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Exhibit 2.1
PURCHASE AND SALE AGREEMENT
DATED DECEMBER 31, 1996
BETWEEN
COMETRA ENERGY, L.P.
AND
COMETRA PRODUCTION COMPANY, L.P.
AS SELLER
AND
LOMAK PETROLEUM, INC.
AS BUYER
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1. TABLE OF CONTENTS
ARTICLE I Purchase and Sale............................................... 1
1.01 - Purchase and Sale............................................... 1
1.02 - Excluded Assets................................................. 2
1.03 - Effective Time.................................................. 3
ARTICLE II Purchase Price................................................. 3
2.01 - Purchase Price.................................................. 3
2.02 - Adjustments to Purchase Price................................... 4
2.03 - Allocation of Purchase Price.................................... 5
ARTICLE III Representations and Warranties................................ 6
3.01 - Representations and Warranties of Seller........................ 6
3.02 - Representations and Warranties of Buyer......................... 7
ARTICLE IV Covenants...................................................... 10
4.01 - Covenants of Seller............................................. 10
4.02 - Covenants of Buyer.............................................. 12
ARTICLE V Title Matters and Defective Interests........................... 13
5.01 - Defensible Title................................................ 13
5.02 - Defective....................................................... 15
5.03 - Buyer's Right of Inspection..................................... 16
5.04 - Notice of Defective Interests................................... 17
5.05 - Arbitration Procedures.......................................... 18
5.06 - Effect of Defective Interests on Closing........................ 19
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5.07 - Identification of Upward Adjustment............................. 20
ARTICLE VI Conditions to Closing.......................................... 20
6.01 - Seller's Conditions............................................. 20
6.02 - Buyer's Conditions.............................................. 21
ARTICLE VII Closing....................................................... 22
7.01 - Date of Closing................................................. 22
7.02 - Closing Obligations............................................. 22
ARTICLE VIII Obligations After Closing.................................... 24
8.01 - Post-Closing Adjustments........................................ 24
8.02 - Sales Taxes and Recording Fees.................................. 25
8.03 - Further Assurances.............................................. 25
8.04 - Buyer's Post-Closing Obligations................................ 26
8.05 - Seller's Post-Closing Obligations............................... 28
8.06 - Files and Records............................................... 29
8.07 - Disclaimers of Representations and Warranties................... 29
8.08 - Waiver of DTPA.................................................. 29
8.09 - Resignation of Operator......................................... 30
8.10 - Registration Obligations of Buyer............................... 30
8.11 - Survival........................................................ 34
ARTICLE IX Termination of Agreement....................................... 34
9.01 - Termination..................................................... 34
9.02 - Liabilities..................................................... 34
ARTICLE X Xxxxxxx Money................................................... 35
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ARTICLE XI Indemnification................................................ 35
11.01 - Right to Employ Counsel........................................ 35
11.02 - Claim Reimbursement and Reduction.............................. 36
ARTICLE XII General....................................................... 37
12.01 - Exhibits....................................................... 37
12.02 - Expenses....................................................... 37
12.03 - Notices........................................................ 37
12.04 - Amendments..................................................... 37
12.05 - Headings....................................................... 38
12.06 - Counterparts................................................... 38
12.07 - References..................................................... 38
12.08 - Governing Law.................................................. 38
12.09 - Entire Agreement............................................... 38
12.10 - Parties in Interest............................................ 38
12.11 - Assignments.................................................... 38
12.12 - Public Announcements........................................... 38
12.13 - Notices After Closing.......................................... 38
12.14 - Severability................................................... 39
12.15 - Time is of the Essence......................................... 39
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Exhibit "A" - Lease Description
Exhibit "B" - Rights-of-Way, Easements and Surface Rights
Exhibit "C" - Contracts
Exhibit "D" - Xxxxx
Exhibit "E" - The Note
Exhibit "F" - Allocated Value
Exhibit "G" - Litigation
Exhibit "H" - AFEs
Exhibit "I" - Take or Pay Liability; Gas Imbalances
Exhibit "J" - PUD and Probable Locations
Exhibit "K" - Additional Permitted Encumbrances
Exhibit "L" - Form of Conveyance
Exhibit "M" - Opinion of Seller's Counsel
Exhibit "N" - Opinion of Buyer's Counsel
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PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (the "Agreement") dated as of the 31st
day of December, 1996, is between COMETRA ENERGY, L.P. ("CE"), a Texas limited
partnership, the general partner of which is Aveneg, Inc., a Delaware
corporation, and COMETRA PRODUCTION COMPANY, L.P. ("CPC"), a Texas limited
partnership, the general partner of which is Grand Lacs, Inc,, a Delaware
corporation (CE and CPC are jointly referred to herein as "Seller"), and LOMAK
PETROLEUM, INC. a Delaware corporation ("Buyer").
In consideration of the mutual promises contained herein, the benefits
to be derived by each party hereunder and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer
agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01 - PURCHASE AND SALE. Subject to the terms and conditions of the
Agreement, Seller agrees to sell and convey and Buyer agrees to purchase and pay
for the following described assets (hereinafter referred to as the
"Properties"):
(a) The interests described in Exhibit "A" hereto, in and to
the oil and gas leases, and oil, gas and mineral leases described in
Exhibit "A" hereto (the "Leases") insofar as they cover the land (the
"Lands") also described in Exhibit "A" hereto, together with
corresponding undivided interests in (i) all rights, privileges,
benefits, and powers conferred upon the holder of the Leases with
respect to the use and occupation of the surface of the Lands that may
be necessary, convenient, or incidental to the possession and enjoyment
of the Leases, (ii) all rights in respect of any pooled or unitized
acreage located in whole or in part within the Lands by virtue of the
Leases, including rights to production from the pool or unit allocated
to any Lease being a part thereof, regardless of whether such
production is from the Lands, (iii) all rights, options, titles, and
interests of Seller granting Seller the right to obtain, or otherwise
earn interests within the Lands no matter how earned, and (iv) all
tenements, hereditaments, and appurtenances belonging to any of the
foregoing;
(b) All of the right title and interest of Seller in and to
the rights-of-way, easements, surface rights and similar interests
described on Exhibit "B" attached hereto and made a part hereof;
(c) All of the right, title and interest of Seller under the
contracts, agreements, and other instruments described on Exhibit "C"
attached hereto and made a part hereof together with all of the right,
title and interest of Seller under any surface leases, farmin
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agreements, farmout agreements, bottom hole agreements, acreage
contribution agreements, operating agreements, unit agreements,
processing agreements, options, leases of equipment or facilities, and
other contracts, agreements, and rights that are owned by Seller in
whole or in part, which are not described on Exhibit "C" hereto, and
that are appurtenant to the Properties or used or held for use in
connection with the ownership or operation of the Properties or with
the production, treatment, sale, or disposal of water, hydrocarbons and
associated substances therefrom or thereon (in the aggregate the
"Contracts");
(d) All of the right, title and interest of Seller in and to
the real, personal and mixed property used in the operation of the
Properties owned by Seller in whole or in part or credited to the joint
account of Seller (the "Equipment") including, but not limited to (i)
all wellhead equipment, fixtures (including, but not limited to, field
separators and liquid extractors), pipe, casing, and tubing in, on or
appurtenant to the xxxxx ("Xxxxx") described on Exhibit "D" attached
hereto and made a part hereof; (ii) all production, gathering,
treating, processing, compression, dehydration, salt water disposal,
injection, gathering line and pipeline equipment and facilities; (iii)
all tanks, machines, equipment, tools, dies, vessels and other
facilities;
(e) Seller's seismic, geological, geochemical and geophysical
data relating to any of the Properties, but only to the extent that
such materials are not restricted from transfer by any legal
constraints, obligations of confidence or prior agreements with third
parties;
(f) Any office building, district office, or similar facility
used in connection with or relating to the Properties and the entire
furnishing and contents thereof (other than the Records);
(g) Any vehicles used by Seller in the operation of the
Properties;
(h) All inventory items related to the operation of the
Properties; and
(i) Subject to the provisions of Section 8.06 hereof, all of
the files, records, documents, correspondence and data now in the
possession or control of Seller that relates to the items described in
sub-paragraphs (a), (b), (c), (d), (e) (f), (g) and (h) above, without
limitation (the "Records").
1.02 - EXCLUDED ASSETS. Notwithstanding anything to the contrary
contained herein, there is hereby excluded from this purchase and sale, and the
Properties not cover or include any of the following:
(a) All accounts receivable, deposits with utilities, claims,
credits and causes of action of Seller (specifically excluding Under
Production, defined below, for which Seller is paid pursuant to this
Agreement) arising under the Contracts, or otherwise attributable
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to the Properties, which arise prior to the Effective Time and for
which Seller has not otherwise received payment or an adjustment credit
under the terms of this Agreement.
(b) Photocopies of any of the Records made by Seller.
1.03 - EFFECTIVE TIME. The purchase and sale of the Properties shall be
effective as of 7:00 a.m. Central Standard Time on October 1, 1996, (herein
called the "Effective Time").
ARTICLE II
PURCHASE PRICE
2.01 - PURCHASE PRICE. The purchase price payable by Buyer for the
Properties shall be THREE HUNDRED FIFTY MILLION AND NO/100 DOLLARS
($350,000,000) (the "Purchase Price"), payable as follows:
(a) Cash. $170,000,000 of the Purchase Price shall be
paid in cash at the Closing, inclusive of cash payments represented by
transfer of the Xxxxxxx Money to Seller.
(b) Buyer's Stock. $30,000,000 of the Purchase Price shall be
payable to Seller in newly issued shares of common stock of Buyer (par value
$0.01 per share) (the "Buyer's Stock") valued at the Index Price (as defined
below). For the purpose of this Agreement, the term "Index Price" means the
average closing sale price of the Buyer's Stock for the five (5) trading days
immediately preceding February 14, 1997 as reported in the Wall Street Journal.
All shares of the Buyer's Stock issued to Seller hereunder shall be rounded to
the nearest whole share.
(c) Balance of Purchase Price. The balance of the
Purchase Price shall be payable as follows:
(i) Promissory Note. If the Securities and Exchange Commission
(the "SEC") gives notice to Buyer of its intention to review Buyer's proposed
public offering of Buyer's common stock pursuant to a registration statement to
be filed by Buyer with the SEC on or about January 15, 1997 (the "Public
Offering"), the balance of the Purchase Price after giving effect to all
Purchase Price adjustments to be made at the Closing according to Section 2.02
hereof (such amount is herein called the "Payment Amount") shall be evidenced by
a promissory note (the "Note") dated the Closing Date and (i) executed by Buyer
and made payable to the order of Seller in the original principal amount of
Payment Amount, (ii) shall not bear interest unless not paid at its maturity
date, (iii) having a final maturity date of March 31, 1997, and (iv) being in
the form of Exhibit "E" attached hereto with blanks appropriately completed in
conformity herewith. The Note shall be secured by an irrevocable standby letter
of credit in form and substance satisfactory to Seller (including bankruptcy
preference provisions) and drawn on a financial institution acceptable to Seller
(the "Letter of Credit"). The Letter of Credit shall expire on the earlier of
April 30, 1997 or the date on which the Note has been paid in full. The
aggregate face amount of the Letter of Credit shall be equal to the original
face amount of the Note; or
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(ii) Cash. If the SEC gives notice to Buyer of its intention not to
review Buyer's Public Offering, the balance of the Purchase Price after giving
effect to all Purchase Price adjustments to be made at Closing according to
Section 2.02 hereof, shall be paid in cash at Closing.
2.02 - ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price
shall be adjusted as follows:
(a) The Purchase Price shall be adjusted upward
by the following:
(1) the value of all merchantable, allowable
oil in storage at the Effective Time, above the
pipeline connection, which is sold and which is
credited to the Properties and paid to Buyer, such
value to be the actual price received less taxes
deducted by the purchaser;
(2) the amount of all verifiable
expenditures (including, without limitation, expenses
under applicable operating agreements or other
similar arrangements or agreements and, in the
absence of such agreements, such expenses of the sort
customarily billed thereunder, but specifically
excluding any amounts attributable to Seller's
overhead) paid by Seller in connection with the
operation of the Properties in accordance with this
Agreement for work actually performed subsequent to
the Effective Time and prior to the Closing Date;
(3) an amount equal to all prepaid ad
valorem, property, production, severance and similar
taxes (but not including income taxes) based upon or
measured by the ownership of property or the
production of hydrocarbons or the receipt of proceeds
therefrom;
(4) an amount equal to the value (based on
the price which could be received by Seller on the
date(s) that such under production occurred) of the
volume of gas less than its ownership percentage
which Seller has produced from any of the Xxxxx
("Under Production");
(5) as to those Properties that are operated
by Seller, an aggregate amount equal to $87,500 per
month (pro rated for partial months) for the period
between the Effective Time and the Closing Date as
reimbursement to Seller for overhead costs incurred
in operating and managing the Properties for the
period after the Effective Time to the Closing; and
(6) any other amount agreed
upon by Seller and Buyer.
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(b) The Purchase Price shall be adjusted
downward by the following:
(1) proceeds and revenues received by Seller
attributable to the Properties and which accrued
after the Effective Time;
(2) an amount equal to all unpaid ad
valorem, property, production, severance and similar
taxes and assessments (but not including income
taxes) based upon or measured by the ownership of
property or the production of hydrocarbons or the
receipt of proceeds therefrom accruing to the
Properties prior to the Effective Time, which amount
shall be computed based upon such taxes assessed
against the applicable portion of the Properties for
the preceding calendar year or, if such taxes are
assessed on other than a calendar year basis, for the
tax related year last ended;
(3) the aggregate amount of the Defect Value
(defined below) of the Defective Interests (defined
below) less Upward Adjustments (as defined in Section
5.07 hereof), to the extent that such difference
exceeds one half of one percent (1/2%) of the
Purchase Price (without giving effect to this Section
2.02 (b)(3));
(4) an amount equal to the value of that
portion of the Properties with respect to which (i)
Seller is obligated by virtue of any prepayment
arrangements under any contract for the sale of
hydrocarbons and containing a "take or pay" or
similar provision or a production payment or any
other arrangement to deliver hydrocarbons produced
from the Properties at some future time without then
or thereafter receiving full payment therefor
("Take-or-Pay Liability"), and/or (ii) Seller has
produced a share of gas in excess of its ownership
percentage and Seller is obligated to reduce its
share of production under a gas balancing agreement
or similar arrangement to allow under-produced
parties to come back into balance ("Over Production")
(the value of such Take-or-Pay Liability and Over
Production to be based on the price which could have
been received by Seller on the dates(s) that such
Take-or-Pay Liability accrued or the date(s) that
such Over Production occurred; and
(5) any other amount agreed upon by Seller
and Buyer, including without limitation the amounts
provided in Section 5.04(c) hereof.
2.03 - ALLOCATION OF PURCHASE PRICE. Seller and Buyer agree that the
Purchase Price will be allocated among the Properties as set forth on Exhibit
"F" attached hereto and made a part hereof.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES
3.01 - REPRESENTATIONS AND WARRANTIES OF SELLER. Each
Seller separately represents and warrants the following:
(a) Each Seller is a duly organized, validly existing limited
partnership organized and in good standing under the laws of its state
of formation and is qualified to do business in the State of Texas.
(b) Each Seller has all requisite power and authority,
partnership, corporate and otherwise, to carry on its business as
presently conducted, to enter into the Agreement, to sell and convey,
free and clear of all adverse claims, the Properties on the terms
described in the Agreement and to perform its other obligations under
the Agreement.
(c) The execution and delivery of this Agreement has been, and
the execution and delivery of all certificates, documents and
instruments required to be executed and delivered by Seller at the
Closing, and the consummation of the transactions contemplated hereby
as of the Effective Time shall have been duly authorized by all
necessary partnership and corporate action on the part of the Seller,
and, assuming expiration or termination of the applicable waiting
period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976
("HSR Act"), no further authorization is required by any law, statute,
regulation, court order or judgment applicable to Seller. This
Agreement constitutes a legal, valid and binding obligation of Seller
enforceable in accordance with its terms, subject however, to the
effects of bankruptcy, insolvency, reorganization, moratorium and
similar laws, as well as to principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
(d) The execution and delivery of the Agreement and the
consummation of the transactions contemplated hereby will not (i)
violate, or be in conflict with, any provisions of Seller's agreement
of limited partnership or other governing documents, (ii) constitute a
material breach of, or any event of default under, any contract or
agreement to which Seller is a party or by which it or its assets are
bound, or constitute the happening of an event or condition upon which
any other party to such a contract or agreement may exercise any right
or option which will materially adversely affect any of the Properties
(except any provision as to (A) required consents to transfer and
related provisions, (B) maintenance of uniform interests provisions and
(C) any other third-party approvals contemplated herein), (iii)
assuming expiration or termination of the applicable waiting period
under the HSR Act, violate any judgment, decree, order, statute, rule
or regulation applicable to Seller, or (iv) result in any material
liability to Buyer under the terms of any contracts or agreements,
except those obligations related to the Properties after the Effective
Time and assumed by Buyer pursuant to the terms of the Agreement.
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(e) Except as shown on Exhibit "G" attached hereto and made a
part hereof, no suit, action or other proceeding is pending before any
court or governmental agency as of the date of this Agreement to which
Seller is a party and which might result in substantial impairment or
loss of Seller's title to any material part of the Properties or that
might materially hinder or impede the operation of the Leases or the
ability of Seller to perform its obligations hereunder.
(f) During the period the Seller has owned the Properties (the
"Ownership Period") to the knowledge of Seller all material royalties
(other than royalties held in suspense), rentals and other payments due
under the Leases have been properly and timely paid.
(g) During the Ownership Period all ad valorem, property,
production, severance and similar taxes and assessments based on or
measured by the ownership of property or the production of hydrocarbons
or the receipt of proceeds therefrom on the Properties have been
properly paid.
(h) Seller has incurred no liability, contingent or otherwise,
for brokers' or finders' fees relating to the transactions contemplated
by this Agreement for which Buyer shall have any responsibility
whatsoever.
(i) The only material surface leases, farmin agreements,
farmout agreements, bottom hole agreements, acreage contribution
agreements, operating agreements, unit agreements, processing
agreements, options, leases of equipment or facilities, and other
contracts, agreements and rights that cover or affect the Properties
are those Contracts described on Exhibit "C" attached hereto and made a
part hereof.
(j) Seller is not a "foreign person" within the meaning of
Section 1445 of the Internal Revenue Code of 1986, as amended.
(k) The financial information furnished by Seller to Buyer in
Section 2 of each of Seller's Data Package dated October 1, 1996 for
the Val Verde Basin Group, the Midland Basin Group, the South Texas
Group and the Offshore Group is correct in all material respects.
(l) The Authorities for Expenditures (AFE's) set forth on
Exhibit "H" attached hereto constitute all of the material AFE's which
have been approved by Seller or other working interest owners
respecting operations to be conducted on the Properties after the
Effective Time.
(m) Exhibit "I" attached hereto sets forth the amount of
Take-or-Pay Liability and Over Production currently known to Seller.
3.02 - REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer
represents and warrants to
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Seller that:
(a) Buyer is a duly organized, validly existing corporation
organized and in good standing under the laws of the State of its
incorporation and is qualified to do business in the State of Texas.
(b) Buyer has all requisite power and authority, corporate and
otherwise, to carry on its business as presently conducted, to enter
into the Agreement, and to perform its obligations under the Agreement.
(c) The execution and delivery of this Agreement has been, and
the execution and delivery of all certificates, documents and
instruments required to be executed and delivered by Buyer at Closing,
and the consummation of the transactions contemplated hereby as of the
Effective Time shall have been duly authorized by all necessary
corporate action on the part of the Buyer and, assuming expiration or
termination of the applicable waiting period under the HSR Act, no
further authorization is required by any law, statute, regulation,
court order or judgment applicable to Buyer. This Agreement constitutes
a legal, valid and binding obligation of Buyer enforceable in
accordance with its terms, subject however, to the effects of
bankruptcy, insolvency, reorganization, moratorium and similar laws, as
well as to principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) The execution and delivery of the Agreement and the
consummation of the transactions contemplated hereby will not (i)
violate, or be in conflict with, any provisions of Buyer's articles of
incorporation, bylaws or governing documents, (ii) constitute a
material breach of, or any event of default under, any contract or
agreement to which Buyer is a party or by which it or its assets are
bound, or constitute the happening of an event or condition upon which
any other party to such a contract or agreement may exercise any right
or option which will materially adversely affect the ability of Buyer
to perform its obligations hereunder, (iii) assuming expiration or
termination of the applicable waiting period under the HSR Act, violate
any judgment, decree, order, statute, rule or regulation applicable to
Buyer, or (iv) result in any material liability to Seller under the
terms of any contracts or agreements to which Buyer is a party.
(e) No suit, action or other proceeding is pending before any
court or governmental agency as of the date of this Agreement to which
Buyer is a party and which might materially hinder or impede the
ability of Buyer to perform its obligations hereunder. Buyer shall
promptly notify Seller of any such proceeding arising prior to the
Closing with respect to which Buyer receives actual notice.
(f) Buyer has incurred no liability, contingent or otherwise,
for brokers' or finders' fees relating to the transactions contemplated
by this Agreement for which Seller shall have any responsibility
whatsoever.
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(g) Buyer is a knowledgeable purchaser, owner and operator of
oil and gas properties, has the ability to evaluate (and in fact has
evaluated) the Properties for purchase, and is acquiring the Properties
for its own account and not with the intent to make a distribution
thereof within the meaning of the Securities Act of 1933 (and the rules
and regulations pertaining thereto) or a distribution thereof in
violation of any other applicable securities laws.
(h) In entering into this Agreement, Buyer has relied solely
on the express representations and covenants of Sellers in this
Agreement, its independent investigation of, and judgment with respect
to, the Properties and the advice of its own legal, tax, economic,
environmental, engineering, geological and geophysical advisors and not
on any comments or statements of Seller or any representatives of, or
consultants or advisors engaged by Seller.
(i) The Buyer's Stock to be issued by Buyer to Seller at
Closing have been duly authorized for such issuance and, when issued
and delivered by Buyer in accordance with the provisions of this
Agreement, will be validly issued, fully paid, and nonassessable. Once
registered in accordance with the provisions of Section 8.10 hereof,
the Buyer's Stock shall be freely tradable by Seller or its assignees
according to Section 8.10 hereof. The issuance of the Buyer's Stock
under this Agreement is not subject to any preemptive or similar
rights.
(j) Buyer is current in its obligations to file all periodic
report and proxy statements with the Securities and Exchange Commission
required to be filed under the Securities Exchange Act of 1934, as
amended, and applicable rules and regulations promulgated thereunder.
Buyer's Annual Report on Form-10K for the year ended December 31, 1995
(the "SEC Document") does not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Since December
31, 1995, there have been no material developments, transactions or
events affecting Buyer (other than developments or events affecting the
oil and gas exploration and production industry generally) other than
as disclosed by Buyer in the SEC Document or to Seller in writing.
There are no material liabilities of Buyer (contingent or otherwise),
other than as disclosed in the SEC Document and the financial
statements included therein.
(k) The authorized and outstanding capital stock of Buyer as
of September 30, 1996, consists solely of (a) 35,000,000 shares of
Buyer's common stock, of which 14,705,293 shares are duly authorized,
validly issued and outstanding, fully paid and non-assessable, and (b)
4,000,000 shares of preferred stock, par value $1.00 per share, of
which 1,150,000 shares are outstanding and are convertible into
3,026,316 shares of Buyer's common stock.
ARTICLE IV
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COVENANTS
4.01 - COVENANTS OF SELLER. Seller covenants and agrees
with Buyer that:
(a) Prior to the Closing, Seller will make available to Buyer
for examination at Seller's office in Fort Worth, Texas, all title and
other information relating to the Properties insofar as the same are in
Seller's possession and will cooperate with Buyer in Buyer's efforts to
obtain, at Buyer's expense, such additional information relating to the
Properties as Buyer may reasonably desire, to the extent in each case
that Seller may do so without violating legal constraints or any
obligation of confidence or other contractual commitment of Seller to a
third party. Historical file information in Seller's possession
regarding crude oil and produced water which may have been spilled or
disposed of on-site and the locations thereof; pits and pit closures;
burials; landfarming; landspreading; underground injection; and solid
waste disposal sites will be made available to Buyer for inspection
prior to Closing. Seller shall permit representatives of Buyer to make
such environmental tests as they deem appropriate, including without
limitation Phase I and Phase II testing. Seller shall permit Buyer, at
Buyer's expense, to inspect and photocopy such information and records
at any reasonable time during the term of this Agreement but only to
the extent, in each case, that Seller may do so without violating any
obligation of confidence or contractual commitment to a third party.
Seller shall not be obligated to furnish any updated abstracts, title
opinions or additional title information, but shall cooperate with
Buyer in Buyer's efforts to obtain, at Buyer's expense, such additional
title information as Buyer may reasonably deem prudent.
(b) From the date of this Agreement Seller shall furnish to
Buyer and shall cause its independent auditors to furnish to Buyer all
information regarding the Properties, Seller and its respective
business, assets, properties, and financial condition which, in the
reasonable judgment of Buyer and/or its legal counsel and independent
auditors is necessary to enable Buyer to comply with filing
requirements under the Securities Act of 1933 (the "Act") and the
Securities and Exchange Act of 1934 ("Exchange Act") to the extent
deemed necessary by the Buyer and its representatives.
(c) From the date of this Agreement until Closing, Seller (i)
will cause the Properties to be operated and maintained in a good and
workmanlike manner consistent with prior practices, and will pay or
cause to be paid all costs and expenses in connection therewith, (ii)
will not abandon any Properties, (iii) will maintain insurance now in
force with respect to the Properties, (iv) will comply with all the
rules, regulations and orders of the Texas Railroad Commission which
are applicable to Seller and the Properties, and will timely, properly
and accurately make all reports required to be filed with the Texas
Railroad Commission, (v) will perform and comply with all of the
material covenants and conditions contained in the agreements relating
to the Properties, and (vi) will pay all taxes and assessments with
respect to the Properties which become due and payable prior to the
Closing Date; provided however, in the absence of Buyer's written
consent, from the date of this Agreement until the Closing, Seller
shall not conduct or authorize any operation on
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the Properties requiring Authority for Expenditure (AFE) approval by
working interest owners under applicable operating agreements, or an
expenditure of $100,000.00 or more for the entire 100% of any single
project (except for emergency operations and except for any AFEs
identified on Exhibit "H" hereto). With respect to the Properties that
are operated by Seller, as reimbursement for Seller's operating and
managing the Properties for the period from the Effective Time to the
Closing Date, Seller shall retain for its own account the amounts that
are paid to Seller from third party non-operators as overhead charges
under the accounting procedure attached to the applicable operating
agreements with respect to the period after the Effective Time.
(d) Without the prior written consent of Buyer, from the date
of this Agreement until Closing, Seller shall not enter into any new
agreements or commitments with respect to the Properties, will not
modify or terminate any of the agreements relating to the Properties,
shall not encumber, sell, transfer, assign, convey, or otherwise
dispose of any of the Properties other than personal property which is
replaced by equivalent property or consumed in the operation of the
Properties, and will not voluntarily compromise any amounts payable to
Seller due to any casualty loss or any pending or threatened taking
related to the Properties.
(e) Seller shall use all reasonable efforts to maintain its
partnership status and to assure that as of the Closing it shall not be
under any material partnership, legal or contractual restriction that
would prohibit or delay the timely consummation of this transaction.
With respect to any third-party consents and notices required under
preferential rights to purchase provisions, Seller shall make requests
of such third parties in compliance with applicable agreements, that
such consents be given or waived and that such preferential rights be
waived; provided however, nothing contained in this subsection of
Section 4.01 shall require Seller to pay money or undertake any
additional legal obligation.
(f) From the date of this Agreement until Closing, Seller
shall permit Buyer's authorized representatives to consult with Seller
and/or such third-party operator's agents and employees during
reasonable business hours concerning the operations on or respecting
the Properties that occur after the Effective Time and to conduct, at
Buyer's sole risk and expense, on-site inspections (including, without
limitation, site visits to offshore facilities of Seller),
environmental assessments, reasonable tests and inventories of the
Properties as provided in Section 5.03 hereof.
(g) As promptly as practicable and in any event not more than
ten (10) days following the date on which the parties hereto shall have
executed and delivered this Agreement, Seller will file with the
Federal Trade Commission and the Department of Justice the notification
and report form required for the transactions contemplated hereby and
will as promptly as practicable furnish any supplemental information
which may be reasonably requested in connection therewith pursuant to
the HSR Act. Seller shall bear one-half (1/2) of the filing fees
associated with filings made under the HSR Act and paid
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by Buyer or Seller.
(h) During the period from the date of this Agreement to the
Closing Date, Seller shall use its best efforts to maintain its
relationships with all suppliers, customers and others having business
relationships with Seller with respect to the Properties so that such
relationships will be preserved for Buyer on and after the Closing
Date.
(i) Seller shall give Buyer notice of any litigation initiated
by or against Seller, of which Seller has notice, and which relates to
the Properties or the ability of Seller to proceed to Closing.
4.02 - COVENANTS OF BUYER. Buyer covenants and agrees with
Seller that:
(a) Buyer shall use all reasonable efforts to maintain its
corporate status and to assure that as of the Closing, it will not be
under any material corporate, legal or contractual restriction that
would prohibit or delay the timely consummation of this transaction.
(b) As promptly as practicable and in any event not more than
ten (10) days following the date on which each of the parties hereto
shall have executed and delivered this Agreement, Buyer will file with
the Federal Trade Commission and the Department of Justice the
notification and report form required for the transactions contemplated
hereby and will as promptly as practicable furnish any supplemental
information which may be reasonably requested in connection therewith
pursuant to the HSR Act. Buyer shall bear one-half (1/2) of the filing
fees associated with filings made under the HSR Act and paid by Buyer
or Seller.
(c) Buyer shall exercise all due diligence in safeguarding and
maintaining secure all engineering, geological and geophysical data,
reports and maps, accounting records, and all other confidential data
or information relating to the Properties in the possession of Buyer.
If the transaction contemplated by this Agreement is not consummated,
Buyer shall return to Seller all information which Seller has delivered
to Buyer which relate to the Properties.
(d) Buyer shall give Seller notice of any litigation initiated
by or against Buyer, of which Buyer has notice, and which relates to
the Properties or the ability of Buyer to proceed to Closing.
ARTICLE X
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TITLE MATTERS AND DEFECTIVE INTERESTS
5.01 - DEFENSIBLE TITLE.
(a) As used herein, the term "Defensible Title" shall mean, as
to the Properties, and each of them, such title, subject to the
Permitted Encumbrances, which in all material respects
(1) is free and clear of liens or encumbrances, and
(A) is otherwise only subject to contractually binding
arrangements which are conventional and which are customarily
experienced in the oil and gas industry and (B) is not subject
to any matters which will result in a breach of any warranty
or representation made by Seller hereunder;
(2) entitles Seller to receive not less than (A) the
"Revenue Interest" set forth on Exhibit "D" hereto for each of
the Xxxxx of all oil, gas and associated liquid and gaseous
hydrocarbons produced, saved and marketed from such Well,
after deducting all royalty, overriding royalty and other
leasehold burdens, and (B) the "Revenue Interest" set forth in
Exhibit "J" attached hereto and made a part hereof for each of
the separate tracts of land or proposed well locations
described on Exhibit "J" hereto of all oil, gas and associated
liquid and gaseous hydrocarbons produced, saved and marketed
from a well which may be drilled on such separate tract of
lands also, after deducting all royalty, overriding royalty
and other leasehold burdens; and
(3) obligates Seller to bear costs and expenses
relating to the maintenance, development and operation of each
of the Xxxxx in an amount not greater than (A) the "Working
Interest" set forth on Exhibit "D" hereto with respect to each
of the Xxxxx, unless there is a corresponding and
proportionately equal increase in the Revenue Interest
attributable to such Well, and (B) the "Working Interest" set
forth on Exhibit "J" hereto with respect to each tract of land
or proposed well location separately identified on Exhibit "J"
hereto, unless there is a corresponding and proportionately
equal increase in the Revenue Interest attributable to such
tract of land.
(b) The term "Permitted Encumbrances" as used herein shall
mean the following items relating to the Properties, provided
none of the following items shall operate to increase the
Working Interest of Seller set forth in Exhibit "D" and
Exhibit "J" hereto for any of the Properties without a
corresponding increase in the applicable Revenue Interests, or
decrease the Revenue Interests of Seller set forth on Exhibit
"D" and Exhibit "J" hereto for any of the Properties:
(1) lessors' royalties, overriding royalties, net
profits interests,
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production payments, reversionary interests and similar
burdens;
(2) preferential rights to purchase and required
third party or governmental consents to assignments and
similar agreements with respect to which prior to Closing (i)
waivers or consents are obtained from the appropriate parties,
(ii) the appropriate time period for asserting such rights has
expired without an exercise of such rights, (iii) with respect
to consent, such consent is not necessary to the validity of
an assignment to Buyer and need not be obtained prior to an
assignment, or (iv) arrangements can be made by Buyer or
Seller to allow Buyer to receive substantially the same
economic benefit as if all such waivers and consents had been
obtained;
(3) liens for taxes or assessments not yet due or not
yet delinquent or, if delinquent, that are being contested in
good faith in the normal course of business;
(4) liens, charges, or other encumbrances in favor of
operators relating to obligations not yet due or pursuant to
which Seller is not in default;
(5) all rights to consent by, required notices to,
filings with, or other actions by governmental entities in
connection with the sale or conveyance of oil and gas leases
or interests therein;
(6) the terms and conditions of division orders,
sales contracts, the Leases, and the Contracts;
(7) rights of re-assignments in the event of intended
release or surrender of an interest;
(8) easements, rights-of-way, servitudes, permits,
surface leases and other rights in respect of surface
operations, pipelines, grazing, logging, canals, ditches,
reservoirs or the like; and easements for streets, alleys,
highways, pipelines, telephone lines, power lines, railways
and other easements and rights-of-way, on, over or in respect
of any of the Properties, that are not such as to interfere
materially with the operation, value or use of the Properties;
(9) rights reserved to or vested in any municipality
or governmental, statutory or public authority to control or
regulate any of the Properties in any manner, and all
applicable laws, rules and orders of governmental authority;
(10) Those matters described on Exhibit "K" attached
hereto and made a part hereof; and
(11) such Title Defects or other defects as Buyer has
waived in writing
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or otherwise pursuant to the terms of this Agreement.
(c) The term "Title Defect" as used herein shall mean any
encumbrances, encroachment, irregularity, defect in or objection to
Seller's title to the Properties (expressly excluding Permitted
Encumbrances), that alone or in combination with other defects renders
Seller's title to the Properties less than Defensible Title.
5.02 - DEFECTIVE INTERESTS.
(a) As used herein the term "Defective Interest" shall
mean
(1) That portion of the Properties affected by a
Title Defect;
(2) That portion of the Properties adversely affected
by Seller's material noncompliance with the laws, rules,
regulations, ordinances or orders of any governmental agency
or authority having jurisdiction over any portion of the
Properties, including without limitation Environmental Laws
(defined below) as may be reasonably determined in accordance
with generally accepted industry practices and standards;
(3) That portion of the Properties adversely affected
by the default of Seller, or any other party, under an
obligation of the Leases or Contracts;
(4) That portion of the Properties with respect to
which any preferential right to purchase is exercised unless
Buyer elects to receive the consideration received from the
exercise of such preferential right to purchase;
(5) That portion of the Equipment which has a
material defect, (resulting from design, construction, wear or
other reason) which will prevent the continued operation of
that portion of the Equipment in accordance with prior
practice;
(6) That portion of the Properties destroyed by fire
or other casualty, or with respect to which there is a taking
or threatened taking in condemnation or under the right of
eminent domain, unless Buyer elects to receive the proceeds
payable under any insurance policy covering such events;
(7) That portion of the Properties affected by any
suit, action or other proceeding before any court or
government agency that would result in a loss or impairment of
Seller's title to any portion of the Properties, or a portion
of the value thereof; and
(8) Any Lease or Contract which is not valid and
subsisting and in full force and effect.
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(b) As used herein the term "Defect Value" shall mean the
lesser of:
(1) the Allocated Value of that part of the Property
affected by a Defective Interest; or
(2) the reduction in value of the Properties caused
by a Defective Interest.
5.03 - BUYER'S RIGHT OF INSPECTION.Seller grants Buyer and its duly
authorized representatives, contractors and subcontractors
(collectively "Representatives") the limited right of entry to the
Properties for the purpose of, inspecting the Properties in accordance
with the terms of Section 4.01(e) hereof ("Permitted Activities"),
subject however, to the following conditions:
(a) Buyer shall notify Seller of its desire to enter the
Properties to conduct Permitted Activities at least 48 hours prior to
such entry.
(b) Upon receipt of such notice, Seller shall allow Buyer and
its Representatives to enter the Properties during normal business
hours to conduct Permitted Activities. The Permitted Activities of
Buyer and its Representatives shall not unreasonably interfere with
Seller's operations or business, and Buyer and its Representatives
shall not remain on the Properties subsequent to the completion of
their Permitted Activities.
(c) The Permitted Activities shall be conducted in accordance
with all applicable environmental and regulatory laws, rules and
regulations, and commonly accepted standards for conducting such
activities. Upon completion of its activity, Buyer and its
Representatives shall restore the Property to its condition existing as
of Buyer's entry thereon and remove all equipment and materials that
were brought onto the Properties by Buyer and its Representatives. As
soon as reasonably possible, Buyer shall provide Seller with a copy of
all written reports prepared for Buyer as a result of conducting
Permitted Activities.
(d) Buyer will be responsible for the conduct and protection
of all persons involved in the Permitted Activities. Seller shall not
have any right to control and shall not exercise any responsibility
with respect to the Permitted Activities conducted by Buyer on the
Properties, except that Seller shall have the right (but not the
obligation) to prevent any damage to its property or disruption to its
business. Buyer and its Representatives will undertake all measures
reasonably necessary to protect all persons conducting the Permitted
Activities on the Properties and any other persons who may enter the
Properties during or after completion of the Permitted Activities.
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(e) Neither Buyer nor its Representatives shall contact any
federal, state, or local agency with respect to environmental
conditions discovered on the Properties without the prior written
permission and consent of Seller, except as may be otherwise required
by applicable law, rule or regulation. Any proposal of Buyer or its
Representatives to contact any federal, state, or local agency shall be
delivered in writing to Seller for review and approval.
(f) BUYER AGREES TO FULLY INDEMNIFY, DEFEND, AND HOLD SELLER,
ITS AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS AND CONTRACTORS HARMLESS FROM AND AGAINST ANY ALL CLAIMS,
LIABILITIES, CAUSES OF ACTIONS, JUDGMENTS OR DEFENSE EXPENSES
(INCLUDING REASONABLE ATTORNEYS FEES AND EXPERT EXPENSES) OF ANY
PERSON, INCLUDING BUYER, ITS AFFILIATES AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS AND CONTRACTORS, FOR (I) PERSONAL INJURY
OR DEATH OF ANY PERSON, (II) DAMAGE TO THE PROPERTY OF SELLER, BUYER OR
ANY OTHER PERSON, OR (III) ALL OTHER DAMAGES OR ECONOMIC LOSSES
(INCLUDING ANY DAMAGES CAUSED BY THE NEGLIGENCE OF SELLER),
ATTRIBUTABLE TO OR ARISING FROM THE PERMITTED ACTIVITIES, EXCEPT THERE
SHALL BE NO LIABILITY OF BUYER TO THE EXTENT ANY SUCH INJURY, DAMAGE,
OR LOSS IS CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
SELLER.
5.04 - NOTICE OF DEFECTIVE INTERESTS.
(a) Buyer shall give Seller notice of Defective Interests not
later than twenty-one (21) days from the date of this Agreement. Such
notice shall be in writing and shall include (i) a description of the
Defective Interest (ii) the reason Buyer believes such Properties to be
a Defective Interest, and (iii) the Defect Value asserted by Buyer with
respect to the asserted Defective Interest. Buyer's notice(s) of
Defective Interests shall not be effective unless and until the total
of the asserted Defect Values for the asserted Defective Interests
exceeds one-half of one percent (1/2%) of the Purchase Price. Buyer
shall be deemed to have waived all Defective Interests of which Seller
has not been given such notice within the time period prescribed in
this Section 5.04(a).
(b) Upon being notified by Buyer pursuant to Section 5.04(a)
of any asserted Defective Interest the Seller shall give written
counter-notice to Buyer within five (5) days (i) that it either (A)
will attempt to correct the asserted Defective Interest, or (B) does
not intend to attempt to correct the Defective Interest; and (ii)
whether it agrees or disagrees that the asserted Defective Interest
exist, and (iii) whether it agrees or disagrees with the Defect Value
asserted by the Buyer.
(c) If Seller gives counter-notice of intent to attempt to
correct any asserted
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Defective Interest, it shall have a period of thirty (30) days from the
receipt of the Buyer's notice (the "Cure Period") to attempt to correct
such asserted Defective Interest at its own expense. The Closing shall
not be extended, but to the extent that the Defect Value allocated to
the Defective Interest when combined with the Defect Value of all other
asserted Defective Interests exceeds one-half of one percent (1/2%) of
the Purchase Price, a downward adjustment of the Purchase Price shall
be made in such amount according to Section 2.02(b)(5). If Seller shall
subsequently cure such Defective Interest within the Cure Period, such
Defect Value as to which curative has been effected shall be a credit
to Seller in the determination of the Final Settlement according to
Section 8.01 hereof. If Seller is unable to cure such Defective
Interest, Seller shall still have the right to assert the provisions of
Sections 5.04 (d) and (e) below after Closing, in which case Buyer
shall deposit the amount of the disputed Defect Value with the Escrow
Agent according to Section 5.06 (b) below.
(d) If Seller gives counter-notice (or notice after the Cure
Period according to Section 5.04 (c)) that it disagrees there is a
Defective Interest, then the existence (and if it exists, the Defect
Value), will be determined by arbitration pursuant to Section 5.05
hereof.
(e) If Seller gives counter-notice (or notice after the Cure
Period according to Section 5.04 (c)) that it disagrees with the Defect
Value asserted by Buyer in connection with a Defective Interest, then
the amount of the Defect Value will be determined by arbitration
pursuant to Section 5.05 hereof.
(f) The failure of Seller to deliver written counter-notice
shall be deemed to be notice that Seller (i) will not attempt to
correct that asserted Defective Interest, (ii) agrees that there is a
Defective Interest and (iii) agrees with the Defect Value asserted by
the Buyer.
(g) In determining which portions of the Properties are
Defective Interests, it is the intent of the parties to include, when
possible, only that portion of the Properties affected by the defect.
5.05 - ARBITRATION PROCEDURES. If any matter is required by this
Article to be arbitrated, such arbitration shall be conducted as set forth in
this Section 5.05.
(a) The parties shall jointly select an acceptable person to
serve as the sole arbitrator under this Agreement. If the parties are
unable to agree upon the designation of a person as arbitrator under
this Section 5.05, then either Seller or Buyer, or both such parties,
may in writing request the American Arbitration Association to appoint
a qualified arbitrator.
(b) Any arbitration hearing shall be held at a place in Fort
Worth, Texas
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acceptable to the arbitrator.
(c) The arbitrator shall settle disputes regarding the
existence of Defective Interests and/or the Defect Value thereof and
Seller's attempts to correct any Title Defects in accordance with the
Texas General Arbitration Act. Such arbitrator shall hear all
arbitration matters arising under this Article V. The decision of the
arbitrator shall be binding upon the parties, and may be enforced in
any court of competent jurisdiction. Seller and Buyer, respectively,
shall bear their own legal fees and other costs incurred in presenting
their respective cases. The charges and expenses of the arbitrator
shall be shared equally by Seller and Buyer.
(d) The arbitration shall commence within ten days after the
arbitrator is selected as set forth in Section 5.05(a) above. In
fulfilling his duties hereunder, the arbitrator shall be bound by the
terms of this Agreement. In fulfilling any of his arbitration duties,
the arbitrator may consider such other matters as in the opinion of the
arbitrator are necessary or helpful to make a proper evaluation.
Additionally, the arbitrator may consult with and engage disinterested
third parties, including, without limitation, petroleum engineers,
attorneys and consultants, to advise the arbitrator.
(e) If any arbitrator selected hereunder should die, resign or
be unable to perform his duties hereunder, the parties, or if the
parties are unable to agree, the American Arbitration Association shall
select a replacement arbitrator. The aforesaid procedure shall be
followed from time to time as necessary.
5.06 - EFFECT OF DEFECTIVE INTERESTS ON THE CLOSING. If Buyer asserts
any Defective Interests the following shall apply:
(a) The parties shall proceed to the Closing as provided in
this Agreement if (i) Seller elects to cure the asserted defect
according to Section 5.04(c), (ii) Buyer agrees to waive the relevant
Defective Interest and purchase the Defective Interest notwithstanding
the asserted Defective Interest, or (iii) Buyer and Seller agree to a
Defect Value and the Purchase Price is reduced by such amount in
accordance with Section 2.02(b) hereof.
(b) If any matter is referred to arbitration under Section
5.05 of this Agreement and the Defect Value or Values asserted by Buyer
with respect to the matters under arbitration when combined with all
other Defective Interests totals less than ten percent (10%) of the
Purchase Price (including an agreement by Buyer to waive any
arbitration award which when combined with all other Defective
Interests would exceed ten percent (10%) of the Purchase Price), then
the parties shall proceed to Closing, the asserted Defective Interests
shall be conveyed to Buyer, and the Closing Amount (defined below)
shall be reduced by an amount equal to the asserted Defect Values of
the asserted Defective Interests (the "Withheld Payment"). The Withheld
Payment shall be placed in escrow with the same entity under
essentially the same terms as the Xxxxxxx Money (defined below). The
Withheld Payment shall be paid as follows:
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(i) If the arbitrator decides that any Defective Interest
asserted by the Buyer is not a Defective Interest, then the
Withheld Payment with respect to the asserted Defective
Interest shall be paid to the Seller.
(ii) If the arbitrator decides that any one or more of the
Defective Interests asserted by the Buyer are in fact
Defective Interests, then, the Withheld Payment, to the extent
it, when combined with all other Defective Interests, exceeds
one-half of one percent (1/2%) of the Purchase Price up to the
amount of the Defect Value, as determined by the arbitrator,
shall be distributed to the Buyer, and the remainder, if any,
shall be distributed to the Seller.
(c) If any matter is referred to arbitration under Section
5.05 of this Agreement and the Defect Value asserted by Buyer with
respect to the matters under arbitration when combined with all other
Defective Interests totals ten percent (10%) of the Purchase Price or
more, then, unless the parties otherwise agree, the Buyer waives its
rights to an arbitration award, which, when combined with all other
Defective Interests exceeds ten percent (10%) of the Purchase Price, or
this Agreement is terminated by Seller pursuant to Article IX hereof.
If none of the foregoing occurs, the Closing shall be postponed until
the arbitrator renders his final decision . After the arbitrator
renders his final decision the parties shall proceed to the Closing,
and the Purchase Price will be reduced by the Defect Value found by the
arbitrator to the extent it, when combined with all other Defective
Interests, exceeds one-half of one percent (1/2%) of the Purchase
Price; provided however, nothing contained in this Section 5.06(c)
shall be deemed to in any way modify or terminate Seller's or Buyer's
conditions to Closing under Section 6.01(d) or 6.02(d).
5.07 - INCREASED INTERESTS OF SELLER.. If Seller owns a greater
undivided interest in the Properties than reflected in the Exhibits hereto which
results in an increase in value of a portion of the Properties, the party
discovering such inaccuracy shall immediately notify the other party and Buyer
and Seller shall endeavor to agree upon an amount that will be set-off against
the Defect Value of the Defective Interests in accordance with Section
2.02(b)(3) (the "Upward Adjustment"). If Buyer and Seller fail to agree to the
Upward Adjustment, Seller may elect to have that portion of the Properties
subject to such increase in value excluded from the Properties to be purchased
by Buyer.
ARTICLE VI
CONDITIONS TO CLOSING
6.01 - SELLER'S CONDITIONS. The obligations of Seller at the Closing
are subject, at the option of Seller, to the satisfaction at or prior to the
Closing of the following conditions:
(a) All representations and warranties of Buyer contained in
this Agreement
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shall be true in all material respects at and as of the Closing as if
such representations and warranties were made at and as of the Closing;
and Buyer shall have performed and satisfied all material obligations
in all material respects required by this Agreement to be performed and
satisfied by Buyer at or prior to the Closing.
(b) No suit or other proceeding shall be pending before any
court or governmental agency seeking to restrain or prohibit or declare
illegal, or seeking substantial damages in connection with, the
purchase and sale contemplated by this Agreement.
(c) All necessary consents, permissions, novations and
approvals by third parties in connection with the sale and transfer of
the Properties shall have been received prior to Closing, except those
required consents, permissions, novations and approvals which are
Permitted Encumbrances.
(d) Defective Interests will not reduce the Purchase Price by
more than ten percent (10%).
(e) The waiting period (and any extension thereof) under the
HSR Act applicable to the transactions contemplated hereby shall have
expired or been terminated.
(f) All transactions contemplated by that certain Purchase and
Sale Agreement (the "Plant Agreement") of even date herewith between
Rockland, L.P. and Buyer shall have closed pursuant to the terms of
such agreement.
6.02 - BUYER'S CONDITIONS. The obligations of Buyer at the Closing are
subject, at the option of Buyer, to the satisfaction at or prior to the Closing
of the following conditions:
(a) All representations and warranties of Seller contained in
this Agreement ( except for the the representations and warranties set
forth in Sections 3.01(i),(k), (l) and (m))shall be true in all
material respects at and as of the Closing as if such representations
and warranties were made at and as of the Closing; and Seller shall
have performed and satisfied all material agreements in all material
respects required by this Agreement to be performed and satisfied by
Seller at or prior to the Closing.
(b) No suit or other proceeding shall be pending before any
court or governmental agency seeking to restrain or prohibit or declare
illegal, or seeking substantial damages in connection with, the
purchase and sale contemplated by this Agreement.
(c) All necessary consents, permissions, novations and
approvals by third parties in connection with the sale and transfer of
the Properties shall have been received prior to Closing, except those
required consents, permissions, novations and approvals which are
Permitted Encumbrances.
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(d) Defective Interests will not reduce the Purchase Price by
more than ten percent (10%).
(e) The waiting period (and any extension thereof) under the
HSR Act applicable to the transactions contemplated hereby shall have
expired or been terminated.
(f) All transactions contemplated by the Plant Agreement shall
have closed pursuant to the terms of such agreement.
ARTICLE VII
CLOSING
7.01 - DATE OF CLOSING. Unless the parties hereto mutually agree
otherwise and subject to the conditions stated in this Agreement, the
consummation of the transactions contemplated hereby (herein called the
"Closing") shall be held at the offices of Seller in Fort Worth, Texas, on the
later of:
(i) February 14, 1997;
(ii) February 21, 1997 if the SEC gives notice to Buyer that it will
not review Buyer's Public Offering and as of February 14, 1997 Buyer is
actively engaged in soliciting offers to purchase the securities to be
offered in the Public Offering and Buyer has requested in writing on or
before February 14, 1997 an extension to the Closing Date and Buyer has
paid to Seller the sum of $500,000 in cash (which shall be in addition
to the Purchase Price) on or prior to February 14, 1997;
notwithstanding the extension of the Closing Date under this subclause
(ii) to February 21, 1997, on February 14, 1997, Buyer shall issue to
Seller Buyer's Stock;
(iii) February 28, 1997 if Buyer has extended the Closing Date
according to subclause (ii) above, and Buyer has requested a further
extension to February 28, 1997 which Seller has, in its sole
discretion, agreed to and Buyer has paid to Seller the additional sum
of $500,000 in cash (which shall be in addition to the Purchase Price)
on or prior to February 21, 1997; or
(iv) Three (3) business days following the expiration or termination of
the applicable waiting period (and any extension thereof) under the HSR
Act.
The date on which closing occurs is referred to herein as the "Closing
Date."
7.02 - CLOSING OBLIGATIONS. At the Closing, the following events shall
occur, each being a condition precedent to the others and each being deemed to
have occurred simultaneously with the others:
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(a) Seller shall execute, acknowledge and deliver an
assignment, xxxx of sale, and conveyance in recordable form (in
sufficient counterparts to facilitate recording) sufficient to convey
to Buyer the Properties with covenants of special warranty as to all
Leases, such conveyance to be in the form attached hereto as Exhibit
"L"; provided, however, the assets described in Sections 1.01 (f), (g)
and (h) hereof shall be transferred to Buyer on a form of conveyance or
xxxx of sale reasonably acceptable to Buyer and Seller without warranty
of title, AS IS, WHERE IS, and with all faults, and disclaiming all
implied warranties, and, as to state or federal leases that are
included in the Properties, Seller shall execute, acknowledge and
deliver an assignment (in sufficient counterparts for filing with the
applicable governmental agency) sufficient to convey to Buyer such
state or federal leases, such conveyances to be in the form prescribed
by the applicable governmental agency.
(b) Seller shall prepare and deliver to Buyer and Seller and
Buyer shall execute and deliver a settlement statement (herein called
the "Preliminary Settlement Statement") that shall set forth the
Closing Amount (as hereinafter defined) and each adjustment and the
calculation of such adjustments used to determine such amount. The term
"Closing Amount" shall mean the Purchase Price adjusted as provided in
Section 2.02, using for such adjustments the best information then
available. Seller shall deliver a draft of the Preliminary Settlement
Statement to Buyer at least three (3) business days prior to Closing.
(c) Buyer shall pay the cash portion of the Purchase Price
other than the Xxxxxxx Money (being the amounts set forth in Section
2.01(a) and, if applicable, Section 2.01(c)(ii)) to Seller by wire
transfer in immediately available funds.
(d) The Escrow Agent shall deliver the Xxxxxxx Money plus
interest earned thereon to Seller.
(e) Unless previously delivered to Seller under Section
7.01(ii), Buyer shall deliver to Seller a certificate or certificates
in definitive form representing the Buyer's Stock to be issued to
Seller pursuant to Section 2.01 hereof.
(f) If Section 2.01(c)(i) is applicable, Buyer shall execute
and deliver to Seller the Note.
(g) If Section 2.01(c)(i) is applicable, Buyer shall deliver
to Seller the Letter of Credit.
(h) Seller and Buyer shall execute Texas Railroad Commission
Forms P-4 designating Buyer operator of the Properties previously
operated by Seller, subject however to the rights of third parties
under applicable operating agreements, and Seller shall file such forms
with the Texas Railroad Commission.
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(i) Seller shall deliver to Buyer, (1) a certificate signed by
a responsible officer of the General Partner of Seller certifying that
all of the representations and warranties of Seller made hereunder are
true and correct at and as of Closing, as if made on the Closing Date,
(2) a certified copy of the Executive Committee of the Board of
Directors of the General Partner of Seller authorizing the transactions
contemplated by the Agreement, such certified copy to show the dates of
adoption and that on the Closing Date the resolutions have not been
rescinded or modified, and (3) a Certificate of the Secretary of the
General Partner of Seller showing the incumbency of the officers of the
General Partner of Seller executing instruments on behalf of the
General Partner of Seller.
(j) Buyer shall deliver to Seller (1) a certificate signed by
a responsible officer of Buyer certifying that all of the
representations and warranties of Buyer made hereunder are true and
correct at and as of Closing, as if made on the Closing Date, (2) a
certified copy of the Board of Directors resolution of Buyer
authorizing the transaction contemplated by the Agreement, such
certified copy to show the date of adoption and that on the Closing
Date it has not been rescinded or modified, (3) a Certificate of the
Secretary of Buyer showing the incumbency of the officers of Buyer
executing instruments on behalf of Buyer, and (4) such documents as may
be reasonably requested by Seller demonstrating that Buyer is a
qualified operator with the Texas Railroad Commission and has posted
all bonds required by it.
(k) Seller shall deliver to Buyer all funds held in suspense
by Seller with respect to the Properties together with a report in
reasonable detail setting forth the reasons such funds are held in
suspense.
(l) Seller and Buyer shall execute, acknowledge and deliver
such transfer orders or letters in lieu thereof, as may be reasonably
requested and prepared by Buyer, directing all purchasers of production
to make payment to Buyer of proceeds attributable to production from
the Properties assigned to Buyer.
(m) Seller shall have delivered to Buyer a favorable opinion
of Xxxxxx Xxxxx Xxxxxxx & Farrier, L.L.P., counsel to Seller, dated the
Closing Date, substantially in the form of Exhibit "M" hereof.
(n) Buyer shall have delivered to Seller a favorable opinion
of Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx, counsel to Buyer, dated the
Closing Date, substantially in the form of Exhibit "N" hereof.
ARTICLE VIII
OBLIGATIONS AFTER CLOSING
8.01 - POST-CLOSING ADJUSTMENTS.
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(a) As soon as practicable after the Closing, but not later
than 60 days after the Closing, Seller shall prepare and deliver to
Buyer, in accordance with this Agreement and generally accepted
accounting principles, a statement ("Seller's Final Settlement
Statement") setting forth each adjustment to Purchase Price that was
not finally determined as of the Closing and showing the calculation of
such adjustments. As soon as practicable after receipt of Seller's
Final Settlement Statement, and no later than 90 days after the Closing
Date, Buyer shall deliver to the Seller a written report containing any
changes that Buyer proposes be made to Seller's Final Settlement
Statement. The parties shall undertake to agree with respect to the
amounts due pursuant to such Post-Closing adjustment not later than 135
days after the Closing Date. If Buyer fails to propose any changes to
the accounting set forth in the Seller's Final Settlement Statement, it
shall be deemed that Buyer agrees with Seller's Final Settlement
Statement. The final agreed price paid by Buyer to Seller for the
Properties after all adjustments is hereinafter referred to as the
"Final Purchase Price." The date upon which such agreement is reached
or upon which the Final Purchase Price is established, shall be herein
called the "Final Settlement Date".
(b) If Seller and Buyer are unable to agree upon the Final
Sales Price within 135 days from the Closing Date, Price Waterhouse,
independent public accountants, is designated to act as an arbitrator
and to decide all points of disagreement with respect to the Final
Sales Price, such decision to be binding upon both parties. If such
firm is unwilling or unable to serve in such capacity, Seller and Buyer
shall attempt to, in good faith, designate another acceptable person as
the sole arbitrator under this Section . If the parties are unable to
agree upon the designation of a person as substitute arbitrator, then
Seller or Buyer, or both of them, may in writing request the American
Arbitration Association to appoint the substitute arbitrator. The
arbitration shall be conducted under the Texas General Arbitration Act
and the rules of the American Arbitration Association to the extent
such rules do not conflict with the terms of such Act and terms hereof.
The costs and expenses of the arbitrator, whether the firm designated
above, or a third party appointed pursuant to the preceding sentence
shall be shared equally by Seller and Buyer. Within five (5) days after
the decision of the arbitrator, the Buyer or Seller, as the case may
be, shall promptly make a cash payment to the other equal to the sum as
may be found to be due as the Final Sales Price. Notwithstanding the
foregoing provisions of this Section 8.01(b), any questions with
respect to a Defective Interest or Defect Value shall be resolved
pursuant to the terms of Article V hereof.
8.02 - SALES TAXES AND RECORDING FEES. Buyer shall pay all sales taxes
occasioned by the sale of the Properties and all documentary, filing and
recording fees required in connection with the filing and recording of any
assignments.
8.03 - FURTHER ASSURANCES. After Closing, Seller and Buyer shall
execute, acknowledge and deliver or cause to be executed, acknowledged and
delivered such instruments and take such other action including payment of
monies as may be necessary or advisable to carry out their
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obligations under this Agreement and under any document, certificate or other
instrument delivered pursuant hereto or required by law.
8.04 - BUYER'S POST-CLOSING OBLIGATIONS.
(a) If at any time subsequent to the Closing, Buyer comes into
possession of money or property belonging to the Seller that was not
previously accounted for by credit or adjustment according to this
Agreement such money or other property shall be promptly delivered to
the Seller.
(b) Buyer assumes all liabilities attributable to the
Properties arising from, attributable to, or alleged to be arising from
or attributable to a violation of, or the failure to perform any
obligation imposed by any and all laws, statutes, ordinances, rules,
regulations, orders or determinations of any governmental authority
pertaining to health or environment, including Environmental Laws, in
effect where the Properties are located, regardless of when such
violation or failure to perform occurred or is deemed to have occurred,
EXCEPT THAT Buyer does not assume, and Seller shall retain any
liability attributable to compliance with, violation of, or the failure
to perform any obligation with respect to the Properties imposed by any
Environmental Laws (as defined below) provided that such liability,
when added to any liability of Rockland, L.P. under the Plant Agreement
for the violation of, or the failure to perform any obligation imposed
by any Environmental Law with respect to the assets covered by the
Plant Agreement, shall not exceed $8,000,000 in the aggregate (the
"Aggregate Liability Amount"), if and only if (i) such liability or
obligation occurred prior to the Effective Time, and (ii) Buyer has
provided written notice of such liability or obligation specifying the
location and nature of the such liability within one (1) year from the
Closing Date ("Environmental Liability"). Buyer does assume any
liability attributable to compliance with, violation of, or the failure
to perform any obligation with respect to the Properties imposed by,
any Environmental Laws which occurred prior to the Effective Time and
which is in excess of the Aggregate Liability Amount. In connection
with this assumption of liability by Buyer, Buyer agrees that prior to
Closing it will conduct such inspections of the properties as deemed
necessary by it to fully evaluate the condition of the Properties. As
used in this Agreement "Environmental Laws" means all laws, as they
exist on the date hereof, relating to (a) the control of any pollutant
or potential pollutant or protection of the air, water, land or the
environment, (b) solid, gaseous or liquid waste generation, handling,
treatment, storage, disposal or transportation, or (c) exposure to
hazardous, toxic, explosive, corrosive or other substances alleged to
be harmful. "Environmental Laws" shall include, but not be limited to,
the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Clean Water Act
33 U.S.C. Section 1251 et seq., the Resource Conservation Recovery Act,
42 U.S.C. Section 6901 et seq., the Superfund Amendments and
Reauthorization Act, 42 U.S.C. Section 11001 et seq., the Water
Pollution Control Act, 33 U.S.C. Section 1251 et seq., the Safe
Drinking Water Act, 42 U.S.C. Section 300f et seq., and the
Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. Section 9601 et seq.
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(c) Except with respect to Environmental Liabilities as
defined in Section 8.04(b), Buyer assumes all duties and obligations of
the owner of the Properties which accrue or arise from and after the
Effective Time. Without limitation of the foregoing, Buyer assumes (i)
all obligations of Seller under the Contracts arising after the
Effective Time, (ii) all accounts payable and contractual obligations
incurred by Seller in accordance with this Agreement with respect to
the Properties attributable to periods on or after the Effective Time,
(iii) the obligation to make proper distribution of any suspense
accounts transferred to Buyer in accordance with standard industry
practice, regardless of whether the suspense funds accrued prior or
subsequent to the Effective Time, (iv) all obligations to properly
remove all pipe and equipment, close pits and to cleanup and restore
any property included in or affected by the Properties, and (v) all
liabilities and obligations resulting from injury or death to persons
and damage to property which occur after the Closing Date.
(d) If, pursuant to Section 4.01(d), Seller does not provide
notice to any third parties under preferential rights to purchase
provisions requesting waiver of such provisions, or if such request for
waiver is made by Seller prior to Closing, but the third party's waiver
of or election to exercise the preferential right is not due under the
applicable agreement until after Closing, the affected Property shall
be conveyed to and purchased by Buyer at Closing pursuant to the terms
of this Agreement subject to the terms of the applicable preferential
right to purchase. After Closing, Buyer shall, if necessary, provide
notice to the appropriate third parties requesting waiver of the
applicable preferential rights to purchase and/or comply with the terms
of the preferential rights to purchase that are properly exercised
after Closing, with Buyer receiving all consideration payable upon the
exercise of such preferential rights to purchase.
(e) For a period of one (1) year after the Closing Date,
Buyer, or its successor who expressly assumes its obligations and
liabilities hereunder, shall maintain its corporate or other legal
status and shall at all times own assets having a value net of
liabilities of not less than $50,000,000.
(f) BUYER AGREES TO INDEMNIFY, RELEASE, DEFEND AND HOLD
HARMLESS SELLER, ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
REPRESENTATIVES, AFFILIATES, SUBSIDIARIES, SUCCESSORS AND ASSIGNS FROM
AND AGAINST ANY CLAIMS, LIABILITIES, LOSSES, DAMAGES, COSTS AND
EXPENSES (INCLUDING WITHOUT LIMITATION, DAMAGE TO PROPERTY, OR INJURY
OR DEATH OF PERSONS, COURT COSTS, REASONABLE ATTORNEY'S FEES AND
EXPENSES OF EXPERTS) CAUSED BY, ARISING FROM OR ATTRIBUTABLE TO THE
BREACH BY BUYER OF ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT OR THE
OWNERSHIP OR OPERATION OF THE PROPERTIES AFTER THE EFFECTIVE DATE,
REGARDLESS OF WHETHER SUCH CLAIMS, LIABILITIES, LOSSES, DAMAGES, COSTS
OR EXPENSES ARE DUE IN WHOLE OR IN PART TO THE NEGLIGENCE OF SELLER.
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8.05 - SELLER'S POST-CLOSING OBLIGATIONS.
(a) If at any time subsequent to the Closing, Seller comes
into possession of money or property belonging to the Buyer that was
not previously accounted for by credit or adjustment according to this
Agreement such money or other property shall be promptly delivered to
the Buyer.
(b) Except for the obligations assumed by Buyer pursuant to
Section 8.04 hereof, Seller shall be responsible for and discharge (i)
Environmental Liabilities as defined in Section 8.04(b) hereof, and in
connection therewith, Buyer shall allow Seller reasonable access to the
Properties affected by the Environmental Liabilities to conduct
clean-up and remedial operations, and (ii) all other claims, costs,
expenses and liabilities with respect to the Properties which accrue or
relate to the times prior to the Effective Time, including claims and
liabilities for unpaid royalties that are not included in the suspense
funds transferred to Buyer.
(c) For a period of one (1) year after the Closing Date,
Seller Rockland, L..P., or any of their respective successors who
expressly assumes its obligations and liabilities hereunder, shall
maintain its partnership or other legal status and shall at all times
own assets having a value net of liabilities of not less than
$50,000,000.
(d) If Seller is unable to transfer to Buyer any seismic,
geological, geochemical or geophysical data (the "Seismic Data")
concerning or relating to the Properties because of legal constraints,
obligations of confidence or prior agreements with third parties,
Seller shall, upon request by Buyer, make such Seismic Data available
for review by Seller to the extent that such review is also not
prohibited by such restrictions.
(e) SELLER AGREES TO INDEMNIFY, RELEASE, DEFEND AND HOLD
HARMLESS BUYER, ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
REPRESENTATIVES, AFFILIATES, SUBSIDIARIES, SUCCESSORS AND ASSIGNS FROM
AND AGAINST ANY CLAIMS, LIABILITIES, LOSSES, DAMAGES, COSTS AND
EXPENSES (INCLUDING WITHOUT LIMITATION, DAMAGE TO PROPERTY, OR INJURY
OR DEATH OF PERSONS, COURT COSTS, REASONABLE ATTORNEY'S FEES AND
EXPENSES OF EXPERTS) CAUSED BY, ARISING FROM OR ATTRIBUTABLE TO THE
BREACH BY SELLER OF ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT, THE
ENVIRONMENTAL LIABILITIES AS DEFINED IN SECTION 8.04(b), OR THE
OWNERSHIP OR OPERATION OF THE PROPERTIES PRIOR TO THE EFFECTIVE TIME
(EXCEPT WITH RESPECT TO LIABILITIES EXPRESSLY ASSUMED BY BUYER UNDER
THIS AGREEMENT).
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8.06 - FILES AND RECORDS. As soon as practicable after Closing, Buyer
and Seller shall arrange for the delivery of the Records to Buyer. For a period
of two years after the Closing Date Buyer shall allow Seller access to the
Records during Buyer's normal business hours after Closing for the purpose of
filing or amending a tax return or for any other legitimate business purpose;
provided that any copies of Records made by Seller shall be at the sole expense
of Seller.
8.07 - DISCLAIMERS OF REPRESENTATIONS AND WARRANTIES. The express
representation and warranties of Seller contained in this Agreement are
exclusive and are in lieu of all other representations and warranties, express,
implied or statutory. BUYER ACKNOWLEDGES THAT, EXCEPT FOR SELLER'S EXPRESS
REPRESENTATIONS, WARRANTIES AND AGREEMENTS CONTAINED HEREIN, SELLER HAS NOT
MADE, AND SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES, AND BUYER HEREBY
EXPRESSLY WAIVES ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON
LAW, BY STATUTE OR OTHERWISE RELATING TO (I) THE ENVIRONMENTAL CONDITION OF THE
ASSETS, (II) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (III) ANY
IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (IV) ANY
IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, (V)
ANY RIGHTS OF PURCHASERS UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF
CONSIDERATION, (VI) ANY AND ALL IMPLIED WARRANTIES EXISTING UNDER APPLICABLE LAW
AND (VII) THE QUALITY, QUANTITY OR VOLUME OF ANY OIL, AND GAS RESERVES; IT BEING
THE EXPRESS INTENTION OF BOTH BUYER AND SELLER THAT THE PERSONAL PROPERTY,
EQUIPMENT AND FIXTURES INCLUDED WITHIN THE ASSETS ARE TO BE CONVEYED TO BUYER IN
THEIR PRESENT CONDITION AND STATE OF REPAIR, "AS IS" AND "WHERE IS" WITH ALL
FAULTS, AND THAT BUYER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS BUYER
DEEMS APPROPRIATE. SELLER AND BUYER AGREE THAT, TO THE EXTENT REQUIRED BY
APPLICABLE LAW TO BE EFFECTIVE, THE DISCLAIMERS OF CERTAIN WARRANTIES CONTAINED
IN THIS SECTION ARE "CONSPICUOUS" DISCLAIMERS FOR THE PURPOSES OF ANY APPLICABLE
LAW, RULE OR ORDER.
8.08 - WAIVER OF DTPA. It is the intent of the parties that Buyer's
rights and remedies with respect to this transaction and with respect to all
acts or practices of Seller, past, present or future, in connection with this
transaction shall be governed by legal principles other than the Texas Deceptive
Trade Practices - Consumer Protection Act, Tex. Bus. & Xxx. Section 17.41 et
seq. (Xxxxxx 1987 and Supp. 1994) (the "DTPA") or any similar statute of any
jurisdiction that may be applicable to the transactions contemplated hereby. As
such, Buyer hereby waives the applicability of the DTPA or any similar statute
to this transaction and any and all duties, rights or remedies that might be
imposed by the DTPA or any similar statute; provided, however, Buyer does not
waive Section 17.555 of the DTPA. Buyer acknowledges, represents and warrants
that it is purchasing the assets covered by this Agreement for commercial or
business matters; that it is
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able to evaluate the merits and risks of a transaction such as this; and that it
is not in a significantly disparate bargaining position with Seller. Buyer
expressly recognizes that the price for which Seller has agreed to sell the
assets and perform its obligations under this Agreement has been predicated upon
the inapplicability of the DTPA or any similar statute and this waiver of the
DTPA and any similar statute. Buyer further recognizes that Seller, in
determining to proceed with the entering into of this Agreement has expressly
relied on the provisions of this Section 8.08.
8.09 - RESIGNATION OF OPERATOR. On the Closing Date, Seller shall
resign as operator of all of the Properties it operates, as provided in any
applicable operating agreement, and shall use reasonable efforts to secure the
consents necessary for Buyer to become operator of the Properties previously
operated by Seller. With respect to those Properties as to which Buyer becomes
operator, Seller shall relinquish operations to Buyer on the Closing Date. At
the xxxx Xxxxxx relinquishes operations to Buyer, Seller shall deliver to Buyer
all amounts payable to third parties out of production attributable to the
Properties and held in suspense by Seller.
8.10 - REGISTRATION OBLIGATIONS OF BUYER.
(a) Shelf Registration. Within thirty (30) days from the
Closing Date, Buyer shall prepare and file with the Securities and Exchange
Commission, or any successor body thereto (the "Commission"), a shelf
registration statement on Form S-3 or other appropriate form (the "Registration
Statement") pursuant to Rule 415 under the Securities Act of 1933, as amended,
and all rules and regulations under such Act (the "Securities Act") covering the
Buyer's Stock.
(b) Registration Procedures. In connection with the
Registration Statement, Buyer shall use its best efforts to effect the
registration of the Buyer's Stock, and pursuant thereto, Buyer shall as
expeditiously as possible:
(i) prepare and file with the Commission the
Registration Statement on the appropriate form with respect to such Buyer's
Stock and use all reasonable efforts to cause the Registration Statement to
become effective as soon as legally practicable following its filing (provided
that before filing a Registration Statement or prospectus or any amendments or
supplements thereto, Buyer will furnish to the counsel selected by Seller copies
of all such documents proposed to be filed, which documents will be subject to
the review of such counsel);
(ii) prepare and file with the Commission such
amendments and supplements to the Registration Statement and the prospectus used
in connection therewith as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by the
Registration Statement in accordance with the intended methods of disposition by
Sellers set forth in the Registration Statement;
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(iii) furnish to Seller such number of copies of the
Registration Statement, each amendment and supplement thereto, the prospectus
included in the Registration Statement (including each preliminary prospectus)
and such other documents as Seller may reasonably request in order to facilitate
the disposition of the Buyer's Stock;
(iv) use its reasonable efforts to register or
qualify the Buyer's Stock under such other securities or blue sky laws of such
jurisdictions within the United States as Seller reasonably requests and do any
and all other acts and things which may be reasonably necessary or advisable to
enable Seller to consummate the disposition in such jurisdictions of the Buyer's
Stock (provided that Buyer will not be required to qualify generally to do
business or file any general consent to service of process in any jurisdiction
where it would not otherwise be required to qualify or file but for this
subparagraph);
(v) notify Seller, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in the
Registration Statement contains an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and, at the request of Seller, Buyer will
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of the Buyer's Stock, such prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading;
(vi) use its reasonable efforts to cause all of the
Buyer's Stock to be listed on each securities exchange on which similar
securities issued by Buyer are then listed;
(vii) provide a transfer agent and registrar (which
may be Buyer) for all of the Buyer's Stock not later than the effective date of
the Registration Statement;
(viii) enter into such customary agreements
(including underwriting agreements in customary form) and take all such other
actions as Seller reasonably requests in order to expedite or facilitate the
disposition of the Buyer's Stock (including, without limitation, effecting a
stock split or a combination of shares);
(ix) make available for inspection by Seller, any
underwriter participating in any disposition pursuant to the Registration
Statement and any attorney, accountant or other agent retained by Seller or
underwriter, all financial and other records (as may be reasonably requested),
pertinent corporate documents and properties of Buyer as shall be reasonably
necessary to enable them to exercise their due diligence responsibility, and
cause Buyer's officers, directors,, employees and independent accountants to
supply all information reasonably requested by Seller, underwriter, attorney,
accountant or agent in connection with the Registration Statement; provided,
however, Seller agrees that information obtained by it as a result of such
inspections which is deemed confidential shall not be used by it as the basis
for any market transaction in securities of the company unless and until such
information is made
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generally available to the public and Seller shall cause any attorney,
accountant or agent retained by Seller to keep confidential any information so
deemed;
(x) otherwise use reasonable efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months beginning with the first day of
Buyer's first full calendar quarter after the effective date of the Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder;
(ix) in the event of the issuance of any stop order
suspending the effectiveness of the Registration Statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any common stock included in the Registration Statement for
sale in any jurisdiction, Buyer will use reasonable efforts promptly to obtain
the withdrawal of such order;
(xii) use reasonable efforts to cause the Buyer's
Stock covered by the Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to enable
Seller to consummate the disposition of the Buyer's Stock;
(c) Registration Expenses. Buyer shall bear and pay all
expenses in connection with the registration effected pursuant to this Section
8.10, including, without limitation, (i) all expenses incident to Buyer's
performance of or compliance with the registration rights granted hereunder,
including (without limitation) all registration and filing fees, fees and
expenses of compliance with securities and blue sky laws, printing and engraving
expenses, messenger, telephone and delivery expenses, and fees and disbursements
of counsel for Buyer, all independent certified public accountants and
underwriters (excluding discounts and commissions, which shall be the obligation
of Seller), (ii) the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the securities to be registered on
each of the securities exchange on which similar securities issued by Buyer are
then listed, and (iii) in connection with the registration hereunder, the
reasonable fees and disbursements of counsel chosen by Seller.
(d) Restriction on Sales of Buyer's Stock.. If, in the written
opinion of Buyer's managing underwriter for the Public Offering, the sale by
Seller of any of Buyer's Stock during the offering period for the Public
Offering could have a material adverse affect on the Public Offering, then
Seller shall not sell or cause to be sold any of the Buyer's Stock for such
period that is recommended in the written opinion of Buyer's managing
underwriter, provided that such period shall not exceed 45 days after the
effective date of the registration statement for the Public Offering.
(e) INDEMNIFICATION. BUYER SHALL INDEMNIFY AND HOLD HARMLESS,
WITH RESPECT TO THE REGISTRATION STATEMENT FILED BY IT, TO THE FULL EXTENT
PERMITTED BY LAW, SELLER AND EACH OTHER
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PERSON OR ENTITY, IF ANY, WHO CONTROLS SELLERS WITH IN THE MEANING OF SECTION 15
OF THE SECURITIES ACT (COLLECTIVELY, "HOLDER INDEMNIFIED PARTIES") AGAINST ALL
LOSSES, CLAIMS, DAMAGES, LIABILITIES AND EXPENSES, JOINT OR SEVERAL, TO WHICH
ANY SUCH HOLDER INDEMNIFIED PARTY MAY BECOME SUBJECT UNDER THE SECURITIES ACT,
THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED, AND ALL RULES AND
REGULATIONS UNDER SUCH ACT, AT COMMON LAW OR OTHERWISE, INSOFAR AS SUCH LOSSES,
CLAIMS, DAMAGES, LIABILITIES OR EXPENSES (OR ACTIONS OR PROCEEDINGS, WHETHER
COMMENCED OR THREATENED, IN RESPECT THEREOF) ARISE OUT OF OR ARE BASED UPON (I)
ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT CONTAINED IN
THE REGISTRATION STATEMENT AS CONTEMPLATED HEREBY OR ANY OMISSION OR ALLEGED
OMISSION TO STATE THEREIN A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR
NECESSARY TO MAKE THE STATEMENTS THEREIN NOT MISLEADING, (II) ANY UNTRUE
STATEMENT OR ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT CONTAINED IN ANY
PRELIMINARY, FINAL OR SUMMARY PROSPECTUS, TOGETHER WITH THE DOCUMENTS
INCORPORATED BY REFERENCE THEREIN (AS AMENDED OR SUPPLEMENTED IF BUYER SHALL
HAVE FILED WITH THE COMMISSION ANY AMENDMENT THEREOF OR SUPPLEMENT THERETO), OR
ANY OMISSION OR ALLEGED OMISSION TO STATE THEREIN A MATERIAL FACT REQUIRED TO BE
STATED THEREIN OR NECESSARY IN ORDER TO MAKE THE STATEMENTS THEREIN, IN THE
LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING, OR (III)
ANY VIOLATION BY BUYER OF ANY FEDERAL, STATE OR COMMON LAW RULE OR REGULATION
APPLICABLE TO BUYER AND RELATING TO ACTION OF OR INACTION BY BUYER IN CONNECTION
WITH ANY SUCH REGISTRATION; AND IN EACH SUCH CASE, BUYER SHALL REIMBURSE EACH
SUCH HOLDER INDEMNIFIED PARTY FOR ANY REASONABLE LEGAL OR OTHER EXPENSES
INCURRED BY ANY OF THEM IN CONNECTION WITH INVESTIGATING OR DEFENDING ANY SUCH
LOSS, CLAIM, DAMAGE, LIABILITY, EXPENSE, ACTION OR PROCEEDING; PROVIDED,
HOWEVER, THAT BUYER SHALL NOT BE LIABLE TO ANY SUCH HOLDER INDEMNIFIED PARTY IN
ANY SUCH CASE TO THE EXTENT, THAT ANY SUCH LOSS, CLAIM, DAMAGE, LIABILITY OR
EXPENSE (OR ACTION OR PROCEEDING, WHETHER COMMENCED OR THREATENED, IN RESPECT
THEREOF) ARISES OUT OF OR IS BASED UPON ANY UNTRUE STATEMENT OR ALLEGED UNTRUE
STATEMENT OR OMISSION OR ALLEGED OMISSION MADE IN THE REGISTRATION STATEMENT OR
AMENDMENT THEREOF OR SUPPLEMENT THERETO OR IN ANY SUCH PRELIMINARY, FINAL OR
SUMMARY PROSPECTUS IN RELIANCE UPON AND IN CONFORMITY WITH WRITTEN INFORMATION
FURNISHED TO BUYER BY OR ON BEHALF OF ANY SUCH HOLDER INDEMNIFIED PARTY FOR USE
IN THE PREPARATION THEREOF. SUCH INDEMNITY AND REIMBURSEMENT OF EXPENSES AND
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OTHER OBLIGATIONS SHALL REMAIN IN FULL FORCE AND EFFECT REGARDLESS OF ANY
INVESTIGATION MADE BY OR ON BEHALF OF THE HOLDER INDEMNIFIED PARTIES AND SHALL
SURVIVE THE TRANSFER OF SUCH SECURITIES BY SUCH HOLDER INDEMNIFIED PARTIES.
8.11 - SURVIVAL. The representations, warranties, covenants, agreements
and indemnities included or provided in Article III, in Article IV, in Section
5.03(f), this Article VIII, in Article X, in Article XI, in Article XII, and in
the assignments and agreements to be delivered at the Closing shall survive the
Closing for a period of one (1) year after the Closing Date. All other
representations, warranties, covenants, certificates, instruments and agreements
contained in or referred to in this Agreement shall terminate at Closing.
ARTICLE IX
TERMINATION OF AGREEMENT
9.01 - TERMINATION. This Agreement and the transactions contemplated
hereby may be terminated in the following instances:
(a) by Seller if the conditions set forth in Section 6.01 are
not satisfied in all material respects or waived prior to the Closing
Date;
(b) by Buyer if the conditions set forth in Section 6.02 are
not satisfied in all material respects or waived prior to the Closing
Date;
(c) By Seller if pursuant to Section 5.04 hereof Buyer gives
Seller notice of Defective Interests having a Defect Value equal to or
greater than ten percent (10%) of the Purchase Price and Buyer asserts
a reduction in the Purchase Price according to Section 2.02(b)(3)
hereof that is in excess of ten percent (10%) of the Purchase Price;
(d) by Seller if Buyer does not deposit all of the Xxxxxxx
Money with the Escrow Agent before 2:00 p.m. on January 2, 1997;
(e) By Seller if Buyer does not provide to Seller by 5:00 p.m.
on January 2, 1997, a letter from a reputable financial institution
that such financial institution is highly confident that Buyer can
obtain financing for the cash portion of the Purchase Price at or prior
to the Closing; or
(f) at any time by the mutual written agreement of Buyer and
Seller.
9.02 - LIABILITIES. Nothing contained in this Agreement shall limit
Seller's or Buyer's legal or equitable remedies including, without limitation,
damages for the breach or failure of any representation, warranty, covenant or
agreement contained herein and the right to enforce specific
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performance of this Agreement; provided however, (i) neither party hereto shall
be liable to the other for consequential damages; (ii) if all conditions
precedent to the obligation of Buyer to close have been satisfied, but Buyer
refuses to close, Seller shall have the option to either pursue specific
performance, receive the Xxxxxxx Money and retain Buyer's Stock issued under
Section 7.01(ii) as liquidated damages and terminate this Agreement or pursue
its actual damages, and if Seller receives the Xxxxxxx Money and retains Buyer's
Stock issued under Section 7.01(ii) as liquidated damages pursuant to Article X
hereof, then Seller shall have no further recourse against Buyer; (iii) if all
conditions precedent to the obligation of Seller to close have been satisfied,
but Seller refuses to close, Buyer shall have the option to either pursue
specific performance, receive the Xxxxxxx Money and Buyer's Stock issued under
Section 7.01(ii) as liquidated damages and terminate this Agreement or pursue
its actual damages, and if Buyer receives the Xxxxxxx Money and Buyer's Stock
issued under Section 7.01(ii) as liquidated damages pursuant to Article X
hereof, then Buyer shall have no further recourse against Seller; and (iv)
Seller shall have no liability to Buyer if Buyer terminates this Agreement
because any representation or warranty made by Seller herein is incorrect.
ARTICLE X
XXXXXXX MONEY
Upon the execution of this Agreement, Buyer has deposited into escrow
with Bank One, Texas, N.A., in Fort Worth, Texas (the "Escrow Agent"), the sum
of money equal to Thirty Five Million and No/100 Dollars ($35,000,000) as
xxxxxxx money (the "Xxxxxxx Money"). At Closing, the Xxxxxxx Money, less any
costs or fees incurred, plus any interest earned thereon shall be applied
against the Purchase Price. If this transaction fails to close due to any breach
by Buyer of the terms, conditions, representations and warranties found in this
Agreement, then at the election of Seller, the Xxxxxxx Money and all interest
earned thereon may be delivered to Seller as liquidated damages. If this
transaction fails to close, due to any breach by Seller of the terms,
conditions, representations and warranties found in this Agreement, then the
Xxxxxxx Money and all interest earned thereon shall be delivered to Buyer. If
this transaction fails to close for any other reason whatsoever, then the
Xxxxxxx Money and all interest earned thereon shall be delivered to Buyer.
Seller and Buyer agree to give the Escrow Agent joint instructions for the
delivery of the Xxxxxxx Money, together with any interest earned thereon, in
accordance with the terms of this Agreement
ARTICLE XI
INDEMNIFICATION
11.01 - RIGHT TO EMPLOY COUNSEL.
(a) When any claim, action, or suit shall be filed or asserted
in writing against any party which is indemnifiable under the terms of
this Agreement, the indemnified party shall promptly notify the
indemnifying party of the same in writing, specifying in detail the
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basis of such claim and the facts pertaining thereto, and the
indemnifying party shall, at its option, have the right to assume the
defense thereof or participate in the defense thereof and to employ its
own legal counsel in connection with such defense. Failure of the
indemnified party to notify the indemnifying party of such claim,
action, or suit within twenty (20) calendar days after notice to the
indemnified party of such claim, action, or suit shall constitute a
waiver of its rights under this Article, unless such failure to notify
within such time period shall not prejudice the rights of the
indemnifying party in respect of such claim, action or suit, in which
case prompt notification as provided above shall be sufficient.
(b) The indemnified party shall have the right to employ
counsel separate from counsel employed by the indemnifying party in any
such action and to participate in the defense thereof, but the fees and
expenses of such counsel employed by the indemnified party shall be at
the sole expense of the indemnified party unless (i) the indemnifying
party shall have elected not or shall have failed to assume or
participate in the defense thereof, (ii) the employment thereof has
been specifically authorized by the indemnifying party in writing, or
(iii) the parties to any such action (including any impleaded parties)
include both the indemnifying and indemnified party, and the
indemnified party shall have been advised by its counsel that there may
be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in any
which case (i), (ii) or (iii) above the indemnifying party shall not
have the right to assume the defense of such action on behalf of the
indemnified party and the fees and expenses of such counsel employed by
the indemnified party shall be at the sole expense of the indemnifying
party).
(c) Prior to effectuating any settlement of any such action or
proceeding, the indemnified party shall furnish the indemnifying party
with written notice of any proposed settlement in sufficient time to
allow the indemnifying party to act thereon. The indemnifying party
shall not be liable for any settlement of any such action or proceeding
effected without the written consent of the indemnifying party. The
indemnifying party shall not effect a settlement of any claim without
the written consent of the indemnified party unless the indemnifying
party secures the complete release of the indemnified party as a part
of such settlement.
11.02 - CLAIM REIMBURSEMENT AND REDUCTION.
(a) Should the indemnified party realize any benefit,
including any tax benefit, resulting from any loss, liability, cost or
damage for which such indemnified party has been indemnified under this
Article, such indemnified party shall reimburse the indemnifying party,
at the time such benefit is realized, an amount equal to the dollar
amount of such benefit so realized.
(b) Any claim shall be reduced to the extent of any third
party insurance or condemnation payment actually received by the
indemnified party or, alternatively, at the
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option of the indemnified party, the rights of the indemnified party
against any insurer or governmental unit with respect to such claim
shall be assigned to the indemnifying party.
ARTICLE XII
GENERAL
12.01 - EXHIBITS. All Exhibits are hereby incorporated in this
Agreement by reference and constitute a part of this Agreement. Each party to
this Agreement and its counsel has received a complete set of Exhibits prior to
and as of the execution of this Agreement.
12.02 - EXPENSES. All fees, costs and expenses incurred by Buyer or
Seller in negotiating this Agreement or in consummating the transactions
contemplated by this Agreement shall be paid by the party incurring the same
including, without limitation, legal and accounting fees, costs and expenses.
12.03 - NOTICES. All notices or communications required or permitted
under this Agreement shall be in writing, and any notices or communications
hereunder shall be deemed to have been duly made if delivered by (i) hand, (ii)
overnight delivery service, (iii) telecopy, or (iv) three days after being
placed in first class certified mail, postage prepaid, with return receipt
requested to the following addresses:
All notices to Seller shall be delivered to:
Cometra Energy, L.P.
000 Xxxxxxxxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Telecopy: 817/877-4464
All notices to Buyer shall be delivered to:
Lomak Petroleum, Inc.
000 Xxxxxxxxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Telecopy: 817/870-2316
The address at which any party hereto is to receive notice may be changed from
time to time by such party by giving notice of the new address to all other
parties hereto. Any notice or communication given by telecopy shall be promptly
confirmed by delivery of a copy of such notice or communication by hand or
overnight delivery service.
12.04 - AMENDMENTS. This Agreement may not be amended nor any rights
hereunder waived except by an instrument in writing signed by the party to be
charged with such amendment or waiver and delivered by such party to the party
claiming the benefit of such amendment or waiver.
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12.05 - HEADINGS. The headings of the articles and sections of this
Agreement are for guidance and convenience of reference only and shall not limit
or otherwise affect any of the terms or provisions of this Agreement.
12.06 - COUNTERPARTS. This Agreement may be executed by Buyer and
Seller in any number of counterparts, each of which shall be deemed an original
instrument, but all of which together shall constitute but one and the same
instrument.
12.07 - REFERENCES. References made in this Agreement, including use of
a pronoun, shall be deemed to include where applicable, masculine, feminine,
singular or plural, individuals, partnerships or corporations. As used in this
Agreement, "person" shall mean any natural person, corporation, partnership,
trust, estate or other entity.
12.08 - GOVERNING LAW. This Agreement and the transactions contemplated
hereby shall be construed in accordance with, and governed by, the laws of the
State of Texas.
12.09 - ENTIRE AGREEMENT. This Agreement (including the Exhibits
hereto) constitutes the entire understanding among the parties with respect to
the subject matter hereof, superseding all negotiations, prior discussions and
prior agreements and understandings relating to such subject matter.
12.10 - PARTIES IN INTEREST. This Agreement shall be binding upon and
shall inure to the benefit of, the parties hereto and, except as otherwise
prohibited, their respective successors and assigns; and except as otherwise
stated herein, nothing contained in this Agreement, or implied herefrom, is
intended to confer upon any other person or entity any benefits, rights or
remedies.
12.11 - ASSIGNMENTS. Neither Buyer nor Seller may assign all or any
portion of their respective rights or delegate any portion of their duties
hereunder without the prior written consent of the other, which consent shall
not be unreasonably withheld. Provided, however, that Buyer may assign this
Agreement and its rights and duties hereunder to a wholly owned limited
partnership, limited liability company or corporation, in which case, Buyer's
Stock shall remain common stock to be issued by Lomak Petroleum, Inc.
12.12 - PUBLIC ANNOUNCEMENTS. The parties hereto agree that prior to
making any public announcement or statement with respect to the transactions
contemplated by this Agreement, the party desiring to make such public
announcement or statement shall consult with the other party hereto and exercise
their best efforts to agree upon the text of a joint public announcement or
statement to be made solely by Seller or Buyer, as the case may be; provided,
however, if Seller or Buyer is required by law to make such public announcement
or statement, then the same may be made without the approval of the other party.
The opinion of counsel of either party shall be conclusive evidence of such
requirement by law.
12.13 - NOTICES AFTER CLOSING. Buyer and Seller hereby agree that each
party shall notify the other of its receipt, after the Closing Date, of any
instrument, notification or other document affecting the Properties while owned
by such other party.
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12.14 - SEVERABILITY. If a court of competent jurisdiction determines
that any clause or provision of this agreement is void, illegal or
unenforceable, the other clauses and provisions of the Agreement shall remain in
full force and effect and the clauses and provisions that are determined to be
void, illegal or unenforceable shall be limited so that they shall remain in
effect to the extent permissible by law.
12.15 - TIME IS OF THE ESSENCE. It is understood and agreed
that time is of the essence in this Agreement.
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IN WITNESS WHEREOF, the parties have executed or caused the Agreement
to be executed as of the day and year first above written.
COMETRA ENERGY, L.P.
a Texas limited partnership
By: AVENEG, INC., a Delaware corporation,
its General Partner
By:___________________________
Xxxx X. Xxxxx, President
COMETRA PRODUCTION COMPANY, L.P.,
a Texas limited partnership
By: GRAND LACS, INC., a Delaware
corporation, its General Partner
By:______________________________
Xxxx X. Xxxxx, President
SELLER
LOMAK PETROLEUM, INC.,
a Delaware corporation
By: ______________________________
Xxxx Xxxxxxxxx, President
BUYER
46
FIRST AMENDMENT TO PURCHASE
AND SALE AGREEMENT
This FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (the "Amendment")
is made and entered into as of the 10th day of January, 1997, by and among
COMETRA ENERGY, L.P. ("CE"), a Texas limited partnership, COMETRA PRODUCTION
COMPANY, L.P. ("CPC"), a Texas limited partnership (CE and CPC are jointly
referred to herein as "Seller") and LOMAK PETROLEUM, INC., a Delaware
corporation ("Buyer").
RECITALS
A. Seller and Buyer have entered into that certain Purchase and Sale
Agreement dated December 31, 1996 (the "Agreement").
B. Seller and Buyer desire to amend the Agreement as set forth herein
in order to, among other things, extend the date that the Buyer's Stock will be
issued to Seller if the issuance of the Buyer's Stock will require filings to be
made under the HSR Act.
C. Capitalized terms used in this Amendment are defined in the
Agreement, as amended hereby, unless otherwise stated in this Amendment.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
ARTICLE I
Amendments
1.01. Amendment to Section 4.01(g). Effective as of the date hereof,
Section 4.01(g) of the Agreement is hereby deleted in its entirety and the
following shall be substituted therefor:
"(g) If on February 14, 1997 it is determined that the shares of stock
comprising the Buyer's Stock represent more than ten percent (10%) of the
outstanding voting securities of Buyer, then as soon as practicable, but before
February 19, 1997, Seller will file with the Federal Trade Commission and the
Department of Justice the notification and report form required for the issuance
of the Buyer's Stock and will as promptly as possible furnish any supplemental
information which may be reasonably requested in connection therewith pursuant
to the HSR Act. Seller shall bear one-half (1/2) of the filing fees associated
with filings made under the HSR Act and paid by Buyer or Seller."
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1.02. Amendment to Section 4.02(b). Effective as of the date hereof,
Section 4.02(b) of the Agreement is hereby deleted in its entirety and the
following shall be substituted therefor:
"(b) If on February 14, 1997 it is determined that the shares of stock
comprising the Buyer's Stock represent more than ten percent (10%) of the
outstanding voting securities of Buyer, then as soon as practicable, but before
February 19, 1997, Buyer will file with the Federal Trade Commission and the
Department of Justice the notification and report form required for the issuance
of the Buyer's Stock and will as promptly as possible furnish any supplemental
information which may be reasonably requested in connection therewith pursuant
to the HSR Act. Buyer shall bear one-half (1/2) of the filing fees associated
with filings made under the HSR Act and paid by Buyer or Seller."
1.03. Deletion of Section 6.01(e). Effective as of the date hereof,
Section 6.01(e) of the Agreement is hereby deleted in its entirety.
1.04. Deletion of Section 6.02(e). Effective as of the date hereof,
Section 6.02(e) of the Agreement is hereby deleted in its entirety.
1.05. Amendment to Subclause (ii) of Section 7.01. Effective as of the
date hereof, subclause (ii) of Section 7.01 of the Agreement is hereby deleted
in its entirety and the following shall be substituted therefor:
"(ii) February 21, 1997 if the SEC gives notice to Buyer that it will
not review Buyer's Public Offering and as of February 14, 1997 Buyer is actively
engaged in soliciting offers to purchase the securities to be offered in the
Public Offering and Buyer has requested in writing on or before February 14,
1997 an extension to the Closing Date and Buyer has paid to Seller the sum of
$500,000 in cash (which shall be in addition to the Purchase Price) on or prior
to February 14, 1997; notwithstanding the extension of the Closing Date under
this subclause (ii) to February 21, 1997, on February 14, 1997, Buyer shall
issue to Seller the Buyer's Stock if the shares comprising Buyer's Stock
represent less than ten percent (10%) of the outstanding voting securities of
Buyer as of February 14, 1997; provided, however, if the shares comprising the
Buyer's Stock represent ten percent (10%) or more of the outstanding voting
securities of Buyer as of February 14, 1997, the Buyer's Stock shall be issued
to Seller (whether before or after the Closing Date) on the earlier to occur of
(a) one (1) business day following the expiration or termination of the
applicable waiting period (and any extensions thereof) under the HSR Act that is
specifically applicable to the issuance of the Buyer's Stock to Seller or (b)
one (1) business day after the date that the securities are issued under Buyer's
Public Offering if, as of such date, the shares comprising the Buyer's Stock
represent less than ten percent (10%) of the outstanding voting securities of
Buyer, inclusive of the securities issued under Buyer's Public Offering."
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1.06. Deletion of Subclause (iv) of Section 7.01. Effective as of the
date hereof, subclause (iv) of Section 7.01 of the Agreement is hereby deleted
in its entirety.
1.07. Amendment to Section 7.02(e). Effective as of the date hereof,
Section 7.02(e) of the Agreement is hereby deleted in its entirety and the
following shall be substituted therefor:
"(e) Unless previously delivered to Seller under Section 7.01(ii) or
unless Section 8.04(g) shall apply after Closing, Buyer shall deliver to Seller
a certificate or certificates in definitive form representing the Buyer's Stock
to be issued pursuant to Section 2.01 hereof."
1.08. Inclusion of Section 8.04(g). Effective as of the date hereof,
the following is hereby added as Section 8.04(g) of the Agreement:
"(g) If the Buyer's Stock is not issued to Seller prior to Closing
according to Section 7.01(ii) or at Closing according to Section 7.02(e), then
after Closing (or if Closing does not occur and this Agreement is terminated,
then according to subclause (ii) of Section 9.02, if applicable), Buyer shall
deliver to Seller a certificate or certificates in definitive form representing
the Buyer's Stock on the earlier to occur of (a) one (1) business day following
the expiration or termination of the applicable waiting period (and any
extension thereof) under the HSR Act that is specifically applicable to the
issuance of the Buyer's Stock to Seller or (b) one (1) business day after the
date the securities are issued under Buyer's Public Offering if as of such date
the shares comprising the Buyer's Stock represent less than ten percent (10%) of
the outstanding voting securities of Buyer, inclusive of the securities issued
under Buyer's Public Offering."
1.09. Amendment to Subclauses (ii) and (iii) of Section 9.02. Effective
as of the date hereof, subclauses (ii) and (iii) of Section 9.02 of the
Agreement are hereby deleted in their entirety and the following shall be
substituted therefor:
"(ii) if all conditions precedent to the obligation of Buyer to close
have been satisfied, but Buyer refuses to close, Seller shall have the option to
either pursue specific performance, receive the Xxxxxxx Money and retain Buyer's
Stock previously issued under Section 7.01(ii) or to be issued under Section
8.04(g) as liquidated damages and terminate this Agreement or pursue its actual
damages, and if Seller receives the Xxxxxxx Money and retains Buyer's Stock
previously issued under Section 7.01(ii) or to be issued under Section 8.04(g)
as liquidated damages pursuant to Article X hereof, then Seller shall have no
further recourse against Buyer; (iii) if all conditions precedent to the
obligation of Seller to close have been satisfied, but Seller refuses to close,
Buyer shall have the option to either pursue specific performance, receive the
Xxxxxxx Money and Buyer's Stock previously issued under Section 7.01(ii) or to
be issued under Section 8.04(g) as liquidated damages and terminate this
Agreement or pursue its actual damages, and if Buyer receives the Xxxxxxx Money
and Buyer's Stock previously issued under Section
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7.01(ii) or to be issued under Section 8.04(g) as liquidated damages pursuant to
Article X hereof, then Buyer shall have no further recourse against Seller."
ARTICLE II
Ratifications
2.01. Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement, and, except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement are ratified and confirmed
and shall continue in full force and effect. Buyer and Seller agree that the
Agreement, as amended hereby, shall continue to be legal, valid, binding and
enforceable in accordance with its terms.
ARTICLE III
Miscellaneous Provisions
3.01. Reference to Agreement. The Agreement and any and all other
agreements, documents or instruments now or hereafter executed and delivered
pursuant to the terms of the Agreement, as amended hereby, are hereby amended so
that any reference in the Agreement and such other documents to the Agreement
shall mean a reference to the Agreement as amended hereby.
3.02. Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
3.03. Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
3.04. Headings. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
3.05 Applicable Law. THIS AMENDMENT SHALL BE DEEMED TO HAVE BEEN MADE
AND TO BE PERFORMABLE IN AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS.
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IN WITNESS WHEREOF, the parties have executed or caused this Amendment
to be executed as of the day and year first above written.
COMETRA ENERGY, L.P.,
a Texas limited partnership
By: AVENEG, INC., a Delaware corporation,
its General Partner
By: ______________________________
Xxxx X. Xxxxx, President
COMETRA PRODUCTION COMPANY, L.P.,
a Texas limited partnership
By: GRAND LACS, INC., a Delaware
corporation, its General Partner
By: ______________________________
Xxxx X. Xxxxx, President
SELLER
LOMAK PETROLEUM, INC.,
a Delaware corporation
By: _____________________________________
Xxxx Xxxxxxxxx, President
BUYER
5
