Exhibit 10.33
ASSET PURCHASE AGREEMENT
Between
SOI FINANCE INC. ("SOIFI") AND
SHELL OFFSHORE INC. ("SOI")
("SELLER")
and
McMoRan OIL & GAS LLC
("PURCHASER")
Dated Effective
December 1, 1999
TABLE OF CONTENTS
ASSET PURCHASE AGREEMENT 1
SECTION 1 - DEFINITIONS / EXHIBITS 1
1.1 Agreement: 1
1.2 Affiliate: 2
1.3 Contract Rights: 2
1.4 Effective Time: 2
1.5 Exhibits: 3
1.6 Closing: 3
1.7 Known/Knowledge: 3
1.8 Lease: 4
1.9 MMS: 4
1.10 Net Revenue Interest: 4
1.11 Oil & Gas Interests: 4
1.12 Operator: 4
1.13 Party: 5
1.14 Schedules: 5
1.15 Seller's Retained Override: 5
1.16 Xxxxx: 5
1.17 Working Interest: 5
SECTION 2 - PURCHASE AND SALE 5
2.1 Purchase and Sale of Assets: 5
2.1.1 Lease(s): 6
2.1.2 Associated Interests: 6
2.1.3 Xxxxx: 6
2.1.4 Easements: 6
2.1.5 Contract Rights: 6
2.1.6 Proprietary Data: 7
2.1.7 Business Records: 7
2.2 Excluded Assets: 7
2.2.1 All Seismic Surveys and Other Licensed Data: 7
2.2.2 Trade Accounts and Causes of Action: 7
2.2.3 Third Party Equipment: 8
2.2.4 Other Excluded Assets: 8
2.3 Assets Subject to Existing Agreements: 8
2.3.1 Exclusions: 9
2.4 Purchase Price: 9
2.5 Additional Consideration: 9
2.5.1 10
2.5.2 10
2.5.3 Exclusions: 11
2.6 Title and Risk of Loss: 12
2.7 Specific Performance: 12
2.8 Insurance: 12
SECTION 3 - TITLE AND ENVIRONMENTAL 12
3.1 Title Matters: 12
3.2 Physical Condition of the Assets: 13
3.3 NORM: 13
3.4 Availability of Data: 13
3.5 Preferential Rights and Consents: 14
SECTION 4 - CLOSING 15
4.1 Time: 15
4.2 Closing: 16
4.3 Post Closing Obligations: 17
4.3.1 Recording & Filing: 17
4.3.2 Change of Operator: 17
4.3.3 Notices to Third Parties: 18
4.3.4 Property Records: 18
4.3.5 Use of Name: 19
4.4 Governmental Approvals: 19
SECTION 5.0 - GENERAL REPRESENTATIONS AND WARRANTIES 19
5.1 Reciprocal Representations and Warranties: 19
5.2 SELLER's Representations & Warranties: 20
5.3 PURCHASER's Representations & Warranties: 25
5.4 SELLER's Reliance: 26
5.5 Survival of Representations & Warranties: 26
SECTION 6 - PURCHASER'S OBLIGATION 26
6.1 PURCHASER's Assumed Obligations: 26
6.2 Plugging and Abandonment of Xxxxx, Removal of Facilities: 27
SECTION 7 - DISCLAIMER OF WARRANTY / INDEMNIFICATION 28
7.1 Sale "As Is" "Where Is": 28
7.2 DISCLAIMER REGARDING OIL & GAS INTERESTS: 29
7.3 DISCLAIMER REGARDING INFORMATION: 30
7.4 Indemnification: 31
SECTION 8 - ADMINISTRATIVE PROVISIONS 35
8.1 Expenses of Sale: 35
8.2 Third Party Rights: 35
8.3 Further Actions: 35
8.4 Assignment: 35
8.5 Notices: 36
8.6 Public Announcements: 37
8.7 Time Limits: 37
8.8 Compliance with Laws & Regulations: 37
8.9 Applicable Law: 38
8.10 Arbitration: 38
8.11 Severance of Invalid Provisions: 40
8.12 Construction & Interpretation: 40
8.12.1 Headings for Convenience: 40
8.12.2 Gender & Number: 40
8.12.3 Independent Representation: 40
8.13 Integrated Agreement: 41
8.14 Binding Effect: 41
8.15 Multiple Counterparts: 41
8.16 Fair Notice Disclosure Statement: 42
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is dated January 14th,
2000, (but is for all purposes effective as of the Effective Time) by and
between SHELL OFFSHORE INC. ("SOI"), a Delaware corporation, having a post
office address of X.X. Xxx 00000, Xxx Xxxxxxx, Xxxxxxxxx 00000, and SOI
FINANCE INC. ("SOIFI"), a Delaware corporation having a post xxxxxx xxxxxxx xx
X.X. Xxx 0000, Xxxxxxx, Xxxxx 00000-0000, herein collectively referred to as
"SELLER", and McMoRan OIL & GAS LLC, a Delaware limited liability company,
("PURCHASER"), the address for which is 0000 Xxxxxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxx 00000. SELLER and PURCHASER are sometimes separately referred to
as a "Party" and are sometimes collectively referred to as "Parties".
WHEREAS, subject to the terms and conditions set forth in this Agreement,
PURCHASER desires to purchase from SELLER, and SELLER desires to sell to
PURCHASER, all of SELLER's interests, subject to SELLER's retention of an
overriding royalty interest, in certain oil and gas properties located in
the Outer Continental Shelf of the Gulf of Mexico and in the State of Louisiana.
NOW THEREFORE, in consideration of the mutual promises contained herein, the
benefits to be derived by each Party hereunder, and other good and valuable
consideration, PURCHASER and SELLER agree as follows:
SECTION 1 - DEFINITIONS / EXHIBITS
The following terms as used in this Agreement shall have the definitions set
forth below:
1.1 Agreement:
Shall mean this "Asset Purchase Agreement" together with its attached Exhibits
and Schedules, all of which are incorporated into this Agreement for all
purposes and as fully as if set forth in the text of this Agreement.
1.2 Affiliate:
Shall mean
(a) any corporation, limited liability company or partnership (including a
limited partnership), or other entity owned or controlled by a Party to this
Agreement. Ownership or control by a Party is deemed to exist if a Party to
this Agreement directly or indirectly owns or controls fifty percent (50%) or
more of the outstanding stock of the corporation having the right to vote for
directors of the corporation (or fifty percent (50%) or more of the interests
in the partnership or other entity). The stock (or interests in a partnership
or other entity) owned or controlled by a Party shall include all stock (or
other interests) directly or indirectly owned or controlled by any other
corporation, partnership or other entity owned or controlled by a Party to
this Agreement; and
(b) any "parent" corporation, limited liability company, partnership or other
entity that directly or indirectly owns or controls fifty percent (50%) or
more of the outstanding stock (or other interests) having the right to vote
for directors of a Party to this Agreement (or fifty percent (50%) or more of
the interests in the Party), and
(c) any "sister" corporation, partnership or other entity in which the parent
corporation directly or indirectly owns or controls fifty percent (50%) of the
voting stock (or other interests) in such sister corporation.
1.3 Contract Rights:
Shall have the meaning set forth in Section 2.1.5.
1.4 Effective Time:
Shall mean 7:00 a.m. local time where the Oil & Gas Interests are located on
December 1, 1999.
1.5 Exhibits:
Attached hereto and forming an integral part of this Agreement are Exhibits "1"
through "6" which are individually described as follows:
Exhibit "1" Description of Property
Exhibit "2a" Form of Assignment of Record Title (OCS)
Exhibit "2b" Form of Assignment Record Title (State of Louisiana)
Exhibit "2c" Form of Assignment of Operating Rights
Exhibit "2d" Form of Assignment of Overriding Royalty Interest
Exhibit "3" Excluded Property
Exhibit "4" Escrow Agreement and Allocation Values
Exhibit "5" List of Unexpired Preferential Rights and Unobtained Consents
Exhibit "6" Non-Foreign Affidavits
1.6 Closing:
Shall mean, subject to Section 3.5, (i) the execution and delivery of the
operative conveyances and other closing documents evidencing this transaction,
and (ii) the payment of the Purchase Price to SELLER, and any other amounts to
be paid at Closing pursuant to the terms of this Agreement.
1.7 Known/Knowledge:
Whenever a statement regarding the existence (or absence) of any fact in this
Agreement is qualified by a phrase such as "to such Party's Knowledge" or
"Known to such Party," the Parties intend that the only information to be
attributed to such Party is information actually known to (a) the person in
the case of an individual or (b) in the case of a corporation (or other
business entity), a current officer or employee. Unless otherwise
specifically provided in this Agreement, no Party is represented or obligated
to have undertaken a separate investigation in connection with the transaction
contemplated in this Agreement to determine the existence (or absence) of any
statement or representation qualified by a phrase such as "to such Party's
Knowledge" or "Known to such Party."
1.8 Lease:
Shall mean the oil and gas lease(s) (or portion(s) thereof) identified in
Exhibit "1" attached hereto and the lands affected by each such Lease.
1.9 MMS:
Shall mean the U.S. Department of the Interior, Minerals Management Service, or
any successor agency, and the records maintained at the New Orleans, La.
Regional Office of that agency, or any successor agency.
1.10 Net Revenue Interest:
Shall mean the aggregate fractional or percentage ownership of SELLER,
immediately prior to the Effective Time, of the right to receive hydrocarbon
production (either in-kind or the share of proceeds from sales of hydrocarbon
production) from the applicable Leases (excluding non-consent operations), after
the deduction of all burdens upon a Lease such as lessor's royalty and any
overriding royalties not being assigned to PURCHASER hereunder.
1.11 Oil & Gas Interests:
Shall mean all of SELLER's interest in the Leases and other oil and gas
leasehold estates or interests, as set forth in Exhibit "1", together with
SELLER's ownership or other interest in the well(s) located on the Lease(s)
and other rights and interests described in Section 2.1 below.
1.12 Operator:
Shall mean the person, designated or approved as Operator of the Oil & Gas
Interests under the terms of the applicable joint operating agreement, if any,
or by the appropriate government agency.
1.13 Party:
Shall mean any of the named SELLER and PURCHASER.
1.14 Schedules:
Attached hereto and forming an integral part of this Agreement are:
Schedule 5.2(c) Preferential Purchase Rights and Consents to Assignments
Schedule 5.2(f) Well List
Schedule 5.2(k) Lease Burdens
1.15 Seller's Retained Override:
SELLER's Retained Override shall have the meaning set forth in Section 2.5.1.
1.16 Xxxxx:
Shall have the meaning set forth in Section 2.1.3.
1.17 Working Interest:
Shall mean the aggregate fractional or percentage record title interest and
operating rights of SELLER in and to each Lease immediately prior to the
Effective Time by virtue of which SELLER has the right to conduct the
operations contemplated by a Lease and this Agreement.
SECTION 2 - PURCHASE AND SALE
2.1 Purchase and Sale of Assets:
SELLER agrees to sell and PURCHASER agrees to purchase, for the consideration
recited and upon the terms and conditions contained in this Agreement, the Oil
& Gas Interests . Except for the excluded assets listed in Section 2.2 below,
and subject to Section 3.5, upon Closing, SELLER shall sell, assign and
deliver to PURCHASER all of SELLER's right, title and interest in, to and
under all of the Oil & Gas Interests, including the following assets:
2.1.1 Lease(s):
All of SELLER's record title interest (or operating rights) comprising the
Working Interest and Net Revenue Interest in each Lease, or portion thereof,
and other interests in oil and gas described in Exhibit "1" and all rights,
privileges and obligations appurtenant to each Lease; and
2.1.2 Associated Interests:
All of SELLER's rights in any unit in which a Lease is included, to the extent
that these rights arise from and are associated with a Lease, including without
limitation, all rights derived from any pooling order, operating agreement,
communitization or other agreement or from any declaration or order of any
governmental body; and
2.1.3 Xxxxx:
All of SELLER's right, title and interest in all oil, gas or condensate xxxxx
and wellbore(s) (whether producing, not producing or permanently or temporarily
abandoned), water source, water injection and other injection and disposal
xxxxx and systems located on a Lease (or lands pooled with a Lease); and
2.1.4 Easements:
All of SELLER's right, title and interest in all easements, rights of way,
licenses, permits, servitudes, surface leases and similar interests applicable
or used in operating a Lease, to the extent assignable or transferable; and
2.1.5 Contract Rights:
All of SELLER's right, title and interest in the contracts and contractual
rights, obligations and interests (to the extent assignable or transferable)
insofar as relating to any of the Leases identified on Exhibit 1 hereto; and
2.1.6 Proprietary Data:
To the extent assignable or transferable, all of SELLER's right, title and
interest in all geological data (including, but not limited to interpretive
maps, electric logs and shallow hazard surveys) existing as of the Effective
Time owned by SELLER as of Closing relating to a Lease, but excluding any
seismic surveys and any geological data which might serve to reveal or disclose
proprietary interpretive or processing methods or techniques; and
2.1.7 Business Records:
Originals of all lease files, land files, division order files, abstracts, title
opinions and contract files, and photocopies of all well files and production
records, insofar as they directly relate to the assets described in Sections
2.1.1 through 2.1.6 above (but excluding any internal valuations, price
forecasts or interpretive data or documentation excluded under Section 2.1.6).
2.2 Excluded Assets:
The assets to be assigned and conveyed under this Agreement do not include
(collectively, the "Excluded Assets"):
2.2.1 All Seismic Surveys and Other Licensed Data:
All seismic surveys and other seismic, geophysical, or geological data owned by
or licensed from third parties or subject to a confidentiality obligation in
favor of a third party or any of SELLER's intellectual property, proprietary
seismic data (other than shallow hazards surveys), software, patents,
trademarks, logos or service marks used in developing or operating a Lease; and
2.2.2 Trade Accounts and Causes of Action:
Accounts and receivables or refunds, income or revenue, deposits, insurance or
condemnation proceeds or awards, rights with respect to operations or claims
and causes of action in favor of SELLER which are attributable to SELLER's
ownership of the Oil and Gas Interests prior to the Effective Time, particularly
such claims regarding the accounting for any SELLER or Affiliate overriding
royalty interest(s); and
2.2.3 Third Party Equipment:
Any leased equipment for which PURCHASER does not specifically assume the
lease or third party equipment and property that may be located on a Lease,
pipelines, fixtures, and equipment which belong to third parties such as
lessors, purchasers and transporters of hydrocarbons, and pipelines or other
assets belonging to Affiliates of Seller; and
2.2.4 Other Excluded Assets:
Those assets owned by SELLER listed on Exhibit 4 hereof, entitled "Excluded
Property".
2.3 Assets Subject to Existing Agreements:
PURCHASER and SELLER agree that the sale of the Oil & Gas Interests will be made
subject to (and PURCHASER upon Closing accepts the Oil and Gas Interests subject
to) any and all reservations, exceptions, limitations, contracts, assignments,
subleases, farmout agreements, joint operating agreements, letter agreements,
pooling or unitization agreements, easements, rights-of-way and all other
agreements or instruments (i) which are of record with the MMS, or (ii) which
have been made available in the data room to PURCHASER for its review prior to
Closing, or (iii) which are listed on Exhibit 1. In addition, as a part of the
consideration hereunder, upon Closing PURCHASER shall assume, pay for, and
perform SELLER's duties, liabilities and obligations as lessee of each Lease
and all duties imposed by governmental laws and regulations respecting each
Lease. PURCHASER further agrees to expressly assume SELLER's obligations and
liabilities under the contracts identified on Exhibit 1 insofar as such
obligations or liabilities relate to the Oil & Gas Interests after the
Effective Time, and to execute any documents necessary to effectuate such
assumption by PURCHASER.
2.3.1 Exclusions:
PURCHASER shall not assume or be responsible for (i) contractual
performance by SELLER due and owing prior to the Effective Time, including
any accounting or payments due to third parties for the performance of services,
sale of equipment or rentals of tools or equipment on the Leases, (ii)
underpayments or failure to pay rentals, royalties, overriding royalties, and
other lease burdens due by SELLER on or under the Leases prior to the Effective
Time, (iii) property damage sustained by third parties, or personal injury or
death occurring prior to the Closing, (iv) any regulatory fines or penalties
attributable to ownership or operations prior to the Closing; or (v) any
accounting or payments due to third parties for hydrocarbon production (or the
proceeds from the sale thereof) or processing attributable to the period of time
prior to the Effective Time, all of which shall remain the responsibility of the
SELLER.
2.4 Purchase Price:
PURCHASER agrees that the total purchase price for the Oil & Gas Interests shall
be Thirty-seven Million Seven hundred Twenty-seven Thousand Five hundred thirty-
three and no/hundredths ($37,727,533.00) Dollars (the "Purchase Price") payable
at Closing. The payment of the Purchase Price shall be made by electronic
transfer of immediately available funds (EFT) (i) in the amount described in
Section 3.5(d) to the credit of the escrow agent in the manner described in
the Exhibit 4 Escrow Agreement, and (ii) in the remaining amount of the
Purchase Price to the credit of SOI, for itself and as agent for SOIFI, at
the following bank account: Account #322018773, Chase Manhattan Bank,
New York, New York, ABA #000000000.
2.5 Additional Consideration:
2.5.1
As additional consideration and upon Closing:
(i) PURCHASER shall assume all of Seller's responsibility and liability for
the proper plugging and abandonment of all Xxxxx; and
(ii) Other than with respect to Prospect Chameleon (East Cameron 187, 194)
and Prospect Killer Bee (Vermilion 260), SELLER shall retain an
overriding royalty interest on each Lease equal to 8.33333% of 8/8ths of
all oil, gas, and other minerals produced and saved attributable to
SELLER's Working Interest in such Lease as such Working Interest is
listed on Exhibit 1, proportionately reduced in the event SELLER owns
less than a 100% Working Interest in such Lease, calculated and paid in
the same manner as royalty is paid to the Lessor of each such Lease
("SELLER's Retained Override"); such overriding royalty shall run with
the land but shall not be payable out of production from xxxxx in which
PURCHASER has no interest by reason of withdrawal, non-consent, or
non-participation under a joint operating agreement. SELLER shall have
the right to take its production in kind. PURCHASER shall be entitled to
pay SOI, for the benefit of both SOI and SOIFI, as their interests appear,
with respect to said Retained Override.
2.5.2
In addition and upon Closing, except as provided in Section 2.5.3,
PURCHASER assumes responsibility and liability for claims arising out of the
following occurrences, events and activities on or related to the Oil & Gas
Interests ("Environmental Obligations"), regardless of whether resulting from
any acts or omissions of SELLER prior to the Effective Time or the condition of
the Oil & Gas Interests when acquired;
(a) Environmental pollution or contamination, including pollution or
contamination of the soil, sea, groundwater or air by hydrocarbons,
brine, NORM or otherwise;
(b) Underground injection activities and waste disposal onsite;
(c) Clean-up responses, and the cost of remediation, control, assessment or
compliance with respect to surface, sea floor, and subsurface pollution;
(d) Disposal on the Oil & Gas Interests of any hazardous substances, wastes,
materials, and products generated by or used in connection with the
ownership or operation of the Oil & Gas Interests.
2.5.3 Exclusions:
PURCHASER's Environmental Obligations do not include the following, all of
which remain the responsibility and liability of SELLER:
(a) Any civil or criminal fines or penalties that may be levied against
SELLER by any court or regulatory authority for any violation of any
laws, rules or regulations in connection with the ownership or operation
of the Oil & Gas Interests before the Effective Time;
(b) Transportation and disposal offsite from the Oil & Gas Interests before
the Effective Time of any hazardous substances, wastes, NORM,
materials, and products generated by or used in connection with the
ownership or operation of the Oil & Gas Interests before the Effective
Time; and
(c) Claims against PURCHASER by third parties, including governmental
agencies, resulting from the Environmental Obligations, which arose,
accrued, and are attributable to the ownership or operation of the Oil &
Gas Interests prior to the Effective Time, and are asserted within
twenty-four (24) months after the Effective Time, based upon laws
enacted as of the Effective Time. It is agreed and understood, moreover,
that this exclusion and SELLER's indemnity obligations with respect to
the same under this Agreement shall be limited only to Claims against
PURCHASER by third parties, including governmental agencies.
2.6 Title and Risk of Loss:
SELLER shall deliver possession of the Oil & Gas Interests to PURCHASER at the
Closing. Upon Closing, title to and risk of loss with respect to the Oil & Gas
Interests (and all associated property) shall pass to PURCHASER as of the
Effective Time.
2.7 Specific Performance:
Each Party shall have the right of specific performance.
2.8 Insurance:
SELLER and PURCHASER agree that, as to liabilities assumed by PURCHASER
hereunder, all property or liability insurance obtained by PURCHASER to cover
losses of property or environmental damages or for personal injury or death
shall name SELLER as additional insured, where permitted by the terms of the
applicable policies, and shall contain a waiver of subrogation against SELLER.
SECTION 3 - TITLE AND ENVIRONMENTAL
3.1 Title Matters:
SELLER WILL CONVEY THE OIL & GAS INTERESTS TO PURCHASER
WITHOUT WARRANTY OF TITLE, EXPRESS, STATUTORY OR IMPLIED,
except that SELLER will specially warrant and agree to defend title to the Oil &
Gas Interests conveyed against the lawful claims and demands of all persons
claiming title to the Oil & Gas Interests by, through and under SELLER, but
not otherwise. Notwithstanding the above, PURCHASER shall have the right of
full substitution and subrogation in and to any and all rights and actions of
warranty which SELLER may have against any and all preceding owners of the Oil
& Gas Interests.
3.2 Physical Condition of the Assets:
PURCHASER acknowledges that the Oil & Gas Interests have been used by SELLER
for oil and gas drilling and production operations and related oilfield
operations and physical changes in the Oil & Gas Interests (or adjacent lands)
may have occurred as a result of such uses. In this regard, the Oil & Gas
Interests may also contain unplugged (or improperly plugged) xxxxx, wellbores
or buried pipelines or other equipment, whether or not of a similar nature,
the locations of which may not now be Known by SELLER or be readily apparent
by a physical inspection of the property. PURCHASER and SELLER understand
that neither SELLER nor PURCHASER has the requisite information with which
to determine the exact condition of the Oil & Gas Interests nor the effect
any such use has had on the physical condition of the Oil & Gas Interests.
3.3 NORM:
PURCHASER acknowledges that some oilfield production equipment comprising the
Oil & Gas Interests may contain naturally occurring radioactive material
("NORM"). In this regard, PURCHASER specifically acknowledges that NORM may
affix or attach itself to the inside of wellbores, materials and equipment as
scale or in other forms, and that xxxxx, materials and equipment comprising
the Oil & Gas Interests and being located on a Lease may contain NORM and that
NORM containing materials may have been disposed of on a Lease. PURCHASER
expressly understands that special procedures may be required for the removal
and disposal of NORM from the Oil & Gas Interests if and where they may be
found, and PURCHASER assumes SELLER'S liability for or in connection with the
assessment, remediation, removal, transportation or disposal of any such
materials present on a Lease at or after the Effective Time in
accordance with all requirements of governmental agencies.
3.4 Availability of Data:
To SELLER's Knowledge, all historical file information of SELLER regarding
hydrocarbon production and produced water that may have been spilled or
disposed of on-site and the locations thereof, together with all underground
injection and solid waste disposal sites have been made available to PURCHASER
for inspection prior to the Closing except for interpretive or predictive
reservoir data or information which SELLER considers confidential or
proprietary. SELLER has not caused any environmental assessment of the Oil &
Gas Interests to be performed or (except as noted above) attempted to gather
information necessary to determine the exact nature of the environmental c
ondition of the Oil & Gas Interests for the purposes of this sale.
3.5 Preferential Rights and Consents:
(a) Prior to the date of the execution of this Agreement, SELLER has consulted
with PURCHASER on the forms of notice and request for waivers to be sent to
all holders of preferential purchase rights ("Rights") or consent rights in the
Leases. As soon as practicable after the date hereof, unless previously
transmitted, SELLER shall transmit to the respective holders of the Rights the
notices and request for waivers.
(b) To the extent that any Rights are exercised by any third party entitled to
exercise such Rights, then the Leases subject to such Rights shall not be sold
to PURCHASER and shall be excluded from the Agreement and the Purchase
Price shall be reduced by the value allocated to such Lease(s) as set forth on
Exhibit 4. Subject to the terms of the Rights, if any third party initially
elects to exercise a Right, but subsequently refuses or elects not to consummate
the purchase under such Right and such refusal continues until 90 days following
Closing, PURCHASER shall purchase such interests covered by the Right for its
allocated value as set forth in Exhibit 4, as of the Effective Time, and the
closing of such transaction shall take place on a date mutually acceptable to
PURCHASER and SELLER, but not more than 30 days following such failure
or refusal.
(c) SELLER shall not object to PURCHASER discussing with the holder of any
Right the possible exercise, waiver or expiration of such Rights, without any
liability on the part of SELLER.
(d) At Closing, (i) SELLER shall deposit into an escrow to be created pursuant
to Exhibit 4, multiple originals of documents of assignment, transfer and
conveyance (the "Right Assignments") relating to the Leases: (a) for which the
time for the exercise of the Right has not expired or been waived and/or (b) on
which all required consents have not been obtained prior to Closing and (ii)
PURCHASER shall deposit into escrow, the portion of the Purchase Price
allocated to the applicable Leases subject to the unexpired Right or unobtained
consent, as set forth in Exhibit 5. Promptly after the expiration or waiver of
any Right and/or the obtaining of the required consents as applicable, SELLER
and PURCHASER, by joint notice, shall instruct the escrow agent (i) to deliver
the applicable Rights Assignment to PURCHASER, and (ii) to release to SELLER
with interest, if any, the allocable portion of the Purchase Price attributable
to the applicable Lease as set forth in Exhibit 4.
(e) If a Right is exercised timely after Closing, or a consent is not obtained
within sixty (60) days of Closing, PURCHASER and SELLER agree as follows: (1)
the escrow agent, upon receipt of the joint instructions of PURCHASER and
SELLER, shall destroy the applicable Right Assignment; (2) SELLER shall
execute and deliver to the holder of the applicable Right an appropriate
instrument of assignment, transfer and conveyance, and (3) the escrow agent
shall release to PURCHASER, with interest, if any, the allocable portion of the
Purchase Price attributable to the applicable Lease as set forth in Exhibit 4.
SECTION 4 - CLOSING
4.1 Time:
The Closing shall be held on or before January 21, 2000, (unless otherwise
mutually delayed as provided in this Section), at the offices of SELLER at
000 Xxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxx. The time and place for Closing
may be changed to an earlier or later time and place by mutual written
agreement of the Parties, but any acceleration or delay in the Closing shall
not change the Effective Time.
4.2 Closing:
Subject to Section 3 hereof, the following shall take place at the Closing:
(a) SELLER and PURCHASER shall execute and deliver assignments on the forms
which are attached as Exhibits "2-a" through "2-d".
(b) PURCHASER shall pay to SELLER by wire transfer an amount equal to the
Purchase Price, less the portion described in item (c) below.
(c) PURCHASER shall pay into escrow by wire transfer the amount provided for in
Section 3.5(d).
(d) PURCHASER and SELLER shall execute and deliver the remaining documents
contemplated by the transaction described herein and any other agreements
relative hereto deemed necessary or appropriate by the Parties.
The parties shall execute other appropriate instruments necessary to effect or
support the transaction contemplated in this Agreement, including without
limitation, any ratification or joinder documents prepared by SELLER
consistent with the terms of this Agreement required to transfer any Contract
Rights and any lease assignment forms, and Designations of Operator or other
forms required by federal or state agencies to transfer operatorship of the
Oil & Gas Interests to PURCHASER, where applicable and contractually
permissible.
Upon PURCHASER's completion of its Closing obligations, and subject to Section
3, SELLER shall deliver to PURCHASER, exclusive possession of the Oil & Gas
Interests as of the Closing. Notwithstanding any other provision of this
Agreement, the failure of PURCHASER to deliver all of the Purchase Price, as
adjusted as contemplated above, at Closing shall entitle SELLER to withhold
all conveyancing documents until such time as it has received the full
consideration for the conveyance. This right shall be in addition to all
other rights and remedies that SELLER may have under this Agreement
or at law or in equity.
No agreement to be executed and delivered at the Closing, or action to be taken
at the Closing, shall be effective until all such agreements have been executed
and delivered or actions have been taken, and all such agreements and actions
shall be deemed to be effective concurrently.
4.3 Post Closing Obligations:
Upon condition that the Closing shall have occurred, SELLER and PURCHASER agree
to perform the following "post-Closing obligations":
4.3.1 Recording & Filing:
Within ninety (90) days of Closing, PURCHASER shall (i) file or record the
conveyancing documents in the appropriate governmental records and (ii) file
for approval with the applicable governmental agencies all state and federal
transfer and assignment documents for the Oil & Gas Interests. PURCHASER
shall provide a copy of same, including recording date, to the SELLER.
4.3.2 Change of Operator:
Where SELLER is the designated Operator of a Lease, and PURCHASER is
entitled to assume operatorship thereof, if requested by PURCHASER, SELLER
will in good faith endeavor to solicit the approval of PURCHASER as Operator
from the working interest owners of the Lease, PURCHASER shall promptly
file all appropriate forms, declarations or bonds with federal and state
governmental agencies relative to PURCHASER's assumption of operations
from SELLER. PURCHASER shall also take all actions necessary to qualify as
a successor Operator to SELLER under any applicable joint operating agreement
(subject to the terms of that operating agreement).
4.3.3 Notices to Third Parties:
PURCHASER shall notify all lessors, royalty owners, operators, non-operators,
purchasers of production and governmental agencies that PURCHASER has
purchased the Oil & Gas Interests and has assumed liability for their continued
operation from and after the Closing. PURCHASER and SELLER shall
execute any transfer orders and division orders necessary to transfer payment of
the proceeds from the sale of production from the Oil & Gas Interests as of the
Effective Time to PURCHASER.
4.3.4 Property Records:
Within thirty (30) days after Closing, SELLER shall deliver to PURCHASER
the property and business records (2.1.7), proprietary data (2.1.6) and other
property and business records specified in this Agreement (subject to the
limitations contained in this Agreement). If SELLER retains any original
records, PURCHASER shall have the right to review (and copy at
PURCHASER'S expense) such original records during SELLER's normal
business hours. PURCHASER shall retain any original records delivered, and
SELLER shall retain any such original records not delivered to PURCHASER
for a period of seven (7) years from the Effective Time. SELLER reserves the
right to access (and copy at SELLER's expense) all original records delivered
for a period of seven (7) years from the Effective Time (and PURCHASER agrees
to grant SELLER access to the records during PURCHASER's normal business
hours). In the event that SELLER or PURCHASER wishes to destroy any such
original books or records in its possession or in the possession of any of its
Affiliates prior to such date, such party shall give not less than sixty (60)
days notice to the other party and such other party shall have the right, at its
own expense, during reasonable business hours, to remove such books and records
and to keep possession of same. After the seventh anniversary of the Effective
Time, each party will retain (and may destroy) such books and records in
accordance with such party's customary record retention practices. If
PURCHASER transfers any portion of Oil & Gas Interests, PURCHASER shall
ensure that this records retention obligation shall continue as its Assignee's
obligation.
4.3.5 Use of Name:
On or before ninety (90) days after Closing, PURCHASER will remove, or
cause to be removed, from the platforms and facilities pertaining to the Oil &
Gas Interests, the name, logo and service xxxx of SELLER and all variations
and derivations thereof, and will not thereafter make use thereof.
4.4 Governmental Approvals:
PURCHASER and SELLER shall execute and file all forms (and PURCHASER shall
perform all acts) required by the MMS (and other appropriate governmental
agencies) to transfer operatorship of the Oil & Gas Interests from SELLER to
PURCHASER, as applicable, effective as of the Effective Time. The
conveyances (along with any change in operatorship) involved in this
transaction are subject to approval by the MMS (and possibly other governmental
agencies).
SECTION 5.0 - GENERAL REPRESENTATIONS AND
WARRANTIES
5.1 Reciprocal Representations and Warranties:
SELLER and PURCHASER each represent and warrant to the other, that as of the
date of this Agreement, as of the Effective Time and as of the Closing:
(a) Corporate Organization: The Party making the representation is a
corporation or limited liability company validly existing and in good standing
under the laws of that entity's state of formation, with the requisite power and
authority to own property and assets such as the Oil & Gas Interests and to
carry on its business as now being conducted.
(b) Requisite Approvals: The Party making the representation has the requisite
power and authority to execute and deliver this Agreement and to consummate
the transaction contemplated in this Agreement. This Agreement constitutes a
valid and binding obligation of the Party making the representation, enforceable
against it in accordance with the terms hereof, and no other act, approval or
proceeding on its part is required to authorize the execution and delivery of
this Agreement or the consummation of the transaction contemplated hereunder.
This Agreement (and all closing documents) are executed by appropriate
officials having the requisite authority to execute and deliver such documents
on behalf of the Party making the representation.
(c) Impediments to Consummation of Agreement: This Agreement, and the
execution and delivery hereof by the representing and warranting Party, do not,
and the consummation of the transaction contemplated hereunder will not,
violate any provision of, or constitute a default under, the charter, by-laws or
operating agreement of such Party or any law or regulation to which it is
subject, or any provision of any agreement, indenture, mortgage, lien, lease,
instrument, order, arbitration award, judgment, or decree to which it is a
Party or by which it or any of its assets or properties is bound.
(d) Bankruptcy: There are no bankruptcy, reorganization or receivership
proceedings pending, being contemplated or threatened against the Party making
the representation.
5.2 SELLER's Representations & Warranties:
SELLER represents and warrants to PURCHASER, that as of the date of this
Agreement, the Effective Time and the Closing:
(a) Permits: All material permits affecting the Oil & Gas Interests have been
made available for PURCHASER's review and are being transferred to PURCHASER
in this transaction, to the extent transferable.
(b) Compliance with Laws: To SELLER's knowledge, SELLER has not violated
any applicable laws or statutes, or any applicable regulations, rules or orders
promulgated by the Federal Energy Regulatory Commission, the MMS or any
other federal or state regulatory agency, or any of their predecessor agencies,
which might materially and adversely affect the value to PURCHASER of the
Oil & Gas Interests, or the production therefrom.
(c) Preferential Purchase Rights and Consents to Assignment: Other than as set
forth on Schedule 5.2(c), the Leases are not subject to any agreements
containing preferential purchase rights or consent to assignment provisions
that must be complied with prior to the assignment of the Leases to PURCHASER.
(d) Litigation: There is neither any claim, dispute, suit, action,
investigation or other proceeding pending before any court or governmental
agency nor, to SELLER's knowledge, threatened against SELLER or any Affiliate
of SELLER which might materially diminish the value or impede the operation of
any Oil & Gas Interest, or which challenges or pertains to the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby.
(e) Taxes: All ad valorem, property, production, excise, severance, windfall
profit and similar taxes and assessments payable with respect to the Oil & Gas
Interests and based on or measured by the ownership of property or the
production or removal of hydrocarbons or the receipt of proceeds therefrom
have been and will be timely paid in all respects.
(f) Leases and Xxxxx: To SELLER's knowledge (i) SELLER is not in material
default under any of the material terms and provisions of any of the Leases or
under any agreement to which the same are subject; (ii) all royalties, rentals,
and other payments due thereunder by SELLER prior to Closing have been timely
and properly paid in full on or before the due dates thereof; and (iii) all of
the xxxxx have been drilled, completed, and operated within the boundaries of
the Leases or Oil & Gas Interests or within the limits otherwise permitted by
contract, pooling, or unit agreement, and by law and in compliance with all
applicable rules, regulations, permits, judgments, orders and decrees of any
court or the federal and state regulatory authorities having jurisdiction
thereof. All Xxxxx drilled by SELLER or its assigns on the Leases are listed on
Schedule 5.2(f).
(g) Marketing: Except as disclosed on Exhibit 1, no amounts of hydrocarbons
produced from the Oil & Gas Interests and marketed by SELLER and to
SELLER's knowledge, no amount of SELLER's hydrocarbons produced from
the Oil & Gas Interests and marketed by others are subject to a sales,
transportation or processing contract (except for contracts terminable without
penalty by SELLER on not more than 30 days notice), and, no person has any
call upon, option to purchase or similar rights under any agreement with
respect to the Oil & Gas Interests or to the production therefrom. (In this
connection, SELLER represents, warrants and undertakes that within twenty-one
(21) days of Closing it will obtain an unconditional release of the dedication
of any volumes from the Leases to Manta Ray Gas Gathering Company.) SELLER has
not in any respect collected, nor will SELLER in any respect collect, any
proceeds from the sale of hydrocarbons produced from the Oil & Gas Interests
that are subject to refund by PURCHASER. As of the Effective Time, proceeds
from the sale of oil, condensate, and gas from the Oil & Gas Interests were
being received in all respects by SELLER in a timely manner and were not
being held in suspense for any reason. SELLER has not been nor will
PURCHASER be obligated by virtue of any prepayment made under any gas
transportation, production sales contract, or any other contract containing a
"take or pay" clause, or under any gas balancing, deferred production or
similar arrangement to deliver oil, gas or other minerals produced from or
allocated to any of the Oil & Gas Interests at some future time without
receiving full payment therefor at the time of delivery.
(h) Contract Rights: To SELLER's knowledge, with respect to the Contract
Rights: (i) as to SELLER, all Contract Rights which have not previously
expired or been terminated by mutual agreement are in full force and effect
and are the valid and legally binding obligations of the parties thereto and
are enforceable in accordance with their respective terms, except to the
extent that such enforcement may be limited by applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally, and by
general equitable principles; (ii) SELLER is not in material breach or
default with respect to any of their obligations under any material Contract
Right; and (iii) neither SELLER nor any other party to any Contract Right has
given or threatened to give notice of any action to terminate, cancel, rescind,
or procure a judicial reformation of any Contract Right or any provision
thereof; and (iv) to SELLER's Knowledge, SELLER has not made or agreed to any
material changes to any Contract Right, between the Effective Date and
Closing, without PURCHASER's Knowledge.
(i) Environmental Matters: To SELLER's knowledge, and only as to those Oil &
Gas Interests where SELLER is the Operator, : (i) SELLER has obtained all
permits, licenses, and other authorizations that are required under federal,
state, and local laws with respect to pollution or protection of the
environment relating to the Oil & Gas Interests, including laws relating to
actual or threatened emissions, discharges, or releases of pollutants,
contaminants, or hazardous substances, or other toxic materials or wastes
into ambient air, surface water, ground water or land, or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants of hazardous
substances, or other toxic materials or wastes ("Environmental Laws"); and
(ii) SELLER and the Oil & Gas Interests are in substantial compliance in all
material respects with all Environmental Laws and all material terms and
conditions of such permits, licenses and authorizations. SELLER has not
received written notice of any past or present conditions, circumstances,
activities, practices, incidents, actions, or plans that are reasonably likely
to interfere or prevent continued compliance, or that are
reasonably likely to give rise to any material liability, or otherwise form the
basis of any material claim, action, suit, proceeding, hearing or
investigation, based on or related to the processing, distribution, use,
treatment, storage, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment, of any pollutant,
contaminant, or hazardous substance or other toxic material or waste from or
attributable to any Oil & Gas Interest.
(j) SELLER'S Working Interest and Net Revenue Interest in each of the Leases and
each of the xxxxx on the Leases are as shown on Exhibit 1 and for purposes of
SELLER'S by, through and under warranty, SELLER warrants that SELLER is
delivering the Working Interest and Net Revenue Interest reflected on Exhibit 1,
exclusive of SELLER's Retained Override.
(k) Except as set forth on Schedule 5.2(k), other than the Retained Override
there are no overriding royalty, production payments, net profit interests or
other revenue burdens on the Leases other than the royalty due the MMS under
each of the Leases.
(l) Operations: To SELLER's Knowledge, with respect to the joint, unit, or
other operating agreements relating to the Oil & Gas Interests: (i) there are
no outstanding calls or payments under authorities for expenditures ("AFE's");
and (ii) there are no operations under the operating agreements relating to
the Oil & Gas Interests with respect to which SELLER has become a non-consenting
party or outstanding AFE's.
5.3 PURCHASER's Representations & Warranties:
PURCHASER represents and warrants to SELLER, that as of the date of this
Agreement, the Effective Time and the Closing:
(a) Receipt of Data: PURCHASER represents that it has had the opportunity to
perform due diligence on the Oil & Gas Interests that PURCHASER wishes to
purchase, which includes physical inspection(s), environmental assessment(s),
reviewing well data and other files, and performing all necessary tasks involved
in evaluating the Oil & Gas Interests.
(b) Independent Evaluation: PURCHASER represents and acknowledges that it is
knowledgeable of the oil and gas business and of the usual and customary
practices of producers such as SELLER and that it has had access to the Oil &
Gas Interests, the officers and employees of SELLER, and the books, records
and files made available by SELLER relating to the Oil & Gas Interests. In
making the decision to enter into this Agreement and consummate the
transactions contemplated hereby, PURCHASER has relied solely on the basis
of its own independent due diligence investigation of the Oil & Gas Interests
and upon the representations and warranties made in Section 5 of the
Agreement. ACCORDINGLY, PURCHASER ACKNOWLEDGES THAT
SELLER HAS NOT MADE, AND SELLER HEREBY EXPRESSLY
DISCLAIMS AND NEGATES ANY REPRESENTATION OR WARRANTY
(OTHER THAN THOSE EXPRESS LIMITED REPRESENTATIONS AND
WARRANTIES MADE IN SECTION 5 OF THIS AGREEMENT), EXPRESS,
IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE,
RELATING TO THE OIL & GAS INTERESTS.
(c) No Securities Distribution: PURCHASER represents to SELLER that
PURCHASER intends to acquire the Oil & Gas Interests for PURCHASER's
own benefit and account and that PURCHASER is not acquiring such interests
with the intent of distributing fractional undivided interests in the Oil & Gas
Interests that would be subject to regulation by federal or state securities
law, and that if, in the future, PURCHASER should sell or otherwise dispose of
the Oil & Gas Interests in any manner that would be subject to securities
regulation, PURCHASER will fully comply with all federal and state securities
laws.
5.4 SELLER's Reliance:
PURCHASER acknowledges that SELLER is entering this transaction relying upon
PURCHASER's representations and warranties, upon PURCHASER's assumption of
obligations and liabilities pertaining to the Oil & Gas Interests and upon the
agreements and undertakings of PURCHASER provided for herein. SELLER
acknowledges that PURCHASER is entering this transaction relying upon SELLER's
representations and warranties, upon SELLER's retention as set forth herein of
certain obligations and liabilities pertaining to the Oil & Gas Interests, and
upon the agreements and undertakings of SELLER provided for herein.
5.5 Survival of Representations & Warranties:
Subject to Section 7 hereof, all of the representations, warranties, indemnities
and agreements of or by the Parties to this Agreement shall survive the
Closing of this transaction as provided herein and shall not merge into the
conveyancing documents.
SECTION 6 - PURCHASER'S OBLIGATION
6.1 PURCHASER's Assumed Obligations:
After the Closing, PURCHASER shall assume and perform all of the rights, duties,
obligations and liabilities of ownership of the Oil & Gas Interests, as follows:
(a) The express and implied obligations, conditions and covenants under the
terms of each Lease or the Contract Rights to which the Oil & Gas Interests are
subject, except as provided in Section 2.3.1; and
(b) Responsibility for compliance with all applicable laws, regulations,
ordinances, rules and orders and the procurement and maintenance of all
permits and bonds required by governmental authorities relating to the Oil &
Gas Interests and which accrue after the Closing; and
(c) Responsibility for royalties, overriding royalties, net profits interests,
rentals, shut-in payments (if any) to which the Oil & Gas Interests are subject
and which are attributable to the period after the Effective Time; and
(d) All other obligations assumed by PURCHASER under the terms of this
Agreement.
6.2 Plugging and Abandonment of Xxxxx, Removal of Facilities:
PURCHASER recognizes and specifically assumes SELLER's obligation to:
(i) properly plug and abandon (or re-plug) any and all oil, gas or condensate
Xxxxx and wellbore(s) (whether producing, not producing or abandoned or plugged
prior to or after the Effective Time), water source, water injection and other
injection and disposal xxxxx and systems located on each Lease (or lands pooled
with a Lease); and
(ii) restore each Lease and wellsite(s) associated with the Oil & Gas Interests
as required by such Lease;
all in accordance with the rules, regulations, and requirements of any
governmental authority having jurisdiction thereof, and in accordance with all
obligations, express or implied, in any contract assumed by PURCHASER, whether
or not any such obligations arise prior to or after the Effective Time.
PURCHASER agrees to pay all such costs and expenses associated with any such
plugging and abandoning, removal, or restoration.
SECTION 7 - DISCLAIMER OF WARRANTY /
INDEMNIFICATION
7.1 Sale "As Is" "Where Is":
PURCHASER REPRESENTS THAT IT HAS INSPECTED THE OIL & GAS
INTERESTS AND ACCEPTED THE PHYSICAL AND ENVIRONMENTAL
CONDITION OF SAME ON AN "AS IS-WHERE IS" BASIS, SUBJECT TO THE
TERMS OF THIS AGREEMENT. PURCHASER RELEASES SELLER FROM ANY
LIABILITY WITH RESPECT TO THE PHYSICAL AND ENVIRONMENTAL
CONDITION OF THE OIL & GAS INTERESTS AT THE EFFECTIVE TIME
(OTHER THAN AS MAY BE PROVIDED FOR UNDER THIS AGREEMENT)
WHETHER OR NOT CAUSED BY OR ATTRIBUTABLE TO SELLER'S
NEGLIGENCE, FAULT, OR STRICT LIABILITY, AND WHETHER OR NOT
ARISING DURING THE PERIOD OF, OR FROM, OR IN CONNECTION WITH
SELLER'S OWNERSHIP OF THE OIL & GAS INTERESTS OR USE OF THE
PROPERTY DESCRIBED IN THE LEASES BEFORE OR AT THE EFFECTIVE
TIME. WITHOUT LIMITING THE ABOVE, PURCHASER WAIVES ANY RIGHT,
EXCEPT TO THE EXTENT PROVIDED FOR IN THIS AGREEMENT, TO
RECOVER FROM SELLER AND FOREVER RELEASES AND DISCHARGES
SELLER AND SUBJECT TO, AND AS PROVIDED IN, THIS AGREEMENT,
AGREES TO RELEASE, INDEMNIFY, DEFEND AND HOLD SELLER
HARMLESS FROM ANY AND ALL DAMAGES, CLAIMS, LOSSES,
LIABILITIES, PENALTIES, FINES, LIENS, JUDGMENTS, COSTS AND
EXPENSES WHATSOEVER, (INCLUDING WITHOUT LIMITATION,
ATTORNEYS' FEES AND COSTS), WHETHER DIRECT OR INDIRECT, KNOWN
OR UNKNOWN, FORESEEN OR UNFORESEEN, THAT MAY ARISE ON
ACCOUNT OF OR IN ANY WAY BE CONNECTED WITH THE PHYSICAL
CONDITION OF THE OIL & GAS INTERESTS AT THE EFFECTIVE TIME OR
ANY LAW OR REGULATION APPLICABLE THERETO, INCLUDING WITHOUT
LIMITATION, THE COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED (42 U.S.C. 9
9601 et. seq.), THE RESOURCE CONSERVATION AND RECOVERY ACT OF
1976 (42 U.S.C. 9 6901 et. seq.), THE CLEAN WATER ACT (33 U.S.C. 99 466 et.
seq.), THE SAFE DRINKING WATER ACT (14 U.S.C. 9 1401-1450), THE
HAZARDOUS MATERIALS TRANSPORTATION ACT (49 U.S.C. 9 7401 et. seq.)
AS AMENDED, THE CLEAN AIR ACT AMENDMENTS OF 1990, AND ANY
OTHER APPLICABLE FEDERAL, STATE OR LOCAL LAW, WHETHER OR NOT
ARISING DURING THE PERIOD OF, OR FROM, OR IN CONNECTION WITH,
SELLER's OWNERSHIP OF THE OIL & GAS INTERESTS OR USE OF THE
PROPERTY DESCRIBED IN THE LEASES AT OR PRIOR TO THE EFFECTIVE
TIME, AND WHETHER OR NOT ATTRIBUTABLE TO THE STRICT LIABILITY
OF SELLER OR TO THE SOLE, JOINT OR CONCURRENT, ACTIVE OR
PASSIVE, NEGLIGENCE OF SELLER, EVEN IF CAUSED BY THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SELLER PRIOR TO CLOSING.
7.2 DISCLAIMER REGARDING OIL & GAS INTERESTS:
PURCHASER ACKNOWLEDGES THAT SELLER HAS NOT MADE, AND
SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES, ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO
THE CONDITION OF ANY IMMOVABLE PROPERTY, MOVABLE PROPERTY,
EQUIPMENT, INVENTORY, MACHINERY, FIXTURES AND PERSONAL
PROPERTY CONSTITUTING PART OF THE OIL & GAS INTERESTS
(INCLUDING, WITHOUT LIMITATION, (a) ANY IMPLIED OR EXPRESS
WARRANTY OF MERCHANTABILITY (b) ANY IMPLIED OR EXPRESS
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (c) ANY IMPLIED
OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF
MATERIALS, (d) ANY RIGHTS OF PURCHASER UNDER APPROPRIATE
STATUTES TO CLAIM DIMINUTION OF CONSIDERATION OR RETURN OF
THE PURCHASE PRICE, (e) ANY IMPLIED OR EXPRESS WARRANTY OF
FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT, (f) ANY
IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM REDHIBITORY
VICES OR DEFECTS OR OTHER VICES OR DEFECTS, WHETHER KNOWN OR
UNKNOWN, AND (g) ANY AND ALL IMPLIED WARRANTIES EXISTING
UNDER APPLICABLE LAW NOW OR HEREAFTER IN EFFECT, IT BEING THE
EXPRESS INTENTION OF SELLER AND PURCHASER THAT THE
IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY,
MACHINERY, FIXTURES AND PERSONAL PROPERTY SHALL BE CONVEYED
TO PURCHASER AS IS AND IN THEIR PRESENT CONDITION AND STATE OF
REPAIR AND PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS
MADE OR CAUSED TO BE MADE SUCH INSPECTIONS WITH RESPECT TO
THE IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT,
INVENTORY, MACHINERY, FIXTURES AND PERSONAL PROPERTY AS
PURCHASER DEEMS APPROPRIATE AND PURCHASER WILL ACCEPT THE
IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY,
MACHINERY, FIXTURES AND PERSONAL PROPERTY AS IS, IN THEIR
PRESENT CONDITION AND STATE OF REPAIR.
7.3 DISCLAIMER REGARDING INFORMATION:
SELLER HEREBY EXPRESSLY NEGATES AND DISCLAIMS, AND
PURCHASER HEREBY WAIVES, AND ACKNOWLEDGES THAT SELLER HAS
NOT MADE, ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, RELATING TO (a) THE ACCURACY, COMPLETENESS OR
MATERIALITY OF ANY INFORMATION (OTHER THAN SUCH INFORMATION
AS IS EXPRESSLY REPRESENTED AND WARRANTED IN SECTIONS 3.4 AND
5 HEREOF), DATA OR OTHER MATERIALS (WRITTEN OR VERBAL) NOW,
HERETOFORE, OR HEREAFTER FURNISHED TO PURCHASER BY OR ON
BEHALF OF SELLER OR (b) PRODUCTION RATES, RECOMPLETION
OPPORTUNITIES, DECLINE RATES, GEOLOGICAL OR GEOPHYSICAL DATA
OR INTERPRETATIONS, THE QUALITY, QUANTITY, RECOVERABILITY OR
COST OF RECOVERY OF ANY HYDROCARBON RESERVES, ANY PRODUCT
PRICING ASSUMPTIONS, OR THE ABILITY TO SELL OR MARKET ANY
HYDROCARBONS AFTER CLOSING.
7.4 Indemnification:
(a) Except for those matters covered by SELLER's indemnity as set forth in
Section 7.4(b), PURCHASER shall indemnify, defend and hold harmless
SELLER and its respective Affiliates, and each of their respective directors,
officers, employees, stockholders and agents, from and against any and all
claims, liabilities, losses, causes of actions, costs and expenses (including,
without limitation, those involving theories of negligence or strict liability
and including court costs and attorneys' fees) ("Losses") asserted against,
resulting from, imposed upon or incurred by SELLER as a result of, or arising
out of, (i) the breach of any of the representations, warranties, covenants or
agreements of PURCHASER contained in this Agreement, (ii) the disclaimers of
SELLER, including but not limited to, the provisions of Paragraphs 3.2, 3.3,
3.4, and those contained in this Section 7.0, and/or (iii) as a result of, or
arising out of, PURCHASER's ownership or operation of the Oil & Gas Interests,
including, but not limited to, the obligation to properly plug and abandon all
xxxxx now or hereafter located on any of the Oil & Gas Interests, or as a result
of, or arising out of, any matter or circumstance relating to the Environmental
Obligations assumed by PURCHASER pursuant to Section 2.5.2, regardless in each
case whether known or unknown, whether attributable to periods of time before
or after the Effective Time or Closing, and regardless of the strict liability
of SELLER or whether SELLER was or was alleged to have been negligent,
including without limitation, the sole, joint or concurrent, active or passive
negligence of SELLER, even if SELLER was or was alleged to have been
grossly negligent or guilty of willful misconduct.
(b) SELLER shall indemnify, defend and hold harmless PURCHASER and its
Affiliates, and its and their respective directors, officers, members, managers,
employees, stockholders and agents, from and against all Losses asserted
against, resulting from, imposed upon or incurred by PURCHASER or such
other persons entitled to indemnification under this Section 7.4(b) as a result
of, or arising out of, (i) the breach of any of the representations, warranties,
covenants or agreements of SELLER contained in this Agreement, (ii) the
Excluded Assets, (iii) any matter or circumstance described in Sections 2.3.1 or
2.5.3, or (iv) the breach of the limited title warranty in Section 3.1.
(c) Notwithstanding anything to the contrary in this Agreement, the liability of
SELLER and PURCHASER under this Agreement and any documents delivered
in connection herewith or contemplated hereby shall be limited as follows:
(i) In no event shall any amounts be recovered from SELLER under Section
7.4(b) or otherwise for which a written notice of claim specifying in
reasonable detail the specific nature of the Losses and the estimated
amount of such Losses ("Claim Notice") is not delivered to SELLER
prior to the close of business within thirty (30) months after Closing at
5:00 p.m., local time, and the indemnity obligation of SELLER in
Section 7.4(b) with respect to such representations and warranties shall
terminate on said date.
(ii) Except as set forth above, the representations and warranties of the
Parties set forth in this Agreement shall survive the Closing for a period
of twenty-four (24) months and all representations and warranties of the
Parties under this Agreement shall terminate twenty-four (24) months
after Closing; provided, however, that any such representation or
warranty that is the subject of a Claim Notice delivered in good faith in
compliance with the requirements of Section 7.4(d) shall survive with
respect only to the specific matter described in such Claim Notice until
the earlier to occur of (A) the date on which a final nonappealable
resolution of the matter described in such Claim Notice has been reached
or (B) the date on which the matter described in such Claim Notice has
otherwise reached final resolution.
(iii) Notwithstanding anything to the contrary herein, in no event shall
(i) SELLER or PURCHASER be liable to the other for punitive,
exemplary, consequential, or special damages; (ii) SELLER indemnify
PURCHASER or any other person, or be otherwise liable in any way
whatsoever to PURCHASER or any other person, for any Losses arising
from whatever cause, including the breach of a representation or
warranty of SELLER, in excess of an amount equal to the Purchase
Price; and (iii) SELLER indemnify PURCHASER, or be otherwise liable
to PURCHASER, for any losses until PURCHASER has suffered losses
in the aggregate in excess of a deductible in an amount equal to one
percent (1%) of the Purchase Price, after which point SELLER will be
obligated only to indemnify PURCHASER from and against further
losses in excess of such deductible.
(iv) No amount shall be recovered from any Party for the breach or untruth of
any representations or warranties, of the other Party, or for any other
matter, to the extent that the Party claiming a Loss as a result thereof
had actual Knowledge of such breach, untruth or other matter at or prior
to the Closing, nor shall PURCHASER be entitled to rescission with
respect to any such matter.
(d) All claims for indemnification under this Agreement shall be asserted and
resolved pursuant to this Section 7.4(d). Any person claiming indemnification
hereunder is hereinafter referred to as the ''Indemnified Party" and any person
against whom such claims are asserted hereunder is hereinafter referred to as
the "Indemnifying Party." In the event that any Losses are asserted against or
sought to be collected from an Indemnified Party by a third party, said
Indemnified Party shall with reasonable promptness provide to the Indemnifying
Party a Claim Notice. The Indemnifying Party shall not be obligated to
indemnify the Indemnified Party with respect to any such Losses if the
Indemnified Party fails to notify the Indemnifying Party thereof in accordance
with the provisions of this Agreement in reasonably sufficient time so that the
Indemnifying Party's ability to defend against the Losses is not prejudiced. The
Indemnifying Party shall have thirty (30) days from the personal delivery or
receipt of the Claim Notice (the "Notice Period") to notify the Indemnified
Party (i) whether or not it disputes the liability of the Indemnifying Party to
the Indemnified Party hereunder with respect to such Losses and/or (ii) whether
or not it desires, at the sole cost and expense of the Indemnifying Party, to
defend the Indemnified Party against such Losses; provided, however, that any
Indemnified Party is hereby authorized prior to and during the Notice Period to
file any motion, answer or other pleading that it shall deem necessary or
appropriate to protect its interests or those of the Indemnifying Party (and of
which it shall have given notice and opportunity to comment to the
Indemnifying Party). In the event that the Indemnifying Party notifies the
Indemnified Party within the Notice Period that it desires to defend the
Indemnified Party against such Losses, the Indemnifying Party shall have the
right to defend all appropriate proceedings, and with counsel of its own
choosing, which proceedings shall be promptly settled or prosecuted by them to
a final conclusion. If the Indemnified Party desires to participate in, but not
control, any such defense or settlement it may do so at its sole cost and
expense. If requested by the Indemnifying Party, the Indemnified Party agrees to
cooperate with the Indemnifying Party and its counsel in contesting any Losses
that the Indemnifying Party elects to contest or, if appropriate and related to
the claim in question, in making any counterclaim against the person asserting
the third party Losses, or any cross-complaint against any person. No claim may
be settled or otherwise compromised without the prior written consent of the
Indemnifying Party and no claim may be settled or compromised by the
Indemnifying Party without the prior written consent of the Indemnified Party
unless such settlement or compromise entails a full and unconditional release of
the Indemnified Party without any admission or finding of fault or liability.
SECTION 8 - ADMINISTRATIVE PROVISIONS
8.1 Expenses of Sale:
Except as otherwise specifically provided herein, each Party to this Agreement
shall pay its own expenses (including without limitation, the fees and expenses
of their respective agents, representatives, counsel and accountants) with
respect to the negotiation, execution and the delivery of this Agreement and the
consummation of the transactions under this Agreement.
8.2 Third Party Rights:
Except as to those indemnity obligations owed to the indemnified entities or
persons listed in Section 7 hereof, notwithstanding any other provision of this
Agreement, this Agreement shall not create benefits on behalf of any person
who is not a Party to this Agreement (including without limitation, any broker
or finder, creditor or other person), and this Agreement shall be effective only
as between the Parties hereto, their successors and permitted assigns.
8.3 Further Actions:
PURCHASER and SELLER further agree that each will, from time to time and upon
reasonable request, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such instruments, and take such other action as may
be necessary, or advisable, to carry out their obligations under this Agreement.
8.4 Assignment:
Prior to the Closing, neither Party shall assign this Agreement or any of its
rights or obligations under this Agreement without obtaining the prior written
consent of the other Party, and any purported assignment by any Party without
the prior written consent of the other Party shall be void. This Agreement and
its respective covenants shall be referenced in any assignment affecting the
Oil & Gas Interests.
8.5 Notices:
Any notice provided or permitted to be given under this Agreement shall be in
writing, and may be sent by personal delivery, facsimile machine or by
depositing same in the United States Mail, addressed to the Party to be
notified, postage prepaid, and registered or certified with a return receipt
requested. Notices deposited in the mail in the manner hereinabove described
shall be deemed to have been given and received upon the date of delivery as
shown on the return receipt (or upon the date of attempted delivery where
delivery is refused). Notice served in any other manner shall be deemed to
have been given and received only if and when actually received by the
addressee (confirmation of such receipt by confirmed facsimile transmission
being deemed receipt of communications sent by telecopy or other facsimile
means), and when delivered and receipted for, if hand-delivered, sent by
express courier or delivery service. For purposes of notice, the addresses
of the Parties shall be as follows:
EXPRESS MAIL REGULAR MAIL
SOI
(and as agent for SOIFI)
Shell Offshore Inc. Shell Offshore Inc.
ATTN: Land Manager ATTN: Land Manager
000 Xxxxxxx Xxxxxx P. O. Xxx 00000
Xxx Xxxxxxx, XX 00000 Xxx Xxxxxxx, XX 00000
Telephone - (000) 000-0000
Facsimile - (000) 000-0000
PURCHASER
McMoRan Oil & Gas LLC
ATTN: Senior Vice President, Land
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Telephone - (000) 000-0000
Facsimile - (000) 000-0000
or at such other address and number as either Party shall have previously
designated by written notice given to the other Party in the manner
hereinabove set forth.
8.6 Public Announcements:
The Parties agree that prior to making any public announcement or statement with
respect to the transaction contemplated by this Agreement, the Party desiring to
make such public announcement or statement shall obtain the written approval of
the other Party to the text of such announcement or statement, which approval
may be withheld for any reason. Nothing contained in this Section shall be
construed to require either Party to obtain approval of the other Party to
disclose information with respect to the transaction contemplated by this
Agreement to any state or federal governmental authority or agency, to the
extent required by applicable law or by any applicable rules, regulations or
orders of any governmental authority or agency having jurisdiction, or
necessary to comply with disclosure requirements of applicable securities laws
or any applicable stock exchanges.
8.7 Time Limits:
Time is of the essence in this Agreement and all time limits shall be strictly
construed and enforced. The failure or delay of any Party in the enforcement
of the rights granted under this Agreement shall not constitute a waiver of
said rights nor shall it be considered as a basis for estoppel. Except as
otherwise limited by the time limits contained in this Agreement, such Party
may exercise its rights under this Agreement despite any delay or failure to
enforce the rights when the right or obligation arose.
8.8 Compliance with Laws & Regulations:
This Agreement, and all operations conducted by the Parties pursuant to this
Agreement, are expressly subject to and shall comply with all laws, orders,
rules and regulations of any federal, state or local governmental authority
having jurisdiction. No Party shall suffer a forfeiture or be liable in
damages for failure to comply with any of the provisions of this Agreement
if such compliance is prevented or if such failure results from compliance
with any applicable law, order, rule or regulation.
8.9 Applicable Law:
The provisions of this Agreement and the relationship of the Parties shall be
governed and interpreted according to the laws of the State of Louisiana
without giving effect to principles of conflicts of laws.
8.10 Arbitration:
Any controversy or claim ("Claim"), whether based on contract, tort, statute or
other legal or equitable theory arising out of or related to the breach of one
or more of the warranties and representations made in this Agreement, or as a
result of any other matters which may give rise to a liability with respect
to this Agreement, shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association ( the
"Rules"), and this provision. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C 1-16, to the exclusion of any provision of
state law inconsistent therewith or which would produce a different result,
and judgment upon the award rendered by the arbitrator may be entered by any
court having jurisdiction.
The arbitration shall be held in New Orleans, Louisiana.
There shall be one arbitrator mutually agreeable to the Parties. In the event
the Parties cannot agree on an arbitrator, the arbitrator shall be selected in
accordance with the Rules.
The arbitrator shall determine the Claims of the Parties and render a final
award in accordance with the substantive law of the State of Louisiana,
excluding the conflicts provisions of such law. The arbitrator shall set
forth the reasons for the award in writing. All statutes of limitations and
defenses based upon passage of time applicable to any Claim (including any
counterclaim or setoff) shall be interrupted by the filing of
the arbitration and suspended while the arbitration is pending.
The obligation to arbitrate any Claim shall extend to the successors, assigns
and third Party beneficiaries of the parties. The Parties shall use their
best efforts to cause the obligation to arbitrate any Claim to extend to any
officer, director, employee, shareholder, agent, trustee, affiliate, or
subsidiary. The terms hereof shall not limit any obligations of a Party to
defend, indemnify, or hold harmless another Party against court
proceedings or other Claims, losses, damages or expenses.
The arbitrator shall order the Parties to promptly exchange copies of all
exhibits and witness lists, and, if requested by a Party, to produce other
relevant documents, to answer interrogatories, to respond to requests for
admissions (which shall be deemed admitted if not denied) and to produce for
deposition and, if requested, at the hearing all witnesses that such Party
has listed and all other persons within such Party's control. Any additional
discovery shall only occur by agreement of the Parties or as ordered by
the arbitrator upon finding good cause.
Each Party shall bear its own costs, expenses and attorney's fees; provided that
if court proceedings to stay litigation or compel arbitration are necessary,
the Party who unsuccessfully opposes such proceedings shall pay all reasonable
associated costs, expenses, and attorney's fees in connection with such court
proceeding.
In order to prevent irreparable harm, the arbitrator shall have the power to
grant temporary or permanent injunctive or other equitable relief. Prior to
the appointment of an arbitrator a Party may, notwithstanding any other
provision of this Agreement, seek temporary injunctive relief from any court
of competent jurisdiction; provided that the Party seeking such relief shall
(if arbitration has not already been commenced) simultaneously commence
arbitration. Such court ordered relief shall not continue more than 10 days
after the appointment of the arbitrator and in no event for longer than 60 days.
The cost of the arbitrator shall be shared equally by all parties.
8.11 Severance of Invalid Provisions:
In case of a conflict between the provisions of this Agreement and the
provisions of any applicable laws or regulations, the provisions of the laws
or regulations shall govern over the provisions of this Agreement. If, for
any reason and for so long as, any clause or provision of this Agreement is
held by a court of competent jurisdiction to be illegal, invalid,
unenforceable or unconscionable under any present or future law (or
interpretation thereof), the remainder of this Agreement shall not be affected
by such illegality or invalidity. Any such invalid provision shall be deemed
severed from this Agreement as if this Agreement had been executed with the
invalid provision eliminated.
8.12 Construction & Interpretation:
The interpretation and construction of the terms of this Agreement will be
governed by the following conventions:
8.12.1 Headings for Convenience:
Except for the definition headings, all the table of contents, captions,
numbering sequences, paragraph headings and punctuation used in this Agreement
are inserted for convenience only and shall in no way define, limit or describe
the scope or intent of this Agreement or any part thereof, nor have any legal
effect other than to aid a reasonable interpretation of this Agreement.
8.12.2 Gender & Number:
The use of pronouns in whatever gender or number shall be deemed to be a
proper reference to the Parties to this Agreement though the Parties may be
individuals, business entities or groups thereof. Any necessary grammatical
changes required to make the provisions of this Agreement refer to the correct
gender or number shall in all instances be assumed as though each case was
fully expressed.
8.12.3 Independent Representation:
Each Party has had the benefit of independent representation with respect to the
subject matter of this Agreement. This Agreement, though drawn by one Party,
shall be construed fairly and reasonably and not more strictly against one Party
than another.
8.13 Integrated Agreement:
This Agreement, and the Exhibits and Schedules attached and incorporated herein,
and the instruments delivered at or in connection with the Closing hereunder
("Closing Documents") contains the final and entire agreement of the Parties
with respect to the subject matter of this contract. There are no
representations, warranties or promises, oral or written, between the Parties
other than those included in this Agreement or in any Closing Document. Upon
execution of this Agreement by all Parties, this Agreement shall supersede
and replace all previous negotiations, understandings or promises, whether
written or oral, relative to the subject of this Agreement. Each of the
Parties acknowledges that no other Party has made any promise, representation or
warranty that is not expressly stated in this Agreement or in any Closing
Document. This Agreement shall not be modified or changed (nor any provision
of this Agreement waived) except by a written amendment signed by all the
Parties. This Agreement is entire as to all the performances to be rendered
under it, and breach of any provision shall constitute a breach of the entire
Agreement. A waiver of any breach or failure to enforce any of the terms or
conditions of this Agreement shall not in any way affect, limit or waive a
Party's rights under this Agreement at any time to enforce strict
compliance thereafter with every term or condition of this Agreement.
8.14 Binding Effect:
This Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors and assigns.
8.15 Multiple Counterparts:
This Agreement may be executed by signing the original or a counterpart hereof.
If this Agreement is executed in multiple counterparts, each counterpart shall
be deemed an original, and all of which when taken together shall constitute
but one and the same agreement with the same effect as if all Parties had
signed the same instrument.
8.16 Fair Notice Disclosure Statement:
PURCHASER'S ATTENTION IS DIRECTED TO CERTAIN PROVISIONS OF THIS
AGREEMENT WHICH REQUIRE PURCHASER TO DEFEND, INDEMNIFY AND
HOLD SELLER HARMLESS IRRESPECTIVE OF THE STRICT LIABILITY OF
SELLER OR THE SOLE, JOINT OR CONCURRENT, ACTIVE OR PASSIVE,
NEGLIGENCE OF SELLER, AND IN SOME CASES THE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT OF SELLER.
IN WITNESS WHEREOF, the Parties have executed the Agreement as of the date
first above written.
SHELL OFFSHORE INC.
By: _________________________
X. X. Xxxxxxx
Agent & Attorney-in-Fact
SOI FINANCE INC.
By: _________________________
X. X. Xxxxxxx
Agent & Attorney-in-Fact
McMoRan OIL & GAS LLC
By: _________________________
Xxxxx X. Xxxxxxxx
Senior Vice President
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, on this day personally appeared X. X.
XXXXXXX, known to me to be the person whose name is subscribed to the foregoing
instrument and acknowledged to me that he, being fully authorized to do so,
executed and delivered the same as Agent and Attorney-in-Fact for Shell
Offshore Inc., a Delaware corporation, on the day and year therein mentioned
and as the act and deed of said corporation, for the purpose and
consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 14th day of January, 2000.
____________________________________
Notary Public
My Commission is for life.
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, on this day personally appeared X. X.
XXXXXXX, known to me to be the person whose name is subscribed to the foregoing
instrument and acknowledged to me that he, being fully authorized to do so,
executed and delivered the same as Agent and Attorney-in-Fact for SOI Finance
Inc., a Delaware corporation, on the day and year therein mentioned and as
the act and deed of said corporation, for the purpose and consideration
therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 14th day of January, 2000.
____________________________________
Notary Public
My Commission is for life.
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, on this day personally appeared Xxxxx
X. Xxxxxxxx, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he, being fully authorized
to do so, executed and delivered the same as Senior Vice President for
McMoRan Oil & Gas LLC, a Delaware limited liability company, on the day and
year therein mentioned and as the act and deed of said corporation,
for the purpose and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 14th day of January, 2000.
____________________________________
Notary Public
My Commission is for life.
