EXHIBIT 2.1
EXECUTION FINAL
FEBRUARY 23, 2006
GOM 2006
PURCHASE AND SALE AGREEMENT
by and between
PIONEER NATURAL RESOURCES USA, INC.
as Seller
and
MARUBENI OFFSHORE PRODUCTION (USA) INC.
as Purchaser
THIS AGREEMENT CONTAINS CERTAIN INDEMNITY AND RELEASE PROVISIONS THAT INDEMNIFY
THE INDEMNIFIED PARTY (OR PARTIES) FROM THE INDEMNIFIED PARTY'S (OR PARTIES')
OWN NEGLIGENCE AND OTHER LEGAL FAULT.
TABLE OF CONTENTS
ARTICLE 1. SALE AND PURCHASE................................................1
1.1 EFFECTIVE TIME..................................................1
1.2 SALE AND PURCHASE...............................................1
1.3 EXCLUDED ASSETS.................................................3
1.4 DEFINED TERMS...................................................3
ARTICLE 2. CONSIDERATION....................................................6
2.1 CONSIDERATION...................................................6
2.2 MANNER OF PAYMENT...............................................8
2.3 LIKE KIND EXCHANGE OPTION.......................................8
2.4. DEPOSIT.........................................................8
2.5 ALLOCATED VALUES................................................8
2.6 GUARANTIES......................................................9
2.7 ESCROW AGREEMENT................................................9
ARTICLE 3. TITLE, PREFERENTIAL RIGHTS AND CONSENTS TO ASSIGN.................9
3.1 [INTENTIONALLY DELETED].........................................9
3.2 SPECIAL WARRANTY OF TITLE.......................................9
3.3 [INTENTIONALLY DELETED].........................................9
3.4 DEFINITION OF PERMITTED ENCUMBRANCES............................9
3.5- 3.9 [INTENTIONALLY DELETED]........................................11
3.10 PREFERENTIAL PURCHASE RIGHTS AND CONSENTS TO ASSIGN............11
3.11 [INTENTIONALLY DELETED]........................................12
3.12 [INTENTIONALLY DELETED]........................................12
ARTICLE 4. SELLER'S REPRESENTATIONS, WARRANTIES AND DISCLAIMER.............12
4.1 EXISTENCE......................................................13
4.2 POWER..........................................................13
4.3 AUTHORIZATION..................................................13
4.4 BROKERS........................................................13
4.5 FOREIGN PERSON.................................................13
4.6 TAXES AND ROYALTIES............................................13
4.7 PERMITS........................................................14
4.8 COMPLIANCE WITH LAW............................................14
4.9 CONTRACTS......................................................14
4.10 LITIGATION.....................................................14
4.11 AFE'S..........................................................14
4.12 ENVIRONMENTAL ACTIONS..........................................14
4.13 TAKE-OR PAY....................................................15
4.14 LIMITATION AND DISCLAIMER OF REPRESENTATIONS
AND WARRANTIES.................................................15
ARTICLE 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.........16
5.1 EXISTENCE......................................................16
5.2 POWER..........................................................17
5.3 AUTHORIZATION..................................................17
5.4 BROKERS........................................................17
5.5 INVESTMENT INTENT..............................................17
5.6 DUE DILIGENCE..................................................17
5.7 SOPHISTICATED BUYER............................................18
5.8 ECONOMIC RISK..................................................18
5.9 FINANCING......................................................18
5.10 ACCREDITED INVESTOR............................................18
5.11 SOLICITATION...................................................18
5.12 ACCESS TO RECORDS..............................................18
5.13 No Breach of Seller's Warranty of Title.......................
ARTICLE 5A. ADDITIONAL COVENANTS...........................................18
5A.1 MAINTENANCE OF ASSETS..........................................18
5A.2 NO ENCUMBRANCES................................................19
5A.3 OPERATIONS.....................................................19
ARTICLE 6. SELLER'S CONDITIONS OF CLOSING..................................20
6.1 PERFORMANCE....................................................20
6.2 HSR ACT........................................................20
ARTICLE 7. PURCHASER'S CONDITIONS OF CLOSING...............................20
7.1 PERFORMANCE....................................................20
7.2 HSR ACT........................................................20
ARTICLE 8. CLOSING.........................................................20
8.1 TIME AND PLACE OF CLOSING......................................21
8.2 CLOSING OBLIGATIONS............................................21
ARTICLE 8A. SELLER'S OBLIGATION TO QUALIFY AS OPERATOR......................22
ARTICLE 9. POST-CLOSING OBLIGATIONS........................................
9.1 RECEIPTS AND CREDITS; SUSPENSE FUNDS...........................22
9.2 COSTS AND LIABILITIES; INDEMNITY...............................23
9.3. FURTHER ASSURANCES.............................................31
9.4 DELIVERY OF RECORDS............................................32
9.5 ACCESS TO DATA.................................................32
9.6 PURCHASER'S RELEASE OF SELLER..................................32
9.7 RETROACTIVE EFFECT.............................................33
9.8 INDUCEMENT TO SELLER...........................................33
9.9 RELATED AGREEMENTS.............................................33
9.10 LITIGATION.....................................................33
ARTICLE 10. TERMINATION....................................................33
10.1 RIGHT OF TERMINATION...........................................34
10.2 EFFECT OF TERMINATION..........................................35
ARTICLE 11. TAXES..........................................................35
11.1 APPORTIONMENT OF AD VALOREM AND PROPERTY TAXES.................35
11.2 SALES TAXES....................................................36
11.3 OTHER TAXES....................................................36
11.4 COOPERATION....................................................36
11.5 TAX REPORTING..................................................36
ARTICLE 12. CONDITION OF THE ASSETS.........................................37
12.1 PRIOR USE OF ASSETS............................................37
12.2 ASSUMPTION OF ASSETS IN PRESENT CONDITION......................37
12.3 CASUALTY LOSS..................................................38
ARTICLE 13. MISCELLANEOUS..................................................38
13.1 GOVERNING LAW..................................................38
13.2 ENTIRE AGREEMENT...............................................38
13.3 WAIVER.........................................................38
13.4 CAPTIONS.......................................................38
13.5 ASSIGNABILITY..................................................38
13.6 NOTICES........................................................39
13.7 WAIVER OF CONSUMER RIGHTS/DTPA WAIVER..........................40
13.8 EXPENSES.......................................................40
13.9 SEVERABILITY...................................................40
13.10 DAMAGES........................................................40
13.11 NO THIRD PARTY BENEFICIARY.....................................41
13.12 SURVIVAL.......................................................41
13.13 COUNTERPARTS...................................................41
13.14 NOT TO BE CONSTRUED AGAINST DRAFTER............................41
13.15 WAIVER OF JURY TRIAL...........................................41
13.16 PUBLICITY......................................................41
13.17 ACCOUNTING.....................................................41
13.18 OPERATORSHIP...................................................43
13.19 [INTENTIONALLY DELETED]........................................43
13.20 TIME OF PERFORMANCE............................................43
13.21 NO PARTNERSHIP CREATED.........................................43
13.22 EXPRESS NEGLIGENCE RULE; CONSPICUOUSNESS.......................43
13.23 DISPUTE RESOLUTION.............................................43
13.24 TRANSFER FEES..................................................45
13.25 FILING AND RECORDING...........................................45
13.26 REMOVAL OF SIGNS...............................................46
13.27 HSR ACT........................................................46
Schedules:
1.4(k) Seller's List of Persons
2.6 (a) Purchaser Parent Guarantee
2.6 (b) Seller Parent Guarantee
3.4(c) List of Preferential Rights Holders
3.4(d) List of Consent Holders
3.4(e) Contested Liens
4.6 Royalty Matters
4.10 Litigation
4.11 AFE's
4.12 Environmental
413 Take-or-Pay
8.2(b) Transfer Letters
9.2(f)(5) Purchaser Disclosure
9.10 Assumed Litigation
Exhibits
A Leases
B Assignment
C Non-Foreign Affidavit
D Transition Agreement
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT, including the exhibits and schedules
hereto, ("Agreement") with the date of February 23, 2006, is by and between
PIONEER NATURAL RESOURCES USA, INC., a Delaware corporation, with the address of
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Seller"), and
MARUBENI OFFSHORE PRODUCTION (USA) INC., a Delaware corporation, with the
address of ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Purchaser").
RECITALS:
WHEREAS, on the terms and conditions provided in this Agreement, Seller has
agreed to sell and Purchaser has agreed to purchase certain of Seller's
interests in certain oil and gas leases, agreements, contracts, real property,
personal property, equipment and related rights hereinafter defined.
NOW, THEREFORE, for good and valuable consideration and for the mutual
benefits and agreements contained herein, Seller and Purchaser hereby agree as
follows:
ARTICLE 1. SALE AND PURCHASE
1.1 Effective Time. The effective time and date of the purchase and sale
contemplated hereby shall be 7:00 a.m. on January 1, 2006 at the site of the
respective Subject Properties as defined below (the "Effective Time").
1.2 Sale and Purchase. Subject to the terms and conditions herein contained, at
Closing, as defined below, and effective as of the Effective Time, Seller shall
sell, assign, transfer and convey to Purchaser, and Purchaser shall purchase,
accept and receive, all of Seller's right, title, and interest, if any, as of
the Effective Time, in and to the following described assets, less and except
the Excluded Assets (the "Assets"):
(a) The oil and gas leases and interests listed on Exhibit "A" (the
"Leases") to the extent and only to the extent the same pertain to the area
within the boundaries of the lands covered, as of the Effective Time, by
the oil and gas leases listed on Exhibit "A" (hereinafter referred to as
the "Lands"), together with Seller's interest in any pooled, communitized
or unitized acreage with the Lands and Leases (the "Subject Properties");
(b) To the extent, and only to the extent, located on the Lands or
attributable or allocable to the Subject Properties: (1) all ▇▇▇▇▇
including, without limitation and all other oil, gas, injection, disposal
and water ▇▇▇▇▇ whether active, idle, plugged or unplugged and whether
abandoned or not ("▇▇▇▇▇"), and well equipment (surface and subsurface),
all materials, fixtures, platforms, boats, facilities, pumps, equipment,
leased equipment (if assignable without penalty, cost or liability unless
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Purchaser agrees to assume and bear such penalty, cost or liability and
Seller agrees with Purchaser's said assumption), electrical distribution
systems, flowlines, gathering pipelines, gas facilities, gathering systems,
storage, distribution, treating, processing and disposal facilities and
tanks, tools, compressors, and all other real or tangible personal property
and fixtures which are located on the Subject Properties and u sed in
connection with the production, disposal, gathering, storing, measuring,
compression, injection, treating, operating, maintaining, marketing or
transportation of production and substances from the Subject Properties and
▇▇▇▇▇, and all other improvements located on the Lands and which were
acquired for or are used in connection with the operation of the Subject
Properties (the "Equipment"), but specifically excluding portable tools,
inventory, and vehicles not used exclusively on or exclusively appurtenant
to the Subject Properties or the ▇▇▇▇▇, and personal property not solely
appurtenant to the ▇▇▇▇▇ or temporarily located on the Subject Properties;
(2) all oil, gas, mineral and other hydrocarbon substances produced on or
after the Effective Time; (3) all contracts insofar as they relate to the
Subject Properties, ▇▇▇▇▇ and Equipment (but subject to all limitations of
assignability or transferability by Seller and subject to the rights of
third parties), including, without limitation, all orders, unit orders,
abstracts of title, leases, deeds, unitization agreements, pooling
agreements, operating agreements, division of interest statements,
participation agreements, license agreements, farmin and farmout
agreements, oil and gas leases, assignments, compression and/or processing
agreements, and oil and gas sales, purchase, transportation, gathering and
processing contracts, pipeline crossing non-objection agreements, and
boarding agreements; (4) all surface leasehold (but only to the extent
overlying and within the boundaries of the Lands or used solely in
connection with the Subject Properties), easements, rights-of-way,
licenses, authorizations, permits and similar rights and interests, limited
by and subject to the rights of third parties and regulatory agencies; (5)
to the extent assignable by Seller without liability, penalty or cost
(unless Purchaser agrees to assume and bear such liability, penalty and/or
cost and Seller agrees with Purchaser's said assumption), all seismic data
(2D and 3D) in the possession of Seller as of the Execution Date and to the
extent not subject to third-party restrictions on transfers, geological and
geophysical data; (6) accounting files, marketing files, environmental
files and records, regulatory files and records, non-privileged legal
records and files, lease files, land files, operating files, well files,
oil and gas sales contract files, gas processing files, logs, test data,
production histories, division order files, abstracts, title files and
materials as well as engineering and production data and records, (the
"Records"), and all rights thereto, limited by and subject to the rights of
third parties and applicable Related Agreements (as defined hereafter) and
limitations on transfer contained therein; (6) mineral fee, royalty and
overriding royalty interests; and (7) all other rights, privileges,
benefits and powers conferred upon the owner and holder of interests in the
Subject Properties.
It is the intent of the Parties that this Agreement shall, except for the
Excluded Assets (as defined in this Agreement), cover any and all of
Seller's right, title and interest in the Subject Properties, irrespective
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of whether those properties and rights are set forth on the exhibits and
schedules attached hereto.
1.3 Excluded Assets. Notwithstanding anything in this Agreement to the contrary,
the Assets do not include and Purchaser agrees and acknowledges that Seller has
reserved and retained from the Assets and hereby reserves and retains unto
itself any and all rights, titles and interests in and to (a) fee, leasehold,
mineral fee, royalty, overriding royalty, and other interests not expressly
included under Section 1.2(a) or (b) above; (b) seismic, geologic and
geophysical records, information, and interpretations relating to the Assets not
included in Section 1.2(b)(5) above; (c) any and all records which consist of
previous, contemporaneous or subsequent offers, discussions, or analyses
associated with the purchase, sale or exchange of the Assets or any part
thereof, proprietary information, personnel information, tax information,
information covered by a non-disclosure obligation of a third party and
information or documents covered by a legal privilege (except that Purchaser's
counsel shall be allowed access to Seller's privileged written communication to
the extent pertaining to the litigation listed on Schedule 9.10 assumed by
Purchaser); (d) originals or copies of Records retained by Seller; (e) all
claims, rights and causes of action of Seller against third parties, asserted
and unasserted, known and unknown relating to the period prior to the Effective
Time relating to the Assets; (f) trucks, communication equipment, computers and
related switching equipment and software; (g) all pipelines which are not used
for production from the Subject Properties; (h) all oil in storage at the
Effective Time or produced prior to the Effective Time; and (i) items or
interests excluded or removed elsewhere in or pursuant to this Agreement;(j) any
refund of taxes, costs or expenses borne by Seller or Seller's predecessors in
title attributable to the period of time prior to the Effective Time; (k) any
and all proceeds receivable from the settlement or final adjudication of
contract disputes with lessors, insurers, co-owners or operators of the Assets
or with purchasers, gatherers, processors or transporters of hydrocarbons from
or attributable to the Assets, including without limitation, settlement of
royalty, take-or-pay, pricing or volume adjustments disputes, insofar as said
proceeds are attributable to periods of time prior to the Effective Time; (l)
all of rights of use of Seller's or any Affiliates name, marks, trade dress or
insignia and all of Seller's intellectual property and (m) the case styled
Dominion Exploration & Production and Pioneer Natural Resources USA vs. Ameron;
Division "N," District Court Parish of Orleans, Louisiana, No. 03-6945 and all
rights and liabilities arising from a final judgement therein and any appeals
thereof (collectively, the "Excluded Assets").
1.4 Defined Terms.
"Act" means the Securities Act of 1933.
"Adjusted Purchase Price" has the meaning as set forth in Section 2.1.(b).
"Affiliate" or "Affiliates" means, as to any Person, each other Person that
directly or indirectly (through one or more intermediaries or otherwise)
controls, is controlled by, or is under common control with, such Person.
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"Allocated Values" has the meaning as set forth in Section 2.5.
"Assets" has the meaning as set forth in Section 1.2.
"Business Day" or "Business Days" means a day or days excluding Saturdays,
Sundays and U.S. federal legal holidays.
"Casualty Loss" has the meaning as set forth in Section 12.3.
"Claims" has the meaning as set forth in Section 9.2(a).
"Closing" means the consummation of the purchase and sale of the Assets by
Purchaser and Seller as contemplated in this Agreement.
"Closing Date" has the meaning as set forth in Section 8.1.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" has the meaning as set forth in Section 13.2.
"Deductible" has the meaning set out in Section 9.2(f).
"Deposit" has the meaning as set forth in Section 2.4.
"Effective Time" has the meaning as set forth in Section 1.1.
"Environmental Laws" means any and all Laws including, but not limited to, those
in existence on the Execution Date that relate to: (a) the prevention of
pollution or environmental damages, (b) the abatement, remediation or
elimination of pollution or environmental damage, (c) the protection of the
environment generally, and/or (d) the protection of Persons or property from
actual or potential exposure (or the effects of exposure) to pollution or
environmental damage, including without limitation, the Clean Air Act, as
amended, the Clean Water Act, as amended, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Federal Water
Pollution Control Act, as amended, the Resource Conservation and Recovery Act of
1976, as amended, the Safe Drinking Water Act, as amended, the Toxic Substance
and Control Act, as amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, the Hazardous and the Solid Waste Amendments Acts of 1984, as
amended, and the Oil Pollution Act of 1990, as amended, and all other federal,
state and local statutes, regulations, and ordinances serving similar or related
purposes.
"Equipment" has the meaning as set forth in Section 1.2(b).
"Escrow Agent" has the meaning set forth in the Escrow Agreement.
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"Escrow Agreement" means that certain escrow agreement dated as of the Execution
Date among Purchaser, Seller and ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank, N.A., as the Escrow
Agent.
"Excluded Assets" has the meaning as set forth in Section 1.3.
"Execution Date" is the date on which the last of the Parties hereto signs this
Agreement.
"Final Accounting" has the meaning as set forth in Section 13.17(b).
"Final Accounting Date" has the meaning as set forth in Section 13.17(b).
"Governmental Entity" or "Governmental Entities" means any court or tribunal, or
any public, governmental, or regulatory body, agency, department, commission,
board, bureau, conservation commission, or other authority or instrumentality
(whether national, state or local, domestic or foreign), having appropriate
jurisdiction over any of the Assets conveyed hereunder.
"Hazardous Substance(s)" means any substance defined as a Hazardous Substance
under Environmental Laws.
"HSR Act" has the meaning as set forth in Section 13.27.
"Imbalances" has the meaning as set forth in Section 9.1.
"Knowledge of Seller" (or Purchaser as the case may be) or "to the best of
Seller's knowledge and belief" (or Purchaser as the case may be) (or words of
similar import) shall mean only the then existing actual knowledge of any
persons listed on Schedule 1.4 (k) for Seller and as to Purchaser (or any
Affiliate of Purchaser) any president, vice president, or manager (without
obligation of further inquiries) of Purchaser and is not intended to imply that
such party in fact has actual knowledge of the subject matter to which such
terms apply.
"Lands" has the meaning as set forth in Section 1.2(a).
"Laws" means laws, statutes, ordinances, permits, decrees, orders, judgments,
rules or regulations (including without limitation Environmental Laws) which are
promulgated, issued or enacted by a governmental entity (whether federal, state
or local) or tribal authority having appropriate jurisdiction.
"Leases" has the meaning set forth in Section 1.2(a).
"LIBOR" means the London Interbank Offered Rate.
"NORM" has the meaning as set forth in Section 9.2(b).
"Party" means either Purchaser or Seller; "Parties" means the Purchaser and
Seller.
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"Permitted Encumbrances" has the meaning as set forth in Section 3.4.
"Person" means an individual, corporation, partnership, association, joint stock
company, trust or trustee thereof, estate or executor thereof, unincorporated
organization or joint venture, Governmental Entity, or any other legally
recognizable entity.
"Preliminary Settlement Statement" has the meaning set forth in Sections 8.2(d)
and 13.17(a).
"Property" is the real property or properties, surface and subsurface, in which
and on which the Assets, or any portion thereof, are located or pertain and
includes the land underlying the Leases, described or referred to in Exhibit
"A."
"Property Taxes" has the meaning as set forth in Section 11.1.
"Purchase Price" has the meaning as set forth in Section 2.1.
"Records" has the meaning as set forth in Section 1.2(b).
"Related Agreements" has the meaning as set forth in Section 9.9.
"Representative" and "Representatives" have the meaning as set forth in Section
9.2(e).
"Subject Properties" has the meaning as set forth in Section 1.2(a).
"Suspense Funds" has the meaning as set forth in Section 9.1.
"Transition Services Agreement" means the form of the instrument attached hereto
as Exhibit "B."
"▇▇▇▇▇" has the meaning as set forth in Section 1.2(b).
ARTICLE 2. CONSIDERATION
2.1 Consideration.
(a) Price. At Closing and subject to the terms hereof, Purchaser shall
pay to Seller One Billion Three Hundred Million in US Dollars
($1,300,000,000.00) by wire transfer per Seller's written instructions (the
"Purchase Price"), as same may be adjusted pursuant hereto.
(b) Adjusted Purchase Price. The net price which the Purchaser shall pay
for the Assets (the "Adjusted Purchase Price") shall be:
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(1) The Purchase Price as set forth in Section 2.1(a) above;
(2) Plus the amount of all direct expenditures and costs (capital and
expensed) chargeable to the Assets under any applicable operating or
unit agreement and incurred and paid by or on behalf of Seller in the
ordinary course of owning and/or operating the Assets and attributable
to the period from the Effective Time to the Closing Date, including
but not limited to, those expenditures and costs set forth in Section
13.17(a) or allowed under Section 5A.3(a) or otherwise incurred or paid
not in breach of this Agreement;
(3) Plus an amount equal to all prepaid expenses that are actually paid
by or on behalf of Seller prior to the Closing Date in the ordinary
course of owning and/or operating the Assets as heretofore owned and/or
operated and attributable to the Assets and allocable to any period
after the Effective Time;
(4) Plus an amount equal to the value of Seller's interest in all
merchantable oil in the tanks on the Effective Time attributable to the
Assets net of all applicable taxes and royalties paid by or on behalf
of Seller;
(5) Less the amount of gross proceeds received by or credited to Seller
that are attributable to the sale of any hydrocarbon production from
the Assets for any period of time after the Effective Time net of all
applicable production related taxes and royalties paid by or on behalf
of Seller;
(6) Less the amount of all expenditures and costs relating to the
Assets, such as unpaid ad valorem, property, production, severance, and
similar taxes and assessments (but not including income, franchise, or
similar taxes) based upon or measured by the ownership of the Assets,
or the production of hydrocarbons or the receipt of proceeds therefrom,
which are payable or which accrued to the Assets prior to the Effective
Time and that are unpaid as of the Closing Date;
(7) Less the allocated value for any of the Assets removed from this
transaction pursuant to this Agreement;
(8) Plus or less, as applicable, any amounts determined to be subject
to a Purchase Price Adjustment provided for in Sections 2.4 (Deposit),
and 3.10 (preferential purchase rights) herein;
(9) As adjusted up or down pursuant to Section 13.17 but only to the
extent not duplicated elsewhere herein, and
(10) Plus an amount equal to the interest on the Purchase Price at the
rate of the 90 day LIBOR (which is quoted as an annualized rate) plus
one hundred (100) basis points from March 1, 2006 through the day of
Closing.
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2.2 Manner of Payment. At Closing, except as provided in the following Section
2.3, Purchaser shall pay Seller or Seller's designee the Adjusted Purchase Price
by wire transfer of immediately available funds pursuant to Seller's written
instructions.
2.3 Like Kind Exchange Option. Seller and Purchaser hereby agree that Seller, in
lieu of the sale of the Assets to Purchaser for the cash consideration provided
herein, shall have the right at any time prior to Closing to assign all or a
portion of its rights under this Agreement to a qualified intermediary in order
to accomplish the transactions contemplated hereby in a manner that will comply
with the requirements of a like kind exchange pursuant to Section 1031 of the
Code. In the event Seller assigns its rights under this Agreement pursuant to
this Section 2.3, Seller agrees to notify Purchaser in writing of such
assignment before Closing. If Seller assigns its rights under this Agreement,
Purchaser agrees to (i) consent to Seller's assignment of its rights under this
Agreement, (ii) deposit the amount of the Adjusted Purchase Price with the
qualified escrow or qualified trust account designated by Seller at Closing, and
(iii) take such further actions, at Seller's cost, as are reasonably required to
effectuate the transactions contemplated hereby pursuant to Section 1031 of the
Code, but, in so acting, Purchaser shall have no liability to Seller or any
Person, Governmental Entity or party in connection with such actions. ALL RISKS
ASSOCIATED WITH ANY LIKE KIND EXCHANGE SHALL BE THE SOLE RISK AND RESPONSIBILITY
OF SELLER, AND SELLER AGREES TO DEFEND, INDEMNIFY AND HOLD PURCHASER HARMLESS
FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, SUITS, COSTS, EXPENSES,
LIABILITIES OR OBLIGATIONS ASSERTED AGAINST PURCHASER BY ANY THIRD PARTY, PERSON
OR GOVERNMENTAL ENTITY TO THE EXTENT BROUGHT ABOUT OR CAUSED BY, SELLER'S
EXERCISE OF ITS RIGHTS UNDER THIS SECTION 2.3.
2.4. Deposit. On or prior to 3:00 p.m. CT on March 2, 2006 (the "Deposit Due
Date"), Purchaser shall deposit with the Escrow Agent for deposit into escrow
(pursuant to the Escrow Agreement) Twenty Percent (20%) of the Purchase Price in
US Dollars (the "Deposit"). If Purchaser fails to pay said Deposit to the Escrow
Agent for deposit into the Escrow Account on or before said Deposit Due Date,
this Agreement shall terminate automatically and Purchaser shall owe Seller and
Seller shall be entitled to receive from Purchaser an amount equal to twenty
percent (20%) of the Purchase Price as liquidated damages plus an amount equal
to the interest on said amount at the rate of the 90 day LIBOR (which is quoted
as an annualized rate) plus one hundred (100) basis points from the Deposit Due
Date until Seller has been paid the amount of the Deposit plus said interest. As
provided pursuant to the Escrow Agreement the Deposit shall earn interest but
otherwise the Deposit will not bear interest. If Closing occurs, the Deposit
shall be released to Seller at the Closing and applied to reduce the Adjusted
Purchase Price and any interest on said Deposit shall be delivered to Purchaser.
If Closing does not occur, the Deposit shall be applied as provided in Section
10.2.
2.5 Allocated Values. The allocation of the Purchase Price values ("Allocated
Values") associated with the Assets to be conveyed under this Agreement has been
prepared by Purchaser and is set forth on Exhibit "A." For purposes of notices
8
for consents or preferential rights to purchase, the Parties may redact those
allocations not applicable to the property subject to such consents or rights.
2.6 Guaranties. Contemporaneously with the execution of this Agreement, (a)
Marubeni Corporation (the ultimate corporate parent of Purchaser) has executed
and delivered to Seller an original of that certain Guaranty in the form of
Schedule 2.6 (a) attached hereto and (b) Pioneer Natural Resources Company (the
ultimate corporate parent of Seller) has executed and delivered to Purchaser an
original of that certain Guaranty in the form of Schedule 2.6 (b).
2.7 Escrow Agreement. Contemporaneously with the execution of this Agreement,
Seller, Purchaser and the Escrow Agent shall execute and deliver the Escrow
Agreement in multiple copies.
ARTICLE 3. TITLE, PREFERENTIAL RIGHTS AND CONSENTS TO ASSIGN
3.1 [INTENTIONALLY DELETED]
3.2 Special Warranty of Title. The Assignment and ▇▇▇▇ of Sale to be delivered
by Seller at Closing shall contain a special warranty of title by Seller wherein
Seller shall warrant and defend title to the Leases against any and all persons
whomsoever claiming title to the same or any part thereof by through or under
Seller but not otherwise, subject to Permitted Encumbrances and the provisions
hereof and as contained in the Assignment and ▇▇▇▇ of Sale, the form for which
is attached hereto as Exhibit "B". The special warranty of title described above
and in the Assignment and ▇▇▇▇ of Sale is personal to Purchaser and is not
assignable.
3.3 [INTENTIONALLY DELETED]
3.4 Definition of Permitted Encumbrances. As used herein, the term "Permitted
Encumbrances" shall mean the following items, provided none of the following
items shall operate, as of Closing, to increase the record interest of Seller as
set forth in Exhibit "A" for any of the Subject Properties, without a
corresponding increase in the applicable net revenue interest for any of the
Leases:
(a) lessors' royalties, overriding royalties, production payments,
reversionary interests and similar burdens in the public records
(including, but not limited to, those of the Minerals Management Service,
or the counties or parishes located adjacent to the Subject Properties), or
Seller's records;
(b) division orders and sales contracts;
9
(c) to the extent applicable to the transactions contemplated by this
Agreement, preferential rights to purchase any of the Subject Properties,
as such rights are identified on Schedule 3.4(c);
(d) rights to consent to transfers affecting any of the Subject Properties,
as identified or described on Schedule 3.4(d), held by Persons other than
Governmental Entities;
(e) materialman's, mechanic's, repairman's, employee's, contractor's,
operator's, tax, and other similar liens, assessments or charges arising in
the ordinary course of business for obligations that are not yet due or
delinquent, or if delinquent, that are being contested by Seller in good
faith in the normal course of business and which, if contested by Seller,
are specifically identified on Schedule 3.4(e);
(f) rights to consent by, required notices to, filings with, or other
actions by Governmental Entities in connection with the transfer of oil and
gas interests, fee estates, or interests therein, if the same are
customarily obtained contemporaneously with or subsequent to such
transfers;
(g) easements, rights-of-way, servitudes, permits, surface leases and other
rights owned by third Persons in respect of surface operations affecting
the Assets;
(h) rights reserved to or vested in any governmental, statutory or public
authority to control or regulate any of the Assets in any manner, and all
applicable laws, rules and orders of any governmental authority affecting
the Assets;
(i) operating agreements, unit agreements, unit operating agreements,
pooling agreements and pooling designations affecting the Subject
Properties which are in the records of the Governmental Entities having
jurisdiction over the Subject Properties or recorded in the public records
of the county(ies)/parish(es) in which the Assets are located, or adjacent,
or contained or referenced in the Records and information made available to
Purchaser, and all actions taken or operations occurring in the normal
course of business pursuant to such instruments;
(j) all contracts, agreements, conveyances, reservations and exceptions
which are present in the records of the Governmental Entities having
jurisdiction over the Subject Properties or recorded in the public records
of the county(ies)/parish(es) in which the affected Assets are located, or
adjacent, or contained or referenced in the Records and/or information made
available to Purchaser affecting the Assets;
(k) letters of credit, bonds or other security to secure abandonment of
▇▇▇▇▇ or other Assets, all or in part; or
(l) all other liens, charges, encumbrances, contracts, agreements,
instruments, obligations, defects and irregularities which are not such as
10
to interfere materially with the operation or use of the Subject Properties
(taken as a whole) or materially reduce the value thereof.
3.5- 3.9 [INTENTIONALLY DELETED].
3.10 Preferential Purchase Rights and Consents to Assign. In connection with the
transactions contemplated by this Agreement, Seller has used reasonable efforts
in preparing Schedules 3.4(c) and 3.4(d), which identify Persons (and their
addresses) who may hold preferential rights to purchase affecting the Assets or
rights to consent with respect to any assignments required hereby in order the
convey certain of the Assets, other than such consents of governmental
authorities, which are usually obtained after Closing in the normal course of
business. On or before the third Business Day after the Execution Date, Seller,
after consulting with Purchaser regarding the form of the notice and the Persons
to whom it shall be sent, shall send notice to those Persons, if any, who may
hold preferential rights to purchase or rights to consent to assign as set forth
in Schedules 3.4(c) and 3.4(d) and provide Purchaser with a copy of all such
Notices. Seller shall send the notice of this Agreement to all such Persons (i)
offering to sell to each such Person the Asset for which a preferential right is
held, on and subject to the terms hereof (as may need to be modified or
conformed as needed for a specific Asset) and for the same allocated value for
such Asset as reflected on Exhibit "A", or (ii) requesting, where appropriate,
consent to any assignment required in connection herewith in order to convey the
Assets. Notwithstanding anything to the contrary in this Agreement and
recognizing that Seller wants to sell the entirety of the Assets in accordance
herewith, Seller will have no obligation to complete the sale of an Asset to a
holder of a preferential purchase right if Closing under this Agreement with
Marubeni Offshore Production (USA) Inc. does not occur. If additional
preferential rights to purchase or consents to assign, exclusive of those set
forth in Sections 3.4 (c) and (d) above but applicable to the contemplated
transactions, are discovered by Purchaser or Seller prior to Closing, Seller
will use commercially reasonable efforts to send notices as soon as reasonably
possible in accordance with this Section 3.10. Until Closing, Seller shall be
responsible for sending such notices and collecting responses from each and
every applicable Person, including but not limited to, lessors, joint interest
owners, farmors, sublessors, assignors, grantors, co-parties to Related
Agreements, Governmental Entities having jurisdiction, or third parties,
relating to approvals and consents and will provide Purchaser on or before the
Closing Date, except as otherwise provided in this Agreement, with copies of
each consent, approval or waiver Seller has received. Seller and Purchaser shall
meet and agree on the form of all such notices; provided that such approval
shall not be unreasonably withheld or delayed and if agreement is not reached,
Seller's form shall be used. If, prior to Closing, any Person, in response to a
notice from Seller asserts a preferential purchase right and notifies Seller
that it intends to consummate the purchase of the Asset to which it holds a
preferential purchase right pursuant to the terms and conditions hereof, or if
the period allowed for acceptance of the notice provided by Seller has not
expired or will not expire as of Closing (subject to Seller's right to extend
the date of Closing), then such Subject Properties shall be excluded at Closing
from the Assets to be conveyed to Purchaser under this Agreement and the
11
Purchase Price shall be reduced by the Allocated Value of such Subject
Properties reflected in Exhibit "A". All Assets for which all preferential
purchase rights have been waived or have not been accepted prior to expiration
after timely notice of the acceptance period by the holder of such right shall
be sold to Purchaser at Closing pursuant and subject to the provisions of this
Agreement. If one (1) or more of the holders of any preferential purchase rights
pertaining to the Assets, or any portion thereof, notifies Seller or Purchaser
subsequent to Closing that it intends to assert its preferential purchase right,
such notified Party shall give notice thereof to the other party, whereupon
Purchaser shall satisfy all such preferential purchase right obligations to such
holders including, but not limited to, transferring the affected Assets to the
holder of such rights and Purchaser shall be entitled to receive upon
satisfaction in full by Purchaser of all the foregoing obligations all proceeds
received from such holders in connection with such preferential purchase rights.
AT, UPON AND AFTER CLOSING, PURCHASER SHALL INDEMNIFY, RELEASE, DEFEND AND HOLD
HARMLESS SELLER, SELLER'S AFFILIATES AND THEIR RESPECTIVE REPRESENTATIVES,
SUCCESSORS AND ASSIGNS, FROM AND AGAINST ANY AND ALL CLAIMS, LIABILITIES,
LOSSES, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, COURT COSTS AND
REASONABLE ATTORNEYS' FEES) THAT ARE THEREAFTER ASSERTED AND WHICH WERE OR ARE
INCURRED AT ANY TIME ON OR AFTER THE EXECUTION DATE WITH RESPECT TO OR ARISING
DIRECTLY OR INDIRECTLY FROM THE CLAIMS OF ANY PERSON TO A PREFERENTIAL PURCHASE
RIGHT THAT IS DISCLOSED OR REFERRED TO IN ANY SCHEDULE ATTACHED HERETO AFFECTING
ANY OF THE ASSETS TRANSFERRED TO PURCHASER HEREUNDER, INCLUDING, BUT NOT LIMITED
TO, CLAIMS RESULTING FROM THE ALLOCATED VALUE PLACED BY PURCHASER ON THE SUBJECT
PROPERTY OR THE FORM, TIMELINESS OR MANNER OF NOTICE OR FAILURE TO NOTIFY, AND,
WITH REGARD TO CONSENTS TO ASSIGN OR TRANSFER, THAT ARE DISCLOSED OR REFERRED TO
IN ANY SCHEDULE ATTACHED HERETO OR IN ANY CONTRACT OR AGREEMENT REFLECTED IN THE
PUBLIC RECORDS OF THE MINERALS MANAGEMENT SERVICE, THE PUBLIC RECORDS OF THE
COUNTIES OR PARISHES LOCATED ADJACENT TO THE SUBJECT PROPERTIES OR IN THE
RECORDS OF SELLER.
3.11 [INTENTIONALLY DELETED].
3.12 [INTENTIONALLY DELETED].
ARTICLE 4. SELLER'S REPRESENTATIONS, WARRANTIES AND DISCLAIMER
Seller represents and warrants to Purchaser that as to Sections 4.1 through
4.13 and Section 4.15 below;
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4.1 Existence. As of the Execution Date and the Closing Date, Pioneer Natural
Resources USA, Inc. is a Delaware corporation, is duly formed, validly existing
and in good standing under the laws of the State of Delaware.
4.2 Power. As of the Execution Date and the Closing Date, Seller has the
requisite power and authority to enter into and perform this Agreement and the
transactions contemplated hereby. Except as to the matters set forth on the
various Exhibits and Schedules attached to this Agreement, the execution,
delivery and performance of this Agreement by Seller, and the transactions
contemplated hereby, will not (a) violate any provision of Seller's certificate,
articles of incorporation, bylaws or other governing documents, (b) to the best
knowledge and belief of Seller, 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 any agreement or instrument to which Seller is a
party or by which Seller is bound, (c) to the best knowledge and belief of
Seller, violate any judgment, order, ruling, or decree applicable to Seller and
entered or delivered in a proceeding in which Seller was or is a named party, or
(d) to the best knowledge and belief of Seller, violate any applicable law, rule
or regulation.
4.3 Authorization. As of the Execution Date and the Closing Date, The execution,
delivery and performance of this Agreement and the transactions contemplated
hereby have been duly and validly authorized by all requisite action on the part
of Seller. This Agreement has been duly executed and delivered on behalf of
Seller, and at the Closing all documents and instruments required hereunder to
be executed and delivered by Seller shall be duly executed and delivered. This
Agreement and such documents and instruments shall constitute legal, valid and
binding obligations of Seller enforceable in accordance with their terms
subject, however, to the effect of bankruptcy, insolvency, reorganization,
moratorium and similar laws from time to time in effect relating to the rights
and remedies of creditors, as well as to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
4.4 Brokers. As of the Execution Date and the Closing Date, Seller has incurred
no obligation or liability, contingent or otherwise, for brokers' or finders'
fees in respect of the matters provided for in this Agreement which will be the
responsibility of Purchaser, and any such obligation or liability that might
exist shall be the sole obligation of Seller.
4.5 Foreign Person. As of the Execution Date and the Closing Date, Seller is not
a "foreign person" within the meaning of the Section 1445(f) of the Code.
4.6 Taxes and Royalties. To the best of Seller's knowledge (and excluding
positions taken or statements made in any litigation or submittals to
Governmental Entities that may be contrary to the positions of such Governmental
Entities) as of the Execution Date, except as disclosed on Schedule 4.6, Seller
has paid all royalties and ad valorem, property, production, severance, excise,
and similar taxes and assessments based on the ownership of or the production of
oil or gas from the Subject Properties applicable to the period prior to the
Effective Time, except those being contested in good faith and which are
disclosed.
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4.7 Permits. To the best of Seller's knowledge as of the Execution Date, Seller
possesses all material licenses, permits, certificates, orders, approvals and
authorizations, and has properly made all filings necessary to obtain such
licenses and permits, necessary to own the Assets (and to operate those Assets
operated by Seller) and to carry on its business as now being conducted.
4.8 Compliance with Law. To the best of Seller's knowledge as of the Execution
Date and Closing Date, Seller is in material compliance with all laws,
ordinances, rules, regulations and orders applicable to the Assets, including,
without limitation, all Environmental Laws, ordinances, rules, regulations and
orders, except to the extent of any non-compliance that is not reasonably
expected to result in a material adverse effect on the Assets, taken as a whole.
4.9 Contracts. To the best of Seller's knowledge as of the Execution Date,
except as reflected in the public records of the Minerals Management Service,
the public records of the counties or parishes located adjacent to the Subject
Properties, or in the records of Seller (including but not limited to those
contracts and agreements disclosed or referenced in any Schedule hereto), or
those entered into by operators to which Seller may be bound by virtue of
operating agreements or other agreements to which Seller is a party, there exist
no contracts or agreements (including any Related Agreements) affecting the
Subject Properties to which Seller is bound and which would have a material
adverse effect upon the Subject Properties, taken as a whole.
4.10 Litigation. As of the Execution Date, except as set forth on Schedule 4.10,
no lawsuit, action or other proceeding in which Seller is a named party affects
any of the Assets whether pending or threatened in writing which is based upon
omissions, events or occurrences prior to the Execution Date, and to the best of
Seller's knowledge as of the Execution Date, Seller has not received any written
third party claim between July 1, 2005 and the Execution Date that could
reasonably be expected to have a material adverse effect on the Assets taken as
a whole.
4.11 AFE's. To the best of Seller's knowledge, as of the Execution Date, and
except as disclosed on Schedule 4.11, the Subject Properties have no outstanding
authorities for expenditure that (a) require the additional drilling of ▇▇▇▇▇ or
other material development obligations in order to earn or continue to hold all
or any portion of said Subject Properties or (b) obligate Seller to make
payments of any single expenditure amounts exceeding $200,000 (net to Seller) in
connection with additional drilling of ▇▇▇▇▇ or other capital expenditures
affecting the said Subject Properties.
4.12 Environmental Actions. As of the Execution Date and except as set forth on
Schedules 4.10, 9.10, 4.12, or other Schedules or Exhibits to this Agreement, to
the best of Seller's knowledge, there is not an active pending written claim
received by Seller from a third party against Seller relating to the Subject
Properties seeking monetary relief, injunctive relief, or remediation from
Seller arising from Seller's ownership or operation of the Subject Properties
prior to the Execution Date and alleging a violation of Environmental Laws, or
the unlawful disposal, discharge or release of any Hazardous Substance, and as
to the Subject Properties operated by Seller, to the best of Seller's knowledge
14
as of the Execution Date there exist no events or circumstances that could
reasonably be expected to result in such a claim that would have a material
adverse effect on such Subject Properties .
4.13 Take-or Pay. To the best of Seller's knowledge as of the Execution Date,
except as disclosed in this Agreement, Schedule 4.13, or other Schedule or
Exhibit hereto, with regard to the Subject Properties, Seller is not obligated
beyond Closing by virtue of (a) a prepayment arrangement under any contract (to
which Seller or its Affiliates are a party) for the sale of hydrocarbons or (b)
any arrangement to deliver Seller's hydrocarbons produced from the Subject
Properties at some future time without receiving full payment therefor.
4.14 LIMITATION AND DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. THE EXPRESS
REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN THIS AGREEMENT ARE
EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS,
IMPLIED, STATUTORY, OR OTHERWISE, AND, EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE
REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN SHALL TERMINATE IN ALL RESPECTS
UPON CLOSING OR TERMINATION OF THIS AGREEMENT, PURCHASER ACKNOWLEDGES THAT
SELLER HAS NOT MADE, AND SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES, ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO THE CONDITION OF ANY
WELL, IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY, MACHINERY,
FIXTURES AND PERSONAL PROPERTY CONSTITUTING ANY PART OF THE ASSETS (INCLUDING,
WITHOUT LIMITATION, (a) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (b)
ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (c) ANY
IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, (d)
ANY RIGHTS OF PURCHASER UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF
CONSIDERATION OR RETURN OF THE PURCHASE PRICE, (e) ANY IMPLIED OR EXPRESS
WARRANTY OF FREEDOM FROM REDHIBITORY VICES OR DEFECTS OR OTHER VICES OR DEFECTS,
WHETHER KNOWN OR UNKNOWN, (f) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM
PATENT OR TRADEMARK INFRINGEMENT, (g) ANY AND ALL IMPLIED WARRANTIES EXISTING
UNDER APPLICABLE LAW NOW OR HEREAFTER IN EFFECT, AND (h) ANY IMPLIED OR EXPRESS
WARRANTY REGARDING ENVIRONMENTAL LAWS, THE RELEASE OF MATERIALS OR SUBSTANCES
INTO THE ENVIRONMENT OR THE PRESENCE OF MATERIALS OR SUBSTANCES IN, ON OR UNDER
THE SUBJECT PROPERTIES OR PROPERTY OR PROTECTION OF THE ENVIRONMENT OR HEALTH;
IT BEING THE EXPRESS INTENTION OF PURCHASER AND SELLER THAT THE ▇▇▇▇▇, IMMOVABLE
PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY, MACHINERY, FIXTURES AND
PERSONAL PROPERTY SHALL BE CONVEYED TO PURCHASER AS IS AND IN THEIR PRESENT
CONDITION AND STATE OF REPAIR AND PURCHASER ACCEPTS THE ▇▇▇▇▇, IMMOVABLE
PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY, MACHINERY, FIXTURES AND
PERSONAL PROPERTY AS IN, IN THEIR PRESENT CONDITION AND STATE OF REPAIR. IN
15
ADDITION, SELLER SPECIFICALLY NEGATES AND MAKES NO WARRANTY OR REPRESENTATION,
EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF
ANY DATA (INCLUDING SEISMIC DATA), INTERPRETATIVE INFORMATION, REPORTS, RECORDS,
PROJECTIONS, INFORMATION OR MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR
MADE AVAILABLE TO PURCHASER IN CONNECTION WITH THIS AGREEMENT OR THE
CONTEMPLATED TRANSACTIONS, INCLUDING, WITHOUT LIMITATION, ANY DESCRIPTION OF THE
ASSETS, PRICING ASSUMPTIONS, OR QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF
ANY) ATTRIBUTABLE TO THE ASSETS OR THE ABILITY OR POTENTIAL OF THE ASSETS TO
PRODUCE HYDROCARBONS OR THE ENVIRONMENTAL CONDITION OF THE ASSETS OR PROPERTY OR
ANY OTHER MATTERS CONTAINED IN CONFIDENTIAL INFORMATION OR ANY OTHER MATERIALS
FURNISHED OR MADE AVAILABLE TO PURCHASER BY SELLER OR BY SELLER'S
REPRESENTATIVES. ANY AND ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS,
INFORMATION AND OTHER MATERIALS FURNISHED BY SELLER OR BY SELLER'S
REPRESENTATIVES OR OTHERWISE MADE AVAILABLE TO PURCHASER OR PURCHASER'S
REPRESENTATIVES OR PURCHASER'S AFFILIATES ARE PROVIDED FOR THE BENEFIT OF
PURCHASER AS A CONVENIENCE, AND SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY
OF OR AGAINST SELLER, SELLER'S AFFILIATES OR THEIR RESPECTIVE REPRESENTATIVES.
ANY RELIANCE ON OR USE OF THE SAME SHALL BE AT PURCHASER'S SOLE RISK. THE
ASSIGNMENTS AND BILLS OF SALE OR OTHER CONVEYANCES TO BE DELIVERED BY SELLER AT
CLOSING SHALL EXPRESSLY SET FORTH THE LIMITATIONS AND DISCLAIMERS OF
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS PARAGRAPH.
4.15 Additions. As to Sections 4.2(b) and 4.8 above, the representations and
warranties of Seller are made with reference to Seller's knowledge on the
Execution Date. In the event Seller becomes aware after the Execution Date, but
before Closing, that additional matters or occurrences need to be added to
Schedules or Exhibits to this Agreement to make said representations and
warranties accurate on the Closing Date, then such matters shall be added
promptly by Seller to said Schedules or Exhibits, after gaining such knowledge
of such matters or occurrences, and Seller shall not as a result thereof be in
default or breach of this Agreement.
ARTICLE 5. REPRESENTATIONS, WARRANTIES AND
COVENANTS OF PURCHASER
Purchaser represents and warrants and covenants to Seller that as of the
Execution Date and the Closing Date:
5.1 Existence. Purchaser is a corporation duly organized, validly existing and
and in good standing under the laws of the State of Delaware.
16
5.2 Power. Purchaser has the requisite power and authority to enter into and
perform this Agreement and the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by Purchaser, and the transactions
contemplated hereby, will not (a) violate any provision of any Purchaser's
certificate or articles of incorporation or organization, as the case may be,
bylaws or other governing documents; (b) to the best knowledge and belief of
Purchaser, 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 any agreement or instrument to which Purchaser is a party or by which
Purchaser is bound; (c) to the best knowledge and belief of Purchaser, violate
any judgment, order, ruling, or decree applicable to Purchaser and entered or
delivered in a proceeding in which Purchaser was or is a named party; or (d) to
the best knowledge and belief of Purchaser, violate any applicable law, rule or
regulation.
5.3 Authorization. The execution, delivery and performance of this Agreement and
the transactions contemplated hereby have been duly and validly authorized by
all requisite action on the part of Purchaser. This Agreement has been duly
executed and delivered on behalf of Purchaser, and at the Closing all documents
and instruments required hereunder to be executed and delivered by Purchaser
shall have been duly executed and delivered. This Agreement and such documents
and instruments shall constitute legal, valid and binding obligations of
Purchaser enforceable in accordance with their terms, subject, however, to the
effect of bankruptcy, insolvency, reorganization, moratorium and similar laws
from time to time in effect relating to the rights and remedies of creditors, as
well as to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5.4 Brokers. Purchaser has not incurred any obligation or liability, contingent
or otherwise, for brokers' or finders' fees in respect of the matters provided
for in this Agreement which will be the responsibility of Seller, and any such
obligation or liability that might exist shall be the sole obligation of
Purchaser.
5.5 Investment Intent. Purchaser is acquiring the Assets for Purchaser's own
account for investment, and not with a view to, or for resale in connection
with, any distribution thereof within the meaning of the Securities Act of 1933,
and shall not resell any or all of the Assets except in compliance with all
applicable securities laws.
5.6 Due Diligence. Purchaser represents, warrants and covenants that it has
performed sufficient review and due diligence, including review of file data and
inspections, to evaluate the Assets and Property to Purchaser's complete
satisfaction as a prudent and knowledgeable purchaser. Further, Purchaser has
inspected or waived its right to inspect the Records and the Assets for all
purposes and satisfied itself as to the accuracy and completeness of the
Records, the physical and environmental condition of the Assets, Property and
Subject Properties, both surface and subsurface, including but not limited to
conditions specifically related to the presence, release or disposal of
Hazardous Substances. Purchaser is relying solely upon its own inspection of the
Assets and Property, and Purchaser shall accept all of the same in their "as is,
where is" condition, with all faults.
17
5.7 Sophisticated Buyer. Purchaser is a sophisticated buyer, knowledgeable in
the evaluation and acquisition of oil and gas properties, and understands that
by purchasing oil and gas properties or interests, the Purchaser may be exposed
to risks and liabilities associated with the oil and gas business. Purchaser is
engaged in the business of exploring for or production of oil and gas or other
minerals as an ongoing business and is not purchasing the Assets for resale. By
reason of this knowledge and experience, Purchaser will evaluate the merits and
risks of the Assets, properties or interests to be purchased from Seller and
will form an opinion based solely upon Purchaser's knowledge and experience and
not upon any statements, opinion or predictions by Seller, Seller's Affiliates
or their respective Representatives.
5.8 Economic Risk. Purchaser is aware that ownership of any of the oil and gas
properties or interests is highly speculative and subject to substantial risks,
and the Purchaser is capable of bearing the high degree of economic risk and
burdens of any purchase of the Assets from Seller, including, but not limited
to, the possibility of the complete loss of the Purchase Price, all contributed
capital, the loss of all anticipated tax benefits (if any), the lack of a public
market and limited transferability of such interests or properties.
5.9 Financing. Purchaser has or will have adequate funding or financing to pay
the Purchase Price at Closing.
5.10 Accredited Investor. Purchaser is an "accredited investor" as that term is
used in Regulation D of the Act.
5.11 Solicitation. At no time was Purchaser presented with or solicited by or
through any public promotion or any form of advertising.
5.12 Access to Records. After Closing, Seller shall have reasonable access to
all records and information in possession of Purchaser required by Seller to
meet its indemnity obligations under this Agreement.
5.13 No Breach of Seller's Title Warranty. There are no facts, circumstances or
matters known to Purchaser or its Representatives which would constitute, or
which with the passage of time would constitute, a breach of the warranty of
Seller contained in Section 3.2 above or in Article V of the Assignment and ▇▇▇▇
of Sale or which would require Seller to defend said title from any claims
against such title.
ARTICLE 5A. ADDITIONAL COVENANTS
Seller covenants and agrees that from and after the Execution Date and
until the Closing Date:
5A.1 Maintenance of Assets. Seller will not sell, transfer, assign, convey or
otherwise dispose of any of the Assets subject to Seller's direct control, other
than (a) oil, gas and other hydrocarbons produced, saved and sold in the
ordinary course of business, (b) personal property and equipment which is
18
consumed in connection with the ownership or operation of the Assets or replaced
with property and equipment of comparable or better value and utility in the
ordinary and routine maintenance and operation of the Subject Properties, and
(c) as required in connection with any exercise of preferential rights or as
otherwise required to satisfy obligations to third parties under contracts
presently existing.
5A.2 No Encumbrances. Seller will not create any lien, security interest or
encumbrance on the Assets, the oil or gas attributable to the Assets, or the
proceeds thereof to secure any borrowing by Seller or any other Person.
5A.3 Operations. With respect to any of the Subject Properties operated by
Seller, Seller shall endeavor in good faith (subject to emergency situations
which may occur) until Closing (subject to this Agreement and the rights of
affected parties under applicable agreements) to:
(a) cause the Subject Properties and Equipment to be developed, maintained
and operated in a reasonably good and workmanlike manner as would a prudent
operator and otherwise consistent with its past practices and maintain
insurance (to be reimbursed by Purchaser to Seller), if any, now in force
with respect to the Subject Properties and Equipment;
(b) not approve the drilling of any new well on the Subject Properties
without notifying Purchaser, other than those identified on Schedule 4.11;
(c) not enter into or assume any contract, agreement, litigation settlement
or commitment which is not in the ordinary course of business as heretofore
conducted or which involves payments, receipts or potential liabilities
with respect to one individual Subject Property of more than $50,000.00
(net to Seller), excluding emergency expenditures, unless (i) Seller has
received Purchaser's approval therefor (which approval shall not be
unreasonably withheld or delayed, or (2) such contract or agreement relates
to any AFE referred to in Section 4.11 or will not have a material adverse
effect on the Assets (taken as a whole);
(d) not resign, transfer or otherwise voluntarily relinquish its rights as
operator of any Subject Property for which it serves as operator on the
date hereof;
(e) not 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
Assets to Purchaser, subject to existing contractual obligations;
(f) not enter into any gas sales contract or crude oil sales or supply
contract with respect to the Subject Properties that is not terminable
without penalty upon notice of thirty (30) days or less;
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(g) not enter into any transaction the effect of which, considered as a
whole, would be to cause Seller's ownership interest in any of the Subject
Properties to be reduced from its ownership interest as of the date hereof;
(h) if any approval or consent by any federal, state or local governmental
authority is required to vest title to any of the Subject Properties in
Purchaser at Closing, exercise reasonable efforts, as reasonably requested
in writing by Purchaser, to assist Purchaser in obtaining all such required
approvals or consents at Purchaser's expense; or
(i) endeavor to give prompt written notice to Purchaser of any written
notice of default (or written threat of default, whether disputed or
denied) received or given by Seller after the date hereof under any
instrument or agreement affecting the Subject Properties to which Seller is
a party or by which it or any of the Subject Properties is bound.
ARTICLE 6. SELLER'S CONDITIONS OF CLOSING
Seller's obligation to consummate the transactions provided for herein is
subject only to the satisfaction (or waiver by Seller) on or before the Closing
Date of the following conditions:
6.1 Performance. Purchaser shall have performed and satisfied in all material
respects the obligations, covenants and agreements hereunder to be performed by
it at or prior to the Closing under Section 8.2, including but not limited to
payment of the Adjusted Purchase Price.
6.2 HSR Act. The waiting period required by HSR Act shall have expired or been
terminated, if applicable.
ARTICLE 7. PURCHASER'S CONDITIONS OF CLOSING
Purchaser's obligation to consummate the transactions provided for herein
is subject only to the satisfaction (or waiver by Purchaser) on or before the
Closing Date of the following conditions:
7.1 Performance. Seller shall have performed and satisfied in all material
respects the obligations, covenants and agreements hereunder to be performed by
it at or prior to the Closing as provided in Section 8.2.
7.2 HSR Act. The waiting period required by HSR Act shall have expired or been
terminated, if applicable.
ARTICLE 8. CLOSING.
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8.1 Time and Place of Closing. If the conditions to Closing set forth in
Articles 6 and 7 have been satisfied or expressly waived by the Party entitled
to the benefits thereof, the consummation of the transactions contemplated
hereby ("Closing") shall take place on or before the third Business Day after
such conditions have been so satisfied or waived (other than those conditions
that by their nature can only be satisfied at the Closing, and subject to such
conditions being duly waived or satisfied at the Closing) at one of Seller's
offices at ▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ at 9:00
a.m., or at such other place and time or in such other manner agreed upon by
Seller and Purchaser or permitted under this Agreement (the date of Closing
being the "Closing Date"); provided, that Seller shall have the right to extend
Closing for thirty (30) days for the purpose of obtaining any consent or waiver
necessary or helpful to complete the Closing, and that any extension by Seller
shall not serve to provide Purchaser rights not otherwise expressly provided
herein. Notwithstanding the foregoing, in no event shall either Party be
obligated to complete Closing prior to March 31, 2006.
8.2 Closing Obligations. At Closing, the following events shall occur, each
being a condition precedent to the others and each being deemed to have occurred
simultaneously with the others:
(a) Seller shall execute, acknowledge and deliver to Purchaser an
Assignment and ▇▇▇▇ of Sale in substantially the form attached hereto as
Exhibit "B" (modified to conform to this Agreement), together with
individual Assignments of Record Title or Operating Rights in the Leases in
a form customarily acceptable to the Minerals Management Service, conveying
the Assets to Purchaser as provided hereby and Purchaser shall execute,
acknowledge and deliver same to Seller;
(b) Seller and Purchaser shall execute, acknowledge and deliver transfer
orders or letters in lieu thereof substantially in the form set forth on
Schedule 8.2(b) attached hereto directing all purchasers of production from
the Assets to make payment to Purchaser of proceeds attributable to the
Assets;
(c) Purchaser shall deliver by wire transfer the Adjusted Purchase Price as
provided in Article 2;
(d) Purchaser and Seller shall execute and deliver a settlement statement
(the "Preliminary Settlement Statement") prepared by Seller and setting
forth the Purchase Price and all adjustments thereto using information to
the extent then available and if not then available then Seller's
reasonable good faith estimate thereof, subject to Section 13.17(a);
(e) Purchaser and Seller shall execute and deliver a Closing Agreement
confirming the occurrence of Closing and such other instruments and
certificates and take such other action as may be necessary to carry out
their respective obligations under this Agreement;
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(f) Seller shall deliver to Purchaser possession of the Assets, unless
otherwise provided in this Agreement;
(g) In compliance with the Code, Seller shall execute and deliver to
Purchaser a nonforeign affidavit in the form of Exhibit "C" attached
hereto;
(h) For Seller-operated and non-operated Assets, (1) Purchaser shall
deliver to Seller evidence of its possession of the appropriate bond,
surety letter, guarantee or guaranty, or letter of credit which has been
accepted or which Seller and Purchaser in good faith agree will be accepted
by the regulatory agency having jurisdiction over the plugging and
abandonment of ▇▇▇▇▇, to the extent the same may be required by Law or
applicable Related Agreements; and (2) Purchaser shall deliver to Seller
letter(s) of credit, guarantee or guaranty, or other security in a form
reasonably satisfactory to Seller covering performance or plugging and
abandonment of ▇▇▇▇▇ and/or other Assets sufficient to replace Seller's
letters of credit, guarantee or guaranty, or other security under any
Related Agreement and relieve Seller of each and every obligation and
liability related thereto or arising therefrom.
(i) Seller shall execute and deliver to Purchaser appropriate resignation
of operator forms with respect to the Subject Properties operated by
Seller, if and to the extent required by Law or applicable contract. Seller
shall execute and deliver to Purchaser appropriate Designation of Operator
forms with respect to the Subject Properties operated by Seller.
(j) Purchaser and Seller shall execute and deliver the Transition Services
Agreement utilizing the form of Exhibit "D" attached hereto.
ARTICLE 8A. PURCHASER'S OBLIGATION TO QUALIFY AS OPERATOR
Purchaser shall endeavor in good faith and diligence to become qualified as the
designated operator of the Assets operated by Seller as soon as practicable.
Upon Purchaser's receipt, but in no event later than five (5) Business Days
after Closing (subject to the extent of any delay caused by a Governmental
Entity beyond the control of Purchaser), Purchaser shall deliver to Seller proof
that Purchaser has been approved by the relevant Governmental Entity as the
designated operator of the Assets operated by Seller, including all
Seller-operated ▇▇▇▇▇ that are subject to this Agreement and evidence that
Purchaser has obtained all necessary approvals, permits or transfers of permits
to operate the Assets.
ARTICLE 9. POST-CLOSING OBLIGATIONS.
9.1 Receipts and Credits; Suspense Funds. Upon Closing and subject to the terms
hereof, all monies, refunds, proceeds, receipts, credits, receivables, accounts
and income attributable to the purchased Assets (a) for all periods of time from
and after the Effective Time shall be the sole property and entitlement of the
Purchaser, and, to the extent received by Seller, Seller shall fully disclose
and account therefor to Purchaser promptly, and (b) for all periods of time
22
prior to the Effective Time shall be the sole property and entitlement of Seller
to the extent received by Purchaser, Purchaser shall fully disclose and account
therefor to Seller promptly. Purchaser shall pay Seller for Seller's share of
hydrocarbons attributable to the purchased Assets produced or in storage on the
Effective Time based on actual, if available, or estimated inventories, at
Seller's relevant contract price. Seller and Purchaser recognize that as of the
Effective Time there may be over or under imbalances with respect to gas
production, gathering, transportation or processing attributable to the Subject
Properties ("Imbalances") and hereby agree that the Subject Properties will be
conveyed specifically subject to Imbalances that exist as of the Effective Time,
with Purchaser, as of Closing, bearing and assuming all obligations with respect
to any overproduction account or liability and receiving the benefit of and
being credited with any underproduction account or credit; provided, however,
that on or after Closing, there shall be a monetary adjustment pursuant to the
Preliminary Settlement Statement or Final Accounting to reflect any known
Effective Time net overproduction or underproduction, or pipeline imbalance to
the extent attributable to the Assets and based upon and not to exceed the
actual settlements thereof.. Notwithstanding the foregoing, the Parties
acknowledge that a pipeline Imbalance may exist that relates to production
through the Canyon Express Pipeline System attributable to one of the Assets
being the Aconcagua Prospect, Mississippi Canyon Block 305. The amount of such
Imbalance and the manner and timing of the settlement thereof may not be
determined prior to Closing. In the event that such Imbalance has not been
settled by Closing, Seller will retain all rights and liabilities attributable
to such Imbalance prior to the Effective Time and Purchaser shall assume all
rights and liabilities attributable to such Imbalance for all periods of time
from and after the Effective Time. No settlement pertaining to the Imbalances
shall be agreed by or on behalf of either Party without the other Party's
express prior written consent (which shall not be unreasonably withheld or
delayed) and each Party shall be given advance notice and be invited to attend
all settlement discussions regarding such Imbalances until a settlement is
reached regarding the Imbalance.
At Closing, Seller shall deliver to Purchaser all amounts in Seller's possession
due third party owners of interests in the Subject Properties (except for funds
suspended as a result of or relating to litigation or claims retained by
Seller), and Purchaser agrees that it shall be solely responsible for the
disposition of such funds, the payment thereof to the rightful owners and the
payment, if any, of royalty thereon (the "Suspense Funds").
9.2 Costs and Liabilities; Indemnity
(a) As used in this Agreement, "Claims", "CLAIMS," "Claims" or "CLAIMS"
shall include costs, expenses, obligations, claims, demands, causes of
action, liabilities, damages, fines, penalties, debts, losses and judgments
of any kind or character, whether matured or, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, known or unknown, and all
costs, expenses and fees (including, without limitation, interest,
attorneys' fees, costs of experts, court costs and costs of investigation)
incurred in connection therewith, including, but not limited to claims
arising from or directly or indirectly related to death, personal or bodily
23
injury, property damage, environmental damage or the remediation thereof,
contract and royalty obligations, operating, suspense and capital
obligations attributable or relating in any way to the Assets or the
Property. As used in this Section 9.2, "Assets" shall include the Suspense
Funds.
(b) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IT IS THE
EXPRESS INTENT AND AGREEMENT OF SELLER AND PURCHASER THAT, IF CLOSING
OCCURS, PURCHASER SHALL, EXCEPT AS MAY BE PROVIDED OTHERWISE IN SECTION
9.2(F) AND THE SPECIAL WARRANTY OF TITLE TO BE CONTAINED IN THE ASSIGNMENT
AND ▇▇▇▇ OF SALE, (AND THE OTHER ASSIGNMENTS OF MINERALS MANAGEMENT SERVICE
RECORD TITLE OR OPERATING RIGHTS EXECUTED AND DELIVERED BY BOTH PURCHASER
AND SELLER PURSUANT TO THIS AGREEMENT) ACCEPT THE ASSETS AND PROPERTY IN
THEIR "AS IS, WHERE IS" CONDITION, SUBJECT TO AND WITH ANY AND ALL FAULTS,
DEFECTS, DEFICIENCIES, IRREGULARITIES AND CLAIMS RELATED OR ATTRIBUTABLE IN
ANY MANNER THERETO, INCLUDING, WITHOUT LIMITATION, REDHIBITORY VICES, TITLE
DEFECTS, ENVIRONMENTAL DEFECTS, SUBSIDENCE, DECAY OR ANY OTHER MATTER
AFFECTING IN ANY RESPECT THE TITLE OR PHYSICAL CONDITION OF, OR THE RIGHT
TO OWN, USE, OPERATE, DEVELOP OR ENJOY, THE ASSETS OR THE PROPERTY, WHETHER
KNOWN OR UNKNOWN, LIQUIDATED OR UNLIQUIDATED, FIXED OR CONTINGENT, DIRECT
OR INDIRECT.
At, upon and after Closing and without further action or documentation,
Purchaser, its successors and assigns, except as may be provided otherwise
in Section 9.2(f) and the special warranty of title to be contained in the
Assignment and ▇▇▇▇ of Sale, (and the other assignments of minerals
management service record title or operating rights executed and delivered
by both Purchaser and Seller pursuant to this Agreement) (1) shall assume,
be responsible for and comply with all duties and obligations, express or
implied, arising at any time with respect to the Assets, including, without
limitation (i) those arising under or by virtue of any Related Agreements,
lease, contract, agreement, document, permit, law, statute, rule,
regulation or order of any governmental authority or court (specifically
including, without limitation, any governmental request or other
requirement to plug, re-plug or abandon or re-abandon any well of
whatsoever type, status or classification, or take any restoration,
clean-up, remedial or other action with respect to the Assets or Property),
(ii) preferential rights to purchase, and (iii) third party consents, and
(iv) Claims in connection with the mispayment or underpayment of royalties
or other burdens on production; (2) shall assume, be responsible for and
pay all Claims affecting or arising, directly or indirectly, at any time in
connection with the Assets, including, without limitation, claims for
personal or property injury or damage, restoration, environmental cleanup,
remediation, or compliance, or for any other relief, arising directly or
indirectly from or incident to, the use, ownership, occupation, operation,
24
maintenance or abandonment of or production from the Assets, or condition
of the Assets or Property, whether latent or patent, including, without
limitation, contamination of property or premises with Naturally Occurring
Radioactive Materials ("NORM"), and whether or not arising solely from or
contributed to by the negligence in any form, whether active or passive, or
of any kind or nature, of Seller or its predecessors in title or their
respective Affiliates agents, employees or contractors; and (3) SHALL
DEFEND, INDEMNIFY AND HOLD SELLER HARMLESS FROM ANY AND ALL CLAIMS ARISING,
ASSERTED OR DUE AT ANY TIME, WHETHER BEFORE, ON OR AFTER THE EFFECTIVE
TIME, IN CONNECTION WITH OR RELATED TO THE FOREGOING.
FURTHER, AT, UPON AND AFTER CLOSING, AND WITHOUT FURTHER DOCUMENTATION AND
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS MAY BE PROVIDED
OTHERWISE IN SECTION 9.2(f) AND SUBJECT TO THE SPECIAL WARRANTY OF TITLE
CONTAINED IN THE ASSIGNMENT AND ▇▇▇▇ OF SALE (AND THE OTHER ASSIGNMENTS OF
MINERALS MANAGEMENT SERVICE RECORD TITLE OR OPERATING RIGHTS EXECUTED AND
DELIVERED BY BOTH PURCHASER AND SELLER PURSUANT TO THIS AGREEMENT)
PURCHASER, ITS SUCCESSORS AND ASSIGNS, SHALL INDEMNIFY, DEFEND AND HOLD
HARMLESS SELLER FROM ANY AND ALL CLAIMS ARISING AT ANY TIME, WHETHER
BEFORE, ON OR AFTER THE EFFECTIVE TIME, MADE BY ANY PERSON AND ARISING OUT
OF OR RESULTING FROM:
(1) THE REVIEW, INSPECTION AND ASSESSMENT OF THE A SSETS OR THE
PROPERTY BY PURCHASER;
(2) THE OWNERSHIP OR OPERATION OF THE ASSETS OR PROPERTY BY OR ON
BEHALF OF SELLER OR ITS PREDECESSORS IN TITLE OR ACTS OR OMISSIONS BY
OR ON BEHALF OF SELLER OR ITS PREDECESSORS IN TITLE IN CONNECTION WITH
OR PERTAINING TO THE ASSETS OR PROPERTY;
(3) THE OWNERSHIP OR OPERATION OF THE ASSETS OR PROPERTY BY OR ON
BEHALF OF PURCHASER OR ITS SUCCESSORS IN TITLE OR THE ACTS OR
OMISSIONS BY OR ON BEHALF OF PURCHASER OR ITS SUCCESSORS IN TITLE IN
CONNECTION WITH OR PERTAINING TO THE ASSETS OR PROPERTY;
(4) THE ACTS OR OMISSIONS OF THIRD PARTIES RELATING TO AN ERROR IN
DESCRIBING THE ASSETS;
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(5) RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER RELATED AGREEMENTS;
(6) FAILURE BY THIRD PARTIES TO APPROVE OR CONSENT TO ANY ASPECT OF
THIS TRANSACTION OR THE SALE OR TRANSFER OF THE ASSETS OR ANY PORTION
THEREOF, BUT LIMITED TO THE EXTENT EXPRESSLY SET OUT IN SECTION 3.10;
(7) OBLIGATIONS TO PLUG, RE-PLUG, ABANDON OR RE-ABANDON ▇▇▇▇▇, REMOVE
FACILITIES, EQUIPMENT, PIPELINES AND FLOWLINES, DREDGE, AND RESTORE,
CLEAN UP AND/OR REMEDIATE THE ASSETS OR PROPERTY;
(8) PAYMENTS, ROYALTIES OR DISBURSEMENTS PAYABLE BY PURCHASER TO THIRD
PARTIES WITH REGARD TO THE ASSETS;
(9) THE PHYSICAL OR ENVIRONMENTAL CONDITION OF OR RELATING TO THE
ASSETS OR PROPERTY OR ANY DISPOSAL SITE (WHETHER ON THE ASSETS OR
PROPERTY OR OFFSITE) CONTAINING MATERIALS OR WASTES FROM THE
OPERATIONS OR ACTIVITIES ON THE PROPERTY OR ASSETS INCLUDING CLAIMS
UNDER ANY LAW OR ENVIRONMENTAL LAW;
(10) REMEDIATION ACTIVITIES, INCLUDING DAMAGES INCURRED BY PURCHASER
DURING OR ARISING FROM REMEDIATION ACTIVITIES RELATING TO THE ASSETS
OR PROPERTY; AND
(11) INABILITY OR FAILURE TO OBTAIN THE TRANSFER OF A PERMIT OR
AUTHORIZATION OR THE INABILITY TO OBTAIN A PERMIT OR AUTHORIZATION
RELATING TO THE ASSETS.
(c) From and after Closing, any demand for indemnity hereunder shall be
made by written notice, together with a written description of any Claims
asserted stating the nature and basis of such Claim and, if ascertainable,
the amount thereof. The Party upon whom notice is served shall have a
period of twenty (20) days after receipt of such notice within which to
respond thereto or, in the case of an underlying demand which requires a
shorter time for response, then within such shorter period as specified in
such notice (the "Notice Period"). If the Party upon whom notice is served
denies liability or fails to provide the defense for any Claim, the other
Party may defend or compromise the Claim as it deems appropriate. If the
Party upon whom notice is served accepts liability and responsibility for
the defense of any Claim, it shall so notify the other Party as soon as is
practicable prior to the expiration of the Notice Period and undertake the
26
defense or compromise of such Claim with counsel selected by the Party
accepting such liability. If the Party on whom notice is served undertakes
the defense or compromise of such Claim, the other Party shall be entitled,
at its own expense, to participate in such defense. No compromise or
settlement of any Claim shall be made without reasonable notice to the
other Party, and without the prior written approval of the other Party,
which approval shall not be unreasonably withheld or delayed, and such
approval shall not be withheld if such compromise or settlement includes a
general and complete release of the other Party, its successors, assigns,
Affiliates and their respective Representatives in respect of the matter,
with prejudice, and with no express or written admission of liability on
the part of the other Party, its Affiliates and their respective
Representatives, and is without cost or liability and had no constraints on
the future conduct of its or their respective businesses. Purchaser and
Seller acknowledge that their obligations to indemnify, defend and hold the
other Party and its Affiliates harmless under this Agreement include
obligations to pay the attorneys' fees and court and arbitral costs
incurred by the other Party and its Affiliates in defending said Claims,
regardless of the merits of said Claims, where the Party to whom notice is
served hereunder denies liability or fails to provide the defense for any
said Claim.
(d) Seller and Purchaser shall have the right at all times to participate,
at their sole cost, in the preparation for any hearing or trial related to
the indemnities set forth in this Agreement, as well as the right to appear
on their own behalf or to retain separate counsel to represent them at any
such hearing or trial.
(e) REGARDLESS OF WHETHER EXPRESSLY SO STATED IN ANY PARTICULAR PROVISION
IN THIS AGREEMENT, THE BENEFIT AND PROTECTION OF EACH AND EVERY OF THE
INDEMNITIES, RELEASE, HOLD HARMLESS AND OBLIGATIONS TO DEFEND OF PURCHASER
PROVIDED TO SELLER IN THIS AGREEMENT SHALL EXTEND TO SELLER AND ITS
AFFILIATES AND ANY PERSON WHO AT ANY TIME HAS SERVED OR IS SERVING AS A
DIRECTOR, OFFICER, EMPLOYEE, CONSULTANT, INVITEE OR AGENT THEREOF (EACH A
"REPRESENTATIVE" AND COLLECTIVELY "REPRESENTATIVES"), AND EACH OF THEIR
RESPECTIVE HEIRS, EXECUTORS, SUCCESSORS AND ASSIGNS, AND SHALL APPLY TO ALL
CLAIMS SUBJECT TO INDEMNITY HEREUNDER, INCLUDING THOSE BASED ON NEGLIGENCE
OF ANY NATURE, INCLUDING SOLE NEGLIGENCE, SIMPLE NEGLIGENCE, CONCURRENT
NEGLIGENCE, ACTIVE NEGLIGENCE, PASSIVE NEGLIGENCE, STRICT LIABILITY OR
FAULT OF SELLER (OR ANY OTHER INDEMNIFIED PARTY) OR ANY OTHER THEORY OF
LIABILITY OR FAULT, WHETHER OF LAW (WHETHER COMMON OR STATUTORY) OR IN
EQUITY (EXCEPT TO THE EXTENT CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SELLER OR SELLER'S AFFILIATES OR THEIR REPRESENTATIVES, BUT
EXCLUDING FROM THIS EXCEPTION GROSS NEGLIGENCE AND WILLFUL MISCONDUCT OF
27
ANY CONTRACTORS, INCLUDING BUT NOT LIMITED TO FABRICATORS, INSTALLERS,
TRANSPORTERS, AND OTHER VENDORS PROVIDING OR SUPPLYING WORK, SERVICES,
MACHINERY, PIPELINES OR EQUIPMENT OF ANY KIND TO ANY OF THE ASSETS AT ANY
TIME EVEN IF SUCH CONTRACTORS ARE OTHERWISE A REPRESENTATIVE OF SELLER OR
ITS AFFILIATES). THE INDEMNIFICATION BY PURCHASER IN THIS SECTION 9.2 SHALL
BE IN ADDITION TO ANY OTHER INDEMNITY PROVISIONS CONTAINED IN THIS
AGREEMENT, AND IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT THE TERMS OF THIS
SECTION 9.2 SHALL, AT SELLER'S OPTION, CONTROL OVER ANY CONFLICTING OR
CONTRADICTING TERMS OR PROVISIONS CONTAINED IN THIS AGREEMENT, AND SHALL
SURVIVE CLOSING.
(f) INDEMNIFICATION BY SELLER OR RESPONSIBILITY OF SELLER FOR CERTAIN THIRD
PARTY CLAIMS AND SELLER'S BREACHES OF ITS REPRESENTATIONS AND WARRANTIES
AND CERTAIN COVENANTS UNDER THIS AGREEMENT.
(i) SELLER AGREES TO DEFEND, INDEMNIFY, AND HOLD HARMLESS PURCHASER FROM
AND AGAINST ANY AND ALL CLAIMS THAT ARE THE SUBJECT OF A LAWSUIT, ACTION OR
OTHER LEGAL PROCEEDING FILED BY UNAFFILIATED THIRD PARTIES AFTER THE
CLOSING DATE BUT PRIOR TO DECEMBER 31, 2007, TO THE EXTENT PERTAINING TO
THE NON-PAYMENT OR UNDERPAYMENT OF (a) ROYALTIES ATTRIBUTABLE TO THE
SUBJECT PROPERTIES WITH RESPECT TO PRODUCTION OBTAINED PRIOR TO THE
EFFECTIVE TIME, OR b) TAXES ATTRIBUTABLE TO SUCH PRODUCTION AND AS TO (a)
AND (b) ABOVE, NET TO SELLER'S INTEREST IN THE SUBJECT PROPERTIES AND
ACCRUING OR DUE PRIOR TO THE EFFECTIVE TIME, TO THE EXTENT, AND ONLY TO THE
EXTENT, THAT:
(1) SUCH CLAIMS ARE MADE BY A GOVERNMENTAL ENTITY OR NON-GOVERNMENTAL
THIRD PARTIES NOT AFFILIATED WITH PURCHASER;
(2) SUCH CLAIMS ARE NOT MADE BY A SUBSEQUENT OWNER OF ANY OR ALL OF
THE ASSETS;
(3) THE PURCHASER (OR ANY SUBSEQUENT PURCHASER, OWNER, ASSIGNEE OR
TRANSFEREE) OR ANY PARTY ASSOCIATED WITH THE FOREGOING, DID NOT TAKE
ACTIONS THAT INTENTIONALLY EXACERBATED OR WERE REASONABLY LIKELY TO
EXACERBATE ANY LOSSES OR DAMAGES, OR THAT ENCOURAGED A THIRD PARTY TO
28
MAKE A CLAIM FOR SUCH LOSSES OR DAMAGES, PROVIDED, HOWEVER, THAT
PURCHASER'S MERE DECISION TO PAY AND THE MERE PAYMENT OF ROYALTIES OR
TAXES IN A MANNER DIFFERENTLY THAN HAS SELLER SHALL NOT LIMIT,
RESTRICT, PRECLUDE OR TERMINATE SELLER'S INDEMNITY OBLIGATIONS
HEREUNDER ;
(4) THE CLAIMS UNDER THIS SECTION 9.2(f)(i) ARE BASED ON FACTS THAT
ORIGINATE OR EVENTS THAT TAKE PLACE SOLELY DURING THE PERIOD PRIOR TO
THE EFFECTIVE TIME; AND
(5) PURCHASER DID NOT HAVE KNOWLEDGE OF SUCH NON-PAYMENT OR
UNDERPAYMENT AS OF THE EXECUTION DATE, EXCEPT TO THE EXTENT DISCLOSED
IN SCHEDULE 4.06 OR OTHERWISE TO SELLER BY PURCHASER BY WRITTEN NOTICE
DELIVERED AT LEAST THREE (3) BUSINESS DAYS PRIOR TO THE EXECUTION
DATE.
PURCHASER SHALL ALSO BE ENTITLED TO INDEMNIFICATION UNDER THIS
SECTION 9.2.(f)(i) TO THE EXTENT PURCHASER NOTIFIES SELLER IN WRITING,
DELIVERED PRIOR TO DECEMBER 31, 2007, OF A LEGITIMATE AND BONA FIDE BASIS,
ACCOMPANIED BY REASONABLY DETAILED RECORDS (TO THE EXTENT REASONABLY
AVAILABLE TO PURCHASER OR ITS AFFILIATES) AND ANALYSIS SUPPORTING THE
CONCLUSION THAT SELLER HAS NOT PAID OR HAS UNDERPAID THE ABOVE-DESCRIBED
ROYALTIES OR TAXES WITH REGARD TO THE SUBJECT PROPERTIES FOR THE PERIOD
PRIOR TO THE EFFECTIVE TIME (WHETHER OR NOT A CLAIM HAS BEEN FILED BY
GOVERNMENTAL ENTITY OR UNAFFILIATED THIRD PARTY). AT LEAST TEN DAYS PRIOR
TO MAKING THE AFOREMENTIONED NOTICE TO SELLER, PURCHASER SHALL CONSULT AND
ENGAGE IN A REASONABLE DIALOGUE WITH THE GENERAL COUNSEL OF THE CORPORATE
PARENT OF SELLER OR IN THE ABSENCE OF THE GENERAL COUNSEL THE CHIEF
FINANCIAL OFFICER OR THEIR RESPECTIVE DESIGNEES AND ADVISE SAME OF THE
COMING NOTICE AND THE REASONS SUPPORTING SAME.
(ii) FOR THE PERIOD BEGINNING ON THE CLOSING DATE AND ENDING DECEMBER 31,
2006, SELLER AGREES TO DEFEND, INDEMNIFY, AND HOLD HARMLESS PURCHASER FROM
AND AGAINST ANY AND ALL LOSSES TO THE EXTENT ATTRIBUTABLE TO ANY BREACH BY
SELLER OF ANY OF ITS COVENANTS UNDER ARTICLE 5A OR REPRESENTATIONS OR
WARRANTIES CONTAINED IN ARTICLE 4 TO THE EXTENT, AND ONLY TO THE EXTENT,
THAT:
29
(1) THE LOSSES ARE NOT THE SUBJECT OF A CLAIM MADE BY A SUBSEQUENT
OWNER OF ANY OR ALL OF THE ASSETS,
(2) THE PURCHASER (OR ANY SUBSEQUENT PURCHASER, OWNER, ASSIGNEE OR
TRANSFEREE) OR ANY PARTY ASSOCIATED WITH THE FOREGOING, DID NOT TAKE
ACTIONS THAT INTENTIONALLY EXACERBATED OR WERE REASONABLY LIKELY TO
EXACERBATE ANY LOSSES, OR THAT ENCOURAGED A THIRD PARTY TO MAKE A
CLAIM FOR SUCH LOSSES,
(3) PURCHASER DID NOT HAVE KNOWLEDGE OF SUCH BREACH OF REPRESENTATION
OR WARRANTY AS OF THE EXECUTION DATE OR CLOSING DATE (AS APPLICABLE TO
THE RESPECTIVE REPRESENTATIONS AND WARRANTIES), AND
(4) AS TO SECTION 5A.3(a), ONLY IF AND TO THE EXTENT THE BREACH ARISES
FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SELLER.
(iii) FOR THE PERIOD BEGINNING ON THE CLOSING DATE AND ENDING DECEMBER 31,
2006, SELLER AGREES TO DEFEND, INDEMNIFY, AND HOLD HARMLESS PURCHASER
FROM AND AGAINST ANY AND ALL LOSSES TO THE EXTENT ATTRIBUTABLE TO ANY
LAWSUIT, ACTION, OR PROCEEDING AGAINST SELLER OR THE ASSETS AND
COMMENCED AFTER THE EXECUTION DATE BUT BEFORE THE CLOSING DATE BY ANY
UNAFFILIATED THIRD PARTY WHICH HAS A MATERIAL ADVERSE EFFECT ON THE
ASSETS IF SUCH LAWSUIT, ACTION, OR PROCEEDING ARISES SOLELY OUT OF
PRE-EFFECTIVE TIME EVENTS, OMISSIONS OR OCCURRENCES; PROVIDED,
HOWEVER, THIS INDEMNITY SHALL NOT APPLY IF THE PURCHASER (OR ANY
SUBSEQUENT PURCHASER, OWNER, ASSIGNEE OR TRANSFEREE) OR ANY PARTY
ASSOCIATED WITH THE FOREGOING, TAKES OR TOOK ACTIONS THAT
INTENTIONALLY EXACERBATED OR WERE REASONABLY LIKELY TO EXACERBATE ANY
LOSSES OR DAMAGES, OR THAT ENCOURAGED A THIRD PARTY TO MAKE A CLAIM
FOR SUCH LOSSES OR DAMAGES.
(iv) Notwithstanding anything to the contrary in this Agreement, the losses
or damages claimed by Purchaser under Section 9.2(f)(ii) and/or
9.2(f)(iii) shall not exceed the Allocated Value of the Lease or
Leases affected by the losses or damages for any claim or claims by
Purchaser pursuant to Section 9.2(f)(ii) and/or (iii) and any single
claim must equal or exceed fifty thousand US Dollars (US $50,000.00)
30
in order for Purchaser to seek indemnification, provided however, no
Claims submitted pursuant to Section 9.2(f)(ii) and/or (iii) will be
valid until the aggregate losses or damages suffered by Purchaser
exceed Three Percent (3%) of the Adjusted Purchase Price, (the
"Deductible") and then, for only that amount that exceeds the
Deductible, and for losses or damages above the Deducible but
amounting to up to Twenty (20%) of the Adjusted Purchase Price,
Seller shall indemnify Purchaser as provided above in Section
9.2(f)(ii) and/or (iii) as applicable and for said Twenty Percent
(20%) of Adjusted Purchase Price, however, in no event shall Seller
be required to indemnify Purchaser or pay any other amount in
connection with respect to the indemnification obligations under
Section 9.2(f)(ii)and/or (iii) and (iv) which individually or in the
aggregate exceeds or would exceed Twenty Percent (20%) of the Adjusted
Purchase Price or which would result in a double recovery or for which
an adjustment has already been made under this Agreement.
(v) Purchaser shall give Seller written notice, if at all, with respect
to Claims brought under Sections 9.2(f)(ii) or 9.2(f)(iii) in
accordance with the notice provisions of this Agreement prior to
December 31, 2006 and with regard to 9.2(f)(i) prior to December 31,
2007. Any Claims submitted by Purchaser pursuant to this Section
9.2(f) shall not be effective if submitted after December 31, 2006 or
December 31, 2007, as applicable, and Seller shall have no
obligation to indemnify Purchaser therefrom. Notwithstanding anything
to the contrary contained in this Agreement or under a ny legal
requirements, the remedies available to Purchaser under this Section
9.2 (f) shall be the sole and exclusive remedies for the breach by
Seller of any of its representations or warranties, covenants or other
obligations contained in this Agreement.
(vi) Notwithstanding anything to the contrary contained herein, or
otherwise, the failure or breach of any one or more of Seller's
representations and warranties set forth in this Agreement or any
other agreement, or the failure by Seller to comply with any of its
obligations set forth in this Agreement (other than its obligation set
forth in Section 7.1 in this Agreement) or any other agreement shall
not terminate any of Seller's rights under this Agreement or release
Purchaser from any of its obligations under this Agreement, including,
without limitation, Purchaser's obligation to close the transactions
contemplated by this Agreement and to pay the Adjusted Purchase Price
at Closing.
9.3. Further Assurances. After the Execution Date, Seller and Purchaser agree to
take such further actions and to execute, acknowledge and deliver all such
further documents and take such further action that is reasonably requested by
31
the other Party and necessary or useful in carrying out the purposes of this
Agreement or of any document delivered pursuant hereto. The Parties will
cooperate at all times after Closing to execute and record correction
instruments to correct scrivener's errors in the preparation of Closing
documents.
9.4 Delivery of Records. As soon as reasonably possible but no later than sixty
(60) days after the Closing Date, Seller shall deliver the Records covering the
Assets with Purchaser bearing the expense for such delivery; provided, that
Seller (i) shall exercise reasonable commercial efforts to provide Purchaser at
Closing or as soon thereafter as is practicable with all Records necessary to
assume and conduct operations of the Assets, and (ii) shall have the right to
retain, as its own, original Records that pertain to Excluded Assets and copies
(at Seller's cost) of all other Records. Purchaser shall provide access to
Seller to all Records, with the right to copy same, upon reasonable notice
during regular business hours, for a period of seven (7) years after the Closing
Date.
9.5 Access to Data. Subject to the rights of third parties and Seller's
proprietary rights, Seller, upon and after Closing, to the extent it can do so
without cost or penalty, shall provide Purchaser with reasonable access to
Seller's books and records for a period ending two (2) years after Closing as
necessary for Purchaser to prepare its financial statements.
9.6 Purchaser's Release of Seller. Upon and after Closing, subject to Seller's
indemnification obligations under Sections 2.3 and 9.2(f) and further subject to
the special warranty of title contained in the Assignment and ▇▇▇▇ of Sale (and
the other assignments of minerals management service record title or operating
rights executed and delivered by both purchaser and seller pursuant to this
agreement), and without further action or documentation, Purchaser releases and
discharges Seller and Seller's Affiliates and their respective Representatives,
successors and assigns, from all Claims relating in any way to the Assets, the
Property or the transactions contemplated by this Agreement, regardless of when
or how the Claims arose or arise, or whether the Claims were foreseeable or
unforeseeable. Purchaser's release of Seller and its Affiliates and their
respective Representatives, successors and assigns, includes Claims resulting in
any way from the negligence or strict liability of Seller and its Affiliates and
their respective Representatives, whether the negligence or strict liability is
active, passive, joint, concurrent, or sole (but excluding gross negligence or
willful misconduct of Seller and its Affiliates and their respective
Representatives). There are no exceptions to Purchaser's release of Seller and
its Affiliates and their respective Representatives, successors and assigns, and
this release is binding on Purchaser and its successors and assigns. PURCHASER
EXPRESSLY WARRANTS AND REPRESENTS AND DOES HEREBY STATE AND REPRESENT THAT NO
PROMISE OR AGREEMENT WHICH IS NOT HEREIN EXPRESSED HAS BEEN MADE TO PURCHASER IN
EXECUTING THIS AGREEMENT OR AGREEING TO THIS RELEASE AND THAT PURCHASER IS NOT
RELYING UPON ANY STATEMENT OR REPRESENTATION OF SELLER OR ANY AFFILIATE OF
SELLER OR ANY OF THEIR RESPECTIVE REPRESENTATIVES. PURCHASER IS REPRESENTED BY
32
LEGAL COUNSEL AND ACKNOWLEDGES THAT SAID COUNSEL HAS READ AND EXPLAINED TO
PURCHASER THE ENTIRE CONTENTS OF THIS AGREEMENT AND THIS RELEASE AND EXPLAINED
THE LEGAL CONSEQUENCES THEREOF.
9.7 Retroactive Effect. Purchaser acknowledges that its obligations to release,
indemnify, defend, and hold Seller and its Affiliates and their respective
Representatives, successors and assigns, harmless apply to matters occurring or
arising before, on and after the Effective Time to the extent provided in this
Agreement. Seller acknowledges that its obligations to indemnify, defend, and
hold Purchaser and its Affiliates and their respective Representatives,
successors and assigns, harmless apply to matters occurring or arising before,
on and after the Effective Time to the extent provided in this Agreement.
9.8 Inducement to Seller. Purchaser acknowledges that it evaluated its
obligations under this article and understands that its assumption of these
obligations is a material inducement to Seller to enter into this Agreement with
and close the sale and transfer to Purchaser.
9.9 Related Agreements. Unless specifically provided otherwise in this
Agreement, the sale of the Assets is made subject to all oil, gas and mineral
leases, deeds, purchase and sale and transfer agreements, asset sale agreements,
assignments, subleases, farmout agreements, joint operating agreements,
operating agreements, unit operating agreements, pooling agreements,
construction management agreements, data exchange agreements, pipeline system
operating agreements, production handling agreements, natural gas sales and
purchase agreements, gas gathering agreements, participation agreements,
engineering procurement construction and installation agreements, spar use and
access agreements, crude oil exchange agreements, processing agreements,
assignment coordination and oversight agreements, capacity commitment letter
agreements, unit agreements, pooling agreements, letter agreements, easements,
rights of way and all other contracts and agreements with respect to or
pertaining to the Assets, to the extent same are binding on Seller or Seller's
Affiliates (the "Related Agreements"). Upon and after Closing, Purchaser
expressly assumes the obligations and liabilities of Seller and Seller's
Affiliates under all such agreements insofar as the obligations and liabilities
concern or pertain to the Assets, and Purchaser agrees to execute any documents
necessary to effectuate such assumption. The Parties agree that this Section 9.9
is applicable to all Related Agreements, recorded and unrecorded.
9.10 Litigation. Upon and after Closing, Purchaser shall assume all obligations
of Seller and be responsible and liable for all litigation listed on Schedule
9.10, and all matters, costs, judgments, and expenses related thereto or arising
therefrom.
ARTICLE 10. TERMINATION
33
10.1 Right of Termination. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the Closing under the following
conditions (subject to extensions allowed Seller in this Agreement):
(a) [INTENTIONALLY DELETED]
(b) By mutual written consent of the Parties; or
(c) By either Seller or Purchaser if the consummation of the transactions
contemplated herein would violate any nonappealable final order, decree or
judgment of any Governmental Entity having appropriate jurisdiction
enjoining or awarding substantial damages in connection with the
consummation of the transactions contemplated herein; or
(d) [INTENTIONALLY DELETED]
(e) [INTENTIONALLY DELETED]
(f) By Seller if any condition specified in Section 6.1 has not been
satisfied on or before 5:00 p.m. on June 15, 2006, and shall not
theretofore have been waived by Seller, provided that the failure to
consummate the transactions contemplated hereby on or before such date did
not result from the failure by Seller to fulfill any undertaking or
commitment of Seller provided for in Section 8.2 herein that is required to
be fulfilled on or prior to Closing and provided further that the waiting
period required by the HSR Act shall have expired or been terminated, if
applicable.
(g) By Purchaser if any condition specified in Section 7.1 has not been
satisfied on or before 5:00 p.m. on June 15, 2006, and shall not
theretofore have been waived by Purchaser, provided that the failure to
consummate the transactions contemplated hereby on or before such date did
not result from the failure by Purchaser to fulfill any undertaking or
commitment of Purchaser provided for herein that is required to be
fulfilled on or prior to Closing and provided further that the waiting
period required by the HSR Act shall have expired or been terminated, if
applicable.
(h) HSR Act. By either Purchaser or Seller if the waiting period required
by the HSR Act shall not have expired or been terminated, if applicable, on
or before September 15, 2006, where the Party seeking to terminate this
Agreement is not at fault for the failure of the waiting period required by
the HSR Act to have expired or be terminated.
34
10.2 Effect of Termination. If this Agreement is terminated pursuant to Sections
2.4 or 10.1, this Agreement shall become void and of no further force or effect
(except for the provisions of Sections 1.4, 2.4, 4.4, 4.14 (the third to the
last and penultimate sentences only), 5.4, Article 10 and Sections 13.1 through
13.11, Sections 13.13, 13.14, 13.15, 13.16, 13.20, 13.21, 13.22 and 13.23, each
of which shall survive such termination and continue in full force and effect).
If Seller validly terminates this Agreement pursuant to Sections 10.1(f) above,
Seller may elect to retain the Deposit without further liability or obligation
to Purchaser and, upon such election, Seller shall have the right to receive the
Deposit from the Escrow Agent under the Escrow Agreement and Purchaser shall
cause the said Escrow Agent to release promptly the Deposit to Seller. The
Deposit shall be returned to Purchaser if this Agreement is validly terminated
pursuant to Sections 10.1(b), (c), or (h) or if validly terminated by Purchaser
pursuant to 10.1(g). If Seller elects to retain the Deposit, then such retention
by Seller of the Deposit, all or in part, shall be treated by the Parties as
liquidated damages, in lieu of all other damages or other remedies (it being
agreed by the Parties that damages in said event would be extremely difficult to
determine and that the Deposit retained by Seller represents a fair and
reasonable estimate of such damages to Seller under the circumstances and does
not constitute a penalty). If the Deposit is returned to Purchaser, Seller shall
have no further obligation or liability to Purchaser and PURCHASER COVENANTS NOT
TO ▇▇▇ SELLER, OR SELLER'S AFFILIATES OR ANY OF THEIR RESPECTIVE REPRESENTATIVES
OR INITIATE LITIGATION OR OTHERWISE PURSUE ANY CLAIM AGAINST SELLER WITH REGARD
TO ANY DISPUTES, ISSUES OR CLAIMS ARISING OUT OF OR RELATING TO THE TERMINATION
OF THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE DEPOSIT
(OR ANY PURPORTEDLY LOST INTEREST THEREON) OR SELLER'S RETENTION OF THE DEPOSIT
PURSUANT TO THIS SECTION 10.2. Notwithstanding anything to the contrary
contained in this Agreement, upon any termination of this Agreement pursuant to
Section 10.1, or as otherwise provided in this Agreement, Seller shall be free
immediately to enjoy all rights of ownership of the Assets and may sell,
transfer, encumber or otherwise dispose of the Assets to any party without any
restriction under this Agreement and without any impairment of its rights
hereunder to recover damages from Purchaser arising from any default hereunder
by Purchaser; provided, that Seller's right to seek specific performance of
Purchaser's obligations hereunder shall be waived upon any such disposition of
the Assets and that its right to seek or recover any other damages shall be
waived upon its express election to retain the Deposit in lieu of any other
remedy against Purchaser.
ARTICLE 11. TAXES
11.1 Apportionment of Ad Valorem and Property Taxes. All ad valorem taxes, real
property taxes, personal property taxes, and similar obligations concerning the
Assets with respect to the tax period in which the Effective Time occurs
("Property Taxes") shall be apportioned as of the Effective Time between Seller
and Purchaser. Purchaser shall file or cause to be filed all required reports
and returns incident to the Property Taxes and shall pay or cause to be paid to
the taxing authorities all Property Taxes relating to the tax period in which
35
the Effective Time occurs. Seller shall pay to Purchaser Seller's pro rata
portion of Property Taxes within thirty (30) days after receipt of Seller's
invoice therefor.
11.2 Sales Taxes. The Purchase Price excludes any sales taxes or other taxes
required to be paid in connection with the sale of property pursuant to this
Agreement. If a determination is ever made that a sales tax or other transfer
tax applies, Purchaser shall be liable for all sales, gross receipts, use and
other taxes, conveyance, transfer and recording fees and real estate transfer
stamps or taxes that may be imposed on any transfer of property pursuant to this
Agreement. These taxes shall be collected and remitted under applicable law.
Purchaser shall indemnify, defend, and hold Seller harmless with respect to the
payment of any of these taxes, if any, including any interest or penalties
assessed thereon. Seller will cooperate with Purchaser in providing any
documentation necessary for Purchaser to obtain an exemption for such taxes.
11.3 Other Taxes. Income taxes, franchise and similar taxes shall be the
responsibility of the Party incurring same. Severance taxes shall be allocated
to each Party based on the ownership (as of the Effective Time) of the
hydrocarbon production giving rise to the liability. All taxes (other than
income taxes) that are imposed on or with respect to the production of oil,
natural gas or other hydrocarbons or minerals or the receipt of proceeds
therefrom (including but not limited to severance, production, and excise taxes)
shall be apportioned between the Parties based upon the respective shares of
production taken by the Parties as of the Effective Time. From and after
Closing, Purchaser shall be responsible for paying or withholding or causing to
be paid or withheld all such taxes and for filing all statements, returns, and
documents incident thereto.
11.4 Cooperation. Each Party to this Agreement shall provide the other Party
with reasonable access to all relevant documents, data and other information
which may be required by the other Party for the purpose of preparing tax
returns and timely responding to any audit by any taxing jurisdiction. Each
Party to this Agreement shall cooperate with all reasonable requests of the
other Party made in connection with contesting the imposition of taxes.
Notwithstanding anything to the contrary in this Agreement, neither Party to
this Agreement shall be required at any time to disclose to the other Party any
tax return or other confidential tax information.
11.5 Tax Reporting. Seller and Purchaser agree that the Assets subject to this
Agreement do not constitute an "applicable asset acquisition" as described under
Internal Revenue Code section 1060 and the regulations thereunder, and do not
constitute a trade or business in the ordinary sense of the term. Nevertheless,
in the event that the Assets are determined by the Internal Revenue Service (or
any other regulatory body) to constitute an "applicable asset acquisition," then
both Seller and Purchaser agree and proclaim that any and all transferred assets
are limited to reserves in the ground and tangible equipment and are "Class III
Assets" and that there is no "goodwill" or "going concern value" attached to the
transferred assets. Both Parties agree to the necessary and timely exchange of
information required to complete and timely file a Form 8594, and any other form
required by the Internal Revenue Service or any other regulatory agency.
36
ARTICLE 12. CONDITION OF THE ASSETS
12.1 Prior Use of Assets. THE ASSETS AND PROPERTY HAVE BEEN USED OR MAY HAVE
BEEN USED FOR EXPLORATION, DEVELOPMENT, PRODUCTION, STORAGE, TREATMENT,
PROCESSING, DISPOSAL, INJECTION AND TRANSPORTATION OF OIL AND GAS AND OTHER
SUBSTANCES AND RELATED OIL AND GAS FIELD OPERATIONS. SUBSIDENCE, MOVEMENT OR
PHYSICAL CHANGES IN THE PROPERTY MAY HAVE OCCURRED AS A RESULT OF SUCH USES. THE
ASSETS OR THE PROPERTY ALSO MAY INCLUDE BURIED PIPELINES, WASTES AND OTHER
EQUIPMENT, WHETHER OR NOT OF A SIMILAR NATURE, THE LOCATIONS OF WHICH MAY BE
HIDDEN OR NOT NOW BE KNOWN OR NOT READILY APPARENT BY A PHYSICAL INSPECTION OF
THE AFFECTED ASSETS. HYDROCARBONS AND OTHER SUBSTANCES, INCLUDING HAZARDOUS
SUBSTANCES, MAY HAVE COME TO BE RELEASED OR LOCATED ON THE SEA BED OR BENEATH
THE SURFACE OF THE ASSETS OR THE PROPERTY.
12.2 Assumption of Assets in Present Condition. PURCHASER ACKNOWLEDGES THAT (i)
THE CONSUMMATION OF THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY BY
PURCHASER SHALL BE SOLELY ON THE BASIS OF ITS OWN INVESTIGATION OF THE PHYSICAL
CONDITION OF THE ASSETS AND PROPERTY, INCLUDING, WITHOUT LIMITATION, SURFACE AND
SUBSURFACE CONDITION; (ii) THE ASSETS AND PROPERTY HAVE BEEN USED IN THE MANNER
AND FOR THE PURPOSES SET FORTH ABOVE AND THAT PHYSICAL CHANGES TO THE ASSETS AND
THE PROPERTY MAY HAVE OCCURRED AS A RESULT OF SUCH USE; AND (iii) NORM AND
ASBESTOS OR MAN-MADE MATERIAL FIBERS (COLLECTIVELY "MMMF") MAY BE PRESENT AT
SOME LOCATIONS. PURCHASER ACKNOWLEDGES THAT NORM IS A NATURAL PHENOMENON
ASSOCIATED WITH MANY OIL AND GAS FIELDS IN THE UNITED STATES AND THROUGHOUT THE
WORLD. PURCHASER SHALL MAKE ITS OWN DETERMINATION OF THIS PHENOMENON AND OTHER
CONDITIONS. SELLER DISCLAIMS ANY LIABILITY ARISING OUT OF OR IN CONNECTION WITH
ANY PRESENCE OF NORM OR MMMF ON OR AFFECTING THE ASSETS OR THE PROPERTY. AT
CLOSING, PURCHASER SHALL ASSUME THE RISK THAT THE ASSETS OR THE PROPERTY MAY
CONTAIN WASTES OR CONTAMINANTS AND ADVERSE PHYSICAL CONDITIONS, INCLUDING THE
PRESENCE OR LOCATION OF PIPELINES, EQUIPMENT AND OTHER ITEMS OF PERSONAL
PROPERTY, TANK BOTTOMS, HEATER TREATER SLUDGE, AND WASTES OR CONTAMINANTS WHICH
MAY NOT HAVE BEEN REVEALED BY PURCHASER'S INVESTIGATION. AT CLOSING, ALL
RESPONSIBILITY AND LIABILITY RELATED TO DISPOSALS, SPILLS, WASTES, OR
CONTAMINATION, OR OTHER ADVERSE PHYSICAL CONDITIONS ON, BELOW, OR RELATED TO OR
AFFECTING THE ASSETS AS WELL AS THE PROPERTY SHALL BE ASSUMED BY PURCHASER AND
PURCHASER SHALL, NOTWITHSTANDING WHEN THE BASIS FOR ANY CLAIM, ACTION, SUIT,
JUDGMENT (INCLUDING, WITHOUT LIMITATION, THOSE FOR DEATH, PERSONAL INJURY OR
37
PROPERTY DAMAGE) SHALL HAVE OCCURRED OR MAY OCCUR, INDEMNIFY, DEFEND AND HOLD
SELLER AND SELLER'S AFFILIATES AND THEIR RESPECTIVE REPRESENTATIVES HARMLESS
THEREFROM PURSUANT TO THIS AGREEMENT.
12.3 Casualty Loss. Assuming Closing occurs and subject to the provisions of
Section 13.17, in the event of any damage by fire or other casualty to any of
the Assets between the Execution Date and the Closing ("Casualty Loss"), this
Agreement shall remain in full force and effect and as to each affected Asset,
Seller shall at its election either collect (and when collected pay over to
Purchaser) or assign to Purchaser any and all insurance claims to the extent and
only to the extent covering such damage, and Purchaser shall take title to the
affected Asset without reduction in the Purchase Price.
ARTICLE 13. MISCELLANEOUS
13.1 Governing Law. This Agreement and all instruments executed in accordance
herewith shall be governed by and interpreted in accordance with the Laws of the
State of Texas, without regard to conflict of law rules that would direct
application of the laws of another jurisdiction, except to the extent that it is
mandatory that the law of the jurisdiction wherein the Assets are located shall
apply.
13.2 Entire Agreement. This Agreement, all agreements and instruments executed
in connection herewith and/or at Closing, the Escrow Agreement, and the
Confidentiality Agreement dated October 24, 2005, between Marubeni Oil and Gas
(USA) Inc., Marubeni Offshore Production (USA) Inc., and Pioneer Natural
Resources USA, Inc., as amended (the "Confidentiality Agreement"), constitute
the entire agreement between the Parties and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties with regard to the transaction contemplated by this Agreement. Purchaser
ratifies and agrees to be bound by the Confidentiality Agreement as if it were
the Receiving Party and received the Confidential Information thereunder. Upon
Closing, the Confidentiality Agreement shall terminate except that it shall
remain in full force and effect in accordance with its terms as to Purchaser and
its Affiliates only as it applies to Green Canyon Blocks 299 and 300 and any of
the Subject Properties removed from sale to Purchaser by the exercise of a
preferential right to purchase. No supplement, amendment, alteration,
modification, waiver or termination of this Agreement shall be binding unless
executed in writing by the Parties hereto.
13.3 Waiver. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
13.4 Captions. The captions in this Agreement are for convenience only and shall
not be considered a part of or affect the construction or interpretation of any
provision of this Agreement.
13.5 Assignability. Purchaser shall not assign this Agreement or any of its
rights or obligations hereunder without the prior written consent of Seller,
which consent may be withheld or conditioned for any reason and any purported
38
assignment without such consent shall be void. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
Parties hereto and their respective permitted successors and assigns, however,
in any event Purchaser shall remain responsible and liable for the performance
of its obligations under this Agreement, in addition to that of its respective
successors and assigns. All transfers or conveyances of all or a portion of the
Assets shall expressly recognize and perpetuate the rights and obligations set
out in this Agreement.
13.6 Notices. Any notice provided or permitted to be given under this Agreement
shall be in writing, and may be served by personal delivery or by registered or
certified U.S. mail, addressed to the Party to be notified, postage prepaid,
return receipt requested. Notice deposited in the mail in the manner hereinabove
described shall be deemed to have been given and received on the date of the
delivery as shown on the return receipt. Notice served in any other manner
(including by facsimile delivery) shall be deemed to have been given and
received only if and when actually received by the addressee. Any notice given
by facsimile shall promptly be confirmed in writing by the Party giving such
notice in one of the other manner specified above. For purposes of notice, the
addresses of the Parties shall be as follows:
SELLER:
Pioneer Natural Resources USA, Inc.
Attn: Vice President, Land
▇▇▇▇ ▇▇▇▇▇ ▇'▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: 972/▇▇▇-▇▇▇▇
Fax: 972/969-3570
With an additional copy to:
Pioneer Natural Resources USA, Inc.
Attn: General Counsel
▇▇▇▇ ▇▇▇▇▇ ▇'▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: 972/▇▇▇-▇▇▇▇
Fax: 972/969-3577
PURCHASER:
Marubeni Offshore Production (USA) Inc.
Attn: Executive Vice President
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone:▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
39
Each Party shall have the right, exercised no more frequently than once every
six (6) months, upon giving ten (10) days prior written notice to the other in
the manner hereinabove provided, to change its address for purposes of notice to
another appropriate single street address.
13.7 WAIVER OF CONSUMER RIGHTS/DTPA WAIVER. TO THE EXTENT APPLICABLE TO THE
ASSETS OR ANY PORTION THEREOF, PURCHASER HEREBY VOLUNTARILY WAIVES THE
PROVISIONS OF THE TEXAS DECEPTIVE TRADE PRACTICES ACT (DTPA), CHAPTER 17,
SUBCHAPTER E, SECTIONS 17.41 THROUGH 17.63, INCLUSIVE (OTHER THAN SECTION
17.555, WHICH IS NOT WAIVED), TEX. BUS. & COM. CODE, A LAW THAT GIVES CONSUMERS
SPECIAL RIGHTS AND PROTECTIONS. IN ORDER TO EVIDENCE ITS ABILITY TO GRANT SUCH
WAIVER, PURCHASER HEREBY REPRESENTS AND WARRANTS TO SELLER THAT IT (i) IS IN THE
BUSINESS OF SEEKING OR ACQUIRING, BY PURCHASE OR LEASE, GOODS OR SERVICES FOR
COMMERCIAL OR BUSINESS USE; (ii) HAS CONSULTED WITH AN ATTORNEY OF PURCHASER'S
OWN CHOOSING; (iii) HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL, BUSINESS AND OIL
AND GAS MATTERS THAT ENABLE IT TO EVALUATE THE MERITS AND RISKS OF THE
TRANSACTIONS CONTEMPLATED HEREBY; (iv) IS NOT IN A SIGNIFICANTLY DISPARATE
BARGAINING POSITION; AND (v) UNDERSTANDS THAT THIS WAIVER IS A MATERIAL AND
INTEGRAL PART OF THIS AGREEMENT AND THE CONSIDERATION THEREOF. IN ADDITION,
PURCHASER WAIVES ITS RIGHTS UNDER ALL OTHER CONSUMER PROTECTION STATUTES OF
TEXAS OR ANY OTHER STATE APPLICABLE TO THIS TRANSACTION THAT MAY BE WAIVED.
PURCHASER EXPRESSLY RECOGNIZES THAT THE PURCHASE PRICE FOR WHICH SELLER HAS
AGREED TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT HAS BEEN PREDICATED UPON
THE INAPPLICABILITY OF THE DTPA AND THE WAIVER OF PURCHASER OF ITS RIGHTS UNDER
CONSUMER PROTECTION STATUTES AND PURCHASER FURTHER RECOGNIZES THAT SELLER IN
DETERMINING TO PROCEED WITH THE ENTERING INTO OF THIS AGREEMENT, HAS EXPRESSLY
RELIED ON THIS WAIVER AND THE INAPPLICABILITY OF THE DTPA AND THE CONSUMER
PROTECTION STATUTES.
13.8 Expenses. Each Party shall be solely responsible for all expenses incurred
by it in connection with this transaction (including, without limitation, fees
and expenses of its own legal counsel and accountants).
13.9 Severability. The invalidity of any one or more provisions of this
Agreement shall not affect the validity of this Agreement as a whole, and in
case of any such invalidity, this Agreement shall be construed as if the invalid
provision had not been included herein.
13.10 Damages. Each Party waives any rights to special, consequential,
exemplary, treble, indirect or punitive damages in connection with this
Agreement or the breach thereof and the transactions contemplated hereby (other
than special, consequential, exemplary, treble, indirect or punitive damages
suffered or asserted by unaffiliated third Persons and for which such Party is
indemnified pursuant to this Agreement .)
40
13.11 No Third Party Beneficiary. This Agreement is not intended to create, nor
shall it be construed to create, any rights in any third party under doctrines
concerning third party beneficiaries except the benefits and protections
provided to Persons described in Section 9.2(e).
13.12 Survival. Except as provided in this Section 13.12 , the representations
and warranties of the Parties under this Agreement and the other terms and
provisions of this Agreement shall survive the Closing and the execution of the
Assignment and ▇▇▇▇ of Sale, and shall terminate and cease to be of further
force and effect on December 31, 2006. All representations, warranties, waivers,
disclaimers, releases, covenants, agreements and indemnities contained entirely
within Articles 1 and 2 and Sections 3.2 (final sentence only) 3.4, 3.10, 4.14
and 5.1 through 5.13, Articles 8A and 9, Section 10.2 and Articles 11, 12 and 13
of this Agreement shall survive the Closing.
13.13 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
13.14 Not to be Construed Against Drafter. Purchaser and Seller acknowledge that
they have read this Agreement, have had the opportunity to review it with an
attorney of their respective choice, and have agreed to all its terms. Under
these circumstances, Purchaser and Seller agree that the rule of construction
that a contract be construed against the drafter shall not be applied in
interpreting this Agreement and that in the event of any ambiguity in any of the
terms or conditions of this Agreement, including any exhibits hereto and whether
or not placed of record, such ambiguity shall not be construed for or against
any Party hereto on the basis that such Party did or did not author the same.
13.15 Waiver of Jury Trial. SELLER AND PURCHASER DO HEREBY IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, SUIT OR OTHER LEGAL PROCEEDING BASED UPON, ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
13.16 Publicity. Seller and Purchaser shall consult with each other with regard
to all publicity and other press releases to be made prior to or at Closing
concerning this Agreement and the transactions contemplated hereby. Prior to and
within ten (10) days after Closing, except as required by applicable law or the
applicable rules or regulations of any governmental body or stock exchange,
neither Party shall issue any publicity release without the prior written
consent of the other Party, which consent shall not be unreasonably withheld or
delayed. At all other times after Closing, Seller and Purchaser shall consult
with each other with regard to all publicity releases to be made concerning this
Agreement and the transactions contemplated hereby to the extent inconsistent
with prior releases by the Parties regarding the Agreement or the contemplated
transactions.
13.17 Accounting.
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(a) Seller shall deliver to Purchaser on or before the fourth Business Day
prior to Closing the Preliminary Settlement Statement setting forth any
adjustments to the Purchase Price provided for in or required by this
Agreement including, without limitation, items such as the Purchase Price,
Deposit, expenses, prepaid items, revenue received, Property Taxes, excise
and energy taxes, copying and recording fees, to the extent such
information is available or estimated by Seller on or before Closing. The
Preliminary Settlement Statement shall be prepared in accordance with this
Agreement and with standard industry and accounting practices. In
connection with the preparation of the Preliminary Settlement Statement,
the Purchase Price shall be (1) increased by (a) the costs and expenses
that are attributable to the Assets for the period from the Effective Time
to the Closing Date that are paid by Seller (including, but not limited to,
Seller's internal cost for administrative overhead for each well operated
by Seller at the rate of $1,000.00 per well per month for ▇▇▇▇▇ not
otherwise subject to an applicable ▇▇▇▇▇ overhead rate under an operating
agreement and an amount equal to the applicable ▇▇▇▇▇ overhead rate less
any non-operator billed overhead amounts that have actually been received
by Seller for ▇▇▇▇▇ subject to an applicable ▇▇▇▇▇ under an operating
agreement), and (b) other amounts due Seller and contemplated hereby, and
(2) reduced by (a) net proceeds received by Seller for hydrocarbons
attributable to the Subject Properties produced after the Effective Time,
and (b) other amounts due Purchaser and contemplated hereby.
(b) Within 120 days after the Closing, Seller shall prepare, in accordance
with this Agreement and with standard industry and accounting practices,
and deliver to Purchaser, a final accounting statement showing the
proration calculation of credits and payment obligations of Purchaser and
Seller hereunder. Such final accounting statement shall be accompanied with
reasonable documentation supporting such calculations and payment
obligations. As soon as reasonably practicable after receipt thereof,
Purchaser shall deliver to Seller a written report containing any changes
that Purchaser proposes to be made to such statement. The Parties shall use
their best efforts to reach agreement (the "Final Accounting") on the final
accounting statement on or before the sixtieth (60) day after Purchaser's
receipt of the final accounting statement (such date the "Final Accounting
Date", whether or not Seller and Purchaser have agreed on the Final
Accounting).
(c) Except as otherwise provided or addressed in this Agreement, any
revenues received or costs and expenses paid by Purchaser after the Final
Accounting Date which are attributable to the ownership or operation of the
Assets before the Effective Time shall be billed or reimbursed to Seller,
as appropriate. Except as otherwise provided or addressed in this
Agreement, any revenues received or costs and expenses paid by Seller after
the Final Accounting Date which are attributable to the ownership or
operation of the Assets after the Effective Time, and not expressly
reserved by Seller, shall be billed or reimbursed to Purchaser, as
appropriate.
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13.18 Operatorship. Seller does not represent to Purchaser that Purchaser will
automatically succeed to the operatorship of any given Subject Property as to
which Seller is currently the operator. Purchaser recognizes and agrees that
Purchaser will be required to comply with applicable operating agreements, unit
operating agreements or other similar contracts relating to any elections or
other selection procedures in order to succeed Seller as operator.
13.19 [INTENTIONALLY DELETED].
13.20 Time of Performance. Time is of the essence in the performance of all
covenants and obligations under this Agreement.
13.21 No Partnership Created. It is not the purpose or intention of this
Agreement to create (and it shall not be construed as creating) a joint venture,
partnership or any type of association, and the Parties are not authorized to
act as agent or principal for each other with respect to any matter related
hereto.
13.22 Express Negligence Rule; Conspicuousness. PURCHASER AND SELLER ACKNOWLEDGE
THAT THE PROVISIONS IN THIS AGREEMENT THAT ARE SET OUT IN ITALICS, IN BOLD,
UNDERLINE OR CAPITALS, OR ANY COMBINATION THEREOF, SATISFY THE REQUIREMENTS FOR
THE EXPRESS NEGLIGENCE RULE AND/OR ARE CONSPICUOUS.
13.23 Dispute Resolution
13.23.1. [Intentionally Deleted.]
13.23.2. Any claim, counterclaim, demand, cause of action, dispute, or any other
controversy arising out of or relating to this Agreement or in any way
relating to the subject matter of this Agreement (each a "Dispute")
shall be resolved by binding arbitration. A Dispute shall be resolved
through arbitration regardless of whether the Dispute involves claims
that this Agreement is unlawful, unenforceable, void, or voidable or
involves claims under state or federal statutory or common law. The
validity, construction and interpretation of this Agreement to
arbitrate, and all other procedural aspects of the arbitration
conducted pursuant hereto shall be decided by the arbitrators. Any
Party may commence an arbitration proceeding by transmitting written
notice to the other Party pursuant to the notice provisions of Section
13.6 of this Agreement and to the AAA regional office associated with
the Location of such Party's demand for arbitration with respect to
such Party's cause of action or claim that is a Dispute (the "Demand
for Arbitration").
13.23.3. Any arbitration under this Agreement shall be conducted in accordance
with the Commercial Arbitration Rules (the "Rules") of the American
Arbitration Association ("AAA"). In resolving any Dispute, the
arbitrators shall refer to the governing law as specified in Section
13.1 of this Agreement. THE ARBITRATORS SHALL NOT BE EMPOWERED TO
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AWARD, AND SHALL NOT AWARD, PUNITIVE, EXEMPLARY, MULTIPLE, TREBLE,
CONSEQUENTIAL, INDIRECT, AND SPECIAL DAMAGES, REGARDLESS OF THE NATURE
OF THE CAUSE OF ACTION, INCLUDING WITHOUT LIMITATION, BREACH OF
CONTRACT, TORT, AND NEGLIGENCE; PROVIDED, HOWEVER, NOTHING HEREIN SHALL
LIMIT THE RIGHTS AND OBLIGATIONS SET FORTH IN SECTION 13.10 OF THIS
AGREEMENT AND ANY AWARD ISSUED BY THE ARBITRATORS SHALL BE CONSISTENT
WITH THE PROVISIONS OF SAID SECTION 13.10. EXCEPT AS MAY BE RECOVERED
PURSUANT TO SECTION 13.10 OF THIS AGREEMENT, EACH OF THE PARTIES WAIVES
ANY RIGHT THAT SUCH PARTY MAY HAVE TO RECOVER SUCH DAMAGES FROM ANY
OTHER PARTY.
13.23.4. The arbitration shall be held in Dallas County, Texas (the "Location").
13.23.5. If the Parties initiate multiple arbitration proceedings, the subject
matters of which are related by common questions of law or fact and
which could result in conflicting awards or obligations, then all such
proceedings may be consolidated into a single arbitral proceeding. The
Parties hereby acknowledge the dispute resolution provisions contained
in the Escrow Agreement, the Transition Services Agreement and the
Guaranties referred to in Section 2.6 and agree that any arbitration
proceeding under this Agreement may be consolidated with any
arbitration proceeding under the Escrow Agreement, the Transition
Services Agreement and/or such Guaranties and the arbitrators shall
have the discretion to adjudicate any such consolidated proceeding in a
manner the arbitrators consider just and reasonable, including, but not
limited to bifurcating Disputes or rendering interim awards.
13.23.6. Unless otherwise agreed by the Parties, the Dispute shall be decided by
a panel of three (3) neutral arbitrators selected as follows. Each
Party shall appoint one (1) arbitrator within thirty (30) days of the
filing of the arbitration, and the two arbitrators so appointed shall
select the presiding arbitrator within thirty (30) days after the
latter of the two arbitrators has been appointed by the Parties. If a
Party fails to appoint its party-appointed arbitrator or if the two
party-appointed arbitrators cannot reach an agreement on the presiding
arbitrator within the applicable time period, then the AAA shall serve
as the appointing authority and shall appoint the remainder of the
three arbitrators not yet appointed. If the Parties agree in writing,
the Dispute may be decided by a single arbitrator who shall be
specified in such written agreement between the Parties.
13.23.7. The arbitrators may award interim measures or injunctive relief, which
may be enforced by the arbitrators or by a court of law.
13.23.8. The arbitration award issued by the arbitrators shall be final and
binding. The award shall be required to be in writing, stating the
amount of the award, and if applicable the amount of attorneys' fees
and costs.
13.23.9. Any litigation relating to or arising under this Section 13.23 must be
brought in the state or federal courts sitting in the Location. Any
arbitration award may be enforced by the state or federal courts of
44
Texas or by any court of competent subject matter jurisdiction
(including but not limited to any jurisdiction in which a Party holds
or keeps assets). The Parties agree that service of process may be
accomplished according to the notice procedures of Section 13.6 or by
any other means authorized by applicable Law. The Parties agree to
waive any objection they may have to service of process if accomplished
according to the procedures of Section 13.6.
13.23.10. The arbitrators are authorized to award costs of the arbitration in
its award, including without limitation (i) the reasonable fees and
expenses of the arbitrators; (ii) the reasonable costs of assistance
required by the tribunal, including its experts; (iii) the reasonable
fees and expenses of the administrator; (iv) the reasonable costs for
legal representation of a successful Party, including attorneys' fees,
expert witness fees, out of pocket costs and other reasonable expenses;
and (v) any such reasonable costs incurred in connection with an
application for interim relief or emergency measures and to allocate
those costs between the Parties.
13.23.11. The award shall include pre-judgment interest at a rate to be
determined by the arbitrators (not to exceed the maximum amount
permitted by Law) from the date of the breach or default. Interest
shall accrue until the date the award is paid in full.
13.23.12. Any arbitration (including a settlement resulting from an award,
documents exchanged or produced during an arbitration proceeding, and
memorials, briefs or other documents prepared for the arbitration)
shall be confidential and may not be disclosed by the Parties, their
employees, officers, directors, counsel, consultants, and expert
witnesses, except (i) in a legal proceeding to enforce rights under
this Section 13.23, (ii) in response to a subpoena or legal process,
but only after giving the other Party reasonable notice in advance for
them to take steps to preserve the confidentiality of the material,
(iii) by agreement of the Parties or (iv) as required by applicable Law
or any applicable stock exchange. A breach of this Section 13.23.12
shall not void any settlement or award.
13.23.13. If any provision of Section 13.23 is found by a court or arbitral
panel to be unenforceable or unlawful, then it shall be severed from
this Agreement and the remaining terms shall be enforced as written.
13.24 Transfer Fees. Purchaser shall pay any fees or other payments required by
a third party in order to transfer the Assets.
13.25 Filing and Recording. Purchaser will file or record the various originals
of the Assignment and ▇▇▇▇ of Sale and other conveyancing documents promptly
after Closing at Purchaser's sole cost. If Purchaser fails to promptly record
such documents then Seller may record such documents. Purchaser will reimburse
Seller for the costs of filing, recording, and other reasonable fees actually
incurred by Seller if Seller records or files said documents, such costs or fees
to be used in the Final Accounting Settlement. The recording Party will provide
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either the original or photocopies of the recorded documents, including the
recording data, to the non-recording Party promptly.
13.26 Removal of Signs. Seller may either remove its name and signs from the
Seller-operated Assets and Property or require Purchaser to do so for those
Assets that it will operate. If Seller's name or signs remain on the Property or
Assets after Seller ceases to be operator and Purchaser has become operator,
Purchaser must (a) remove any remaining signs and references to Seller promptly,
but no later than the time required by applicable regulations or forty-five days
after Seller ceases to be operator, whichever occurs first, (b) install signs
complying with applicable governmental regulations, including signs showing
Purchaser as operator of the Assets it operates, and (c) notify Seller of the
removal and installation. Seller reserves a right of access to the Assets and
Property after it ceases to be operator to remove its signs and name from all
▇▇▇▇▇, facilities and Property, or to confirm that Purchaser has done so for the
Assets operated by Purchaser. If Seller removes signs because Purchaser has not
done so, Seller will charge its costs to Purchaser, and Purchaser will pay the
invoice within fifteen days of receipt.
13.27 HSR Act. The Parties shall exercise their best efforts to file (or will
cause their ultimate parent entities to file), within one (1) week after the
Execution Date, with the United States Federal Trade Commission and the United
States Department of Justice all notifications and reports required for the
transaction contemplated hereby under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976 ("HSR Act"), and shall request early termination of the
prescribed waiting period. Purchaser shall be responsible for any required fees.
Both Parties shall use their best efforts to promptly supply any supplemental or
additional information which may be requested in connection therewith pursuant
to the HSR Act and shall comply in all material respects with the requirements
of the HSR Act. Closing of the transaction contemplated hereby shall not occur
unless and until all necessary filings and notifications under the HSR Act have
been made, including the provision of any required additional information or
documents, and the waiting period referred to in such Act shall have expired or
terminated.
EXECUTED on February 22, 2006 but the date of this Agreement shall be deemed
February 23, 2006.
SELLER:
PIONEER NATURAL RESOURCES USA, INC.
By: /s/ A. R. Alameddine
---------------------------------
Name: A. R. Alameddine
Its EVP - World Wide Negotiation
PURCHASER:
MARUBENI OFFSHORE PRODUCTION (USA) INC.
By: /s/ M. D. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Executive Vice President
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