EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
BP EXPLORATION & PRODUCTION INC.
AND
APACHE CORPORATION
INDEX
ARTICLE 1. DEFINITIONS...................................................... 1
1.1 Definitions........................................................... 1
ARTICLE 2. SALE OF PROPERTIES............................................... 12
2.1 Sale and Purchase..................................................... 12
2.2 Purchase Price........................................................ 12
2.3 Performance Deposit................................................... 13
2.4 State Water Properties................................................ 13
ARTICLE 3. PREFERENTIAL RIGHTS.............................................. 13
3.1 Preferential Rights To Purchase....................................... 13
ARTICLE 4. TITLE REVIEW..................................................... 14
4.1 Review of Title Records............................................... 14
4.2 Alleged Title Defects................................................. 14
4.3 Waiver................................................................ 17
ARTICLE 5. INSPECTION OF PREMISES........................................... 17
5.1 Inspection of Premises................................................ 17
5.2 Alleged Adverse Conditions............................................ 18
5.3 Waiver................................................................ 20
ARTICLE 6. ACCOUNTING....................................................... 20
6.1 Products.............................................................. 20
6.2 Revenues, Expenses and Capital Expenditures........................... 20
6.3 Taxes................................................................. 21
6.4 Credits............................................................... 21
6.5 Miscellaneous Accounting.............................................. 21
6.6 Final Accounting Settlement........................................... 22
6.7 Post-Final Accounting Settlement Revenues............................. 22
6.8 Post-Final Accounting Settlement Expenses............................. 22
ARTICLE 7. LOSS, CASUALTY AND CONDEMNATION.................................. 23
7.1 Notice of Loss........................................................ 23
7.2 Casualty Loss......................................................... 23
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ARTICLE 8. ALLOCATION OF RESPONSIBILITIES AND INDEMNITIES................... 24
8.1 Opportunity for Review................................................ 24
8.2 Seller's Indemnity With Respect to Retained Litigation................ 24
8.3 Seller's Non-Environmental Indemnity Obligation....................... 24
8.4 Seller's Environmental Indemnity Obligation........................... 25
8.5 Buyer's Non-Environmental Indemnity Obligation........................ 25
8.6 Buyer's Environmental Indemnity Obligation............................ 26
8.7 Notice of Claims...................................................... 26
8.8 Defense of Claims..................................................... 26
8.9 No Duplication of Remedies............................................ 27
8.10 Other Contracts Between the Parties................................. 27
8.11 Waiver of Certain Damages........................................... 27
ARTICLE 9. DISCLAIMERS...................................................... 28
9.1 Disclaimers........................................................... 28
9.2 Disclaimer of Statements and Information.............................. 28
ARTICLE 10. SELLER'S REPRESENTATIONS AND WARRANTIES......................... 28
10.1 Seller's Representations and Warranties............................. 28
ARTICLE 11. BUYER'S REPRESENTATIONS AND WARRANTIES.......................... 31
11.1 Buyer's Representations and Warranties.............................. 31
ARTICLE 12. ADDITIONAL COVENANTS............................................ 32
12.1 Subsequent Operations............................................... 32
12.2 Rights of Non-Exclusive Use......................................... 32
12.3 Buyer's Assumption of Obligations................................... 33
12.4 Asbestos and NORM................................................... 33
12.5 Plugging and Abandonment............................................ 34
12.6 Imbalances.......................................................... 35
12.7 Suspense Funds...................................................... 36
12.8 Sales Tax........................................................... 36
12.9 Guaranty Agreement.................................................. 37
12.10 Transition Agreement................................................ 37
12.11 Third Party Technology.............................................. 37
12.12 Interim Period...................................................... 38
12.13 Operator Acts....................................................... 40
12.14 Notification of Breaches............................................ 40
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12.15 Delivery of Certain Information..................................... 41
12.16 Financial Audit..................................................... 42
ARTICLE 13. HSR ACT......................................................... 43
13.1 HSR Filings......................................................... 43
ARTICLE 14. PERSONNEL....................................................... 43
14.1 Employees........................................................... 43
14.2 Restriction on Solicitation......................................... 43
ARTICLE 15. CONDITIONS PRECEDENT TO CLOSING................................. 44
15.1 Conditions Precedent to Seller's Obligation to Close................ 44
15.2 Conditions Precedent to Buyer's Obligation to Close................. 44
15.3 Conditions Precedent to Obligation of Each Party to Close........... 45
ARTICLE 16. THE CLOSING..................................................... 46
16.1 Closing............................................................. 46
16.2 Seller's Obligations at Closing..................................... 46
16.3 Buyer's Obligations at Closing...................................... 48
ARTICLE 17. TERMINATION..................................................... 49
17.1 Grounds for Termination............................................. 49
17.2 Effect of Termination............................................... 49
17.3 Dispute over Right to Terminate..................................... 49
17.4 Confidentiality..................................................... 50
ARTICLE 18. ARBITRATION..................................................... 51
18.1 Arbitration......................................................... 51
ARTICLE 19. MISCELLANEOUS................................................... 51
19.1 Notices............................................................. 51
19.2 Costs and Post-Closing Consents..................................... 52
19.3 Brokers, Agents and Finders......................................... 52
19.4 Records............................................................. 53
19.5 Further Assurances.................................................. 54
19.6 Survival of Certain Obligations..................................... 54
19.7 Amendments and Severability......................................... 54
19.8 Successors and Assigns.............................................. 55
19.9 Headings............................................................ 55
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19.10 Governing Law....................................................... 55
19.11 No Partnership Created.............................................. 55
19.12 Public Announcements................................................ 55
19.13 No Third Party Beneficiaries........................................ 55
19.14 Waiver of Consumer Rights........................................... 55
19.15 Redhibition Waiver.................................................. 56
19.16 UTPCPL Waiver....................................................... 56
19.17 Not to be Construed Against Drafter................................. 56
19.18 Indemnities and Conspicuousness of Provisions....................... 56
19.19 Possible Exchange................................................... 56
19.20 Recordation......................................................... 56
19.21 Execution in Counterparts........................................... 57
19.22 Entire Agreement.................................................... 57
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EXHIBITS
EXHIBIT "A" - PROPERTIES AND ALLOCATIONS OF PURCHASE PRICE
EXHIBIT "A-1" - EASEMENTS
EXHIBIT "B" - EXCLUDED PROPERTIES
ANNEX 1 - RESERVED DEEP RIGHTS
EXHIBIT "C" - LITIGATION
EXHIBIT "D-1" - ASSIGNMENT AND ▇▇▇▇ OF SALE - TEXAS
EXHIBIT "D-2" - ASSIGNMENT AND ▇▇▇▇ OF SALE - LOUISIANA
EXHIBIT "E" - CERTIFICATE
EXHIBIT "F" - LETTERS IN LIEU
EXHIBIT "G" - NON-FOREIGN AFFIDAVIT
EXHIBIT "H" - TRANSITION AGREEMENT
EXHIBIT "I" - GUARANTY AGREEMENT
EXHIBIT "J" - FORM OF ASSIGNMENT OF RECORD TITLE INTEREST
EXHIBIT "K" - FORM OF ASSIGNMENT OF OPERATING RIGHTS
EXHIBIT "L" - FORM OF PREFERENTIAL RIGHTS LETTER
EXHIBIT "M" - FORM OF OPERATING AGREEMENT
Exhibit "A" - Operator, Description of Leases,
Division of Interests, and Notification
Addresses
Exhibit "B" - Insurance Provisions
Exhibit "C" - Accounting Procedure
Exhibit "D" - Non-discrimination Provisions
Exhibit "E" - Gas Balancing Agreement
Exhibit "F" - Memorandum of Operating Agreement
and Financing Statement
Exhibit "G" - Area of Mutual Interest
Schedule 1 (Grand Isle 20 Prospect)
Schedule 1 (West Delta 40/42 Prospect)
EXHIBIT "N" - FORM OF SEISMIC LICENSE
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SCHEDULES
CONDITIONS ASSOCIATED WITH PROPERTIES 1.1.6
BP AMERICA PROPERTIES 1.1.12
NON-CONSENT OPERATIONS 1.1.33
DEFAULTS UNDER MATERIAL CONTRACTS 10.1.7
COMPLIANCE WITH LAWS 10.1.9
MARKETING CONTRACTS 10.1.11
PLUGGING AND ABANDONMENT 10.1.13
JOINTLY USED FACILITIES 12.2
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "AGREEMENT") dated January 11, 2003, is
between BP EXPLORATION & PRODUCTION INC., a Delaware corporation, with an
office at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("SELLER") and
APACHE CORPORATION, a Delaware corporation, with an office at ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("BUYER") (individually, a
"PARTY" and collectively, the "PARTIES".)
WHEREAS, Seller desires to sell and deliver to Buyer, and Buyer desires to
purchase and accept Seller's interests in certain oil and gas properties
and related assets; and
WHEREAS, the Parties have reached agreement regarding the sale and
purchase,
NOW, THEREFORE, for and in consideration of the mutual covenants herein, the
Parties agree to all the terms and conditions in this Agreement:
ARTICLE 1. DEFINITIONS
1.1 Definitions. Unless provided otherwise in this Agreement, each capitalized
term in this Agreement has the meaning given to it in this Article. All
defined terms include the singular and the plural. All references to
Articles refer to Articles in this Agreement, and all references to
Exhibits and Schedules refer to the Exhibits and Schedules attached to and
made a part of this Agreement. When a term is defined as one part of
speech (e.g., noun), any other part of speech (e.g., verb) with respect to
the term has a comparable meaning.
1.1.1 "AAA" has the meaning given it in Article 18.1.
1.1.2 "ACCOUNTING REFEREE" means the accounting firm of Deloitte & Touche
LLP or any other nationally recognized United States based accounting firm
on which the Parties agree in writing.
1.1.3 "ADJUSTED PURCHASE PRICE" shall have the meaning given to it in
Article 2.2.
1.1.4 "AFFILIATE" means any entity that, directly or indirectly, through
one or more intermediaries, controls or is controlled by or is under
common control with the entity specified. For the purpose of this
definition, the term "control" means ownership of fifty percent (50%) or
more of voting rights (stock or otherwise) or ownership interest.
1.1.5 "AGREEMENT" has the meaning given it in the introductory
paragraph of this Agreement.
1.1.6 "ALLEGED ADVERSE CONDITION" means any of the following individual
conditions associated with the Properties and asserted by Buyer in
accordance with Article 5.2, other than any such condition disclosed on
Schedule 1.1.6, which individually (i) has an adverse effect on the value
of the Properties exceeding one million United States dollars (US
$1,000,000) and, (ii) if curable, has a cost to cure exceeding one million
United
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\ States dollars (US $1,000,000), in each case net to Seller's interests in
the Properties affected by such individual Alleged Adverse Condition:
(a) Any environmental condition not in compliance with
existing Environmental Laws;
(b) Any Contract, other than an operating agreement or unit agreement
disclosed to Buyer on or prior to December 30, 2002 in the Indigo
Pool dataroom for the sale of the Properties, whose terms would have
a material adverse effect on Buyer's ability to operate the
Properties as operated as of the Effective Time or any Contract (or
failure to have a Contract in place prior to Closing) that would
increase the Charges borne by the owner of the Properties or reduce
the revenues received by the owner of the Properties relative to the
Financial Model;
(c) Any Equipment not in compliance with applicable Laws or incapable of
performing consistently with Seller's practices as of the Effective
Time; or
(d) Any omissions from any of the lists supplied pursuant to
Articles 12.15(b), (c) and (d).
1.1.7 "ALLEGED TITLE DEFECT" means an individual Title Defect associated
with one or more Real Properties described on Exhibit "A" and/or one or
more easements, rights-of-way, servitudes or subsurface leases included in
the Real Properties but not described on Exhibit "A" that (a) is asserted
by Buyer in accordance with Article 4.2, and (b) individually (i) has an
adverse effect on the value of such Real Properties (including any
increase in the negative value of any Property with a negative Buyer's
Allocation) exceeding five hundred thousand United States dollars (US
$500,000) and (ii) if curable, has a cost to cure exceeding five hundred
thousand United States dollars (US $500,000), in each case net to Seller's
interests in all Real Properties affected by such individual Title Defect.
1.1.8 "AMI" means any of the Areas of Mutual Interest described in the
Operating Agreement attached hereto as Exhibit "M" with respect to those
Excluded Properties described in paragraph 1 of Exhibit "B".
1.1.9 "ARBITRABLE DISPUTE" means, except as set forth below, any and all
disputes, claims, counterclaims, demands, causes of action, controversies
and other matters in question between Buyer and Seller arising out of or
relating to this Agreement or alleged breach hereof, or relating to
matters that are the subject of this Agreement or the relationship between
the Parties under this Agreement, regardless of whether (a)
extra-contractual in nature, (b) sounding in contract, tort or otherwise,
(c) provided for by Law or otherwise, or (d) would result in damages or
any other relief, whether at law, in equity or otherwise; provided that
"ARBITRABLE DISPUTE" does not include disputes that by the terms of this
Agreement (i) shall be determined by the Accounting Referee, (ii) relate
to breach of confidentiality obligations, or (iii) concern either Party's
failure or refusal to Close when required by this Agreement, right to
terminate this Agreement, or termination of this Agreement.
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1.1.10 "ASSIGNMENT AND ▇▇▇▇ OF SALE" means a document in the form of
Exhibit "D".
1.1.11 "BP AMERICA" means BP America Production Company.
1.1.12 "BP AMERICA PROPERTIES" means the Properties currently held by BP
America, as described in Schedule 1.1.12.
1.1.13 "BUSINESS DAY" means between 8:00 a.m., Central Time and 4:00 p.m.,
Central Time, on a Day when federally chartered banks in the State of
Texas are generally open for business.
1.1.14 "BUYER" has the meaning set forth in the introductory paragraph of
this Agreement.
1.1.15 "BUYER GROUP" means each and all of: (a) Buyer and its officers,
directors, agents, consultants and employees, and (b) Buyer's Affiliates
and their officers, directors, agents, consultants and employees.
1.1.16 "BUYER'S ACQUISITION TEAM" means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (Corporate
Counsel), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ (Director, Business Development), ▇▇▇▇ ▇.
▇▇▇▇▇ (Vice President, Associate General Counsel and Assistant Secretary),
▇▇▇ ▇▇▇▇▇▇▇▇ (Regional Vice President- Gulf Coast), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(Corporate Counsel).
1.1.17 "BUYER'S ALLOCATIONS" means Buyer's allocation of the Purchase
Price among the Properties as set forth on Exhibit "A".
1.1.18 "BUYER'S REPRESENTATIVES" has the meaning given to it in Article
5.1.
1.1.19 "CASUALTY LOSS" means physical damage to the Properties that (a)
occurs between execution of this Agreement and Closing, (b) is not the
result of normal wear and tear, mechanical failure or gradual structural
deterioration of materials, equipment and infrastructure, downhole failure
(including: (i) failures arising or occurring during drilling or
completing operations; (ii) junked or lost holes; or (iii) sidetracking or
deviating a well) or reservoir changes; and (c) exceeds one million United
States dollars (US $1,000,000).
1.1.20 "CERTIFICATE" means a document in the form of Exhibit "E".
1.1.21 "CHARGES" means (a) invoices or bills received under Contracts in
the ordinary course of business; other ordinary course of business charges
for acquiring and maintaining material, equipment, other personal property
and fixtures, services, easements, rights-of-way, servitudes, subsurface
leases, licenses and permits; costs of utilities and insurance; and
directly chargeable salaries, wages and employee benefits, (b) producing,
drilling and construction overhead costs, and (c) taxes and assessments of
governmental authorities (other than income taxes, and Sales Tax, if any,
on the transactions contemplated by this Agreement), which are in each
case attributable to the Properties, but excluding without limitation (i)
Non-Environmental Claims, (ii) obligations to plug and abandon ▇▇▇▇▇,
dismantle platforms and other Equipment and
3
clear sites and/or restore the seabed, (iii) obligations under
Environmental Laws, including Environmental Claims, (iv) Imbalances, (v)
royalty payment obligations, (vi) obligations to pay to Third Parties any
Suspense Funds delivered to Buyer pursuant to Article 12.7, (vii) Casualty
Losses or other physical damage to the Properties, and (viii) claims for
indemnification or reimbursement from any Third Party with respect to
items excluded from the definition of "Charges."
1.1.22 "CLAIM NOTICE" means a notice of Claim provided in accordance with
Article 8.7.
1.1.23 "CLAIMANT" has the meaning set forth in Article 18.1.
1.1.24 "CLAIMS" means any and all claims, demands, suits, causes of
action, losses, damages, liabilities, fines, penalties and costs
(including attorneys' fees and costs of litigation), whether known or
unknown, and whether an Environmental Claim or a Non-Environmental Claim,
that are brought by or owed to a Third Party.
1.1.25 "CLOSING" means consummation of the transactions contemplated
herein, including execution and delivery of all documents and other
consideration as provided in this Agreement.
1.1.26 "CLOSING DATE" means, subject to Article 17.1, (a) the later of (i)
March 31, 2003 or (ii) five (5) Business Days after all conditions
precedent in Articles 15.1, 15.2 and 15.3 have been satisfied or waived,
or (b) any other date agreed by the Parties in writing.
1.1.27 "CLOSING PAYMENT" has the meaning set forth in Article 16.1.
1.1.28 "CLOSING STATEMENT" refers to the document described in Article
16.1.
1.1.29 "COMPUTED INTEREST" means simple interest at a rate per annum equal
to (i) four and one-quarter percent (4.25%) for any period through and
including February 28, 2003 and (ii) one and four-tenths percent (1.4%)
for any period after February 28, 2003, but in no event greater than the
maximum rate of interest allowed by applicable Law.
1.1.30 "CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement
dated December 5, 2002, between Seller and Buyer, as amended December 11,
2002, and as may be further amended from time to time.
1.1.31 "CONTRACTS" has the meaning given to it in the definition of
"Properties".
1.1.32 "DAY" means a calendar day consisting of twenty-four (24) hours
from midnight to midnight.
1.1.33 "DEFENSIBLE TITLE" means the title to the Real Properties held by
Seller that (except for the Permitted Encumbrances):
(a) entitles Seller to receive, as of the Effective Time, not less than
the Net Revenue Interests set forth on Exhibit "A" of all oil, gas
and associated liquid and gaseous hydrocarbon substances produced,
saved and marketed from those leases, ▇▇▇▇▇ or
4
units set forth on Exhibit "A", except decreases resulting from
operations where Seller is a non-consenting party that are reflected
in the Financial Model or disclosed on Schedule 1.1.33 and decreases
required to allow other working interest owners to make up past
underproduction or pipelines to make up past under-deliveries;
(b) obligates Seller to bear, as of the Effective Time, not greater than
the Working Interest share set forth on Exhibit "A" of costs and
expenses associated with ownership, operation, maintenance and
repair of those leases, ▇▇▇▇▇ or units set forth on Exhibit "A",
unless, in the case of a Property having a positive Buyer's
Allocation, there is a corresponding and proportionate increase in
the associated Net Revenue Interests, or unless such increase
results from contribution requirements with respect to defaulting
co-owners (providing that there is a corresponding and proportionate
right to receive the proceeds of the defaulting co-owner's share of
production while it remains in default); and
(c) is free of liens, claims and encumbrances.
1.1.34 "EFFECTIVE TIME" as to each Property, means January 1, 2003, at
7:00 a.m., local time where the Property is located.
1.1.35 "ENVIRONMENTAL CLAIMS" means all Claims based on breach of
Environmental Laws; provided that only with respect to Claims for which
Seller owes an obligation of indemnity to Buyer, the term "Environmental
Claims" is limited to Claims based on breach of Environmental Laws as such
Laws were in effect on the Effective Time.
1.1.36 "EQUIPMENT" has the meaning given to it in the definition of
"Properties".
1.1.37 "ENVIRONMENTAL LAWS" means any and all Laws that relate to (a)
prevention of pollution or environmental damage, (b) removal or
remediation of pollution or environmental damage, or (c) protection of the
environment.
1.1.38 "EXCLUDED PROPERTIES" means the properties set forth in Exhibit "B"
or otherwise excepted, reserved or retained by Seller (or, as applicable,
its Affiliates) under the terms of this Agreement.
1.1.39 "FINAL ACCOUNTING SETTLEMENT" means the post-Closing accounting
activities conducted in accordance with Article 6.6. The Final Accounting
Settlement shall be conducted in accordance with generally accepted
accounting principles and consistent with Seller's practices with respect
to the Properties on the date of this Agreement.
1.1.40 "FINAL ACCOUNTING STATEMENT" means a statement prepared by Seller
and delivered to Buyer in accordance with Article 6.6 setting forth the
final calculation of the Adjusted Purchase Price.
1.1.41 "FINANCIAL MODEL" means the Excel model named "GOM shelf properties
projection model.xls", dated as of December 12, 2002 and included in the
IndigoPool dataroom for the sale of the Properties.
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1.1.42 "GUARANTY AGREEMENT" means (if applicable under the terms of this
Agreement) that certain Guaranty Agreement in the form of Exhibit "I"
dated as of the date hereof.
1.1.43 "HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
1.1.44 "IMBALANCE" means over-production or under-production or
over-deliveries or under-deliveries with respect to oil or gas produced
from or allocated to the Properties, regardless of whether such
over-production or under-production or over-deliveries or under-deliveries
arise at the platform, wellhead, pipeline, gathering system,
transportation or other location.
1.1.45 "INCLUDING", whether or not capitalized, means including without
limitation.
1.1.46 "INDEMNIFIED PARTY" has the meaning set forth in Article 8.7.
1.1.47 "INDEMNIFYING PARTY" has the meaning set forth in Article 8.7.
1.1.48 "INTERIM PERIOD" means the period between the date of this
Agreement and the Closing Date.
1.1.49 "KNOWLEDGE" (whether or not capitalized) means, in the case of
Seller, the actual knowledge of Seller's Disposition Team and, in the case
of Buyer, the actual knowledge of Buyer's Acquisition Team.
1.1.50 "LAWS" means any and all laws, statutes, codes, ordinances,
permits, licenses, authorizations, decrees, orders, judgments, rules or
regulations (including, for the avoidance of doubt, Environmental Laws)
that are promulgated, issued or enacted by a governmental entity or
authority having appropriate jurisdiction of the Property or the Parties.
1.1.51 "LETTERS-IN-LIEU" means a document in the form of Exhibit "F" in
connection with oil production from the Properties.
1.1.52 "MATERIAL ADVERSE EFFECT" means, with respect to any individual
breach of representation or warranty, that such breach would have an
adverse effect on the value of the Properties exceeding one million United
States dollars ($1,000,000).
1.1.53 "MMS" means the Minerals Management Service of the United States.
1.1.54 "NET REVENUE INTERESTS" means the "Net Revenue Interests" set forth
in Exhibit "A".
1.1.55 "NON-ENVIRONMENTAL CLAIMS" means all Claims other than (i)
Environmental Claims and (ii) invoices or bills received under Contracts
in the ordinary course of business; other ordinary course of business
charges for acquiring and maintaining material, equipment, other personal
property and fixtures, services, easements, rights-of-way, servitudes,
subsurface leases, licenses and permits; costs of utilities and insurance;
6
directly chargeable salaries, wages and employee benefits; producing,
drilling and construction overhead costs; and taxes and assessments of
governmental authorities.
1.1.56 "NON-FOREIGN AFFIDAVIT" means a document in the form of Exhibit
"G".
1.1.57 "NORM" means naturally occurring radioactive materials.
1.1.58 "OPERATING AGREEMENTS" means operating agreements with respect to
those Excluded Properties and related AMI's described in item 1 of Exhibit
"B", each substantially in the form of Exhibit "N."
1.1.59 "OPERATING REVENUES" means sales proceeds attributable to oil, gas
and other hydrocarbons produced from the Properties, net of royalties,
excise, severance and other production taxes, and marketing costs (which
include for purposes of this definition, among other things, costs of
gathering, treating, processing, compression, and transportation), to the
extent such items are not treated as "Charges" under Article 6, and all
other operating revenues attributable to the Properties, including
producing, drilling and construction overhead receipts under operating
agreements with Third Parties.
1.1.60 "PARTIES" has the meaning given it in the introductory paragraph of
this Agreement.
1.1.61 "PARTY" has the meaning given it in the introductory paragraph of
this Agreement.
1.1.62 "PERFORMANCE DEPOSIT" has the meaning given it in Article 2.3.
1.1.63 "PERMITTED ENCUMBRANCES" means any and all:
(a) royalties, overriding royalties, sliding scale royalties, production
payments, reversionary interests, convertible interests, net profits
interests and similar burdens encumbering the Properties to the
extent the net cumulative effect of such burdens does not operate to
reduce the Net Revenue Interests to less than that set forth in
Exhibit "A" or increase the Working Interests above that set forth
in Exhibit "A" without a corresponding and proportionate increase in
the associated Net Revenue Interests;
(b) consents to assignment and similar contractual provisions affecting
the Properties, as set forth on the list delivered pursuant to
Article 12.15(c)(ii); provided that, with respect to transfers or
assignments to Seller or its predecessors, such consents have been
obtained prior to Closing;
(c) preferential rights to purchase and similar contractual provisions
affecting the Properties, as set forth on the lists delivered
pursuant to Articles 12.15(b)(ii) and 12.15(c)(i); provided that,
with respect to transfers or assignments to Seller or its
predecessors, such preferential rights have expired or been waived
prior to Closing;
7
(d) rights to consent by, required notices to, and filings with a
governmental entity or authority associated with the conveyance of
the Properties pursuant hereto which are obtained by Closing or are
customarily obtained post-closing;
(e) rights reserved to or vested in a governmental entity having
jurisdiction to control or regulate the Properties in any manner
whatsoever, and all Laws of such governmental entities or
authorities;
(f) easements, rights-of-way, servitudes, sub-surface leases, equipment,
pipelines, and utility lines on, over and through the Properties,
provided that they do not materially interfere with the operation of
the Properties in the manner such operations were conducted as of
the Effective Time;
(g) terms and conditions of unitization, communitization, and pooling
agreements, and any other agreements affecting the Properties,
provided that they do not (i) reduce Seller's Net Revenue Interests
to less than that set forth on Exhibit "A" or increase Seller's
Working Interests above that set forth on Exhibit "A" without a
corresponding and proportionate increase in the associated Net
Revenue Interests, or (ii) materially interfere with the operation
of the Properties in the manner such operations were conducted as of
the Effective Time;
(h) terms and conditions of governmental licenses and permits affecting
the Properties;
(i) liens for taxes or assessments not yet delinquent or, if delinquent,
being contested by Seller in good faith in the normal course of
business; provided, however, this provision will not diminish or
affect in any way the Parties' rights and obligations under Article
6.3 or under the indemnities in Article 8 of this Agreement;
(j) liens of operators relating to obligations not yet delinquent or, if
delinquent, being contested by Seller in good faith in the normal
course of business; provided, however, this provision will not
diminish or affect in any way the Parties' rights and obligations
under Article 6.2 or under the indemnities in Article 8 of this
Agreement;
(k) matters that would otherwise be Alleged Title Defects but that do
not meet the individual threshold set forth in Article 1.1.7,
provided that this clause (k) shall not apply for purposes of
Seller's special warranty of title in Article 10.1.6;
(l) matters that Buyer waives in writing;
(m) litigation or claims referenced in Exhibit "C";
(n) production, gathering, processing and transportation related gas
imbalances associated with the Properties;
8
(o) Alleged Title Defects consisting of failure to file any instrument
in Seller's chain of title in the records of any adjoining county or
parish, so long as the instrument in question is filed with the MMS;
(p) matters specifically listed on Exhibit "A" or otherwise disclosed on
Schedule 1.1.6 to this Agreement; and
(q) such defects or irregularities in the title to the Properties that
do not materially interfere with the ownership, operation, value or
use of the Properties affected thereby and that would not be
considered material when applying general standards in the oil and
gas industry.
1.1.64 "PROPERTIES" means all of Seller's (or in the case of the BP
America Properties, BP America's) right, title and interests (real,
personal, mixed, contractual or otherwise) in, to and under or derived
from the following:
(a) all oil and gas leasehold interests, royalty interests, overriding
royalty interests, mineral interests, production payments, and net
profits interests that are attributable to the interests described
in Exhibit "A" (irrespective of the Working Interests or Net Revenue
Interests set forth on Exhibit "A"), and the production of oil, gas
or other hydrocarbon substances attributable thereto;
(b) all unitization, communitization and pooling declarations, orders
and agreements (including all units formed by voluntary agreement
and those formed under the rules, regulations, orders or other
official acts of any governmental entity having jurisdiction) to the
extent they relate to any of the interests described in Exhibit "A",
or the production of oil, gas or other hydrocarbon substances
attributable thereto;
(c) all product sales contracts, processing contracts, gathering
contracts, transportation contracts, farm-in and farm-out contracts,
areas of mutual interest, operating agreements, balancing contracts
and other contracts, agreements and instruments to the extent they
relate to any of the interests described in Exhibit "A", or the
production of oil, gas or other hydrocarbon substances attributable
thereto (collectively, the "CONTRACTS");
(d) all easements, rights-of-way, servitudes, and subsurface leases, to
the extent they relate to the interests described on Exhibit "A",
including the easements, rights-of-way, servitudes and subsurface
leases described in Exhibit "A-1" attached hereto;
(e) all tangible personal property, equipment, improvements, and
fixtures (collectively, the "EQUIPMENT"), and all other personal
property and appurtenances, to the extent situated upon and
primarily used, or situated upon and held primarily for use, by
Seller in connection with ownership, operation, maintenance or
repair of the Real Properties, or production of oil, gas or other
hydrocarbon substances attributable thereto, including all ▇▇▇▇▇
(whether producing, shut-in, injection, disposal, water supply or
plugged and abandoned),
9
gathering and processing systems, platforms, pipelines, compressors,
meters, tanks, equipment, machinery, tools, permits, and licenses;
(f) all Imbalances;
(g) Suspense Funds, to the extent provided in Article 12.7;
(h) the Records; and
(i) all partnerships (tax, state law or otherwise) affecting any
Properties.
The term "Properties" does not include the Excluded Properties.
1.1.65 "PURCHASE PRICE" has the meaning set forth in Article 2.2.
1.1.66 "REAL PROPERTIES" means those Properties consisting of interests in
oil, gas and/or other hydrocarbon reserves in place or otherwise
classified as real property under applicable property Law.
1.1.67 "RECORDS" means, except as otherwise provided under the terms of
this Agreement, Seller's (or, in the case of the BP America Properties, BP
America's) original books, records, files, data, information, drawings and
maps to the extent related to the Properties (including electronic copies
of all computer records where available, contract files, division order
files, title opinions and other title information (including abstracts,
evidences of rental payments, maps, surveys and data sheets), production
records, engineering files and environmental records); provided, however,
Buyer acknowledges that Seller images and retains Records in electronic
format, and may provide imaged or electronic Records rather than originals
of seismic data and of data not maintained in hard copy form, and further
provided that "Records" shall not include any Excluded Properties, and
with respect to seismic data the Records shall consist of the proprietary
Transferable Seismic Data pursuant to licenses in substantially the form
of Exhibit "N" and, where applicable under Article 12.11, copies of
licensed Transferable Seismic Data.
1.1.68 "RESPONDENT" has the meaning set forth in Article 18.1.
1.1.69 "SALES TAX" means any and all transfer, sales, gross receipts,
compensating use, use or similar taxes, and any associated penalties and
interest.
1.1.70 "SELLER" has the meaning set forth in the introductory paragraph of
this Agreement.
1.1.71 "SELLER GROUP" means each and all of: (a) Seller and its officers,
directors, agents, consultants and employees, and (b) Seller's Affiliates
and their officers, directors, agents, consultants and employees.
1.1.72 "SELLER'S DISPOSITION TEAM" means ▇▇▇▇ ▇▇▇▇▇▇▇▇ (Manager, Mergers
and Acquisitions), ▇▇▇▇▇ ▇▇▇▇▇▇ (Director Business Development, Gulf of
Mexico Shelf), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (Project Manager, Mergers and
Acquisitions), ▇▇▇▇▇▇ ▇▇▇▇ (Asset
10
Manager, Gulf of Mexico Shelf), ▇▇▇▇▇ ▇▇▇▇▇▇ (Commercial Team Lead, Gulf
of Mexico Shelf), ▇▇▇▇▇ ▇▇▇▇▇ (Performance Unit Leader, Gulf of Mexico
Shelf), ▇▇▇▇ ▇▇▇▇▇ (VP and Business Unit Leader, Gulf of Mexico Shelf) and
▇▇▇▇ ▇▇▇▇▇▇ (Managing Attorney).
1.1.73 "SUSPENSE FUNDS" means proceeds of production, and penalties and
interest with respect thereto, payable to Third Parties but held in
suspense by Seller as operator of any of the Properties.
1.1.74 "THIRD PARTY" means any person or entity, governmental or
otherwise, other than Seller, Buyer, and their respective Affiliates.
1.1.75 "TITLE BENEFIT" means any right, circumstance or condition that is
asserted in accordance with Article 4.2 and that operates to (i) increase
the Net Revenue Interest of Seller in any Real Property described on
Exhibit "A" having a positive Buyer's Allocation above the Net Revenue
Interest set forth in Exhibit "A", without causing a greater than
proportionate increase in the Working Interest above that shown in Exhibit
"A", (ii) decrease the Working Interest of Seller in a Real Property
described on Exhibit "A" having a positive Buyer's Allocation below the
Working Interest set forth in Exhibit "A" without decreasing the Net
Revenue Interest for such Real Property below that shown in Exhibit "A",
or (iii) decrease the Working Interest of Seller in any Real Property
described on Exhibit "A" having a negative Buyer's Allocation below the
Working Interest set forth in Exhibit "A", without causing a greater than
a proportionate decrease in the Net Revenue Interest below that shown in
Exhibit "A", which in each case increases the value of the Real Properties
(including any reduction in the negative value of any Real Property with a
negative Buyer's Allocation) by more than five hundred thousand United
States dollars (US $500,000) net to Seller's interests in the Real
Properties affected by any such individual Title Benefit.
1.1.76 "TITLE DEFECT" means an (a) individual defect in Seller's title to
one or more Real Properties described on Exhibit "A" and/or one or more
easements, rights-of-ways, servitudes or subsurface leases included in the
Real Properties but not described on Exhibit "A", or (b) inaccuracy in the
Working Interests or Net Revenue Interests for such a Real Property (where
such Working Interests or Net Revenue Interests are stated on Exhibit
"A"), that in either case would cause Seller not to have Defensible Title.
1.1.77 "TRANSFERABLE SEISMIC DATA" means Seller's proprietary and licensed
seismic data covering the Properties or AMI and extending not more than
one mile beyond the boundaries thereof provided that such data shall not
include data the transfer or disclosure of which is restricted by the
terms of any Third Party agreement unless consent to such transfer or
disclosure has been obtained, and shall not include the codes for
processing such data.
1.1.78 "TRANSITION AGREEMENT" means a document in the form of Exhibit "H".
1.1.79 "TRANSITION PERIOD" has the meaning set forth in the Transition
Agreement.
1.1.80 "WORKING INTERESTS" means the "Working Interests" set forth in
Exhibit "A".
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ARTICLE 2. SALE OF PROPERTIES
2.1 Sale and Purchase. On the Closing Date, but effective as of the Effective
Time, and upon the terms and conditions of this Agreement: (a) Seller
(and, with respect to the BP America Properties, BP America) shall sell,
assign and convey the Properties to Buyer, and (b) Buyer shall purchase
and accept the Properties from Seller (and BP America); provided, however,
Seller (and, if applicable, BP America) expressly excepts, reserves and
retains, unto itself, its Affiliates, successors and assigns the Excluded
Properties.
2.2 Purchase Price. The total purchase price, subject to adjustments as
described below, that Buyer shall pay Seller (on behalf of Seller and BP
America) for the Properties is Six Hundred Seventy Million United States
Dollars (US $670,000,000) ("PURCHASE PRICE"), payable in full at Closing
in immediately available funds. The Purchase Price shall be adjusted as
follows:
(a) Increased by Computed Interest for the period from the Effective
Time through the Closing Date;
(b) Decreased by the amount of Operating Revenues to which Buyer is
entitled under Article 6.2 but which are collected and retained by
Seller;
(c) Increased by US $450,000 per month (pro-rated on a daily basis for
any partial month) pursuant to Article 6.2(b);
(d) Increased by the amount of Charges for which Buyer is responsible
under Article 6.2 but which are paid by Seller;
(e) Decreased by the amount of Charges for which Seller is responsible
under Article 6.2 but which are paid by Buyer;
(f) Increased by amounts to which Seller is entitled pursuant to Article
6.1 with respect to inventory;
(g) Increased by the amount of taxes and assessments for which Buyer is
responsible under Article 6.3 but which are paid by Seller;
(h) Decreased by the amount of taxes or assessments for which Seller is
responsible under Article 6.3 but which are paid by Buyer;
(i) Increased by amounts owing by Buyer pursuant to Article 6.4;
(j) Increased or decreased, as appropriate, pursuant to Article 6.5;
(k) Decreased by the agreed or arbitrated net adjustment, if any, for
Alleged Title Defects pursuant to Article 4.2, and increased by the
agreed or arbitrated net adjustment, if any, for Title Benefits
pursuant to Article 4.2;
12
(l) Decreased by the agreed or arbitrated net adjustment, if any, to
which Buyer is entitled for Alleged Adverse Conditions pursuant to
Article 5.2;
(m) Decreased or increased, as appropriate, by any adjustments made for
Properties excluded pursuant to Article 3.1;
(n) Decreased for any agreed reduction in value pursuant to Article 7.2,
and decreased or increased, as appropriate, by any adjustments made
for Properties excluded pursuant to Article 7.2; and
(o) Increased or decreased, as the case may be, by any other amount
mutually agreed to by the Parties in writing.
The Purchase Price, as so adjusted, shall be the "ADJUSTED PURCHASE
PRICE."
2.3 Performance Deposit. Upon execution of this Agreement and prior to its
delivery to Buyer, Buyer shall deposit with Seller cash equal to the
lesser of (i) ten percent (10%) of the unadjusted Purchase Price or (ii)
twenty million United States dollars (US $20,000,000) ("PERFORMANCE
DEPOSIT"), provided however, that if this Agreement is executed on a day
other than a Business Day, Buyer shall deliver the Performance Deposit to
Seller on the next Business Day.
2.4 State Water Properties. Title to the BP America Properties is currently
held by BP America, an Affiliate of Seller. Seller agrees to cause BP
America to comply with the terms of the various covenants contained in
Article 12 that are expressly applicable to BP America under the terms
thereof and to provide the deliveries at Closing required of BP America
under the terms of Article 16, and shall be liable for BP America's
failure to comply to the same extent as if Seller had failed to comply.
Seller's representations, indemnities and agreements under this Agreement
with respect to the Properties shall apply to the BP America Properties as
fully as if title to such Properties were held by Seller.
ARTICLE 3. PREFERENTIAL RIGHTS
3.1 Preferential Rights To Purchase. Seller shall use Buyer's Allocations to
provide any required preferential right to purchase notifications as
promptly as practicable after Buyer has furnished Buyer's Allocations,
based on the form of Preferential Purchase Right Notice Letter attached
hereto as Exhibit "L". If, prior to the Closing Date, a holder of a
preferential purchase right notifies Seller that it elects to exercise its
rights with respect to the Properties to which its preferential purchase
right applies (determined by and in accordance with the agreement in which
the preferential purchase right arises), the Properties covered by that
preferential purchase right will not be sold to the Party originally
executing this Agreement as "Buyer" (subject to the remaining provisions
in this Article), and the Purchase Price will be reduced by Buyer's
Allocations for such Properties if Buyer's Allocations are positive
numbers and increased by Buyer's Allocations for such Properties if
Buyer's Allocations are negative numbers. Buyer remains obligated to
purchase the remainder of the Properties not affected by exercised
preferential rights to purchase. If for any reason, other than Seller's
breach, the purchase
13
and sale of the Properties covered by the preferential purchase right is
not or cannot be consummated with the holder of the preferential purchase
right, Seller shall so notify Buyer promptly, but no later than thirty
(30) Days after the date set forth in Article 17.1.4, and within ten (10)
Business Days after Buyer's receipt of such notice, Seller shall sell,
assign and convey to Buyer and Buyer shall purchase and accept from Seller
such Properties pursuant to the terms of this Agreement and for the value
allocated to such Properties in Buyer's Allocations (except "CLOSING DATE"
with respect to such Properties shall mean the date of assignment of such
Properties from Seller to Buyer). Any preferential purchase right must be
exercised subject to all the terms and conditions of this Agreement,
including successful Closing of this Agreement pursuant to Article 16.
ARTICLE 4. TITLE REVIEW
4.1 Review of Title Records. After execution and delivery of this Agreement,
Seller shall make available (during Seller's regular business hours and at
their current location) for Buyer's review, Records in Seller's possession
or under Seller's control relating to title to the Properties. If Buyer
requests copies of title Records, Seller shall use reasonable efforts to
provide the requested copies to Buyer at Buyer's expense. Such review of
Records will be conducted in accordance with the terms of the
Confidentiality Agreement.
4.2 Alleged Title Defects.
(a) Should Seller's Disposition Team discover a Title Defect on or
before Closing, Seller shall as soon as practicable, but in any
event prior to Closing, deliver to Buyer a notice including a
specific description of the Title Defect and the Real Properties
affected. As soon as reasonably practicable (and on an ongoing
basis), but no later than fifteen (15) Days prior to Closing, Buyer
may notify Seller in writing of any Alleged Title Defects. Buyer's
notice asserting Alleged Title Defects must include a reasonably
detailed description and explanation (including any available
supporting documentation) of each Alleged Title Defect claimed, the
Real Properties affected, and the value Buyer in good faith
attributes to the Alleged Title Defect. Buyer and Seller shall meet
from time-to-time to attempt to agree on resolution with respect to
Alleged Title Defects. Seller shall have the right, but not the
obligation, to attempt, at its sole cost, to cure or remove on or
before the Closing Date any Alleged Title Defects with respect to
the Real Properties. If prior to Closing, Seller has commenced to
cure the Alleged Title Defect in a timely manner and pursues such
cure diligently, then Seller may, by notice to Buyer prior to
Closing, elect to continue diligently attempting to cure such defect
to completion for up to one hundred eighty (180) Days following
Closing.
(b) Should Buyer's Acquisition Team discover any Title Benefit on or
before Closing, Buyer shall as soon as practicable, but in any case
prior to Closing, deliver to Seller a notice including a specific
description of the Title Benefit and the Real Properties affected.
Seller shall have the right to deliver to Buyer a similar notice on
or before Closing with respect to each Title Benefit discovered
14
by Seller, which in the case of Seller, shall include the value
Seller in good faith attributes to the Title Benefit.
(c) A Purchase Price adjustment shall be made under Article 2.2(k) by
reducing the Purchase Price by the net aggregate value of all actual
Alleged Title Defects timely reported under this Article (or of
which Seller had knowledge and should have reported under Article
4.2(a)) and not timely cured as permitted under this Article, and
increasing the Purchase Price by the net aggregate value of all
actual Title Benefits timely reported under this Article (or of
which Buyer had knowledge and should have reported under Article
4.2(b)), subject to the other terms of this Article. The value
attributable to the uncured Alleged Title Defects shall be
determined as follows:
(i) Where Seller agrees in writing with the value of the Alleged
Title Defect as set forth in Buyer's notice, that value shall
be the value of the Alleged Title Defect.
(ii) If the Alleged Title Defect is a lien, encumbrance or other
charge upon a Real Property which is undisputed and liquidated
in amount, then the value of the Alleged Title Defect shall be
the amount necessary to be paid to the obligee to remove the
Alleged Title Defect from the affected Real Property.
(iii) If the Buyer's Allocation for any Real Property is positive
and the Alleged Title Defect represents a discrepancy between
the Net Revenue Interest for such Real Property and the Net
Revenue Interest for that Real Property stated on Exhibit "A",
then the value of such Alleged Title Defect shall be the
product of the Buyer's Allocation for such Real Property
multiplied by a fraction, the numerator of which is the
decrease in Net Revenue Interest and the denominator of which
is the Net Revenue Interest stated on Exhibit "A".
(iv) If the Alleged Title Defect represents an obligation,
encumbrance, burden or charge upon or other defect in title to
the affected Real Property of a type not described in
subsections (i), (ii) or (iii) above, the value of the Alleged
Title Defect shall be determined by taking into account
Buyer's Allocation for the Real Property so affected, the
portion of the Real Property affected by the Alleged Title
Defect, the legal effect of the Alleged Title Defect, the
potential economic effect of the Alleged Title Defect over the
life of the affected Real Property, and such other factors as
are necessary to make a proper evaluation. Where the affected
Real Property is an easement, right-of-way, servitude or
subsurface lease that is not given a separate Buyer's
Allocation, that easement, right-of-way, servitude or
subsurface lease shall be considered a part of the Real
Property or Real Properties to which it is appurtenant for
purposes of taking into account Buyer's Allocation.
15
The Parties agree for all purposes of this Article 4 that Buyer's
Allocation for each Real Property is the value of that Real Property
if it has the Net Revenue Interest and Working Interest stated on
Exhibit "A" and is free of liens, claims and encumbrances other than
Permitted Encumbrances. The value of any Alleged Title Defect or
Title Benefit consisting of a discrepancy in Net Revenue Interest
and/or Working Interest shall be determined solely by starting with
the Buyer's Allocation and calculating the effect of the percentage
change in Net Revenue Interest and/or Working Interest. Such
calculation shall be based on the same assumptions with respect to
production rate, production profile, price, and amounts of future
capital expenditures as were used in the calculation of Buyer's
Allocation, which assumptions shall be disclosed to Seller and any
applicable arbitrator. Furthermore, if an Alleged Title Defect is
reasonably susceptible of being cured, the adjustments or payments
with respect to that Alleged Title Defect shall not exceed the
reasonable costs of cure.
(d) If prior to Closing, the Parties are unable to agree on a resolution
associated with any Alleged Title Defects raised by Buyer (or of
which Seller had knowledge and should have reported under Article
4.2(a)), the Parties shall Close with the Purchase Price being
reduced by Seller's estimate of the value of all uncured Alleged
Title Defects, in accordance with Article 4.2(c), excluding those
Alleged Title Defects with respect to which Seller has provided
notice of its election to continue curing under Article 4.2(a);
provided, however, that within thirty (30) Days after the Closing
Date, either Party may initiate binding arbitration in accordance
with the provisions set forth in Article 18.1 to resolve the
dispute. If prior to Closing, the Parties are unable to agree on a
resolution associated with any Title Benefit raised pursuant to
Article 4.2(b) (or of which Buyer had knowledge and should have
reported under Article 4.2(b)), the Parties shall Close with the
Purchase Price being increased by Seller's estimate of the increase
in the value of the Properties above that shown in Buyer's
Allocations (including any reduction in the negative value of any
Property with a negative Buyer's Allocation) as a consequence of the
Title Benefit, subject to the right of either Party to initiate
binding arbitration in accordance with the provisions set forth in
Article 18.1 to resolve the dispute.
(e) If by one hundred eighty (180) Days following Closing, Seller has
failed to cure any Alleged Title Defects with respect to which
Seller has provided notice of its election to continue curing under
Article 4.2(a), and the Parties have been unable by such date to
agree upon a resolution associated with such Alleged Title Defects,
then Seller shall make a payment to Buyer equal to Seller's estimate
of the value of such uncured Alleged Title Defects, in accordance
with Article 4.2(c). Within thirty (30) Days after the one hundred
eighty (180) Day cure period has expired, either Party may initiate
binding arbitration in accordance with the provisions set forth in
Article 18.1 to resolve the dispute.
(f) ANY CLAIM FOR PAYMENT WITH RESPECT TO ANY ALLEGED TITLE DEFECT, AND
ANY ASSERTION THAT ANY ALLEGED TITLE DEFECT FOR WHICH SELLER HAS
PROVIDED NOTICE OF ITS INTENT TO CURE HAS NOT BEEN CURED, THAT ARE
NOT RESOLVED BY AGREEMENT OF
16
THE PARTIES OR REFERRED TO ARBITRATION WITHIN THIRTY (30) DAYS
FOLLOWING CLOSING (OR, IN THE EVENT SELLER PROVIDES NOTICE THAT IT
WILL CONTINUE ATTEMPTING TO CURE THE ALLEGED TITLE DEFECT AFTER
CLOSING, WITHIN THIRTY (30) DAYS AFTER THE ONE HUNDRED EIGHTY (180)
DAY CURE PERIOD FOLLOWING CLOSING HAS EXPIRED) SHALL BE DEEMED
WAIVED, UNLESS THE THIRTY (30) DAY PERIOD IS EXTENDED BY MUTUAL
WRITTEN AGREEMENT OF THE PARTIES.
(g) Any limitations contained in the definition of Alleged Title Defect
or in this Article 4.2 on Buyer's right to compensation with respect
to any Title Defect shall have no effect on Buyer's right to
compensation, if any, with respect to any Claim for damages or other
matter (except title) involving the Real Property subject to the
Title Defect under any other provision of this Agreement.
(h) Seller's election to attempt to cure an Alleged Title Defect shall
not constitute a waiver of Seller's right to dispute the existence,
nature or value of, or cost to cure, the Alleged Title Defect.
Buyer's acceptance of any payment or adjustment based on Seller's
estimate of the value of an uncured Alleged Title Defect shall not
constitute a waiver of Buyer's right to dispute such estimate by
initiating arbitration within the time permitted by this Article.
4.3 Waiver. EXCEPT FOR THE SPECIAL WARRANTY OF TITLE GIVEN BY SELLER IN
ARTICLE 10.1.6, BUYER WAIVES FOR ALL PURPOSES ALL OBJECTIONS ASSOCIATED
WITH THE TITLE TO THE PROPERTIES (INCLUDING ALLEGED TITLE DEFECTS), UNLESS
RAISED BY PROPER NOTICE WITHIN THE APPLICABLE TIME PERIOD SET FORTH IN
ARTICLE 4.2; AND BUYER (ON BEHALF OF BUYER GROUP AND THEIR SUCCESSORS AND
ASSIGNS) IRREVOCABLY WAIVES ANY AND ALL CLAIMS THEY MAY HAVE AGAINST
SELLER GROUP ASSOCIATED WITH THE SAME.
ARTICLE 5. INSPECTION OF PREMISES
5.1 Inspection of Premises. After execution and delivery of this Agreement,
Seller shall provide Buyer access (during Seller's regular business hours)
to Seller-operated Properties, and Seller will use reasonable efforts to
obtain permission for Buyer to gain access to third party-operated
Properties, to inspect the condition of the same. Such inspection shall be
conducted in accordance with the terms of the Confidentiality Agreement
and subject to any boarding agreements or releases or other agreements
required by the operator of the Properties and the rules and regulations
of such operator with respect to health, safety and the environment. Buyer
may not operate equipment during such inspection. At Buyer's reasonable
request, Seller shall conduct tests for sustained casing pressure on ▇▇▇▇▇
included in the Properties and any other equipment tests that Seller's
on-site personnel deem reasonably acceptable in connection with Buyer's
site visits. Buyer may not conduct testing or sampling of materials during
such inspection without Seller's prior written consent, such consent not
to be unreasonably withheld or delayed (and Seller shall use good faith
efforts, considering the circumstances, to respond to Buyer's requests
made while on-site on a Property prior to Buyer's departure from the
Property). Seller shall arrange, at Buyer's cost, for any transportation
to and from any such Properties as is reasonably requested by Buyer. BUYER
TO THE FULLEST EXTENT PERMITTED BY LAW, SHALL INDEMNIFY, DEFEND AND HOLD
17
HARMLESS SELLER GROUP, THE OTHER OWNERS OF INTERESTS IN THE PROPERTIES AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND
REPRESENTATIVES, FROM ANY AND ALL CLAIMS, DEMANDS, SUITS, CAUSES OF
ACTION, LOSSES, DAMAGES, LIABILITIES, FINES, PENALTIES AND COSTS
(INCLUDING ATTORNEYS' FEES AND COSTS OF LITIGATION), INCLUDING THOSE FOR
(1) ANY INJURY TO PERSONS (INCLUDING OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS, CONSULTANTS, LEGAL AND FINANCIAL ADVISORS AND OTHER
REPRESENTATIVES OF BUYER (COLLECTIVELY, "BUYER'S REPRESENTATIVES") OR
SELLER GROUP); (2) DAMAGES TO PROPERTY (INCLUDING DAMAGE TO THE PROPERTY
OF THIRD PARTIES, PROPERTY OF SELLER GROUP, AND PROPERTY OF BUYER AND
BUYER'S REPRESENTATIVES); AND (3) DAMAGES TO NATURAL RESOURCES OR
ENVIRONMENTAL DAMAGE TO OR ASSOCIATED WITH THE PROPERTIES, TO THE EXTENT
CAUSED BY, ARISING OUT OF, OR RESULTING FROM THE ACTIONS OF BUYER AND/OR
BUYER'S REPRESENTATIVES IN CONNECTION WITH SAID SITE VISIT OR PHYSICAL
INVESTIGATION OF THE PROPERTIES, EVEN IF SUCH INDEMNIFIED EVENT IS CAUSED
BY, ARISES OUT OF OR RESULTS FROM NEGLIGENCE, STRICT LIABILITY, BREACH OF
DUTY (STATUTORY OR OTHERWISE), VIOLATION OF LAW OR OTHER FAULT OF ANY OF
THE AFORESAID INDEMNIFIED PARTIES, OR ANY PRE-EXISTING DEFECT, BUT NOT TO
THE EXTENT THAT SUCH INDEMNIFIED EVENT OR OCCURRENCE IS CAUSED BY OR THE
RESULT OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED
PARTIES. As promptly as practicable, and taking into account to the extent
practicable any priorities of which Buyer has provided notice, but in any
event within ten (10) Business Days after execution and delivery of this
Agreement, Seller shall make available (during Seller's regular business
hours and at their current location) for Buyer's review, Records in
Seller's possession or under Seller's control relating to the Properties.
If Buyer requests copies of Records, Seller shall use reasonable efforts
to provide the requested copies to Buyer at Buyer's expense. Such review
of Records will be conducted in accordance with the terms of the
Confidentiality Agreement.
5.2 Alleged Adverse Conditions.
(a) As soon as reasonably practicable (and on an ongoing basis), but no
later than fifteen (15) Days prior to Closing, Buyer may notify
Seller in writing of any Alleged Adverse Conditions. Buyer's notice
asserting Alleged Adverse Conditions must include a reasonably
detailed description and explanation (including any available
supporting documentation) of each Alleged Adverse Condition claimed,
the Properties affected, and the value Buyer in good faith
attributes to the Alleged Adverse Condition. Buyer and Seller shall
meet from time-to-time to attempt to agree on resolution with
respect to Alleged Adverse Conditions. Seller shall have the right,
but not the obligation, to attempt, at its sole cost, to cure or
remove on or before the Closing Date any Alleged Adverse Conditions
with respect to the Properties. If prior to Closing, Seller has
commenced to cure the Alleged Adverse Condition in a timely manner
and pursues such cure diligently, then Seller may, by notice to
Buyer prior to Closing, elect to continue diligently attempting to
cure such condition to completion for up to one hundred eighty (180)
Days following Closing.
(b) A Purchase Price adjustment shall be made under Article 2.2(l) by
reducing the Purchase Price by the net aggregate value of all actual
Alleged Adverse Conditions timely reported under this Article and
not timely cured as permitted
18
under this Article, subject to Article 5.2(g) and the other terms of
this Article. When calculating the value of any Alleged Adverse
Conditions, if an Alleged Adverse Condition is reasonably
susceptible of being cured, the adjustments or payments with respect
to that Alleged Adverse Condition shall not exceed the reasonable
costs of cure.
(c) Notwithstanding the other terms of this Article 5.2, Seller may
elect by notice to Buyer at least five (5) Business Days prior to
the Closing Date to exclude from this Agreement any Real Property
and associated personal Property affected by an Alleged Adverse
Condition of which Buyer has provided timely notice if (i) the Real
Property has a positive Buyer's Allocation and the cumulative
adjustments and payments associated with the effects of Alleged
Adverse Conditions on such Real Property and associated personal
Property would exceed Buyer's Allocation for such Real Property or
(ii) the Real Property has a negative Buyer's Allocation. In the
event any Property is excluded from this Agreement pursuant to this
Article, the Purchase Price shall be reduced by Buyer's Allocation
for such Property, and no other adjustment shall be made with
respect to such Property.
(d) If prior to Closing, the Parties are unable to agree on a resolution
associated with any Alleged Adverse Conditions raised by Buyer, the
Parties shall Close with the Purchase Price being reduced by
Seller's estimate of the value of all uncured Alleged Adverse
Conditions, excluding those Alleged Adverse Conditions with respect
to which Seller has provided notice of its election to continue
curing under Article 5.2(a); provided, however, that within thirty
(30) Days after the Closing Date, either Party may initiate binding
arbitration in accordance with the provisions set forth in Article
18.1 to resolve the dispute.
(e) If by one hundred eighty (180) Days following Closing, Seller has
failed to cure any Alleged Adverse Conditions with respect to which
Seller has provided notice of its election to continue curing under
Article 5.2(a), and the Parties have been unable by such date to
agree upon a resolution associated with such Alleged Adverse
Conditions, Seller shall make a payment to Buyer equal to Seller's
estimate of the value of such uncured Alleged Adverse Conditions.
Within thirty (30) Days after the one hundred eighty (180) Day cure
period has expired, either Party may initiate binding arbitration in
accordance with the provisions set forth in Article 18.1 to resolve
the dispute.
(f) ANY CLAIM FOR PAYMENT WITH RESPECT TO ANY ALLEGED ADVERSE CONDITION,
AND ANY ASSERTION THAT ANY ALLEGED ADVERSE CONDITION FOR WHICH
SELLER HAS PROVIDED NOTICE OF ITS INTENT TO CURE HAS NOT BEEN CURED,
THAT ARE NOT RESOLVED BY AGREEMENT OF THE PARTIES OR REFERRED TO
ARBITRATION WITHIN THIRTY (30) DAYS FOLLOWING CLOSING (OR, IN THE
EVENT SELLER PROVIDES NOTICE THAT IT WILL CONTINUE ATTEMPTING TO
CURE THE ALLEGED ADVERSE CONDITIONS AFTER CLOSING, WITHIN THIRTY
(30) DAYS AFTER THE ONE HUNDRED EIGHTY (180) DAY CURE PERIOD
FOLLOWING CLOSING HAS EXPIRED) SHALL BE DEEMED WAIVED, UNLESS THE
THIRTY (30) DAY PERIOD IS EXTENDED BY MUTUAL WRITTEN AGREEMENT OF
THE PARTIES.
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(g) Notwithstanding anything contained in this Agreement to the
contrary, Buyer shall not be entitled to an adjustment or other
remedy under Articles 5.2, 8.3 or 8.4 unless the aggregate value
(determined in accordance with those Articles) of all Alleged
Adverse Conditions, Non-Environmental Claims and Environmental
Claims timely reported under those Articles and not cured by Seller
exceeds seventeen million five hundred thousand United States
dollars (US $17,500,000), and then only to the extent such aggregate
value exceeds seventeen million five hundred thousand United States
dollars (US $17,500,000), and as between Buyer and Seller Group,
Buyer shall be solely responsible for and bear all costs and
expenses associated with any and all Alleged Adverse Conditions,
Non-Environmental Claims and Environmental Claims up to seventeen
million five hundred thousand United States dollars (US
$17,500,000).
(h) Seller's election to attempt to cure an Alleged Adverse Condition
shall not constitute a waiver of Seller's right to dispute the
existence, nature, or value of, or cost to cure, the Alleged Adverse
Condition. Buyer's acceptance of any payment or adjustment based on
Seller's estimate of the value of an uncured Alleged Adverse
Condition shall not constitute a waiver of Buyer's right to dispute
such estimate by initiating arbitration within the time period
permitted by this Article.
5.3 Waiver. BUYER WAIVES FOR ALL PURPOSES ALL OBJECTIONS ASSOCIATED WITH THE
ENVIRONMENTAL AND PHYSICAL AND OTHER CONDITION OF THE PROPERTIES
(INCLUDING ALLEGED ADVERSE CONDITIONS), UNLESS RAISED BY PROPER NOTICE
WITHIN THE APPLICABLE TIME PERIOD SET FORTH IN ARTICLE 5.2; AND BUYER (ON
BEHALF OF BUYER GROUP AND THEIR SUCCESSORS AND ASSIGNS) IRREVOCABLY WAIVES
ANY AND ALL CLAIMS, EXCEPT CLAIMS UNDER SELLER'S INDEMNITIES PURSUANT TO
ARTICLES 8.2, 8.3 AND 8.4, THEY MAY HAVE AGAINST SELLER GROUP ASSOCIATED
WITH THE SAME.
ARTICLE 6. ACCOUNTING
6.1 Products. Seller (or operator of the Properties) shall gauge all
merchantable oil and liquid hydrocarbon substances associated with the
Properties and stored in tanks and vessels to the bottom of the flange, as
of the Effective Time. Buyer shall purchase from Seller, at Closing, all
such oil and liquid hydrocarbon substances at a price equal to the average
price received by Seller from sales during the month of December 2002 of
comparable oil and liquid hydrocarbon substances from each field from
which such substances were produced, net of royalties, excise, severance
and other production taxes, and marketing costs (which include for
purposes hereof, among other things, costs of gathering, treating,
processing, compression, and transportation), to the extent such items are
not treated as "Charges" under this Article 6. Oil and liquid hydrocarbon
substances in treating and separation equipment upstream of pipeline
connections, as of the Effective Time, shall not be considered
merchantable and shall become the property of Buyer. Actual amounts shall
be accounted for in the Final Accounting Settlement.
6.2 Revenues, Expenses and Capital Expenditures. Except as expressly provided
otherwise in this Agreement: (a) Seller (or, if applicable, BP America) is
entitled to all Operating Revenues attributable to the Properties during
the period prior to the Effective Time and
20
is responsible for all Charges attributable to the Properties during the
period prior to the Effective Time; (b) Seller (on behalf of Seller and BP
America) is entitled to the sum of US $450,000 per month (prorated on a
daily basis for any partial month) (as an agreed reimbursement in lieu of
actual overhead) for the period from and after the Effective Time to but
excluding the Closing Date; and (c) Buyer is entitled to all Operating
Revenues attributable to the Properties during the period on and after the
Effective Time and is responsible for all Charges (except producing,
drilling and overhead costs payable to Seller or its Affiliates, other
than pursuant to Section 6.2(b)) attributable to the Properties during the
period on and after the Effective Time. Actual amounts shall be accounted
for in the Final Accounting Settlement, unless previously accounted for
under the Transition Agreement. Whether Charges and Operating Revenues
with respect to the Properties are attributable to periods before or after
the Effective Time shall be determined in accordance with United States
generally accepted accounting principles (as published by the Financial
Accounting Standards Board) and Council of Petroleum Accountants Societies
(▇▇▇▇▇) standards, based on the accrual method of accounting.
6.3 Taxes. Seller (or, if applicable, BP America) shall bear all taxes and
assessments, including excise taxes, severance or other production taxes,
ad valorem taxes and any other federal, state or local taxes or
assessments attributable to ownership or operation of the Properties prior
to the Effective Time; and all deductions, credits or refunds pertaining
to the aforementioned taxes and assessments, no matter when received,
belong to Seller (or BP America). Buyer shall bear all taxes and
assessments, including sales taxes, excise taxes, severance or other
production taxes, ad valorem taxes and any other federal, state or local
taxes and assessments attributable to ownership or operation of the
Properties on and after the Effective Time (excluding Seller's and BP
America's income taxes from the Effective Time through Closing); and all
deductions, credits and refunds pertaining to the aforementioned taxes and
assessments, no matter when received, belong to Buyer. Ad valorem or
property or other taxes based on revenue from the Properties shall apply
to the tax year for which the tax rendition is issued and be prorated
based on the percentage of the assessment period occurring before and
after the Effective Time. Actual amounts shall be accounted for in the
Final Accounting Settlement. Buyer shall bear all Sales Tax, if any, on
the transaction contemplated by this Agreement. Each Party is responsible
for filing any tax returns and handling payment of any tax due under Law
during the period when it or its Affiliate holds title to the Properties.
6.4 Credits. Buyer shall reimburse Seller (on behalf of itself and BP America)
for any and all prepaid utility charges, rentals, deposits and any other
prepays (excluding taxes) applicable to the period on and after the
Effective Time that are attributable to the Properties. Actual amounts
shall be accounted for in the Final Accounting Settlement.
6.5 Miscellaneous Accounting. Unless previously accounted for under the
Transition Agreement, in addition to the items set forth in Articles 6.1
through 6.4, any other amounts due between Buyer and Seller associated
with ownership or operation of the Properties from the Effective Time
through the end of the Transition Period will be accounted for in the
Final Accounting Settlement.
21
6.6 Final Accounting Settlement. As soon as reasonably practicable, but no
later than one hundred eighty (180) Days after the end of the Transition
Period, Seller shall deliver the Final Accounting Statement to Buyer. As
soon as reasonably practicable, but no later than sixty (60) Days after
Buyer receives the Final Accounting Statement, Buyer may deliver to Seller
a written report containing any changes Buyer proposes to such statement.
Any matters covered by the Final Accounting Statement as delivered by
Seller to which Buyer fails to object in the written report shall be
deemed correct and is final and binding on the Parties and not subject to
further review, audit or arbitration. As soon as reasonably practicable,
but no later than forty-five (45) Days after Seller receives Buyer's
written report, the Parties shall meet to attempt to agree on any
adjustments to the Final Accounting Statement. If the Parties fail to
agree on final adjustments within that forty-five (45) Day period, either
Party may submit the disputed items to the Accounting Referee no later
than the thirtieth (30th) Day following the expiration of such forty-five
(45) Day period. ANY ADJUSTMENT DISPUTE THAT IS NOT RESOLVED BY AGREEMENT
OF THE PARTIES OR SUBMITTED TO THE ACCOUNTING REFEREE BY SUCH THIRTIETH
(30TH) DAY SHALL BE DEEMED WAIVED UNLESS THE THIRTY (30) DAY PERIOD IS
EXTENDED BY MUTUAL WRITTEN AGREEMENT OF THE PARTIES. The Parties shall
direct the Accounting Referee to resolve the disputes within thirty (30)
Days after its receipt of relevant materials pertaining to the dispute.
The Accounting Referee shall act as an expert for the limited purpose of
determining the specific disputed matters submitted by either Party and
may not award damages or penalties to either Party with respect to any
matter. Seller and Buyer shall share equally the Accounting Referee's fees
and expenses. The Final Accounting Statement, whether as agreed between
the Parties or as determined by a decision of the Accounting Referee,
shall be binding on and non-appealable by the Parties. Within fifteen (15)
Business Days after the earlier of (i) the date the amounts are agreed by
the Parties and (ii) the date the Parties receive the Accounting Referee's
decision (A) Buyer shall pay to Seller (on behalf of itself and BP
America) the amount by which the Adjusted Purchase Price exceeds the
Closing Payment, or (B) Seller shall pay to Buyer the amount by which the
Closing Payment exceeds the Adjusted Purchase Price, as applicable. Any
post-Closing payment pursuant to this Article 6.6 shall bear Computed
Interest from the Closing Date to the date of payment. The revenues and
expenses included in the Final Accounting Settlement shall be final and
binding on the Parties and not subject to further review, audit or
arbitration.
6.7 Post-Final Accounting Settlement Revenues. (a) Buyer shall pay Seller (on
behalf of itself and BP America) any and all Operating Revenues received
by Buyer (to the extent not accounted for in the Final Accounting
Settlement or under the Transition Agreement) attributable to the
Properties prior to the Effective Time, and (b) Seller shall pay Buyer any
and all Operating Revenues received by Seller (or BP America) (to the
extent not accounted for in the Final Accounting Settlement or under the
Transition Agreement) attributable to the Properties on and after the
Effective Time. The Party responsible for the payment of Operating
Revenues shall make full payment to the other Party, together with
reasonably available supporting documentation with respect to such
amounts, within sixty (60) Days after receipt of such amounts.
6.8 Post-Final Accounting Settlement Expenses. (a) Seller shall reimburse
Buyer for any and all Charges paid by Buyer (to the extent not accounted
for in the Final Accounting
22
Settlement or under the Transition Agreement) attributable to the
Properties prior to the Effective Time, and (b) Buyer shall reimburse
Seller (on behalf of itself and BP America) for any and all Charges paid
by Seller (or BP America) (to the extent not accounted for in the Final
Accounting Settlement or under the Transition Agreement) attributable to
the Properties on and after the Effective Time. The Party responsible for
the payment of such Charges shall make full payment to the other Party
within sixty (60) Days after receipt of an applicable invoice and proof
that such invoice was paid. Seller or BP America, as applicable, shall be
entitled to resolve all joint interest audits or other audits of such
costs for periods for which Seller or BP America is responsible, and
neither Party shall agree to settle any audit with respect to periods for
which the other is in part responsible without the prior written consent
of the other, such consent not to be unreasonably withheld.
ARTICLE 7. LOSS, CASUALTY AND CONDEMNATION
7.1 Notice of Loss. Seller shall promptly notify Buyer of all instances of
Casualty Loss that occur and become known to Seller between the date of
this Agreement and Closing.
7.2 Casualty Loss. If, prior to Closing, a portion of the Properties is
damaged or destroyed by a Casualty Loss, Seller and Buyer shall meet to
attempt to agree on an adjustment to the Purchase Price reflecting the
"reduction in value" of the Properties because of such Casualty Loss. For
this purpose, "reduction in value" is based on the principle that Seller
should generally bear the costs of repairing the Properties to the state
existing immediately prior to the Casualty Loss, but if such repair
results in equipment or facilities that are newer than or upgraded from
that which existed immediately prior to the Casualty Loss, Buyer should
bear a portion of such costs that is equitable under the circumstances
because of the benefit to Buyer of such newer or upgraded equipment or
facilities. Except as to those Real Properties with a negative Buyer's
Allocation, no adjustment associated with a Casualty Loss shall exceed
Buyer's Allocation for the affected Property. For those Real Properties
with a negative Buyer's Allocation, Buyer may give Seller written notice
at least five (5) Business Days prior to Closing and exclude from this
Agreement the Real Property subject to the Casualty Loss and increase the
Purchase Price by an amount equal to the Buyer's Allocation for such Real
Property. If the Parties are unable to agree on resolution of a Casualty
Loss, the Parties shall Close with the Purchase Price being reduced by
Seller's estimate of the reduction in the value of the Properties as a
result of the Casualty Loss; provided, however, either Party may, within
sixty (60) Days after the Closing Date (but not later), initiate binding
arbitration in accordance with Article 18.1 to resolve the dispute. Any
claim for a Casualty Loss not referred to arbitration within sixty (60)
Days after Closing shall be deemed waived. Notwithstanding the preceding,
if a platform is damaged or destroyed by a Casualty Loss, Buyer may elect
by notice to Seller at least five (5) Business Days prior to the Closing
Date to exclude from this Agreement the Real Properties on which ▇▇▇▇▇
served by such platform are located and other related Properties and the
Purchase Price shall be reduced by Buyer's Allocations for such Real
Properties, and no other adjustment shall be made with respect to such
platform and other Properties. Seller shall retain any and all insurance
proceeds and other payments associated with or attributable to any
pre-Closing Casualty Loss. Notwithstanding the foregoing, if the aggregate
Casualty Losses and
23
Property exclusions under this Article exceed twenty-five percent (25%) of
the Purchase Price, either Party may, by notice to the other at least one
Business Day prior to Closing, elect to terminate this Agreement under
Article 17.1.5.
ARTICLE 8. ALLOCATION OF RESPONSIBILITIES AND INDEMNITIES
8.1 OPPORTUNITY FOR REVIEW. EACH PARTY REPRESENTS THAT IT HAS HAD AN ADEQUATE
OPPORTUNITY TO REVIEW ALL RELEASE, INDEMNITY AND DEFENSE PROVISIONS IN
THIS AGREEMENT, INCLUDING THE OPPORTUNITY TO SUBMIT THE SAME TO LEGAL
COUNSEL FOR REVIEW AND ADVICE. BASED ON THE FOREGOING REPRESENTATION, THE
PARTIES AGREE TO THE PROVISIONS SET FORTH BELOW.
8.2 SELLER'S INDEMNITY WITH RESPECT TO RETAINED LITIGATION. SELLER RETAINS
SOLE RESPONSIBILITY AND LIABILITY FOR THE LITIGATION AND CLAIMS SET FORTH
IN EXHIBIT "C" TO THE EXTENT (AND ONLY TO THE EXTENT) SUCH LITIGATION AND
CLAIMS RELATE TO THE PERIOD PRIOR TO THE EFFECTIVE TIME, AND SELLER
RELEASES BUYER GROUP FROM AND SHALL PROTECT, DEFEND, INDEMNIFY AND HOLD
BUYER GROUP HARMLESS FROM AND AGAINST ALL CLAIMS TO THE EXTENT RELATING
TO, ARISING OUT OF, OR CONNECTED WITH, DIRECTLY OR INDIRECTLY, SUCH
LITIGATION AND CLAIMS.
8.3 SELLER'S NON-ENVIRONMENTAL INDEMNITY OBLIGATION. SELLER RELEASES BUYER
GROUP FROM AND, SUBJECT TO THE LIMITATIONS SET FORTH IN THIS AGREEMENT,
SHALL PROTECT, DEFEND, INDEMNIFY AND HOLD BUYER GROUP HARMLESS FROM AND
AGAINST THE FOLLOWING:
(i) CLAIMS FOR INJURY OR DEATH TO ANY PERSON TO THE
EXTENT RELATING TO, ARISING OUT OF, OR CONNECTED
WITH, DIRECTLY OR INDIRECTLY, SELLER'S OR SELLER'S
AFFILIATES' OWNERSHIP OR OPERATION OF THE
PROPERTIES OR ANY PART THEREOF PRIOR TO THE
EFFECTIVE TIME, OF WHICH BUYER PROVIDES SELLER
NOTICE IN ACCORDANCE WITH ARTICLE 8.7 WITHIN THREE
YEARS AFTER THE CLOSING DATE, (OR, IF BUYER
RECEIVES NOTICE OF SUCH CLAIM WITHIN THE LAST
THIRTY (30) DAYS OF SUCH PERIOD, WITHIN THIRTY (30)
DAYS OF BUYER'S RECEIPT OF NOTICE);
(ii) CLAIMS THAT SELLER FAILED TO PAY ROYALTIES (INCLUDING
OVERRIDING ROYALTIES) TO THE EXTENT RELATING TO, ARISING OUT
OF, OR CONNECTED WITH, DIRECTLY OR INDIRECTLY, SELLER'S OR
SELLER'S AFFILIATES' OWNERSHIP OR OPERATION OF THE PROPERTIES
OR ANY PART THEREOF PRIOR TO THE EFFECTIVE TIME, OF WHICH
BUYER PROVIDES SELLER NOTICE IN ACCORDANCE WITH ARTICLE 8.7
WITHIN THREE YEARS AFTER THE CLOSING DATE (OR, IF BUYER
RECEIVES NOTICE OF SUCH CLAIM WITHIN THE LAST THIRTY (30) DAYS
OF SUCH PERIOD, WITHIN THIRTY (30) DAYS OF BUYER'S RECEIPT OF
NOTICE); AND
(iii) ALL OTHER NON-ENVIRONMENTAL CLAIMS TO THE EXTENT RELATING TO,
ARISING OUT OF, OR CONNECTED WITH, DIRECTLY OR INDIRECTLY,
SELLER'S OR SELLER'S AFFILIATES' OWNERSHIP OR OPERATION OF THE
PROPERTIES OR ANY PART THEREOF PRIOR TO THE EFFECTIVE TIME, OF
WHICH BUYER PROVIDES SELLER NOTICE IN ACCORDANCE WITH ARTICLE
8.7 WITHIN ONE YEAR AFTER THE CLOSING
24
DATE (OR, IF BUYER RECEIVES NOTICE OF SUCH CLAIM WITHIN THE
LAST THIRTY (30) DAYS OF SUCH PERIOD, WITHIN THIRTY (30) DAYS
OF BUYER'S RECEIPT OF NOTICE), INCLUDING NON-ENVIRONMENTAL
CLAIMS RELATING TO: (A) DAMAGES TO OR LOSS OF ANY PROPERTY OR
RESOURCES, (B) BREACH OF CONTRACT, (C) COMMON LAW CAUSES OF
ACTION SUCH AS NEGLIGENCE, STRICT LIABILITY, NUISANCE OR
TRESPASS, OR (D) FAULT IMPOSED BY LAW OR OTHERWISE.
THESE INDEMNITY AND DEFENSE OBLIGATIONS APPLY REGARDLESS OF CAUSE OR OF
ANY NEGLIGENT ACTS OR OMISSIONS (INCLUDING SOLE NEGLIGENCE, CONCURRENT
NEGLIGENCE OR STRICT LIABILITY), BREACH OF DUTY (STATUTORY OR OTHERWISE),
VIOLATION OF LAW, OR OTHER FAULT OF BUYER GROUP, OR ANY PRE-EXISTING
DEFECT. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, SELLER
HAS NO OBLIGATION UNDER THIS AGREEMENT OR OTHERWISE TO PROTECT, DEFEND,
INDEMNIFY, AND HOLD BUYER GROUP HARMLESS FROM AND AGAINST ANY
NON-ENVIRONMENTAL CLAIMS FOR WHICH BUYER IS NOT ENTITLED TO A REMEDY UNDER
ARTICLE 5.2(G). AS BETWEEN BUYER AND SELLER GROUP, BUYER ASSUMES AND IS
SOLELY RESPONSIBLE FOR ALL NON-ENVIRONMENTAL CLAIMS NOT SUBJECT TO
INDEMNIFICATION BY SELLER AT THE TIME IN QUESTION UNDER THE TERMS OF THIS
ARTICLE.
8.4 SELLER'S ENVIRONMENTAL INDEMNITY OBLIGATION. SELLER RELEASES BUYER GROUP
FROM AND SUBJECT TO THE LIMITATIONS SET FORTH IN THIS AGREEMENT, SHALL
PROTECT, DEFEND, INDEMNIFY AND HOLD BUYER GROUP HARMLESS FROM AND AGAINST
ALL ENVIRONMENTAL CLAIMS TO THE EXTENT RELATING TO, ARISING OUT OF, OR
CONNECTED WITH, DIRECTLY OR INDIRECTLY, SELLER'S OR SELLER'S AFFILIATES'
OWNERSHIP OR OPERATION OF THE PROPERTIES OR ANY PART THEREOF PRIOR TO THE
EFFECTIVE TIME OF WHICH BUYER PROVIDES SELLER WITH NOTICE IN ACCORDANCE
WITH ARTICLE 8.7 WITHIN ONE YEAR AFTER THE CLOSING DATE (OR, IF BUYER
RECEIVES NOTICE OF SUCH CLAIM WITHIN THE LAST THIRTY (30) DAYS OF SUCH
PERIOD, WITHIN THIRTY (30) DAYS AFTER BUYER'S RECEIPT OF NOTICE). THIS
INDEMNITY AND DEFENSE OBLIGATION APPLIES REGARDLESS OF CAUSE OR OF ANY
NEGLIGENT ACTS OR OMISSIONS (INCLUDING SOLE NEGLIGENCE, CONCURRENT
NEGLIGENCE OR STRICT LIABILITY), BREACH OF DUTY (STATUTORY OR OTHERWISE),
VIOLATION OF LAW, OR OTHER FAULT OF BUYER GROUP, OR ANY PRE-EXISTING
DEFECT. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, SELLER
HAS NO OBLIGATION UNDER THIS AGREEMENT OR OTHERWISE TO PROTECT, DEFEND,
INDEMNIFY, AND HOLD BUYER GROUP HARMLESS FROM AND AGAINST ANY
ENVIRONMENTAL CLAIMS FOR WHICH BUYER IS NOT ENTITLED TO A REMEDY UNDER
ARTICLE 5.2(G). AS BETWEEN BUYER AND SELLER GROUP, BUYER ASSUMES AND IS
SOLELY RESPONSIBLE FOR ANY AND ALL ENVIRONMENTAL CLAIMS NOT SUBJECT TO
INDEMNIFICATION BY SELLER AT THE TIME IN QUESTION UNDER THE TERMS OF THIS
ARTICLE.
8.5 BUYER'S NON-ENVIRONMENTAL INDEMNITY OBLIGATION. BUYER RELEASES SELLER
GROUP FROM AND SHALL PROTECT, DEFEND, INDEMNIFY AND HOLD SELLER GROUP
HARMLESS FROM AND AGAINST ALL NON-ENVIRONMENTAL CLAIMS RELATING TO,
ARISING OUT OF, OR CONNECTED WITH, DIRECTLY OR INDIRECTLY, OWNERSHIP OR
OPERATION OF THE PROPERTIES OR ANY PART THEREOF PRIOR TO THE EFFECTIVE
TIME (NO MATTER WHEN ASSERTED) FOR WHICH SELLER'S INDEMNITY AND DEFENSE
OBLIGATION IN ARTICLE 8.3 HAS CEASED, TERMINATED (IN ACCORDANCE WITH
ARTICLE 8.3 OR OTHERWISE) OR DOES NOT APPLY, AS WELL AS FOR ANY CLAIMS
ARISING AGAINST SELLER GROUP FROM BUYER'S ALLOCATION OF THE PURCHASE PRICE
FOR THE PURPOSES OF ARTICLE 3, AND FROM AND AGAINST ALL NON-ENVIRONMENTAL
CLAIMS RELATING TO, ARISING
25
OUT OF, OR CONNECTED WITH, DIRECTLY OR INDIRECTLY, OWNERSHIP OR OPERATION
OF THE PROPERTIES OR ANY PART THEREOF ON AND AFTER THE EFFECTIVE TIME (NO
MATTER WHEN ASSERTED), INCLUDING IN EACH CASE NON-ENVIRONMENTAL CLAIMS
RELATING TO (A) INJURY OR DEATH OF ANY PERSON WHOMSOEVER, (B) DAMAGES TO
OR LOSS OF ANY PROPERTY OR RESOURCES, (C) BREACH OF CONTRACT, (D) PAYMENT
OF ROYALTIES, (E) COMMON LAW CAUSES OF ACTION SUCH AS NEGLIGENCE, STRICT
LIABILITY, NUISANCE OR TRESPASS, OR (F) FAULT IMPOSED BY LAW OR OTHERWISE.
THESE INDEMNITY AND DEFENSE OBLIGATIONS APPLY REGARDLESS OF CAUSE OR OF
ANY NEGLIGENT ACTS OR OMISSIONS (INCLUDING SOLE NEGLIGENCE, CONCURRENT
NEGLIGENCE OR STRICT LIABILITY), BREACH OF DUTY (STATUTORY OR OTHERWISE),
VIOLATION OF LAW, OR OTHER FAULT OF SELLER GROUP, OR ANY PRE-EXISTING
DEFECT.
8.6 BUYER'S ENVIRONMENTAL INDEMNITY OBLIGATION. BUYER RELEASES SELLER GROUP
FROM AND SHALL PROTECT, DEFEND, INDEMNIFY AND HOLD SELLER GROUP HARMLESS
FROM AND AGAINST ALL ENVIRONMENTAL CLAIMS RELATING TO, ARISING OUT OF, OR
CONNECTED WITH, DIRECTLY OR INDIRECTLY, OWNERSHIP OR OPERATION OF THE
PROPERTIES OR ANY PART THEREOF PRIOR TO THE EFFECTIVE TIME (NO MATTER WHEN
ASSERTED) FOR WHICH SELLER'S INDEMNITY AND DEFENSE OBLIGATION IN ARTICLE
8.4 HAS CEASED, TERMINATED (IN ACCORDANCE WITH ARTICLE 8.4 OR OTHERWISE)
OR DOES NOT APPLY, AND FROM AND AGAINST ANY AND ALL ENVIRONMENTAL CLAIMS
RELATING TO, ARISING OUT OF, OR CONNECTED WITH, DIRECTLY OR INDIRECTLY,
OWNERSHIP OR OPERATION OF THE PROPERTIES OR ANY PART THEREOF ON AND AFTER
THE EFFECTIVE TIME. THESE INDEMNITY AND DEFENSE OBLIGATIONS APPLY
REGARDLESS OF CAUSE OR OF ANY NEGLIGENT ACTS OR OMISSIONS (INCLUDING SOLE
NEGLIGENCE, CONCURRENT NEGLIGENCE OR STRICT LIABILITY), BREACH OF DUTY
(STATUTORY OR OTHERWISE), VIOLATION OF LAW, OR OTHER FAULT OF SELLER
GROUP, OR ANY PRE-EXISTING DEFECT.
8.7 Notice of Claims. If a Claim is asserted against a Party for which the
other Party may have an obligation of indemnity and defense or may be
entitled to indemnity or defense (whether under this Article 8 or any
other provision of this Agreement), the Party against whom the Claim is
asserted shall give the other Party prompt written notice of the Claim,
setting forth the particulars associated with the Claim (including a copy
of the written Claim, if any) as then known by the Indemnified Party. In
the event that the Party sending the notice is seeking indemnification
under this Agreement, it shall include that request in its notice (a
"CLAIM NOTICE"). Any Party seeking indemnification under the terms of this
Agreement shall be referred to herein as the "INDEMNIFIED PARTY" and the
Party from whom the Indemnified Party seeks indemnification shall be
referred to herein as the "INDEMNIFYING PARTY." The failure of any
Indemnified Party to give prompt notice of a Claim as required by this
Article shall not relieve the Indemnifying Party of its obligations under
this Agreement except to the extent such failure materially prejudices the
Indemnifying Party's ability to defend against the Claim.
8.8 Defense of Claims. Within thirty (30) Days after the Indemnifying Party
receives a Claim Notice, the Indemnifying Party shall notify the
Indemnified Party whether or not the Indemnifying Party will assume
responsibility for defense and payment of the Claim. The Indemnified Party
is authorized, prior to and during such thirty (30) Day period, to file
any motion, pleading or other answer that it deems necessary or
appropriate to protect its interests, or those of the Indemnifying Party,
and that is not prejudicial to the Indemnifying Party. If the Indemnifying
Party elects not to assume responsibility for
26
defense and payment of the Claim, the Indemnified Party may defend
against, or enter into any settlement with respect to, the Claim as it
deems appropriate without relieving the Indemnifying Party of any
indemnification obligations the Indemnifying Party may have with respect
to such Claim. The Indemnifying Party's failure to respond in writing to a
Claim Notice within the thirty (30) Day period shall be deemed an election
by the Indemnifying Party not to assume responsibility for defense and
payment of the Claim. If the Indemnifying Party elects to assume
responsibility for defense and payment of the Claim: (a) the Indemnifying
Party shall defend the Indemnified Party against the Claim with counsel of
the Indemnifying Party's choice (reasonably acceptable to Indemnified
Party which shall cooperate with the Indemnifying Party in all reasonable
respects in such defense), (b) the Indemnifying Party shall pay any
judgment entered or settlement with respect to such Claim, (c) the
Indemnifying Party shall not consent to entry of any judgment or enter
into any settlement with respect to the Claim that (i) does not include a
provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect to the Claim or (ii)
contains terms that may materially and adversely affect the Indemnified
Party (other than as a result of money damages covered by the indemnity),
and (d) if the Indemnified Party consents to entry of any judgment or
enters into any settlement with respect to the Claim without the
Indemnifying Party's prior written consent, then the Indemnified Party
shall be conclusively deemed to have waived any right to indemnification
under this Agreement with respect to such Claim. In all instances the
Indemnified Party may employ separate counsel and participate in defense
of a Claim, but the Indemnified Party shall bear all fees and expenses of
counsel employed by the Indemnified Party.
8.9 No Duplication of Remedies. In no event shall either Party be entitled to
duplicate compensation with respect to any Claim or breach of
representation, warranty or agreement asserted under the terms of this
Agreement, even though such Claim or breach may be addressed by more than
one provision of this Agreement. Non-Environmental Claims and
Environmental Claims are excluded from Charges, which are adjusted between
the Parties in accordance with the terms of Article 6. Payments for Claims
under Article 8 shall not effect allocations of Charges and Operating
Revenues under Article 6 and allocations of Charges and Operating Revenues
under Article 6 shall not effect payments for Claims under Article 8. For
the avoidance of doubt, Buyer's claims for indemnification under this
Agreement are limited to Seller's ownership interest in the asset giving
rise to such a claim.
8.10 Other Contracts Between the Parties. The releases in this Article 8 are
not intended to waive any existing contractual rights between any member
of Seller Group and any member of Buyer Group under operating agreements,
unit agreements, service contracts or other agreements not entered into
and delivered in connection with this Agreement or the transactions
contemplated hereunder.
8.11 WAIVER OF CERTAIN DAMAGES. EACH PARTY IRREVOCABLY WAIVES AND AGREES NOT TO
SEEK INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OF ANY KIND IN
CONNECTION WITH ANY DISPUTE ARISING OUT OF OR RELATED TO THIS AGREEMENT OR
THE BREACH HEREOF. FOR THE AVOIDANCE OF DOUBT, THIS ARTICLE 8.11 DOES NOT
DIMINISH OR OTHERWISE AFFECT THE PARTIES' RIGHTS AND OBLIGATIONS TO BE
INDEMNIFIED AGAINST, AND PROVIDE INDEMNITY
27
FOR, INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES AWARDED TO ANY
THIRD PARTY FOR WHICH INDEMNIFICATION IS PROVIDED IN THIS AGREEMENT OR
SELLER'S RIGHT TO RECEIVE LIQUIDATED DAMAGES, INCLUDING THE PERFORMANCE
DEPOSIT, PURSUANT TO THE TERMS OF ARTICLE 17.2. NOTWITHSTANDING ANYTHING
TO THE CONTRARY CONTAINED ELSEWHERE IN THIS AGREEMENT, SELLER SHALL NOT BE
REQUIRED TO INDEMNIFY BUYER UNDER THIS ARTICLE 8 FOR AGGREGATE DAMAGES IN
EXCESS OF THE PURCHASE PRICE.
ARTICLE 9. DISCLAIMERS
9.1 DISCLAIMERS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ARTICLE 10 OR AS
OTHERWISE EXPRESSLY STATED IN THIS AGREEMENT: (A) SELLER SHALL ASSIGN AND
CONVEY THE PROPERTIES TO BUYER "AS-IS, WHERE-IS", AND WITH ALL FAULTS AND
DEFECTS IN THEIR PRESENT CONDITION AND STATE OF REPAIR, WITHOUT RECOURSE,
EVEN FOR THE RETURN OF THE PURCHASE PRICE, AND (B) SELLER DISCLAIMS ANY
AND ALL REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE PROPERTIES,
EXPRESS, STATUTORY, IMPLIED OR OTHERWISE, INCLUDING ANY WARRANTY AS TO (I)
TITLE, (II) COMPLIANCE WITH LAWS, (III) EXISTENCE OF ANY AND ALL PROSPECTS
OR RECOMPLETION OPPORTUNITIES, (IV) GEOGRAPHIC, GEOLOGIC OR GEOPHYSICAL
CHARACTERISTICS, (V) EXISTENCE, QUALITY, QUANTITY OR RECOVERABILITY OF
HYDROCARBON SUBSTANCES, (VI) ABILITY TO PRODUCE, INCLUDING PRODUCTION OR
DECLINE RATES, (VII) COSTS, EXPENSES, REVENUES, RECEIPTS, PRICES, ACCOUNTS
RECEIVABLE OR ACCOUNTS PAYABLE, (VIII) CONTRACTUAL, ECONOMIC OR FINANCIAL
INFORMATION AND DATA, (IX) CONTINUED FINANCIAL VIABILITY, INCLUDING
PRESENT OR FUTURE VALUE OR ANTICIPATED INCOME OR PROFITS, (X)
ENVIRONMENTAL OR PHYSICAL CONDITION, (XI) FEDERAL, STATE, OR LOCAL INCOME
OR OTHER TAX CONSEQUENCES, (XII) ABSENCE OF PATENT OR LATENT DEFECTS,
(XIII) SAFETY, (XIV) STATE OF REPAIR, (XV) MERCHANTABILITY, (XVI) FITNESS
FOR A PARTICULAR PURPOSE AND (XVII) CONFORMITY TO MODELS OR SAMPLES OF
MATERIALS; AND BUYER (ON BEHALF OF BUYER GROUP AND THEIR SUCCESSORS AND
ASSIGNS) IRREVOCABLY WAIVES ANY AND ALL CLAIMS THEY MAY HAVE AGAINST
SELLER GROUP ASSOCIATED WITH THE SAME OTHER THAN BUYER'S RIGHT TO ASSERT
THE EXISTENCE OF ALLEGED ADVERSE CONDITIONS UNDER ARTICLE 5.2 OR BUYER'S
RIGHT TO CLAIM BREACHES OF REPRESENTATIONS AND WARRANTIES UNDER ARTICLE
10.
9.2 DISCLAIMER OF STATEMENTS AND INFORMATION. SELLER EXPRESSLY DISCLAIMS ANY
AND ALL LIABILITY AND RESPONSIBILITY FOR AND ASSOCIATED WITH THE QUALITY,
ACCURACY, COMPLETENESS OR MATERIALITY OF INFORMATION, DATA AND MATERIALS
SHOWN TO OR FURNISHED (ELECTRONICALLY, ORALLY, IN WRITING OR ANY OTHER
MEDIUM) TO BUYER GROUP ASSOCIATED WITH THE PROPERTIES OR THE TRANSACTION
CONTEMPLATED BY THIS AGREEMENT; AND BUYER (ON BEHALF OF BUYER GROUP AND
THEIR SUCCESSORS AND ASSIGNS) IRREVOCABLY WAIVES ANY AND ALL CLAIMS THEY
MAY HAVE AGAINST SELLER GROUP ASSOCIATED WITH THE SAME. FOR THE AVOIDANCE
OF DOUBT, BUYER'S WAIVER OF CLAIMS UNDER THIS ARTICLE 9.2 DOES NOT WAIVE
BUYER'S RIGHT TO ASSERT UNDER ARTICLE 5.2 THE EXISTENCE OF ALLEGED ADVERSE
CONDITIONS DESCRIBED IN ARTICLE 1.1.6(B).
ARTICLE 10. SELLER'S REPRESENTATIONS AND WARRANTIES
10.1 Seller's Representations and Warranties. Seller represents and
warrants to Buyer that on the date of this Agreement and as of
Closing (unless another time is set forth below):
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10.1.1 Organization and Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the Laws of
Delaware and has all requisite corporate power and authority to own the
Properties. Seller is duly licensed or qualified to do business as a
foreign corporation and is in good standing in all jurisdictions in which
the Properties are located.
10.1.2 Corporate Authority; Authorization of Agreement. Seller has all
requisite corporate power and authority to execute and deliver this
Agreement, to consummate the transaction contemplated by this Agreement
and to perform all obligations placed on Seller in this Agreement. This
Agreement, when executed and delivered by Seller, constitutes the valid
and binding obligation of Seller, enforceable against it in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency or other Laws relating to or affecting the
enforcement of creditors' rights and general principles of equity
(regardless of whether such enforceability is considered in a proceeding
at law or in equity).
10.1.3 No Violations. Seller's execution and delivery of this Agreement
and consummation of the transaction contemplated by this Agreement will
not:
(a) conflict with or require consent of any person or entity under any
terms, conditions or provisions of Seller's certificate of
incorporation or bylaws;
(b) violate any provision of, or require any consent or approval under
any Law applicable to Seller (except for consents and approvals of
governmental entities or authorities customarily obtained subsequent
to Closing); or
(c) result in creation or imposition of any lien or encumbrance on any
of the Properties.
10.1.4 Litigation. Except as set forth in Exhibit "C", (i) there is no
litigation, action or proceeding pending to which Seller or Seller's
Affiliate is a party which relates to all or any portion of the
Properties; (ii) to Seller's knowledge, there is no litigation, action or
proceeding threatened against Seller or Seller's Affiliates (nor, to the
knowledge of Seller, has any claim been threatened against Seller or
Seller's Affiliates in writing or notice of royalty audit been received
from the MMS) that would have a Material Adverse Effect or that would
prevent timely consummation of the transaction contemplated by this
Agreement.
10.1.5 Bankruptcy. There are no bankruptcy or receivership proceedings
pending against, being contemplated by or, to Seller's knowledge,
threatened against Seller.
10.1.6 Special Warranty of Title. Seller shall warrant title to the Real
Properties, subject to the Permitted Encumbrances, against adverse claims
of title by, through or under Seller, but not otherwise. However, Seller
shall subrogate to Buyer all warranties and indemnities in favor of Seller
and its Affiliates from Third Parties relating to the Properties, except
to the extent such warranties and indemnities are not transferable or are
subject to a transfer fee or similar payment (unless Buyer assumes
responsibility for such transfer fee or similar payment).
29
10.1.7 Contracts. To the knowledge of Seller, no Person is in default
under any material contract comprising a part of the Properties except as
disclosed on Schedule 10.1.7 and except such defaults as would not have a
Material Adverse Effect.
10.1.8 Payments for Production. Seller is not obligated by virtue of any
take or pay payment, advance payment or other similar payment (except
royalties, overriding royalties and other burdens on production reflected
in the Net Revenue Interests) to deliver hydrocarbons from the Real
Properties at a future time without receiving payment at or after the time
of delivery.
10.1.9 Compliance with Laws. To the knowledge of Seller, except as shown
on Schedule 10.1.9 each of Seller and its Affiliates has conducted its
operations with respect to the Properties in compliance with all
applicable Laws, except such failures to comply as would not have a
Material Adverse Effect.
10.1.10 Tax Matters. With respect to the Properties, (i) Seller or
Seller's Affiliate has filed all material tax returns that are due, (ii)
all taxes shown to be due on such returns have been paid, and (iii) to the
knowledge of Seller there is no material dispute or claim concerning any
tax liability of Seller or Seller's Affiliate with respect to the
Properties of which Seller or Seller's Affiliate has received written
notice from any tax authority to the knowledge of Seller.
10.1.11 Marketing Contracts. Except as disclosed on Schedule 10.1.11, (i)
Seller is not a party to any contract for the sale and marketing of
hydrocarbons produced from or attributable to the Properties which has a
term in excess of thirty (30) Days; and (ii) there are no calls on, or
other rights to purchase, hydrocarbons produced from or attributable to
the Properties, whether or not the same are currently being exercised.
10.1.12 Leases. Seller is not in default in any material respect regarding
any of Seller's obligations, including Seller's obligations to pay
royalties, under the oil and gas leases for the Properties which Seller
operates and, to Seller's knowledge, under the oil and gas leases for the
Properties on which Seller is not the operator.
10.1.13 Plugging and Abandonment. To Seller's knowledge, except as set
forth on Schedule 10.1.13, as of the date of this Agreement there are no
existing ▇▇▇▇▇, pipelines, or other facilities included in the Properties
which, in accordance with applicable Law, must be plugged and abandoned
within twelve (12) months after the date of execution of this Agreement.
To Seller's knowledge, as of the date of this Agreement all existing ▇▇▇▇▇
on the Properties that have been plugged and abandoned have been properly
plugged and abandoned.
10.1.14 Encumbrances. Neither Seller nor any of Seller's Affiliates has
granted liens for borrowed money or other voluntary liens against the
Properties, except liens granted under operating agreements, production
sales contracts, or other Contracts in the ordinary course of business
that would not have a Material Adverse Effect.
30
ARTICLE 11. BUYER'S REPRESENTATIONS AND WARRANTIES
11.1 Buyer's Representations and Warranties. Buyer represents and warrants to
Seller that on the date of this Agreement and as of Closing:
11.1.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of
Delaware and has all requisite corporate power and authority to own the
Properties. Buyer is qualified under Law to own and operate the Properties
and in particular, Buyer is qualified pursuant to the rules and
regulations of the Minerals Management Service (the "MMS") to own and
operate federal oil and gas leases in the Outer Continental Shelf, Gulf of
Mexico, and is in good standing with, authorized by and qualified with all
governmental agencies with jurisdiction or cognizance over operations on
the Outer Continental Shelf, Gulf of Mexico, to the extent Buyer is
required by such agencies to so qualify and maintain good standing. Buyer
is duly licensed or qualified to do business as a foreign corporation and
is in good standing in all adjoining states onshore from where the
Properties are located.
11.1.2 Corporate Authority; Authorization of Agreement. Buyer has all
requisite corporate power and authority to execute and deliver this
Agreement, to consummate the transaction contemplated by this Agreement
and to perform all obligations placed on Buyer in this Agreement. This
Agreement, when executed and delivered by Buyer, constitutes the valid and
binding obligation of Buyer, enforceable against it in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency or other Laws relating to or affecting the enforcement of
creditors' rights and general principles of equity (regardless of whether
such enforceability is considered in a proceeding at law or in equity).
11.1.3 No Violations. Buyer's execution and delivery of this Agreement and
consummation of the transaction contemplated by this Agreement will not:
(a) conflict with or require consent of any person or entity under any
terms, conditions or provisions of Buyer's certificate of
incorporation or bylaws; or
(b) violate any provision of, or require any consent or approval under
any Law applicable to Buyer (except for consents and approvals of
governmental entities or authorities customarily obtained subsequent
to transfer of title).
11.1.4 SEC Disclosure. Buyer is acquiring the Properties for its own
account for use in its trade or business, and not with a view toward or
for sale associated with any distribution thereof, nor with any present
intention of making a distribution thereof within the meaning of the
Securities Act of 1933, as amended.
11.1.5 Litigation. There is no litigation, action or proceeding pending
against Buyer or, to Buyer's knowledge, threatened against Buyer that
would prevent timely consummation of the transaction contemplated by this
Agreement.
11.1.6 Independent Evaluation. Buyer is sophisticated in evaluation,
purchase, ownership and operation of oil and gas properties and related
facilities similar to the
31
Properties and in making its decision to enter into this Agreement and
consummate the transaction contemplated herein, Buyer (a) relied solely on
its own independent investigation and evaluation of the Properties, and
(b) satisfied itself as to the environmental, physical and other condition
of, and contractual arrangements affecting, the Properties.
11.1.7 Bankruptcy. There are no bankruptcy or receivership proceedings
pending against, being contemplated by or, to Buyer's knowledge,
threatened against Buyer.
ARTICLE 12. ADDITIONAL COVENANTS
12.1 Subsequent Operations. Seller makes no representations or warranties to
Buyer as to transferability or assignability of operatorship of any
Properties Seller currently operates. Rights and obligations associated
with operatorship of the Properties are governed by operating and similar
agreements covering the Properties and will be decided in accordance with
the terms of such agreements.
12.2 Rights of Non-Exclusive Use.
(a) At Closing, Buyer shall execute and deliver to Seller recordable
instruments, in form and substance reasonably acceptable to Seller
and Buyer, granting Seller (and, if requested by Seller, Seller's
Affiliates) certain non-exclusive rights-of-way on, over and through
the Properties and certain rights to use facilities (including
pipeline usage rights, production handling arrangements, and other
reasonable rights to use improvements) as appropriate for Seller and
its Affiliates to continue to conduct operations on, over and across
such Properties, as specified on Schedule 12.2, in connection with
properties owned by Seller or its Affiliates at Closing and not
being conveyed from Seller to Buyer in the transactions contemplated
by this Agreement, provided that where an existing Contract governs
such use, the terms of such Contract shall continue to govern such
use following Closing.
(b) At Closing, Seller shall execute and deliver to Buyer recordable
instruments, in form and substance reasonably acceptable to Seller
and Buyer, granting Buyer certain non-exclusive rights-of-way on,
over and through properties owned by Seller or its Affiliates as of
Closing other than the Properties and certain rights to use
facilities (including pipeline usage rights, production handling
arrangements, and other reasonable rights to use improvements), to
the extent appropriate for Buyer to continue to operate the
Properties in the manner in which they were being operated at the
Effective Time, as specified in Schedule 12.2, provided that where
an existing Contract governs such use, the terms of such Contract
shall continue to govern such use following Closing.
(c) Articles 12.2(a) and 12.2(b) are not intended to apply to facilities
of a regional nature not associated with any particular field or
field area (e.g. oil spill facilities, fire training facilities,
shorebases, communications systems, etc.).
32
(d) Provided that Buyer acquires Properties covering twenty (20) or more
OCS blocks, Buyer shall be provided with certain mutually agreed
rights to the shared use of certain of Seller's retained
communication equipment to the extent appropriate for Buyer to
continue to operate the Properties in the manner in which they were
being operated at the Effective Time, as specified in Schedule 12.2.
(e) Seller shall be provided with certain mutually agreed rights to the
shared use of certain of Buyer's communication equipment transferred
as part of the Properties to the extent appropriate for Seller to
continue to operate properties owned by Seller or its Affiliates at
Closing in the manner in which they were being operated at the
Effective Time, as specified in Schedule 12.2.
(f) Neither Buyer nor Seller shall be obligated to offer rights of use
under Article 12.2(a), 12.2(b), 12.2(d) or 12.2(e) above, as
applicable, if such use would materially impair that Party's ability
to operate the Properties, or Seller's and its Affiliates' other
properties, as applicable, in the manner they were being operated at
the Effective Time or make it uneconomic to do so.
(g) It is the intent of the Parties that the arrangements described in
Articles 12.2(a), 12.2(b), 12.2(d) and 12.2(e) above be on a
cost-sharing basis with neither Seller nor Buyer making a profit or
suffering a loss as a result of such arrangements. Without limiting
the generality of the preceding sentence, the Party to whom a
benefit is assigned or with whom a benefit is shared shall, where
provided under the terms of the applicable agreement, pay its pro
rata share, based on usage, of required payments to Third Parties
for the use of the shared facilities. If either Party proposes to
sell or abandon its interest in the shared improvements separately
from its rights in the lease on which the facility is located, it is
the intent of the Parties that the other Party shall have, in the
case of a sale, a preferential right of purchase or, in the case of
abandonment, the right to acquire the interest to be abandoned at a
price equal to the estimated cost of abandonment less any salvage
value, each of the foregoing subject to any applicable rights of
Third Parties.
12.3 Buyer's Assumption of Obligations. If Closing occurs, Buyer effective at
Closing assumes and shall timely perform and discharge all of Seller's
duties and obligations associated with the Properties (including any and
all contractual duties and obligations) relating to the period on and
after the Closing Date, and in fulfilling these obligations, Buyer shall
comply with Laws. Buyer shall provide Seller (and its employees and
contractors) reasonable access to the Properties as may be necessary or
convenient to Seller from time to time for Seller to exercise any retained
rights or comply with any retained obligations Seller may have associated
with the Properties.
12.4 Asbestos and NORM. The Properties may currently or have in the past
contained asbestos and NORM, and special procedures associated with
assessment, remediation, removal, transportation or disposal of asbestos
and NORM may be necessary. It is the Parties' intent that Seller shall not
be liable for and Buyer shall have no claim against Seller for the mere
existence of asbestos or NORM on the Properties (except to the extent
33
the asbestos or NORM is as of the date of execution of this Agreement in a
condition that violates applicable Environmental Laws and Buyer would be
entitled to a remedy with respect to such violation under another term of
this Agreement) or Buyer's actions such as removal or remediation thereof.
NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY,
INCLUDING ARTICLE 8:
(a) IF CLOSING OCCURS, BUYER, FROM AND AFTER CLOSING, ACCEPTS
SOLE RESPONSIBILITY FOR AND AGREES TO PAY ANY AND ALL
COSTS AND EXPENSES ASSOCIATED WITH ASSESSMENT,
REMEDIATION, REMOVAL, TRANSPORTATION AND DISPOSAL OF
ASBESTOS AND NORM ASSOCIATED WITH THE PROPERTIES, AND MAY
NOT CLAIM THE FACT THAT ASSESSMENT, REMEDIATION, REMOVAL,
TRANSPORTATION OR DISPOSAL OF ASBESTOS AND NORM ARE NOT
COMPLETE OR THAT ADDITIONAL COSTS AND EXPENSES ARE
REQUIRED IN CONNECTION WITH ASSESSMENT, REMEDIATION,
REMOVAL, TRANSPORTATION OR DISPOSAL OF ASBESTOS AND NORM
AS AN ALLEGED ADVERSE CONDITION OR A BREACH OF SELLER'S
REPRESENTATIONS AND WARRANTIES UNDER THIS AGREEMENT OR
THE BASIS FOR ANY OTHER REDRESS AGAINST SELLER, AND BUYER
(ON BEHALF OF BUYER GROUP AND THEIR SUCCESSORS AND
ASSIGNS) IRREVOCABLY WAIVES ANY AND ALL CLAIMS THEY MAY
HAVE AGAINST SELLER GROUP ASSOCIATED WITH THE SAME,
EXCEPT (I) TO THE EXTENT THE ASBESTOS OR NORM IS AS OF
THE DATE OF EXECUTION OF THIS AGREEMENT IN A CONDITION
THAT VIOLATES APPLICABLE ENVIRONMENTAL LAWS AND BUYER
WOULD BE ENTITLED TO A REMEDY WITH RESPECT TO SUCH
VIOLATION UNDER ANOTHER TERM OF THIS AGREEMENT OR (II)
THE ASBESTOS OR NORM IS THE BASIS OF A CLAIM FOR DEATH OR
BODILY INJURY THAT ACCRUED PRIOR TO THE EFFECTIVE TIME
AND BUYER WOULD BE ENTITLED TO A REMEDY WITH RESPECT TO
SUCH CLAIM UNDER ANOTHER TERM OF THIS AGREEMENT; AND
(b) IF CLOSING OCCURS, BUYER, FROM AND AFTER CLOSING,
RELEASES SELLER GROUP FROM AND SHALL FULLY PROTECT,
DEFEND, INDEMNIFY, AND HOLD SELLER GROUP HARMLESS FROM
AND AGAINST ANY AND ALL CLAIMS RELATING TO, ARISING OUT
OF, OR CONNECTED WITH, DIRECTLY OR INDIRECTLY, THE
ASSESSMENT, REMEDIATION, REMOVAL, TRANSPORTATION AND
DISPOSAL OF ASBESTOS AND NORM FROM THE PROPERTIES AFTER
THE EFFECTIVE TIME. THIS INDEMNITY AND DEFENSE
OBLIGATION WILL APPLY REGARDLESS OF CAUSE OR OF ANY
NEGLIGENT ACTS OR OMISSIONS (INCLUDING SOLE NEGLIGENCE,
CONCURRENT NEGLIGENCE OR STRICT LIABILITY), BREACH OF
DUTY (STATUTORY OR OTHERWISE), VIOLATION OF LAW OR OTHER
FAULT OF SELLER GROUP, OR ANY PRE-EXISTING DEFECT. FOR
THE REMOVAL OF DOUBT, BUYER'S RELEASE UNDER THIS ARTICLE
12.4(B) DOES NOT PREVENT BUYER FROM ASSERTING THE
EXISTENCE OF AN ALLEGED ADVERSE CONDITION UNDER ARTICLE
5.2 FOR ASBESTOS OR NORM THAT IS, AS OF THE DATE OF
EXECUTION OF THIS AGREEMENT, IN A CONDITION THAT VIOLATES
EXISTING ENVIRONMENTAL LAWS.
12.5 Plugging and Abandonment. In addition to any ▇▇▇▇▇ and facilities
currently in use, the Properties contain ▇▇▇▇▇ and facilities that have
been temporarily or permanently abandoned. EXCEPT TO THE EXTENT OF A
BREACH OF SELLER'S REPRESENTATION IN ARTICLE 10.1.13 ASSERTED DURING THE
TERM OF SUCH REPRESENTATION, NOTWITHSTANDING ANYTHING CONTAINED IN THIS
AGREEMENT TO THE CONTRARY, INCLUDING ARTICLE 8:
34
(a) IF CLOSING OCCURS, BUYER, FROM AND AFTER CLOSING, ACCEPTS SOLE
RESPONSIBILITY FOR AND AGREES TO PAY ALL COSTS AND EXPENSES
ASSOCIATED WITH PLUGGING AND ABANDONMENT OF ALL ▇▇▇▇▇,
DECOMMISSIONING OF ALL FACILITIES, AND CLEARING OF SITES AND
RESTORING SEABEDS ASSOCIATED WITH THE PROPERTIES, AND MAY NOT CLAIM
THE FACT THAT PLUGGING AND ABANDONMENT, DECOMMISSIONING, SITE
CLEARANCE OR SEABED RESTORATION OPERATIONS ARE NOT COMPLETE OR THAT
ADDITIONAL COSTS AND EXPENSES ARE REQUIRED TO COMPLETE PLUGGING AND
ABANDONMENT, DECOMMISSIONING, SITE CLEARANCE OR SEABED RESTORATION
OPERATIONS AS AN ALLEGED ENVIRONMENTAL CONDITION OR A BREACH OF
SELLER'S REPRESENTATIONS AND WARRANTIES UNDER THIS AGREEMENT OR THE
BASIS FOR ANY OTHER REDRESS AGAINST SELLER, AND BUYER (ON BEHALF OF
BUYER GROUP AND THEIR SUCCESSORS AND ASSIGNS) IRREVOCABLY WAIVES ANY
AND ALL CLAIMS THEY MAY HAVE AGAINST SELLER GROUP ASSOCIATED WITH
THE SAME; AND
(b) IF CLOSING OCCURS, BUYER, FROM AND AFTER CLOSING, RELEASES SELLER
GROUP FROM AND SHALL FULLY PROTECT, DEFEND, INDEMNIFY, AND HOLD
SELLER GROUP HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS RELATING
TO, ARISING OUT OF, OR CONNECTED WITH, DIRECTLY OR INDIRECTLY,
PLUGGING AND ABANDONMENT OF ▇▇▇▇▇, DECOMMISSIONING OF FACILITIES,
AND CLEARING OF SITES AND RESTORING SEABEDS ASSOCIATED WITH THE
PROPERTIES, NO MATTER WHETHER ARISING BEFORE OR AFTER THE EFFECTIVE
TIME. THIS INDEMNITY AND DEFENSE OBLIGATION WILL APPLY REGARDLESS OF
CAUSE OR OF ANY NEGLIGENT ACTS OR OMISSIONS (INCLUDING SOLE
NEGLIGENCE, CONCURRENT NEGLIGENCE OR STRICT LIABILITY), BREACH OF
DUTY (STATUTORY OR OTHERWISE), VIOLATION OF LAW, OR OTHER FAULT OF
SELLER GROUP, OR ANY PRE-EXISTING DEFECT.
12.6 Imbalances. Buyer acknowledges that Imbalances may exist that are
associated with the Properties and all Imbalances (whether for
overproduction by Seller or underproduction by Seller) shall pass to Buyer
as of the Effective Time, and Buyer shall thereupon be entitled to all
rights and obligations with respect to any and all such Imbalances. Except
as provided below in this Article, there shall be no amounts paid to or
from either Party to the other as a Purchase Price adjustment, as part of
the Final Accounting Settlement or otherwise, based on Imbalances. Except
as provided below in this Article, NOTWITHSTANDING ANYTHING CONTAINED IN
THIS AGREEMENT TO THE CONTRARY, INCLUDING ARTICLE 8:
(a) IF CLOSING OCCURS, BUYER FROM AND AFTER CLOSING ACCEPTS SOLE
RESPONSIBILITY FOR AND AGREES TO PAY ALL COSTS AND EXPENSES
ASSOCIATED WITH IMBALANCES ASSOCIATED WITH THE PROPERTIES, AND BUYER
(ON BEHALF OF BUYER GROUP AND THEIR SUCCESSORS AND ASSIGNS)
IRREVOCABLY WAIVES ANY AND ALL CLAIMS IT AND THEY MAY HAVE AGAINST
SELLER GROUP ASSOCIATED WITH THE SAME; AND
(b) IF CLOSING OCCURS, BUYER FROM AND AFTER CLOSING RELEASES SELLER
GROUP FROM AND SHALL FULLY PROTECT, DEFEND, INDEMNIFY AND HOLD
SELLER GROUP HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS RELATING
TO, ARISING OUT OF, OR CONNECTED WITH, DIRECTLY OR INDIRECTLY,
IMBALANCES ASSOCIATED WITH THE PROPERTIES, NO MATTER WHETHER ARISING
BEFORE OR AFTER THE EFFECTIVE TIME. THIS INDEMNITY
35
AND DEFENSE OBLIGATION WILL APPLY REGARDLESS OF CAUSE OR OF ANY
NEGLIGENT ACTS OR OMISSIONS (INCLUDING SOLE NEGLIGENCE, CONCURRENT
NEGLIGENCE OR STRICT LIABILITY), BREACH OF DUTY (STATUTORY OR
OTHERWISE), VIOLATION OF LAW, OR OTHER FAULT OF SELLER GROUP, OR ANY
PRE-EXISTING DEFECT.
Notwithstanding the preceding, the following adjustment shall be made
between the Parties with respect to Imbalances:
(i) If Seller's aggregate production Imbalances on January 1, 2003
vary from - 1.0 Bcfe (underproduced) to the detriment of
Seller by more than 1.0 Bcfe, then Seller shall pay Buyer the
product of $2.00/mcf and the entire amount of such variance
(including the first 1.0 Bcfe); or
(ii) If Seller's aggregate production Imbalances on January 1, 2003
vary from - 1.0 Bcfe (underproduced) to the benefit of Seller
by more than 1.0 Bcfe, then Buyer shall pay Seller the product
of $2.00/mcf and the entire amount of such variance (including
the first 1.0 Bcfe),
AND EACH PARTY WAIVES ANY OTHER REMEDIES.
12.7 Suspense Funds. Buyer acknowledges that Suspense Funds may exist that are
associated with the Properties. Seller shall transfer all Suspense Funds
and the obligation for the Suspense Funds to Buyer in the Final Accounting
Statement. NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE
CONTRARY, INCLUDING ARTICLE 8:
(a) IF CLOSING OCCURS, BUYER, FROM AND AFTER CLOSING, ACCEPTS SOLE
RESPONSIBILITY FOR AND AGREES TO PAY ALL COSTS AND EXPENSES
ASSOCIATED WITH SUSPENSE FUNDS (INCLUDING ANY ADDITIONAL FINES,
PENALTIES OR INTEREST (I) THAT ACCRUE PRIOR TO CLOSING TO THE
EXTENT, BUT ONLY TO THE EXTENT, THAT THE SUSPENSE FUNDS DELIVERED TO
BUYER INCLUDE SUCH AMOUNTS AND (II) THAT MAY ACCRUE AFTER CLOSING),
AND BUYER (ON BEHALF OF BUYER GROUP AND THEIR SUCCESSORS AND
ASSIGNS) IRREVOCABLY WAIVES ANY AND ALL CLAIMS THEY MAY HAVE AGAINST
SELLER GROUP ASSOCIATED WITH THE SAME; AND
(b) IF CLOSING OCCURS, BUYER, FROM AND AFTER CLOSING, RELEASES SELLER
GROUP FROM AND SHALL FULLY PROTECT, DEFEND, INDEMNIFY AND HOLD
SELLER GROUP HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS RELATING
TO, ARISING OUT OF, OR CONNECTED WITH, DIRECTLY OR INDIRECTLY,
SUSPENSE FUNDS (INCLUDING ANY ADDITIONAL FINES, PENALTIES OR
INTEREST (I) THAT ACCRUE PRIOR TO CLOSING TO THE EXTENT, BUT ONLY TO
THE EXTENT, THAT THE SUSPENSE FUNDS DELIVERED TO BUYER INCLUDE SUCH
AMOUNTS AND (II) THAT MAY ACCRUE AFTER CLOSING), NO MATTER WHEN
ASSERTED. THIS INDEMNITY AND DEFENSE OBLIGATION APPLIES REGARDLESS
OF CAUSE OR OF ANY NEGLIGENT ACTS OR OMISSIONS (INCLUDING SOLE
NEGLIGENCE, CONCURRENT NEGLIGENCE OR STRICT LIABILITY), BREACH OF
DUTY (STATUTORY OR OTHERWISE), VIOLATION OF LAW, OR OTHER FAULT OF
SELLER GROUP, OR ANY PRE-EXISTING DEFECT.
12.8 Sales Tax. Although it is believed that no Sales Tax will be due with
respect to the transactions contemplated herein, Buyer acknowledges that
if Sales Tax is due and owing
36
as a result of Seller's or BP America's transfer of the Properties to
Buyer, Buyer shall be liable for any and all such Sales Tax. Before the
Closing Date, Buyer and Seller shall agree on the value of the tangible
personal property being transferred and Buyer shall provide Seller with
documentation detailing the basis for Buyer's allocation of the Purchase
Price to any Properties that are subject to Sales Tax. Buyer shall provide
Seller with an exemption certificate for any tangible personal property
included in the Properties for which it claims a Sales Tax exemption.
Seller shall invoice, and Buyer shall pay, any Sales Tax on Buyer's
acquisition of all nonexempt tangible personal property and Seller or BP
America shall remit the Sales Tax to the applicable governmental entity.
NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY
(INCLUDING ARTICLE 8), BUYER RELEASES SELLER GROUP FROM AND SHALL FULLY
PROTECT, DEFEND, INDEMNIFY AND HOLD SELLER GROUP HARMLESS FROM AND AGAINST
ANY AND ALL CLAIMS (NO MATTER WHEN ASSERTED) RELATING TO, ARISING OUT OF,
OR CONNECTED WITH, DIRECTLY OR INDIRECTLY, SALES TAX RESULTING FROM OR
ASSOCIATED WITH SELLER'S TRANSFER OF PROPERTIES TO BUYER. THIS INDEMNITY
AND DEFENSE OBLIGATION APPLIES REGARDLESS OF CAUSE OR OF ANY NEGLIGENT
ACTS OR OMISSIONS (INCLUDING SOLE NEGLIGENCE, CONCURRENT NEGLIGENCE OR
STRICT LIABILITY), BREACH OF DUTY (STATUTORY OR OTHERWISE), VIOLATION OF
LAW, OR OTHER FAULT OF SELLER GROUP, OR ANY PRE-EXISTING DEFECT. IF SELLER
IS LATER REQUIRED TO PAY ANY ADDITIONAL SALES TAX, INTEREST, OR PENALTY
THEREON, BUYER SHALL REIMBURSE SELLER WITHIN THIRTY (30) DAYS AFTER
RECEIPT OF SELLER'S WRITTEN NOTICE OF THE PAYMENT.
12.9 Guaranty Agreement. If the Buyer does not have a net worth as shown on its
most recent audited annual financial statements and most recent quarterly
reviewed financial statements (each prepared in accordance with generally
accepted accounting principles) of at least one billion dollars (US
$1,000,000,000), Buyer has caused an Affiliate of Buyer, which has a net
worth of at least one billion dollars (US $1,000,000,000), to execute and
deliver the Guaranty Agreement simultaneously with the execution of this
Agreement or, if Buyer has no such Affiliate, Buyer has provided Seller
with a letter of credit or surety bond from a bank or other financial
institution having a net worth of at least one billion dollars (US
$1,000,000,000), in form and substance satisfactory to Seller, in an
amount sufficient to secure Buyer's performance of all obligations of
Buyer hereunder, including plugging and abandonment obligations.
12.10 Transition Agreement. Provided that Buyer acquires Properties covering
twenty (20) or more OCS blocks, Buyer and Seller shall execute and deliver
the Transition Agreement and Letters-in-Lieu as provided in the Transition
Agreement on the Closing Date.
12.11 Third Party Technology. Third Party proprietary seismic and other
proprietary technology, including software, is used in connection with
ownership or operation of the Properties. Notwithstanding anything in this
Agreement to the contrary, Buyer is responsible for obtaining any
necessary consents to Seller's (or, if applicable with respect to the BP
America Properties, BP America's) assignment of any licenses or other
agreements or for Buyer to enter into new licenses or other agreements as
may be needed to permit Buyer to continue to utilize any Third Party
seismic or Third Party technology used on the Properties after the Closing
Date. Seller shall reasonably assist Buyer in contacting the relevant
Third Parties, but Buyer shall be solely responsible for and shall
37
bear all costs and transfer and other fees required to obtain licenses,
assignments or new agreements. In the event Buyer acquires any such Third
Party licenses, then Seller shall provide (or, if applicable, Seller shall
cause BP America to provide) Buyer with all Transferable Seismic Data with
respect to such licenses to the extent Seller's (or, if applicable, BP
America's) licenses permit, with the cost of supplying and copying such
data borne one-half by Buyer and one-half by Seller.
12.12 Interim Period.
(a) During the Interim Period, Seller shall (or, where applicable,
Seller shall cause BP America to): (i) maintain and operate the
Properties and dispose of production from the Properties in the
ordinary course of business consistent with the Seller's (or BP
America's, where applicable) past custom and practice with respect
to the Properties, (ii) to the extent practicable in the
circumstances, consult with Buyer in relation to any material
decision in connection with the Properties, provided that nothing in
this sub-clause shall operate to ▇▇▇▇▇▇ the discretion of Seller (or
BP America, where applicable) in acting with respect to the
Properties except as explicitly provided in this Article 12.12, and
(iii) generally keep Buyer in a timely manner informed of matters
(not of a routine or minor nature) relating to the Properties.
(b) Without the consent of Buyer (which shall not be unreasonably
withheld or delayed), during the Interim Period, Seller shall not,
(or, if applicable with respect to the BP America Properties, Seller
shall cause BP America not to) with respect to the Properties:
(i) except with respect to matters retained by Seller that are
referenced in Exhibit "C", waive, compromise or settle any
right or claim for an amount in excess of US $250,000 or which
may reasonably be expected to have an adverse effect on the
value of the Properties as a whole in excess of US $250,000;
(ii) incur obligations with respect to the Properties for which
Buyer would be responsible after Closing, other than
transactions (x) not exceeding US $250,000 individually which
are incurred in the normal, usual and customary manner, of a
nature and in an amount consistent with past practices
employed by Seller (or, if applicable, BP America) with
respect to the Properties, and/or (y) in connection with
situations believed in good faith by Seller to constitute an
emergency (in which case Seller's obligation is limited to
notifying Buyer as soon as reasonably practicable of such
emergency and obligations);
(iii) encumber, sell, lease, remove from the Real Property or
otherwise dispose of any of the Properties (excluding sales of
production therefrom in the ordinary course of business under
existing Contracts or new contracts allowed under Article
12.12(b)(v)), except to the extent replaced by
38
equivalent property or used, consumed or abandoned in the
normal operations of Seller's (or, if applicable, BP
America's) business;
(iv) enter into a contract or commitment for capital expenditures
or the acquisition or construction of fixed assets for which
Buyer shall have financial responsibility after Closing in an
amount individually in excess of two hundred fifty thousand
dollars (US $250,000), except in connection with situations
believed in good faith by Seller to constitute an emergency
(in which case Seller's obligation is limited to notifying
Buyer as soon as reasonably practicable of such emergency and
obligations);
(v) enter into a contract or agreement with an Affiliate of Seller
or a contract or agreement with a term of greater than thirty
(30) Days unless it can be terminated without penalty on no
more than thirty (30) Days notice; or
(vi) terminate, or materially amend or modify, or agree to
terminate or materially amend or modify, any of the contracts
included in the Properties, except renewals or extensions of
such contracts on substantially the same terms.
(c) Regardless of whether all of the operations conducted by Seller (or,
if applicable, BP America) during the Interim Period with respect to
any of the Properties have been fully completed by Seller (or, if
applicable, BP America) prior to Closing, Buyer shall, upon Closing,
assume full responsibility for the completion of all such operations
applicable to the Properties not in violation of this Article 12.12,
subject, however, to the terms of the Transition Agreement during
the Transition Period.
(d) During the Interim Period, Seller shall use (and, with respect to
the BP America Properties, Seller shall cause BP America to use) its
reasonable efforts to obtain all required consents and approvals,
and all waivers of preferential purchase rights, applicable to the
transactions contemplated by this Agreement, provided that Seller
(and BP America) shall not be required to make payments or undertake
obligations to or for the benefit of the holders of such rights in
order to obtain the required consents, approvals and waivers. Buyer
shall cooperate with Seller (and BP America) in seeking to obtain
such consents, approvals and waivers.
(e) If any approvals are required under this Article 12.12, requests
shall be delivered to the following individuals, each of whom shall
have full authority to grant or deny such requests for approvals:
39
As to Buyer: As to Seller
(and BP America):
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Drilling & Engineering Title: Performance Unit
Manager, Gulf Coast Region Leader
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇: ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇-▇, ▇▇▇▇ ▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email:▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇ Email: ▇▇▇▇▇▇@▇▇.▇▇▇
and and
Name: ▇▇▇▇ ▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Production Manager, Gulf Title: Director,
Coast Region Business Development
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇: ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇-▇, ▇▇▇▇ ▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email:▇▇▇▇.▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇ Email: ▇▇▇▇▇▇▇▇@▇▇.▇▇▇
12.13 Operator Acts. Seller shall not be deemed or held in breach of any of
Seller's representations, warranties, covenants or agreements contained in
this Agreement to the extent that any such breach arises out of the
actions of Buyer as operator of certain of the Properties.
12.14 Notification of Breaches. Until the Closing:
(a) Seller shall notify Buyer at the time any Schedule or Exhibit is
delivered pursuant to Article 12.15(a) or Article 12.15(e) of any
item in such Schedule or Exhibit that to Seller's knowledge is
inaccurate or missing, and Buyer shall notify Seller following
Buyer's review, but before the Parties have agreed upon such
Schedule or Exhibit, of any item in such Schedule or Exhibit that to
Buyer's knowledge is inaccurate or missing.
(b) Buyer shall notify Seller promptly after Buyer obtains actual
knowledge that any representation or warranty of Seller contained in
this Agreement is untrue in any material respect or will be untrue
in any material respect as of the Closing Date or that any covenant
or agreement to be performed or observed by Seller prior to or on
the Closing Date has not been so performed or observed in any
material respect.
(c) Seller shall notify Buyer promptly after Seller obtains actual
knowledge that any representation or warranty of Buyer contained in
this Agreement is untrue in any
40
material respect or will be untrue in any material respect as of the
Closing Date or that any covenant or agreement to be performed or
observed by Buyer prior to or on the Closing Date has not been so
performed or observed in a material respect.
(d) If any of Buyer's or Seller's representations or warranties is
untrue or shall become untrue in any material respect between the
date of execution of this Agreement and the Closing Date, or if any
of Buyer's or Seller's covenants or agreements to be performed or
observed prior to or on the Closing Date shall not have been so
performed or observed in any material respect, but if such breach of
representation, warranty, covenant or agreement shall (if curable)
be cured by the Closing, then such breach shall be considered not to
have occurred for all purposes of this Agreement.
12.15 Delivery of Certain Information.
(a) As soon as practicable and not later than twenty (20) Business Days
after the date of this Agreement, but in no event later than twenty
(20) Days prior to the Closing Date, Seller shall deliver to Buyer
Schedules 10.1.7, 10.1.11 and 12.2, each in a form and substance
reasonably acceptable to Seller and Buyer.
(b) Prior to execution of this Agreement, Seller has delivered to Buyer:
(i) A list of all partnerships expressly established by written
agreement to which any Properties are subject (not including
tax partnerships contained in joint operating agreements or
"mining partnerships" imposed under applicable Law); and
(ii) A list of all preferential rights under the operating
agreements and unit agreements affecting the Properties and
applicable to the transactions contemplated by this Agreement;
(c) As soon as practicable and not later than twenty (20) Business Days
after the date of this Agreement, but in no event later than twenty
(20) Days prior to the Closing Date, Seller shall provide Buyer with
the following information:
(i) A list of all preferential rights to purchase affecting the
Properties and applicable to the transactions contemplated by
this Agreement not otherwise delivered under Article 12.15(b),
and
(ii) A list of all filing, registration, permit, authorization,
consent or approval requirements in favor of any governmental
authority or other Third Party affecting the Properties that
must be satisfied for consummation of the transactions
contemplated by this Agreement, other than those governmental
filings, registrations, permits, authorizations, consents and
approvals that are customarily made or obtained post-Closing;
(d) As soon as practicable, and not later than ten (10) Business Days
after the date of this Agreement, Seller shall provide Buyer with
the following information:
41
(i) A list of all Properties where proceeds from the sale of
hydrocarbons produced from or attributable to the Properties
were held as of the date hereof without Seller's consent by
any Third Party after the due date for payment, in suspense
accounts or otherwise, and
(ii) A list of any capital commitments or agreements of Seller as
of the Effective Time which Seller reasonably anticipates will
require capital expenditures by the owner of the Properties
after the Effective Time individually in excess of US
$250,000.
(e) As soon as practicable, and not later than January 24, 2003, Seller
shall deliver to Buyer a replacement for Exhibit "A" containing
detailed Net Revenue Interest and Working Interest information and
an Exhibit "A-1." Within three (3) Business Days after receipt of
the replacement Exhibit "A," Buyer shall deliver to Seller Buyer's
Allocations. Buyer and Seller shall reach agreement in writing upon
the form and content of each such Exhibit and Buyer's Allocations,
consent by each Party not to be unreasonably withheld or delayed. As
of the date on which Buyer and Seller have agreed in writing upon a
revised Exhibit "A" and Buyer's Allocations, such Exhibit "A"
(including Buyers' Allocations) shall replace in its entirety the
Exhibit "A" attached to this Agreement at signing, and shall be
deemed to be Exhibit "A" hereto for all purposes. The adjustments
for Alleged Title Defects and Title Benefits under Article 4.2 and
Seller's representation and warranty in Article 10.1.6 shall not
come into force and effect until the date on which Buyer and Seller
have agreed in writing upon such revised Exhibits and Buyer's
Allocations.
(f) Seller may amend Exhibit "C", the Schedules to this Agreement and,
once submitted, the lists supplied pursuant to this Article, subject
to the consent of Buyer, which consent shall not be unreasonably
withheld, provided that Buyer's withholding consent shall be deemed
reasonable if the amendment would result in a material decrease in
the value of the Properties or a negative impact on Buyer unless
Seller has agreed in writing to indemnify Buyer Group from and
against any and all claims, demands, suits, causes of action,
losses, damages, liabilities, fines, penalties and costs (including
attorneys' fees and costs of litigation) to the extent relating to,
arising out of, or connected with, directly or indirectly, the
subject matter of such amendment, provided that Seller's right to
indemnify Buyer Group under this Article shall not apply to with
respect to claims, demands, suits, causes of action, losses,
damages, liabilities, fines, penalties and costs (including
attorneys' fees and costs of litigation) that in aggregate can be
reasonably expected to exceed twenty-five percent (25%) of the
Purchase Price.
12.16 Financial Audit. Both prior to and after the Closing, Seller shall provide
Buyer with access to Seller's financial records for the Properties for the
calendar years 2001 and 2002 which were previously made available to
Seller's auditors for purposes of preparing Seller's annual audited and
quarterly reviewed financial statements for those years and to Seller's
corresponding financial records for any portion of 2003 prior to the
Closing, including in each case records with respect to direct lease
operating costs with respect to
42
each of the Properties and the gross revenues from such Properties and
such other information as may be required for Buyer's Form 8-K filing with
respect to the transactions contemplated by this Agreement. Seller shall
cause Seller's and Seller's Affiliates' personnel to cooperate with Buyer
in providing such access and to reasonably assist Buyer in locating and
interpreting such records and Seller shall cause Seller's contractor IBM
to provide reasonable assistance to Buyer in the preparation of certain
supporting financial schedules and audit work papers. The cost incurred by
Seller in providing the financial data to Buyer and assisting Buyer shall
be borne by Buyer. BUYER RELEASES SELLER GROUP FROM AND SHALL FULLY
PROTECT, DEFEND, INDEMNIFY AND HOLD SELLER GROUP HARMLESS FROM AND AGAINST
ANY AND ALL CLAIMS RELATING TO, ARISING OUT OF, OR CONNECTED WITH,
DIRECTLY OR INDIRECTLY, SELLER'S PREPARATION OR FURNISHING OF ANY SUCH
RECORDS TO BUYER, ANY ACTIONS, REPRESENTATIONS OR CERTIFICATIONS OF
SELLER'S AND ITS AFFILIATES' PERSONNEL OR AUDITORS WITH RESPECT TO THE
INFORMATION CONTAINED IN SUCH RECORDS, OR BUYER'S USE OF THE INFORMATION
CONTAINED IN SUCH FINANCIAL RECORDS, REGARDLESS OF CAUSE OR OF ANY
NEGLIGENT ACTS OR OMISSIONS (INCLUDING SOLE NEGLIGENCE, CONCURRENT
NEGLIGENCE OR STRICT LIABILITY), BREACH OF DUTY (STATUTORY OR OTHERWISE),
VIOLATION OF LAW, OR OTHER FAULT OF SELLER GROUP, OR ANY PRE-EXISTING
DEFECT.
ARTICLE 13. HSR ACT
13.1 HSR Filings. If compliance with the HSR Act is required in connection with
the transaction contemplated by this Agreement, as promptly as practicable
and in any event not more than thirty (30) Days after the date of this
Agreement, both Parties shall file with the Federal Trade Commission and
the Department of Justice, as applicable, the required notification and
report forms and shall as promptly as practicable furnish any supplemental
information that may be requested in connection therewith. Each Party
shall take all reasonable steps to achieve early termination of applicable
waiting periods.
ARTICLE 14. PERSONNEL
14.1 Employees. Seller has no obligation to provide Buyer an opportunity to
interview for employment any individuals who support the Properties and
Buyer has no obligation to hire any such individuals.
14.2 Restriction on Solicitation. Buyer may not (without obtaining the prior
written consent of Seller), for a period of twelve (12) months after the
Closing Date, solicit employment of, or contact except for such contact as
may be necessary in respect to litigation, claims or other business
matters unrelated to the solicitation of employment, any of Seller's
employees directly or indirectly engaged in operation of the Properties as
of the date hereof and as of the Closing Date or engaged in the
negotiation or Closing of the transactions contemplated by this Agreement.
For purposes of this Article 14.2, a general published solicitation or
advertisement for employment (whether in print or on-line) shall not be a
breach hereof.
43
ARTICLE 15. CONDITIONS PRECEDENT TO CLOSING
15.1 Conditions Precedent to Seller's Obligation to Close. Seller shall,
subject to satisfaction or waiver of the conditions to Closing in Article
15.3, consummate the sale of the Properties on the Closing Date, provided
the following conditions precedent have been satisfied or waived by
Seller:
15.1.1 ALL REPRESENTATIONS AND WARRANTIES OF BUYER CONTAINED IN THIS
AGREEMENT ARE TRUE AND CORRECT IN ALL MATERIAL RESPECTS; PROVIDED,
HOWEVER, FOR THE PURPOSES OF THIS ARTICLE 15.1.1, IF BUYER AGREES IN
WRITING TO INDEMNIFY SELLER GROUP FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, SUITS, CAUSES OF ACTION, LOSSES, DAMAGES, LIABILITIES, FINES,
PENALTIES AND COSTS (INCLUDING ATTORNEYS' FEES AND COSTS OF LITIGATION)
RELATING TO, ARISING OUT OF, OR CONNECTED WITH, DIRECTLY OR INDIRECTLY,
FAILURE OF THE REPRESENTATION OR WARRANTY IN ARTICLE 11.1.5, SUCH
REPRESENTATION SHALL BE DEEMED TRUE AND CORRECT IN ALL MATERIAL RESPECTS;
15.1.2 Buyer shall have complied in all material respects with all Buyer's
material obligations, covenants and conditions in this Agreement to be
performed or complied with prior to Closing;
15.1.3 Buyer shall have provided Seller evidence satisfactory to Seller
that Buyer is as of Closing qualified with the MMS to hold oil and gas
leases on the U.S. Outer Continental Shelf and has posted with the MMS an
area wide bond and any supplemental or additional bonds required by the
MMS with respect to the Properties, and provided satisfactory evidence of
financial responsibility under the Oil Pollution Act; and
15.1.4 The aggregate reduction in the Purchase Price through exclusion of
Properties pursuant to Articles 5.2 and 7.2 shall not exceed twenty-five
percent (25%) of the Purchase Price.
15.2 Conditions Precedent to Buyer's Obligation to Close. Buyer shall, subject
to satisfaction or waiver of the conditions to Closing set forth in
Article 15.3, consummate the purchase of the Properties contemplated by
this Agreement on the Closing Date, provided the following conditions
precedent have been satisfied or waived by Buyer:
15.2.1 ALL REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN THIS
AGREEMENT ARE TRUE AND CORRECT IN ALL MATERIAL RESPECTS; PROVIDED,
HOWEVER, FOR PURPOSES OF THIS ARTICLE 15.2.1 IF SELLER AGREES IN WRITING
TO INDEMNIFY BUYER GROUP FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS,
SUITS, CAUSES OF ACTION, LOSSES, DAMAGES, LIABILITIES, FINES, PENALTIES
AND COSTS (INCLUDING ATTORNEYS' FEES AND COSTS OF LITIGATION) RELATING TO,
ARISING OUT OF, OR CONNECTED WITH, DIRECTLY OR INDIRECTLY, FAILURE OF A
REPRESENTATION OR WARRANTY IN ARTICLES 10.1.4, 10.1.7, 10.1.8, 10.1.9
(OTHER THAN AS A RESULT OF CONTAMINATION ON THE PROPERTIES), 10.1.10,
10.1.11, 10.1.12, 10.1.13 AND 10.1.14, SUCH REPRESENTATION OR WARRANTY
WILL BE DEEMED TO BE TRUE AND CORRECT IN ALL MATERIAL RESPECTS;
44
15.2.2 Seller shall have complied in all material respects with all
Seller's material obligations, covenants and conditions in this Agreement
to be performed or complied with prior to Closing; and
15.2.3 The aggregate reduction in the Purchase Price through exclusion of
Properties pursuant to Articles 5.2 and 7.2 shall not exceed twenty-five
percent (25%) of the Purchase Price.
15.3 Conditions Precedent to Obligation of Each Party to Close. The Parties
shall, subject to satisfaction or waiver of their respective conditions to
Closing set forth in Articles 15.1 and 15.2, consummate the sale and
purchase of the Properties on the Closing Date, provided the following
conditions precedent have been satisfied or waived by both Parties:
15.3.1 if applicable, consummation of the transaction contemplated by this
Agreement is not prevented by (and the required waiting period, if any,
has expired or been terminated under) the HSR Act and the rules and
regulations of the Federal Trade Commission and the Department of Justice;
15.3.2 No injunction, order or award restraining, enjoining or otherwise
prohibiting consummation of or granting material damages associated with
the transactions contemplated by this Agreement or sale of any one or more
of the Properties has been issued by any court, governmental entity or
arbitrator of competent jurisdiction, and no suits, actions or other
proceedings are pending before any such court, governmental entity or
arbitrator in which a third party seeks to restrain, enjoin or otherwise
prohibit consummation of or obtain material damages associated with the
transactions contemplated by this Agreement or sale of any one or more of
the Properties; nor to the Parties' knowledge are there any pending
investigations by a governmental entity that would be likely to result in
any suit, action or other proceedings to restrain, enjoin or otherwise
prohibit consummation of the transaction contemplated by this Agreement or
sale of any one or more of the Properties; provided that if such an
injunction, order, award, suit, action or other proceeding applicable to
some (but not all) of the Properties is pending on the Closing Date,
Closing with respect to the unaffected Properties shall proceed and the
Parties shall conduct a second closing for the affected Properties if and
when the above-referenced condition to Closing is removed. If the
above-referenced condition to Closing is not removed as to the affected
Properties within one hundred twenty (120) Days after the Closing Date,
the affected Properties, automatically and without need for amendment of
this Agreement, shall be removed from this Agreement, and Buyer shall not
be obligated to make payment to Seller for that portion of the Purchase
Price allocated to such Properties in Buyer's Allocations, and the Parties
shall have no further obligations to each other with respect to the same;
15.3.3 all material consents and approvals (except for consents and
approvals of governmental entities or authorities customarily obtained
subsequent to transfer of title) have been obtained; provided, however, if
on the Closing Date consents applicable to some (but not all) of the
Properties have not been obtained, Closing with respect to the unaffected
Properties shall proceed, and the Parties shall conduct a second closing
for the
45
affected Properties if and when the above-referenced condition to Closing
is removed. If the above-referenced condition to Closing is not removed as
to the affected Properties within one hundred eighty (180) Days after the
Closing Date, the affected Properties automatically and without need for
amendment of this Agreement shall be removed from this Agreement, and
Buyer shall not be obligated to make payment to Seller for that portion of
the Purchase Price allocated to such Properties in Buyer's Allocations,
and the Parties shall have no further obligations to each other with
respect to the same; and
15.3.4 (a) preferential purchase rights applicable to the Properties
either have been exercised and affected Properties excluded from the
Closing in accordance with Article 3.1, or have been waived; or (b) the
time to elect under such preferential purchase rights has elapsed. If on
the Closing Date preferential purchase rights applicable to some (but not
all) Properties have not been waived, or the time to elect has not
elapsed, Closing with respect to the unaffected Properties shall proceed,
and the Parties shall conduct a second closing with respect to the
affected Properties if and when the above-referenced condition to Closing
is removed. If the above-referenced condition to the Closing Date is not
removed as to the affected Properties within one hundred twenty (120) Days
after the Closing Date, the affected Properties, automatically and without
need to amend this Agreement, shall be removed from this Agreement and the
Parties shall have no further obligations to each other with respect to
the same.
ARTICLE 16. THE CLOSING
16.1 Closing. No later than three (3) Business Days prior to the Closing Date,
Seller shall provide Buyer a statement setting forth Seller's good faith
estimate of the Adjusted Purchase Price after giving effect to all
Purchase Price adjustments set forth in Article 2.2 ("CLOSING STATEMENT").
The estimate delivered in the Closing Statement shall constitute the
dollar amount to be paid by Buyer to Seller at Closing (the "CLOSING
PAYMENT"). Seller also shall provide Buyer wiring instructions designating
the account(s) to which Buyer shall deliver the Purchase Price. Closing
shall be held on the Closing Date in Seller's office at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or such other place as Seller may notify
Buyer before Closing.
16.2 Seller's Obligations at Closing. At Closing, Seller shall deliver to
Buyer, unless waived by Buyer, the following:
16.2.1 a document substantially in the form of the Assignment and ▇▇▇▇ of
Sale, conveying all of Seller's right, title and interests in the
Properties, executed by an Attorney-in-Fact of Seller and acknowledged, in
four (4) multiple originals plus such additional originals as are
necessary to allow recording in all appropriate jurisdictions, or such
greater number as the Parties agree;
16.2.2 a document substantially in the form of the Assignment and ▇▇▇▇ of
Sale, conveying all of BP America's right, title and interests in the BP
America Properties, executed by an Attorney-in-Fact of BP America and
acknowledged, in four (4) multiple originals plus such additional
originals as are necessary to allow recording in all appropriate
jurisdictions, or such greater number as the Parties agree;
46
16.2.3 documents substantially in the form of the Assignment of Record
Title Interest, a form of which is attached as Exhibit "J", conveying all
of Seller's right, title and interest in the Properties to which Seller
holds record title, and documents substantially in the form of Assignment
of Operating Rights attached hereto as Exhibit "K", conveying all of
Seller's right, title and interest in all other Properties, each executed
by an Attorney-in-Fact of Seller and acknowledged in four (4) executed
multiple originals plus such additional originals as are required by the
MMS or other governmental entity or authority or such greater number as
the Parties agree.
16.2.4 documents substantially in the form of the Assignment of Record
Title Interest, a form of which is attached as Exhibit "J", conveying all
of BP America's right, title and interest in the Properties to which BP
America holds record title, and documents substantially in the form of
Assignment of Operating Rights attached hereto as Exhibit "K", conveying
all of BP America's right, title and interest in all other Properties,
each executed by an Attorney-in-Fact of BP America and acknowledged in
four (4) executed multiple originals plus such additional originals as are
required by the MMS or other governmental entity or authority or such
greater number as the Parties agree.
16.2.5 with respect to Properties on the U.S. Outer Continental Shelf
which Seller operates and in which Seller owns one hundred percent of the
Working Interest, designation of operator forms (Form MMS 1123 (July
2002)), as applicable, executed by an Attorney-in-Fact of Seller,
designating Buyer as operator of such Properties;
16.2.6 four (4) originals of the Certificate executed by an authorized
officer or an Attorney-in-Fact of Seller;
16.2.7 four (4) originals of a Non-Foreign Affidavit executed by an
Attorney-in-Fact of Seller, and four (4) originals of a Non-Foreign
Affidavit executed by an Attorney-in-Fact of BP America;
16.2.8 four (4) originals of a Secretary's Certificate or Assistant
Secretary's Certificate of Seller, dated as of the Closing Date,
certifying (A) as to the incumbency and due authorization of Seller's
signatory to this Agreement and Seller's and BP America's signatories to
the documents signed at Closing; and (B) that a true and correct copy of
the resolutions of Seller's board of directors authorizing this Agreement
and the transactions contemplated hereby are attached thereto;
16.2.9 four (4) originals of the Transition Agreement executed by an
Attorney-in-Fact of Seller;
16.2.10 four (4) originals of each Operating Agreement executed by an
Attorney-in-Fact of Seller;
16.2.11 four (4) originals of each facilities sharing agreement to be
entered into pursuant to Section 12.2;
16.2.12 four (4) originals of a Seismic License in substantially the form
of Exhibit "N"; and
47
16.2.13 any other instruments and agreements (including ratification or
joinder instruments required to transfer Properties from Seller or BP
America to Buyer) as are necessary or appropriate to comply with Seller's
obligations under this Agreement.
16.3 Buyer's Obligations at Closing. At Closing, Buyer shall deliver to Seller
(on behalf of itself and BP America), unless waived by Seller, the
following:
16.3.1 the Closing Payment, less the amount of the Performance Deposit
plus Computed Interest thereon from the date of receipt, by wire transfer
of immediately available funds to the account(s) designated by Seller in
accordance with this Agreement;
16.3.2 the documents referred to in Articles 16.2.1, 16.2.2, 16.2.3 and
16.2.4, executed by an authorized officer or an Attorney-in-Fact of Buyer
and acknowledged;
16.3.3 the federal and state assignments executed by an authorized officer
or an Attorney-in-Fact of Buyer and acknowledged;
16.3.4 four (4) originals of the Certificate executed by an authorized
officer or an Attorney-in-Fact of Buyer;
16.3.5 four (4) originals of (i) certificates of the appropriate
governmental authorities, dated as of a date not earlier than five (5)
Business Days prior to the Closing Date, evidencing Buyer's existence and
good standing in the States of Texas, Louisiana and Delaware and (ii)
certificates of the Secretary or Assistant Secretary of Buyer (and with
respect to the Guaranty Agreement, if any, Buyer's Affiliate), dated on
the Closing Date, certifying (A) that a true and correct copy of the
resolutions of Buyer's board of directors authorizing this Agreement and
the transaction contemplated hereby are attached thereto (and with respect
to Buyer's Affiliate, if applicable, the resolutions of such Affiliate's
board of directors authorizing the Guaranty Agreement) have been duly
adopted and are in full force and effect; and (B) as to the incumbency and
authorization of Buyer's signatory executing on behalf of Buyer this
Agreement and the other documents executed in connection herewith (and
Buyer's Affiliate's signatory, if applicable, with respect to the Guaranty
Agreement);
16.3.6 four (4) originals of the Transition Agreement executed by an
authorized officer or an Attorney-in-Fact of Buyer;
16.3.7 four (4) originals of each Operating Agreement executed by an
Attorney-in-Fact of Buyer;
16.3.8 evidence that Buyer is at Closing qualified with the MMS to hold
oil and gas leases on the U.S. Outer Continental Shelf, and has posted
with the MMS bonds (area-wide, supplemental and/or additional) required by
the MMS with respect to the Properties, and provided satisfactory evidence
of financial responsibility under the Oil Pollution Act;
16.3.9 four (4) originals of each facilities sharing agreement to be
entered into pursuant to Section 12.2;
48
16.3.10 four (4) originals of a Seismic License in substantially the form
of Exhibit "N"; and
16.3.11 any other instruments and agreements (including ratification or
joinder instruments required to transfer the Properties from Seller or BP
America to Buyer) as necessary or appropriate to comply with Buyer's
obligations under this Agreement.
ARTICLE 17. TERMINATION
17.1 Grounds for Termination. This Agreement may be terminated (except for the
individual provisions specifically referenced in Article 17.2 below) at
any time prior to Closing (unless another date is stated below):
17.1.1 by the Parties' mutual written agreement;
17.1.2 by either Party, if consummation of the transaction contemplated by
this Agreement would violate any non-appealable final order, decree or
judgment of any state or federal court or agency enjoining, restraining,
prohibiting or awarding substantial damages in connection with (a) the
proposed sale of Properties to Buyer hereunder, or (b) consummation of the
transaction contemplated by this Agreement;
17.1.3 by Seller, if Buyer refuses or fails for any reason to deliver to
Seller the Performance Deposit in accordance with Article 2.3;
17.1.4 notwithstanding anything contained in this Agreement to the
contrary, by either Seller or Buyer, if Closing has not occurred on or
before June 1, 2003 provided the terminating party is not then in breach
in any material respect of its obligations under Articles 12, 13 and 16;
or
17.1.5 by either Seller or Buyer pursuant to Article 7.2.
17.2 Effect of Termination. If this Agreement is terminated in accordance with
Article 17.1, such termination is without liability to either Party,
except performance of obligations in this Article 17.2 and Articles 14.2,
17.3, 17.4, 19.1, 19.3, 19.10, 19.11, 19.12, 19.13, 19.14, and 19.15 (all
of which provisions survive termination of this Agreement), and except as
provided in the following sentence. If Closing does not occur, Seller
shall refund the Performance Deposit together with Computed Interest to
Buyer unless the Closing did not occur because of a failure of Buyer's
representations and warranties in this Agreement to be true and correct in
all material respects, Buyer's material breach of a material obligation,
covenant or condition of this Agreement, Buyer's failure to furnish
satisfactory evidence pursuant to Section 15.1.3, or Buyer's failure or
refusal to Close that is not permitted by the terms of this Agreement, in
any of which events Buyer shall pay to Seller as Seller's exclusive remedy
an amount equal to five percent (5%) of the Purchase Price, less the
Performance Deposit, which Seller shall be entitled to retain together
with any interest earned thereon as liquidated damages and not a penalty.
17.3 Dispute over Right to Terminate. If there is a dispute between the Parties
over the termination of or over the right of a Party to terminate this
Agreement, Closing shall not
49
occur on the Closing Date, and the Party that disputes the right of the
other Party to terminate is entitled, within thirty (30) Days after the
date on which notice of termination was provided by either Party to the
other, to initiate litigation to resolve the dispute, unless the Parties
mutually agree in writing to extend such time. If the Party that disputes
the other Party's right to terminate this Agreement does not initiate
litigation within the thirty (30) Day period (as extended in writing, if
applicable), this Agreement shall be deemed properly terminated as of the
original date of termination (without prejudice to Seller's right to
receive liquidated damages, including retention of the Performance Deposit
together with any interest earned thereon, pursuant to Article 17.2), AND
THE PARTY THAT DISPUTES OR HAS A RIGHT TO DISPUTE TERMINATION OF THIS
AGREEMENT, ON BEHALF OF ITSELF, ITS AFFILIATES, AND THE OFFICERS,
DIRECTORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS OF ITSELF AND ITS
AFFILIATES, IRREVOCABLY WAIVES ANY AND ALL CLAIMS IT AND THEY MAY HAVE
AGAINST THE TERMINATING PARTY FOR TERMINATION OF THIS AGREEMENT. In the
event that there is a dispute between the Parties with regard to the
termination of or the right to terminate this Agreement and litigation is
initiated, Buyer may elect to place into an escrow account an amount equal
to five percent (5%) of the Purchase Price, less the Performance Deposit,
pending the resolution of the litigation. If Buyer so elects, Seller shall
place into an escrow account an amount equal to the Performance Deposit.
17.4 Confidentiality. Notwithstanding the termination of this Agreement or any
other provision of this Agreement to the contrary, the terms of the
Confidentiality Agreement remain in full force and effect, provided that
if and when Closing occurs and effective on the Closing Date, the
Confidentiality Agreement shall terminate to the extent (and only to the
extent) it applies to the Properties conveyed at Closing. The foregoing
notwithstanding, after Closing: (a) Seller shall continue to comply with
all current Third Party confidentiality agreements, as applicable, with
respect to the Records, (b) Seller shall treat the geological, geophysical
and engineering Records in accordance with the same standards of conduct
by which Seller treats its own geological, geophysical and engineering
records, provided that nothing in (b) above shall be construed as
prohibiting Seller from disclosing the Records or information contained
therein (i) to an Affiliate, (ii) to a governmental agency or other entity
when required by Law or to the extent such data and information is
required to be furnished in compliance with any applicable Laws, or
pursuant to any legal proceedings or because of any order of any court
binding upon Seller or Seller's Affiliate, (iii) to prospective or actual
contractors, consultants and attorneys employed by Seller where disclosure
of such data or information is essential to such contractor's,
consultant's or attorney's work, (iv) to co-owners or joint venturers and
bona fide prospective transferees of Seller's ownership interest in
properties to which the information relates, (v) to a bank or other
financial institution in order to arrange for financing, (vi) to the
extent that it must be disclosed pursuant to any rules or requirements of
any government or stock exchange having jurisdiction over Seller or an
Affiliate of Seller, and (vii) to the extent it, through no fault of
Seller, becomes a part of the public domain, provided that, in the cases
of (i), (iii), (iv) and (v) above, the person to whom such Records or
information is disclosed shall maintain the confidentiality thereof in
accordance with Article 17.4.
50
ARTICLE 18. ARBITRATION
18.1 Arbitration. Arbitrable Disputes must be resolved through use of binding
arbitration using three (3) arbitrators, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA") as
in effect on January 11, 2003, as supplemented to the extent necessary to
determine any procedural appeal questions by the Federal Arbitration Act
(Title 9 of the United States Code). If there is any inconsistency between
this Article and the Commercial Arbitration Rules or the Federal
Arbitration Act, this Article shall control. Arbitration must be initiated
within the applicable time limits set forth in this Agreement and not
thereafter or if no time limit is given, within the time period allowed by
the applicable statute of limitations. Arbitration, if initiated, must be
initiated by a Party ("CLAIMANT") serving written notice on the other
Party ("RESPONDENT") that the Claimant elects to refer the Arbitrable
Dispute to binding arbitration. Claimant's notice initiating arbitration
must identify the arbitrator Claimant has appointed. The Respondent shall
respond to Claimant within thirty (30) Days after receipt of Claimant's
notice, identifying the arbitrator Respondent has appointed. If the
Respondent does not name an arbitrator within the thirty (30) Day period,
the administrator of the Houston office of the AAA shall provide the
Parties with a list of potential arbitrators from the National Panel of
Commercial Arbitrators maintained by the AAA (subject to the qualification
requirements of this Article 18) and an arbitrator for Respondent's
account shall be determined in accordance with the procedures set forth in
Section R-13.b of the Commercial Arbitration Rules of the AAA. The two (2)
arbitrators so chosen shall select a third arbitrator within thirty (30)
Days after the second arbitrator has been appointed. If the
Party-appointed arbitrators cannot reach agreement upon the third
arbitrator within the thirty (30) Day period, the third arbitrator shall
be selected in accordance with the procedures set forth in Section R-15.c
of the Commercial Arbitration Rules of AAA, provided that, all potential
arbitrators shall meet the qualification requirements of this Article 18.
With respect to arbitrators selected using the procedures set out in
R-13.b or R-15.c, if any, the AAA shall submit lists to the Parties until
an arbitrator is selected and shall not have the power to make an
appointment other than through the exchange of lists. The Parties each
shall pay one-half of the compensation and expenses of the arbitrators.
All arbitrators must (a) be neutral persons who have never been officers,
directors, employees, or consultants or had other business relationships
with the Parties or any of their Affiliates, officers, directors or
employees, and (b) have not less than seven (7) years recent experience in
the U.S. oil and gas industry relevant to the matters in dispute. The
hearing will be conducted in Houston, Texas, and commence as soon as
practicable after the selection of the third arbitrator. The Parties and
the arbitrators should proceed diligently and in good faith so that the
award can be made as promptly as possible. Except as provided in the
Federal Arbitration Act, the decision of the arbitrators shall be binding
on and non-appealable by the Parties. The arbitrators shall have no right
or authority to grant or award indirect, consequential, punitive or
exemplary damages of any kind.
ARTICLE 19. MISCELLANEOUS
19.1 Notices. All notices and other communications required or desired to be
given hereunder must be in writing and sent (properly addressed as set
forth below) by (a) certified or
51
registered U.S. mail, return receipt requested, with all postage and other
charges fully prepaid, (b) hand or courier delivery, or (c) facsimile
transmission. Date of service by mail and delivery is the date on which
such notice is received by the addressee and by facsimile is the date sent
(as evidenced by fax machine generated confirmation of transmission);
provided, however, if such date received is not a Business Day, then date
of receipt will be on the next date that is a Business Day. Each Party may
change its address by notifying the other Party in writing of such address
change, and the change will be effective thirty (30) Days after such
notification is received by the other Party.
To Seller:
BP Exploration & Production Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
Attention: Assistant General Counsel, Legal Group
To Buyer:
Apache Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: 713-296-6569
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President - Business Development and E&P Services
19.2 Costs and Post-Closing Consents. Notwithstanding other provisions of this
Agreement, Buyer shall be responsible for recording and filing documents
associated with assignment of the Properties to it and for all costs and
fees associated therewith, including filing the assignments with
appropriate federal, state and local authorities as required by Law and in
all adjoining counties or parishes onshore of the Properties. As soon as
practicable after recording or filing, Buyer shall furnish Seller all
recording data and evidence of all required filings. Buyer shall be
responsible for obtaining all consents and approvals of governmental
entities or authorities customarily obtained subsequent to transfer of
title and all costs and fees associated therewith. Except as expressly
provided otherwise in this Agreement, all fees, costs and expenses
incurred by the Parties in negotiating this Agreement and in consummating
the transaction contemplated by this Agreement shall be paid in full by
the Party that incurred such fees, costs and expenses.
19.3 Brokers, Agents and Finders. Seller has not retained any brokers, agents
or finders in this matter for which Buyer shall have any liability. SELLER
RELEASES BUYER FROM AND SHALL FULLY PROTECT, INDEMNIFY AND DEFEND BUYER
AND HOLD IT HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS RELATING TO,
ARISING OUT OF, OR CONNECTED WITH, DIRECTLY OR INDIRECTLY, COMMISSIONS,
FINDERS' FEES OR OTHER REMUNERATION DUE TO ANY AGENT, BROKER OR FINDER
CLAIMING BY, THROUGH OR UNDER SELLER. Buyer represents to Seller that it
has not retained any agent or broker for Buyer associated with the
proposed transaction
52
for which Seller shall have any liability, and no undisclosed Person has a
right to act on Buyer's behalf with regard to the proposed transaction.
BUYER RELEASES SELLER FROM AND SHALL FULLY PROTECT, INDEMNIFY AND DEFEND
SELLER AND HOLD IT HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS RELATING
TO, ARISING OUT OF, OR CONNECTED WITH, DIRECTLY OR INDIRECTLY,
COMMISSIONS, FINDERS' FEES OR OTHER REMUNERATION DUE TO ANY AGENT, BROKER
OR FINDER CLAIMING BY, THROUGH OR UNDER BUYER.
19.4 Records. At Closing, and through the Transition Period, Seller shall grant
Buyer reasonable access to the Records and shall, to the extent reasonably
possible, grant Buyer access during normal business hours, to copy the
Records at Buyer's expense. As soon as practicable, but in no event later
than sixty (60) Days after the end of the Transition Period (except as
provided below), Seller shall furnish Buyer Records that are maintained by
Seller; provided, however, Seller may retain (a) copies of any or all
Records, (b) originals of any Records associated with litigation or other
proceedings pending or threatened by or against Seller or Seller Group,
(c) originals of tax records, (d) originals of any Records in connection
with the Final Accounting Settlement until payments made thereunder have
been agreed and paid in full, (e) originals of any Records required in
connection with any Transition Period activities, and (f) originals of any
Records associated with any properties not conveyed to Buyer pursuant to
this Agreement. To the extent Records to be transferred hereunder are not
needed by Seller during the Transition Period, Seller shall to the extent
practicable deliver such Records prior to the end of the Transition Period
as requested by Buyer. If Seller retains originals of Records, other than
Records described in clause (e) which will be delivered after the
Transition Period, or Records described in clause (f), Seller shall
furnish copies thereof to Buyer at Seller's expense (provided that the
cost of supplying and copying any seismic Records shall be borne one-half
by Buyer and one-half by Seller). Buyer shall maintain the Records
received from Seller for ten (10) years after the Closing Date and afford
Seller full access to the Records and a right to copy the Records at
Seller's expense as reasonably requested by Seller. If Buyer desires to
destroy the Records within such ten (10) year period, it shall notify
Seller prior to such destruction, and provide Seller an opportunity to
take possession of them at Seller's expense. In addition, Buyer shall
afford Seller full access to records and data produced after the Closing
Date and reasonably requested by Seller in connection with any claim by
Buyer for indemnity or breach of representation and warranty under this
Agreement (excluding, however, attorney work product and attorney-client
communications entitled to legal privilege), and a right to copy such
records and data at Seller's expense.
Seller shall afford Buyer full access to records and data produced after
the Closing Date and reasonably requested by Buyer in connection with any
claim by Seller for indemnity or breach of representation and warranty
under this Agreement (excluding, however, attorney work product and
attorney-client communications entitled to legal privilege), and a right
to copy such records and data at Buyer's expense.
Disclosure or transfer of the Records to Buyer pursuant to this Agreement
is not intended to waive legal privilege for any privileged documents that
may be included among the Records. Should Seller determine after the
disclosure or transfer of any Records that such Records are entitled to
legal privilege, including attorney work product and
53
attorney-client communications, and should Seller notify Buyer to that
effect, Buyer agrees to use all reasonable efforts to preserve the
privilege to which such materials are or may be entitled, including
segregation and/or return of such materials, execution of a joint defense
agreement, or any other reasonable arrangement, and shall cooperate with
and provide reasonable assistance to Seller in Seller's efforts to
preserve such privilege.
19.5 Further Assurances. After Closing and on an on-going basis: (a) Buyer
shall execute and deliver or use reasonable efforts to cause to be
executed and delivered any other instruments of conveyance and take any
other actions as Seller reasonably requests to more effectively put Seller
in possession of any property that was not intended by the Parties to have
been conveyed or was conveyed in error (including reassignment from Buyer
to Seller of any Properties that were conveyed in violation of valid
preferential purchase rights or consents to assignment), or to implement
Buyer's assumption of obligations pursuant to Article 12.3; and (b) Seller
shall execute and deliver or use reasonable efforts to cause to be
executed and delivered any other instruments of conveyance and take any
other actions as Buyer reasonably requests to more effectively put Buyer
in possession of the Properties conveyed or to have been conveyed in
accordance with the terms of this Agreement. In particular, Seller and
Buyer agree to execute and deliver such instruments and take such other
actions as may be necessary and advisable to: (i) make all filings,
registrations, and recordings which must be made with respect to the
Properties in the records of the MMS in order that the records maintained
by the MMS shall accurately reflect the transfer of the Properties from
Seller to Buyer, (ii) enable Seller to promptly take all reasonable
actions within Seller's control to allow Buyer to be designated as
operator with respect to the Properties, of which Seller is the sole owner
and to recommend that Buyer be designated as operator with respect to the
other Properties of which Seller is currently operator; and (iii) obtain
prompt and unconditional MMS approvals of transfer of the Properties. To
the extent the MMS requires, Buyer agrees to promptly take any and all
action necessary to post with the MMS any supplemental bonds and provide
any and all documentation that the MMS requires, to evidence Buyer's
financial responsibility under applicable federal regulations and MMS
policies.
19.6 Survival of Certain Obligations. Representations and warranties in Article
10 of this Agreement terminate one (1) year after the Closing Date; and
thereafter no action can be commenced either in court or disputes brought
to arbitration based on breach of those representations and warranties,
without prejudice to the right to recovery in connection with actions or
disputes commenced in the appropriate forum prior to the end of the
one-year period. Except as expressly provided otherwise in this Agreement,
waivers, disclaimers, releases and obligations of indemnity and defense
contained in this Agreement survive the Closing indefinitely.
19.7 Amendments and Severability. No amendments, waivers or other modifications
of terms of this Agreement shall be effective or binding on the Parties
unless they are written and signed by both Parties. Invalidity of any
provisions in this Agreement shall not affect the validity of this
Agreement as a whole, and in case of such invalidity, this Agreement shall
be construed as if the invalid provision had not been included herein.
54
19.8 Successors and Assigns. Except as provided otherwise in this Agreement,
this Agreement may not be assigned, either in whole or in part, without
the express prior written consent of the non-assigning Party, except that
Seller may assign its rights and obligations hereunder to any one or more
of Seller's Affiliates without Buyer's consent, and may freely assign its
rights to proceeds hereunder. The terms, covenants and conditions
contained in this Agreement are binding upon and inure to the benefit of
the Parties and their successors and permitted assigns.
19.9 Headings. Titles and headings in this Agreement have been included solely
for ease of reference and shall not be considered in interpretation or
construction of this Agreement.
19.10 Governing Law. THIS AGREEMENT (INCLUDING ADMINISTRATION OF BINDING
ARBITRATION PURSUANT TO ARTICLE 18) IS GOVERNED BY THE LAWS OF THE STATE
OF TEXAS, EXCLUDING ANY CHOICE OF LAW RULES THAT WOULD DIRECT APPLICATION
OF LAWS OF ANOTHER JURISDICTION. ANY ACTION PERMITTED BY THIS AGREEMENT TO
BE COMMENCED IN COURT SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN
FEDERAL OR STATE COURT LOCATED IN ▇▇▇▇▇▇ COUNTY, TEXAS, AND EACH PARTY
HEREBY WAIVES ANY OBJECTION IT MAY HAVE THERETO.
19.11 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 neither Party is
authorized to act as an agent or principal for the other Party with
respect to any matter related hereto.
19.12 Public Announcements. Seller (on behalf of Seller Group) and Buyer (on
behalf of Buyer Group) agree not to issue any public statement or press
release concerning this Agreement or the transaction contemplated by it
(including price or other terms) without prior notice to and consultation
with the other Party.
19.13 No Third Party Beneficiaries. Nothing contained in this Agreement entitles
anyone other than Seller or Buyer or their authorized successors and
assigns to any claim, cause of action, remedy or right of any kind
whatsoever, except with respect to waivers and indemnities that expressly
provide for waivers or indemnification of Buyer Group or Seller Group, in
which case members of such groups are considered third party beneficiaries
for the sole purposes of those waiver and indemnity provisions.
19.14 Waiver of Consumer Rights AS PARTIAL CONSIDERATION FOR THE PARTIES
ENTERING INTO THIS AGREEMENT, EACH PARTY CAN AND DOES HEREBY WAIVE THE
PROVISIONS OF THE TEXAS DECEPTIVE TRADE PRACTICES CONSUMER PROTECTION ACT,
ARTICLE 17.41 ET SEQ., TEXAS BUSINESS AND COMMERCE CODE, A LAW THAT GIVES
CONSUMERS SPECIAL RIGHTS AND PROTECTION, AND ALL OTHER CONSUMER PROTECTION
LAWS OF THE STATE OF TEXAS, OR OF ANY OTHER STATE THAT MAY BE APPLICABLE
TO THIS TRANSACTION, THAT MAY BE WAIVED BY SUCH PARTY. IT IS NOT THE
INTENT OF EITHER PARTY TO WAIVE AND NEITHER PARTY DOES WAIVE ANY LAW OR
PROVISION THEREOF THAT IS PROHIBITED BY LAW FROM BEING WAIVED. EACH PARTY
REPRESENTS THAT IT HAS HAD AN ADEQUATE OPPORTUNITY TO REVIEW THE PRECEDING
WAIVER PROVISION, INCLUDING THE OPPORTUNITY TO SUBMIT THE SAME TO LEGAL
COUNSEL FOR REVIEW AND ADVICE AND AFTER CONSULTATION WITH AN ATTORNEY OF
ITS OWN SELECTION VOLUNTARILY CONSENTS TO THIS WAIVER, AND UNDERSTANDS THE
RIGHTS BEING WAIVED HEREIN.
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19.15 Redhibition Waiver. BUYER: (I) WAIVES ALL RIGHTS IN REDHIBITION PURSUANT
TO LOUISIANA CIVIL CODE ARTICLES 2520, ET SEQ.; (II) ACKNOWLEDGES THAT
THIS EXPRESS WAIVER SHALL BE CONSIDERED A MATERIAL AND INTEGRAL PART OF
THIS SALE AND THE CONSIDERATION THEREOF; AND (III) ACKNOWLEDGES THAT THIS
WAIVER HAS BEEN BROUGHT TO THE ATTENTION OF BUYER, HAS BEEN EXPLAINED IN
DETAIL AND THAT BUYER HAS VOLUNTARILY AND KNOWINGLY CONSENTED TO THIS
WAIVER OF WARRANTY OF FITNESS AND WARRANTY AGAINST REDHIBITORY VICES AND
DEFECTS FOR THE PROPERTIES.
19.16 UTPCPL Waiver. TO THE EXTENT APPLICABLE TO THE PROPERTIES OR ANY PORTION
THEREOF, BUYER HEREBY WAIVES THE PROVISIONS OF THE LOUISIANA UNFAIR TRADE
PRACTICES AND CONSUMER PROTECTION LAW (LA. R.S. 51:1402, ET SEQ.). BUYER
WARRANTS AND REPRESENTS THAT IT: (I) IS EXPERIENCED AND KNOWLEDGEABLE WITH
RESPECT TO THE OIL AND GAS INDUSTRY GENERALLY AND WITH TRANSACTIONS OF
THIS TYPE SPECIFICALLY; (II) POSSESSES AMPLE KNOWLEDGE, EXPERIENCE AND
EXPERTISE TO EVALUATE INDEPENDENTLY THE MERITS AND RISKS OF THE
TRANSACTIONS HEREIN CONTEMPLATED; AND (III) IS NOT IN A SIGNIFICANTLY
DISPARATE BARGAINING POSITION.
19.17 Not to be Construed Against Drafter. EACH PARTY HAS HAD AN ADEQUATE
OPPORTUNITY TO REVIEW EACH AND EVERY PROVISION OF THIS AGREEMENT AND TO
SUBMIT THE SAME TO LEGAL COUNSEL FOR REVIEW AND ADVICE. BASED ON THE
FOREGOING, THE RULE OF CONSTRUCTION, IF ANY, THAT A CONTRACT BE CONSTRUED
AGAINST THE DRAFTER SHALL NOT APPLY TO INTERPRETATION OR CONSTRUCTION OF
THIS AGREEMENT.
19.18 Indemnities and Conspicuousness of Provisions. THE RELEASE, DEFENSE,
INDEMNIFICATION AND HOLD HARMLESS PROVISIONS PROVIDED FOR IN THIS
AGREEMENT SHALL BE APPLICABLE WHETHER OR NOT THE CLAIMS, DEMANDS, SUITS,
CAUSES OF ACTION, LOSSES, DAMAGES, LIABILITIES, FINES, PENALTIES AND COSTS
(INCLUDING ATTORNEYS' FEES AND COSTS OF LITIGATION) IN QUESTION AROSE
SOLELY OR IN PART FROM THE ACTIVE, PASSIVE OR CONCURRENT NEGLIGENCE,
STRICT LIABILITY, BREACH OF DUTY (STATUTORY OR OTHERWISE), VIOLATION OF
LAW, OR OTHER FAULT OF ANY INDEMNIFIED PARTY, OR FROM ANY PRE-EXISTING
DEFECT. THE PARTIES AGREE THAT PROVISIONS OF THIS AGREEMENT IN "BOLD" TYPE
SATISFY ANY REQUIREMENT OF THE "EXPRESS NEGLIGENCE RULE" AND OTHER
REQUIREMENT AT LAW OR IN EQUITY THAT PROVISIONS BE CONSPICUOUSLY MARKED OR
HIGHLIGHTED.
19.19 Possible Exchange. Each Party reserves the right to structure the
transaction contemplated under the terms of this Agreement as a
non-simultaneous like-kind exchange pursuant to Section 1031 of the
Internal Revenue Code of 1986, as amended. If either Party elects to so
structure this transaction, the Parties shall execute all documents
reasonably necessary for such Party to effectuate the non-simultaneous
like-kind exchange.
19.20 Recordation. The Assignment and ▇▇▇▇ of Sale in the form attached as
Exhibits "D-1" and "D-2" is intended to convey all of the Properties being
conveyed pursuant to this Agreement. Certain Properties or specific
portions of the Properties that are leased from, or require the approval
to transfer by, a governmental entity are conveyed under the Assignment
and ▇▇▇▇ of Sale and also are described and covered by Assignments of
Record Title Interest and Assignments of Operating Rights, and other
separate
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assignments made by Seller to Buyer on officially approved forms, or forms
acceptable to such entity, in sufficient multiple originals to satisfy
applicable statutory and regulatory requirements. THE INTERESTS CONVEYED
BY SUCH SEPARATE ASSIGNMENTS ARE THE SAME, AND NOT IN ADDITION TO, THE
INTERESTS CONVEYED IN THE ASSIGNMENT AND ▇▇▇▇ OF SALE. Further, such
assignments shall be deemed to contain the special limited title warranty
of Seller and all of the exceptions, reservations, rights, titles, power
and privileges set forth herein as fully and only to the extent as though
they were set forth in each such separate assignment.
19.21 Execution in Counterparts. This Agreement may be executed in counterparts,
that when taken together constitute one valid and binding agreement.
19.22 Entire Agreement. This Agreement and the Confidentiality Agreement
supersede all prior and contemporaneous negotiations, understandings,
letters of intent and agreements (whether oral or written) between the
Parties or their Affiliates relating to the terms of purchase and sale of
the Properties and constitute the entire understanding and agreement
between the Parties with respect to the sale, assignment and conveyance of
the Properties and other transactions contemplated by this Agreement.
The Parties have caused this Agreement to be executed by their duly authorized
representatives on the day and year first set forth above.
SELLER BUYER
BP EXPLORATION & PRODUCTION INC. APACHE CORPORATION
By: /s/ J. ▇▇▇▇ ▇▇▇▇▇ By: /s/ G. ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------- ----------------------------
Name: J. ▇▇▇▇ ▇▇▇▇▇ Name: G. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Attorney-in-Fact Title: President, Chief
Executive Officer and
Chief Operating Officer
57