EXHIBIT 10.1
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ASSET PURCHASE AGREEMENT
by and among
JUNEAU EXPLORATION, L.P.
and
CONTANGO OIL & GAS COMPANY
Dated as of January 4, 2002
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT dated as of January 4, 2002 (this
"Agreement"), is entered into by and among Juneau Exploration, L.P., a Texas
limited partnership ("Seller") and Contango Oil & Gas Company, a Delaware
corporation ("Buyer") (collectively, the "Parties").
RECITALS
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, all of Seller's oil and gas interests and related assets identified
in Exhibits "▇," "▇" and "C" attached hereto and made a part hereof, all on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1 Assets. On the terms and subject to the conditions set forth in
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this Agreement, at the Closings (as defined herein in Section 6.1) Seller agrees
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to sell, transfer and assign to Buyer, and Buyer shall purchase and receive, all
of Seller's right, title and interest in and to the following tangible and
intangible assets:
(a) Leases. The oil and gas leases described in Exhibit "A" and the
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lands covered thereby ("First Leases," "Second Leases" and "Third Leases,"
collectively sometimes hereinafter referred to as the "Leases");
(b) ▇▇▇▇▇. All oil and/or gas ▇▇▇▇▇, equipment, machinery, tanks,
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pipelines and other appurtenances and all other tangible property located
thereon, thereunder or associated therewith or used in connection with the
ownership or operation of the Leases and the production of oil and/or gas
therefrom, including, without limitation, all ▇▇▇▇▇, whether producing,
operating, shut-in or temporarily abandoned, located on the lands covered by the
Leases described in Exhibit "B" ("First ▇▇▇▇▇," "Second ▇▇▇▇▇" and "Third
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▇▇▇▇▇," collectively sometimes hereinafter referred to as the "▇▇▇▇▇");
(c) Contracts. The agreements described in Exhibit "C" (the
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"Contracts"), to the extent such agreements relate to the Leases; and
(d) Other Assets. All tangible and intangible assets of Seller
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necessary to or used primarily in connection with the Leases, ▇▇▇▇▇ and
Contracts, whether presently existing or arising hereafter, including without
limitation, any and all rights arising under or relating to the Exploration and
Operations Agreements described in Exhibit "C" (the "Other Assets").
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First Leases and First ▇▇▇▇▇ together with the related Contracts and
related Other Assets (collectively, the "First Tranche"), Second Leases and
Second ▇▇▇▇▇ together with the related
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Contracts and related Other Assets (collectively, the "Second Tranche") and
Third Leases and Third ▇▇▇▇▇ together with the related Contracts and related
Other Assets (collectively, the "Third Tranche"); and First Tranche, Second
Tranche and Third Tranche collectively hereinafter referred to as the "Assets."
Section 1.2 Excluded Assets. The Assets do not include (the "Excluded
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Assets"), and Seller shall not sell, transfer or assign to Buyer, and Buyer
shall not acquire, or make any payments or otherwise discharge any liability or
obligation of Seller relating to, any of the following:
(a) accounts receivable relating to any operation or ownership of the
Assets prior to (i) the First Effective Time (as defined in Section 6.1 herein)
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as to the First Tranche of Assets, (ii) the Second Effective Time (as defined in
Section 6.1 herein) as to the Second Tranche of Assets and (iii) the Third
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Effective Time (as defined in Section 6.1 herein) as to the Third Tranche of
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Assets;
(b) oil and liquid hydrocarbon inventories in tanks above the pipeline
connections as of the First Effective Time (relative to the First Tranche of
Assets), the Second Effective Time (relative to the Second Tranche of Assets)
and the Third Effective Time (relative to the Third Tranche of Assets); and
(c) gas produced through designated sales meters prior to the First
Effective Time (as to the First Tranche of Assets), the Second Effective Time
(as to the Second Tranche of Assets) and the Third Effective Time (as to the
Third Tranche of Assets).
Section 1.3 Purchase Price. As consideration for the sale of the Assets,
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the aggregate purchase price to be paid by Buyer to Seller shall be Fourteen
Million Six Hundred Seventy-Three Thousand Sixty-Six Dollars ($14,673,066) (the
"Purchase Price"), subject to adjustment as set forth in Sections 1.4 and 1.5
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herein, allocated and payable as follows in each case by wire transfer of
immediately available funds to a bank account designated by Seller:
(a) Eleven Million Sixty-One Thousand Twenty-Six Dollars ($11,061,026)
of the Purchase Price shall be payable by Buyer to Seller in cash on the First
Closing (as defined in Section 6.1 herein) for the purchase of the First Tranche
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of Assets effective as of the First Effective Time (as defined in Section 6.1
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herein);
(b) Two Million Six Hundred Ninety-Four Thousand Sixty-Eight Dollars
($2,694,068) of the Purchase Price shall be payable by Buyer to Seller in cash
on the Second Closing (as defined in Section 6.1 herein) for the purchase of the
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Second Tranche of Assets effective as of the Second Effective Time (as defined
in Section 6.1 herein); and
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(c) Nine Hundred Seventeen Thousand Nine Hundred Seventy-Two Dollars
($917,972) of the Purchase Price shall be payable by Buyer to Seller in cash on
the Third Closing (as defined in Section 6.1 herein) for the purchase of the
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Third Tranche of Assets effective as of the Third Effective Time (as defined in
Section 6.1 herein).
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Section 1.4 Adjustments to Purchase Price. Notice of any adjustments to the
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portion of the Purchase Price otherwise payable at any Closing (as defined in
Section 6.1 herein) shall be
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delivered, as between the Parties, no later than two (2) business days prior to
such Closing in order to be considered at such Closing. Any notice of adjustment
not timely provided, together with any other adjustment will be made in the
final adjustment as set forth in Section 6.5 herein. The Purchase Price shall be
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adjusted as follows with respect to the First Tranche, Second Tranche and/or
Third Tranche of Assets, if and as applicable:
(a) The Purchase Price shall be increased by the following:
(1) an amount equal to paid ad valorem, property, production,
excise, severance and similar taxes and assessments based upon or measured by
the ownership of the Assets that are attributable to periods of time from and
after the First Effective Time, Second Effective Time and/or Third Effective
Time of the First Tranche, Second Tranche and/or Third Tranche of Assets,
respectively, if and as applicable, which amounts shall, to the extent not
actually assessed, be computed based on such taxes and assessments for the
preceding tax year (such amount to be prorated for the period of Seller's and
Buyer's ownership before and from and after the First Effective Time, Second
Effective Time and/or Third Effective Time, as applicable);
(2) an amount equal to all expenses attributable to the Assets
that are paid by or on behalf of Seller that are, in accordance with generally
accepted accounting principles, attributable to the periods from and after the
First Effective Time (relative to the First Tranche of Assets), Second Effective
Time (relative to the Second Tranche of Assets) and/or Third Effective Time
(relative to the Third Tranche of Assets), if and as applicable; and
(3) any adjustment(s) to the Purchase Price pursuant to Section
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1.5 herein.
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(b) The Purchase Price shall be reduced by the following:
(1) the amount of the proceeds received by Seller attributable to
the Assets that are, in accordance with generally accepted accounting
principles, attributable to the periods of time from and after the First
Effective Time, Second Effective Time and/or Third Effective Time of the First
Tranche, Second Tranche and/or Third Tranche of Assets, respectively, if and as
applicable;
(2) an amount equal to unpaid ad valorem, property, production,
excise, severance and similar taxes and assessments based upon or measured by
the ownership of the Assets that are attributable to periods of time prior to
the First Effective Time, Second Effective Time and/or Third Effective Time of
the First Tranche, Second Tranche and/or Third Tranche of Assets, respectively,
if and as applicable, which amounts shall, to the extent not actually assessed,
be computed based on such taxes and assessments for the preceding tax year (such
amount to be prorated for the period of Seller's and Buyer's ownership before
and after the First Effective Time, Second Effective Time and/or Third Effective
Time, as applicable);
(3) an amount equal to all expenses attributable to the Assets
that are paid by or on behalf of Buyer that are, in accordance with generally
accepted accounting principles, attributable to any periods prior to the First
Effective Time (relative to the First
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Tranche of Assets), Second Effective Time (relative to the Second Tranche of
Assets) and/or Third Effective Time (relative to the Third Tranche of Assets),
if and as applicable; and
(4) any adjustment(s) to the Purchase Price pursuant to Section
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1.5 herein.
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Section 1.5 Changes to the Purchase Price Allocable to the Second Tranche
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or the Third Tranche of Assets. The portion of the Purchase Price payable for
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the Second Tranche and/or the Third Tranche of Assets shall be increased or
decreased, as applicable, at or prior to the Second Closing and/or the Third
Closing, as the case may be, because of one or more of the following events:
(a) A change in oil and/or gas commodity prices, as determined by
reference to the NYMEX as of the date hereof as compared to the NYMEX as of the
Second Effective Date and Third Effective Date, respectively;
(b) A change in reserves with respect to any of the Second ▇▇▇▇▇ or
the Third ▇▇▇▇▇ as determined by Von Gonten & Co; provided, that (i) the change
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of events which causes the increase or decrease is unrelated to the price of oil
or gas, and (ii) such increase or decrease in value is determined by comparing
the reserve report produced by Von Gonten attached as Exhibit "D" (the "Reserve
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Report") to a revised reserve report produced by Von Gonten, and (iii) such
decrease in value is not attributable to production from the Second ▇▇▇▇▇ or
Third ▇▇▇▇▇ from January 1, 2002 to the Second Effective Time or Third Effective
Time, respectively.
Section 1.6 Assumption of Liabilities. As additional consideration for the
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sale of the Assets, if the Closings occur, Buyer shall assume the following
obligations and liabilities ("Assumed Liabilities"):
(a) all obligations and liabilities relating to the ownership or
use of the Assets that arise and are attributable to occurrences from and after
the First Effective Time (as to the First Tranche), the Second Effective Time
(as to the Second Tranche) and/or the Third Effective Time (as to the Third
Tranche), as applicable (except for (1) any liability or obligation that arises
under contracts or agreements, or that arises from or is the subject of a breach
by Seller of any of its covenants, representations or warranties hereunder, none
of which shall be Assumed Liabilities; and (2) any payment obligation associated
with an agreement for the supply of materials, goods or services, which shall be
an Assumed Liability only to the extent that such materials, goods or services
with respect to which such payment is due is received by Buyer and relates to
operation of the Assets from and after the First Effective Time (as to the First
Tranche of Assets), the Second Effective Time (as to the Second Tranche of
Assets) and/or the Third Effective Time (as to the Third Tranche of Assets), as
the case may be);
(b) all obligations and liabilities relating to the ownership or
use of the Assets that arise from and after the First Effective Time (as to the
First Tranche), the Second Effective Time (as to the Second Tranche) and/or the
Third Effective Time (as to the Third Tranche), as applicable, for site
reclamation and plugging and abandonment of all ▇▇▇▇▇. Buyer recognizes
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and specifically assumes the obligation to properly plug and abandon all ▇▇▇▇▇
and remove all personal property associated with the Assets when appropriate;
(c) all obligations and liabilities (including, without limitation,
all liabilities and obligations under present and future federal, state and
local laws relating to the protection of health or the environment) in respect
of the condition of the Assets as of the Closings relating to such Assets
(including, without limitation, conditions resulting from, and remediation of,
Environmental Matters occurring on or before the respective Closings), other
than any condition that is the subject of a breach by Seller of any of its
representations and warranties under this Agreement.
As used herein, the term "Environmental Matters" shall mean any pollution,
contamination, degradation, damage or injury, caused by, related to or arising
from or in connection with the generation, use, handling, treatment,
remediation, storage, transportation, disposal, discharge, release or emission
of any Hazardous Materials by, in, on or underlying the Assets. As used in the
preceding definition, "Hazardous Materials" means any asbestos material,
pollutants, contaminants, hazardous, corrosive or toxic substances, special
waste or waste of any kind, and any other material or substance the storage,
manufacture, disposal, treatment, generation, use, transportation, remediation
or release into the environment of which is prohibited, controlled, regulated or
licensed under Environmental Laws. As used herein, "Environmental Laws" means
all laws, statutes, ordinances, rules, regulations, orders or determinations of
any governmental authority pertaining to human health or protection of the
environment in effect now or in the future in the jurisdictions in which the
respective Lease or lands pooled or unitized with such Lease are located.
Section 1.7 Retained Liabilities. Seller shall retain, and Buyer shall not
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acquire or make any payments or otherwise discharge any liability or obligation
of Seller not specifically enumerated as an Assumed Liability at Section 1.6
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herein ("Retained Liabilities") including the following:
(a) all liabilities and obligations relating to or arising out of
personal injury claims and accounts payable affecting the ownership of the
Assets that arose prior to, or are attributable to periods of times or acts or
omissions prior to, the First Effective Time (as to the First Tranche), the
Second Effective Time (as to the Second Tranche) and/or the Third Effective Time
(as to the Third Tranche), as the case may be, of the respective Closings (other
than those liabilities and obligations referred to in clauses (b) and (c) of the
definition of Assumed Liabilities);
(b) those liabilities and obligations that result in a credit or
payment to Seller under Section 6.5 herein;
(c) all liabilities and obligations incurred in violation of, or
arising out of or that are the subject matter of a breach of, the covenants,
representations or warranties of Seller under this Agreement;
(d) all liabilities and obligations under contracts and agreements to
which the Assets are subject on the date of this Agreement other than the
Contracts;
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(e) all liabilities and obligations that result from a breach by
Seller with respect to the Assets as regards preferential rights, consents to
assign and/or notices of transfers.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents, warrants and covenants to Buyer that:
Section 2.1 Organization and Good Standing. Seller is a limited partnership
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duly organized, validly existing and in good standing under the laws of the
State of Texas. Seller has the power and authority to own its properties and to
carry on its business as now conducted and to enter into and to carry out the
terms of this Agreement. Seller does not have any subsidiaries.
Section 2.2 Authorization. Seller has the requisite power and authority, to
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execute, deliver and perform its obligations under this Agreement. The
execution, delivery and performance by Seller of this Agreement has been duly
authorized by all necessary action of Seller, and no other act or proceeding on
the part of Seller or its general partner is necessary to authorize the
execution, delivery or performance by Seller of this Agreement.
Section 2.3 Purchased Assets; Defensible Title. Seller owns Defensible
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Title (as such term is defined below) to all of the Assets. Seller has the right
to convey, and (a) after the First Closing, Seller will have conveyed, and Buyer
will be vested with, Defensible Title to the First Tranche of Assets; and (b)
after the Second Closing, Seller will have conveyed, and Buyer will be vested
with, Defensible Title to the Second Tranche of Assets; and (c) after the Third
Closing, Seller will have conveyed, and Buyer will be vested with, Defensible
Title to the Third Tranche of Assets. "Defensible Title" shall mean, with
respect to Seller, such title, free and clear of all liens and encumbrances and
defects, other than the Contracts, as will (a) entitle Buyer to receive a
percentage of the oil and gas produced and saved from the ▇▇▇▇▇ that is not less
than the net revenue interest of Seller shown on Exhibit "B," without reduction
throughout the productive life of the ▇▇▇▇▇ except as set forth in Exhibit "B,"
and (b) obligate Buyer to bear and pay a portion of the costs and expenses of
operating the ▇▇▇▇▇ that is not greater than the working interest of Seller
shown on Exhibit "B," without increase throughout the productive life of the
▇▇▇▇▇ except as set forth in Exhibit "B."
Section 2.4 Consents and Approvals. No consent, approval, order or
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authorization of, or registration, declaration or filing with, any Person is
required to be made or obtained by Seller in connection with the authorization,
execution, delivery and performance by Seller of this Agreement and the
transactions contemplated hereby, other than those set forth on Schedule 2.4,
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which will be obtained as soon as practicable following the date hereof, but in
any event prior to the First Closing.
Section 2.5 No Violation. The execution, delivery and performance by Seller
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of this Agreement and the consummation of the transactions contemplated herein,
will not: (a) result in the breach of any of the terms or conditions of, or
constitute a default under, or in any manner release any party thereto from any
obligation under, any mortgage, note, bond, indenture, contract, agreement,
license or other instrument or obligation of any kind or nature by which
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Seller may be bound or affected; (b) violate any law, order, writ, injunction,
rule, regulation, statute or decree of any court, administrative agency, or
Governmental Authority (as defined in Section 7.2 hereof); (c) result in the
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creation or imposition of any liens, mortgages, charges, security interests,
pledges or other encumbrances or adverse claims ("Liens") upon any of the
Assets; or (d) violate any provision of the organizational documents of Seller.
Section 2.6 Litigation. To the best of Seller's knowledge, there are no
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claims, counterclaims, actions, suits, orders, proceedings (arbitration or
otherwise) or investigations pending or threatened against or involving Seller
or the Assets, or relating to the transactions contemplated hereby, at law or in
equity in any court or agency, or before or by any Governmental Authority or
arbitral tribunal that, if granted, could be reasonably expected to have a
Materially Adverse Affect (as hereinafter defined). "Materially Adverse Effect"
shall mean a material adverse effect on the prospects, value, use, operation or
ownership of the First Tranche, the Second Tranche and the Third Tranche of the
Assets, taken not as a whole but individually as to each tranche.
Section 2.7 No Brokers or Finders. Seller has not retained any broker or
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finder, made any statement or representation to any Person which would entitle
such Person to, or agreed to pay, any broker's, finder's or similar fees or
commissions in connection with the transactions contemplated by this Agreement.
Section 2.8 Contracts; Leases. Complete and correct copies of the
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Contracts and Leases have been furnished to Buyer. To the best of Seller's
knowledge, Seller is not in default under any order, judgment, Contract, Lease,
license or instrument, which default or potential default might reasonably be
expected to have a Materially Adverse Effect. To the best of Seller's knowledge,
all of the Contracts and Leases are in full force and effect, and Seller is not
in default or material breach and no event has occurred which, with the giving
of notice or the passage of time or both, would constitute a default by Seller
under any Contracts or Leases. Schedule 2.8(a) identifies all of those Contracts
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and Leases that may not be assigned to Buyer without the consent, approval,
notification or waiver of any Person. Schedule 2.8(b) identifies those Contracts
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and Leases that are subject to a preferential right to purchase obligation.
Seller has obtained or will obtain as soon as practicable following the date
hereof (but in any event prior to the First Closing) such consents, approvals
and waivers of the preferential right to purchase provisions.
Section 2.9 Environmental Matters. To Seller's knowledge, there are no
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notices, claims, suits, actions or proceedings (including government
investigations and audits) now pending or threatened against Seller relating to
Environmental Matters with respect to any of the Assets, and Seller is not aware
of any reasonable basis for believing that any such claims for Environmental
Matters may be asserted against Seller with respect to the Assets.
Section 2.10 Disclosure. No representation, warranty or statement made by
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Seller in this Agreement or any of the exhibits or schedules hereto contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading. To the knowledge of Seller, there is no material fact that has not
been
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disclosed to Buyer that might reasonably be expected to have a Materially
Adverse Effect on the Assets or Seller's ability to consummate the transactions
contemplated hereby.
Section 2.11 Condition of the Assets. EXCEPT AS EXPRESSLY PROVIDED IN THIS
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AGREEMENT TO THE CONTRARY, BUYER UNDERSTANDS AND AGREES THAT THE ASSETS ARE SOLD
"AS IS" AND "WHERE IS," WITH ALL FAULTS AND DEFECTS, WITHOUT COVENANT,
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED; AND WITHOUT LIMITATION OF THE
GENERALITY OF THE IMMEDIATELY PRECEDING CLAUSE, SELLER EXPRESSLY DISCLAIMS ANY
IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, QUALITY,
CONDITION OR MERCHANTABILITY OF THE ASSETS.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents, warrants and covenants to Seller that:
Section 3.1 Corporate Organization. Buyer is a corporation duly organized,
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validly existing and in good standing under the laws of the State of Delaware.
Section 3.2 Authorization. The execution and delivery of this Agreement,
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the performance by Buyer of its obligations hereunder and the consummation by
Buyer of the transactions contemplated hereby have been duly authorized by all
necessary organizational action and no other act or proceeding on the part of
Buyer is necessary. Buyer has full power and authority to enter into, execute
and deliver this Agreement and to perform its obligations hereunder.
Section 3.3 No Violation. The execution, delivery and performance by Buyer
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of this Agreement and the consummation of the transactions contemplated herein
do not and will not: (a) result in the breach of any of the terms or conditions
of, or constitute a default under, or in any manner release any party thereto
from any obligation under, any mortgage, note, bond, indenture, contract,
agreement, license or other instrument or obligation of any kind or nature by
which Buyer may be bound or affected; (b) violate any law, order, writ,
injunction, rule, regulation, statute or decree of any court, administrative
agency, or Governmental Authority; or (c) violate any provision of the
Certificate of Incorporation or by-laws of Buyer.
Section 3.4 Consents and Approvals. No consent, approval or authorization
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of, or declaration, filing or registration with, any Person is required to be
made or obtained by Buyer in connection with the execution and delivery of this
Agreement by Buyer, the performance by Buyer of its obligations hereunder, and
the consummation by it of the transactions contemplated hereby.
Section 3.5 No Brokers or Finders. Buyer has not retained any broker or
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finder, made any statement or representation to any Person which would entitle
such Person to, or agreed to pay, any broker's, finder's or similar fees or
commissions in connection with transactions contemplated by this Agreement.
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Section 3.6 Knowledge of the Business. Buyer is directly and actively
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engaged in the business of exploration for and production of oil and gas. Buyer
is a sophisticated investor in oil and gas properties and has knowledge and
expertise in financial and business matters relating to the evaluation and
purchase of producing oil and gas properties. Buyer is acquiring the interests
to be conveyed herein for investment purposes and not for distribution in
violation of any applicable securities laws.
ARTICLE IV
INDEMNIFICATION
Section 4.1 Indemnification by Seller. If the Closings occur, Seller
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hereby agrees to indemnify, defend and save Buyer and its officers, directors,
employees, agents and Affiliates (all or each, a "Buyer Indemnified Party")
harmless from and against (a) any and all liabilities (whether contingent, fixed
or unfixed, liquidated or unliquidated, or otherwise), obligations,
deficiencies, demands, claims, suits, actions, or causes of action, assessments,
losses, costs, expenses, interest, fines, penalties, and damages (including
reasonable fees and expenses of attorneys, accountants and other experts)
(individually and collectively, the "Losses") suffered, sustained or incurred by
any Buyer Indemnified Party relating to, resulting from, arising out of or
otherwise by virtue of any misrepresentation or breach of the representations or
warranties of Seller contained in this Agreement or in any exhibit or schedule
hereto; (b) the failure of Seller to perform any of its covenants or obligations
contained in this Agreement; (c) the liabilities and obligations (other than
Assumed Liabilities) relating to or arising out of the ownership of the Assets
and attributable to any act, omission, occurrence or event occurring prior to
the First Effective Time as to the First Tranche of Assets, prior to the Second
Effective Time as to the Second Tranche of Assets and prior to the Third
Effective Time as to the Third Tranche of Assets; and (d) any and all Losses
arising directly or indirectly out of the Retained Liabilities.
Section 4.2 Indemnification by Buyer. If the Closings occur, Buyer agrees
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to indemnify, defend and save Seller and its Affiliates, and their respective
officers, directors, employees and agents (each, a "Seller Indemnified Party")
forever harmless from and against any and all Losses sustained or incurred by
any Seller Indemnified Party relating to, resulting from, arising out of or
otherwise by virtue of: (a) any misrepresentation in or breach of the
representations and warranties of Buyer contained in this Agreement or in any
schedule or exhibit hereto; (b) the failure of Buyer to perform any of its
covenants or obligations contained in this Agreement or in any exhibit or
schedule hereto; (c) the liabilities and obligations (other than Retained
Liabilities) relating to or arising out of ownership of the Assets and
attributable to any act, omission, occurrence or event occurring after the First
Effective Time as to the First Tranche of Assets, after the Second Effective
Time as to the Second Tranche of Assets and after the Third Effective Time as to
the Third Tranche of Assets; (d) all liabilities and obligations (including,
without limitation, all liabilities and obligations under present and future
federal, state and local laws relating to the protection of health or the
environment) in respect of Environmental Matters occurring before or after the
respective Closings, other than any condition that is the subject of a breach by
Seller or its representations and warranties under this Agreement and (e) all
Assumed Liabilities.
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Section 4.3 Indemnification Procedure. Any party seeking indemnification
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pursuant to this Article IV shall promptly provide written notice of any claim
to the party from which it seeks indemnification within a reasonable period of
time. The indemnifying Person, if it so elects, shall assume and control the
defense thereof (and shall consult with the indemnified person with respect
thereto), including the employment of counsel reasonably satisfactory to the
indemnified person within ten (10) business days after receipt of the notice
with respect thereto, and the payment of all necessary expenses; provided that
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as a condition precedent to the indemnifying person's right to assume control of
such defense, it must first enter into an agreement with the indemnified person
(in form and substance reasonably satisfactory to the indemnified person)
pursuant to which the indemnifying person agrees to be fully responsible for all
losses relating to such claim and unconditionally guarantees the payment and
performance of any liability or obligation which may arise with respect to such
claim or the facts giving rise to such claim for indemnification; provided
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further that the indemnifying person shall not have the right to assume control
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of such defense if the claim which the indemnifying person seeks to assume
control of (i) seeks non-monetary relief or (ii) involves criminal or
quasi-criminal allegations; and provided further that (i) the indemnifying
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person shall not consent to the imposition of any injunction against the
indemnified person without the written consent of the indemnified person, (ii)
the indemnifying person shall permit the indemnified person to participate in
such conduct or settlement through counsel chosen by the indemnified person, but
the fees and expenses of such counsel shall be borne by the indemnified person
(except as provided below), and (iii) upon a final determination of such action,
suit or proceeding, the indemnifying person shall promptly reimburse to the full
extent required under this Article IV the indemnified person for the full amount
of any Loss resulting from such action, suit or proceeding and all reasonable
and related expenses incurred by the indemnified person, other than fees and
expenses of counsel for the indemnified person incurred after the assumption of
the conduct and control of such action, suit or proceeding by the indemnifying
person (except as provided below). If the indemnifying person is permitted to
assume and control the defense and elects to do so, the indemnified person shall
have the right to employ counsel separate from counsel employed by the
indemnifying person in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel employed by the indemnified
person shall be at the expense of the indemnified person unless (i) the
employment thereof has been specifically authorized by the indemnifying person
in writing, (ii) the indemnifying person has been advised by counsel that a
reasonable likelihood exists of a conflict of interest between the indemnifying
person and the indemnified person, (iii) the indemnifying person has failed to
assume the defense and employ counsel; or (iv) the indemnified person has
reasonably determined that an adverse outcome could have a material adverse
effect on its business reputation or could reasonably be expected to have a
materially adverse precedential effect; in which case the fees and expenses of
the indemnified person's counsel shall be paid by the indemnifying person. In
the event the indemnifying person fails to elect to defend such claim in
accordance with the foregoing, then the indemnified person may elect, but shall
not be required, to defend against or settle such claim as it sees fit, provided
that any settlement of such claim shall require the consent of the indemnifying
person, which consent shall not be unreasonably withheld.
Section 4.4 Failure to Give Timely Notice. A failure by an indemnified
-----------------------------
person to give timely, complete or accurate notice as provided in Section 4.3
-----------
will not affect the rights or
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obligations of any party hereunder except and only to the extent that such
failure results in actual prejudice to the indemnifying person.
ARTICLE V
CLOSING CONDITIONS
Section 5.1 Buyer's Conditions to Closings. The obligation of Buyer to
------------------------------
proceed with the Closings contemplated hereby is subject to the satisfaction on
or prior to the Closings of all of the following conditions:
(a) Representations and Warranties. The representations and warranties
------------------------------
of Seller contained in Article II of this Agreement shall be true and correct in
all material respects with respect to the Assets (covered by such closing).
(b) Board Approval. Buyer shall have received authorization to acquire
--------------
the Assets (covered by such closing) from its Board of Directors.
(c) Due Diligence. Buyer shall have reviewed and approved all
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documents and information, including title and production records, for the
Assets (covered by such closing) relating thereto.
ARTICLE VI
CLOSINGS
Section 6.1 Closings. The transactions that are the subject of this
--------
Agreement shall be consummated at three closings (the "Closings").
(a) The first closing shall be held at the offices of Seller in
Magnolia, Texas as soon as possible but no later than January 31, 2002 (the
"First Closing"). The ownership of the First Tranche of Assets shall be
transferred from Seller to Buyer at the First Closing but effective as of 7:00
a.m., Central Time, January 1, 2002 (the "First Effective Time").
(b) The second closing shall be held at the offices of Seller in
Magnolia, Texas on April 1, 2002 (the "Second Closing"). The ownership of the
Second Tranche of Assets shall be transferred from Seller to Buyer at the Second
Closing but effective as of 7:00 a.m., Central Time, April 1, 2002 (the "Second
Effective Time").
(c) The third closing shall be held at the offices of Seller in
Magnolia, Texas on July 1, ▇▇▇▇ (▇▇▇ "▇▇▇▇▇ ▇▇▇▇▇▇▇"). The ownership of the
Second Tranche of Assets shall be transferred from Seller to Buyer at the Third
Closing effective as of 7:00 a.m., Central Time, July 1, 2002 (the "Third
Effective Time").
Section 6.2 Deliveries by Seller.
--------------------
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(a) At the First Closing, pursuant to this Agreement, Seller shall
execute and deliver to Buyer: (i) an Assignment and ▇▇▇▇ of Sale (in the form
attached hereto as Schedule 6.2) transferring to Buyer the First Tranche of
------------
Assets; and (ii) such other documents and instruments as Buyer may reasonably
require.
(b) At the Second Closing, pursuant to this Agreement, Seller shall
execute and deliver to Buyer: (i) an Assignment and ▇▇▇▇ of Sale transferring to
Buyer the Second Tranche of Assets; and (ii) such other documents and
instruments as Buyer may reasonably require.
(c) At the Third Closing, pursuant to this Agreement, Seller shall
execute and deliver to Buyer: (i) an Assignment and ▇▇▇▇ of Sale transferring to
Buyer the Third Tranche of Assets; and (ii) such other documents and instruments
as Buyer may reasonably require.
All such other documents and instruments delivered to Buyer, as applicable,
shall be in form and substance reasonably satisfactory to Buyer.
Section 6.3 Deliveries by Buyer.
-------------------
(a) At the First Closing, Buyer shall deliver to Seller: (i) a wire
transfer of immediately available funds for the portion of the Purchase Price
(as set forth in Section 1.3 hereof) payable at the First Closing and (ii) such
-----------
other documents and instruments as Seller may reasonably require in order to
effectuate the transactions which are the subject of this Agreement.
(b) At the Second Closing, Buyer shall deliver to Seller: (i) a wire
transfer of immediately available funds for the portion of the Purchase Price
(as set forth in Section 1.3 hereof) payable at the Second Closing and (ii) such
-----------
other documents and instruments as Seller may reasonably require in order to
effectuate the transactions which are the subject of this Agreement.
(c) At the Third Closing, Buyer shall deliver to Seller: (i) a wire
transfer of immediately available funds for the portion of the Purchase Price
(as set forth in Section 1.3 hereof) payable at the Third Closing and (ii) such
-----------
other documents and instruments as Seller may reasonably require in order to
effectuate the transactions which are the subject of this Agreement.
All documents and instruments delivered to Seller shall be in form and
substance reasonably satisfactory to Seller.
Section 6.4 Further Assurances. From time to time after each of the
------------------
Closings, as applicable, and without further consideration, the Parties shall
execute such further documents and perform such further acts as may be necessary
to transfer and convey the Assets to Buyer, on the terms contained herein, and
to otherwise comply with the terms of this Agreement and consummate the
transactions contemplated hereby.
Section 6.5 Post Closing Adjustments. Within 90 days after each Closing,
------------------------
Seller and Buyer shall jointly prepare a final accounting statement for the
gross revenue, if any, received by Seller for hydrocarbons and liquid
hydrocarbon inventory produced from the Assets from and after the First
Effective Time (as to the First Tranche of Assets), the Second Effective Time
(as
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to the Second Tranche of Assets) and the Third Effective Time (as to the Third
Tranche of Assets), as applicable, less reasonable and documented expenses
incurred by the Seller for periods of times from and after the applicable
effective times and attributable to the operation of the Assets or sale of such
hydrocarbons and liquid hydrocarbon inventory following the First, Second and
Third Effective Times, respectively. The Parties shall have 30 days following
completion of such accounting to agree as to its accuracy. Following such
agreement, Seller or Buyer, as the case may be, shall promptly pay to the other
such sum as may be found due. Nothing in this Section 6.5 in intended to limit
-----------
any right of Seller or Buyer to assert a claim for reimbursement after the final
accounting with respect to each Closing.
Section 6.6 Failure to Close. If any of the Closings do not occur on or
----------------
before their scheduled closing dates as set forth hereunder, either party may
terminate this Agreement by giving written notice to the other party.
Thereafter, neither party shall have any further obligations to the other
hereunder, other than any obligations and liabilities arising prior to such
termination and those obligations that by their terms survive the termination of
this Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Notices. All notices, reports, records or other communications
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that are required or permitted to be given to the Parties under this Agreement
shall be sufficient in all respects if given in writing and delivered in person,
by telecopy, by overnight courier or by registered or certified mail, postage
prepaid, return receipt requested, to the receiving party at the following
address:
If to Seller: Juneau Exploration, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: 281.356.2666
Phone: ▇▇▇.▇▇▇.▇▇▇▇
If to Buyer: Contango Oil & Gas Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Peak
Telecopier: 713.960.1065
Phone: ▇▇▇.▇▇▇.▇▇▇▇
or such other address as such party may have given to the other party by notice
pursuant to this Section 7.1. Notice shall be deemed given on (i) the date such
-----------
notice is personally delivered, (ii) three (3) days after the mailing if sent by
Certified or Registered Mail, (iii) one (1) day after the date of delivery to
the overnight courier if sent by overnight courier, or (iv) the next succeeding
day after transmission by facsimile.
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Section 7.2 General Definitions. For the purposes of this Agreement, the
-------------------
following terms have the meaning set forth below:
"Affiliate" with respect to any party, any Person directly or indirectly
controlling, controlled by, or under common control with such party, and any
officer, director or executive employee of such party and includes any past or
present Affiliate of any such Person.
"Governmental Authority" means any federal, state, provincial, local,
governmental, judicial, public, quasi-public or administrative authority or
agency.
"Person" means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated association,
corporation, other entity or any Governmental Authority.
Section 7.3 Entire Agreement. The Schedules and Exhibits attached to this
----------------
Agreement shall be deemed to be an integral part of this Agreement. This
Agreement, including the Schedules and Exhibits, set forth the entire
understanding of the Parties with respect to the subject matter hereof and may
be modified only by instruments signed by both of the Parties hereto.
Section 7.4 Counterparts. This Agreement may be executed via facsimile in
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 7.5 Third Parties. Nothing in this Agreement, express or implied,
-------------
is intended to confer any right or remedy under or by reason of this Agreement
on any Person other than the Parties hereto and their respective heirs,
representatives, successors and assigns, nor is anything set forth herein
intended to affect or discharge the obligation or liability of any third persons
to any party to this Agreement, nor shall any provision give any third party any
right of subrogation or action over against any party to this Agreement.
Section 7.6 Expenses. Each of the Parties shall pay all costs and expenses
--------
incurred or to be incurred by it in negotiating and preparing this Agreement and
in closing and carrying out the transactions contemplated by hereunder,
including, without limitation, legal and accounting fees and expenses.
Section 7.7 Waiver. No failure of any party to exercise any right or remedy
------
given such party under this Agreement or otherwise available to such party or to
insist upon strict compliance by any other party with its obligations hereunder,
and no custom or practice of the Parties in variance with the terms hereof,
shall constitute a waiver of any party's right to demand exact compliance with
the terms hereof, unless such waiver is set forth in writing and executed by
such party.
Section. 7.8 Survival. All representations, warranties, indemnifications
--------
and rights to set off of the Parties hereto contained in or arising out of this
Agreement or otherwise in connection herewith shall survive the Closings
hereunder and shall continue in effect until the expiration of all applicable
statute of limitations (including any extensions of said statute). Unless a
specified period is set forth in this Agreement (in which event such specified
period will
14
control), all covenants contained in this Agreement will survive the Closings
and remain in effect indefinitely.
Section 7.8 Governing Law; Jurisdiction. This Agreement shall be construed
---------------------------
and governed in accordance with the laws of the State of Texas without regard to
the principles of conflicting laws. Any action to enforce, or which arises out
of or relates in any way to, any of the provisions of this Agreement shall be
brought and prosecuted solely in the Texas state courts or the Federal district
courts located in ▇▇▇▇▇▇ County, Texas.
Section 7.9 Assignment. No party may assign its rights or delegate its
----------
obligations hereunder without the consent of the other party. Subject to the
foregoing, this Agreement shall inure to the benefit of and be binding upon the
Parties hereto and their respective heirs, successors and assigns.
Section 7.10 Confidentiality. Buyer and Seller acknowledge that all
---------------
information furnished or disclosed pursuant hereto must remain confidential.
Buyer and Seller must mutually approve all press releases. Buyer may disclose
such information only to its subsidiaries or Affiliates, agents, advisors or
representatives who have need to know such information and who have agreed in
writing, prior to being given access to such information, to be bound by the
terms of this Section 7.10.
------------
Section 7.11 Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any adverse manner to
any party. Upon any binding determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible and in an acceptable manner, to the end that the
transaction hereby may be contemplated to the extent possible.
Section 7.12 DTPA. Each party hereby certifies to the other that it is not
----
a "Consumer" within the meaning of the Texas Deceptive Trade Practices -
Consumer Protection Act, Subchapter E of Chapter 17, Section 17.41, et. Seq. of
the Texas Business and Commerce Code, as amended (the "DTPA"). The Parties
covenant, for themselves and for an on behalf of any successors and assigns,
that if the DTPA is applicable, (a) the Parties are "business consumers"
thereunder and (b) each party hereby waives and releases all of its rights and
remedies thereunder (other than Section 17.555, Texas Business and Commercial
Code) as applicable to the other party and its successors and (c) each party
shall defend and indemnify the other party from and against any and all claims,
demands or causes of action of or by that party or any successor or any of its
Affiliates based in whole or in part on the DTPA, arising out of or in
connection with the transaction set forth in this Agreement.
Section 7.13 Headings. The subject headings of paragraphs and subparagraphs
--------
of this Agreement are included for purposes of convenience only and shall not
affect the construction or interpretation of any of its provisions.
15
Section 7.14 Construction. Where specific language is used to clarify by
------------
example a general statement contained herein, such specific language shall not
be deemed to modify, limit or restrict in any manner the construction of the
general statement to which it relates. The language used in this Agreement shall
be deemed to be the language chosen by the Parties to express their mutual
intent, and no rule of strict construction shall be applied against any party.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
SELLER:
JUNEAU EXPLORATION, L.P.
By: Juneau GP, LLC
Its General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Sole Manager
BUYER:
CONTANGO OIL & GAS COMPANY,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. PEAK
--------------------------------------
▇▇▇▇▇▇▇ ▇. Peak
President and Chief Executive Officer
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