that belong to the other party under this
Agreement (or COI receives revenues for which a Purchase Price
adjustment would otherwise be required), those revenues (or an
equivalent amount) will be remitted to the other party, and (ii)
if either party pays expenses that are the responsibility of the
other party under this Agreement (or COI pays expenses for which
a Purchase Price adjustment would otherwise be required), those
expenses will be promptly reimbursed to the other party for such
expenses upon receiving satisfactory evidence of such payment.
However, neither party will be obligated to reimburse the other
party for any such expenses in excess of $5,000 unless it has
been consulted about that expense prior to payment, unless that
payment was required by a government agency or other government
entity.
2.4 Payment Method. Unless the parties otherwise agree in writing, all payments
under this Agreement will be by wire transfer in immediately available
funds to the account(s) designated by the party receiving payment.
2.5 Principles of Accounting. The Preliminary Settlement Statement and Final
Settlement Statement will be prepared in accordance with generally accepted
accounting principles in the petroleum industry and with reasonable
supporting documentation for each item in those statements.
2.6 Reporting Value of the Property. Neither party will take any position in
preparing financial statements, tax returns, reports to shareholders or
governmental authorities, or otherwise, that is inconsistent with
allocation of value for the Property in Exhibit A, Schedule 6, unless the
parties otherwise agree in writing. The value assigned to each portion of
the Property in Exhibit A, Schedule 6 is hereafter referred to as the
"Allocated Value" of that portion of the Property.
2.7 Section 1031 Exchange. SELLER and BUYER hereby agree that either SELLER or
BUYER shall have the right at any time prior to Closing to assign all or a
portion of its rights under this Agreement to a Qualified Intermediary (as
that term is defined in Section 1.1031(k)-1(g)(4)(v) of the Treasury
Regulations) in order to accomplish the transaction in a manner that will
comply, either in whole or in part, with the requirements of a like-kind
exchange pursuant to Section 1031 of the Internal Revenue Code of 1986, as
amended, (the "Code"). In the event either party assigns its rights under
this Agreement pursuant to this Section 2.7, such party agrees to notify
the other party in writing of such assignment at or before Closing. If
SELLER assigns its rights under this Agreement for this purpose, BUYER
agrees to (i) consent to SELLER's assignment of its rights in this
Agreement in form attached hereto as Exhibit B-1, and (ii) pay the Purchase
Price into a qualified escrow or qualified trust account at Closing as
directed in writing. If BUYER assigns its rights under this Agreement for
this purpose, SELLER agrees to (i) consent to BUYER's assignment of its
rights in this Agreement in the form of Exhibit B-2, (ii) accept the
Purchase Price from the qualified escrow or qualified trust account at
Closing, and (iii) at Closing, convey and assign directly to BUYER the
Property which is the subject of this Agreement upon satisfaction of the
other conditions to Closing and other terms and conditions hereof. SELLER
and BUYER acknowledge and agree that any assignment of this Agreement to a
Qualified Intermediary shall not release either party from any of their
respective liabilities and obligations to each other under this Agreement,
and that neither party represents to the other that any particular tax
treatment will be given to either party as a result thereof.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
3.1 Reciprocal Representations and Warranties. By their execution of this
Agreement, SELLER and BUYER each represent and warrant that the following
statements are true and accurate as to itself, as of the execution date of
this Agreement, the Effective Date and the Closing Date.
3.1.1 Corporate Authority. It is a corporation duly organized and in
good standing under the laws of its state of incorporation, is
duly qualified to carry on its business in the states or
jurisdictions where the Property is located, and has all the
requisite power and authority to enter into and perform this
Agreement.
3.1.2 Requisite Approvals. Upon execution of this Agreement, it will
have taken all necessary actions pursuant to its articles of
incorporation, by-laws and other governing documents to fully
authorize (i) the execution and delivery of this Agreement and
any transaction documents related to this Agreement; and (ii) the
consummation of the transaction contemplated by this Agreement.
3.1.3 Validity of Obligation. This Agreement and all other transaction
documents it is to execute and deliver on or before the Closing
Date (i) have been duly executed by its authorized
representatives; (ii) constitute its valid and legally binding
obligations; and (iii) are enforceable against it in accordance
with their respective terms.
3.1.4 No Violation of Contractual Restrictions. Its execution,
delivery and performance of this Agreement does not conflict with
or violate any agreement or instrument to which it is a party or
by which it is bound, except any provision contained in
agreements customary in the oil and gas industry relating to (i)
required consents to transfer and related provisions; and (ii)
any other third-party approvals or consents contemplated in this
Agreement.
3.1.5 No Violation of Other Legal Restrictions. Its execution,
delivery and performance of this Agreement does not violate any
law, rule, regulation, ordinance, judgment, decree or order to
which it or the Property is subject.
3.1.6 No Restraining Litigation. To its knowledge and subject to those
matters listed in Exhibit C, there is no action, suit,
proceeding, claim or investigation by any person, entity,
administrative agency or governmental body pending or, to its
knowledge, threatened, against it before any court or
governmental agency that seeks to restrain or prohibit, or to
obtain substantial damages from it, with respect to this
Agreement or the consummation of all or part of the transaction
contemplated in this Agreement.
3.1.7 Bankruptcy. There are no bankruptcy, reorganization or
receivership proceedings pending, being contemplated by, or to
its actual knowledge, threatened against it.
3.1.8 Broker's Fees. It has not incurred any obligation for brokers,
finders or similar fees for which the other party would be
liable.
3.2 SELLER's Representations and Warranties. By its execution of this
Agreement, SELLER represents and warrants to BUYER that the following
statements are true and accurate, as of the execution date of this
Agreement, the Effective Date and the Closing Date.
3.2.1 Mortgages and Other Instruments. The transfer of the Property to
BUYER does not violate any covenants or restrictions imposed on
SELLER by any bank or other financial institution in connection
with a mortgage or other instrument, and will not result in the
creation or imposition of a lien on any portion of the Property.
3.2.2 Compliance with Laws. Except as disclosed by SELLER in writing
prior to Closing and limited by Section 3.4, if SELLER is the
operator of the Property, to SELLER's knowledge, it is in
compliance with all laws, rules, regulations and orders
pertaining to the Property.
3.2.3 Permits. Except as disclosed by SELLER in writing prior to
Closing and limited by Section 3.4, if SELLER is the operator of
the Property, to SELLER's knowledge, it has all governmental
permits necessary for the operation of the Property and is not in
default under any permit, license or agreement relating to the
operation and maintenance of the Property.
3.2.4 Lawsuits and Claims. Except as disclosed in Exhibit C to this
Agreement and limited by Section 3.4, to SELLER's knowledge,
there is no demand or lawsuit, nor any compliance order, notice
of probable violation or similar governmental action, pending or
threatened before any court or governmental agency that (i) would
result in an impairment or loss of title to any part of the
Property, or substantial impairment of the value thereof, or (ii)
would hinder or impede the operation of the Property.
3.2.5 COI Existence and Powers. The Corporation is a corporation duly
incorporated, organized and validly existing under the laws of
the state of Delaware, is authorized to carry on business in the
states of Louisiana and Delaware, and has all necessary corporate
power to own the Corporation's properties (including and the
power and right to own oil and gas leases and interests in the
Outer Continental Shelf), and to carry on the Corporation's
business as such business is now being conducted (prior to
Closing SELLER will arrange for COI to terminate its
authorization to do business in the states of Alaska, Oklahoma
and Texas).
3.2.6 SELLER's Authority. SELLER is the holder of record and is the
sole legal and/or beneficial owner of the Purchased Shares and
has the absolute right, title, and authority to sell, convey and
assign the Purchased Shares to BUYER.
3.2.7 No Subsidiaries. The Corporation does not own shares or
interests in any other entity or subsidiary, and is not party to
any agreement to acquire shares or interests in any other entity
or subsidiary.
3.2.8 Purchased Shared Unencumbered. SELLER, COI and their affiliates
have not alienated or encumbered the Purchased Shares or any part
or portion thereof, and the Purchased Shares have not been
assigned, sold, pledged, or hypothecated by SELLER, and are and
will be acquired by BUYER free and clear of all liens, charges,
pledges, claims, demands, security interests, adverse claims,
equities and encumbrances of every nature and kind whatsoever.
3.2.9 Purchased Shares Valid. the Purchased Shares have been validly
issued by the Corporation and are outstanding as fully paid and
non-assessable.
3.2.10 No Share Contracts. Except pursuant to this Agreement, no
person or entity now has any contract, commitment, agreement,
understanding, arrangement, option, warrant or any right or
privilege, whether by law, preemptive or contractual, absolute or
contingent (including on the exercise of one or more rights of
conversion) which is capable of becoming an agreement or right
for the acquisition, purchase, subscription, allotment or
issuance of any of the Purchased Shares or any of the unissued
shares in the capital of the Corporation or of any securities of
the Corporation including but not restricted to any convertible
securities or obligations of any nature or kind whatsoever.
3.2.11 No shareholder Agreements. There exists no shareholder or other
agreement in effect which affects the transferability of the
Purchased Shares. Neither SELLER nor the Corporation is a party
to any voting trust agreement, unanimous shareholders agreement,
pooling agreement or other contract, agreement, arrangement,
commitment, plan or understanding restricting or otherwise
relating to voting or dividend rights with respect to any
securities of the Corporation (including the Purchased Shares).
3.2.12 Private Company. The Corporation is a private company and has
no filing or reporting obligations pursuant to any securities
legislation of any jurisdiction.
3.2.13 No Dividends. Since September 28, 2001, the Corporation has not
(i) declared and paid or set aside for payment any dividend,
whether in cash, shares or otherwise; (ii) reduced the
Corporation's stated capital in any manner or purchased,
acquired, cancelled or redeemed, or agreed to purchase, acquire,
cancel or redeem, any outstanding shares in the Corporation's
issued capital (but the Corporation will declare and pay
dividends to SELLER at or prior to Closing as provided in Section
6.3 (xiv)).
3.2.14 Dividends Paid. All dividends which have been declared by the
Corporation have been paid in full (but the Corporation will
declare and pay dividends to SELLER at or prior to Closing as
provided in Section 6.3 (xiv)).
3.2.15 No Guarantees. The Corporation has not given or agreed to give,
or is a party to or bound by, any continuing guarantee or
indemnity in respect of indebtedness, or other obligations of any
other person or entity that are, in the aggregate, material other
than those: (i) that were incurred in the ordinary course of
business, or (ii) are contained within the Leases and Related
Contracts.
3.2.16 No Debt. The Corporation is not indebted to SELLER.
3.2.17 No Employees. The Corporation has no, and never has had,
employees.
3.2.18 No Asset Encumbrances. Except as may be provided in the Related
Contracts applicable to the Assets, COI has not alienated or
encumbered the Assets by, through or under COI.
3.3 BUYER's Representations and Warranties. By its execution of this Agreement,
BUYER represents and warrants to SELLER that the following statements are
true and accurate, as of the execution date of this Agreement, the
Effective Date and the Closing Date.
3.3.1 Independent Evaluation. BUYER is an experienced and knowledgeable
investor in the oil and gas business. BUYER has been advised by
and has relied solely on its own expertise and legal, tax,
reservoir engineering and other professional counsel concerning
this transaction, the Property and the value thereof.
3.3.2 Qualification. BUYER is now or at Closing will be, and
thereafter will continue to be, qualified to own and operate any
federal or state of Louisiana oil, gas and mineral leases that
constitute part of the Property, including meeting all bonding
requirements. Consummating the transaction contemplated in this
Agreement will not cause BUYER to be disqualified or to exceed
any acreage limitation imposed by law, statute or regulation.
3.3.3 Securities Laws and BUYER's Other Dealings. BUYER has complied
with all federal and state securities laws applicable to the sale
of the Property and will comply with such laws if it subsequently
disposes of all or any part of the Property. BUYER is acquiring
the Property for its own account and not with a view to, or for
offer of resale in connection with, a distribution thereof,
within the meaning of the Securities Act of 1933, 15 ▇.▇.▇.▇▇.
77a et -- seq., and any other rules, regulations, and laws
pertaining to the distribution of securities. Except for
traditional mortgage financing from reputable financial
institutions, BUYER has not sought or solicited, nor is BUYER
participating with, investors, partners or other third parties in
order to fund the Purchase Price or the Performance Deposit and
to close this transaction, and all funds used by BUYER in
connection with this transaction are BUYER's own funds.
3.3.4 BUYER's Funds. BUYER has arranged or will arrange to have
available by the Closing Date sufficient funds to enable the
BUYER to pay in full the Purchase Price as herein provided and
otherwise to perform its obligations under this Agreement without
financing that is subject to any material contingency.
3.3.5 BUYER Financial Statements. BUYER's financial statements
supplied to SELLER, together with the notes thereto, are complete
and correct in all material respects and present fairly the
financial position and the results of operations of BUYER as of
the dates and for the periods therein indicated, and all such
statements have been prepared and conformed with accounting
principles generally applied on a consistent basis throughout the
periods involved. Since the last date of such financial
statements, there has not been any material adverse change,
however caused, in the business, assets, liabilities (actual or
contingent), earnings, financial or other conditions or other
operations of BUYER.
3.3.6 No Holding Company. BUYER is not (i) a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding
company," or a "public utility company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended, or (ii)
subject in any respect to the provisions of that act.
3.3.7 No Investment Company. BUYER is not (i) an investment company or
a company controlled by an investment company within the meaning
of the Investment Company Act of 1940, as amended, or (ii)
subject in any respect to the provisions of that act.
3.4 Limitation as to Environmental Matters. The warranties and representations
of SELLER in this Article 3 do not extend to environmental matters,
permits, compliance with environmental laws and regulations, and
environmental lawsuits and environmental Claims pertaining to the ownership
or operation of the Property or COI's ownership or operation of the Assets.
All liabilities and obligations of SELLER, COI and BUYER with respect to
environmental matters, permits, compliance with environmental laws and
regulations, and environmental lawsuits and environmental Claims pertaining
to the ownership or operation of the Property and COI's ownership or
operation of the Assets will be governed solely and exclusively by the
provisions of Sections 5.3, 5.8, 7.5, and 8.4, regardless of the warranties
or representations in this Article 3.
3.5 Notice of Changes. Prior to Closing, SELLER and BUYER will each give the
other prompt written notice of any matter materially affecting any of their
representations or warranties under this Article 3 or rendering any such
warranty or representation untrue or inaccurate.
3.6 Representations and Warranties Exclusive. All representations and
warranties contained in this Agreement (including without limitation those
in this Article 3) are exclusive, and are given in lieu of all other
representations and warranties, express or implied.
ARTICLE 4. DISCLAIMER OF WARRANTIES
------------------------
4.1 Title; Encumbrances. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLER
CONVEYS THE PROPERTY TO BUYER--AND THE ASSETS ARE--SUBJECT TO ALL
ROYALTIES, OVERRIDING ROYALTIES, BURDENS, LIENS, ENCUMBRANCES, AND SURFACE
RIGHTS, AND WITHOUT WARRANTY OF TITLE, EXPRESS, STATUTORY, OR IMPLIED.
4.2 Condition and Fitness of the Property. Except as expressly set forth in
this Agreement, SELLER CONVEYS THE PROPERTY TO BUYER WITHOUT ANY EXPRESS,
STATUTORY OR IMPLIED WARRANTY OR REPRESENTATION OF ANY KIND, INCLUDING
WARRANTIES RELATING TO (i) THE CONDITION OR MERCHANTABILITY OF THE PROPERTY
OR ASSETS, (ii) THE FITNESS OF THE PROPERTY OR ASSETS FOR A PARTICULAR
PURPOSE, OR (iii) CONFORMITY TO MODELS OR SAMPLES OF MATERIALS. BUYER HAS
INSPECTED, OR BEFORE CLOSING WILL INSPECT OR WILL HAVE BEEN GIVEN THE
OPPORTUNITY TO INSPECT, THE PROPERTY AND ASSETS AND IS SATISFIED AS TO THE
PHYSICAL, OPERATING, REGULATORY COMPLIANCE, SAFETY, AND ENVIRONMENTAL
CONDITION (BOTH SURFACE AND SUBSURFACE) OF THE PROPERTY AND ASSETS AND
ACCEPTS THE PROPERTY (AND ACKNOWLEDGES COI'S ASSETS TO BE) "AS IS," "WHERE
IS," AND "WITH ALL FAULTS" and in its present condition and state of
repair. Without limiting the generality of the foregoing, 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 Assets and Downstream Pipeline, (ii)
the physical, operating, regulatory compliance, safety or environmental
condition of the Assets and Downstream Pipeline (including the ability of
any computer and electronic equipment comprising a part of the Assets and
Downstream Pipeline to recognize, properly compute, or otherwise function
on or after January 1, 2000), or (iii) the geological or engineering
condition of the Assets and Downstream Pipeline or any value thereof. WITH
RESPECT TO THE EASEMENTS, RIGHTS-OF-WAY AND PERMITS FOR THE PIPELINES
COMPRISING A PART OF THE PROPERTY AND ASSETS (INCLUDING THE DOWNSTREAM
PIPELINE), SELLER EXPRESSLY DISCLAIMS, AND BUYER HEREBY WAIVES, ALL
WARRANTIES AND REPRESENTATIONS THAT SELLER OR COI (OR THEIR RESPECTIVE
OPERATORS) OWNS THE EASEMENTS, RIGHTS-OF-WAY AND PERMITS; THAT THEY ARE IN
FORCE AND EFFECT; THAT THEY MAY BE ASSIGNED; THAT THEY ARE CONTIGUOUS; THAT
THE PIPELINES LIE WITHIN THE EASEMENTS, RIGHTS-OF-WAY AND PERMITS; OR THAT
THEY GRANT THE RIGHT TO LAY, MAINTAIN, REPAIR, REPLACE, OPERATE, CONSTRUCT,
OR REMOVE THE PIPELINES. SELLER EXPRESSLY DISCLAIMS, AND BUYER HEREBY
WAIVES, ALL WARRANTIES AND REPRESENTATIONS THAT THERE ARE ANY EASEMENTS,
RIGHTS-OF-WAY, OR PERMITS IN FORCE AND EFFECT WITH RESPECT TO THE
PIPELINES. If necessary, BUYER shall secure its own rights to operate and
maintain the pipelines on the land of others at its own expense. If any
consents of third parties are required to assign the easements,
rights-of-way, permits, or other agreements with respect to the pipelines,
BUYER shall secure any necessary consents to assign at its own expense;
provided, however, SELLER shall provide such assistance to BUYER to secure
the consents as may reasonably be required.
4.3 Information About the Property. Except as expressly set forth in this
Agreement, the parties to this Agreement each disclaim all liability and
responsibility for any representation, warranty, statements or
communications (orally or in writing) to the other party (including, but
not limited to, any information contained in any opinion, information or
advice that may have been provided to any such party by any employee,
officer, director, agent, consultant, engineer or engineering firm,
trustee, representative, partner, member, beneficiary, stockholder or
contractor of such disclaiming party or its affiliates) wherever and
however made, including those made in any data room and any supplements or
amendments thereto or during any negotiations with respect to this
Agreement or any confidentiality agreement previously executed by the
parties with respect to the Property and Assets. SELLER MAKES NO WARRANTY
OR REPRESENTATION, EXPRESS, STATUTORY OR IMPLIED, AS TO (i) THE ACCURACY,
COMPLETENESS, OR MATERIALITY OF ANY DATA, INFORMATION OR RECORDS FURNISHED
TO BUYER IN CONNECTION WITH THE ASSETS AND DOWNSTREAM PIPELINE; (ii)
INFORMATION CONCERNING THE QUALITY AND QUANTITY OF HYDROCARBON RESERVES (IF
ANY) ATTRIBUTABLE TO THE ASSETS; (iii) INFORMATION CONCERNING THE ABILITY
OF THE ASSETS TO PRODUCE HYDROCARBONS, INCLUDING WITHOUT LIMITATION
PRODUCTION RATES, DECLINE RATES AND RECOMPLETION OPPORTUNITIES; (iv) GAS
BALANCING OR PAYOUT ACCOUNT INFORMATION, ALLOWABLES, OR OTHER REGULATORY
MATTERS WITH RESPECT TO THE ASSETS, (v) THE PRESENT OR FUTURE VALUE OF THE
ANTICIPATED INCOME, COSTS OR PROFITS, IF ANY, TO BE DERIVED FROM THE
PROPERTY, (vi) THE ENVIRONMENTAL CONDITION OF THE PROPERTY AND ASSETS,
(vii) ANY PROJECTIONS AS TO EVENTS THAT COULD OR COULD NOT OCCUR, AND
(viii) ANY OTHER MATTERS CONTAINED IN OR OMITTED FROM ANY INFORMATION OR
MATERIAL FURNISHED TO BUYER BY SELLER. 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.
4.4 Information in Exhibits. SELLER MAKES NO REPRESENTATION OR WARRANTY AS TO
THE COMPLETENESS OR ACCURACY OF THE INFORMATION CONTAINED IN EXHIBIT A,
SCHEDULE 2 (▇▇▇▇▇), EXHIBIT A, SCHEDULE 3 (PLATFORMS, PIPELINES, AND OTHER
IMMOVABLES AND EQUIPMENT), EXHIBIT A, SCHEDULE 4 (EASEMENTS, SURFACE
LEASES, AND PERMITS) OR EXHIBIT A, SCHEDULE 5 (RELATED CONTRACTS).
4.5 Subrogation of Warranties. To the extent transferable, SELLER will give and
grant to BUYER, its successors and assigns full power and right of
substitution and subrogation in and to all covenants and warranties
(including warranties of title) by preceding owners, vendors, or others,
given or made with respect to the Property or any part thereof prior to the
Effective Date of this Agreement.
4.6 Disclaimers Deemed Conspicuous. To the extent required to be operative,
BUYER here agrees that the disclaimers of warranties contained in this
Agreement are conspicuous disclaimers for the purpose of any applicable
law, rule or order.
ARTICLE 5. DUE DILIGENCE REVIEW OF THE PROPERTY
------------------------------------
5.1 Records Review and Confidentiality. To allow BUYER to confirm SELLER's and
COI's title and conduct other due diligence with respect to the Property
and Assets, SELLER shall give BUYER, and BUYER's authorized
representatives, at mutually agreeable times before Closing, access to all
contract, land and lease, and operational records, to the extent such data
and records are in SELLER's or COI's possession and relate to the Property
and Assets. With SELLER's permission, BUYER may photocopy such records at
its sole expense. BUYER shall keep confidential all information made
available to BUYER until the later of the Closing Date or the Effective
Date. This Agreement and the terms and provisions thereof, including the
Purchase Price, shall be maintained confidential by BUYER until Closing;
provided however that this Agreement and the terms and provisions thereof
may be disclosed to BUYER's lenders, if any, and their consultants, who
shall be required to keep such information confidential. Any
confidentiality agreement previously executed by SELLER and BUYER with
respect to the Property will continue in force until the later of the
Closing Date or the Effective Date, and for as long thereafter as provided
in the confidentiality agreement. BUYER shall take all reasonable steps
necessary to ensure that BUYER's authorized representatives comply with the
provisions of this Section 5.1 and any confidentiality agreement in effect.
5.2 Physical Inspection. Before Closing, (i) with respect to that portion of
the Property operated by SELLER, SELLER will permit BUYER and its
representatives, at their sole risk and expense, to conduct reasonable
inspections of the Property at times approved by SELLER, and (ii) with
respect to that portion of the Property not operated by SELLER, SELLER will
attempt to obtain access to the Property, in accordance with the applicable
operating agreements, for BUYER and its representatives, at their sole risk
and expense, to conduct reasonable inspections of the Property at times
approved by the operator of the Property. BUYER shall repair any damage to
the Property resulting from its inspection and shall indemnify, defend and
hold SELLER harmless from and against any and all Claims arising from BUYER
inspecting and observing the Property, including, without limitation, (i)
Claims for personal injuries to or death of employees of the BUYER, its
contractors, agents, consultants and representatives, and damage to the
property of BUYER or others acting on behalf of BUYER, regardless of
whether and including such Claims arising out of or resulting, in whole or
part, from the condition of the Property or SELLER's (or its employees',
agents', contractors', successors' or assigns') sole or concurrent
negligence, strict liability or fault, 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.
5.3 Environmental Assessment.
5.3.1 Inspection. Up to five (5) days prior to Closing, the BUYER will
have the right, at its sole cost, to conduct a Phase I
environmental assessment of the Property and Assets. However, the
Phase I environmental assessment must be conducted by an agent or
representative (the "Inspector") of BUYER acceptable to both
SELLER and BUYER. For purposes of this Agreement, a Phase I
environmental assessment means (i) a review of SELLER's and the
government's environmental records, (ii) the submission of
pre-inspection questionnaires to SELLER, (iii) a site visit to
visually inspect the Property and Assets, and (iv) interviews
with corporate and site personnel of SELLER. A Phase I
environmental assessment does not include soil or groundwater
sampling or subsurface testing of any kind.
5.3.2 Inspection Results. Each party will be entitled to receive a
copy of Inspector's Phase I review of the Property and Assets,
including all written reports, data and conclusions. BUYER agrees
not to disclose the Phase I inspection results for the Property
and Assets, or any SELLER information reviewed during the Phase I
environmental assessment, to third parties without the agreement
of SELLER, except as required by law or by the order of a court
or regulatory agency. This confidentiality obligation shall be
effective for five (5) years after the Closing Date and will
survive the termination of this Agreement for any reason.
5.3.3 Notice of Adverse Environmental Conditions. Prior to Closing,
BUYER will review the inspection results for the Property and
Assets and determine based on those results if any Adverse
Environmental Conditions exist with respect to the Property and
Assets. No later than twenty (20) business days before Closing,
BUYER will notify SELLER in writing of any Adverse Environmental
Condition with respect to the Property and Assets. Such notice
shall describe in reasonable detail the Adverse Environmental
Condition, include all data and information in BUYER's and the
Inspector's possession or control bearing thereon, and include
the estimated Environmental Defect Value attributable thereto.
The "Environmental Defect Value" attributable to any Adverse
Environmental Condition will be the estimated amount of all
reasonable costs and Claims, net to SELLER's and COI's interest
in the Property and Assets, associated with the existence,
remediation or correction of the Adverse Environmental Condition,
as reasonably determined and estimated by the Inspector. The term
"Adverse Environmental Condition" means and includes, with
respect to any portion of the Property and Assets, (i) the
failure of the Property and Assets to be in compliance with
applicable Environmental Laws, (ii) the Property and Assets being
subject to any agreements, consent orders, decrees, or judgments,
in existence at this time based on any Environmental Laws that
negatively impact the future use of any portion of the Property
and Assets, or that require any change in the present conditions
of any of the Property and Assets, or (iii) the Property and
Assets being subject to any uncured notices of violations of or
noncompliance with any applicable Environmental Laws; provided,
however, that no matter shall be deemed to be or constitute an
Adverse Environmental Condition unless the Environmental Defect
Value attributable thereto exceeds $50,000, net to SELLER's or
COI's interest in the Property and Assets. The term
"Environmental Laws" means all laws, regulations, rules, codes,
permits and orders relating to pollution or protection of the
public health and the environment
5.3.4 Right and Remedies for Adverse Environmental Conditions.
(i) With respect to any Adverse Environmental Condition
affecting the Property or Assets, BUYER may (a) request
SELLER to cure (or cause COI to cure) the environmental
condition, but SELLER and COI will have no obligation to
cure the Adverse Environmental Condition, or (b) request an
adjustment in the Purchase Price equal to the estimated
value of the Adverse Environmental Condition. If SELLER and
BUYER are unable to agree no later than 15 business days
before Closing on curative measures or an adjustment in the
Purchase Price with respect to any such Adverse
Environmental Condition, the parties will have the rights
and remedies set forth in subpart (ii) of this Section
5.3.4.
(ii) The rights and remedies of the parties with respect to
Adverse Environmental Conditions on the Property and Assets
on which the parties cannot agree on curative measures or a
Purchase Price adjustment are as follows:
(a) If the collective value of the Adverse Environmental
Conditions is less than two percent (2%) of the
Purchase Price, the parties will be obligated to
proceed with Closing as to all of the Property without
curative action by SELLER with respect to such Adverse
Environmental Conditions and without an adjustment to
the Purchase Price.
(b) If the collective value of the Adverse Environmental
Conditions equals or exceeds two percent (2%) of the
Purchase Price, either SELLER or BUYER may exclude the
Property (or SELLER will cause COI to exclude and
transfer the affected Asset from the Assets prior to
Closing if possible) affected by the Adverse
Environmental Condition, in which case the Purchase
Price will be reduced by the said collective value and
the parties will be obligated to proceed with Closing,
subject to the termination rights of the parties under
Section 5.8 and subpart (c) of this Section 5.3.4.
(c) If the collective value of the Adverse Environmental
Conditions equals or exceeds twenty-five percent (25%)
of the Purchase Price, either party may terminate this
Agreement, and neither SELLER nor BUYER will have any
further obligation to conclude the transfer of the
Property under this Agreement. However, the right of
termination under this subpart (c) must be exercised no
later than 10 business days before Closing, after which
both parties will be deemed to have waived their
termination rights under this subpart (c) in connection
with Adverse Environmental Conditions.
(iii)Notwithstanding any agreement by SELLER to a attempt to cure
an Adverse Environmental Condition or to reduce the Purchase
Price due to an Adverse Environmental Condition with respect
to the Property or COI's Assets, or any other provision of
this Agreement, BUYER at Closing will assume (and COI will
retain) all Environmental Obligations with respect to the
Property (and Assets), as provided in Section 7.5.
5.3.5 Exclusive Remedies. The remedies set forth in this Section 5.3
are the sole and exclusive remedies of BUYER with respect to any
Adverse Environmental Condition (and all Environmental
Obligations arising out of any such Adverse Environmental
Condition) attributable to SELLER's and COI's ownership or
operation of the Property and Assets prior to the Effective Date
that is known to BUYER or COI prior to Closing, regardless of
whether BUYER notifies SELLER of any such Adverse Environmental
Condition. SELLER shall have no liability to BUYER for any such
Adverse Environmental Condition (or its related Environmental
Obligations) known to BUYER or COI prior to Closing, if BUYER
fails to notify SELLER as provided in Section 5.3.3. The
indemnification obligations set forth in Section 8.4.2 are the
sole and exclusive remedy of BUYER with respect to any Adverse
Environmental Condition (and all Environmental Obligations
arising out of any such Adverse Environmental Condition)
attributable to SELLER's and COI's ownership or operation of the
Property and Assets prior to the Effective date that becomes
known to BUYER after Closing.
5.4 Government Approvals.
5.4.1 MMS and State Approvals. BUYER agrees promptly after Closing to
take all actions required of it by the MMS, the Secretary of
State of the state of Delaware, or any other regulatory agencies
to obtain all requisite regulatory approvals with respect to this
transaction, if required.
5.4.2 MMS and State Bonding Requirements. BUYER agrees to promptly
purchase and post (or cause COI to procure and post) any and all
bonds, supplemental bonds or other securities which may be
required of it (or COI) pursuant to 30 CFRss.ss.250.7, 256.58,
256.59, and 256.61 in excess of any existing lease, pipeline or
area-wide bond(s). Upon execution of this Agreement, BUYER shall
confer with the MMS regarding the amounts and terms for the
posting of any supplemental bonds or pledge of securities to be
required pursuant to the provisions of 30 CFRss.ss.250.7 and
256.61. If the terms and amounts of any such supplemental bonds
or arrangements for the pledge of securities required (or
anticipated to be required) of BUYER or COI by the MMS do not
fully cover all of SELLER's and COI's Plugging and Abandonment
Obligations and other obligations being assumed under this
Agreement by BUYER with respect to the Assets, then at Closing
BUYER (or COI) shall also deliver to SELLER an additional
plugging and abandonment bond with terms and in the form of
Exhibit I or as mutually agreed by the parties. The amount of the
additional bond to be delivered to SELLER at Closing under this
Section 5.4 shall equal the difference between $ 6.5 million and
the total amount of the bonds, supplemental bonds and/or pledge
of securities made and in place with the MMS by COI or BUYER with
respect to the Assets on the Closing Date. The additional bond to
be given by BUYER to SELLER under this Section 5.4 must be issued
by an insurance company, surety, or other financial institution
approved by SELLER in its sole discretion and shall be executed
on the form attached hereto as Exhibit I, or such other form
mutually agreed to by the parties. BUYER shall maintain this
additional bond in full force and effect, at BUYER's sole cost
and expense, until the Property and Assets have been finally and
permanently plugged, abandoned, and restored, all in accordance
with governmental regulations. The face amount of the bond may be
reduced by BUYER and its surety by the reasonable amounts spent
by BUYER and COI in partial compliance with their Plugging and
Abandonment Obligations under this Agreement, once SELLER has
determined (in its sole discretion) that such operations have
been satisfactorily completed and has provided written notice of
same to BUYER and its surety. BUYER's or COI's intention not to
renew, or its failure to maintain, the additional bond in force
shall entitle SELLER to full payment of the face amount of the
bond on demand.
5.4.3 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. This Agreement is subject in all respects to
and conditioned upon compliance by the parties with Title II of
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 (the
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act"), and rules and regulations promulgated
pursuant thereto, to the extent that said act, rules and
regulations are applicable to the transaction contemplated by
this Agreement. BUYER and SELLER agree to make such filings with
and provide such information to the Federal Trade Commission and
the Department of Justice with respect to the transaction
contemplated by this Agreement as are required in connection with
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act sufficiently in advance of the Closing
Date to permit the lapse of the initial waiting periods
prescribed in connection with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act before
the Closing Date.
5.5 Preferential Rights and Consents to Assign.
5.5.1 Notices to Holders.
(i) If any of the Property is subject to third party
preferential purchase rights, rights of first refusal, or
similar rights (collectively, "Preferential Rights"), or
third party consents to assign, lessor's approvals or
similar rights (collectively, "Consents"), SELLER shall use
reasonable efforts to (a) notify the holders of the
Preferential Rights and Consents that it intends to transfer
the Property to BUYER, (b) provide them with any information
about the transfer of the Property to which they are
entitled, and (c) in the case of Consents, ask the holders
of the Consents to consent to the assignment of the affected
Property to BUYER.
(ii) SELLER shall promptly notify BUYER whether (a) any
Preferential Rights are exercised, waived or deemed waived,
(b) any Consents are denied, or (c) the requisite time
periods have elapsed without any Preferential Rights being
exercised or Consents being received. SELLER will not be
liable to BUYER if any Preferential Rights are exercised, or
any Consents are denied, except as expressly provided in
this Section 5.5.
5.5.2 Remedies Before Closing. If SELLER is unable before Closing to
obtain the required Consents (other than Consents ordinarily
obtained after closing and Consents on hydrocarbon sales,
purchase, gathering, transportation, treating, marketing,
exchange, processing and fractionating agreements, if necessary)
and waivers of all Preferential Rights, then as the sole
pre-Closing remedy for same:
(i) SELLER and BUYER by agreement may proceed with Closing as to
the Property affected by the unwaived Preferential Rights or
unobtained Consents, subject to the further obligations of
SELLER and BUYER set forth in Section 5.5.3 in the event
that such Preferential Rights are validly exercised or such
Consents are ultimately denied after Closing; or
(ii) SELLER and BUYER will exclude the affected portion of the
Property from the transaction under this Agreement, adjust
the Purchase Price by the Allocated Value of the excluded
Property, and proceed with Closing as to the rest of the
Property.
5.5.3 Remedies After Closing.
(i) Preferential Rights. After Closing, if (a) any holder of
Preferential Rights alleges improper notice of sale or other
defect in the notice, or (b) SELLER or BUYER discover, or
any third party alleges, the existence of additional
Preferential Rights, SELLER and BUYER will attempt to obtain
waivers of those Preferential Rights. If SELLER and BUYER
are unable to obtain waivers of such Preferential Rights, or
the third party ultimately establishes and exercises its
rights, and such exercise denies the Property to BUYER, then
BUYER shall satisfy all such Preferential Rights
obligations. BUYER shall be entitled to receive (and SELLER
hereby assigns to BUYER all of SELLER's rights to) all
proceeds received by SELLER in connection with the sale, due
to an exercise of Preferential Rights, of any portion of the
Property BUYER was to receive under this Agreement. BUYER's
receipt of proceeds from the sale of the affected Property
shall be BUYER's sole remedy if undiscovered or alleged
Preferential Rights are established and exercised after
Closing.
(ii) Consents. After Closing, if SELLER or BUYER discover, or any
third party alleges, the existence of additional Consents,
SELLER and BUYER will attempt to obtain waivers of those
Consents. If SELLER and BUYER are unable to obtain waivers
of such Consents (other than Consents on hydrocarbon sales,
purchase, gathering, transportation, treating, marketing,
exchange, processing and fractionating agreements), and such
unwaived Consents deny the affected Property to BUYER, then
SELLER and BUYER will rescind the assignment of the affected
Property under this Agreement, after which SELLER shall pay
BUYER the Allocated Value of the affected Property, and
BUYER shall immediately reassign the affected Property to
the SELLER. Rescission of the assignment of the affected
Property and receipt of the Allocated Value of the affected
Property shall be BUYER's sole remedy if undiscovered or
alleged Consents are established and denied after Closing.
5.6 Title Defects.
5.6.1 Definition of Title Defect. For the purposes of this Agreement, a
"Title Defect" means any impairment, encumbrance, encroachment,
irregularity, defect in, or dispute concerning SELLER's title to
the Property or COI's title to the Assets, and that in the
opinion of BUYER would:
(i) Reduce, impair or prevent BUYER or COI from receiving
payment from the purchasers of production from the Property
or Assets;
(ii) Reduce BUYER's or COI's net revenue interest in all or a
portion of the Property or Assets;
(iii)Increase BUYER's or COI's working interest in all or a
portion of the Property or Assets without a corresponding
increase in net revenue interest; or
(iv) Restrict or extinguish BUYER's or COI's right to use the
Property or Assets as owner, lessee, licensee or permittee,
as applicable.
Neither the environmental condition of the Property or Assets,
any Pre-Sale Hydrocarbon Imbalances, nor any failure to obtain
Consents to the transfer of Related Contracts will be considered
a Title Defect under this Section 5.6.
5.6.2 Notice of Title Defects. BUYER will review title to the Property
and Assets prior to Closing and notify SELLER in writing of any
Title Defect it discovers as soon as reasonably practicable after
its discovery, but in no event less than ten (10) business days
before the Closing Date. BUYER will be deemed to have
conclusively waived any Title Defect about which it fails to
notify SELLER in writing at least ten (10) business days before
the Closing Date.
5.6.3 Request to Cure Title Defects. If BUYER notifies SELLER of a
Title Defect as provided in Section 5.6.2, BUYER may request
SELLER to cure (or COI to cure) the Title Defect, but SELLER and
COI will have no obligation to cure any Title Defect in the
Property or Assets. If SELLER agrees to attempt to cure a Title
Defect, SELLER must cure the Title Defect before Closing, unless
the parties otherwise agree in writing.
5.6.4 Remedies for Uncured Title Defects. If BUYER notifies SELLER of
any Title Defect as provided in Section 5.6.2, and SELLER and COI
refuse or are unable to cure the Title Defect before Closing,
then BUYER and SELLER will have the following rights and remedies
with respect to the uncured Title Defect(s) in the Property or
Assets, unless the parties otherwise agree in writing.
(i) BUYER may waive the uncured Title Defect and proceed with
Closing.
(ii) If an uncured, unwaived Title Defect reduces the value of
the Property by an amount less than two percent (2%) of the
Allocated Value of that Property, SELLER and BUYER will be
obligated to proceed with Closing as to all the Property
without adjustment to the Purchase Price.
(iii)If an uncured, unwaived Title Defect reduces the value of
the Property by an amount equal to or more than two percent
(2%) of the Allocated Value of that Property, either SELLER
or BUYER may exclude the portion of the Property affected by
the Title Defect from the transaction under this Agreement,
in which case SELLER and BUYER will adjust the Purchase
Price by the Allocated Value of the excluded Property, and
proceed with Closing as to the rest of the Property.
(iv) In addition to the rights and remedies set forth in subparts
(i) through (iii) of this Section 5.6.4, SELLER and BUYER
will have the termination rights set forth in Section 5.8.
5.6.5 Exclusive Remedy. The remedies set forth in this Section 5.6 are
the exclusive remedies under this Agreement for all Title Defect
matters, and SELLER shall have no other liability to BUYER with
respect to Title Defects.
5.7 Casualty Losses and Government Takings.
5.7.1 Notice of Casualty Losses. If, prior to the Closing Date, all or
part of the Property (or Assets) is damaged or destroyed by fire,
flood, storm, hurricane, named tropical disturbance, or other
casualty ("Casualty Loss"), or is taken in condemnation or under
the right of eminent domain, or if proceedings for such purposes
shall be pending or threatened ("Government Taking"), SELLER must
promptly notify BUYER in writing of the nature and extent of the
Casualty Loss or Government Taking and SELLER's estimate of the
cost required to repair or replace that portion of the Property
or Assets affected by the Casualty Loss or value of the Property
or Assets taken by the Government Taking.
5.7.2 Remedies for Casualty Losses and Government Takings. With
respect to each Casualty Loss to or Government Taking of the
Property or Assets, SELLER and BUYER will have the following
rights and remedies.
(i) If the agreed cost to repair or replace the portion of the
Property or Assets affected by the Casualty Loss or the
agreed value of the Property taken in any Government Taking
is less than $ 50 million, the Purchase Price will be
adjusted by the agreed cost of the Casualty Loss or the
agreed value of the Property or Assets taken by the
Government Taking, and the parties will proceed with
Closing.
(ii) If the agreed cost to repair or replace the portion of the
Property or Assets affected by the Casualty Loss or the
agreed value of the Property or Assets taken in any
Government Taking equals or exceeds $ 50 million, SELLER and
BUYER by agreement may adjust the Purchase Price by the
agreed cost of the Casualty Loss or the agreed value of the
Property or Assets taken in any Government Taking, and
proceed with Closing.
(iii)In addition to the remedies set forth in subparts (i) and
(ii) of this Section 5.7.2, SELLER and BUYER will have the
termination rights in connection with Casualty Losses and
Government Takings set forth in Section 5.8.
5.7.3 Insurance Proceeds and Settlement Payments. If SELLER and BUYER
adjust the Purchase Price of the Property due to a Casualty Loss
or Government Taking, and proceed with Closing, SELLER will be
entitled to retain (or cause COI to pay over to SELLER) (i) all
insurance proceeds payable to SELLER or COI with respect to any
such Casualty Loss, (ii) all sums paid to SELLER or COI by third
parties by reason of any such Casualty Loss, and (iii) all
compensation paid to SELLER or COI with respect to any such
Government Taking.
5.7.4 Change in Condition. BUYER will assume all risk and loss with
respect to any change, between the Effective Date and the Closing
Date, in the condition of the Property or Assets resulting from
production of Hydrocarbons through normal depletion (including
the watering-out, casing collapse, or sand infiltration of any
well) and the depreciation of personal property through ordinary
wear and tear. None of the events or conditions set forth in this
Section 5.7.4 will be considered a Casualty Loss with respect to
the Property or Assets, nor will they be cause for any other
reduction in the Purchase Price, or give rise to any right to
terminate this Agreement.
5.8 Termination Due to Impairments to the Property.
5.8.1 Right to Terminate.
(i) If, on the Closing Date, the Allocated Value of all Property
to be excluded from the transaction contemplated by this
Agreement due to unwaived, uncured Title Defects or Adverse
Environmental Conditions on the Property or Assets exceeds
twenty-five percent (25%) of the total Allocated Value of
all of the Property, either SELLER or BUYER may terminate
this Agreement, and neither SELLER nor BUYER will have any
further obligation to conclude the transfer of the Property
under this Agreement.
(ii) If, on or before the Closing Date, a Casualty Loss or
Government Taking has occurred with respect to the Property
or COI's Assets, and (a) SELLER and BUYER have been unable
to agree on the cost of the Casualty Loss or the value of
the Property or Assets taken in any Government Taking, or
(b) the agreed cost to repair or replace the portion of the
Property or Assets affected by the Casualty Loss or the
agreed value of the Property taken in any Government Taking
equals or exceeds $ 50 million, then either SELLER or BUYER
may terminate this Agreement, and neither SELLER nor BUYER
will have any further obligation to conclude the transfer of
the Property under this Agreement.
5.8.2 Notice of Termination. Any party exercising a right of
termination under this Section 5.8 must notify the other party in
writing no later than three (3) business days before the Closing
Date of its election to terminate this Agreement.
ARTICLE 6. CLOSING AND POST-CLOSING OBLIGATIONS
6.1 Closing Date. The actions and events described in Section 6.3 are the
"Closing" of this transaction, which shall be held beginning at 9:00 a.m.
local time at SELLER's offices located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ on December 31, 2001, or on such earlier or later date or at
such other place as the parties agree in writing ("Closing Date"). Time is
of the essence in the performance of this Agreement. All events of Closing
shall each be deemed to have occurred simultaneously with the other,
regardless of when actually occurring, and each shall be a condition
precedent to the other. If the Closing occurs, all conditions of Closing
shall be deemed to have been satisfied or waived (but SELLER's and BUYER's
warranties and representations shall not be waived and shall survive the
Closing, to the extent provided in Section 11.5).
6.2 Conditions to Closing. SELLER and BUYER will not be obligated to close the
transaction described in this Agreement, and will have the right to
terminate this Agreement, unless each of the conditions to its performance
set forth in this Section 6.2 is satisfied as of the Closing Date, or it
waives in whole or part any such condition to its performance that is
unsatisfied as of the Closing Date. If a party elects to terminate this
Agreement because a condition to its performance is not satisfied, the
terminating party must give the other party written notice of termination
on or before the Closing Date, after which neither SELLER nor BUYER will
have any further obligation to conclude the transfer of the Property under
this Agreement. The inclusion in this Agreement of conditions to SELLER's
and BUYER's obligations at Closing shall not, in and of itself, constitute
a covenant of either SELLER or BUYER to satisfy the conditions to the other
party's obligations at Closing.
6.2.1 Representations and Warranties.
(i) SELLER will not be obligated to close if, as of the Closing
Date, any matter represented or warranted in this Agreement
by the BUYER is untrue, inaccurate or is misleading in any
material respect and has a material adverse effect on the
value, use or operation of the Property.
(ii) BUYER will not be obligated to close if, as of the Closing
Date, any matter represented or warranted in this Agreement
by the SELLER is untrue, inaccurate or is misleading in any
material respect and has a material adverse effect on the
value, use or operation of the Property.
6.2.2 Performance of Obligations.
(i) SELLER will not be obligated to close if, as of the Closing
Date, BUYER has not performed all material obligations under
this Agreement that BUYER is required to perform on or
before Closing.
(ii) BUYER will not be obligated to close if, as of the Closing
Date, SELLER has not performed all material obligations
under this Agreement that SELLER is required to perform on
or before Closing.
6.2.3 Legal Proceedings. Neither SELLER nor BUYER will be obligated to
close if, as of the Closing Date, any suit or other proceeding is
pending or threatened before any court or governmental agency
seeking to restrain, prohibit, or declare illegal, or seeking
substantial damages in connection with, the transaction that is
the subject of this Agreement, and/or there is reasonable basis
for any such suit or other proceeding.
6.2.4 FTC Consent. Neither SELLER nor BUYER will be obligated to close
if, as of the Closing Date, any necessary consent of the Federal
Trade Commission and any other state or federal governmental
authority or agency relating to the consummation of the
transaction contemplated by this Agreement (except for approvals
covered by Section 5.4) has not been obtained or waived, or
applicable waiting periods prescribed by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Act have not elapsed or terminated.
6.2.5 BUYER's Insurance. SELLER will not be obligated to close if
BUYER, as of the Closing Date, does not have insurance providing
the following minimum insurance coverages with limits of
liability of not less than those set out below:
(i) Insurance which shall comply with all applicable Workers'
Compensation and Occupational Disease Laws and which shall
cover all of the BUYER's employees performing any work or
activities as to the Property. BUYER shall carry insurance
for all work performed offshore, including insurance to
cover Claims under the United States Longshoremen's and
Harbor Workers' Act extended to include the Outer
Continental Shelf;
(ii) Comprehensive/Commercial General Liability Insurance
(including contractual liability coverage) with a combined
bodily injury and property damage limit of not less than
$5,000,000 for each occurrence, together with Pollution
Liability Insurance with a coverage of not less than
$5,000,000 for each occurrence.
Such insurance shall include coverage for all liability assumed
by BUYER under the terms of this Agreement with limits not less
than those set out above. As to all comprehensive/commercial
general public and pollution liability insurance policies, SELLER
shall be named as an additional insured to the extent of BUYER's
liabilities and obligations hereunder. All such insurance of
BUYER hereunder shall be written on policy forms and by insurance
companies approved by SELLER. BUYER shall furnish SELLER with
certificates of insurance on forms approved by SELLER, listing
all such insurance policies. All such certificates must be signed
by authorized representatives of the insurance companies and must
provide for not less than ten (10) days prior written notice to
SELLER in the event of cancellation or material change affecting
SELLER's interest. BUYER shall ensure that it and its
contractors' insurers waive all rights of recovery or subrogation
against SELLER, its parent, subsidiaries, affiliates, agents,
directors, officers, employees, servants, co-lessees or
co-venturers. Neither failure to comply, nor full compliance with
the insurance provisions of this Agreement, shall limit or
relieve BUYER from its indemnity obligations in accordance with
this Agreement.
6.2.6 SELLER's Corporate Approvals. SELLER will not be obligated to
close if, as of the close of business October 10, 2001, final
corporate approval by the appropriate levels of its and BUYER's
management and board of directors has not been obtained. Such
approval is not assured, and if any requisite level of such
management and corporate approval is not forthcoming for any
reason whatsoever, SELLER shall not be obligated to seek other
such approvals. SELLER shall notify BUYER in writing by close of
business October 12, 2001, whether such approval has been
obtained.
6.2.7 BUYER's Corporate Approvals. BUYER will not be obligated to
close if, as of the close of business October 10, 2001, final
corporate approval by the appropriate levels of its and SELLER's
management and board of directors has not been obtained. Such
approval is not assured, and if any requisite level of such
management and corporate approval is not forthcoming for any
reason whatsoever, BUYER shall not be obligated to seek other
such approvals. BUYER shall notify SELLER in writing by close of
business October 12, 2001, whether such approval has been
obtained.
6.2.8 One Closing. SELLER will not be obligated to close if BUYER has
made an election under this Agreement or some other event has
occurred that will prevent SELLER from Closing on, or will cause
SELLER to be unable to close and convey, all of the Property at
one Closing and to receive at such Closing the entire Purchase
Price, adjusted as provided in Section 2.2, and to be paid
pursuant to Section 6.3.
6.2.9 Concurrent Closing. Neither SELLER nor BUYER will be obligated
to close if the closing of that certain Purchase and Sale
Agreement between them of even date herewith is not closed
concurrently with the Closing of this Agreement.
6.2.10 BUYER's Financial Information and Condition. SELLER will not be
obligated to close if (i) BUYER has not provided SELLER, at least
ten (10) business days in advance of Closing, copies of BUYER's
audited financial statements and any other financial information
reasonably requested by SELLER, (ii) such information is not
materially true and correct in all respects, or (iii) any
material adverse change in the financial condition of BUYER has
occurred between the Effective Date and the Closing Date.
6.3 Closing. At Closing, the following events shall occur, and SELLER and BUYER
shall execute, acknowledge (if necessary), and exchange, as applicable, the
following items:
(i) Both parties at Closing shall execute a Closing Statement
evidencing the amounts to be wire transferred into the
accounts of each receiving party at Closing.
(ii) BUYER shall deliver to SELLER the Purchase Price, as
adjusted by the amount shown on the Preliminary Settlement
Statement, by wire transfer in immediately available funds
to the account of SELLER designated in writing by SELLER
prior to Closing.
(iii)If SELLER elects to return the Performance Deposit as
provided in Section 2.1.2, SELLER shall deliver to BUYER the
Performance Deposit without interest, by wire transfer in
immediately available funds to the account of BUYER
designated in writing by BUYER prior to Closing.
(iv) Conoco will deliver share certificate No. 3 with a Stock
Power in the form of Exhibit D, Schedule 1, representing the
Purchased Shares either endorsed in favor of the BUYER or
accompanied by duly executed instruments of transfer, and
any other documents necessary to transfer to BUYER good,
marketable, unencumbered title to the Purchased Shares.
(v) Conoco will secure and deliver the resignations of all
officers and members of the board of directors of COI who
are affiliated with or employed by Conoco effective as of
the Closing Date.
(vi) COPL shall execute and deliver to BUYER the assignment
documents (in sufficient counterparts for recording) for the
assignment and conveyance of the Downstream Pipeline to be
transferred under this Agreement in the form set forth in
Exhibit D, Schedule 2 (the "Assignment Documents");
(vii)COPL and BUYER shall execute and deliver the Assignment of
Contracts in the form of Exhibit E for the Related Contracts
relative to the Downstream Pipeline, together with any other
ratification and joinder instruments required to transfer
the rights, obligations and interests in applicable Related
Contracts;
(viii) SELLER shall execute the Nonforeign Affidavits in the
forms of Exhibit F;
(ix) SELLER and BUYER shall execute, acknowledge (if necessary)
and exchange, as applicable, any applications necessary to
transfer to BUYER all transferable governmental or
regulatory permits to which the Property is subject, and
which SELLER has agreed to transfer under this Agreement.
(x) BUYER shall furnish SELLER with evidence acceptable to
SELLER that BUYER is qualified (and that COI will continue
to be qualified) to hold title to the Leases and other
Property with the MMS and state of Louisiana, as applicable,
and to operate (should BUYER become the operator of the
Property or a portion thereof) the platforms, ▇▇▇▇▇,
pipelines and facilities associated therewith, including
copies of all BUYER's ownership, operational, and plugging
bonds or other supplemental security arrangements for the
Property, as provided in Section 5.4.
(xi) BUYER shall furnish SELLER with Certificate(s) of Insurance
confirming the existence of the BUYER's insurance coverages
pursuant to Section 6.2.5.
(xii)BUYER shall furnish SELLER with a certified resolution or
secretary's certificate of BUYER evidencing the authority of
BUYER to enter into this Agreement and close the transaction
contemplated hereby in a form and having content
satisfactory to SELLER.
(xiii) BUYER (COI, if necessary), SELLER, and BUYER's (COI's)
surety will execute and deliver the additional bond provided
in Section 5.4.2.
(xiv)SELLER will cause COI to close all of its bank accounts and
transfer (by dividend or otherwise) all of its funds to
SELLER, and will also declare and pay dividends (whether one
or more) to SELLER sufficient to reduce its working capital
and retained earnings to zero at Closing (these actions may
be taken prior to Closing and evidence of same provided to
BUYER at Closing). BUYER will arrange for any necessary bank
accounts for COI on or after Closing.
(xv) The Management and Administrative Services Agreement between
SELLER and COI dated December 30, 1993, and any outstanding
guarantees in favor of COI, will be terminated.
(xiv)The parties shall execute and deliver other appropriate
assignments, bills of sale, deeds or instruments necessary
to transfer the Property to BUYER or to effect and support
this transaction contemplated in this Agreement, including
any conveyances on official forms and related documentation
necessary to transfer the Property to BUYER in accordance
with requirements of governmental regulations.
(xv) The original minute books of COI will be delivered to BUYER.
(xvi)SELLER and COI will execute the agreement provided in
Section 11.1 (Preferential Right to Purchase and Process
Production).
6.4 Post-Closing Obligations. SELLER and BUYER have the following post-closing
obligations:
6.4.1 Asset Records. Within sixty (60) days after Closing, SELLER shall
deliver to BUYER the originals or legible copies of the Asset
Records, at a location designated by BUYER. Any transportation,
postage or delivery costs from SELLER's offices shall be at
BUYER's sole cost, risk and expense. If SELLER retains any
original Asset Records, BUYER shall have the right to access and
review those original Asset Records during normal business hours.
BUYER agrees to maintain the Asset Records for seven (7) years
after Closing. BUYER shall provide SELLER and its representatives
reasonable access to and the right to copy such Asset Records for
the purposes of (i) preparing and delivering any accounting
provided under this Agreement and adjusting, prorating and
settling the charges and credits provided in this Agreement; (ii)
complying with any law, rule or regulation affecting SELLER's
interest in the Property prior to the Closing Date; (iii)
preparing any audit of the books and records of any third party
relating to SELLER's interest in the Property prior to the
Closing Date, or responding to any audit prepared by such third
parties; (iv) preparing tax returns; (v) responding to or
disputing any tax audit; or (vi) asserting, defending or
otherwise dealing with any claim or dispute under this Agreement.
BUYER shall notify SELLER in writing before destroying any Asset
Records. SELLER agrees to use all reasonable efforts, but without
any obligation to incur any cost or expense in connection
therewith, to cooperate with BUYER's efforts to obtain access to
files, records and data relating to the Property not provided by
SELLER which are in the possession of any third party operator of
any of the Property.
6.4.2 Recording and Filing. BUYER, within thirty (30) days after
Closing, shall (i) record all Assignment Documents and all other
instruments that must be recorded to effectuate the transfer of
the Property; and (ii) file for approval with the applicable
government agencies all Assignment Documents and other state and
federal transfer documents required to effectuate the transfer of
the Property. BUYER shall provide SELLER a recorded copy of each
Assignment Document and other recorded instruments, and approved
copies of the Assignment Documents and other state and federal
transfer documents as soon as they are available.
6.4.3 Further Assurances. BUYER and SELLER agree to execute and
deliver from time to time such further instruments and do such
other acts as may be reasonably requested and necessary to
effectuate the purposes of this Agreement.
ARTICLE 7. ASSUMED AND RETAINED RIGHTS AND OBLIGATIONS
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7.1 BUYER's Rights After Closing. Upon and after Closing, BUYER will receive
and assume all of SELLER's right, title and interest in the Property, with
effect as of the Effective Date.
7.2 BUYER's Obligations After Closing.
7.2.1 Description of Obligations. Upon and after Closing, BUYER will
guarantee, assume, pay and perform all the obligations,
liabilities and duties with respect to the ownership and (if
applicable) operation of the Property (and COI's ownership of the
Assets) that are attributable to periods on and after the
Effective Date (the "BUYER's Assumed Obligations"). The BUYER's
Assumed Obligations include:
(i) Responsibility for payment of all operating expenses and
capital expenditures related to the Property and Assets and
attributable to the period on and after the Effective Date;
(ii) Responsibility for performance (including by COI) of all
express and implied obligations and covenants under the
terms of the Leases, other instruments of record in the
chain of title, the Related Contracts and all other orders
and contracts to which the Assets or the operation thereof
is subject arising on and after the Effective Date;
(iii)Responsibility for payment by COI of all royalties,
overriding royalties, production payments, net profits
obligations, rentals, shut-in payments and other burdens or
encumbrances to which the Assets are subject that are
attributable to periods on and after the Effective Date;
(iv) Responsibility for proper accounting for and disbursement of
production proceeds from the Assets attributable to periods
on and after the Effective Date, including funds in any
suspense accounts received from SELLER;
(v) Responsibility for compliance with all applicable laws,
ordinances, rules and regulations pertaining to the Property
(and Assets by COI), and the procurement and maintenance of
all permits required by public authorities in connection
with the Property (and Assets by COI) on and after the
Effective Date;
(vi) The Plugging and Abandonment Obligations, the Environmental
Obligations, and all other obligations assumed by BUYER
under this Agreement; and
(vii)Responsibility for all obligations related to the Post-Sale
Hydrocarbon Imbalances.
7.2.2 Non-Operator's Obligations. With respect to (i) any part of the
Property and Assets for which BUYER or COI is not duly elected
operator, or (ii) any non-operating interests in the Property or
Assets, BUYER shall assume full responsibility and liability for
BUYER's Assumed Obligations with respect to such non-operating
interests.
7.3 SELLER's Obligations After Closing.
7.3.1 Description of Obligations. After Closing, SELLER will retain and
guarantee responsibility for all liabilities, obligations and
duties with respect to the ownership and (if applicable)
operation of the Property (and COI's ownership of the Assets)
that are attributable to periods before the Effective Date,
except as otherwise specifically provided in this Agreement (the
"SELLER's Retained Obligations"). The SELLER's Retained
Obligations include:
(i) Responsibility for the payment of all operating expenses and
capital expenditures related to the Property and Assets and
attributable to the period prior to the Effective Date;
(ii) Responsibility for performance (including by COI) of all
express and implied obligations and covenants under the
terms of the Leases, other instruments in the chain of
title, the Related Contracts and all other orders and
contracts to which the Assets are subject arising before the
Effective Date;
(iii)Responsibility for payment by COI of all royalties,
overriding royalties, production payments, net profits
obligations, rentals, shut-in payments and other burdens or
encumbrances to which the Assets are subject that are
attributable to periods before the Effective Date;
(iv) Responsibility for proper accounting for and disbursement of
production proceeds from the Assets attributable to periods
before the Effective Date;
(v) Responsibility for the exclusions from the Plugging and
Abandonment Obligations described in Section 7.4.2, and the
exclusions from the Environmental Obligations described in
Section 7.5.2; and
(vi) Responsibility for all obligations related to the Pre-Sale
Hydrocarbon Imbalances.
7.3.2 Non-Operator's Obligations. With respect to (i) any periods of
time before the Effective Date during which SELLER or COI was not
operator of the Property or Assets, or (ii) any non-operating
interests in the Property or Assets, SELLER retains full
responsibility and liability for SELLER's Retained Obligations
with respect to such non-operating interests.
7.4 Plugging and Abandonment Obligations.
7.4.1 BUYER's Obligations. Upon and after Closing, BUYER guarantees and
assumes full responsibility and liability for the following
plugging and abandonment obligations (and COI's obligations)
related to the Property and Assets (the "Plugging and Abandonment
Obligations"), regardless of whether they are attributable to the
ownership or operation of the Property op Assets before or after
the Effective Date:
(i) The necessary and proper plugging, replugging and
abandonment of all ▇▇▇▇▇ on the Property and Assets, whether
plugged and abandoned before or after the Effective Date;
(ii) The necessary and proper removal, abandonment, and disposal
of all platforms, structures, pipelines, equipment,
abandoned property and junk located on or comprising part of
the Property and Assets, including junk on the sea floor at
the Leases;
(iii)The necessary and proper capping and burying of all flow
lines associated with the ▇▇▇▇▇ and located on or comprising
part of the Assets;
(iv) The necessary and proper restoration of the Property and
Assets, both surface, sea floor, and subsurface, as may be
required by applicable laws, regulation or contract;
(v) Any necessary clean-up or disposal of Property and Assets
contaminated by naturally occurring radioactive material
("NORM"), as may be required by applicable laws, regulations
or contract;
(vi) All obligations arising from contractual requirements and
demands made by courts, authorized regulatory bodies or
parties claiming a vested interest in the Property and
Assets; and
(vii)Obtaining and maintaining all bonds, or supplemental or
additional bonds, that may be required contractually or by
governmental authorities.
7.4.2 Exclusions from BUYER's Obligations. BUYER's obligations under
this Section 7.4 do not include any civil or criminal fines or
penalties that may be levied against SELLER, COI or BUYER by any
court or regulatory authority for non-compliance with applicable
laws, regulations or orders in connection with the ownership or
operation of the Property or Assets before the Effective Date.
7.4.3 Standard of Operations. BUYER shall conduct (and shall ensure
that COI conducts) all plugging, replugging, abandonment,
removal, disposal and restoration operations in a good and
workmanlike manner and in compliance with all applicable laws and
regulations.
7.4.4 Non-Operator's Obligations. With respect to any non-operating
interests in the Property and Assets, BUYER shall guarantee and
assume full responsibility and liability, from and after the
Effective Date, for the Plugging and Abandonment Obligations with
respect to such non-operating interests.
7.4.5 SELLER's Remedies. BUYER's liability and obligations under this
Section 7.4 are included in the liabilities and obligations to be
secured by the bonds, supplemental or additional bonds and/or
pledge of securities, as may be established pursuant to Section
5.4. If BUYER defaults in the performance of its obligations
pursuant to this Section 7.4, SELLER, at its option, and after
reasonable notice, may complete, or have completed, the plugging,
replugging, abandonment, removal, disposal, capping, burying, and
restoration operations at BUYER's expense. Exercise of SELLER's
rights hereunder shall in no way limit SELLER's rights to seek
recovery for any uncompensated damages resulting from such
default or to exercise any other legal rights and remedies under
this Agreement.
7.5 Environmental Obligations.
7.5.1 BUYER's Obligations. Except as provided in Section 7.5.2, upon
and after Closing, BUYER assumes full responsibility and
liability for the following occurrences, events and activities on
or related to the Property and Assets (the "Environmental
Obligations"), regardless of whether arising from the ownership
or operation of the Property (or COI's ownership or operation of
the Assets) before or after the Effective Date, and regardless of
whether resulting from any acts or omissions of SELLER or COI or
the condition of the Property when acquired (or the condition of
the Assets when COI was acquired by BUYER):
(i) Environmental pollution or contamination, including
pollution or contamination of the soil, sea, groundwater or
air by oil, gas, condensate, distillate, other hydrocarbons,
brine, NORM or otherwise;
(ii) Underground injection activities and waste disposal onsite;
(iii)Clean-up responses, and the cost of remediation, control,
assessment or compliance with respect to surface, sea floor,
and subsurface pollution caused by spills, pits, ponds or
lagoons;
(iv) Failure to comply with applicable land use, surface
disturbance, licensing or notification requirements;
(v) Disposal on the Property or Assets of any hazardous
substances, wastes, materials and products generated by or
used in connection with the ownership or operation of the
Property or Assets before or after the Effective Date; and
(vi) Non-compliance with environmental or land use rules,
regulations, demands or orders of appropriate state or
federal regulatory agencies.
7.5.2 Exclusions from BUYER's Obligations. BUYER's Environmental
Obligations do not include:
(i) Any civil or criminal fines or penalties that may be levied
against SELLER or COI by any court or regulatory authority
for any such violation of any laws, rules or regulations in
connection with the ownership or operation of the Property
(or the ownership or operation of the Assets by COI) before
the Effective Date, all of which shall remain the
responsibility of SELLER (and to be guaranteed by SELLER);
and
(ii) Disposal offsite from the Property or Assets before the
Effective Date of any hazardous substances, wastes, NORM,
materials and products generated by or used in connection
with the ownership or operation of the Property (or the
ownership or operation of the Assets by COI) before the
Effective Date.
7.5.3 Non-Operator's Obligations. With respect to any non-operating
interests in the Property being transferred to BUYER under this
Agreement (and any non-operating interests of COI in the Assets),
BUYER agrees to guarantee and assume full responsibility and
liability, from and after the Effective Date, for the
Environmental Obligations with respect to such non-operating
interests.
ARTICLE 8. INDEMNITIES
-----------
8.1 Definition of Claims. As used in this Agreement, the term "Claims" means
any and all losses, liabilities, damages, punitive damages, obligations,
expenses, fines, penalties, costs, claims, causes of action and judgments
for: (i) breaches of contract; (ii) loss or damage to property, injury to
or death of persons, and other tortious injury; and (iii) violations of
applicable laws, rules, regulations, orders or any other legal right or
duty actionable at law or equity. The term "Claims" also includes
reasonable attorneys fees, court costs, and other reasonable costs of
litigation resulting from the defense of any claim or cause of action
within the scope of the indemnities in this Agreement.
8.2 Application of Indemnities.
8.2.1 Covered Claims and Parties. All indemnities set forth in this
Agreement extend to the officers, directors, employees and
affiliates of the party indemnified. Unless this Agreement
expressly provides to the contrary, the indemnities set forth in
this Agreement apply regardless of whether the indemnified party
(or its employees, agents, contractors, successors or assigns)
causes, in whole or part, an indemnified Claim, including
indemnified Claims arising out of or resulting, in whole or part,
from the condition of the Property or the indemnified party's (or
its employees', agents', contractors', successors' or assigns')
sole or concurrent negligence, strict liability or fault.
However, the indemnities set forth in this Agreement do not
extend to any part of an indemnified Claim that (i) is the result
of the gross negligence, willful misconduct or fraud of the
indemnified party, (ii) is the result of the imposition of
punitive damages on the indemnified party arising from the acts
of the indemnified party, or (iii) is the result of the
imposition of civil or criminal fines or penalties by any court
or regulatory authority on the indemnified party due the
indemnified party's failure to comply with applicable laws,
regulations or orders.
8.2.2 Other Limitations. The indemnities of the indemnifying party in
this Agreement do not cover or include any amounts that the
indemnified party may legally recoup from other third party
owners under applicable joint operating agreements or other
agreements, or for which the indemnified party is reimbursed by
any third party. The indemnities in this Agreement do not relieve
the parties to this Agreement from any obligations to third
parties. The indemnities of the parties in this Agreement do not
relieve the indemnified party from, or extend to cover, any
obligations of the indemnified party under the terms of any
operating agreement or other cost-sharing arrangement which is
applicable to any Claim. There will be no upward or downward
adjustment in the Purchase Price as a result of any matter for
which BUYER or SELLER is indemnified under this Agreement.
8.3 BUYER's Indemnity. BUYER shall indemnify, defend and hold SELLER harmless
from and against any and all Claims caused by, resulting from or incidental
to:
8.3.1 BUYER's Assumed Obligations, including the Plugging and
Abandonment Obligations, the Environmental Obligations (except as
provided in Section 8.4), and the Post-Sale Hydrocarbon
Imbalances;
8.3.2 Any obligations for brokerage or finder's fee or commission
incurred by BUYER in connection with its purchase of the
Property;
8.3.3 Any violation by BUYER of state or federal securities laws, or
BUYER's dealings (including any dealings in breach of BUYER's
warranties and representations in Section 3.3.3) with its
partners, investors, financial institutions, assignees and other
third parties in connection with the transaction under this
Agreement, or any subsequent sale or other disposition of the
Property (or portion thereof) by BUYER, its affiliates or
assignees;
8.3.4 BUYER's ownership or operation of any portion of the Property
reconveyed or reassigned to SELLER pursuant to Section 5.5.3 (ii)
due to failure to obtain requisite Consents or government
approvals, except to the extent any such Claim is the direct
result of SELLER's ownership or operation of the Property before
the Effective Date; and
8.3.5 BUYER's inspection of the Property and Assets under Section 5.2
and any other provisions of this Agreement, to the extent
provided in Section 5.2.
8.4 SELLER's Indemnity. Subject to Section 8.6, SELLER shall indemnify, defend
and hold BUYER harmless from and against any and all Claims caused by,
resulting from or incidental to:
8.4.1 SELLER's Retained Obligations, including the exclusions from the
Plugging and Abandonment Obligations, the exclusions from the
Environmental Obligations assumed by BUYER in the BUYER's Assumed
Obligations, and the Pre-Sale Hydrocarbon Imbalances;
8.4.2 Claims against BUYER by third parties (and third parties only,
including governmental agencies) of which BUYER notifies SELLER
in writing within one (1) year after Closing, to the extent those
Claims result from Environmental Obligations that arise from
SELLER's and COI's ownership or operation of the Property and
Assets prior to the Effective Date, but SELLER shall have no
obligation to BUYER under this Section 8.4 for any such Claim of
which SELLER is not notified in writing by BUYER within one (1)
year after Closing.
8.4.3 Any ownership, operations or activities of COI in or associated
with the state of Alaska.
8.5 Notices and Defense of Indemnified Claims. Each party shall immediately
notify the other party of any Claim of which it becomes aware and for which
it is entitled to indemnification from the other party under this
Agreement. The indemnifying party shall be obligated to defend at the
indemnifying party's sole expense any litigation or other administrative or
adversarial proceeding against the indemnified party relating to any Claim
for which the indemnifying party has agreed to indemnify and hold the
indemnified party harmless under this Agreement. However, the indemnified
party shall have the right to participate with the indemnifying party in
the defense of any such Claim at its own expense.
8.6 SELLER's Indemnity Limit. Notwithstanding anything herein to the contrary,
(i) in no event shall SELLER be required to indemnify BUYER for any Claim
or pay any other amount in connection with or with respect to the
transactions contemplated in this Agreement in any amount exceeding in the
aggregate twenty-five percent (25 %) of the Purchase Price as adjusted
pursuant to Section 2.2 and (ii) in no event shall SELLER be required to
indemnify BUYER for any Claim covered by SELLER's indemnity under Section
8.4, if SELLER does not receive written notice of the Claim as provided in
Section 8.5 within one (1) year after the Closing Date; provided, however,
the indemnity provided in Section 8.4.3 shall be unlimited as to time and
amount.
8.7 NORM. BUYER ACKNOWLEDGES THAT IT HAS BEEN INFORMED THAT OIL AND GAS
PRODUCING FORMATIONS CAN CONTAIN NATURALLY OCCURRING RADIOACTIVE MATERIAL.
SCALE FORMATION OR SLUDGE DEPOSITS CAN CONCENTRATE LOW LEVELS OF NORM ON
EQUIPMENT, MATERIALS AND OTHER PROPERTY. SOME OR ALL OF THE EQUIPMENT,
MATERIALS AND OTHER PROPERTY SUBJECT TO THIS AGREEMENT MAY HAVE LEVELS OF
NORM ABOVE BACKGROUND LEVELS. A HEALTH HAZARD MAY EXIST IN CONNECTION WITH
THIS EQUIPMENT, MATERIALS AND OTHER PROPERTY BY REASON THEREOF. THEREFORE,
BUYER MAY NEED TO FOLLOW SAFETY PROCEDURES WHEN HANDLING THIS EQUIPMENT,
MATERIALS AND OTHER PROPERTY.
8.8 Pending Litigation and Claims. Notwithstanding anything in this Agreement
to the contrary, BUYER shall indemnify, defend and hold SELLER harmless
from and against any Claims resulting from the litigation and claims listed
on Exhibit C under the section entitled "BUYER's Responsibility," except as
may otherwise be expressly provided in that Exhibit. SELLER shall
indemnify, defend and hold BUYER harmless from and against any Claims
resulting from the litigation and claims listed on Exhibit C under the
section entitled "SELLER's Responsibility," except as may otherwise be
expressly provided in that Exhibit. Furthermore, if BUYER is a party in any
of the litigation listed on Exhibit C against SELLER, BUYER shall release
SELLER from its Claims and dismiss such litigation with prejudice. These
matters shall not constitute an Adverse Environmental Condition or a Title
Defect.
8.9 Waiver of Consequential and Punitive Damages; Data Room Matters. NEITHER
BUYER NOR SELLER SHALL BE ENTITLED TO RECOVER FROM THE OTHER, RESPECTIVELY,
AND EACH PARTY RELEASES THE OTHER PARTY FROM, ANY LOSSES, COSTS, EXPENSES,
OR DAMAGES ARISING UNDER THIS AGREEMENT OR IN CONNECTION WITH OR WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT ANY AMOUNT IN
EXCESS OF THE ACTUAL COMPENSATORY DAMAGES SUFFERED BY SUCH PARTY. BUYER AND
SELLER BOTH WAIVE, AND RELEASE THE OTHER FROM, ANY RIGHT TO RECOVER
PUNITIVE, SPECIAL, EXEMPLARY AND CONSEQUENTIAL DAMAGES ARISING IN
CONNECTION WITH OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED IN THIS
AGREEMENT; PROVIDED, HOWEVER, ANY SUCH DAMAGES RECOVERED BY A THIRD PARTY
(OTHER THAN SUBSIDIARIES, AFFILIATES OR PARENTS OF A PARTY) FOR WHICH A
PARTY OWES THE OTHER PARTY AN INDEMNITY UNDER THIS ARTICLE 8 SHALL NOT BE
WAIVED. BUYER hereby fully and unconditionally releases SELLER and their
affiliates and subsidiaries and their officer, directors and employees,
from any and all Claims, causes of action or damages, if any, arising in
favor of BUYER from SELLER's data room process and proposal procedures in
connection with its sale of the Property.
ARTICLE 9. TAXES AND EXPENSES
------------------
9.1 Recording Expenses. BUYER shall pay all costs of recording and filing the
Assignment Documents for the Property, all other state and federal transfer
documents, and any other instruments that must be filed to effectuate the
transfer of the Property.
9.2 Ad Valorem, Real Property and Personal Property Taxes. All Ad Valorem
Taxes, Real Property Taxes, Personal Property Taxes, and similar
obligations ("Property Taxes") on the Property are SELLER's obligation for
periods before the Effective Date and BUYER's obligation for periods after
the Effective Date. If Property Taxes for the current tax year have not
been assessed and paid as of the Closing Date, the BUYER shall file all
required reports and returns incident to the Property Taxes and pay the
Property Taxes for the current tax year and subsequent periods. The SELLER
will reimburse the BUYER promptly for the SELLER's proportionate share of
these taxes, prorated as of the Effective Date, upon receipt of evidence of
the BUYER's payment of the taxes. If Property Taxes for the current tax
year have been assessed and paid as of the Closing Date, the BUYER will
reimburse the SELLER for its proportionate share of these taxes, prorated
as of the Effective Date, as a closing adjustment to the Purchase Price, as
provided in Section 2.2.
9.3 Severance Taxes. SELLER shall bear and pay all severance or other taxes
measured by Hydrocarbon production from the Property, or the receipt of
proceeds therefrom, to the extent attributable to production from the
Property before the Effective Date. BUYER shall bear and pay all such taxes
on production from the Property on and after the Effective Date. SELLER
shall withhold and pay on behalf of BUYER all such taxes on production from
the Property between the Effective Date and the Closing Date, if the
Closing Date follows the Effective Date, and the amount of any such payment
shall be reimbursed to SELLER as a closing adjustment to the Purchase Price
pursuant to Section 2.2. If either party pays taxes owed by the other, upon
receipt of evidence of payment the nonpaying party will reimburse the
paying party promptly for its proportionate share of such taxes.
9.4 Tax and Financial Reporting.
9.4.1 IRS Form 8594. If the parties mutually agree that a filing of
Form 8594 is required, the parties will confer and cooperate in
the preparation and filing of their respective forms to reflect a
consistent reporting of the agreed upon allocation of the value
of the Property.
9.4.2 Financial Reporting. SELLER and BUYER agree to furnish to each
other at Closing or as soon thereafter as practicable any and all
information and documents reasonably required to comply with tax
and financial reporting requirements and audits.
9.4.3 Intangible Drilling Cost Recapture. SELLER and BUYER agree to
furnish to each other, at Closing or as soon as practicable
thereafter, data relative to deductions claimed, pursuant to
Section 263(c) of the Internal Revenue Code of 1986, for
intangible drilling costs related to the Property, and any other
relevant data to allow each party to calculate the carryover
intangible drilling costs associated with the Property that is
subject to potential recapture under Section 1254(a) of the
Internal Revenue Code of 1986.
9.4.4 Federal Tax Reporting. The taxable income or loss and all other
tax items of the Corporation for all taxable periods of the
Corporation ending on or before the Effective Date therefore
shall be included in the consolidated federal income tax return
of the SELLER's affiliated group. SELLER has paid or shall pay or
cause to be paid all income taxes, interest, penalties and other
amounts due with respect to federal income tax returns of all
members of SELLER's affiliated group (including the Corporation)
filed or required to be filed for any and all taxable periods
ending on or before the Effective Date ("Pre-closing Periods").
9.5 Sales and Use Taxes. BUYER shall be responsible for and pay all federal,
state, or local sales, transfer, gross proceeds, use and similar taxes
incident or applicable to the Property it receives under this Agreement, or
caused by the transfer of the Property to BUYER under this Agreement. If
SELLER is required to pay such sales, use or similar taxes on behalf of
BUYER, BUYER will reimburse SELLER at Closing for all sales and use taxes
due and payable on the transfer of the Property to BUYER.
9.6 Income Taxes. Each party shall be responsible for its own state and federal
income taxes, if any, as may result from this transaction.
9.7 Incidental Expenses. Each party shall bear its own respective expenses
incurred in connection with the negotiation and Closing of this
transaction, including its own consultants' fees, attorneys' fees,
accountants' fees, and other similar costs and expenses.
9.8 Indemnity. BUYER shall be responsible for and shall pay or cause to be paid
all federal, state and local taxes of the Corporation, if any, for the
taxable periods following the Effective Date, and BUYER shall indemnify and
hold SELLER harmless for any and all federal, state and local taxes,
penalties, interest or any other government levies assessed therefrom.
9.9 Cooperation. BUYER and SELLER shall cooperate with each other in connection
with any tax matters, concerning the Corporation including, but not limited
to compliance, audits and litigations. SELLER shall have the right to
defend (at its own expense) any contest for the assessment of taxes for
which it is responsible for under this Agreement.
9.10 Section 338(h)(10) Election. SELLER and BUYER shall file a simultaneous
joint election to treat the sale of the shares of the Corporation as a sale
of assets under Treasury Regulations section 1.338(h)(10)-1T, and related
regulations. SELLER and BUYER agree, without limitation, to execute all
consents, forms, adjusted basis allocations and supporting schedules
necessary to effect said election under the consolidated federal tax
returns of the parties.
ARTICLE 10. [Intentionally left blank.]
ARTICLE 11. MISCELLANEOUS
-------------
11.1 Preferential Right to Purchase and Process Production. At Closing, SELLER
and COI will execute an agreement providing for the following:
11.1.1 SELLER's Right and Option. COI shall grant and SELLER shall
have the ongoing preferential right and option, but not the
obligation, to purchase oil, condensate or other liquid
Hydrocarbons ("Liquid Hydrocarbons") produced from the Assets,
and payment for such Liquid Hydrocarbons shall be at the same
price and under the same terms and conditions offered to COI in
any bona fide offer from a third party purchaser. If COI does not
have a bona fide offer from a third party purchaser, then payment
for such Liquid Hydrocarbons shall be at SELLER's posted price as
specified in SELLER's posted price bulletin in effect on the
delivery date for Liquid Hydrocarbons of like kind and quality to
that produced from the Assets (currently Conoco's South Louisiana
Sweet (Onshore) posting), less per barrel taxes and
transportation deductions. If SELLER does not have a posted price
for Liquid Hydrocarbons from the Assets, then payment for such
Liquid Hydrocarbons shall be based on the published price of
another major oil company on which SELLER and COI mutually agree,
in effect on the delivery date for Liquid Hydrocarbons of like
kind, quality, and location, less per barrel taxes and
transportation deductions. COI shall grant and SELLER shall also
have the preferential right and option to purchase or process
natural and casinghead gas, or other gaseous Hydrocarbons
("Gaseous Hydrocarbons") produced from the Assets, with payment
for the Gaseous Hydrocarbons purchased and/or gas products
recovered to be at the same price and under the same terms and
conditions offered to COI in any bona fide offer from a third
party purchaser. If COI does not have a bona fide offer from a
third party purchaser, then the price will be determined on the
basis of an agreement between SELLER and COI containing terms
generally acceptable in the area.
11.1.2 Third-Party Offers. If COI receives from a responsible,
unaffiliated third-party a bona fide offer acceptable to COI to
purchase Liquid Hydrocarbons or purchase and/or process Gaseous
Hydrocarbons from the Assets it receives, COI shall furnish
SELLER a copy of this offer as written on the letterhead of the
third-party offeror. SELLER shall then have one (1) day (or such
shorter period as may be mutually agreeable to the parties) after
receiving a copy of the offer to either waive its right or elect
to purchase and/or process the Liquid Hydrocarbons or Gaseous
Hydrocarbons, as applicable, on terms substantially equivalent to
those offered to COI by the third-party offeror or on more
favorable terms and conditions to COI. Failure to timely reply to
COI's notice will be a one-time waiver of SELLER's preferential
rights under this Section 11.1. Once waived, and if COI accepts
the third-party offer, the preferential rights under this Section
11.1 will not be enforceable during the term of any sale or
processing contract between COI and the third-party offeror.
However, COI agrees not to enter into any sale or processing
contract with a third-party offeror with a term in excess of six
months in duration.
11.1.3 Miscellaneous.
(i) The preferential rights in this Section 11.1 shall be
subject to the expiration of any existing contracts for the
purchase of Liquid Hydrocarbons or Gaseous Hydrocarbons from
the Assets between COI and third-party purchasers that are
part of the Related Contracts, and also subject to the Gas
Purchase Agreement, dated January 1, 1994, as amended May 1,
2000, between Continental Alaska Pipe Line Company (now
called Conoco Offshore Inc.) and Conoco Inc. (item 12 of the
Related Contracts, C-12996).
(ii) The failure of SELLER to exercise its preferential rights to
purchase Liquid Hydrocarbons or Gaseous Hydrocarbons from
the Assets under this Section 11.1 at any time or times
shall not constitute a waiver of those preferential rights.
(iii)For the purposes of this Agreement, any exchange or other
disposition of Liquid Hydrocarbons or Gaseous Hydrocarbons
from the Assets will be considered a sale under this Section
11.1 and subject to SELLER's preferential rights under this
Section 11.1.
(iv) The preferential rights in this Section 11.1 shall be a
covenant running with the land.
11.2 Dispute Resolution. Any dispute concerning this Agreement (other than
Claims by a third party in litigation for which a party to this Agreement
is claiming indemnity) shall be resolved under the mediation and binding
arbitration procedures set forth in Exhibit H. Compliance with this Section
11.2 and the procedures set forth in Exhibit H shall constitute a condition
precedent to either party seeking judicial enforcement of any provisions of
this Agreement. The parties agree that the provisions of Exhibit H are a
severable, independent arbitration agreement separately enforceable from
the remainder of this Agreement.
11.3 Suspense Accounts. At SELLER's option and as soon as practical after the
Closing, SELLER shall transfer to BUYER all funds held by SELLER in
suspense related to proceeds of production and attributable to third
parties' interests in the Leases or Hydrocarbon production from the Leases
(but not including any suspended funds relating to any Claims described in
Exhibit C), including funds suspended awaiting minimum disbursement
requirements, funds suspended under division orders and funds suspended for
title and other defects. If such funds are transferred to BUYER, BUYER
agrees to administer all such accounts and assume all payment obligations
relating thereto in accordance with all applicable laws, rules and
regulations, and shall be liable for the payment thereof to the proper
parties.
11.4 SELLER's Marks and Logos. Rights to the name "Conoco" and all its variants,
and all other marks and logos of SELLER are expressly retained by SELLER.
To the extent COI has or uses any such names, marks and logos after
Closing, BUYER will cause COI to cease such use and, if necessary, to
assign same to SELLER. BUYER shall cause COI to change its corporate name
within sixty (60) days after Closing to remove the name "Conoco" from its
corporate name.
11.5 Survival of Representations and Warranties. All of the representations,
warranties, covenants, indemnities and agreements of or by the parties to
this Agreement will survive the Closing, the execution and delivery of the
Assignment Documents and other instruments under this Agreement, and the
transfer of the Property between the parties; and they shall not be merged
into or superseded by the Assignment Documents or other documents delivered
at Closing. However, neither party to this Agreement will be entitled to
make a Claim against the other party in connection with the inaccuracy of
the representations and warranties of the other party in this Agreement
unless the other party is notified of that Claim in writing within one (1)
year after the Closing Date.
11.6 Public Announcements. Neither party may make press releases or other public
announcements concerning this transaction, without the other party's prior
written approval and agreement to the form of the announcement, except as
may be required by applicable laws or rules and regulations of any
governmental agency or stock exchange.
11.7 Notices. All notices under this Agreement must be in writing. Any notice
under this Agreement may be given by personal delivery, facsimile
transmission, U.S. mail (postage prepaid), or commercial delivery service,
and will be deemed duly given when received by the party charged with such
notice and addressed as follows:
If to SELLER: CONOCO INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Acquisitions and Divestitures
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
CONOCO OFFSHORE PIPE LINE COMPANY
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇. ▇. ▇▇▇▇▇, Vice President
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with copy to: CONOCO INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇. ▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Real Property Administration
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
If to BUYER: STONE ENERGY CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇. ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Land
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Any party, by written notice to the other, may change the address or the
individual to which or to whom notices are to be sent under this Agreement.
11.8 Effective Date. The Effective Date of this Agreement will be 11:59 p.m.
Central Standard Time, on December 31, 2001.
11.9 Binding Effect; Assignment. Except as expressly provided in Section 2.7,
prior to the later of the Closing Date or the Effective Date neither party
may assign its rights or obligations under this Agreement without the prior
written consent of the other, which may be withheld for any reason
including convenience. If BUYER sells, transfers or assigns all or a
portion of the Property, (i) this Agreement shall remain in effect between
BUYER and SELLER as to all the Property regardless of such sale or
assignment (and BUYER will remain obligated hereunder), and (ii) BUYER
shall require its successors and assigns expressly to assume its
obligations under this Agreement, to the extent related or applicable to
the Property or portion thereof acquired by them.
11.10Entire Agreement and Amendment. This Agreement, together with any relevant
confidentiality agreement referred to in Section 5.1, constitutes the
entire understanding between the parties, replacing and superseding all
prior negotiations, discussions, arrangements, agreements and
understandings between the parties regarding the subject transaction and
subject matter hereof (whether written or oral), excepting any written
agreements that may be executed by the parties concurrently or after the
execution of this Agreement. No other agreement, statement or promise made
by any party, or to any employee, officer or agent of any party, which is
not contained in this Agreement shall be binding or valid. This Agreement
may be supplemented, altered, amended, modified or revoked by writing only,
signed by the parties hereto.
11.11Interpretation. The parties stipulate and agree that this Agreement shall
be deemed and considered for all purposes to have been jointly prepared by
the parties, and shall not be construed against any one party (nor shall
any inference or presumption be made) on the basis of who drafted this
Agreement or any particular provision hereof, who supplied the form of
Agreement, or any other event of the negotiation, drafting or execution of
this Agreement. Each party agrees that this Agreement has been purposefully
drawn and correctly reflects its understanding of the transaction that it
contemplates. In construing this Agreement, the following principles will
apply.
11.11.1 Examples shall not be construed to limit, expressly or by
implication, the matter they illustrate.
11.11.2 The word "includes" and its derivatives means "includes, but
is not limited to" and corresponding derivative expressions.
11.11.3 A defined term has its defined meaning throughout this
Agreement and each Appendix, Exhibit and Schedule to this
Agreement, regardless of whether it appears before or after the
place where it is defined.
11.11.4 If there is any conflict or inconsistency between the
provisions of the main body of this Agreement and the provisions
of any Appendix, Exhibit, Schedule or executed Assignment
Document, the provisions of this Agreement shall take precedence.
If there is any conflict between the provisions of any pro forma
Assignment Document or other transaction documents attached to
this Agreement as an Appendix, Exhibit or Schedule and the
provisions of any Assignment Documents and other transaction
documents actually executed by the parties, the provisions of the
executed Assignment Documents and other executed transaction
documents shall take precedence.
11.11.5 The omission of certain provisions of this Agreement from the
Assignment Documents does not constitute a conflict or
inconsistency between this Agreement and the Assignment
Documents, and will not effect a merger of the omitted
provisions. To the fullest extent permitted by law, all
provisions of this Agreement are hereby deemed incorporated into
the Assignment Documents by reference.
11.11.6 The underlined Article, Section and Exhibit references in this
Agreement refer to the Articles, Sections and Exhibits of this
Agreement. The headings and titles in this Agreement are for
convenience only and shall have no significance in interpreting
or otherwise affect the meaning of this Agreement.
11.11.7 The plural shall be deemed to include the singular, and vice
versa
11.11.8 The term "knowledge" as applied to either party, shall mean
the actual knowledge of such party's officers and directors, and
its employees, agents, or representatives at a supervisory level
and above.
11.12Third-Party Beneficiaries. It is understood and agreed that there shall be
no third-party beneficiary of this Agreement, and that the provisions
hereof do not impart enforceable rights, benefits, or remedies in anyone
who is not a party or a successor or assignee of a party hereto.
11.13Successors and Assigns. This Agreement binds and inures to the benefit of
the parties hereto their respective permitted successors and assigns, and
all the terms, provisions, covenants, obligations, indemnities,
representations, warranties and conditions of this Agreement shall be
enforceable by the parties hereto and their respective permitted successors
and assigns.
11.14Severability. If any provision of this Agreement is found by a court of
competent jurisdiction to be invalid or unenforceable, that provision will
be deemed modified to the extent necessary to make it valid and enforceable
and if it cannot be so modified, it shall be deemed deleted and the
remainder of the Agreement shall continue and remain in full force and
effect.
11.15Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute an original and all of which shall constitute one
document.
11.16Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF LOUISIANA, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS OTHERWISE APPLICABLE TO SUCH
DETERMINATIONS.
11.17Exhibits. The Appendices, Exhibits and Schedules attached to this
Agreement are incorporated into and made a part of this Agreement, and,
prior to Closing, SELLER and BUYER agree to revise or supplement the
Appendices, Exhibits and Schedules, as and if necessary to more accurately
describe the information mutually intended by the parties to be reflected
thereon.
11.18Waiver. Any of the terms, provisions, covenants, representations,
warranties or conditions hereof may be waived only by a written instrument
executed by the party waiving compliance. Except as otherwise expressly
provided in this Agreement, the failure of any party at any time or times
to require performance of any provision hereof shall in no manner affect
such party's right to enforce the same. No waiver by any party of any
condition, or of the breach of any term, provision, covenant,
representation or warranty contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach
or a waiver of any other condition or of the breach of any other term,
provision, covenant, representation or warranty.
11.19 Default and Remedies.
11.19.1 SELLER's Remedies. Upon failure of BUYER to perform any of the
obligations under this Agreement to be performed by BUYER prior
to and on the Closing Date, SELLER, at SELLER's sole option, may
(i) enforce specific performance, or (ii) terminate this
Agreement and retain the Performance Deposit as agreed liquidated
damages and not as a penalty. The remedies set forth in this
Section 11.19.1 shall be SELLER's sole and exclusive remedies for
any such default, and SELLER hereby expressly waives and releases
all other remedies (except as provided in Section 11.19.4).
11.19.2 BUYER's Remedies. Upon failure of SELLER to perform any of the
obligations to be performed by SELLER prior to and on the Closing
Date, BUYER, at BUYER's sole option, may (i) enforce specific
performance, or (ii) terminate this Agreement and receive back
the Performance Deposit (without interest) from SELLER. The
remedies set forth in this Section 11.19.2 shall be BUYER's sole
and exclusive remedies for such default, and BUYER hereby
expressly waives and releases all other remedies (except as
provided in Section 11.19.4).
11.19.3 Effect of Termination. Notwithstanding anything to the
contrary in this Agreement (except Section 11.19.4), in the event
of termination of this Agreement, the transaction shall not close
and this Agreement shall become void and have no further effect
whatsoever, and neither BUYER nor SELLER shall have any further
liability, obligations, right or duty to the other under this
Agreement, except as provided in Sections 11.19.1, 11.19.2, and
11.19.4, as applicable.
11.19.4 Other Remedies. Notwithstanding the provisions of Sections
11.19.1, 11.19.2 and 11.19.3, termination of this Agreement shall
not prejudice or impair SELLER's or BUYER's rights and
obligations under Sections 5.1 (and the confidentiality
agreements referenced therein), 5.2 (BUYER's inspections), 5.3.2
(confidentiality of environmental data), and 11.2 (dispute
resolution), and such other portions of this Agreement as are
necessary to the enforcement and construction of Sections 5.1,
5.2, 5.3.2, and 11.2.
11.20SELLER's Audit Rights. SELLER shall have the right, during reasonable
business hours, to audit all records (excepting federal tax records and
records subject to the attorney/client privilege) of BUYER pertaining to
the Property for a period of two years from Closing.
IN WITNESS WHEREOF, the authorized representatives of Conoco, COPL and Stone
execute this Agreement on the dates stated below.
CONOCO INC. STONE ENERGY CORPORATION
(formerly Continental Oil Company,
Charter Number 523126)
By: /s/ W.E. ▇▇▇▇▇▇▇ By: /s/ D. ▇▇▇▇▇ ▇▇▇▇▇
_____________________________ ___________________________
Name: W. E. ▇▇▇▇▇▇▇ Name: D. ▇▇▇▇▇ ▇▇▇▇▇
_____________________________ ___________________________
Title: Attorney-in-Fact Title: President and CEO
_____________________________ ___________________________
Date: October 8, 2001 Date: October 8, 2001
_____________________________ ___________________________
Witnesses: _________________________ Witnesses: ___________________________
_________________________ ___________________________
CONOCO OFFSHORE PIPE LINE COMPANY
By: /s/ ▇.▇. ▇▇▇▇▇
_____________________________
Name: ▇.▇. ▇▇▇▇▇
_____________________________
Title: Vice-President
_____________________________
Date: October 8, 2001
_____________________________
Witnesses: ___________________________
___________________________