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EXHIBIT 2.2
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REDEMPTION AGREEMENT
by and between
▇▇▇▇▇▇ OFFSHORE, INC.,
and
FLEXTREND DEVELOPMENT COMPANY, L.L.C.
FEBRUARY 27, 1998
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TABLE OF CONTENTS
1. Transfer of the Properties...............................................1
2. Delivery of Senior Preferred Stock.......................................1
3. Representations and Warranties of the Company............................1
3.1. Organization....................................................1
3.2. Authority and Conflicts.........................................1
3.3. Authorization...................................................2
3.4. Enforceability..................................................2
3.5. Title...........................................................2
3.6. Contracts.......................................................2
3.7. Litigation and Claims...........................................2
3.8. Approvals and Preferential Rights...............................3
3.9. Compliance with Law and Permits.................................3
3.10. Status of Contracts............................................3
3.11. Production Burdens, Taxes, Expenses and Revenues...............3
3.12. Production Balances............................................3
3.13. Expenditure Commitments........................................3
3.14. Payout Balances................................................4
3.15. Qualification..................................................4
3.16. Absence of Certain Changes.....................................4
3.17. Disclaimer.....................................................4
4. Representations and Warranties of Flextrend..............................4
4.1. Organization....................................................4
4.2. Authority and Conflicts.........................................4
4.3. Authorization...................................................5
4.4. Enforceability..................................................5
4.5. Qualification...................................................5
4.6. Senior Preferred Stock..........................................5
5. Closing..................................................................5
5.1. The Closing.....................................................5
5.2. Deliveries by Company at Closing................................6
5.3. Possession......................................................7
5.4. Deliveries by Flextrend At Closing..............................7
6. Assumption by Flextrend..................................................7
7. Production, Proceeds, Expenses and Taxes.................................7
7.1. Division of Substances..........................................7
7.2. Division of Expenses............................................7
7.3. Division of Proceeds............................................8
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7.4. Property Tax Prorations.........................................8
7.5. Adjustments.....................................................8
8. Negative Covenants.......................................................8
9. Survival and Indemnification.............................................9
9.1. Survival and Notice.............................................9
9.2. The Company's Indemnification...................................9
9.3. Flextrend's Indemnification....................................10
10. Further Assurances.....................................................10
11. Notice.................................................................10
12. Assignment.............................................................11
13. Governing Law..........................................................11
14. Expenses and Fees......................................................12
15. Integration............................................................12
16. Waiver or Modification.................................................12
17. Headings...............................................................12
18. Invalid Provisions.....................................................12
19. Multiple Counterparts..................................................13
20. Termination............................................................13
21. Guarantee..............................................................13
22. Certain Definitions....................................................13
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EXHIBITS
Exhibit 1 - Oil and Gas Properties
Exhibit 3.6 - Contracts
Exhibit 3.7 - Litigation and Claims
Exhibit 3.8 - Approvals and Preferential Rights
Exhibit 3.13 - Commitments
Exhibit 3.14 - Payout Balances
Exhibit 21 - Form of Guarantee
ANNEXES
Annex IA - Assignment of Leases and ▇▇▇▇ of Sale [State Filing Form]
Annex IB - Assignment of Leases and ▇▇▇▇ of Sale [MMS Filing Form]
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REDEMPTION AGREEMENT
This Redemption Agreement is made and entered into on this the 27th day
of February, 1998, by and between ▇▇▇▇▇▇ Offshore, Inc., a Delaware corporation
(the "Company"), and Flextrend Development Company, L.L.C., a Delaware limited
liability company ("Flextrend").
1. TRANSFER OF THE PROPERTIES. Subject to the terms and conditions herein set
forth, in consideration of (i) redemption of the 7,500 shares of 9% Senior
Convertible Preferred Stock, par value $0.01 per share, of the Company (the
"Senior Preferred Stock"), owned or beneficially owned by the Partnership and
(ii) all accrued and unpaid dividends on the shares of Senior Preferred Stock
due to the Partnership, the Company agrees to sell, assign, convey and deliver
to Flextrend, and Flextrend agrees to acquire from the Company, effective as of
7:00 a.m. at the location of each of the Oil and Gas Properties on the date of
Closing (as defined in Section 5.1(a)) all of the interest of the Company in
and to the Properties as they exist on such date as such Properties are more
specifically described on Exhibit 1.
2. DELIVERY OF SENIOR PREFERRED STOCK. In consideration for the transfer of
the Properties to Flextrend, Flextrend shall cause the Partnership to agree
that all accrued and unpaid dividends on the shares of Senior Preferred Stock
shall conclusively be deemed to have been satisfied and paid in full, and the
shares of Senior Preferred Stock owned or beneficially owned by the Partnership
shall be redeemed, and Flextrend shall cause the Partnership to deliver to the
Company the shares of Senior Preferred Stock, free and clear of all
Encumbrances.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to Flextrend as follows:
3.1. ORGANIZATION. The Company is a corporation validly existing and
in good standing under the laws of the State of Delaware and is qualified to do
business in and is in good standing under the laws of Texas, Louisiana and
Alabama.
3.2. AUTHORITY AND CONFLICTS. The Company has full corporate power and
authority to carry on its business as presently conducted, to enter into this
Agreement and any agreements contemplated hereby to which it is a party and to
perform its obligations hereunder and thereunder. The execution and delivery of
this Agreement by the Company and any agreement contemplated hereby does not,
and the consummation of the transactions contemplated hereunder and thereunder
shall not, (a) violate or be in conflict with, or require the consent of any
person or entity under, any provision of the Company's governing documents, (b)
conflict with, result in a breach of, constitute a default (or an
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event that with the lapse of time or notice, or both would constitute a
default) under, or require any consent, authorization or approval under any
agreement or instrument to which the Company is a party or to which any of the
Properties or the Company is bound, except as disclosed in Exhibit 3.8, (c)
violate any provision of or require any consent, authorization or approval
under any judgment, decree, judicial or administrative order, award, writ,
injunction, statute, rule or regulation applicable to the Company, or (d)
result in the creation of any Encumbrance on any of the Properties other than
those contemplated by either this Agreement or any related agreements and
documents.
3.3. AUTHORIZATION. The execution and delivery of this Agreement and
the agreements contemplated hereby have been, and the performance of this
Agreement and the agreements contemplated hereby and the transactions
contemplated hereby and thereby shall be at the time required to be performed
hereunder, duly and validly authorized by all requisite corporate action on the
part of the Company.
3.4. ENFORCEABILITY. This Agreement has been duly executed and
delivered on behalf of the Company and constitutes the legal, valid and binding
obligation of the Company enforceable in accordance with its terms, except as
enforceability may be limited by Equitable Limitations. All documents and
instruments required hereunder to be executed and delivered by the Company
shall be duly executed and delivered and shall constitute legal, valid and
binding obligations of the Company enforceable in accordance with their terms,
except as enforceability may be limited by Equitable Limitations.
3.5. TITLE. The Company has (i) Marketable Title to the Oil and Gas
Properties and (ii) defensible title to all of the Properties other than the
Oil and Gas Properties.
3.6. CONTRACTS. Exhibit 3.6 contains a complete list of all contracts
that constitute a part of the Properties or by which the Properties are bound
or subject (collectively, the "Contracts").
3.7. LITIGATION AND CLAIMS. Except as set forth on Exhibit 3.7, no
claim, demand, filing, cause of action, administrative proceeding, lawsuit or
other litigation is pending or, to the best knowledge of the Company,
threatened that could now or hereafter adversely affect the ownership,
development or operation of any of the Properties, other than proceedings
relating to the industry generally and as to which the Company is not a named
party. No written or oral notice from any governmental body or any other person
has been received by the Company (i) claiming any violation or repudiation of
the Oil and Gas Properties or any violation of any law, ordinance, code, rule
or regulation with respect to the Oil and Gas Properties or (ii) requiring, or
calling attention to, the need for any work, repairs, construction, alterations
or installations on or in connection with the Properties with which the Company
has not complied.
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3.8. APPROVALS AND PREFERENTIAL RIGHTS. Exhibit 3.8 contains a
complete and accurate list of all approvals required to be obtained by the
Company for the assignment of the Properties to Flextrend and all preferential
purchase rights that affect the Properties.
3.9. COMPLIANCE WITH LAW AND PERMITS. The Properties have been
operated in compliance with the provisions and requirements of all laws,
orders, regulations, rules and ordinances issued or promulgated by all
governmental authorities having jurisdiction with respect to the Properties,
noncompliance with which reasonably may be expected to have a material adverse
effect on the Properties. All necessary governmental authorizations with regard
to the ownership, development or operation of the Properties have been obtained
where the failure to obtain such authorizations reasonably may be expected to
have a material adverse effect on the Properties, and no material violations
exist in respect of such licenses, permits or authorizations.
3.10. STATUS OF CONTRACTS. (i) To the Company's knowledge, all of the
Contracts and the rights and obligations of the Company thereunder are in full
force and effect, and (ii) the Company is not in breach of or default, or with
the lapse of time or the giving of notice, or both, would be in breach or
default, with respect to any of its obligations thereunder to the extent that
such breaches or defaults reasonably may be expected to have a material adverse
effect on the Properties.
3.11. PRODUCTION BURDENS, TAXES, EXPENSES AND REVENUES. All rents,
royalties, excess royalty, overriding royalty interests and other payments due
under or with respect to the Oil and Gas Properties have been properly and
timely paid; and all ad valorem, property, production, severance and other
taxes based on or measured by the ownership of the Properties or the production
of Substances therefrom, have been properly and timely paid. All expenses due
and payable as of the date hereof under the terms of the Contracts have been
properly and timely paid. All of the proceeds from the sale of Substances have
been properly and timely paid to the Company by the purchasers of production
without suspense or indemnity other than standard division order indemnities.
3.12. PRODUCTION BALANCES. None of the purchasers under any
production sales contracts are entitled to "make-up" or otherwise receive
deliveries of Substances at any time on or after January 1, 1998, without
paying at such time the full contract price therefor. No person is entitled to
receive any portion of the interest of the Company in any Substances or to
receive cash or other payments to "balance" any disproportionate allocation of
Substances under any operating agreement, gas balancing and storage agreement,
gas processing or dehydration agreement, or other similar agreements.
3.13. EXPENDITURE COMMITMENTS. Exhibit 3.13 contains a complete and
accurate list of (i) all authorities for expenditures ("AFE") to drill, rework
or plug and
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abandon ▇▇▇▇▇ or for other capital expenditures pursuant to any of the
Contracts that have been proposed by any person on or after January 1, 1998,
whether or not accepted by the Company or any other person, and (ii) all AFE
and oral or written commitments to drill, rework or plug and abandon ▇▇▇▇▇ or
for other capital expenditures pursuant to any of the Contracts for which all
of the activities anticipated in such AFE or commitments have not been
completed by the date of this Agreement.
3.14. PAYOUT BALANCES. Exhibit 3.14 contains a complete and accurate
list of the status of cost recovery or other "payout" balance, as of the dates
shown in Exhibit 3.14, for each Well that is subject to a reversion or other
adjustment at some level of cost recovery or payout.
3.15. QUALIFICATION. To the extent required with respect to the
ownership, development and operation of the Properties, the Company is properly
qualified by the MMS to own and operate the Properties.
3.16. ABSENCE OF CERTAIN CHANGES. Since January 1, 1998, the
Properties have not suffered any material destruction, damage or loss; provided
that no representation or warranty is made in this Section 3.16 relating to
Viosca ▇▇▇▇▇ Block 817.
3.17. DISCLAIMER. Except as set forth herein, the Properties are
being transferred to Flextrend hereunder "as is", "where is" and "with all
faults" without any representations or warranties of any kind, including,
without limitation, those relating to merchantability, fitness for purpose,
quality, condition, value or otherwise.
4. REPRESENTATIONS AND WARRANTIES OF FLEXTREND. Flextrend represents and
warrants to the Company that:
4.1. ORGANIZATION. Flextrend is a limited liability company validly
existing and in good standing under the laws of the State of Delaware and is
qualified to do business in and is in good standing under the laws of Texas,
Louisiana, and Alabama.
4.2. AUTHORITY AND CONFLICTS. Flextrend has full limited liability
company power and authority to carry on its business as presently conducted, to
enter into this Agreement and any agreements contemplated hereby to which it is
a party, and to perform its obligations hereunder and thereunder. Flextrend has
full corporate or similar power and authority to purchase the Properties on the
terms described in this Agreement. The execution and delivery of this Agreement
by the Company and any agreement contemplated hereby does not, and the
consummation of the transactions contemplated hereunder and thereunder shall
not, (a) violate or be in conflict with, or require the consent of any person
or entity under, any provision of Flextrend's governing documents, (b) conflict
with, result in a breach of, constitute a default (or an event that with the
lapse of time or notice, or both, would constitute a default) under, or require
any consent,
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authorization or approval under any agreement or instrument to which Flextrend
is a party or is bound, (c) violate any provision of or require any consent
(except for qualifying with and filing the appropriate bonds and transfer
documents with the MMS), authorization or approval under any judgment, decree,
judicial or administrative order, award, writ, injunction, statute, rule or
regulation applicable to Flextrend, or (d) result in the creation of any
Encumbrance on the Senior Preferred Stock.
4.3. AUTHORIZATION. The execution and delivery of this Agreement and
the agreements contemplated hereby have been and the performance of this
Agreement and the transactions contemplated thereby shall be at the time
required to be performed hereunder, duly and validly authorized by all
requisite partnership action on the part of Flextrend.
4.4. ENFORCEABILITY. This Agreement has been duly executed and
delivered on behalf of Flextrend and constitutes a legal, valid and binding
obligation of Flextrend enforceable in accordance with its terms, except as
enforceability may be limited by Equitable Limitations. All documents and
instruments required hereunder to be executed and delivered by Flextrend shall
be duly executed and delivered and shall constitute legal, valid and binding
obligations of Flextrend enforceable in accordance with their terms, except as
enforceability may be limited by Equitable Limitations.
4.5. QUALIFICATION. To the extent required with respect to the
ownership, development and operation of the Properties, Flextrend is properly
qualified by the MMS to own and, upon the MMS' acceptance of the required bond
from Flextrend, operate the Properties.
4.6. SENIOR PREFERRED STOCK. The shares of Senior Preferred Stock are
owned by the Partnership free and clear of all Encumbrances.
5. CLOSING.
5.1. THE CLOSING. (a) The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Akin, Gump,
Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ on the later of (i) July 1, 1998 or
(ii) such later date which shall be one business day following the Completion
Date (as defined in the Contribution Agreement); provided that, should the
Completion Date fall on or after October 1, 1998, the Company may, at its
option, elect to close the transactions contemplated by this Agreement on any
date on or after October 1, 1998, with ten (10) days' prior notice to
Flextrend, in which case, the Closing shall be deemed to occur on a date
specified by the Company. Time shall be of the essence in this Agreement.
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(b) The obligation of each of the parties hereto to effect the
transactions contemplated hereby is subject to the satisfaction or waiver of the
following conditions: (i) the representations and warranties made by the other
party in this Agreement shall be true and correct on and as of the date hereof
(unless stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date), but only if the failure to be true would,
after giving effect to any indemnification rights, have a material adverse
effect on the value or operation of the Properties and the other party shall
have performed its covenants and agreements herein to be performed prior to the
Closing, except where the failure to perform such covenants and agreements would
not, individually or in the aggregate, have a material adverse effect on the
value or operation of any of the Properties or the ability of such other party
to consummate the transactions contemplated hereby, and an executive officer of
the other party shall have provided a certificate to such effect, dated the date
hereof; (ii) all material consents and filings required in connection with the
transactions contemplated hereby shall have been obtained or made; and (iii) the
other party shall have made the deliveries required to be made by it pursuant to
this Section 5.
5.2. DELIVERIES BY COMPANY AT CLOSING. The Company shall have
delivered to Flextrend the following instruments, properly executed and
acknowledged:
5.2.1. Counterparts of the following: (i) State Assignment;
and (ii) MMS Assignment.
5.2.2. Such other instruments as are necessary to effectuate
the conveyance of the Properties to Flextrend.
5.2.3. With respect to any leases in which the Company owns
less than all of the operating rights or leasehold interests and is designated
as the operator under the applicable operating or other similar agreement, (i)
letters to all working interest owners in which the Company resigns as the
operator and recommends Flextrend or an affiliate of Flextrend as the successor
operator and (ii) any forms promulgated by the appropriate governmental
authority and necessary for the resignation by the Company as operator, which
forms shall be completed and executed by the Company and shall designate
Flextrend or an affiliate of Flextrend as the operator under the applicable
operating or other similar agreement. With respect to any leases in which the
Company owns all of the leasehold interests or operating rights and is
designated as the operator, any forms promulgated by the appropriate
governmental authority and necessary for the resignation by the Company as
operator, which forms shall be completed and executed by the Company and shall
designate Flextrend or an affiliate of Flextrend as the operator under the
applicable operating or other similar agreement.
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5.3. POSSESSION. At the Closing, the Company shall deliver to
Flextrend at Flextrend's offices all of the Data and shall deliver to Flextrend
possession of the other Properties.
5.4. DELIVERIES BY FLEXTREND AT CLOSING. Against delivery of the
documents and materials described in Section 5.2, Flextrend shall cause the
Partnership to deliver to the Company, free and clear of all Encumbrances, a
duly executed certificate or certificates representing the 7,500 shares of
Senior Preferred Stock owned or beneficially owned by the Partnership, together
with transfer powers endorsed in blank relating to such certificates.
6. ASSUMPTION BY FLEXTREND. At Closing, Flextrend shall assume all of the
costs, obligations and liabilities of the Company relating to the Properties
that arise from or relate to (i) the period beginning on January 1, 1998, (ii)
plugging, abandonment or similar restoration operations relating to any ▇▇▇▇▇,
platforms or other facilities on or related to the Properties necessary or
appropriate to comply with all contracts, and any rules, laws, regulations or
orders of any governmental authority relating to such plugging, abandonment and
similar restoration operations and (iii) that certain (a) Production Payment
Agreement dated September 19, 1995 between the Company and J. ▇▇▇ ▇▇▇▇▇▇▇▇▇
Properties, Inc. and (b) Production Payment Agreement dated September 19, 1995
between the Company and F-W Oil Interests, Inc. Except to the extent provided
in clause (ii) and (iii) of the immediately preceding sentence, Flextrend shall
not assume any costs, obligations or liabilities (including negligence and
strict liability) that relate to the Properties and arise from or relate to the
period ending prior to January 1, 1998; or any obligation of the Company or any
other person to pay and discharge any refunds, including interest and
penalties, if any, that may be imposed by any governmental agency arising from
the sale of the Substances prior to January 1, 1998. Notwithstanding anything
to the contrary herein, the Company expressly reserves and retains any and all
of its rights and interests in and to that certain (a) Exchange Agreement dated
September 19, 1995 between the Company and J. ▇▇▇ ▇▇▇▇▇▇▇▇▇ Properties, Inc.
and (b) Exchange Agreement dated September 19, 1995 between the Company and F-W
Oil Interests, Inc.
7. PRODUCTION, PROCEEDS, EXPENSES AND TAXES.
7.1. DIVISION OF SUBSTANCES. After the Closing, all Substances
produced from the Oil and Gas Properties on or after January 1, 1998 shall be
owned by Flextrend. All Substances produced and sold from the Oil and Gas
Properties prior to January 1, 1998 shall be owned by the Company.
7.2. DIVISION OF EXPENSES. Subject to Section 9 hereof, all costs,
expenses incurred and other expenditures incurred in connection with the
Properties and attributable to the period ending prior to January 1, 1998 shall
be borne by the Company.
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Subject to Section 9 hereof, all costs, expenses and other expenditures
incurred in connection with the Properties and attributable to the period
beginning on January 1, 1998 other than costs and expenses not assumed by
Flextrend under Section 6 shall be borne by Flextrend.
7.3. DIVISION OF PROCEEDS. All net proceeds earned in connection with
the Properties attributable to the period ending prior to January 1, 1998 shall
be deemed to be owned by the Company. All proceeds earned in connection with
the Properties attributable to the period beginning on January 1, 1998 shall be
deemed to be owned by Flextrend.
7.4. PROPERTY TAX PRORATIONS. Real and personal property taxes for
the Properties for the year in which Closing occurs shall be prorated between
Flextrend and the Company as of January 1, 1998. If the actual taxes are not
known as of the Closing Date, the Company's share of such taxes shall be
determined by using (i) the rates and mileages for the year prior to the year
in which the Closing occurs, with appropriate adjustments for any known and
verifiable changes thereto, and (ii) the assessed values for the year in which
Closing occurs.
7.5. ADJUSTMENTS. At the Closing, the Company or Flextrend, as
appropriate, shall make a cash payment to the other to give effect to the
provisions of Section 7 to the extent then determinable and promptly after such
amount is finally determinable, the Company or Flextrend shall make such
payments as may be necessary to make final settlement. If, after the Closing,
the Company receives any proceeds that pursuant to this Section 7 belong to
Flextrend, then the Company shall deliver such proceeds to Flextrend within
five Business Days after receipt of such proceeds. If, after the Closing,
Flextrend receives any proceeds that pursuant to this Section 7 belong to the
Company, then such proceeds shall be returned to the Company within five
Business Days after receipt of such proceeds. If after Closing either party
hereto receives invoices for costs or expenses that pursuant to the terms of
this Section 7 are the responsibility of the other party, the party receiving
such invoices shall immediately deliver them to the other party.
8. NEGATIVE COVENANTS.
Except as Flextrend may otherwise consent in writing, between
the date of this Agreement and the date of Closing and except as contemplated by
this Agreement, the Company shall not:
(a) sell, transfer, assign, convey or otherwise dispose of any
Properties other than (i) oil, gas and other hydrocarbons produced, saved and
sold in the ordinary course of business, and (ii) personal property and
equipment which is replaced with
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property and equipment of comparable or better value and utility in the
ordinary and routine maintenance and operation of the Properties;
(b) create or permit the creation of any Encumbrance on the
Properties, other than Permitted Encumbrances;
(c) grant any preferential right to purchase or similar right
or agree to require the consent of any party to the transfer and assignment of
the Properties to Flextrend;
(d) designate any Person, other than Flextrend, as an
operator of the Properties;
(e) incur or agree to incur any contractual obligation or
liability, whether absolute, contingent, matured or unmatured, which would
constitute an assumed liability by Flextrend as provided in Section 6 above;
provided that, the Company may incur such obligations or liabilities in the
ordinary course of business or in the ordinary and routine maintenance and
operation of the Properties with the consent of Flextrend which consent shall
not be unreasonably withheld or delayed; provided that any such obligation or
liability would not, either individually or in the aggregate, have a material
adverse effect on any of the Properties;
(f) enter into any transaction the effect of which, considered
as a whole, would be to cause the Company's ownership interest in any of the
Working Interests to be altered from its ownership interest as of the date
hereof; or
(g) agree or commit to do any of the foregoing.
9. SURVIVAL AND INDEMNIFICATION.
9.1. SURVIVAL AND NOTICE. The liability of Flextrend and the Company
under each of their respective representations, warranties and covenants
contained in this Agreement shall survive the Closing and execution and
delivery of the assignments contemplated hereby. Any assertion by any party to
this Agreement that any party is liable for the inaccuracy of any
representation or warranty or the breach of any covenant (except in Section
7.5, which shall survive until the closing of the applicable statute of
limitations) must be made in writing and must be given to the other party not
later than the first Business Day occurring eighteen months after the date of
Closing. The notice shall state the facts known to the person providing such
notice that give rise to such notice in sufficient detail to allow the
receiving person to evaluate the claim.
9.2. THE COMPANY'S INDEMNIFICATION. To the extent permitted by law,
the Company, from and after Closing, shall defend, indemnify and hold Flextrend
harmless
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from and against any and all damage, loss, cost, expense, obligation, claim or
liability, including reasonable counsel fees and reasonable expenses of
investigating, defending arid prosecuting litigation (collectively, the
"Liability"), suffered by Flextrend as a result of (i) any cost, liability or
obligation that was not assumed by Flextrend pursuant to Section 6 (other than
Liability resulting from the inaccuracy of any representation or warranty or
the breach of a covenant by Flextrend contained in this Agreement); (ii) the
failure of the Company to comply with the bulk sales laws of Texas or any other
jurisdiction in connection with the transactions provided for in this
Agreement; (iii) any brokers' or finders' fees or commissions arising with
respect to brokers or finders retained or engaged by the Company and resulting
from or relating to the transactions contemplated in this Agreement; (iv) the
inaccuracy of any representation or warranty of the Company set forth in this
Agreement; and (v) the breach of, or failure to perform or satisfy, any of the
covenants of the Company set forth in this Agreement.
9.3. FLEXTREND'S INDEMNIFICATION. To the extent permitted by law,
Flextrend, from and after Closing, shall defend, indemnify and hold the Company
harmless from and against any and all Liability suffered by the Company as a
result of (i) any cost, liability or obligation that was assumed by Flextrend
pursuant to Section 6 (other than Liability resulting from the inaccuracy of
any representation or warranty or the breach of a covenant of the Company
contained in this Agreement); (ii) the failure of Flextrend to comply with the
bulk sales laws of Texas or any other jurisdiction in connection with the
transactions provided for in this Agreement; (iii) any brokers or finders' fees
or commissions arising with respect to brokers or finders retained or engaged
by Flextrend and resulting from or relating to the transactions contemplated in
this Agreement; (iv) the inaccuracy of any representation or warranty of
Flextrend set forth in this Agreement; and (v) the breach of, or failure to
perform or satisfy any of the covenants of Flextrend set forth in this
Agreement.
10. FURTHER ASSURANCES. After the Closing, the Company and Flextrend shall
execute, acknowledge and deliver or cause to be executed, acknowledged and
delivered such instruments and take such other action as may be necessary or
advisable to carry out their obligations under this Agreement and under any
exhibit, document, certificate or other instrument delivered pursuant hereto.
The Company and Flextrend, as applicable, shall cooperate and use their best
efforts to obtain all approvals and consents required by or necessary for the
transactions contemplated by this Agreement that are customarily obtained after
Closing.
11. NOTICE. All notices required or permitted under this Agreement shall be in
writing and, (a) if by air courier, shall be deemed to have been given one
Business Day after the date deposited with a recognized carrier of overnight
mail, with all freight or other charges prepaid, (b) if by telegram, shall be
deemed to have been given one Business Day after delivered to the wire service,
(c) if by telex, provided a confirmation is received and
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such notice is also sent by U.S. mail, shall be deemed to have been given when
such telex is sent, (d) if mailed, shall be deemed to have been given three
Business Days after the date when sent by registered or certified mail, postage
prepaid, and (e) if sent by telecopier, provided a confirmation is received and
such notice is also sent by U.S. mail, shall be deemed to have been given when
such telecopy is sent, addressed as follows:
The Company: ▇▇▇▇▇▇ Offshore, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Tower
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Flextrend: Flextrend Development Company, L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Tower
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as either party hereto may from time to time designate
by notice in writing to the other.
12. ASSIGNMENT. This Agreement and any of the rights, interests or obligations
hereunder may be assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the other party;
provided that, in the case of any assignment as described above, no such
assignment shall relieve the assigning party of any of its obligations under
this Agreement and the non-assigning party shall have the right to seek
remedies directly from the assigning party without seeking the same from the
assignee. Subject to the preceding sentence, this Agreement will be binding
upon and inure to the benefit of, and be enforceable by, the parties and their
respective successors and permitted assigns.
13. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Texas without giving effect to any
principles of conflicts of laws. The validity of the various conveyances
affecting the title to real property shall be governed by and construed in
accordance with the laws of the jurisdiction in which such
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property is situated. The representations and warranties contained in such
conveyances and the remedies available because of a breach of such
representations and warranties shall be governed by and construed in accordance
with the laws of the State of Texas without giving effect to the principles of
conflict of laws.
14. EXPENSES AND FEES. (i) Each of the parties hereto shall pay the fees and
expenses of their respective counsel, accountants and other experts incident to
the negotiation and preparation of this Agreement and consummation of the
transactions contemplated hereby, (ii) Flextrend and the Company shall each pay
one half of (x) the cost of all fees for the recording of transfer documents
described in Section 5.2 and (y) any sales, transfer, stamp or other excise
taxes resulting from the transfer of the Properties to Flextrend, and (iii) all
other costs shall be borne by the party incurring such costs.
15. INTEGRATION. This Agreement, the exhibits hereto and the other agreements
to be entered into by the parties under the provisions of this Agreement set
forth the entire agreement and understanding of the parties in respect of the
transactions contemplated hereby and supersede all prior agreements, prior
arrangements and prior understandings relating to the subject matter hereof.
16. WAIVER OR MODIFICATION. This Agreement may be amended, modified,
superseded or cancelled, and any of the terms, covenants, representations,
warranties or conditions hereof may be waived, only by a written instrument
executed by a duly authorized officer of Flextrend and the Company, or, in the
case of a waiver or consent, by or on behalf of the party or parties waiving
compliance or giving such consent. No waiver by any party of any condition, or
of any breach of any covenant, agreement, representation or warranty contained
in this Agreement, 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
waiver of any other condition or of any breach of any other covenant,
agreement, representation or warranty.
17. HEADINGS. The Section headings contained in this Agreement are for
convenient reference only and shall not in any way affect the meaning or
interpretation of this Agreement.
18. INVALID PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable; this Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof; and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from
this Agreement.
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19. MULTIPLE COUNTERPARTS. This Agreement may be executed in a number of
identical counterparts, each of which for all purposes is to be deemed as
original, and all of which constitute, collectively, one agreement; but in
making proof of this Agreement, it shall not be necessary to produce or account
for more than one such counterpart.
20. TERMINATION. This Agreement may be terminated by mutual written consent of
the parties hereto.
21. GUARANTEE. All obligations of Flextrend hereunder shall be unconditionally
guaranteed by the Partnership pursuant to that certain form of Guarantee
attached hereto as Exhibit 21.
22. CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
"AFEs" shall have the meaning set out in Section 3.13 above.
"Agreement" shall mean this Redemption Agreement, as the same may from
time to time be amended or supplemented.
"Business Day" shall mean a day other than the days that banking
institutions are required or permitted to be closed under the laws of the State
of Texas.
"Closing" shall have the meaning set out in Section 5.1(a) above.
"Contracts" shall have the meaning set out in Section 3.6.
"Contribution Agreement" shall mean the Contribution and Distribution
Agreement made as of the date hereof among DeepTech International Inc., a
Delaware corporation, the Company, DeepFlex Production Services, Inc., a
Delaware corporation, and El Paso Natural Gas Company, a Delaware corporation.
"Data" shall mean all (i) abstracts, title opinions, title reports,
title policies, lease and land files, surveys, analyses, compilations,
correspondence, filings with regulatory agencies, other documents and
instruments that relate to the Properties; (ii) geological, engineering,
exploration, production, and other technical data, magnetic field recordings,
digital processing tapes, field prints, summaries, reports and maps, whether
written or in an electronically reproducible form, that are in the possession or
control of the Company, and relate to the Oil and Gas Properties; and (iii) all
other books, records, files and magnetic tapes containing financial, title or
other information that are in the possession or control of the Company, or any
affiliate of the Company (excluding Flextrend), and in any manner relate to the
Properties; provided that "Data" shall not include any of the foregoing
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to the extent such Data is subject to a licensing agreement that does not
permit access to Flextrend.
"Employee" shall mean any current, former, or retired employee,
consultant or director of the Company whose duties relate or related to the
business conducted with the Properties.
"Encumbrances" shall refer to each and all of the following items:
mortgages, claims, charges, security interests, liens, obligations,
encumbrances, imperfections of title or other matters affecting title, and any
rights of third parties whatsoever.
"Equipment" shall mean all equipment, fixtures, physical facilities or
interests therein of every type and description to the extent that the same are
used or held for use in connection with the ownership, development or operation
of the Properties, whether located on or off the Properties.
"Equitable Limitations" shall mean applicable bankruptcy,
reorganization or moratorium statutes, equitable principles or other similar
laws affecting the rights of creditors generally.
"Laws" shall refer to each and all of the following: domestic
(federal, state or local) or foreign laws, statutes, ordinances, rules,
regulations, decrees or orders.
"Liability" shall have the meaning set out in Section 9.2.
"Liens" shall mean all encumbrances, liens, claim, easements, rights,
agreements, instruments, obligations, burdens or defects.
"Marketable Title" shall mean such title as (i) will enable Flextrend,
as the Company's successor in title, to receive from a particular Oil and Gas
Property at least the Net Revenue Interests for the leases identified in Exhibit
1, without reduction, suspension or termination throughout the term of such
lease, except for any reduction, suspension or termination (a) caused by
Flextrend, any of its affiliates (other than the Company), successors in title
or assigns, (b) caused by orders of the appropriate regulatory agency having
jurisdiction over such Oil and Gas Property that are promulgated after January
1, 1998 and that concern pooling, unitization, communitization or spacing
matters affecting such Oil and Gas Property, (c) or otherwise set forth in
Exhibit 1; (ii) will obligate Flextrend, as the Company's successor in title, to
bear no greater Working Interests other than the Working Interests for each of
the leases identified in Exhibit 1, without increase throughout the term of such
lease, except for any increase (a) caused by Flextrend, any of its affiliates
(other than the Company), successors in title or assigns, (b) that also results
in the Net Revenue Interests associated with such lease being proportionately
increased, (c) caused by contribution requirements provided for under provisions
similar to those
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contained in Article VII.B. of the A.A.P.L. Form 610-1982 Model Form Operating
Agreement, (d) caused by orders of the appropriate regulatory agency having
jurisdiction over an Oil and Gas Property that are promulgated after January 1,
1998, and that concern pooling, unitization, communitization or spacing matters
affecting a particular Oil and Gas Property, or (e) otherwise set forth in
Exhibit 1; and (iii) is free and clear of all Liens except for Permitted
Encumbrances.
"MMS" shall mean the Minerals Management Service.
"MMS Assignment" shall mean both the Assignment of Leases and ▇▇▇▇ of
Sale for filing with the MMS in the form of Annex IB.
"Net Revenue Interest" shall mean that interest in the gross production
of oil and gas and other minerals from the Properties subject to the oil, gas
and mineral leases to which Flextrend will be entitled to by virtue of its
acquisition of the Working Interests after deducting all landowner royalties,
overriding royalties and similar burdens attributable to the Working Interest.
"Oil and Gas Properties" shall mean all properties described in Exhibit
1 whether such properties are in the nature of fee interests, leasehold
interests, working interests, farmout rights, royalty, overriding royalty or
other non-working or carried interests, operating rights or other mineral rights
of every nature and any rights that arise by operation of law or otherwise in
all properties and lands pooled, unitized, communitized or consolidated with
such properties.
"Partnership" shall mean Leviathan Gas Pipeline Partners, L.P. and any
affiliate or subsidiary thereof.
"Payment Rights" shall mean all (i) accounts, instruments and general
intangibles (as such terms are defined in the Uniform Commercial Code of Texas)
attributable to the Properties with respect to any period of time on or after
January 1, 1998 and (ii) liens and security interests in favor of the Company,
whether ▇▇▇▇▇▇ or inchoate, under any law, rule or regulation or under the
Contracts (a) arising from the ownership, operation, sale or other disposition
on or after January 1, 1998 of any of the Properties and (b) arising in favor of
the Company as the operator of certain of the Oil and Gas Properties.
"Permitted Encumbrances" shall mean (i) liens for taxes not yet
delinquent, (ii) lessors' royalties, overriding royalties, division orders,
reversionary interests, and similar burdens that do not operate to reduce the
net revenue interests of the Company in any of the Oil and Gas Properties to
less than the amount set forth therefor in Exhibit 1, (iii) the consents and
rights described in Exhibit 3.8, (iv) the Contracts, (v) except to the extent
any amounts related thereto are due and payable, any mechanic and materialmen,
operator, non-operator, contractor and subcontractor or similar liens created by
the
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Contracts or operation of law, and (vi) the Liens created by the documents
contemplated hereby.
"Person" shall include an individual, a partnership, a limited
liability company, a corporation, a trust, an unincorporated organization, a
government or any department or agency thereof and any other entity.
"Properties" shall mean the Oil and Gas Properties, ▇▇▇▇▇, Substances,
Equipment, Data, Contracts and Payment Rights. "Properties" shall include any
additional interests acquired by Flextrend in a particular operation as a result
of one or more working interest owners electing to go non-consent under the
applicable operating agreements.
"State Assignment" shall mean an Assignment of Leases and ▇▇▇▇ of Sale
for recordation in the appropriate real property records of the appropriate
parishes and/or counties in Louisiana, Alabama and Mississippi where the
Assignment needs to be recorded in the form of Annex IA.
"Substances" shall mean all severed crude oil, natural gas, casinghead
gas, drip gasoline, natural gasoline, petroleum, natural gas liquids,
condensate, products, liquids and other hydrocarbons and other minerals or
materials of every kind and description produced from the Oil and Gas Properties
on or after January 1, 1998.
"▇▇▇▇▇" shall mean all oil, condensate or natural gas ▇▇▇▇▇, water
source ▇▇▇▇▇, and water and other types of injection ▇▇▇▇▇ either located on the
Oil and Gas Properties or held for use in connection with the Oil and Gas
Properties, whether producing, operating, shut-in or temporarily abandoned.
"Working Interest" shall mean the interest that Flextrend will be
acquiring pursuant to the terms of this Agreement upon which will be calculated
Flextrend's proportionate share of the costs, expenses and liabilities
attributable to the oil, gas and mineral leases described herein.
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This Agreement has been executed as of the date first set forth above.
FLEXTREND DEVELOPMENT COMPANY, L.L.C.
By:
----------------------------------
Name:
Title:
▇▇▇▇▇▇ OFFSHORE, INC.
By:
----------------------------------
Name:
Title:
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