EXHIBIT 10.1
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FIRST AMENDMENT
TO EARNOUT AGREEMENT
between
ENERGY PARTNERS, LTD.
and
PARTICIPANTS
Effective
July 1, 2002
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TABLE OF CONTENTS
Page
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FIRST AMENDMENT TO EARNOUT AGREEMENT..............................................................................1
Article I DEFINITIONS AND INTERPRETATION..........................................................................2
1.1 Terms Defined Above................................................................................2
1.2 Terms Defined in Agreement.........................................................................2
1.3 References.........................................................................................2
1.4 Articles and Sections..............................................................................3
1.5 Number and Gender..................................................................................3
1.6 Incorporation of Schedule..........................................................................3
Article II AMENDMENTS.............................................................................................3
2.1 Amendment to Section 1.2...........................................................................3
2.2 Amendment to Section 6.1...........................................................................4
2.3 Amendment to Section 8.5...........................................................................4
Article III ACKNOWLEDGEMENT.......................................................................................4
Article IV RATIFICATION...........................................................................................5
Article V MISCELLANEOUS...........................................................................................5
5.1 Successors and Assigns.............................................................................5
5.2 Rights of Third Parties............................................................................5
5.3 Counterparts.......................................................................................5
5.4 Entire Agreement...................................................................................5
5.5 Invalidity.........................................................................................5
5.6 Governing Law......................................................................................5
SCHEDULE 1.......................................................................................................
FIRST AMENDMENT TO
EARNOUT AGREEMENT
This FIRST AMENDMENT TO
EARNOUT AGREEMENT (this "Amendment") executed
effective as of July 1, 2002 (the "Effective Date") is by and among ENERGY
PARTNERS, LTD., a
Delaware corporation ("Energy Partners"), and those
Participants (as such term is defined in the
Earnout Agreement referred to
hereinafter) who or which are signatories to this Amendment, being the owners
and holders of a majority in interest of the Earnout Percentages (as such term
is defined in the
Earnout Agreement referred to hereinafter) and thus sufficient
to cause this Amendment to be binding on all Participants.
WITNESSETH:
WHEREAS, Energy Partners and ▇▇▇▇-▇▇▇▇▇▇▇ Oil Company, a Texas
corporation ("▇▇▇▇-▇▇▇▇▇▇▇"), acting for the benefit of the Participants,
entered into an
Earnout Agreement dated January 15, 2002 (the "Agreement");
WHEREAS, each of the Participants has become a party to the Agreement
by executing and providing to Energy Partners an Adoption Agreement (as such
term is defined in the Agreement);
WHEREAS, it is presently contemplated that ▇▇▇▇-▇▇▇▇▇▇▇ may merge into
its sole shareholder, Energy Partners;
WHEREAS, prior to such merger being contemplated, ▇▇▇▇-▇▇▇▇▇▇▇ proposed
to convey to Energy Partners, subject to obtaining execution of this Amendment
by all necessary parties, an undivided fifty percent (50%) working interest in
each of those of the Initial Ring Fenced Properties (as such term is defined in
the Agreement) referred to in Section 6.1 of the Agreement (prior to giving
effect to this Amendment) other than East Cameron Block 378 (collectively, the
"Deleted Interests") in exchange for an undivided fifty percent (50%) working
interest in each of the Federal Offshore Oil and Gas Leases described in
Schedule 1 hereto (collectively, the "Added Interests"), the entire leasehold
estate in such leases (the "Additional Ring Fenced Properties") being owned, as
of the Effective Date, by Energy Partners as the lessee named in such leases;
WHEREAS, regardless of whether the contemplated merger of ▇▇▇▇-▇▇▇▇▇▇▇
into Energy Partners occurs, it is intended that (i) the Additional Ring Fenced
Properties be considered Ring Fenced Properties for all purposes of the
Agreement, (ii) the Added Interests be considered as within the scope of the
Agreement for all purposes (which Added Interests, absent the merger of
▇▇▇▇-▇▇▇▇▇▇▇ into Energy Partners, may be conveyed to ▇▇▇▇-▇▇▇▇▇▇▇ by Energy
Partners), and (iii) the Deleted Interests and the interests of Energy Partners
in the Additional Ring Fenced Properties in excess of the Added Interests
(collectively with the Deleted Interests, the "Excluded Interests") not be
considered as within the scope of the Agreement for any purpose (which Deleted
Interests, absent the merger of ▇▇▇▇-▇▇▇▇▇▇▇ into Energy Partners, may be
conveyed to Energy Partners by ▇▇▇▇-▇▇▇▇▇▇▇);
WHEREAS, consistent with such intentions as to the Added Interests and
the Excluded Interests, Energy Partners will commit a portion of the $13,000,000
of capital referred to in Section
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6.1 of the Agreement to fund the share (excluding in all cases, including
following a merger of ▇▇▇▇-▇▇▇▇▇▇▇ into Energy Partners, the Excluded Interests)
of the cost of drilling and evaluation of two ▇▇▇▇▇ in addition to the four
▇▇▇▇▇ presently referred to in Section 6.1 of the Agreement attributable to the
interests of Energy Partners and its subsidiaries (as such interests may exist
from time to time) considered within the scope of the Agreement, one such
additional well to be located on each of the Additional Ring Fenced Properties;
and
WHEREAS, Energy Partners and the additional signatories hereto desire
to amend the Agreement in the particulars hereinafter provided and to
acknowledge (i) the Additional Ring Fenced Properties as being Ring Fenced
Properties for all purposes under the Agreement, (ii) the Added Interests as
being considered within the scope of the Agreement for all purposes, and (iii)
the Excluded Interests as not being considered within the scope of the Agreement
for any purpose;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above. As used in this First Amendment to
Earnout
Agreement, each of the terms "Added Interests," "Additional Ring Fenced
Properties," "Agreement," "Amendment," "Deleted Interests," "Effective Date,"
"Energy Partners," "Excluded Interests," and "▇▇▇▇-▇▇▇▇▇▇▇" shall have the
meaning assigned to such term hereinabove.
1.2 Terms Defined in Agreement. Each term defined in the Agreement and
used herein without definition shall have the meaning assigned to such term in
the Agreement, unless herein expressly provided to the contrary.
1.3 References. References in this Amendment to Schedule, Article, or
Section numbers shall be to Schedules, Articles, or Sections of this Amendment,
unless expressly stated to the contrary. References in this Amendment to
"hereby," "herein," "hereinafter," "hereinabove," "hereinbelow," "hereof,"
"hereunder" and words of similar import shall be to this Amendment in its
entirety and not only to the particular Schedule, Exhibit, Article, or Section
in which such reference appears. Except as otherwise indicated, references in
this Amendment to statutes, sections, or regulations are to be construed as
including all statutory or regulatory provisions consolidating, amending,
replacing, succeeding, or supplementing the statute, section, or regulation
referred to. References in this Amendment to "writing" include printing, typing,
lithography, facsimile reproduction, and other means of reproducing words in a
tangible visible form. References in this Amendment to amendments and other
contractual instruments shall be deemed to include all exhibits and appendices
attached thereto and all subsequent amendments and other modifications to such
instruments, but only to the extent such amendments and other modifications are
not prohibited by the terms of this Amendment. References in this Amendment to
Persons include their respective successors and permitted assigns.
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1.4 Articles and Sections. This Amendment, for convenience only, has
been divided into Articles and Sections; and it is understood that the rights
and other legal relations of the parties hereto shall be determined from this
instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.
1.5 Number and Gender. Whenever the context requires, reference herein
made to the single number shall be understood to include the plural; and
likewise, the plural shall be understood to include the singular. Definitions of
terms defined in the singular or plural shall be equally applicable to the
plural or singular, as the case may be, unless otherwise indicated. Words
denoting sex shall be construed to include the masculine, feminine and neuter,
when such construction is appropriate; and specific enumeration shall not
exclude the general but shall be construed as cumulative.
1.6 Incorporation of Schedule. The Schedule attached to this Amendment
is an integral part of this Amendment and is incorporated into this Amendment
for all purposes by this reference.
ARTICLE II
AMENDMENTS
2.1 Amendment to Section 1.2. Section 1.2 of the Agreement is amended
to add thereto, in their respective appropriate places alphabetically, the
following defined terms:
"Added Interests" means, collectively, an undivided
fifty percent (50%) working interest in each of the Additional
Ring Fenced Properties.
"Additional Ring Fenced Properties" means,
collectively, the following:
PROPERTY: ▇▇▇▇▇▇ ISLAND 27
SERIAL NO.: OCS-G 23853
Lease Description: Oil and Gas Lease effective May 1,
2002, between the United States of America, as Lessor, and
Energy Partners, Ltd., as Lessee, covering all of Block 27,
▇▇▇▇▇▇ Island Area, OCS Leasing Map, Louisiana Map No. 4,
containing approximately 5,000.00 acres.
PROPERTY: EAST CAMERON 43
SERIAL NO.: OCS-G 23788
Lease Description: Oil and Gas Lease effective July
1, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, as Lessor, and
Energy Partners, Ltd., as Lessee, covering all of Block 43,
East Cameron Area, OCS Leasing Map, Louisiana Map No. 2,
containing approximately 5,000.00 acres.
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"Excluded Interests" means, collectively, an
undivided fifty percent (50%) working interest in each of
those Initial Ring Fenced Properties referred to as Green
Canyon Blocks 9 and 10 and ▇▇▇▇▇▇ Island Block 376 and the
interests of Energy Partners and its subsidiaries in the
Additional Ring Fenced Properties in excess of the Added
Interests."
2.2 Amendment to Section 6.1. Section 6.1 of the Agreement is replaced
in its entirety with the following:
"6.1 Initial Capital Commitment. Energy Partners
hereby commits $13,000,000 of capital for payment of the share
of the cost of drilling and evaluation of six ▇▇▇▇▇ intended
to establish Earnout Reserves with respect to Green Canyon
Blocks 9 and 10 (two ▇▇▇▇▇), ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ (▇▇▇ ▇▇▇▇),
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ 378 (one well), ▇▇▇▇▇▇ Island Block 27 (one
well) and ▇▇▇▇▇▇ Island Block 376 (one well) attributable to
the interests of Energy Partners and its subsidiaries (as such
interests may exist from time to time) in such properties,
which interests shall include the Additional Interests but
exclude the Excluded Interests. Such funds shall be made
available so as to permit the Drilling Operations for all of
such ▇▇▇▇▇ to be commenced on or before June 30, 2003;
provided, however, the commencement of Drilling Operations
with respect to any or all of such ▇▇▇▇▇ may be delayed at the
election of the Earnout Representative, although no such delay
shall operate to extend the end of the Earnout Term."
2.3 Amendment to Section 8.5. Section 8.5 of the Agreement is replaced
in its entirety with the following:
"8.5 Successors and Assigns. Subject to the
provisions of Section 2.4, the provisions of this Agreement
shall be binding upon and inure to the benefit of the parties
hereto (including the Participants and their respective
successors and permitted assigns); provided, however, that,
should ▇▇▇▇-▇▇▇▇▇▇▇ merge into Energy Partners, only the Added
Interests and the interests of the former ▇▇▇▇-▇▇▇▇▇▇▇ in all
other Ring Fenced Properties shall be considered within the
scope of this Agreement, with the Excluded Interests being
considered as outside the scope of this Agreement for all
purposes, subject, however, to the operation of the provisions
of Section 6.3."
ARTICLE III
ACKNOWLEDGEMENT
Energy Partners and all Participants acknowledge that, as of the
Effective Date, (i) the Additional Ring Fenced Properties shall constitute Ring
Fenced Properties for all purposes of the Agreement, as fully as if such
Additional Ring Fenced Properties had been described in Schedule 2
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to the Agreement at the time of execution of the Agreement, (ii) the Added
Interests shall be considered within the scope of the Agreement for all
purposes, and (iii) the Excluded Interests shall not be considered within the
scope of the Agreement for any purpose.
ARTICLE IV
RATIFICATION
Each of Energy Partners and the Participants does hereby adopt, ratify
and confirm the Agreement, as the same is amended hereby, and acknowledges and
agrees that the Agreement, as amended hereby, is and remains in full force and
effect.
ARTICLE V
MISCELLANEOUS
5.1 Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted pursuant to the Agreement.
5.2 Rights of Third Parties. Except as provided in Section 5.1, all
provisions herein are imposed solely and exclusively for the benefit of the
parties hereto.
5.3 Counterparts. This Amendment may be executed by one or more of the
parties hereto in any number of separate counterparts, and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument and shall be enforceable as of the Effective Date upon the execution
of one or more counterparts hereof by each of the necessary parties hereto. In
this regard, each of the parties hereto acknowledges that a counterpart of this
Amendment containing a set of counterpart execution pages reflecting the
execution of each necessary party hereto shall be sufficient to reflect the
execution of this Amendment by each necessary party hereto and shall constitute
one instrument.
5.4 Entire Agreement. This Amendment constitutes the entire agreement
among the parties hereto with respect to the subject hereof. All prior
understandings, statements and agreements, whether written or oral, relating to
the subject hereof are superseded by this Amendment.
5.5 Invalidity. In the event that any one or more of the provisions
contained in this Amendment shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Amendment.
5.6 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF
DELAWARE, WITHOUT REGARD TO PRINCIPLES OF SUCH LAWS RELATING TO
CONFLICTS OF LAW.
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IN WITNESS WHEREOF, the signatory parties hereto have caused this First
Amendment to
Earnout Agreement to be duly executed and delivered, as of the
Effective Date.
ENERGY PARTNERS, LTD.
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Executive Vice President
[SIGNATURES OF PARTICIPANTS APPEAR ON THE FOLLOWING PAGES]
CORPORATE, TRUST AND
401(K) PROFIT SHARING PLAN
PARTICIPANT'S SIGNATURE PAGE TO
FIRST AMENDMENT TO
EARNOUT AGREEMENT
PARTICIPANT:
Name of Entity:
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(Please Print or Type)
By:
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Printed Name:
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Title:
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LIMITED PARTNERSHIP PARTICIPANT'S SIGNATURE PAGE TO
FIRST AMENDMENT TO EARNOUT AGREEMENT
PARTICIPANT:
Name of Entity:
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(Please Print or Type)
By:
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its General Partner
(Please Print or Type)
By:
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Printed Name:
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Title:
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INDIVIDUAL PARTICIPANT'S SIGNATURE PAGE
TO FIRST AMENDMENT TO EARNOUT AGREEMENT
PARTICIPANT:
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Printed Name:
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SPOUSE'S JOINDER IN EXECUTION OF
FIRST AMENDMENT TO EARNOUT AGREEMENT
The undersigned, the spouse of the Participant named above on this
signature page, who is not otherwise a party to the Earnout Agreement dated
effective as of January 15, 2002, by and between Energy Partners, Ltd. and
▇▇▇▇-▇▇▇▇▇▇▇ Oil Company, acting on behalf of the Participants under such
Earnout Agreement (the "Agreement"), by execution hereof, acknowledges and
agrees that the undersigned has read and understands the First Amendment to
Earnout Agreement and accepts the provisions of the First Amendment to Earnout
Agreement as binding the undersigned's interest, if any, in the Participation
Percentage (as defined in the Agreement) of such Participant.
SPOUSE:
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Printed Name:
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SCHEDULE 1
1. PROPERTY: ▇▇▇▇▇▇ ISLAND 27
SERIAL NO.: OCS-G 23853
Lease Description: Oil and Gas Lease effective May 1, 2002, between the
United States of America, as Lessor, and Energy Partners, Ltd., as
Lessee, covering all of Block 27, ▇▇▇▇▇▇ Island Area, OCS Leasing Map,
Louisiana Map No. 4, containing approximately 5,000.00 acres.
2. PROPERTY: EAST CAMERON 43
SERIAL NO.: OCS-G 23788
Lease Description: Oil and Gas Lease effective July 1, ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, as Lessor, and Energy Partners, Ltd., as
Lessee, covering all of Block 43, East Cameron Area, OCS Leasing Map,
Louisiana Map No. 2, containing approximately 5,000.00 acres.