<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DECEMBER 31, 1999
(DATE OF REPORT) (DATE OF EARLIEST EVENT REPORTED)
EXCO RESOURCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS
(STATE OR OTHER JURISDICTION OF INCORPORATION)
0-9204 74-1492779
(COMMISSION FILE NO.) (IRS EMPLOYER IDENTIFICATION NO.)
5735 PINELAND DRIVE
SUITE 235
DALLAS, TEXAS 75231
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (214) 368-2084
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<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Sale of Jackson Parish, Louisiana Assets on December 31, 1999
On December 31, 1999, EXUS Energy, LLC, a Delaware limited liability company
("EXUS"), conveyed 100% of the leasehold and mineral interests it held in
Jackson Parish, Louisiana (the "Jackson Parish Properties"), to its equity
members in proportion to their respective membership interests. EXUS is owned
50% by EXCO Resources, Inc. ("EXCO") and 50% by Venus Exploration, Inc.
("Venus"). Venus is a publicly-held oil and gas exploration company based in
San Antonio, Texas.
Then on December 31, 1999, pursuant to the terms of a Purchase, Sale and
Exchange agreement dated December 17, 1999, and subsequent amendment dated
December 31, 1999, between EXCO, as seller, and Anadarko Petroleum Corporation
("Anakarko"), as buyer, EXCO sold to Anadarko the property interests conveyed
to it by EXUS. The gross consideration was approximately $18.7 million cash
($18.2 million cash after adjustments which principally reflect production
since October 1, 1999, the effective date of the sale), and oil and gas
leasehold interests located in Seward County, Kansas, valued by the parties at
$800,000. EXCO expects to book a pre-tax gain from the sale of approximately
$5.1 million in the fourth quarter of 1999 based on the estimated tax basis of
the properties on December 31, 1999. The price was determined through
arms-length negotiation between the parties.
The instruments of conveyance were executed and delivered into escrow on and
dated as of December 31, 1999. The cash consideration was paid to the escrow
agent on January 6, 2000. The conveyance documents were delivered by the escrow
agent to Anadarko on January 6, 2000. The payment of cash was delayed due to the
anticipation of the potential for a Y2K disruption to the banking system.
The Jackson Parish Properties which were sold included 17 gross (7.125 net to
EXCO's interest) producing wells. EXCO was the named operator of the Jackson
Parish Properties. The Jackson Parish Properties sold included approximately
6,410 gross (2,830 net to EXCO's interest) developed acres and approximately
1,530 gross (570 net to EXCO's interest) undeveloped acres. As of October 1,
1999, the Jackson Parish Properties were estimated to contain net total proved
reserves to EXCO's interest of 1,340 barrels of oil and natural gas liquids
("Bbls") and 32.7 billion cubic feet ("Bcf") of gas. Net production to EXCO's
interest as of November 1999, was running approximately 85.7 million cubic feet
("Mmcf") per month of natural gas, and no barrels of oil or condensate. Anadarko
took over operations on January 1, 2000.
The proceeds received by EXCO were placed in a tax-deferred escrow account with
Texas Escrow Company, Inc. ("Texas Escrow") of Dallas, Texas, under terms of a
Deferred Exchange Agreement ("Exchange Agreement") between EXCO and Texas
Escrow executed on December 31, 1999. The Exchange Agreement is designed to
comply with the like-kind exchange provisions of Section 1031 of the Tax Code
which permits the deferral of gains from a sale of assets if specific like-kind
exchange reinvestment criteria are met. If EXCO is successful in meeting the
like-kind exchange provisions, some, if not most, of the federal and state tax
payments on the gain from the sale of the Jackson Parish Properties will be
deferred to future periods. A portion of the assets purchased in Natchitoches
Parish, Louisiana, described below,
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meet the requirements for a like-kind exchange. Therefore, EXCO will be
permitted to defer at least some of its gain on the sale of the Jackson Parish
Properties.
Under terms of the Escrow Agreement For Closing Funds and Closing Documents (the
"Escrow Agreement") dated December 31, 1999, by and among Anadarko, Venus
Exploration, Inc. ("Venus"), EXUS, EXCO, Wells Fargo Bank (Texas), N.A. ("Wells
Fargo"), Texas Escrow and American Escrow Company ("American Escrow"), the
Credit Agreement among EXUS, as borrower, and NationsBank, N.A., as
Administrative Agent, was paid in full on January 6, 2000. The payoff amount
consisted of $14.2 million of principal, and approximately $28,000 for accrued
interest and unused line fees.
Also, on December 31, 1999, pursuant to the terms of a separate Purchase and
Sale Agreement dated December 17, 1999, between Venus, as seller, and Anadarko,
as buyer, Venus sold to Anadarko the property interests conveyed to it by EXUS.
The gross consideration was approximately $18.9 million cash ($18.4 million
cash after adjustments which principally reflect production since October 1,
1999, the effective date of the sale). The proceeds received by Venus were
placed in an escrow account with American Escrow.
Then, under terms of the Escrow Agreement, Venus paid in full $7.0 million of
principal, approximately $369,000 of accrued interest, and a $250,000
pre-payment penalty owed to EXCO under terms of an $8 million Convertible
Promissory Note made between Venus and EXCO dated June 30, 1999.
As a result of the sale, EXUS was dissolved effective December 31, 1999, with a
nominal amount of working capital retained to wind-up the affairs of the joint
venture.
Purchase of Natchitoches Parish, Louisiana Assets on January 7, 2000
On January 7, 2000, under terms of a Purchase and Sale Agreement dated November
16, 1999, which was subsequently amended on December 21, 1999, between Western
Gas Resources, Inc. ("Western"), as seller, and EXCO, as buyer, EXCO purchased
certain oil and gas assets located in Natchitoches Parish, Louisiana from
Western (the "Natchitoches Parish Properties"). The assets include Western's
interest in the Black Lake Unit and the Black Lake processing and treating
facilities.
The purchase price, before closing adjustments, was $7.8 million cash, and after
adjustments (the adjustments principally reflect production since September 1,
1999, the effective date of the acquisition), was approximately $7.2 million
cash. Of the $7.2 net purchase price, approximately $1.4 million has been
allocated to the plants. The plants are not subject to the like-kind exchange
treatment as the cash used for this portion of the purchase was paid directly by
EXCO. After deducting the value allocated and paid on the plants, approximately
$5.8 million was allocated to the leasehold interests, mineral interests,
and equipment. This amount was paid with tax-deferred exchange proceeds held by
Texas Escrow. This use of tax-deferred exchange proceeds is in compliance with
the like-kind exchange provisions of Sections 1031 of the Tax Code described
above. The price was determined through arms-length negotiation between the
parties.
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The Natchitoches Parish Properties include 29 gross (20 net) producing wells.
EXCO is the named operator of the Natchitoches Parish Properties and assumed
operations of 75 wells acquired in the transaction. The Natchitoches Parish
Properties include approximately 14,250 gross (10,590 net) developed acres and
approximately 10,390 gross (8,320 net) undeveloped acres. As of September 1,
1999, the Natchitoches Parish Properties were estimated to contain net reserves
of 570,000 barrels of oil and natural gas liquids ("Bbls") and 4.5 billion
cubic feet ("Bcf") of gas. Net production as of December 1999, was running
approximately 95,000 mcf per month of net residue gas, 7,100 barrels per month
of natural gas liquids, and 5,400 barrels of oil and condensate per month. EXCO
took over operations on January 7, 2000.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
As permitted by Form 8-K, the required historical financial
statements in respect of the Natchitoches Parish Properties
will be filed by amendment to this Form 8-K no later than
March 24, 2000.
(b) Pro Forma Financial Information.
Pro Forma Combined Condensed Financial Statements of EXCO
Resources, Inc. for the year ended December 31, 1998 and the
nine months ended September 30, 1999, with respect to the
disposition of the Jackson Parish Properties.
As permitted by Form 8-K, the required pro forma financial
information with respect to the acquisition of the
Natchitoches Parish Properties will be filed by amendment to
this Form 8- K no later than March 24, 2000.
(c) Exhibits.
Number Document
10.1 Purchase, Sale and Exchange Agreement
between EXCO Resources, Inc., as seller,
and Anadarko Petroleum Corporation, as
buyer, dated December 17, 1999.
10.2 Amendment to Purchase, Sale and Exchange
Agreement dated as of December 17, 1999,
between EXCO Resources, Inc., as seller,
and Anadarko Petroleum Corporation, as
buyer, dated December 31, 1999.
10.3 Purchase and Sale Agreement between Western
Gas Resources, Inc., as seller, and EXCO
Resources, Inc., as buyer, dated November
16, 1999.
10.4 Amendment No. 1 to Purchase and Sale
Agreement between Western Gas Resources,
Inc., as seller, and EXCO Resources, Inc.,
as buyer, dated December 21, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
EXCO RESOURCES, INC.
By: /s/ T. W. EUBANK
-----------------------
T.W. Eubank, President
Dated: January 18, 2000
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<PAGE> 7
Item 7(b)
EXCO RESOURCES, INC.
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
As discussed in "Item 2. Acquisition or Disposition of Assets," of
EXCO's Current Report on Form 8-K filed on January 18, 2000, dated December 31,
1999, EXUS Energy, LLC, a Delaware limited liability company (EXUS), owned 50%
by EXCO Resources, Inc. (EXCO) and 50% by Venus Exploration, Inc. (Venus),
completed the disposition of the Jackson Parish Properties on December 31, 1999.
The accompanying pro forma combined condensed financial statements are
based on the historical financial statements of EXCO for the year ended December
31, 1998, and the nine months ended September 30, 1999. The pro forma combined
condensed financial statements are also based, in part, on the historical
financial statements of Jacobi-Johnson Energy, Inc. (Jacobi-Johnson) which was
acquired by EXCO effective May 8, 1998, Rio Grande, Inc. (Rio Grande or RGI)
which was acquired by EXCO effective March 16, 1999, and on EXCO's share of the
historical operating revenues and direct operating expenses of the Dawson County
Properties (described in EXCO's Form 8-K dated June 30, 1998).
The Pro Forma Combined Condensed Balance Sheet as of September 30,
1999, assumes the disposition of the Jackson Parish Properties and the related
repayment of borrowings had been consummated on that date. Because RGI was
acquired on March 16, 1999, Jacobi-Johnson and the Dawson County Properties were
both acquired in 1998, and the common stock Rights Offering was completed in
1998, they are already included in EXCO's September 30, 1999 balance sheet. The
Pro Forma Combined Condensed Statement of Operations for the year ended December
31, 1998, and the nine months ended September 30, 1999, have been prepared
assuming the acquisition of Jacobi-Johnson, the Dawson County Properties, and
RGI, the related borrowings, the common stock Rights Offering, and the
disposition of the Jackson Parish Properties had been consummated on January 1,
1998.
The pro forma adjustments are based upon available information and
assumptions that management of EXCO believes are reasonable. The pro forma
combined condensed financial statements do not purport to represent the
financial position or results of operations of EXCO which would have occurred
had such transactions been consummated on the dates indicated or EXCO's
financial position or results of operations for any future date or period.
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<PAGE> 8
EXCO RESOURCES, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
PRO FORMA
EXCO ADJUSTMENTS FOR PRO FORMA
HISTORICAL THE DISPOSITION COMBINED
---------- --------------- -----------
(In thousands)
<S> <C> <C> <C>
ASSETS:
Current assets:
Cash............................................... $ 10,428 $ 18,179 (7)(8) $ 28,607
Accounts receivable and other assets............... 2,337 (591) (7) 1,746
--------- --------------- -----------
Total current assets........................... 12,765 17,588 30,353
Net property and equipment............................. 25,770 (12,804) (8) 12,966
Other assets .......................................... 664 (279) (7) 385
Note receivable........................................ 7,000 (7,000) (8) --
Investments............................................ 344 -- 344
--------- --------------- -----------
Total assets................................... $ 46,543 $ (2,495) $ 44,048
========= =============== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued
liabilities.................................... $ 2,576 $ 1,511 (7) (8) $ 4,087
Current maturities of long-term debt............... 1 -- 1
--------- --------------- -----------
Total current liabilities...................... 2,577 1,511 4,088
Long-term debt, less current maturities................ 6,862 (6,862) (8) --
Other long-term liabilities............................ 227 (113) (7) 114
Stockholders' equity:
Preferred stock.................................... -- -- --
Common stock....................................... 134 -- 134
Additional paid-in capital......................... 36,610 -- 36,610
Minority interest in limited partnership (187) -- (187)
Retained earnings.................................. 320 2,969 (8) 3,289
--------- --------------- -----------
Total stockholders' equity..................... 36,877 2,969 39,846
--------- --------------- -----------
Total liabilities and stockholders' equity..... $ 46,543 $ (2,495) $ 44,048
========= =============== ===========
</TABLE>
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<PAGE> 9
EXCO RESOURCES, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
FOR THE 1998
JACOBI- DAWSON ACQUISITIONS ADJUSTED
EXCO JOHNSON COUNTY & RIGHTS EXCO RIO GRANDE
HISTORICAL HISTORICAL HISTORICAL OFFERING HISTORICAL HISTORICAL
---------- ---------- ---------- ------------ ---------- ----------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Oil and natural gas ............... $ 1,385 $ 236 $ 479 $ -- $ 2,100 $ 4,407
Other ............................. 690 -- -- (315) (4) 375 351
---------- ---------- ---------- ------------ ---------- ----------
Total revenues ................ 2,075 236 479 (315) 2,475 4,758
EXPENSES:
Oil and natural gas production .... 786 140 106 -- 1,032 2,060
Abandonment costs ................. -- -- -- -- -- 137
Depletion, depreciation and
amortization .................. 465 32 -- 142 (1) 639 6,097
General and administrative ........ 1,231 7 -- 16 (2) 1,254 1,350
Interest and other ................ 104 10 -- (114) (3) -- 939
---------- ---------- ---------- ------------ ---------- ----------
Income (loss) before income taxes
and minority interest .............. (511) 47 373 (359) (450) (5,825)
Minority interest in limited
partnership ........................ -- -- -- -- -- (127)
---------- ---------- ---------- ------------ ---------- ----------
Income (loss) before income taxes ..... (511) 47 373 (359) (450) (5,698)
Income taxes .......................... -- -- -- -- -- 10
---------- ---------- ---------- ------------ ---------- ----------
Net income (loss) ..................... (511) 47 373 (359) (450) (5,708)
Dividends on preferred stock .......... -- -- -- -- -- (817)
---------- ---------- ---------- ------------ ---------- ----------
Net income (loss) applicable to
common stock ....................... $ (511) $ 47 $ 373 $ (359) $ (450) $ (6,525)
========== ========== ========== ============ ========== ==========
Basic and diluted earnings (loss)
per share .......................... $ (0.18) $ -- $ -- $ -- $ (0.07) $ --
========== ========== ========== ============ ========== ==========
Weighted average number of
common and common
equivalent shares outstanding:
Basic .............................. 2,871 -- -- 3,711 (5) 6,582 --
========== ========== ========== ============ ========== ==========
Diluted ............................ 2,874 -- -- 3,711 6,585 --
========== ========== ========== ============ ========== ==========
</TABLE>
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<PAGE> 10
EXCO RESOURCES, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(Unaudited)
PRO FORMA
ADJUSTMENTS
FOR THE 1999
ACQUISITION PRO FORMA
AND DISPOSITION COMBINED
--------------- -----------
REVENUES:
Oil and natural gas............... $ -- $ 6,507
Other............................. -- 726
--------------- -----------
Total revenues............... -- 7,233
EXPENSES:
Oil and natural gas production.... -- 3,092
Abandonment costs................. -- 137
Depletion, depreciation and
amortization................... -- 6,736
General and administrative........ -- 2,604
Interest and other................ (939)(6) --
--------------- -----------
Income (loss) before income taxes
and minority interest.......... 939 (5,336)
Minority interest in limited
partnership.................... -- (127)
--------------- -----------
Income (loss) before income taxes. 939 (5,209)
Income taxes...................... -- 10
--------------- -----------
Net income (loss)................. 939 (5,219)
Dividends on preferred stock...... 817 (6) --
--------------- -----------
Net income (loss) applicable to
common stock................... $ 1,756 $ (5,219)
=============== ===========
Basic and diluted earnings (loss)
per share...................... $ -- $ (.79)
=============== ===========
Weighted average number of
common and common equivalent
shares outstanding:
Basic ......................... -- 6.582
=============== ===========
Diluted ....................... -- 6,585
=============== ===========
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<PAGE> 11
EXCO RESOURCES, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
FOR THE
EXCO RIO GRANDE ACQUISITION PRO FORMA
HISTORICAL HISTORICAL AND DISPOSITION COMBINED
------------- -------------- ----------------- -----------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
REVENUES:
Oil and natural gas ...................... $ 4,482 $ 176 $ (896) (10) $ 3,762
Other .................................... 970 23 (176) (9) 817
------------- -------------- ----------------- -----------
Total revenues ....................... 5,452 199 (1,072) 4,579
EXPENSES:
Oil and natural gas production ........... 1,694 123 (107) (10) 1,710
Depletion, depreciation and
amortization .......................... 1,382 9 (242) (10) 1,149
General and administrative ............... 1,425 73 (12) (10) 1,486
Interest and other ....................... 125 0 (124) (11) 1
------------- -------------- ----------------- -----------
Income (loss) before income taxes and
minority interest ......................... 826 (6) (587) 233
Minority interest ............................ (5) 1 -- (4)
Income taxes ................................. -- -- -- --
------------- -------------- ----------------- -----------
Net income (loss) ............................ $ 831 $ (7) $ (587) $ 237
============= ============== ================= ===========
Basic and diluted earnings (loss) per share
$ .12 $ -- $ -- $ .04
============= ============== ================= ===========
Weighted average number of
common and common equivalent
shares outstanding:
Basic .................................... 6,688 -- -- 6,688
============= ============== ================= ===========
Diluted .................................. 6,704 -- -- 6,704
============= ============== ================= ===========
</TABLE>
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<PAGE> 12
EXCO RESOURCES, INC.
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
A. PRO FORMA ADJUSTMENTS FOR THE ACQUISITIONS OF JACOBI-JOHNSON AND THE
DAWSON COUNTY PROPERTIES
The accompanying unaudited Pro Forma Combined Condensed Statement of
Operations for the year ended December 31, 1998 has been prepared as if the
acquisitions of Jacobi-Johnson and the Dawson County Properties had been
consummated on January 1, 1998 and reflects the following adjustments:
(1) To adjust depreciation, depletion and amortization of the oil
and gas properties to reflect the effect of the acquisitions
of Jacobi-Johnson and the Dawson County Properties using the
full cost method of accounting on total pro forma proved oil
and natural gas reserves.
(2) To adjust general and administrative expense for unused line
fees on the Credit Facility.
(3) To eliminate interest expense on EXCO's and Jacobi-Johnson's
historical borrowings.
B. PRO FORMA ADJUSTMENTS FOR THE COMMON STOCK RIGHTS OFFERING
The accompanying unaudited Pro Forma Combined Condensed Statement of
Operations for the year ended December 31, 1998 has been prepared as if the
common stock Rights Offering had been consummated on January 1, 1998 and
reflects the following adjustments:
(4) To adjust interest income on surplus cash of $7.0 million,
based on a 4.0% per annum interest rate.
(5) To adjust the weighted average common shares outstanding as a
result of the exercise of the common stock purchase rights by
shareholders in connection with the Rights Offering.
C. PRO FORMA ADJUSTMENTS FOR THE ACQUISITION OF RIO GRANDE
The accompanying unaudited Pro Forma Combined Condensed Statement of
Operations for the year ended December 31, 1998 has been prepared as if the
acquisition of RGI had been consummated on January 1, 1998 and reflects the
following adjustment:
(6) To eliminate the accrued interest on RGI's bank note and RGI's
accrued preferred stock dividends as a result of RGI's
bankruptcy settlement.
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<PAGE> 13
EXCO RESOURCES, INC.
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
D. PRO FORMA ADJUSTMENTS FOR THE JACKSON PARISH PROPERTIES
The accompanying unaudited Pro Forma Combined Condensed Balance Sheet
has been prepared as if EXCO's share of the disposition of the Jackson Parish
Properties and the related repayment of borrowings and recognition of a gain on
the sale and deferred tax liability had been consummated on September 30, 1999,
and reflects the following adjustments:
(7) To eliminate EXCO's share of the working capital in EXUS.
(8) To record EXCO's proceeds of cash and properties, and the
reduction in properties and equipment from the sale of its
interest in the Jackson Parish Properties, the after-tax gain
therefrom, the repayment of the EXUS credit facility, and the
repayment of $7 million of principal owed by Venus to EXCO
under a related convertible promissory note.
The accompanying unaudited Pro Forma Combined Condensed Statements of
Operations for the year ended December 31, 1998, and the nine months ended
September 30, 1999 have been prepared as if EXCO's share of the disposition of
the Jackson Parish Properties and the related repayment of debt had been
consummated on January 1, 1998 and reflect the following adjustments:
(9) To record a decrease in interest income as a result of the
repayment of the Venus convertible promissory note.
(10) To eliminate the historical operating revenues and expenses of
the Jackson Parish Properties.
(11) To eliminate the historical interest expense for EXCO's share
of the EXUS credit facility.
E. PRO FORMA COMBINED SUPPLEMENTAL OIL AND NATURAL GAS RESERVE AND
STANDARDIZED MEASURE INFORMATION
RESERVE QUANTITY INFORMATION
The following table presents EXCO's estimate of the pro forma combined
proved oil and natural gas reserves of EXCO after giving effect to the
acquisition of Rio Grande, Inc. All reserves are located in the United States.
EXCO emphasizes that reserve estimates are inherently imprecise and that
estimates of new discoveries are more imprecise than those of producing oil and
natural gas properties. Accordingly, the estimates are expected to change as
future information becomes available.
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<PAGE> 14
EXCO RESOURCES, INC.
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
OIL (BBLS) GAS (MCF) BOE*
------------ ----------- ----------
(In thousands)
<S> <C> <C> <C>
Proved reserves..................... 1,756 13,057 3,932
============ =========== ==========
Proved developed reserves........... 1,472 10,748 3,263
============ =========== ==========
</TABLE>
- -----------------
* Boe - Barrels of oil equivalent calculated by converting 6 Mcf of natural
gas to 1 Bbl of oil.
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL
AND NATURAL GAS RESERVES
The Standardized Measure of Discounted Future Net Cash Flows Relating
to Proved Oil and Natural Gas Reserves (Standardized Measure) is a disclosure
requirement under Statement of Financial Accounting Standards No. 69.
The Standardized Measure does not purport to be, nor should it be
interpreted to present, the fair value of EXCO's oil and natural gas reserves.
An estimate of fair value would also take into account, among other things, the
recovery of reserves not presently classified as proved, the value of unproved
properties, and consideration of expected future economic and operating
conditions.
Under the Standardized Measure, future cash flows are estimated by
applying year-end prices, adjusted for fixed and determinable escalations, to
the estimated future production of year-end proved reserves. Future cash inflows
are reduced by estimated future production costs, based on period-end costs, and
projected future development costs to determine pre-tax cash inflows. Future
income taxes are computed by applying the statutory rate (based on the current
tax law adjusted for permanent differences and tax credits) to the excess of
pre-tax net cash flows over EXCO's income tax basis of its oil and natural gas
properties. Future net cash flows are discounted using a 10% annual discount
rate to arrive at the Standardized Measure.
The pro forma Standardized Measure of discounted future net cash flows
relating to EXCO's proved oil and natural gas reserves at December 31, 1998,
follows (in thousands):
<TABLE>
<S> <C>
Future cash inflows............................................ $ 40,360
Future production costs........................................ 15,347
Future development costs....................................... 2,919
Future income taxes............................................ 1,369
----------
Future net cash flows.......................................... 20,725
Discount of future net cash flows at 10% per annum............. 8,461
----------
Pro forma Standardized Measure of discounted future
net cash flows.............................................. $ 12,264
==========
</TABLE>
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<PAGE> 15
EXCO RESOURCES, INC.
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
The future cash flows shown above include amounts attributable to
non-producing reserves requiring approximately $2.9 million of future
development costs. If these reserves are not developed, the Standardized Measure
of discounted future net cash flows as of December 31, 1998, shown above would
be reduced significantly.
Estimates of economically recoverable oil and natural gas reserves and
of future net reserves are based upon a number of variable factors and
assumptions, all of which are to some degree speculative and may vary
considerably from actual results. Therefore, actual production, revenues, taxes,
development and operating expenditures may not occur as estimated. The reserve
data are estimates only, are subject to many uncertainties and are based on data
gained from production histories and on assumptions as to geologic formations
and other matters. Actual quantities of oil and natural gas may differ
materially from the amounts estimated.
The weighted average prices of oil and natural gas at December 31, 1998
used in the calculation of the Standardized Measure were $10.19 per Bbl and
$1.72 per Mcf, respectively.
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<PAGE> 16
Index To Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.1 Purchase, Sale and Exchange Agreement
between EXCO Resources, Inc., as seller,
and Anadarko Petroleum Corporation, as
buyer, dated December 17, 1999.
10.2 Amendment to Purchase, Sale and Exchange
Agreement dated as of December 17, 1999,
between EXCO Resources, Inc., as seller,
and Anadarko Petroleum Corporation, as
buyer, dated December 31, 1999.
10.3 Purchase and Sale Agreement between Western
Gas Resources, Inc., as seller, and EXCO
Resources, Inc., as buyer, dated November
16, 1999.
10.4 Amendment No. 1 to Purchase and Sale
Agreement between Western Gas Resources,
Inc., as seller, and EXCO Resources, Inc.,
as buyer, dated December 21, 1999.
</TABLE>
<PAGE> 1
EXHIBIT 10.1
PURCHASE, SALE AND EXCHANGE AGREEMENT
BETWEEN
EXCO RESOURCES, INC.
AS SELLER
AND
ANADARKO PETROLEUM CORPORATION
AS BUYER
EFFECTIVE ON DECEMBER 17, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE NO.
- ------- --------
<S> <C> <C> <C>
1. Purchase, Sale and Exchange............................................................1
1.1 Purchase, Sale and Exchange...................................................1
1.2 Assets........................................................................2
1.3 Excluded Assets...............................................................4
1.4 Effective Time: Proration of Costs and Revenues..............................4
1.5 Delivery and Maintenance of Records...........................................5
2. Purchase Price.........................................................................6
2.1 Purchase Price................................................................6
2.2 Deferred Tax-Free Like-Kind Exchange..........................................6
2.3 Adjustments to Purchase Price.................................................6
2.4 Allocation of Purchase Price..................................................7
3. Title and Environmental Matters........................................................8
3.1 Seller's Title................................................................8
3.2 Definition of Defensible Title................................................8
3.3 Definition of Permitted Encumbrances..........................................9
3.4 Notice of Title Defects: Defect Adjustment..................................10
3.5 Consents to Assignment and Preferential Rights to Purchase...................12
3.6 Casualty or Condemnation or Expropriation Loss...............................13
3.7 Environmental Audit..........................................................14
4. Representations and Warranties of Seller..............................................14
4.1 Disclaimers..................................................................14
4.2 Representations and Warranties...............................................15
4.3 Existence and Qualification..................................................16
4.4 Power........................................................................16
4.5 Authorization and Enforceability.............................................16
4.6 No Conflicts.................................................................16
4.7 Liability for Brokers' Fees..................................................16
4.8 Litigation...................................................................16
4.9 Taxes and Assessments........................................................17
4.10 Environmental Laws...........................................................17
4.11 Safety and Health............................................................18
4.12 Outstanding Capital Commitments and Property Costs...........................18
4.13 Compliance with Laws.........................................................19
4.14 Contracts....................................................................19
4.15 Payments for Production......................................................19
4.16 Gas Imbalances...............................................................20
</TABLE>
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<TABLE>
<S> <C> <C> <C>
4.17 Consents.....................................................................20
4.18 Plugging Status..............................................................21
4.19 Equipment....................................................................21
4.20 Current Commitments..........................................................21
4.21 Condemnation or Expropriation................................................21
4.22 Bankruptcy...................................................................21
4.23 Historical Information.......................................................22
4.24 Government Authorizations....................................................22
4.25 Production Proceeds Payable to Exus..........................................22
5. Representations and Warranties of Buyer...............................................23
5.1 Existence and Qualification..................................................23
5.2 Power........................................................................23
5.3 Authorization and Enforceability.............................................23
5.4 No Conflicts.................................................................23
5.5 Liability for Brokers' Fees..................................................23
5.6 Litigation...................................................................24
6. Covenants of the Parties..............................................................24
6.1 Access.......................................................................24
6.2 Government Reviews...........................................................24
6.3 Notification of Breaches.....................................................24
6.4 Letters-in-Lieu: Assignments: Operatorship.................................25
6.5 Public Announcements.........................................................25
6.6 Operation of Assets..........................................................26
6.7 Indemnity Regarding Access...................................................27
6.8 Gas Imbalances...............................................................27
6.9 Consents and Preferential Rights.............................................27
6.10 Release of Liens.............................................................27
6.11 Tax Matters..................................................................28
6.12 Seller's Post Agreement Acquisitions, Non-Compete
Obligation...................................................................28
6.13 Further Assurances...........................................................30
7. Conditions to Closing.................................................................30
7.1 Conditions of Seller to Closing..............................................30
7.2 Conditions of Buyer to Closing...............................................31
8. Closing...............................................................................31
8.1 Time and Place of Closing....................................................31
8.2 Obligations of Seller at Closing.............................................32
8.3 Obligations of Buyer at Closing..............................................32
8.4 Closing Payment and Post-Closing Purchase Price Adjustments..................33
</TABLE>
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<TABLE>
<S> <C> <C> <C>
9. Termination and Amendment.............................................................34
9.1 Termination..................................................................34
9.2 Effect of Termination........................................................34
10. Post-Closing Obligations; Indemnification; Limitations................................34
10.1 Receipts.....................................................................34
10.2 Expenses.....................................................................35
10.3 Assumption and Indemnification...............................................35
10.4 Indemnification Actions......................................................37
10.5 Limitation on Actions........................................................39
11. Miscellaneous.........................................................................39
11.1 Counterparts.................................................................39
11.2 Exhibits.....................................................................39
11.3 Expenses.....................................................................39
11.4 Notices......................................................................39
11.5 Wire Transfer Instructions...................................................40
11.6 Amendments...................................................................40
11.7 Assignment...................................................................40
11.8 Conditions...................................................................40
11.9 Counterparts.................................................................41
11.10 Governing Law................................................................41
11.11 Entire Agreement.............................................................41
11.12 Parties in Interest..........................................................41
11.13 Survival.....................................................................41
11.14 Construction.................................................................41
11.15 Limitation on Damages........................................................42
11.16 Arbitration..................................................................42
11.17 Severability.................................................................42
12. Definitions...........................................................................42
</TABLE>
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PURCHASE, SALE AND EXCHANGE AGREEMENT
This Purchase, Sale and Exchange Agreement (the "Agreement"), is
effective on December 17, 1999 by and between EXCO Resources, Inc., a
corporation whose address is 5735 Pineland Dr., Ste. 235, Dallas, Texas 75231
("Seller") and Anadarko Petroleum Corporation, a Delaware corporation whose
address is 17001 Northchase Drive, Houston, TX 77060 ("Buyer").
RECITALS:
A. Seller owns various oil and gas properties, either of record or
beneficially.
B. Seller desires to sell to Buyer and Buyer desires to purchase from
Seller the properties and rights of Seller hereafter described, in the manner
and upon the terms and conditions hereafter set forth.
C. Seller and Buyer also wish to enter into a like-kind exchange
agreement with respect to certain properties, all as more particularly described
below.
D. Capitalized terms used herein shall have the meanings ascribed to
them in this Agreement as such terms are identified and/or defined in Article 12
hereof.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations, warranties, covenants, conditions and agreements
contained herein, and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound by the terms hereof, agree as follows:
ARTICLE 1. PURCHASE, SALE AND EXCHANGE
SECTION 1.1 PURCHASE, SALE AND EXCHANGE.
(a) At the Closing, and upon the terms and subject to the conditions of
this Agreement, Seller agrees to sell and convey to Buyer, or such subsidiary or
affiliate of Buyer as may be designated by Buyer within five (5) days prior to
Closing (sometimes hereinafter referred to as "Buyer's Affiliate") and Buyer
agrees to purchase, accept and pay for the Assets (as defined in Section 1.2);
provided, however, the Parties agree that a portion of the Assets to be conveyed
to Buyer or Buyer's Affiliate shall be subject to a like-kind exchange of
properties as more particularly set forth in Section 1.1(b), below.
<PAGE> 6
(b) On or prior to five (5) days prior to the Closing, Buyer shall
designate a portion of the Assets which shall be transferred to Buyer or Buyer's
Affiliate through a like-kind exchange agreement ("Seller's Like-Kind Exchange
Assets"), such agreement to be in the form of that attached hereto as Exhibit
"B". Buyer's property to be conveyed pursuant to said like-kind exchange
agreement shall be all of Buyer's right, title and interest in and to those
properties identified in Exhibit "C" attached hereto and incorporated herein
("Anadarko's Like-Kind Exchange Property"). The Parties agree that the value of
Anadarko's Like-Kind Exchange Property shall be $800,000.00 and that such
Anadarko Like-Kind Exchange Property shall be conveyed to Seller.
SECTION 1.2 ASSETS.
As used herein, the term "Assets" means, subject to the terms and
conditions of this Agreement, all of Seller's right, title, interest and estate,
real or personal, recorded or unrecorded, movable or immovable, tangible or
intangible, in and to the following:
(a) The oil, gas and mineral leases, and the other leases, licenses,
permits, rights of way and other agreements described in Exhibit "A" (the
"Leases") which cover and relate to the lands described in Exhibit "A", lands
pooled or unitized therewith or the Units (the "Lands") together with the
leasehold and all other estates created thereby, including all mineral
interests, royalty interests, overriding royalty interests, production payments,
other payments out of or measured by the value of oil and gas production, net
profits interests, carried interests, farmout rights, options, subleases, and
all other interests that Seller has in and to the Leases, whether owned now, as
of the Effective Time or acquired on or prior to Closing, but subject to Section
6.12;
(b) The oil and gas wells described in Exhibit "A-1" hereto (the
"Wells");
(c) All oil, gas, casinghead gas, condensate, distillate, liquid
hydrocarbons, gaseous hydrocarbons and all products refined therefrom, together
with all minerals produced in association with these substances (collectively
called the "Hydrocarbons") in and under and which may be produced and saved from
or attributable to the Leases, Units, Lands or Wells from and after the
Effective Time, and all rents, issues, profits, proceeds, products, revenues and
other income from or attributable thereto from and after the Effective Time;
(d) All right, title and interest of Seller in or to any pools or units
which include any Lands or all or a part of any Leases or include any Wells,
including those pools or units shown on Exhibit A-2 (the "Units"; the Units,
together with the Leases, Lands and Wells, being hereinafter referred to as the
"Properties"), and including all right, title and interest of Seller in
production from any such pool or unit, whether such unit production comes from
wells located on or off of a Lease, and all tenements, hereditaments and
appurtenances belonging to the Leases and Units;
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<PAGE> 7
(e) All of the equipment, machinery, fixtures and other tangible
personal property and improvements on the Lands or appurtenant to the Wells,
Units, Leases or Lands, or used or obtained in connection with the operation of
the Wells, Units or the Leases or with the production, treatment, sale or
disposal of hydrocarbons or water produced therefrom or attributable thereto,
including without limitation, pipelines, disposal systems, water wells,
gathering systems, injection facilities, saltwater disposal facilities, pumping
units and engines, buildings, flow lines and compression facilities appurtenant
to or located upon the Lands (the "Equipment"); and including without limitation
the equipment specifically listed on Exhibit "F".
(f) All right, title and interest of Seller in, to and under or derived
from all contracts, agreements and instruments by which the Properties are
bound, or that relate to or otherwise affect the Properties, including but not
limited to the Permitted Encumbrances as identified in Section 3.3(j), below,
operating agreements, unitization, pooling and communitization agreements,
declarations and orders, joint venture agreements, farmin and farmout
agreements, water rights agreements, exploration agreements, participation
agreements, joint venture agreements, exchange agreements, transportation or
gathering agreements, agreements for the sale and purchase of oil, gas, or
casinghead gas, and processing agreements to the extent applicable to the
Properties or the production of oil and gas and other minerals and products
produced in association therewith from the Properties (all of which are
hereinafter collectively referred to as "Contracts" and provided that
"Contracts" shall not include the instruments constituting the Leases);
(g) All right, title and interest of Seller in or to all easements,
permits, licenses, servitudes, rights-of-way, surface leases and other surface
rights ("Surface Contracts") appurtenant to, and used or held for use in
connection with, the Properties and not otherwise described in Exhibit A;
(h) All right, title, and interest of Seller in and to all lease files,
land files, well files, gas and oil sales contract files, gas processing files,
division order files, abstracts, title opinions, land surveys, geologic and
geophysical data (including interpretations thereof), logs, maps, engineering
data and reports, reserve studies and evaluations, and files and all other
books, records, data, files, maps and accounting records related to Assets, or
used or held for use in connection with the maintenance or operation thereof,
but excluding (i) computer software, (ii) work product of Seller's legal counsel
(other than title opinions), (iii) data held confidentially pursuant to
contractual obligations, and (iv) records relating to the negotiation and
consummation of the sale of the Assets (subject to such exclusions, the
"Records"); provided, however, that Seller may retain the copies of such files
and other records as Seller has determined may be required for litigation, tax,
accounting, and auditing purposes; and
(i) All right, title and interest of EXUS in and to the items described
in Section 1.2(a)-1.2(h), above, to the extent such interests are attributable
to EXCO's ownership in EXUS (see Section 4.2(b), below).
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<PAGE> 8
excluding, however, the Excluded Assets (as defined in Section 1.3).
SECTION 1.3 EXCLUDED ASSETS.
Notwithstanding the foregoing, the Assets shall not include, and there
is excepted, reserved and excluded from the purchase and sale contemplated
hereby (collectively, the "Excluded Assets"):
(a) All corporate, financial, income and franchise tax and legal
records of Seller that relate to Seller's business generally (whether or not
relating to the Properties), and all books, records and files that relate to the
Excluded Assets and those records retained by Seller pursuant to Section 1.2(h);
(b) All rights to any refund of Taxes or other costs or expenses borne
by Seller or Seller's predecessors in interest and title attributable to periods
prior to the Effective Time;
(c) All rights relating to the existing claims and causes of action;
(d) Seller's (and EXUS') area-wide bonds, permits and licenses or other
permits, licenses or authorizations used in the conduct of Seller's business
generally; and
(e) All trade credits, account receivables, note receivables, and other
receivables attributable to the Properties with respect to any period of time
prior to the Effective Time.
SECTION 1.4 EFFECTIVE TIME: PRORATION OF COSTS AND REVENUES.
(a) Possession of the Assets shall be transferred from Seller to Buyer
at the Closing, but certain financial benefits and burdens of the Assets shall
be transferred effective as of 7:00 a.m., local time, where the respective
Assets are located, on October 1, 1999 (the "Effective Time"), as described
below.
Buyer shall be entitled to all production from or attributable to the
Leases, Units and Wells at and after the Effective Time (and all products and
proceeds attributable thereto), and to all other income, proceeds, receipts and
credits earned with respect to the Assets at or after the Effective Time, and
shall be responsible for (and entitled to any refunds with respect to) all
Property Costs incurred at and after the Effective Time except as noted in
Section 1.4(b), below. Seller shall be entitled to all production from or
attributable to Leases, Units and Wells prior to the Effective Time (and all
products and proceeds attributable thereto), and to all other income, proceeds,
receipts and credits earned with respect to the Assets prior to the Effective
Time, and shall be responsible for (and entitled to any refunds with respect to)
all Property Costs incurred prior to the Effective Time except as noted in
Section 1.4(b), below. "Earned" and "incurred", as used in this Agreement, shall
be interpreted in accordance with generally accepted accounting
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<PAGE> 9
principles and Council of Petroleum Accountants Society (COPAS) standards.
"Property Costs" means all operating expenses (including without limitation
costs of insurance and ad valorem, property, severance, production and similar
Taxes based upon or measured by the ownership or operation of the Assets or the
production of Hydrocarbons therefrom, but excluding any other Taxes) and capital
expenditures incurred in the ownership and operation of the Assets under the
applicable operating or unit agreement, and overhead costs charged to the Assets
under the applicable operating or unit agreement. For purposes of allocating
production (and accounts receivable with respect thereto), under this Section
1.4, (i) liquid hydrocarbons shall be deemed to be "from or attributable to" the
Leases, Units and Wells when they pass through the pipeline connecting into the
storage facilities into which they are run and (ii) gaseous hydrocarbons shall
be deemed to be "from or attributable to" the Leases, Units and Wells when they
pass through the delivery point sales meters on the pipelines through which they
are gathered or transported, as applicable. Seller shall utilize reasonable
interpolative procedures to arrive at an allocation of production when exact
meter readings or gauging and strapping data is not available. Seller shall
provide to Buyer, no later than ten (10) Business Days prior to Closing,
evidence of all meter readings and all gauging and strapping procedures
conducted on or about the Effective Time in connection with the Assets, together
with all data necessary to support any estimated allocation, for purposes of
establishing the adjustment to the Purchase Price pursuant to Section 2.3 hereof
that will be used to determine the Closing Payment (as defined in Section
8.4(a)). Taxes, right-of-way fees, insurance premiums and other Property Costs
that are paid periodically shall be prorated based on the number of days in the
applicable period falling before and the number of days in the applicable period
falling at or after the Effective Time, except that production, severance and
similar Taxes shall be prorated based on the number of units actually produced,
purchased or sold, as applicable, before, and at or after, the Effective Time.
In each case, Buyer shall be responsible for the portion allocated to the period
at and after the Effective Time and Seller shall be responsible for the portion
allocated to the period before the Effective Time.
(b) Notwithstanding the provisions of Section 1.4(a), above, the
Parties agree that Buyer shall be responsible for certain Property Costs
incurred prior to the Effective Time which are attributable to drilling the
Louisiana Minerals 15-1 Alternate Well, those costs being reasonable costs for
title opinions and surface damages for such well even though incurred prior to
the Effective Time.
SECTION 1.5 DELIVERY AND MAINTENANCE OF RECORDS.
Seller, at Seller's cost, shall deliver the Records to Buyer within ten
(10) days following Closing. Seller may retain copies of any Records delivered
to Buyer.
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<PAGE> 10
ARTICLE 2. PURCHASE PRICE
SECTION 2.1 PURCHASE PRICE.
The purchase price for the Assets, excluding the Seller's Like-Kind
Exchange Assets, (the "Purchase Price") shall be Eighteen Million Six Hundred
Eighty Thousand Dollars ($18,680,000.00), subject to adjustment as provided in
Section 2.3, and payable to Texas Escrow Company, Inc. ("Texas Escrow") at or
before Closing, as provided in Section 2.2, subject to any post closing
adjustments as provided herein.
SECTION 2.2 DEFERRED TAX-FREE LIKE-KIND EXCHANGE.
Seller and Buyer hereby agree that Seller, in lieu of the sale of the
Assets to Buyer for the cash consideration provided herein, shall assign all of
its rights under this Agreement to Texas Escrow, as a qualified intermediary, in
order to accomplish the transaction in a manner that will comply, either in
whole or in part, with the requirements of a like-kind exchange pursuant to
Section 1031 of the Internal Revenue Code of 1986, as amended. Buyer agrees to
tender the full Purchase Price less adjustments permitted herein to Texas Escrow
at or before Closing. Except as otherwise provided herein, upon payment to Texas
Escrow, Buyer shall not be obligated to pay any additional costs or incur any
additional obligations or liabilities in the acquisition of the Property. Seller
hereby acknowledges that any assignment of its rights pursuant to this Section
2.2 shall in no way relieve Seller from any of its obligations under this
Agreement.
SECTION 2.3 ADJUSTMENTS TO PURCHASE PRICE.
The Purchase Price for the Assets shall be adjusted as follows with all
such amounts being determined in accordance with generally accepted accounting
principles and Council of Petroleum Accountants Society (COPAS) standards:
(a) Reduced by the aggregate amount of the following proceeds received
by Seller between the Effective Time and the Closing Date (with the period
between the Effective Time and the Closing Date referred to as the "Adjustment
Period"): (i) proceeds from the sale of Hydrocarbons (net of any royalties,
overriding royalties or other burdens on or payable out of production,
gathering, processing and transportation costs and any production, severance,
sales or excise Taxes not reimbursed to Seller by the Buyer of production)
produced from or attributable to the Properties during the Adjustment Period,
and (ii) other proceeds earned with respect to the Assets during the Adjustment
Period;
(b) Reduced in accordance with Section 3.5, by an amount equal to the
Allocated Value of those Properties (i) with respect to which preferential
purchase rights have been exercised prior to Closing or (ii) that cannot be
transferred at Closing due to unwaived requirements for consent to the
assignments contemplated hereby;
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<PAGE> 11
(c) Reduced (i) as a result of Title Defects by the Title Defect
Amount; and (ii) as a result of Environmental Defects under Section 3.7;
(d) Reduced by the aggregate amounts payable to third-party owners of
working interests, royalties and overriding royalties and other interests in the
Properties held in suspense (plus interest to be paid with such suspense funds)
by Seller as of the Closing Date;
(e) Reduced by an amount equal to unpaid ad valorem, property,
production, severance and similar taxes and assessments based upon or measured
by the ownership or operation of the Assets that are attributable to periods of
time prior to the Effective Time, which amounts shall, to the extent not
actually assessed, be computed based on such taxes and assessments for the
preceding tax year (such amount to be prorated for the period of Seller's and
Buyer's ownership before and after the Effective Time);
(f) Increased by the amount of all Property Costs and other costs
attributable to the ownership and operation of the Assets which are paid by
Seller and incurred at or after the Effective Time, except any Property Costs
and other such costs already deducted in the determination of proceeds in
Section 2.3(a);
(g) Increased by the amount of the reasonable title opinion costs and
surface costs for the Louisiana Minerals 15-1 Alternate Well which have been
incurred by Seller prior to the Effective Time; and
(h) Increased or decreased, as appropriate, pursuant to the provisions
of Section 6.8 for Gas Imbalances.
The adjustment described in Section 2.3(a) shall serve to satisfy, up
to the amount of the adjustment, Buyer's entitlement under Section 1.4 to
Hydrocarbon production from or attributable to the Properties during the
Adjustment Period, and to the value of other income, proceeds, receipts and
credits earned with respect to the Assets during the Adjustment Period, and
Buyer shall not have any separate rights to receive any production or income,
proceeds, receipts and credits with respect to which an adjustment has been
made. Similarly, the adjustment described in Section 2.3(f) shall serve to
satisfy, up to the amount of the adjustment, Buyer's obligation under Section
1.4 to pay Property Costs and other costs attributable to the ownership and
operation of the Assets which are incurred during the Adjustment Period, and
Buyer shall not be separately obligated to pay for any Property Costs or other
such costs respect to which an adjustment has been made.
SECTION 2.4 ALLOCATION OF PURCHASE PRICE.
Schedule 2.4 sets forth the agreed allocation of the unadjusted
Purchase Price among each of the Assets, which has been made in compliance with
the principles of Section 1060 of the Internal Revenue Code of 1986, as amended
(the "Code"), and the Treasury regulations
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<PAGE> 12
thereunder. The "Allocated Value" for any Asset equals the portion of the
unadjusted Purchase Price allocated to such Asset on Schedule 2.4, increased or
decreased as described in this Section. Any adjustments to the Purchase Price
other than the adjustments provided for in Sections 2.3(b), 2.3(c) and 2.3(h)
shall be applied on a pro rata basis to the amounts set forth on Schedule 2.4
for all Assets. After all such adjustments are made, any adjustments to the
Purchase Price pursuant to Sections 2.3(b), 2.3(c) and 2.3(h) shall be applied
to the amounts set forth in Schedule 2.4 for the particular affected Assets.
Buyer and Seller further agree that, on or before the Closing Date, they will
mutually agree as to the further allocation of the Allocated Values included in
Schedule 2.4 as to the relative portions of those values attributable to
leasehold costs and depreciable equipment.
ARTICLE 3. TITLE AND ENVIRONMENTAL MATTERS
SECTION 3.1 SELLER'S TITLE.
(a) Seller represents and warrants to Buyer that EXUS's title to the
Leases, Wells, Units and Lands shown on Exhibits A, A-1 and A-2, as applicable,
as of the Effective Time is (and as of the Closing Date EXCO's title shall be)
Defensible Title as defined in Section 3.2.
(b) The conveyance to be delivered by Seller to Buyer shall be
substantially in the form of Exhibit "D" hereto (the "Conveyance") and contain a
special warranty of title by, through and under Seller to the Leases, Wells and
Units shown on Exhibits A, A-1 and A-2, subject to the Permitted Encumbrances,
but shall otherwise be without warranty of title, express, implied or statutory,
except that such conveyances shall transfer to Buyer all rights or actions on
title warranties given or made by Seller's predecessors, to the extent Seller
may legally transfer such rights.
(c) Buyer shall not be entitled to protection under Seller's special
warranty of title in the Conveyance against any Title Defect reported under this
Article 3.
SECTION 3.2 DEFINITION OF DEFENSIBLE TITLE.
As used in this Agreement, the term "Defensible Title" means that title
of Seller and EXUS which, subject to Permitted Encumbrances:
(a) Entitles Seller to receive throughout the duration of the
productive life of any Units, Wells or Leases (after satisfaction of all
royalties, overriding royalties, non-participating royalties, net profits
interests or other similar burdens on or measured by production of oil and gas),
not less than the "net revenue interest" share plus the "payout balance" shown
in Exhibit A-1 or A-2 of all oil, gas and other minerals produced, saved and
marketed from such Wells or Units, as applicable;
8
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(b) Obligates Seller to bear a percentage of the costs and expenses for
the maintenance and development of, and operations relating to any Lease, Unit
or Well not greater than the "working interest" shown in Exhibits A-1 and A-2
without increase throughout the productive life of such Lease, Unit or Well,
except as stated in Exhibits A-1 or A-2 and except increases resulting from
contribution requirements with respect to defaulting co-owners under applicable
operating agreements and increases that are accompanied by at least a
proportionate increase in Seller's net revenue interest;
(c) Entitles Seller to payout balances not less than the "payout
balances" as provided in Exhibit A-1; and
(d) Is free and clear of liens, encumbrances, obligations, security
interests, restrictions, pledges, claims or other defects.
As used in this Agreement, the term "Title Defect" means any lien,
charge, encumbrance, obligation (including contract obligation), defect, or
other matter (including without limitation a discrepancy in net revenue interest
or working interest) that renders Seller's title to the Asset less than
Defensible Title.
SECTION 3.3 DEFINITION OF PERMITTED ENCUMBRANCES.
As used herein, the term "Permitted Encumbrances" means any or all of
the following:
(a) Lessors' royalties and any overriding royalties, reversionary
interests and other burdens to the extent that they do not, individually or in
the aggregate, impair Seller's rights to receive proceeds of production from the
affected Property, reduce Seller's net revenue interests below that shown in
Exhibit A-1 or A-2 or increase Seller's working interest above that shown in
Exhibit A-1 or A-2 without a corresponding increase in the net revenue interest;
(b) All leases, unit agreements, pooling agreements, operating
agreements, production sales contracts, division orders and other contracts,
agreements and instruments applicable to the Assets, to the extent that they do
not, individually or in the aggregate, reduce Seller's net revenue interests
below that shown in Exhibit A-1 or A-2 or increase Seller's working interest
above that shown in Exhibit A-1 or A-2 without a corresponding increase in the
net revenue interest;
(c) Preferential rights to purchase the Assets with respect to which
waivers or consents are obtained by Seller from the appropriate parties prior to
the Closing Date or the appropriate time period for asserting the right has
expired or which need not be satisfied prior to a transfer;
(d) Third-party consent requirements and similar restrictions with
respect to which waivers or consents are obtained by Seller from the appropriate
parties prior to the Closing Date
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<PAGE> 14
or the appropriate time period for asserting the right has expired or which need
not be satisfied prior to a transfer;
(e) Liens for current Taxes or assessments not yet delinquent or, if
delinquent, being contested in good faith by appropriate actions;
(f) Materialman's, mechanic's, repairman's, employee's, contractor's,
operator's and other similar liens or charges arising in the ordinary course of
business for amounts not yet delinquent (including any amounts being withheld as
provided by law), or if delinquent, being contested in good faith by appropriate
actions;
(g) All rights to consent, by required notices to, filings with, or
other actions by Governmental Bodies in connection with the sale or conveyance
of oil and gas leases or interests therein if they are not required prior to the
sale or conveyance;
(h) Easements, rights-of-way, servitudes, permits, surface leases and
other rights in respect of surface operations to the extent that they do not,
individually or in the aggregate, impair Seller's right to receive proceeds of
production from the affected Property, reduce Seller's net revenue interests
below that shown in Exhibits A-1 or A-2 or increase Seller's working interest
above that shown in Exhibits A-1 or A-2 without a corresponding increase in the
net revenue interest;
(i) Any other liens, charges, encumbrances, defects or irregularities
which do not, individually or in the aggregate, detract from the value of or
interfere with the use or ownership of the Assets subject thereto or affected
thereby (as currently used or owned), which would be accepted by a reasonably
prudent Buyer engaged in the business of owning and operating oil and gas
properties, and which do not impair Seller's right to receive proceeds of
production from the affected Property, reduce Seller's net revenue interest
below that shown in Exhibits A-1 or A-2, or increase Seller's working interest
above that shown in Exhibits A-1 or A-2 without a corresponding increase in the
net revenue interest, or otherwise; and
(j) All those contracts, and other matters described on Exhibit "E".
SECTION 3.4 NOTICE OF TITLE DEFECTS: DEFECT ADJUSTMENTS.
(a) To assert a claim arising out of a breach of Section 3.1(a), Buyer
may from time to time deliver claim notices to Seller (each a "Title Defect
Notice") on or before the date which is six (6) days prior to the Closing Date
(the "Title Claim Date"). Each Title Defect Notice shall be in writing and shall
include (i) a description of the alleged Title Defect(s), (ii) the Units, Wells,
or Lands affected by the Title Defect (each a "Title Defect Property"), (iii)
the Allocated Values of the Title Defect Property, (iv) supporting documents
reasonably necessary for Seller (as well as any title attorney or examiner hired
by Seller) to verify the existence of the alleged Title Defect(s) and (v) the
amount by which Buyer reasonably believes the Allocated Values of the
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Title Defect Property are reduced by the alleged Title Defect(s) and the
computations and information upon which Buyer's belief is based. Buyer shall be
deemed to have waived all Title Defects, excluding Seller's special warranty of
title contained in the Conveyance, that do not meet the threshold for an
adjustment as set forth in Section 3.4(g).
(b) Seller shall have the right, but not the obligation, to attempt, at
its sole cost, to cure or remove any Title Defects of which it has been advised
by Buyer during the five (5) day period following the date of a Title Defect
Notice (the "Cure Period").
(c) With respect to any Title Defect Property not cured during the Cure
Period, Buyer shall be entitled to receive an amount (the "Title Defect Amount")
equal to the reduction in the Allocated Value for such Title Defect Property
caused by such Title Defects, as determined pursuant to Section 3.4(e). If the
Title Defect Amount has been determined for any such Title Defect Property prior
to Closing then the Purchase Price shall be reduced by that Title Defect Amount.
For any other such Title Defect Property, the Purchase Price in the final
statement prepared under Section 8.4(b) shall be reduced by the Title Defect
Amount determined for such Title Defect Property.
(d) If Seller timely pays all Title Defect Amounts, Section 3.4(c)
shall, to the fullest extent permitted by applicable law, be the exclusive right
and remedy of Buyer with respect to Seller's breach of its warranty and
representation in Section 3.1(a). Notwithstanding the foregoing, Seller's
special warranty under Section 3.1(b) shall extend beyond the Closing Date and
the Title Claim Date.
(e) The Title Defect Amount resulting from a Title Defect shall be
determined as follows:
(i) If Buyer and Seller agree on the Title Defect Amount, that
amount shall be the Title Defect Amount;
(ii) If the Title Defect is a lien, encumbrance or other
charge which is undisputed and liquidated in amount, then the Title
Defect Amount shall be the amount necessary to be paid to remove the
Title Defect from the Title Defect Property;
(iii) If the Title Defect represents a discrepancy between (A)
the net revenue interest for any Title Defect Property and (B) the net
revenue interest or percentage stated on Exhibits A-1 or A-2, then the
Title Defect Amount shall be the product of the Allocated Value of such
Title Defect Property multiplied by a fraction, the numerator of which
is the net revenue interest or percentage ownership decrease and the
denominator of which is the net revenue interest or percentage
ownership stated on such Exhibits;
(iv) If the Title Defect represents an obligation,
encumbrance, burden, charge or condition upon or other defect in title
to the Title Defect Property of a type not
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described in subsections (i), (ii) or (iii) above, the Title Defect
Amount shall be determined by taking into account the Allocated Value
of the Title Defect Property, the portion of the Title Defect
Property, the legal effect of the Title Defect, the potential economic
effect of the Title Defect over the life of the Title Defect Property,
the values placed upon the Title Defect by Buyer and Seller and such
other factors as are necessary to make a proper evaluation; and
(v) Notwithstanding anything to the contrary in this Article
3, the aggregate Title Defect Amounts attributable to the effects of
all Title Defects upon any Title Defect Property shall not exceed the
Allocated Value of the Title Defect Property.
(f) Seller and Buyer shall attempt to agree on all Title Defect Amounts
within five (5) days after the end of the Cure Period for any Title Defect
Property. If Seller and Buyer are unable to agree by that date, Title Defect
Amounts in dispute shall be resolved by arbitration pursuant to the provisions
of Section 11.16. Buyer may withhold from the Closing Payment the amount, if
any, which Buyer claims is the Title Defect Amount for any Title Defect Amount
which is in dispute on the Closing Date until such Title Defect Amount is
determined.
(g) Notwithstanding anything to the contrary contained in this Article
3, no adjustment to the Purchase Price for Title Defects shall be made unless
and until, and only to the extent that the Title Defect Amount as to a specific
Well or Unit, as applicable, exceeds Five Thousand Dollars ($5,000) and the
aggregate value of all Title Defect Amounts exceeds One Hundred Fifty Thousand
Dollars ($150,000).
SECTION 3.5 CONSENTS TO ASSIGNMENT AND PREFERENTIAL RIGHTS TO
PURCHASE.
(a) Seller shall notify Buyer at least ten (10) Business Days prior to
Closing of all required third-party consents to the assignment of the Assets to
Buyer which have not been obtained and preferential rights to purchase which
have not been waived and the Assets to which they pertain, as well as advise
Buyer if the assignment of any Contract or other Asset without obtaining a
consent would result in termination or material impairment of Seller's rights in
such Contract or other Asset. In no event shall there be included in the
Conveyances at Closing any Asset subject to a consent requirement that provides
that transfer of the Asset without consent will result in a termination or other
material impairment of any rights in relation to such Asset. In cases where the
Asset subject to such a requirement is a Contract and Buyer is assigned the
Properties to which the Contract relates, but the Contract is not transferred to
Buyer due to the unwaived consent requirement, Seller shall continue after
Closing to use commercially reasonable efforts to obtain such consent so that
such Contract can be transferred to Buyer upon receipt of such consent. In cases
where the Asset subject to such a requirement is a Property and the third-party
consent to the sale and transfer of the Property is not obtained, or the
preferential right to purchase has not been waived, prior to the Closing Date,
Buyer may elect to treat the unsatisfied consent requirement or unwaived
preferential right to purchase as a Title Defect and receive the appropriate
purchase price adjustment under Section 2.3(b) by giving Seller notice
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thereof in accordance with Section 3.4(a), except that such notice may be given
up to one (1) Business Day prior to the Closing Date. If an unsatisfied consent
or preferential right to purchase requirement with respect to which a Purchase
Price adjustment is made under Section 3.4 is subsequently satisfied prior to
the date of the final adjustment to the Purchase Price under Section 8.4(b),
conveyance of the Asset shall be promptly made to Buyer and Seller shall be paid
the amount of the previous reduction in the Purchase Price, and the provisions
of this Section 3.5 shall no longer apply.
(b) If any preferential rights to purchase any Properties are exercised
prior to Closing, those Properties transferred to a third party as a result of
the exercise of such preferential rights shall be treated as if subject to a
Title Defect resulting in the complete loss of title and the Purchase Price
shall be reduced under Section 2.3(b) by the Allocated Value for such Property.
Seller shall retain the consideration paid by the third party.
SECTION 3.6 CASUALTY OR CONDEMNATION OR EXPROPRIATION LOSS.
If, after the date of this Agreement but prior to the Closing Date, any
portion or portions of the Assets is destroyed or damaged (either totally or
partially) by fire or other casualty (including well blowout, either surface or
subsurface) or is taken in condemnation or expropriation or under right of
eminent domain, and the loss of any one or more casualty or taking equals or
exceeds Two Hundred Thousand Dollars ($200,000.00), Buyer may terminate this
Agreement.
If, after the date of this Agreement but prior to the Closing Date, any
portion of the Assets is destroyed or damaged by fire or other casualty
(including well blowout, either surface or subsurface) or is taken in
condemnation or expropriation or under right of eminent domain, and the loss as
a result of such individual casualty or taking is less than Two Hundred Thousand
Dollars ($200,000.00), Buyer shall elect by written notice to Seller to either
(i) treat such casualty or taking as a Title Defect with respect to the affected
Property or Properties under Section 3.4 and Seller shall retain all rights to
insurance and other claims against third parties with respect to the casualty or
taking except to the extent the parties otherwise agree in writing; or (ii)
Buyer shall accept the Assets affected by any casualty and Seller shall, at
Closing, pay to Buyer all sums paid to Seller or EXUS by third parties by reason
of such casualty or taking and shall assign, transfer and set over to Buyer or
subrogate Buyer to all of Seller's right, title and interest (if any) in
insurance claims, unpaid awards, and other rights against third parties (other
than Affiliates of Seller and its directors, officers, employees and agents)
arising out of the casualty or taking. Seller shall promptly notify Buyer of any
destruction of Assets (either partial or total) by fire or other casualty or of
commencement of condemnation or expropriation or eminent domain proceedings.
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SECTION 3.7 ENVIRONMENTAL AUDIT.
(a) Buyer may perform an environmental audit of some or all of the
Properties (the "Environmental Audit") prior to the Closing Date. The scope of
the Environmental Audit (including any testing, coring, or sampling) to be made
on or with respect to the Properties shall be determined by Buyer, and shall be
performed upon prior notice and in a manner that will not unreasonably interfere
with Seller's operations. Seller hereby grants to Buyer and its agents,
employees and representatives any and all rights of access that are necessary to
complete the Environmental Audit.
Buyer's access shall be at Buyer's sole risk, cost and expense, and
Buyer shall release Seller from and shall fully protect, indemnify and defend
Seller and its respective officers, agents, employees and Affiliates and hold
them harmless from and against any and all claims relating to, arising out of,
or connected, directly or indirectly, with Buyer's exercise of its rights under
this Article 3.7, including without limitation, claims relating to (a) injury or
death of any person or persons whomsoever caused by Buyer or its agents, (b)
damage to or loss of any property or resource caused by Buyer or its agents, (c)
pollution, environmental damage or violation of Environmental Laws caused by
Buyer or its agents, (d) common law causes of action such as negligence, gross
negligence, strict liability, nuisance or trespass, or (e) fault imposed by
statute, rule, regulation or otherwise; it being understood that Buyer shall not
be responsible hereunder for any pre-existing condition of the Assets discovered
by such inspection. Buyer additionally agrees to comply with Seller's safety
rules and procedures while upon the Properties.
(b) With respect to any single Property identified in the Audit Report
for which the Estimated Remedial Cost exceeds Twenty Thousand Dollars
($20,000.00), Buyer may notify Seller in writing that it will either:
(i) accept the Property affected by such Environmental Defect with
a Purchase Price adjustment based on an agreed upon remedial cost
amount; or
(ii) allow Seller the option to remediate to Buyer's satisfaction
at Seller's cost prior to closing.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLER
SECTION 4.1 DISCLAIMERS.
EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN ARTICLE 3 OR THIS ARTICLE
4 OR IN THE CONVEYANCE TO BE DELIVERED TO BUYER HEREUNDER, SELLER EXPRESSLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO (i) ANY OF
THE ASSETS, (ii) THE CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE
MEMORANDUM, OR ANY REPORT OF ANY
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PETROLEUM ENGINEERING CONSULTANT, OR ANY GEOLOGICAL OR SEISMIC DATA OR
INTERPRETATION, RELATING TO THE ASSETS, (iii) THE QUANTITY, QUALITY OR
RECOVERABILITY OF PETROLEUM SUBSTANCES IN OR FROM THE ASSETS, (iv) ANY ESTIMATES
OF THE VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE ASSETS, (v) THE
PRODUCTION OF PETROLEUM SUBSTANCES FROM THE ASSETS, OR (vi) ANY OTHER MATERIAL
OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE OR COMMUNICATED TO BUYER OR ITS
AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR
ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR
ANY DISCUSSION OR PRESENTATION RELATING THERETO, AND FURTHER DISCLAIM ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY
EQUIPMENT, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT
BUYER SHALL BE DEEMED TO BE OBTAINING EQUIPMENT IN ITS PRESENT STATUS, CONDITION
AND STATE OF REPAIR, "AS IS" AND "WHERE IS" WITH ALL FAULTS.
SECTION 4.2 REPRESENTATIONS AND WARRANTIES.
(a) Seller represents and warrants to Buyer the matters set out in
Sections 4.2(b) through 4.24. Such representations and warranties shall, unless
expressly specified to the contrary therein, be applicable both as of the date
hereof and also as of the Closing Date.
(b) Notwithstanding 4.2(a), the Parties acknowledge that as of the
Effective Time, title to the Properties is in EXUS. Seller represents that
Seller and Venus are each fifty percent (50%) owners in EXUS. On or prior to the
Closing Date, EXUS will duly execute conveyances of the Assets and other
documents and certificates of title to Seller and Venus, all in form
satisfactory to Buyer, to allow Seller to make the transfer and perform all
other obligations contemplated herein. To the extent this Agreement sets forth
warranties by and/or representations or obligations upon Seller to operate,
administer or perform certain acts in connection with the Assets or to refrain
from participating in certain transactions or activities with respect thereto,
including but not limited to the provisions contained in this Article 4 and
Article 6, Seller will cause EXUS to act or refrain from acting as so required.
Likewise, where this Agreement refers to proceeds received or earned by Seller,
expenses or costs paid by Seller, or similar provisions (including without
limitation the provisions in Sections 1.4, 2.3, 10.1 and 10.2), the Parties
agree that the term Seller shall also mean EXUS, to the extent such proceeds,
costs or expenses are attributable to EXCO's ownership in EXUS.
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SECTION 4.3 EXISTENCE AND QUALIFICATION.
Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas and is duly qualified to do
business as a foreign corporation in each jurisdiction where the Assets are
located, except where the failure to so qualify would not have a Material
Adverse Effect.
SECTION 4.4 POWER.
Seller has the corporate power to enter into and perform this Agreement
and consummate the transactions contemplated by this Agreement.
SECTION 4.5 AUTHORIZATION AND ENFORCEABILITY.
The execution, delivery and performance of this Agreement, and the
performance of the transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action on the part of Seller. This
Agreement has been duly executed and delivered by Seller (and all documents
required hereunder to be executed and delivered by Seller at Closing will be
duly executed and delivered by Seller) and this Agreement constitutes, and at
the Closing such documents will constitute, the valid and binding obligations of
Seller, enforceable in accordance with their terms except as such enforceability
may be limited by applicable bankruptcy or other similar laws affecting the
rights and remedies of creditors generally as well as to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
SECTION 4.6 NO CONFLICTS.
Seller's execution, delivery and performance of this Agreement will not
conflict with or violate any agreement or instrument to which Seller is a party
or any law, rule, regulation, ordinance, judgment, decree or order to which
Seller or EXUS is subject.
SECTION 4.7 LIABILITY FOR BROKERS' FEES.
Buyer shall not directly or indirectly have any responsibility,
liability or expense, as a result of undertakings or agreements of Seller, for
brokerage fees, finder's fees, agent's commissions or other similar forms of
compensation in connection with this Agreement or any agreement or transaction
contemplated hereby.
SECTION 4.8 LITIGATION.
Except as set forth in Schedule 4.8, (a) no claim, demand, filing
(including lis pendens filings and abstracts of judgment), investigation,
proceeding, action, suit, or other legal proceeding of any kind or nature
(including any claims that Seller or EXUS is in breach of any
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Contract and/or any Lease) is pending or, to Seller's knowledge, is or has been
threatened with respect to the Properties, the Assets, or Seller or EXUS (with
respect to any of the Properties or the Assets), or the ownership, operation,
development, maintenance, or use of any thereof, (b) Seller is not aware of any
facts, conditions or circumstances in connection with, related to, or associated
with the Properties (or the ownership, operation, development, maintenance, or
use of any thereof), the Assets, the Contracts, the Leases or Seller or EXUS
(with respect to any of the Properties or the Assets), that could reasonably be
expected to give rise to any such claim, demand, filing, investigation,
proceeding, action, suit, or other legal proceeding, and (c) no notice from any
Governmental Body or any other Person has been received by Seller or EXUS (i)
claiming any violation, repudiation, or termination, in whole or in part, of any
of the Properties or any violation of any Law with respect to the Properties
(including any such Law concerning the conservation of natural resources) or
(ii) requiring, or calling attention to the need for, any work, repairs,
construction, alterations, installations, remediation, response, removal or
abatement actions, restoration, investigation or monitoring of, on, in, under,
in connection with, or related to the Properties or the ownership, operation,
development, maintenance, or use of any thereof, which matters, all or in part,
remain outstanding and unresolved to the satisfaction of the sender of such
notice.
SECTION 4.9 TAXES AND ASSESSMENTS.
Seller warrants and represents (a) all reports, returns, statements
(including estimated reports, returns, or statements), and other similar filings
required to be filed on or before the Closing Date by Seller or EXUS with
respect to any Taxes (the "Tax Returns") have been timely filed with the
appropriate governmental agencies in all jurisdictions in which such Tax Returns
are required to be filed; (b) the Tax Returns are true and correct in all
material respects, and all Taxes reported on such returns have been paid; (c)
Seller or EXUS has not extended or waived the application of any statute of
limitations of any jurisdiction regarding the assessment or collection of any
Tax; (d) there are no administrative proceedings or lawsuits pending or, to the
knowledge of Seller, there are no claims, assessments, levies, administrative
proceedings, or lawsuits threatened against the Assets or Seller or EXUS by any
taxing authority; and (e) there are no Tax liens on any of the Assets.
SECTION 4.10 ENVIRONMENTAL LAWS.
Except as set forth on Schedule 4.10, (a) all environmental and health
and safety permits and plans, licenses, approvals, consents, certificates and
other authorizations of any kind or nature ("Environmental Permits") necessary
for the ownership, operation, development, maintenance, or use of any of the
Properties have been obtained and maintained in effect and will be transferred
to Buyer at Closing, (b) Seller, EXUS and the Properties, and the ownership,
operation, development, maintenance, and use thereof, are in compliance with all
Environmental Laws and with all terms and conditions of all Environmental
Permits, and all prior instances of non-compliance have been fully and finally
resolved to the satisfaction of all Governmental Bodies with jurisdiction over
such matters, (c) neither the Seller, EXUS nor the Properties, or the
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ownership, operation, development, maintenance, or use thereof, is subject to
any Environmental Claim or Environmental Liabilities arising from, based upon,
associated with or related in any way to the Properties or the ownership,
operation, or use of any thereof, (d) neither Seller nor EXUS has received any
notice of any Environmental Claim, Environmental Liabilities or any violation or
non-compliance with any Environmental Law or the terms or conditions of any
Environmental Permit, arising from, based upon, associated with or related in
any way to the Properties or the ownership, operation, development, maintenance,
or use of any thereof, (e) no Hazardous Materials or hazardous substances are
present, or have been disposed of (onsite or offsite), released, migrated or
transported to or from, or have escaped on, in, from, under or in connection
with the Properties, or the ownership, operation, development, maintenance, or
use of any thereof, such as to cause a condition or circumstances that could
reasonably be expected to result in a violation of or liability pursuant to any
Environmental Law, and (f) Seller and EXUS are not aware of any facts,
conditions, or circumstances in connection with, related to, or associated with
the Properties, or any of them, or the ownership, operation, development,
maintenance, or use of any thereof, that could reasonably be expected to give
rise to an assertion that Seller, EXUS or the Properties, or the ownership,
operation, or use thereof are not in substantial compliance with Environmental
Laws or the terms or conditions of any Environmental Permit, or have any
liability pursuant to any Environmental Law.
SECTION 4.11 SAFETY AND HEALTH.
The Seller/EXUS operated Leases and to Seller's knowledge, all other
Properties, have been operated in compliance with all Laws addressing the safety
and/or health of employees, including but not limited to the Occupational Safety
and Health Act, 29 U.S.C.A. Section 651, et seq., and the regulations
promulgated pursuant thereto, except where a failure to comply would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 4.12 OUTSTANDING CAPITAL COMMITMENTS AND PROPERTY COSTS.
Other than with respect to: (a) the Louisiana Minerals 15-1 Alternate
Well; and (b) the Davis Bros. "J" No. 4 Well; as of the Effective Time; there
were no outstanding AFEs or other commitments to make capital expenditures which
are binding on the Assets and which Seller reasonably anticipates will
individually require expenditures by the owner of the Assets after the Effective
Time in excess of $20,000 other than those shown on Schedule 4.12 hereto. All
Property Costs relating to periods of time prior to the Effective Time have been
timely and properly paid in full.
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SECTION 4.13 COMPLIANCE WITH LAWS.
Except as disclosed on Schedule 4.13, (a) the Properties have been and
currently are operated, and the Seller, EXUS and the Properties are, in
substantial compliance with the provisions and requirements of all Laws of all
Governmental Bodies having jurisdiction with respect to such parties, the
Properties, or the ownership, operation, development, maintenance, or use of any
thereof.
SECTION 4.14 CONTRACTS.
Seller and EXUS have paid their share of all costs payable by them
under the Leases, Surface Contracts, Contracts, and Permitted Encumbrances.
Neither Seller nor EXUS, nor, to the knowledge of Seller, any other party is in
default under or in breach of any Lease, Surface Contract, Contract or Permitted
Encumbrance. To the best of Seller's knowledge, the Leases are valid and
subsisting oil and gas leases and are currently in force. Exhibit "E" sets forth
all Contracts and Surface Contracts to which the Properties are subject. Seller
has furnished or made available to Buyer true and correct copies of all Leases
and the portion of the Permitted Encumbrances identified in Exhibit "E", as
amended and in effect as of the Closing Date.
SECTION 4.15 PAYMENTS FOR PRODUCTION.
Except as set forth on Schedule 4.15, (a) all rentals, royalties,
excess royalty, overriding royalty interests, production payments, and other
payments due and/or payable on or prior to the Effective Time under or with
respect to the Wells, Units and Leases, and the Hydrocarbons produced therefrom
or attributable thereto, have been properly and timely paid, (b) all rentals,
payments, and obligations due and payable or performable on or prior to the
Effective Time under or on account of any of the Properties have been duly paid,
performed, or provided for prior to the Effective Time, (c) all ad valorem,
property, production, transportation, sales, gross receipts, excise, use,
severance, employee, income, franchise and other taxes, including taxes based on
or measured by the ownership or operation of the Properties or the production of
Hydrocarbons from the Wells and Leases, as well as all assessments and other
governmental charges, penalties, interest and fines, which have become due and
payable on or prior to the Effective Time with respect to the Properties, or
Seller's or EXUS' ownership or operation thereof, or which have been collected
by Seller or EXUS in connection with the Properties on behalf of some
governmental entity, have been properly paid prior to becoming delinquent, and
all returns and reports with respect to such matters have been duly and timely
filed, (d) all costs, expenses, and liabilities payable on or prior to the
Effective Time under the terms of the Contracts and any other agreement to which
any of the Properties or the Seller or EXUS is bound have been properly and
timely paid, except for such expenses as are being currently paid prior to
delinquency in the ordinary course of business, and (e) Seller and EXUS are not
obligated under any contract or agreement for the sale of gas containing a
take-or-pay, advance payment, prepayment, or similar provision, or under any
gathering, transmission, or any other contract or
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agreement with respect to any of the Properties (i) to pay for and take any gas
if the purchase of such gas becomes unprofitable or (ii) to gather, deliver,
process, or transport any gas without then receiving full payment therefor.
SECTION 4.16 GAS IMBALANCES.
(a) Schedule 4.16 accurately sets forth all pipeline and production
imbalances and penalties as of the Effective Time arising with respect to the
Properties.
(b) Except as disclosed in Schedule 4.16, (i) no Buyer is entitled to
"make-up" or otherwise take or receive deliveries of Hydrocarbons attributable
to Seller's or EXUS's interest in the Wells, Units and Leases without paying at
the time of such deliveries the full contract price therefor, (ii) no Person is
entitled to receive any portion of Seller's or EXUS's Hydrocarbons or to receive
cash or other payments to "balance" any disproportionate allocation of
Hydrocarbons produced from the Units, Wells and Leases under any operating
agreement, gas balancing or storage agreement, gas processing or dehydration
agreement, gas transportation agreement, gas purchase agreement, or other
agreements, whether similar or dissimilar, (iii) neither Seller nor EXUS is
obligated to deliver any quantities of gas, or to pay any penalties or other
amounts, in connection with the violation of any of the terms of any gas
transportation contract or other agreement with shippers, (iv) no claim, notice,
or order from any Governmental Body has been received by Seller or EXUS due to
Hydrocarbon production from the Properties being in excess of allowables or
similar violations which could result in curtailment of Hydrocarbon production
from the Properties after Closing, and (v) neither Seller nor EXUS is obligated
to pay any penalties or other payments under any gas transportation or other
agreement as a result of the delivery of quantities of gas from the Wells in
excess of the contract requirements.
SECTION 4.17 CONSENTS.
Seller, on or before Closing, shall have used its reasonable efforts to
obtain consents, except those which by their nature cannot be requested or
obtained until after Closing, or which Buyer and Seller shall have mutually
waived or which have resulted in an adjustment to the Purchase Price.
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SECTION 4.18 PLUGGING STATUS.
Except as shown on Schedule 4.18, as of the date of this Agreement,
there are no Wells located on the Properties that (i) Seller or EXUS is
currently obligated by law or contract to presently plug and abandon; (ii)
Seller or EXUS will be obligated by law or contract to plug and abandon with the
lapse of time or notice or both because the Well is not currently capable of
producing Hydrocarbons in commercial quantities or otherwise currently being
used in normal operations; (iii) are subject to exceptions to a requirement to
plug and abandon issued by a regulatory authority having jurisdiction over the
Properties; or (iv) to the best knowledge of Seller, have been plugged and
abandoned but have not been plugged in accordance in all material respects with
all applicable requirements of each regulatory authority having jurisdiction
over the Properties.
SECTION 4.19 EQUIPMENT.
The Equipment has been maintained in good repair, working order and
operating condition and is adequate for normal operation of the Properties.
Neither Seller nor EXUS have removed Equipment from the Properties since the
Effective Time, and they shall not remove any Equipment from the Properties
without the consent of Buyer, including rental compressors and any other rental
equipment utilized for or in connection with operation of the Properties.
SECTION 4.20 CURRENT COMMITMENTS.
Schedule 4.12 contains a true and complete list as of the date of this
Agreement of all oral or written commitments for capital expenditures of more
than $20,000 with respect to any of the Properties for which all of the
activities anticipated in such commitments have not been completed by the
Effective Time.
SECTION 4.21 CONDEMNATION OR EXPROPRIATION.
Seller has no knowledge or notice of any actual or threatened taking
(whether permanent, temporary, whole or partial) of any part of the Properties
by reason of condemnation or expropriation or the threat of condemnation or
expropriation.
SECTION 4.22 BANKRUPTCY.
There are no bankruptcy, reorganization, or arrangement proceedings
pending, being contemplated by or, to Seller's knowledge, threatened against
Seller, EXUS or any Affiliate of Seller.
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SECTION 4.23 HISTORICAL INFORMATION.
The historical factual information furnished by Seller to Buyer
regarding lease operating expenses, Hydrocarbon pricing, and rates of production
with respect to the Properties was accurate and complete in all material
respects.
SECTION 4.24 GOVERNMENT AUTHORIZATIONS.
Except as disclosed on Schedule 4.13, Seller or EXUS has obtained and
is maintaining all federal, state and local governmental licenses, permits,
franchises, orders, exemptions, variances, waivers, authorizations,
certificates, consents, rights, privileges and applications therefor (the
"Governmental Authorizations") that are presently necessary or required for the
ownership and operation of the Seller's/EXUS's operated Assets as currently
owned and operated (including, but not limited to, those required under
Environmental Laws), the loss of which would, individually or in the aggregate,
have a Material Adverse Effect. Except as disclosed in Schedule 4.8 or Schedule
4.13 and except as would not, individually or in the aggregate, have a Material
Adverse Effect, (i) Seller has caused to be operated the Seller/EXUS operated
Assets in accordance with the conditions and provisions of such Government
Authorizations, and (ii) no notices of violation have been received by Seller or
EXUS, and no proceedings are pending or, to Seller's knowledge, threatened in
writing that might result in any modification, revocation, termination or
suspension of any such Governmental Authorizations or which would require any
corrective or remediation action by Seller or EXUS.
SECTION 4.25 PRODUCTION PROCEEDS PAYABLE TO EXUS.
Exco represents and warrants that all revenues attributable to
production from the Assets under this Agreement and the Assets under the Venus
Agreement are (and have been since the Effective Time) being paid directly to
EXUS and, to assure that Venus is able to satisfy all its post-Closing
adjustment obligations to Buyer, that EXUS: (i) shall not disburse (and has not
disbursed subsequent to the Effective Time) to Venus proceeds attributable to
production after the Effective Time; and (ii) shall continue to utilize proceeds
from production attributable to Venus's interest in the Venus Assets to pay
Venus's proportionate share of Property Costs incurred after the Effective Time.
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ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller the following:
SECTION 5.1 EXISTENCE AND QUALIFICATION.
Buyer is a corporation organized, validly existing and in good standing
under the laws of the state of its incorporation and is duly qualified to do
business as a foreign corporation in every jurisdiction in which it is required
to qualify in order to conduct its business except where the failure to so
qualify would not have a material adverse effect on Buyer or its properties; and
Buyer is duly qualified to do business as a foreign corporation in the
respective jurisdictions where the Assets to be transferred to it are located.
SECTION 5.2 POWER.
Buyer has the corporate power to enter into and perform this Agreement
and consummate the transactions contemplated by this Agreement.
SECTION 5.3 AUTHORIZATION AND ENFORCEABILITY.
The execution, delivery and performance of this Agreement, and the
performance of the transaction contemplated hereby, have been duly and validly
authorized by all necessary corporate action on the part of Buyer. This
Agreement has been duly executed and delivered by Buyer (and all documents
required hereunder to be executed and delivered by Buyer at Closing will be duly
executed and delivered by Buyer) and this Agreement constitutes, and at the
Closing such documents will constitute, the valid and binding obligations of
Buyer, enforceable in accordance with their terms except as such enforceability
may be limited by applicable bankruptcy or other similar laws affecting the
rights and remedies of creditors generally as well as to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
SECTION 5.4 NO CONFLICTS.
Buyer's execution, delivery and performance of this Agreement will not
conflict with or violate any agreement, instrument to which Buyer is a party or
any law, rule, regulation, ordinance, judgment, decree or order to which Buyer
is subject.
SECTION 5.5 LIABILITY FOR BROKERS' FEES.
Seller shall not directly or indirectly have any responsibility,
liability or expense, as a result of undertakings or agreements of Buyer, for
brokerage fees, finder's fees, agent's
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commissions or other similar forms of compensation in connection with this
Agreement or any agreement or transaction contemplated hereby.
SECTION 5.6 LITIGATION.
There are no actions, suits or proceedings pending, or to Buyer's
knowledge, threatened in writing before any Governmental Body against Buyer or
any subsidiary or Buyer which are reasonably likely to impair materially Buyer's
ability to perform its obligations under this Agreement.
ARTICLE 6. COVENANTS OF THE PARTIES
SECTION 6.1 ACCESS.
(a) Between the date of execution of this Agreement and the Closing
Date, Seller will give Buyer and its representatives access to the Assets and
access to and the right to copy, at Buyer's expense, the Records in Seller's
possession, for the purpose of conducting an investigation of the Assets, but
only to the extent that Seller may do so without violating any obligations to
any third party and to the extent that Seller has authority to grant such access
without breaching any restriction binding on Seller. Such access by Buyer shall
be limited to Seller's normal business hours and any weekends and after hours
requested by Buyer that can be reasonably accommodated by Seller, and Buyer's
investigation shall be conducted in a manner that minimizes interference with
the operation of the Assets. All information obtained by Buyer and its
representatives under this Section shall be subject to the terms of Section 6.6.
SECTION 6.2 GOVERNMENT REVIEWS.
Seller and Buyer shall in a timely manner (a) make all required
filings, if any, with and prepare applications to and conduct negotiations with,
each governmental agency as to which such filings, applications or negotiations
are necessary or appropriate in the consummation of the transactions
contemplated hereby, and (b) provide such information as each may reasonably
request to make such filings, prepare such applications and conduct such
negotiations. The Parties shall cooperate with and use all reasonable efforts to
assist the other with respect to such filings, applications and negotiations.
SECTION 6.3 NOTIFICATION OF BREACHES.
Until the Closing,
(a) Buyer shall notify Seller promptly after Buyer obtains actual
knowledge that any representation or warranty of Seller contained in this
Agreement is untrue in any material respect or will be untrue in any material
respect as of the Closing Date or that any covenant or agreement
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to be performed or observed by Seller prior to or on the Closing Date has not
been so performed or observed in any material respect.
(b) Seller shall notify Buyer promptly after Seller obtains actual
knowledge that any representation or warranty of Buyer contained in this
Agreement is untrue in any material respect or will be untrue in any material
respect as of the Closing Date or that any covenant or agreement to be performed
or observed by Buyer prior to or on the Closing Date has not been so performed
or observed in a material respect.
(c) If any of Buyer's or Seller's representations or warranties are
untrue or shall become untrue in any material respect between the date of
execution of this Agreement and the Closing Date, or if any of Buyer's or
Seller's covenants or agreements to be performed or observed prior to on or the
Closing Date shall not have been so performed or observed in any material
respect, but if such breach of representation ,warranty, covenant or agreement
shall (if curable) be cured by the Closing (or if the Closing does not occur, by
the date set forth in Section 8.1(a)), then such breach shall be considered not
to have occurred for all purposes of this Agreement.
SECTION 6.4 LETTERS-IN-LIEU: ASSIGNMENTS: OPERATORSHIP.
(a) Seller will execute on the Closing Date Letters in Lieu of Division
and Transfer Orders relating to the Assets on forms prepared by Buyer and
reasonably satisfactory to Seller to reflect the transactions contemplated
hereby.
(b) Seller will prepare and Seller and Buyer will execute on the
Closing Date all assignments necessary to convey to Buyer, or Buyer's Affiliate,
all federal or state leases in the form as prescribed by the applicable
governmental body and otherwise acceptable to Buyer and Seller.
(c) Seller will use its reasonable efforts to cause Buyer or Buyer's
Affiliate, effective as of the Closing Date, to be appointed Operator of the
Seller/EXUS operated Leases.
SECTION 6.5 PUBLIC ANNOUNCEMENTS.
Until thirty (30) days after the Closing, no Party shall make any press
release or other public announcement regarding the existence of this Agreement,
the contents hereof or the transactions contemplated hereby without the prior
written consent of the Other; provided, however, the foregoing shall not
restrict disclosures by Buyer or Seller which are required by applicable
securities or other laws or regulations or the applicable rules of any stock
exchange having jurisdiction over the disclosing party or its Affiliates.
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SECTION 6.6 OPERATION OF ASSETS.
(a) Except as set in Section 6.6(b), below, until the Closing, Seller
or EXUS (i) will continue to operate and administer the Assets in a good and
workmanlike manner, (ii) will not, without the prior written consent of Buyer,
commit to any operation, or services of related operations, reasonably
anticipated by Seller or EXUS to require future capital expenditures by the
owner of the Assets in excess of $20,000, or make any capital expenditures in
excess of $20,000 except for matters set forth on Schedule 4.12, or terminate,
materially amend, execute or extend any material agreements affecting the
Assets, (iii) will maintain generally insurance coverage on the Assets presently
furnished by nonaffiliated third parties in the amounts and of the types
presently in force, (iv) will use commercially reasonable efforts to maintain in
full force and effect all Leases, (v) will maintain all material governmental
permits and approvals affecting the Assets, (vi) will not transfer, farmout,
sell, hypothecate, encumber or otherwise dispose of any Assets except for sales
and dispositions of oil and gas production made in the ordinary course of
business consistent with past practices, and (vii) will not enter into, assign,
terminate or amend, in any material respect, any Contract or any other contract
or agreement by which the Properties are bound. Buyer's approval of any action
restricted by this Section 6.6 shall be considered granted within 10 days
(unless a shorter time is reasonably required by the circumstances and such
shorter time is specified in Seller's written notice) of Seller's notice to
Buyer requesting such consent unless Buyer notifies Seller to the contrary
during that period. In the event of an emergency, Seller may take such action as
a prudent operator would take and shall notify Buyer of such action promptly
thereafter.
(b) The Louisiana Minerals 15-1 Alternate Well is currently drilling.
Seller agrees to cause to be operated the Louisiana Minerals 15-1 Alternate Well
in a good and workmanlike manner, consistent with industry standards. Seller or
EXUS shall allow Buyer and Buyer's representatives and contractors reasonable
access to this Well, at Buyer's sole cost and risk, and agrees to provide Buyer
all information regarding such Well in the possession of Seller or EXUS. Seller
also agrees to cause consultation with Buyer concerning all aspects regarding
the drilling and/or completion of the Well including without limitation, casing
size and completion procedures, in a timely manner so that Buyer's
recommendations concerning drilling and completion operations may be fully
evaluated and considered with respect to such Well.
Buyer's access shall be at Buyer's sole risk, cost and expense, and
Buyer shall release Seller from and shall fully protect, indemnify and defend
Seller and its respective officers, agents, employees and Affiliates and hold
them harmless from and against any and all claims relating to, arising out of,
or connected, directly or indirectly, with Buyer's exercise of its rights under
this Article 6.6(b), including without limitation, claims relating to (a) injury
or death of any person or persons whomsoever caused by Buyer or its agents, (b)
damage to or loss of any property or resource caused by Buyer or its agents, (c)
common law causes of action such as negligence, gross negligence, strict
liability, nuisance or trespass, or (d) fault imposed by statute, rule,
regulation or otherwise. Buyer additionally agrees to comply with Seller's
safety rules and procedures while upon the Properties.
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SECTION 6.7 INDEMNITY REGARDING ACCESS.
Buyer agrees to indemnify, defend and hold harmless Seller, its
Affiliates, the other owners of interests in the Properties, and all such
Persons' directors, officers, employees, agents and representatives from and
against any and all claims, liabilities, losses, costs and expenses (including
court costs and reasonable attorneys' fees), including claims, liabilities,
losses, costs and expenses attributable to personal injuries, death, or property
damage, caused by or resulting from the exercise of access rights to the Assets
and to the Records and other related information prior to the Closing by Buyer,
its Affiliates, or its or their directors, officers, employees, agents or
representatives.
SECTION 6.8 GAS IMBALANCES.
Buyer expressly assumes any and all obligations attributable to gas
production imbalances with co-owners of the Properties. Should Buyer discover
any inaccuracy in Schedule 4.16 prior to the submission of Buyer's written
report pursuant to Section 8.4(b), Buyer may assert a claim for an adjustment
under this Section by delivering a claim notice to Seller. If it is determined
that there is an inaccuracy in the imbalances set forth on Schedule 4.16, then
an adjustment to the Purchase Price, at the rate of $2.00 per Mcf will be made.
SECTION 6.9 CONSENTS AND PREFERENTIAL RIGHTS.
Seller shall promptly prepare and send (i) notices to the holders of
any required consents to assignment of any Property requesting such consents and
(ii) notices to the holders of any applicable preferential rights to purchase
any Asset requesting waivers of such preferential rights to purchase. The
consideration payable under this Agreement for any particular Well, Unit or
other Property for purposes of preferential purchase right notices shall be the
Allocated Value for such Well, Unit or other Property. The allocated value for a
Lease shall be the product of a fraction, the numerator of which shall be the
surface acreage covered by a Lease which is included within a Unit and the
denominator of which shall be the total surface acres within such Unit
multiplied by the allocated value of such Unit as shown on Schedule 2.4. Seller
shall use commercially reasonable efforts to cause such consents and waivers of
preferential rights to purchase (or the exercise thereof) to be obtained and
delivered prior to Closing. Buyer shall cooperate with Seller in seeking to
obtain such consents and waivers of preferential rights. Should a third party
fail to exercise its preferential right to purchase as to any portion of the
Assets prior to Closing and the time for exercise or waiver has not yet expired,
such preferential purchase right shall be treated in accordance with Section
3.5(a).
SECTION 6.10 RELEASE OF LIENS.
(a) The Assets are encumbered by a first and prior lien and security
interest created in that certain Security Agreement dated June 30, 1999 and
executed by EXUS, as Debtor, in favor
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of NationsBank, N.A., as Administrative Agent for certain financial institutions
("Banks"), and also evidenced by certain mortgages, deeds of trust, financing
statements and assignments of production (collectively the "Lien"), all pursuant
to that certain Credit Agreement dated June 30, 1999 by and between the same
parties (the "Credit Agreement"). As provided in the Credit Agreement, and
pursuant to separate agreements among NationsBank, Banc of America Securities,
LLC ("Banc of America") and EXUS, Banc of America is the Sole Lead Arranger and
Book Manager for the credit facility provided in the Credit Agreement. On or
prior to Closing, Seller shall obtain a release of the Lien from Banc of America
as well as statements from Banc of America and NationsBank that Banc of America
is authorized to execute such release on behalf of all parties to the Credit
Agreement and any other instrument evidencing or granting a security interest in
the Assets, the intention being that the Assets shall be free and clear of all
Liens or security interests related to the Credit Agreement. Said release shall
be duly executed in recordable form.
(b) To the extent the Assets are encumbered by any other lien or
security interest, excluding those defined as Permitted Encumbrances under
Section 3.3, Seller shall, on or prior to Closing, obtain releases of such liens
or security interests, duly executed and in recordable form.
SECTION 6.11 TAX MATTERS.
(a) Subject to the provisions of Section 10.3, Seller shall be
responsible for all Taxes (other than ad valorem, property, severance,
production and similar Taxes based upon or measured by the ownership or
operation of the Assets or the production of Hydrocarbons therefrom, which are
addressed in Section 1.4) attributable to any period of time at or prior to
Closing, including without limitation income Taxes arising as a result of the
gain recognized on the transfer of the Assets, and Buyer shall be responsible
for all such Taxes attributable to any period of time after Closing. Regardless
of which party is responsible, Seller or EXUS shall handle payment to the
appropriate Governmental Body of all Taxes with respect to the Assets which are
required to be paid prior to Closing (and shall file all returns with respect to
such Taxes).
(b) With respect to the 1999 ad valorem taxes on the Properties, Seller
or EXUS shall pay in full such taxes on or before December 31, 1999. Seller
shall provide Buyer with copies of paid tax receipts. Buyer shall be responsible
for its pro rata share of such taxes based on the Effective Time of October 1,
1999. Buyer's pro rata share shall be calculated by taking the gross taxes
levied on the total working interest in the Properties times Seller's percentage
ownership in the total working interest times the proration factor (91/365).
SECTION 6.12 SELLER'S POST AGREEMENT ACQUISITIONS, NON-COMPETE
OBLIGATION.
(a) The Parties acknowledge that Seller on the date of execution of
this Agreement is in the process of evaluating the acquisition of certain
royalty and overriding royalty interests applicable to the Lands and the Area of
Exclusion. Seller represents that the acquisition of such
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interests shall in no way diminish the net revenue interest or working interest
being conveyed by Seller to Buyer as set forth on Exhibits A-1 and A-2.
Notwithstanding anything to the contrary contained in this Agreement, any
royalty interest or overriding royalty interest acquired by Seller after the
date of this Agreement and prior to Closing shall not constitute Assets
hereunder. Before Seller sends any offer to a party to purchase or otherwise
acquire any such interest, Seller shall first provide to Buyer data showing how
it determined the value of the royalty interest or overriding royalty interest,
as applicable, and a copy of the offer. If Seller acquires a royalty interest or
overriding royalty interest applicable to any Leases or Lands, Seller shall
comply with the provisions of Section 6.12(b), below.
(b) This Section 6.12(b) shall apply to any royalty or overriding
royalty interest acquired by Seller subsequent to the execution of this
Agreement and on or prior to December 31, 2000. If Seller, whether acting
individually or jointly with others, purchases, acquires, obtains or otherwise
becomes entitled to receive ("Acquisition") any royalty or overriding royalty
interest within the Area of Exclusion, Seller shall, within thirty (30) days
thereafter, notify Buyer in writing of such acquisition and the particulars
thereof and provide Seller with a copy of the Purchase and Sale Agreement or
other agreement evidencing such particulars including the nature, amount and
proportion of the interest involved and the costs, terms and conditions upon
which the royalty or overriding royalty interest was acquired. Within fifteen
(15) days after Buyer's receipt of the aforesaid notice and information, Buyer
shall have an opportunity to elect to purchase all of the interest acquired by
Seller for the price paid by Seller. Failure by Buyer to respond within said
fifteen (15) day period shall be deemed an election not to purchase the
interest. Within fifteen (15) days after an election by Buyer to acquire such
interest, it shall pay to Seller the aforesaid amount, and Seller shall promptly
assign such interest, the form of assignment to be agreed upon by the parties
and to contain a special warranty of title by, through and under Seller, but not
otherwise.
(c) At Closing Seller agrees to turn over to Buyer all its work in
progress pertaining to its acquisition of royalty and overriding royalty
interests, including all documents related thereto. Seller has had two employees
devoted full time to evaluation of and preparation of offers for such interests
since November 17, and these employees will continue this work until Closing. If
Closing occurs, Buyer agrees to pay Seller the sum of Four Hundred Fifteen
Dollars ($415.00) per day for each full work day both employees have devoted to
these acquisitions as reimbursement to Seller for the expenses it has incurred
for such work; provided, however, in no event shall such payment exceed Twelve
Thousand Dollars ($12,000.00). Seller agrees to provide Buyer with documentation
substantiating its costs on or immediately prior to Closing.
(d) As further consideration for Buyer entering into this transaction,
Seller agrees that it shall not acquire any mineral interest or oil and gas
leases in the Area of Exclusion on or after execution of this Agreement and
prior to January 1, 2001. In the event that Seller does inadvertently acquire
any such interest, then Seller shall, without prejudice to Buyer's other legal
remedies, be required to offer such interest to Buyer in accordance with the
procedure set out in Section 6.12(b), above.
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SECTION 6.13 FURTHER ASSURANCES.
After Closing, Seller and Buyer agree to take such further actions and
to execute, acknowledge and deliver all such further documents as are reasonably
requested by the other Party for carrying out the purposes of this Agreement or
of any document delivered pursuant to this Agreement.
ARTICLE 7. CONDITIONS TO CLOSING
SECTION 7.1 CONDITIONS OF SELLER TO CLOSING.
The obligations of Seller to consummate the transactions contemplated
by this Agreement are subject, at the option of Seller, to the satisfaction on
or prior to Closing of each of the following conditions:
(a) Representations. The representations and warranties of Buyer set
forth in Article 5 shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date;
(b) Performance. Buyer shall have performed and observed, in all
material respects, all covenants and agreements to be performed or observed by
it under this Agreement prior to or on the Closing Date;
(c) Pending Litigation. No suit, action or other proceeding by a third
party (including any Governmental Body) seeking to restrain, enjoin or otherwise
prohibit the consummation of the transactions contemplated by this Agreement
shall be pending before any Governmental Body;
(d) Deliveries. Buyer shall have for delivery to Seller duly executed
counterparts of the Conveyances and the other documents and certificates to be
delivered by Buyer under Section 8.3; and
(e) Title Defects. The sum of all Title Defect Amounts for Title
Defects determined under Section 3.4(a) prior to Closing (except Title Defect
Amounts pursuant to Sections 3.5 and 6.9) plus Estimated Environmental Remedial
Costs associated with Environmental Defects under Section 3.7, and gas
imbalances shall be less than $400,000.
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SECTION 7.2 CONDITIONS OF BUYER TO CLOSING.
The obligations of Buyer to consummate the transactions contemplated by
this Agreement are subject, at the option of Buyer, to the satisfaction on or
prior to Closing of each of the following conditions:
(a) Representations. The representations and warranties of Seller set
forth in Article 4 shall be true and correct as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date (other
than representations and warranties that refer to a specified date which need
only be true and correct on and as of such specified date), except for such
breaches, if any, as would not have a Material Adverse Effect;
(b) Performance. Seller shall have performed and observed, in all
material respects, all covenants and agreements to be performed or observed by
it under this Agreement prior to or on the Closing Date;
(c) Simultaneous Closing. Both the transaction contemplated under this
Agreement and that under the Venus Agreement shall be consummated simultaneously
at Closing. Should Seller or Venus fail to close, Buyer, at its option, shall
have the right to terminate this Agreement pursuant to Article 9;
(d) Pending Litigation. No suit, action or other proceeding by a third
party (including any Governmental Body) seeking to restrain, enjoin or otherwise
prohibit the consummation of the transactions contemplated by this Agreement
shall be threatened or pending before any Governmental Body;
(e) Deliveries. Seller shall have delivered to Buyer duly executed
counterparts of the Conveyances and the other documents and certificates to be
delivered by Seller under Section 8.2;
(f) Title Defects. The sum of all Title Defect Amounts for Title
Defects determined under Section 3.4(a) prior to the Closing, including Title
Defect Amounts pursuant to Sections 3.6 and 6.9, and Estimated Environmental
Remedial Costs associated with Environmental Defects shall be less than six
percent (6%) of the unadjusted Purchase Price; and
ARTICLE 8. CLOSING
SECTION 8.1 TIME AND PLACE OF CLOSING.
(a) Consummation of the purchase, sale and exchange transaction and
exchange transaction as contemplated by this Agreement (the "Closing"), shall,
unless otherwise agreed to in writing by Buyer and Seller, take place at the
offices of Texas Escrow, 300 Crescent Court,
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Ste. 100, Dallas, Texas, at 10:00 a.m., local time, on or before December 31,
1999, or if all conditions in Article 7 to be satisfied prior to Closing have
not yet been satisfied or waived, as soon thereafter as such conditions have
been satisfied or waived, subject to the rights of the parties under Article 9.
(b) The date on which the Closing occurs is herein referred to as the
"Closing Date."
SECTION 8.2 OBLIGATIONS OF SELLER AT CLOSING.
At the Closing, upon the terms and subject to the conditions of this
Agreement, Seller shall deliver or cause to be delivered to Buyer, among other
things, the following:
(a) Conveyances of the Assets, subject to the provisions of Section
3.5(a), in sufficient duplicate originals to allow recording in all appropriate
jurisdictions and offices, duly executed by Seller;
(b) Physical possession of all the Assets and Environmental Permits and
health and safety plans to Buyer, unless another time for delivery of a portion
of the Assets is elsewhere specified herein.
(c) Assignments, on appropriate forms, of state and of federal leases
comprising portions of the Assets, duly executed by Seller;
(d) Letters-in-lieu of transfer orders covering the Assets, duly
executed by Seller; and
(e) An executed statement described in Treasury Regulation
ss.1.1445-2(b)(2) certifying that Seller is not a foreign person within the
meaning of the Code.
(f) Release of Liens, as described in Section 6.10, in sufficient
duplicate originals to allow recording in all appropriate jurisdictions and
offices, duly executed by the holder of said Lien.
SECTION 8.3 OBLIGATIONS OF BUYER AT CLOSING.
At the Closing, upon the terms and subject to the conditions of this
Agreement, Buyer shall deliver or cause to be delivered, among other things, the
following:
(a) A wire transfer to Texas Escrow of the Closing Payment (as defined
in Section 8.4(a), below) in same-day funds;
(b) Conveyances of the Assets, duly executed by Buyer;
(c) Conveyances to EXCO of the Anadarko Like-Kind Exchange Properties;
and
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(d) Letters-in-lieu of transfer orders covering the Assets, duly
executed by Buyer.
SECTION 8.4 CLOSING PAYMENT AND POST-CLOSING PURCHASE PRICE
ADJUSTMENTS.
(a) Not later than ten (10) business days prior to the Closing Date,
Seller shall prepare and deliver to Buyer, using and based upon the best
information available to Seller, a preliminary settlement statement estimating
the Adjusted Purchase Price after giving effect to all Purchase Price
adjustments set forth in Section 2.3. The estimate delivered in accordance with
this Section 8.4(a) shall, after any reduction for a Title Defect Amount which
is in dispute, constitute the dollar amount to be paid by Buyer to Seller at the
Closing (the "Closing Payment").
(b) As soon as reasonably practicable after the Closing but not later
than the 60th day following the Closing Date, Seller shall prepare and deliver
to Buyer a statement setting forth the final calculation of the Adjusted
Purchase Price and showing the calculation of each adjustment, based, to the
extent possible, on actual credits, charges, receipts and other items before and
after the Effective Time and taking into account all Title Defect adjustments
under Section 3.4. Seller shall at Buyer's request supply reasonable
documentation available to support any credit, charge, receipt or other item. As
soon as reasonably practicable but not later than the 60th day following receipt
of Seller's statement hereunder, Buyer shall deliver to Seller a written report
containing any changes that Buyer proposes be made to such Statement. The
parties shall undertake to agree on the final statement of the Adjusted Purchase
Price no later than 150 days after the Closing Date. In the event that the
parties cannot reach agreement within such period of time, the remaining matters
may be determined pursuant to Section 11.16. Within ten (10) days after the
earlier of (i) the expiration of Buyers 60-day review period without delivery of
any written report, or (ii) the date on which the parties finally determine the
disputed matters, (x) Buyer shall pay to Seller the amount by which the Adjusted
Purchase Price exceeds the Closing Payment or (y) Seller shall pay to Buyer the
amount by which the Closing Payment exceeds the Adjusted Purchase Price, as
applicable. Any post-closing payment pursuant to this Section 8.4 shall bear
interest from the Closing Date to the date of payment at the Agreed Interest
Rate.
(c) All payments made or to be made hereunder to Seller shall be by
electronic transfer of immediately available funds to Texas Escrow for the
credit of Seller. All payments made or to be made hereunder to Buyer shall be by
electronic transfer of immediately available funds to a bank and account
specified by Buyer in writing to Seller.
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ARTICLE 9. TERMINATION AND AMENDMENT
SECTION 9.1 TERMINATION.
This Agreement may be terminated at any time prior to Closing: (i) by
the mutual prior written consent of Seller and Buyer; or (ii) by either Buyer or
Seller, if Closing has not occurred on or before December 31, 1999; provided,
however, that no party shall be entitled to terminate this Agreement under this
Section 9.1 (ii) if the Closing has failed to occur because such party failed to
perform or observe in any material respect its covenants and agreements
hereunder.
SECTION 9.2 EFFECT OF TERMINATION.
If this Agreement is terminated pursuant to Section 9.1, this Agreement
shall become void and of no further force or effect (except for the provisions
of Sections 4.6, 5.5, 6.6(b), 6.7, 11.4 and 11.16 which shall continue in full
force and effect) and Seller shall be free immediately to enjoy all rights of
ownership of the Assets and to sell, transfer, encumber or otherwise dispose of
the Assets to any party without any restriction under this Agreement. In the
event this Agreement terminates under Section 9.1 (ii) because a party has
failed to perform or observe in any material respect any of its agreements or
covenants contained herein which are to be performed at or prior to Closing,
then the other party shall be entitled to all remedies available at law or in
equity and shall be entitled to recover attorneys' fees in addition to any other
relief to which such party maybe entitled.
ARTICLE 10. POST-CLOSING OBLIGATIONS;
INDEMNIFICATION; LIMITATIONS
SECTION 10.1 RECEIPTS.
Except as otherwise provided in this Agreement, any production from or
attributable to the Assets (and all products and proceeds attributable thereto)
and any other income, proceeds, receipts and credits attributable to the Assets
which are not reflected in the adjustments to the Purchase Price following the
final adjustment pursuant to Section 8.4(b) shall be treated as follows: (a) all
production from or attributable to the Assets (and all products and proceeds
attributable thereto) and all other income, proceeds, receipts and credits
earned with respect to the Assets to which Buyer is entitled under Section 1.4
shall be the sole property and entitlement of Buyer, and, to the extent received
by Seller, Seller shall fully disclose, account for and remit the same promptly
to Buyer, and (b) all production from or attributable to the Assets (and all
products and proceeds attributable thereto) and all other income, proceeds,
receipts and credits earned with respect to the Assets to which Seller is
entitled under Section 1.4 shall be the sole property and entitlement of Seller
and, to the extent received by Buyer, Buyer shall fully disclose, account for
and remit the same promptly to Seller.
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SECTION 10.2 EXPENSES.
Except as otherwise provided in this Agreement, any Property Costs
which are not reflected in the adjustments to the Purchase Price following the
final adjustment pursuant to Section 8.4(b) shall be treated as follows: (a) all
Property Costs for which Seller is responsible under Section 1.4 shall be the
sole obligation of Seller and Seller shall promptly pay, or if paid by Buyer,
promptly reimburse Buyer for and hold Buyer harmless from and against same; and
(b) all Property Costs for which Buyer is responsible under Section 1.4 shall be
the sole obligation of Buyer and Buyer shall promptly pay, or if paid by Seller,
promptly reimburse Seller for and hold Seller harmless from and against same.
Seller is entitled to resolve all joint interest audits and other audits of
Property Costs covering periods for which Seller is in whole or in part
responsible, provided that Seller shall not agree to any adjustments to
previously assessed costs for which Buyer is liable without the prior written
consent of Buyer, such consent not to be unreasonably withheld. Seller shall
provide Buyer with a copy of all applicable audit reports and written audit
agreements received by Seller and relating to periods for which Buyer is
partially responsible.
SECTION 10.3 ASSUMPTION AND INDEMNIFICATION.
(a) AT CLOSING, BUYER SHALL ASSUME ALL COSTS, OBLIGATIONS AND
LIABILITIES OF SELLER THAT (I) RELATE TO THE ASSETS, (II) ARISE FROM OR RELATE
TO EVENTS OCCURRING ON OR AFTER BUT NOT BEFORE THE EFFECTIVE TIME AND (III) DO
NOT ARISE FROM OR RELATE TO THE INACCURACY OF ANY REPRESENTATION OR WARRANTY OF
SELLER, OR THE BREACH OF, OR FAILURE TO PERFORM OR SATISFY, ANY COVENANT OF
SELLER, SET FORTH IN THIS AGREEMENT OR IN ANY OTHER AGREEMENT, INSTRUMENT,
DOCUMENT OR CERTIFICATE EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT
("ASSUMED OBLIGATIONS"); PROVIDED; HOWEVER, BUYER SHALL HAVE NO OBLIGATIONS WITH
RESPECT TO LIABILITIES ARISING FROM INJURIES OR DEATH WITH RESPECT TO CONTINUED
OPERATION BY SELLER OF THE ASSETS AFTER THE EFFECTIVE TIME AND PRIOR TO THE
CLOSING DATE.
(b) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
AGREEMENT, SELLER SHALL BE RESPONSIBLE FOR, SHALL PAY ON A CURRENT BASIS, AND
SHALL DEFEND, INDEMNIFY, SAVE, HOLD HARMLESS, DISCHARGE AND RELEASE BUYER FROM
AND AGAINST ANY AND ALL LIABILITIES, ARISING FROM, BASED UPON, RELATED TO OR
ASSOCIATED WITH: (1) ANY LIABILITIES OF SELLER OTHER THAN THE ASSUMED
OBLIGATIONS; (2) ANY ACT, OMISSION, EVENT, CONDITION OR CIRCUMSTANCE INVOLVING
OR RELATING TO THE ASSETS OCCURRING OR EXISTING BEFORE THE EFFECTIVE TIME; (3)
THE OWNERSHIP OR OPERATION
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OF THE ASSETS BEFORE THE EFFECTIVE TIME; (4) ANY BROKERS' OR FINDERS' FEES OR
COMMISSIONS ARISING WITH RESPECT TO BROKERS OR FINDERS RETAINED OR ENGAGED BY
ANY PERSON OTHER THAN BUYER AND RESULTING FROM OR RELATING TO THE TRANSACTIONS
CONTEMPLATED IN THIS AGREEMENT; (5) THE INACCURACY OF ANY REPRESENTATION OR
WARRANTY OF SELLER SET FORTH IN THIS AGREEMENT OR IN ANY OTHER AGREEMENT,
INSTRUMENT, DOCUMENT OR CERTIFICATE EXECUTED OR DELIVERED IN CONNECTION WITH
THIS AGREEMENT; (6) THE BREACH OF, OR FAILURE TO PERFORM OR SATISFY, ANY OF THE
COVENANTS OF SELLER SET FORTH IN THIS AGREEMENT OR IN ANY OTHER AGREEMENT,
INSTRUMENT, DOCUMENT OR CERTIFICATE EXECUTED OR DELIVERED IN CONNECTION WITH
THIS AGREEMENT; AND/OR (7) CAUSED BY OR ARISING OUT OF OR RESULTING FROM INJURY
OR DEATH WHICH IS ATTRIBUTABLE TO OPERATIONS BY SELLER BETWEEN THE EFFECTIVE
TIME AND THE CLOSING DATE. SELLER SHALL ALSO DEFEND, INDEMNIFY AND HOLD BUYER
HARMLESS FROM AND AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, LAWSUITS,
FINES, PENALTIES, JUDGMENTS AND/OR EXPENSES (INCLUDING BUT NOT LIMITED TO
REASONABLE ATTORNEYS' FEES) ARISING FROM OR RELATED TO THE BREACH OF, OR FAILURE
OF VENUS TO PERFORM OR SATISFY ANY OF THE COVENANTS OR OTHER OBLIGATIONS,
WHETHER PRE OR POST-CLOSING, INCLUDING VENUS' INDEMNITY OBLIGATIONS, ALL AS SET
FORTH IN THE VENUS AGREEMENT.
(c) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
AGREEMENT, BUYER SHALL BE RESPONSIBLE FOR, SHALL PAY ON A CURRENT BASIS, AND
SHALL DEFEND, INDEMNIFY, SAVE, HOLD HARMLESS, DISCHARGE AND RELEASE SELLER FROM
AND AGAINST ANY AND ALL LIABILITIES ARISING FROM, BASED UPON, RELATED TO OR
ASSOCIATED WITH: (1) THE ASSUMED OBLIGATIONS; (2) ANY ACT, OMISSION OR EVENT
INVOLVING OR RELATING TO THE ASSETS OCCURRING AFTER THE EFFECTIVE TIME EXCEPT AS
SET FORTH IN SECTION 10.3(B), ABOVE; (3) THE OWNERSHIP OR OPERATIONS OF THE
ASSETS AFTER THE EFFECTIVE TIME EXCEPT AS SET FORTH IN SECTION 10.3(B), ABOVE;
(4) ANY BROKERS' OR FINDERS' FEES OR COMMISSIONS ARISING WITH RESPECT TO BROKERS
OR FINDERS RETAINED OR ENGAGED BY BUYER AND RESULTING FROM OR RELATING TO THE
TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT; (5) THE INACCURACY OF ANY
REPRESENTATION OR WARRANTY OF BUYER SET FORTH IN THIS AGREEMENT OR IN ANY OTHER
AGREEMENT, INSTRUMENT, DOCUMENT OR CERTIFICATE EXECUTED OR DELIVERED IN
CONNECTION WITH THIS AGREEMENT; AND/OR (6) THE BREACH OF, OR FAILURE TO PERFORM
OR SATISFY ANY OF THE COVENANTS OF BUYER SET FORTH IN THIS AGREEMENT OR IN ANY
OTHER AGREEMENT, INSTRUMENT, DOCUMENT OR
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CERTIFICATE EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT.
(d) "Liabilities", for purposes of this Article 10, shall mean any
actual liability, loss, cost, diminution in value, expense, claim, demand,
notice of violation, investigation, administrative proceeding, payment, charge,
obligation, fine, penalty, deficiency, award or judgment, including reasonable
fees and expenses of attorneys, consultants, accountants or other agents and
experts reasonably incident to matters indemnified against, and the costs of
investigation and/or monitoring of such matters, and the costs of enforcement of
the indemnity; provided, however, that Buyer and Seller shall not be entitled to
indemnification under this Section 10.3 for, and "Liabilities" shall not
include, loss of profits or other consequential damages suffered by the party
claiming indemnification, or any punitive damages.
(e) The indemnity of each party provided in this Section 10.3 shall be
for the benefit of and extend to each Party's present, former and future
Affiliates, successors and permitted assigns, and its and their directors,
officers, employees, agents, and representatives.
SECTION 10.4 INDEMNIFICATION ACTIONS.
All claims for indemnification under Section 10.3 shall be asserted and
resolved as follows:
(a) For purposes of this Article 10, the term "Indemnifying Party" when
used in connection with particular Liabilities shall mean the Party or Parties
having an obligation to indemnify another Party or Parties with respect to such
Liabilities pursuant to this Article 10, and the term "Indemnified Party" when
used in connection with particular Liabilities shall mean the Party or Parties
having the right to be indemnified with respect to such Liabilities by another
Party or Parties pursuant to this Article 10.
(b) To make claim for indemnification under Section 10.3, an
Indemnified Party shall notify the Indemnifying Party of its claim under this
Section 10.4, including the specific details of and specific basis under this
Agreement for its claim (the "Claim Notice"). In the event that the claim for
indemnification is based upon a claim by a third party against the Indemnified
Party (a "Claim"), the Indemnified Party shall provide its Claim Notice promptly
after the Indemnified Party has actual knowledge of the Claim and shall enclose
a copy of all papers (if any) served with respect to the Claim; provided that
the failure of any Indemnified Party to give notice of a Claim as provided in
this Section 10.4 shall not relieve the Indemnifying Party of its obligations
under Section 10.3 except to the extent such failure results in insufficient
time being available to permit the Indemnifying Party to effectively defend
against the Claim or otherwise prejudices the Indemnifying Party's ability to
defend against the Claim. In the event that the claim for indemnification is
based upon an inaccuracy or breach of a representation, warranty, covenant or
agreement, the Claim Notice shall specify the representation, warranty, covenant
or agreement which was inaccurate or breached.
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(c) In the case of a claim for indemnification based upon a Claim, the
Indemnifying Party shall have 30 days from its receipt of the Claim Notice to
notify the Indemnified Party whether it admits or denies its liability to defend
the Indemnified Party against such Claim at the sole cost and expense of the
Indemnifying Party. The Indemnified Party is authorized, prior to and during
such 30-day 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 that is not prejudicial to the Indemnifying Party.
(d) If the Indemnifying Party admits its liability, it shall have the
right and obligation to diligently defend, at its sole cost and expense, the
Claim. The Indemnifying Party shall have full control of such defense and
proceedings, including any compromise or settlement thereof if requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate in contesting any
Claim which the Indemnifying Party elects to contest. The Indemnified Party may
participate in, but not control, any defense or settlement of any Claim
controlled by the Indemnifying Party pursuant to this Section 10.4(d). An
Indemnifying Party shall not, without the written consent of the Indemnified
Party, (i) settle any Claim or consent to the entry of any judgment with respect
thereto which does not include an unconditional written release of the
Indemnified Party from all liability in respect of such Claim or (ii) settle any
Claim or consent to the entry of any judgment with respect thereto in any manner
that may materially and adversely affect the Indemnified Party (other than as a
result of money damages covered by the indemnity).
(e) If the Indemnifying Party admits its liability but fails to
diligently prosecute or settle the Claim, then the Indemnified Party shall have
the right to defend against the Claim at the sole cost and expense of the
Indemnifying Party, with counsel of the Indemnified Party's choosing, subject to
the right of the Indemnifying Party to admit its liability and assume the
defense of the Claim at any time prior to settlement or final determination
thereof. If the Indemnifying Party in good faith does not admit its liability,
then the Indemnifying Party shall have the right to defend against the Claim
with counsel of the Indemnified Party's choosing. The Indemnified Party will be
entitled to its costs and expenses if the Indemnifying Party is unable to
establish it was not required to indemnify the Indemnified Party. If the
Indemnifying Party has not yet admitted its liability for a Claim, the
Indemnified Party shall send written notice to the Indemnifying Party of any
proposed settlement and the Indemnifying Party shall have the option for 10 days
following receipt of such notice to (i) admit in writing its liability for the
Claim and (ii) if liability is so admitted, reject, in its reasonable judgment,
the proposed settlement.
(f) In the case of a claim for indemnification not based upon a Claim,
the Indemnifying Party shall have 30 days from its receipt of the Claim Notice
to (i) cure the Liabilities complained of, (ii) admit its liability for such
Liabilities or (iii) dispute the claim for such Liabilities. If the Indemnifying
Party does not notify the Indemnified Party within such 30 day period that it
has cured the Liabilities or that it disputes the claim for such Liabilities,
the amount of such Liabilities shall conclusively be deemed a liability of the
Indemnifying Party hereunder.
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SECTION 10.5 LIMITATION ON ACTIONS.
After Closing, any assertion by Buyer that Seller is liable for
indemnity under Section 10.3(b) for an Environmental Claim or Environmental
Liabilities must be made by Buyer in writing and given to Seller on or before
the Final Environmental Claim Date (or not at all).
ARTICLE 11. MISCELLANEOUS
SECTION 11.1 COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be
deemed an original instrument, but all such counterparts together shall
constitute but one agreement.
SECTION 11.2 EXHIBITS.
The Exhibits and Schedules referred to in this Agreement are hereby
incorporated in this Agreement by reference and constitute a part of this
Agreement.
SECTION 11.3 EXPENSES.
Except as otherwise specifically provided, 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.
SECTION 11.4 NOTICES.
All notices and communications required or permitted under this
Agreement shall be in writing and any communication or delivery hereunder shall
be deemed to have been duly made when personally delivered to the individual
indicated below, or if mailed, when received by the Party charged with such
notice and addressed as follows:
If to Seller: EXCO Resources, Inc.
------------ 5735 Pineland Dr., Ste. 235
Dallas, Texas 75231
Attn: General Counsel
Telephone: 214-368-2084
Telecopy: 214-368-2087
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If to Buyer: Anadarko Petroleum Corporation
----------- 17001 Northchase Drive
P. O. Box 1330
Houston, Texas 77251-1330
Attn: Randy Junior
Telephone: 281-874-3513
Telecopy: 281-873-1390
Any Party may, by written notice so delivered to the other Party,
change the address or individual to which delivery shall thereafter be made.
SECTION 11.5 WIRE TRANSFER INSTRUCTIONS.
Funds payable to Seller shall be wired to:
Texas Escrow Company, Inc.
300 Crescent Court, Ste. 100
Dallas, TX 75201
SECTION 11.6 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 benefit of
such amendment or waiver.
SECTION 11.7 ASSIGNMENT.
Subject to Section 2.2, no Party may assign all or any portion of its
rights or delegate all or any portion of its duties hereunder unless it
continues to remain liable for the performance of its obligations hereunder and
obtains the prior written consent of the other Party; provided, however, this
Section 11.7 shall not require Seller's consent to any transfer of rights
hereunder by Buyer to Buyer's Affiliate.
SECTION 11.8 CONDITIONS.
The inclusion in this Agreement of conditions to Seller's and Buyer's
obligations at the Closing shall not, in and of itself, constitute a covenant of
either Seller or Buyer to satisfy the conditions to the other Party's
obligations at the Closing.
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SECTION 11.9 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.
SECTION 11.10 GOVERNING LAW.
This Agreement and the transactions contemplated hereby shall be
construed and enforced in accordance with the laws of the State of Texas, but
without regard to laws or principles of conflicts of laws that would cause
application of the laws of another jurisdiction.
SECTION 11.11 ENTIRE AGREEMENT.
This Agreement (including the Exhibits and Schedules 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.
SECTION 11.12 PARTIES IN INTEREST.
This Agreement shall be binding upon, and shall inure to the benefit
of, the Parties hereto, and their respective successors and assigns, and nothing
contained in this Agreement, express or implied, is intended to confer upon any
other person or entity any benefits, rights or remedies.
SECTION 11.13 SURVIVAL.
The representations, warranties, covenants, agreements and indemnities
provided for in this Agreement shall survive the Closing and shall not be
extinguished by the doctrine of merger by deed, confusion or any similar
doctrine and no waiver, release or forbearance of the application of the
provisions of those paragraphs in any given circumstance shall operate as a
waiver, release or forbearance of the provisions of the paragraphs as to any
other circumstance.
SECTION 11.14 CONSTRUCTION.
Seller and Buyer have had substantial input into the drafting and
preparation of this Agreement and have had the opportunity to exercise business
discretion in relation to the negotiation of the details of the transaction
contemplated hereby. This Agreement is the result of arm's-length negotiations
from equal bargaining positions.
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SECTION 11.15 LIMITATION ON DAMAGES.
Notwithstanding anything to the contrary contained herein, none of
Buyer, Seller or any of their respective Affiliates shall be entitled to
punitive damages in connection with this Agreement and the transactions
contemplated hereby and each of Buyer and Seller, for itself and on behalf of
its Affiliates, hereby expressly waives any right to punitive damages in
connection with this Agreement and the transactions contemplated hereby.
SECTION 11.16 ARBITRATION.
Any dispute arising out of or relating to this Agreement or the breach,
termination or validity thereof, shall be finally settled by arbitration
conducted expeditiously in accordance with the Center for Public Resources
("CPR") Rules for Non-Administered Arbitration of Business Disputes by three
independent and impartial arbitrators selected by CPR in accordance with Rule 6
of the CPR Rules. The arbitration shall be governed by the Uniform Arbitration
Act, V.T.C.A., Civil Practice and Remedies Code, Sections 171.001 to 171.020,
and judgment upon the award rendered by the arbitrators may be entered by any
court having jurisdiction thereof. The place of arbitration shall be Houston,
Texas, unless otherwise agreed to by the parties hereto. The arbitrators are not
empowered to award consequential, indirect, special, punitive, or exemplary
damages, and each Party hereby irrevocably waives any damages in excess of
actual damages.
SECTION 11.17 SEVERABILITY.
If any term or other provision of this Agreement is held invalid,
illegal or incapable of being enforced under any rule of law, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in a materially adverse manner with respect
to either Party.
ARTICLE 12. DEFINITIONS
"Adjustment Period" has the meaning set forth in Section 2.3(a).
"Adjusted Purchase Price" has the meaning set forth in Section 2.3.
"Affiliate" with respect to any Person, means any person that directly
or indirectly controls, is controlled by or is under common control with such
Person, including a limited liability corporation.
"Agreed Interest Rate" shall mean six percent (6%) per annum simple
interest.
"Agreement" has the meaning set forth in the first paragraph of this
Agreement.
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"Allocated Value" has the meaning set forth in Section 2.4.
"Anadarko's Like-Kind Exchange Property" shall mean the property
described in Exhibit "C".
"Acquisition" has the meaning set forth in Section 6.12(b).
"Area of Exclusion" shall mean the property described in Exhibit "G".
"Assets" has the meaning set forth in Section 1.2.
"Assumed Obligations" has the meaning set forth in Section 10.3(a).
"Business Day" means each calendar day except Saturdays, Sundays, and
Federal holidays.
"Buyer's Affiliate" has the meaning set forth in Section 1.1(a).
"Claim" has the meaning set forth in Section 10.4.
"Claim Notice" has the meaning set forth in Section 10.4.
"Closing" has the meaning set forth in Section 8.1(a).
"Closing Date" has the meaning set forth in Section 8.l(b).
"Closing Payment" has the meaning set forth in Section 8.4(a).
"Code" has the meaning set forth in Section 2.4.
"Contracts" has the meaning set forth in Section 1.2(f).
"Conveyance" has the meaning set forth in Section 3.1(b).
"Defensible Title" has the meaning set forth in Section 3.2.
"Effective Time" has the meaning set forth in Section 1.4.
"Environmental Audit" has the meaning set forth in Section 3.7(a).
"Environmental Claim" shall mean any action, claim or written notice by
any Person alleging potential liability of the Seller or its Affiliates arising
out of or resulting from any actual
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or alleged violation of, or any remedial obligation under, any Environmental Law
with respect to the Properties.
"Environmental Defect" has the meaning set forth in Section 3.7.
"Environmental Laws" means, as the same have been amended to the date
hereof, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 et seq.; the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901 et seq.; the Federal Water Pollution Control Act, 33
U.S.C. Section 1251 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.;
the Clean Water Act; the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1471 et seq.; the Toxic Substances Control Act, 15 U.S.C. Sections 2601
through 2629; the Oil Pollution Act, 33 U.S.C. Section 2701 et seq.; the
Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Section 11001 et
seq.; and the Safe Drinking Water Act, 42 U.S.C. Sections 300f through 300j; and
all similar Laws as of the date hereof of any Governmental Body having
jurisdiction over the property in question addressing pollution or protection of
the environment and all regulations implementing the foregoing.
"Environmental Liabilities" shall mean any and all costs (including
costs of remediation), damages, natural resource damages, settlements,
consulting fees, expenses, penalties, fines, taxes, orphan share, prejudgment
and postjudgment interest, court costs, attorneys' fees, and other Liabilities
incurred or imposed (i) pursuant to any order, notice of responsibility,
directive (including requirements embodied in Environmental Laws), injunction,
judgment or similar act (including settlements) by any Governmental Body to the
extent arising out of or under Environmental Laws or (ii) pursuant to any claim
or cause of action by a Governmental Body or other Person for personal injury,
property damage, damage to natural resources, remediation or response costs to
the extent arising out of or attributable to any violation of, or any
remediation obligation under, any Environmental Law.
"Environmental Permits" has the meaning set forth in Section 4.9.
"Equipment" has the meaning set forth in Section 1.2(e).
"Excluded Assets" has the meaning set forth in Section 1.3.
"EXUS" means EXUS Energy, LLC, a Delaware Limited Liability Company,
formed by Venus Exploration Inc ("Venus") and EXCO.
"Final Environmental Claim Date" means the date that is one (1) year
after the Closing Date.
"Governmental Authorization" has the meaning set forth in Section 4.23.
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"Governmental Body" means any federal, state, local, municipal, or
other governments; any governmental, regulatory or administrative agency,
commission, body or other authority exercising or entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power; and any court or governmental tribunal.
"Hazardous Materials" shall mean any explosives, radioactive materials,
asbestos material, urea formaldehyde, hydrocarbon contaminants, underground
tanks, pollutants, contaminants, hazardous, corrosive or toxic substances,
special waste or waste of any kind, including compounds known as
chlorobiophenyls and any material or substance the storage, manufacture,
disposal, treatment, generation, use, transport, migration, or release into the
environment of which is prohibited, controlled, regulated or licensed under
Environmental Laws, including, but not limited to, (i) all "hazardous
substances" as that term is defined in Section 101(14) of the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, and (ii)
petroleum and petroleum products.
"Hydrocarbons" has the meaning set forth in Section 1.2(c).
"Indemnified Party" has the meaning set forth in Section 10.4.
"Indemnifying Party" has the meaning set forth in Section 10.4.
"Lands" has the meaning set forth in Section 1.2(a).
"Laws" means all statutes, rules, regulations, ordinances, orders, and
codes of Governmental Bodies.
"Leases" has the meaning set forth in Section 1.2(a).
"Liabilities" has the meaning set forth in Section 10.3(d).
"Material Adverse Effect" means any material adverse effect on the
ownership, operation or value of the Assets, as currently operated, taken as a
whole, provided, however, that "Material Adverse Effect" shall not include
general changes in industry or economic conditions or changes in laws or in
regulatory policies.
"Party" or "Parties" means one or all of signatory Parties to this
Agreement, respectively, unless otherwise indicated.
"Permitted Encumbrances" has the meaning set forth in Section 3.3.
"Person" means any individual, firm, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization, government or agency or subdivision thereof or any other entity.
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"Properties" has the meaning set forth in Section 1.2(d).
"Property Costs" has the meaning set forth in Section 1.4.
"Purchase Price" has the meaning set forth in Section 2.1.
"Buyer" has the meaning set forth in the first paragraph of this
Agreement.
"Records" has the meaning set forth in Section 1.2(h).
"Seller" has the meaning set forth in the first paragraph of this
Agreement and in Section 4.2(b).
"Seller Like-Kind Exchange Assets" has the meaning set forth in Section
1.1(b).
"Surface Contracts" has the meaning set forth in Section 1.2(g).
"Taxes" means all federal, state, local, and foreign income, profits,
franchise, sales, use, ad valorem, property, severance, production, excise,
stamp, documentary, real property transfer or gain, gross receipts, goods and
services, registration, capital, transfer, or withholding Taxes or other
governmental fees or charges imposed by any taxing authority, including any
interest, penalties or additional amounts which may be imposed with respect
thereto.
"Tax Returns" has the meaning set forth in Section 4.8.
"Title Claim Date" has the meaning set forth in Section 3.4(a).
"Title Defect" has the meaning set forth in Section 3.2.
"Title Defect Amount" has the meaning set forth in Section 3.4(c).
"Title Defect Notice" has the meaning set forth in Section 3.4(a).
"Title Defect Property" has the meaning set forth in Section 3.4(a).
"Units" has the meaning set forth in Section 1.2(d).
"Venus Agreement" means the Purchase and Sale Agreement between Venus
and Anadarko under which Venus is obligated to sell, and Anadarko is obligated
to purchase, Venus' interest in the Wells, Units and Leases identified in
Exhibits A, A-1 and A-2.
"Wells" has the meaning set forth in Section 1.2(b).
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IN WITNESS WHEREOF, this Agreement has been signed by each of the
parties hereto on the date as set forth below but effective as of December 17,
1999.
ATTEST: SELLER:
EXCO RESOURCES, INC.
By: /s/ RICHARD E. MILLER By: /s/ DOUGLAS H. MILLER
--------------------- ---------------------
Name: Richard E. Miller Name: Douglas H. Miller
Title: Secretary Title: Chief Executive Officer
Date: 12-17-99 Date: 12-17-99
ATTEST: BUYER:
ANADARKO PETROLEUM CORPORATION
By: /s/ JAMES J. WARD, JR. By: /s/ BRUCE H. STOVER
--------------------- -------------------
Name: James J. Ward, Jr. Name: Bruce H. Stover
Title: Asst. Secretary Title: Vice President,
Date: 12-17-99 Worldwide Business Development
Date: 12-17-99
47
<PAGE> 52
LIST OF EXHIBITS AND SCHEDULES
<TABLE>
<S> <C>
EXHIBIT A Oil, Gas and Mineral Leases
EXHIBIT A-1 Oil and Gas Wells
EXHIBIT A-2 All right, title and interest of Seller in or to any pools or units
EXHIBIT B Exchange Agreement
SCHEDULE 4.12A Authority for Expenditure
SCHEDULE 4.13 Non-Compliance With Laws/Governmental Authorizations
SCHEDULE 4.15 Outstanding Payments for Production
SCHEDULE 4.16 Gas Imbalances as of the Effective Time
SCHEDULE 4.18 Unplugged/Improperly Plugged Wells
EXHIBIT C Anadarko's Like-Kind Exchange Property
EXHIBIT D Assignment and Bill of Sale
EXHIBIT E Permitted Encumbrances
EXHIBIT F Equipment
EXHIBIT G Area of Exclusion
</TABLE>
Exhibits and schedules for this Exhibit 10.1 have not been
filed herewith. These exhibits and schedules will be filed if
requested by the Securities and Exchange Commission.
48
<PAGE> 1
EXHIBIT 10.2
December 31, 1999
Anadarko Petroleum Corporation
17001 Northchase Dr.
Houston, Texas 77060
Attn: Mr. James J. Ward, Jr.
Re: Amendments to: (i) Purchase, Sale and Exchange
Agreement dated as of December 17, 1999, between EXCO
Resources, Inc., as Seller, and Anadarko Petroleum
Corporation ("Anadarko"), as Buyer (the "EXCO PSA")
and (ii) Purchase and Sale Agreement dated December
17, 1999 between Venus Exploration, Inc., as Seller,
and Anadarko as Buyer (the "Venus PSA")
Gentlemen:
By the EXCO PSA and Venus PSA (collectively the "Agreements"), EXCO
Resources, Inc. ("EXCO") and Venus Exploration, Inc. ("Venus") agreed to sell to
Anadarko certain properties located in Jackson Parish, Louisiana. Reference to
the Agreements is hereby made for all purposes. Unless otherwise stated, words
beginning with capital letters in this Agreement shall have the same meaning
ascribed thereto in the Agreements. The Closing Date specified in the Agreements
is December 31, 1999. Because of potential problems in arranging for the wire
transfer of money as a result of the "Y2K" phenomenon, and other matters, EXCO,
Venus and Anadarko have concluded that it is in everyone's best interest to
modify the closing as set forth below, including deferring the actual cash
transfer of the adjusted Purchase Price until a few days after the first of
January, 2000 as set forth hereinbelow. Such deferral necessitates an amendment
to the Agreements. This letter, when accepted by you in the manner hereinafter
set forth, shall constitute the agreement of EXCO, Venus and Anadarko to amend
the Agreements as follows:
1. The method and date of Closing as set forth in the Agreements
is hereby changed as follows:
1.1 On December 31, 1999, the following documents (the
"Escrow Documents") which are contemplated by the
Agreements, will be fully executed and delivered to
American Escrow Company:
(1) The Assignment and Bill of Sale attached as:
(a) Exhibit D to the EXCO PSA, (b) Exhibit B
to the Venus PSA, and (c) Exhibit D to the
Exchange Agreement between Anadarko and
EXCO;
(2) The escrow agreement attached hereto as
Addendum "A" (the "Escrow Agreement");
<PAGE> 2
Mr. James J. Ward, Jr.
December 31, 1999
Page 2
(3) The letters-in-lieu of transfer orders
described in the Agreements;
(4) The affidavit of non-foreign status
contemplated by the Agreements;
(5) The Exchange Agreement between Anadarko and
EXCO; and
(6) The Assignment and Bill of Sale conveying
from EXUS Energy LLC ("EXUS") to EXCO and
Venus the properties subject to the
Agreements.
1.2 Provided that all of the conditions to payment set
forth in the Escrow Agreement and the Agreements have
been satisfied, on January 6, 2000 (the "Initial
Escrow Payment Date"), Anadarko will make the payment
of the Purchase Price adjusted as provided for in the
Agreements as follows, which payments, subject to the
next sentence of this section, shall not be less
than:
(a) $16,848,307 under the EXCO PSA ("Initial
EXCO PSA Payment"); and
(b) $17,104,571 under the Venus PSA ("Initial
Venus PSA Payment", collectively the
"Initial Escrow Payment").
Title defects which may be cured by obtaining a
corrective assignment from Apache representing a
Title Defect Amount of $919,188 as to the EXCO Assets
and $887,710 as to the Venus Assets is anticipated to
be received by Anadarko prior to the Initial Escrow
Payment Date. In the event such assignment is not
received, then the Initial EXCO PSA Payment shall be
reduced by $919,188 and the Initial Venus PSA
Agreement shall be reduced by $887,710.
A. Payments attributable to the EXCO PSA shall be made
to Texas Escrow Company, Inc. to the following
account:
Bank One Texas
ABA No. 111000614
For Credit to Texas Escrow Company, Inc.
Account No. 189 234 8820
Re: GF No. 99S12314 SJ1E
Notify Holly Garfield at (214) 855-8837
<PAGE> 3
Mr. James J. Ward, Jr.
December 31, 1999
Page 3
B. Payments attributable to the Venus PSA shall be made
to American Escrow Company to the following account:
Bank One Dallas, Texas
ABA No. 111000614
For Credit to American Escrow Company
Account No. 1825159336
Re: GF No. 99S13498 SJ1
Notify Melissa Garfield at (214) 855-8862
Distributions of the Initial Escrow Payment and any subsequent payments from
Anadarko by Texas Escrow Company, Inc. and American Escrow Company shall be made
as set forth in the Escrow Agreement.
2. Section 3.5 of each of the Agreements provides that Buyer
(Anadarko) may elect to treat unsatisfied consent requirements
and preferential purchase right requirements as Title Defects
by giving Seller (EXCO and Venus) notice of such treatment no
later than one business day prior to the Closing Date. Section
3.5 of the Agreements is hereby amended to permit Buyer to
treat such unsatisfied consent and preferential purchase
rights as Title Defects by giving Seller notice no later than
January 5, 2000, at 5:00 p.m. In the event (i) Anadarko treats
unsatisfied consent requirements and/or preferential purchase
right requirements as a Title Defect; (ii) makes adjustments
to the Purchase Price on account thereof; (iii) such consent
requirements remain unsatisfied as of March 31, 2000; and (iv)
Anadarko does not waive all or any portion of such unsatisfied
consent requirements and/or preferential purchase rights by
making additional payments attributable to EXCO's Assets to
Texas Escrow Company, Inc. and additional payments
attributable to Venus' Assets to American Escrow Company in an
amount equal to the adjustments to the Purchase Price made on
account thereof, then and in such event, Anadarko agrees that
it shall reconvey unto EXCO and Venus, all of the Assets
attributable to such unsatisfied consent requirements,
effective as of October 1, 1999. In the event of such
reconveyance, the parties shall make adjustment of the type
contemplated by the Agreements as if such Property had never
been conveyed to Anadarko with EXCO and Venus being: (a)
responsible for all reasonable costs and expenses of every
nature incurred by Anadarko arising out of or related to the
reconveyed Property; and (b) entitled to net proceeds
attributable to production from the reconveyed Property
received by Anadarko. As Title Defects with respect to a
Property are cured to Anadarko's satisfaction, Anadarko shall
make additional payments to the escrow account which are equal
to the Title Defect Amount for which Anadarko received a
reduction in the Purchase Price.
3. Notwithstanding anything contained in the Agreements to the
contrary, upon receipt of the Assignment and Bill of Sale as
to a particular property, Anadarko, its
<PAGE> 4
Mr. James J. Ward, Jr.
December 31, 1999
Page 4
successors and assigns, shall not thereafter be required
to obtain from EXUS, EXCO, Venus or their successors or
assigns any consent to assign any of the Properties or
interests described in such Assignment and Bill of Sale.
4. EXCO, Venus and Anadarko have reached an agreement regarding
Title Defect Amount attributable to the Properties. The total
Title Defect Amount under both of the Agreements is
$5,414,020. The allocation of the Title Defect Amount amongst
the Properties and the Agreements is set forth on Addendum "B"
hereto. EXCO and Venus shall have the right to cure the Title
Defects which comprise the Title Defect Amount for a period up
to and including March 31, 2000. If the total Title Defect
Amount still outstanding as of March 31, 2000 is less than the
Title Defect Amount set forth on Addendum "B" hereto but is
equal to or greater than at least $300,000.00, and Anadarko
shall have reduced the initial payment to the escrow agent by
at least $300,000, then Anadarko shall, except for Title
Defect Amounts for Property it reconveys to EXCO or Venus, pay
to EXCO and Venus, in equal proportions, the difference
between the Title Defect Amount set forth on Addendum "B"
hereto and the Title Defect Amount outstanding as of March 31,
2000. If the total Title Defect Amount still outstanding as of
March 31, 2000 is less than $300,000.00, and Anadarko shall
have reduced the initial payment to the escrow agent by
$300,000, then Anadarko shall, except for Title Defect Amounts
for Property it reconveys to EXCO or Venus, pay to EXCO and
Venus the entire Title Defect Amount.
5. Title Defect number 108 described on Addendum "B" hereto
pertains to the drilling and production unit known as the
"Lower Cotton Valley Reservoir A SUA", or "LCV RA SUA". Such
unit includes the Davis Bros. H-1 and K-1 wells. In the event
the Title Defect set forth on Addendum "B" hereto which
pertains to such unit is cured prior to March 31, 1999 by
obtaining a lease or a ratification of a lease from mineral
owners in such unit, any payments made to such mineral owners
by Anadarko in order to secure such lease or ratification
shall be added to the Title Defect Amount in determining
whether the Title Defect Amount is lesser or greater than
$300,000 pursuant to paragraph 4, above.
6. All representations, warranties and covenants of the Parties
and other conditions set forth in the Agreements as being
applicable on or extending through the Closing Date shall be
applicable as of the Initial Escrow Payment Date.
7. Operation of the properties shall be transferred to Buyer at
1:00 p.m. on December 31, 1999, and Anadarko shall assume risk
of loss to the Properties attributable to its operations
commencing with its assumption of operations. Anadarko agrees
to defend, indemnify and hold harmless Venus and EXCO from all
Liabilities arising
<PAGE> 5
Mr. James J. Ward, Jr.
December 31, 1999
Page 5
out of or related to operations conducted by Anadarko on the
Properties including, without limitation, Liabilities
attributable to operations on the Louisiana Minerals 15-1
Alternate well.
8. The number of days after the Closing Date in which Seller
shall provide a statement to Buyer, as set forth in Section
8.4(b) of the Agreements, setting forth the final calculation
of the Adjusted Purchase Price shall be 90 days, instead of 60
days, and the parties shall undertake to agree on the final
statement within 180 days after the Closing Date, instead of
150 days after the Closing Date.
9. The place of Closing as set forth in Section 8.1(a) of the
Agreements shall be Anadarko's office at 17001 Northchase
Drive, Houston, Texas.
10. Sections 9.1 and 9.2 of the Agreements shall be deleted in
their entirety and the following substituted in lieu thereof:
Section 9.1 Termination
This Agreement may be terminated at any time prior to
the Initial Escrow Payment Date if either party has failed to
perform or observe in any material respect its covenants and
agreements hereunder. In the event this Agreement terminates
because a party has failed to perform or observe in any
material respect any of its agreements or covenants contained
herein which are to be performed at or prior to the Initial
Escrow Payment Date, then the other party shall be entitled to
all remedies available at law or in equity and shall be
entitled to recover attorneys' fees in addition to any other
relief to which such party may be entitled.
11. Except as amended hereby, the Agreements shall remain in full
force and effect in accordance with their original terms.
If the foregoing correctly sets forth your understanding of our
agreement, please indicate your acceptance hereof by executing three copies of
this agreement in the space provided below and by returning two copies to the
undersigned at the address set forth above.
EXCO Resources, Inc.
<PAGE> 6
Mr. James J. Ward, Jr.
December 31, 1999
Page 6
By: /s/ T. W. EUBANK
-----------------------
T. W. Eubank, President
Accepted and agreed to this 31st
day of December, 1999.
Venus Exploration, Inc.
By: /s/ JOHN Y. AMES
----------------
John Y. Ames, President
Accepted and agreed to this 31st
day of December, 1999.
Anadarko Petroleum Corporation
By: /s/ BRUCE H. STOVER
-------------------
Bruce H. Stover, Vice President
Worldwide Business Development
<PAGE> 7
Mr. James J. Ward, Jr.
December 31, 1999
Page 7
LIST OF ADDENDUMS
<TABLE>
<S> <C>
ADDENDUM A ESCROW AGREEMENT FOR CLOSING FUNDS
AND CLOSING DOCUMENTS
ADDENDUM B EXCO RESOURCES, INC. AND ANADARKO
PETROLEUM CORPORATION'S AGREED TO
TITLE DEFECTS
</TABLE>
Addendums for this Exhibit 10.2 have not been filed herewith. These addendums
will be filed if requested by the Securities and Exchange Commission.
<PAGE> 1
EXHIBIT 10.3
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is dated as of the
16th day of November, 1999, by and between WESTERN GAS RESOURCES, INC.,
(hereinafter referred to as "Seller") and EXCO RESOURCES, INC., (hereinafter
referred to as "Buyer"), and is based on the following premises:
WHEREAS, Seller desires to sell, assign and convey to Buyer and Buyer
desires to purchase and accept certain assets and related interests; and
WHEREAS, the parties have reached agreement regarding such sale and
purchase.
NOW, THEREFORE, for valuable consideration and the mutual covenants and
agreements herein contained, Seller and Buyer agree as follows:
ARTICLE 1. DEFINITIONS
1. DEFINITIONS: In this Agreement, capitalized terms have the meanings provided
in this Article, unless expressly provided otherwise in other Articles. (All
defined terms include both the singular and the plural. All references to
Articles refer to Articles in this Agreement, and all Exhibits refer to Exhibits
attached to and made a part of this Agreement.)
"Affiliate" means and includes any entity that, directly or indirectly,
through one or more intermediaries, controls or is controlled by or is under
common control with the entity specified. Control means ownership of 51% or more
of the voting stock of such entity.
"Alleged Title Defect" means a Title Defect (as hereinafter defined)
which is asserted by Buyer in accordance with Article 4.2.
"Assignment and Bill of Sale" means a document in the form of Exhibit
"D", and "Assignment" means a document in the form of Exhibit "D-1" and in the
form of Exhibit "D-2".
"Business Days" means the days of Monday through Friday, except legal
holidays.
"Casualty Loss" means any loss, damage or reduction in value resulting
from mechanical failure or defects, catastrophic occurrences, acts of God and
any other losses which are not the result of normal wear and tear to the
personalty or of natural changes to the realty.
"Claim" or "Claims" means any and all claims, demands, suits, causes of
action, losses, damages, liabilities, fines, penalties and costs (including
reasonable attorneys' fees and costs of litigation) which are brought by or owed
to a third party.
1
<PAGE> 2
"Closing" means the consummation of the transactions contemplated in
this Agreement.
"Closing Date" means December 15, 1999, or such later date as may be
required to comply with the provisions of any preferential purchase rights
applicable to any portion of the Properties, or such other date as may be
mutually agreed upon by the parties.
"Defensible Title" means, as to the Properties, such title, whether
held by Seller, that, except for and subject to the Permitted Encumbrances, as
defined in Article 1 above, (i) entitles Seller to receive as to each of the
Properties not less than the "Net Revenue Interest" set forth in Exhibit "A-1",
as to such Property, in the oil, gas and associated liquid and gaseous
hydrocarbons produced, saved and marketed from any Well located on such Property
as to its presently producing formations; (ii) obligates Seller to bear costs
and expenses relating to the maintenance, development and operation of any Well
located on such Property in an amount not greater than the "Working Interest"
set forth in Exhibit "A-1" without a proportionate increase in the Net Revenue
Interest, and (iii) is free and clear of liens and material encumbrances and
defects.
"Effective Time" means September 1, 1999, at 7:00 a.m., local time
where the Leases are located.
"Environmental Claims" means all Claims for pollution or environmental
damages of any kind, including without limitation, those relating to: (a)
remediation and/or clean-up thereof, (b) damage to and/or loss of any property
or resource, and/or (c) injury or death of any person(s) whomsoever resulting
from environmental contamination; such Claims for pollution or environmental
damages shall include, but not be limited to, those relating to breach and/or
violation of Environmental Laws, common law causes of action such as negligence,
gross negligence, strict liability, nuisance or trespass, or fault imposed by
statute, rule, regulation or otherwise, asbestos, or potentially hazardous
substances, all costs associated with remediation and clean up, and fines and
penalties associated with any of the foregoing.
"Environmental Insurance Policy" means an insurance policy issued by
Insurance Company providing the insurance coverage substantially in the form and
content of the policy attached hereto as Exhibit H.
"Environmental Laws" means all laws, statutes, ordinances, permits,
orders, judgments, rules or regulations which are promulgated, issued or enacted
by a governmental entity or authority having appropriate jurisdiction that
relate to (a) the prevention of pollution or environmental damage, (b) the
remediation of pollution or environmental damage, or (c) the protection of the
environment generally; including without limitation, the Clean Air Act, as
2
<PAGE> 3
amended, the Clean Water Act, as amended, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Federal Water
Pollution Control Act, as amended, the Resource Conservation and Recovery Act of
1976, as amended, the Safe Drinking Water Act, as amended, the Toxic Substance
and Control Act, as amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, the Hazardous and the Solid Waste Amendments Act of 1984, as
amended, and the Oil Pollution Act of 1990, as amended, and (d) the "Risk
Evaluation/Corrective Action Program" under the jurisdiction of the Louisiana
Department of Environmental Quality pursuant to the Louisiana Environmental
Quality Act, R.S. 30:2001, et seq. ("RECAP").
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Identified Environmental Conditions" means condition(s) disclosed by
the Environmental Consultant in accordance with Article 5 that, as of the time
of Buyer's notice, are not in compliance with the then existing Environmental
Laws (as herein defined).
"Insurance Company" means American International Group, and its
subsidiary companies, or such other insurers acceptable to the parties that will
be the underwriter and issuer of the Environmental Insurance Policy, defined
below.
"Laws" means laws, statutes, ordinances, permits, decrees, orders,
judgments, rules or regulations (including, without limitation, Environmental
Laws) which are promulgated, issued or enacted by a governmental entity or
authority having appropriate jurisdiction which are in effect as of the date of
this Agreement.
"Material Adverse Effect" shall mean, with respect to the Properties,
adverse changes or adverse conditions with respect to the ownership, use or
operation of the Properties which result in a quantifiable diminution in value
of the Properties which exceeds an aggregate of 20% of the unadjusted Purchase
Price; provided however, that any prospective change or changes in financial
condition the existence of which is publicly known on the date hereof or any
change or changes in or caused by the reduction or depletion of reserves or
decline in deliverability or change in prices of oil, gas, feedstock, ethylene
or other hydrocarbon products, declines in production, general economic
conditions or local, regional, national or international industry conditions
shall not be deemed to constitute a Material Adverse Effect.
"Non-Environmental Claims" means all Claims, except Environmental
Claims.
"NORM" means naturally occurring radioactive materials.
3
<PAGE> 4
"Permitted Encumbrances" means:
(a) Consents to assignment and similar contractual provisions
encumbering the Properties with respect to which, prior to Closing, (i) waivers
or consents are obtained from the appropriate parties, or (ii) the appropriate
time period for asserting such rights have expired without an exercise of such
rights;
(b) All rights to consent by, required notices to, filings with, or
other actions by governmental entities or authorities in connection with the
sale or conveyance of the Properties, if the same are customarily obtained
subsequent to the transfer of title;
(c) Rights reserved to or vested in any governmental entity or
authority having appropriate jurisdiction to control or regulate the Properties
in any manner whatsoever, and all Laws of any such governmental entity or
authority;
(d) Third party easements, rights-of-way, servitudes, surface leases,
sub-surface leases, grazing rights, logging rights, canals, ditches, reservoirs,
pipelines, utility lines, telephone lines, power lines, railways, streets,
roads, alleys, highways and structures on, over and through the Properties, to
the extent such rights, interests or structures do not materially interfere with
the operation, value or use of the Properties;
(e) The terms and conditions of all easements, rights of way, and
leases, included within, attributable to or encumbering the Properties, to the
extent described in or referred to on any Exhibits or Schedules attached hereto,
and which would be acceptable to a reasonably prudent person acquiring those
easements, rights of way and leases for the purposes for which they are being
utilized;
(f) Liens for taxes or assessments not yet due or not yet delinquent
or, if delinquent, that are being contested by Seller in good faith in the
normal course of business and for which Seller remains responsible for the
period prior to the Effective Time;
(g) Mechanics and material men's liens relating to obligations not yet
due or not yet delinquent or, if delinquent, that are being contested by Seller
in good faith in the normal course of business and for which Seller remains
responsible for the period prior to the Effective Time;
(h) The absence of executed grants of rights of way or easements for
pipelines which were installed pursuant to the rights granted to the lessee
under the terms of applicable oil and gas leases or unit agreements;
4
<PAGE> 5
(i) Those defects and irregularities disclosed in that certain Title
Opinion dated September 9, 1993, a copy of which has previously been furnished
to Buyer, as well as such defects or irregularities in the title to the
Properties that do not materially interfere with the operation, value or use of
the Properties affected thereby and that would be considered not material when
applying general industry standards, including defects or irregularities in the
CO2 line and salt dome line which have reverted to surface interest owners and
including the absence of oil and gas leases from non-locatable mineral owners.
(j) Preferential purchase rights affecting any portion of the
Properties with respect to which either (i) the time in which to exercise the
right has lapsed without exercise, or (ii) the right has been waived by the
holder of the right.
"Properties" means Seller's right, title and interest in and to the
following properties (real, personal or mixed) and rights (contractual or
otherwise):
(a) The undivided oil and gas leasehold interests, working interests,
net revenue interests, mineral interests, royalty interests and overriding
royalty interests which are expressly described in Exhibit "A" (the "Leases");
(b) The rights in, to and under, or derived from, all of the presently
existing and valid unitization and pooling agreements and units (including all
units formed by voluntary agreement and those formed under the rules,
regulations, orders or other official acts of any governmental entity having
appropriate jurisdiction) to the extent they relate to any of the Leases;
(c) The plants, pipelines, generators, meters, valves, compression
facilities, gas treating facilities, refrigeration natural gas liquid extraction
facility, cryogenic liquid extraction facility, dehydration facilities, gas and
liquid handling and storage facilities, condensate stabilization facilities,
residue gas redelivery pipelines, recompression facilities and appurtenant
equipment, and related rights and other properties and assets known as the
"Black Lake Plant" located in Natchitoches Parish, Louisiana, all as further
described on Exhibit B, attached hereto (the "Plant");
(d) The rights of way, easements, servitudes, licenses, leaseholds, fee
interests, surface agreements and other rights and interest in land created by
conveyances, grants, deeds, leases and other instruments described in Exhibit C,
and all other rights of way, easements, servitudes, licenses, leaseholds, fee
interests and other rights and interest in land held by Seller and used for or
relating to the construction, ownership or operation of the Plant or Leases (the
"Rights of Way");
5
<PAGE> 6
(e) The rights in, to and under, or derived from, all of the presently
existing and valid oil sales contracts, casinghead gas sales contracts, gas
sales contracts, processing contracts, gathering contracts, treating contracts
and transportation contracts, equipment leases, the lease of the refrigeration
unit, and other contracts and agreements to the extent they relate to the Leases
or the Plant (the "Contracts");
(f) The personal property and improvements, including without
limitation, wells (including, without limitation wells that are producing,
plugged and abandoned, shut-in, temporarily abandoned, non-producing, injection
or water supply), tanks, boilers, buildings, fixtures, machinery, equipment,
pipelines, utility lines, power lines, telephone lines, telegraph lines, roads
and other appurtenances, to the extent the same are situated upon and/or used or
held for use by Seller solely in connection with the ownership, operation,
maintenance and repair of the Leases or the Plant (the "Equipment");
(g) All (i) land files, contract files, right of way records, surveys,
maps, plats, correspondence and other documents and instruments evidencing
Seller's title to the foregoing, (ii) accounting and financial records, (iii)
sales and property tax records, (iv) operation and maintenance records, and (v)
all other books, records, files and computer databases (excluding computer
software licenses) containing financial, title, environmental or other
information that relate solely to the foregoing properties, or if not relating
solely thereto, then copies of the relevant records (the "Records").
"Title Defect" means any lien, encumbrance, encroachment or defect
associated with Seller's title to the Properties (excluding Permitted
Encumbrances) that would cause Seller, or Buyer upon assignment to Buyer at
Closing, not to have Defensible Title and which involves a value of more than
$25,000 to remedy or cure.
ARTICLE 2. TRANSFER OF THE PROPERTIES
2.1 Sale and Purchase. On the Closing Date, effective as of the
Effective Time and upon the terms and conditions herein set forth, Seller agrees
to sell and assign the Properties to Buyer and Buyer agrees to buy and accept
the Properties.
ARTICLE 3. PURCHASE PRICE
3.1 Purchase Price. The total purchase price, subject to adjustments as
set forth herein, to be paid to Seller by Buyer for the Properties shall be
$7,800,000 U.S. ("Purchase
6
<PAGE> 7
Price"), payable in full at Closing in immediately available funds by wire
transfer in accordance with the following instructions:
ABA Routing No.: 111000012
Bank: Bank of America, Dallas, Texas
Account No: 0180352922
3.2 Allocation of Purchase Price. For the purposes of complying with
any applicable preferential purchase rights, Buyer has allocated, in good faith,
the Purchase Price among the Properties as set forth in Schedule 3.2, attached
hereto.
3.3 Tax Allocation of Purchase Price. For the purpose of making the
requisite filings under Section 1060 of the Internal Revenue Code and the
regulations thereunder, Buyer and Seller mutually agree to allocate the Purchase
Price among the Properties within a reasonable period of time following Closing
(but in no event later than 7 months after Closing). Buyer and Seller each agree
to report the federal, state and local income and other tax consequences of the
transactions contemplated herein, and, in particular, to report the information
required by Section 1060(b) of the Code, in a manner consistent with such
allocation and will not take any position inconsistent therewith in connection
with the examination of any tax return, any refund claim or any litigation,
investigation or other proceeding involving any tax return. Buyer and Seller
each agree to furnish the other a copy of Form 8594 (Asset Acquisition Statement
under Section 1060) as filed with the Internal Revenue Service by such company
or any Affiliate thereof, pursuant to Section 1060 of the Code and Temporary
Regulation 1.1060-1T thereunder, as a result of the consummation of the
transactions contemplated hereby, within 30 days of the filing of such form with
the Internal Revenue Service.
ARTICLE 4. TITLE AND RECORDS REVIEW
4.1 Review of Records. Seller shall make available to Buyer for Buyer's
review all Records relating to the Properties in Seller's possession. Buyer
shall have the right to obtain copies of any and all such Records at Buyer's
expense.
4.2 Adjustment of Purchase Price for Title Defects. As soon as
reasonably practicable after Buyer's discovery thereof during review of the
title Records, but in no event later than 5:00 p.m., Mountain Time, on December
5, 1999, ("Title Review Period"), Buyer shall notify Seller, in writing, of any
Properties which are subject to Alleged Title Defect(s). Notice of Alleged Title
Defect(s) shall include a description and reasonably full explanation (including
supporting documentation) of each Alleged Title Defect being claimed and a value
which Buyer, in good faith, attributes to each said Alleged Title Defect. With
respect to Alleged Title Defect(s), Seller
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may undertake to satisfy some, all or none of those raised by Buyer at Seller's
sole cost and expense. Buyer and Seller shall meet within 5 Business Days after
Seller's receipt of Buyer's notice of Alleged Title Defect(s) in an attempt to
mutually agree on a proposed resolution with respect to any Alleged Title
Defect(s) which by such time have not been agreed between the parties. It is
recognized that good faith differences of opinion may exist between Buyer and
Seller in connection with Alleged Title Defect(s), including without limitation,
disputes as to (a) whether or not the alleged defect constitutes an Alleged
Title Defect within the meaning of this Agreement, (b) whether or not the
magnitude of the alleged defect is great enough that Buyer is contractually
entitled to assert an Alleged Title Defect, (c) whether or not the Alleged Title
Defect was properly and timely asserted by Buyer pursuant to this Article, and
(d) the appropriate downward adjustment, if any, to be made to the Purchase
Price, or as a post-Closing adjustment, on account of a Title Defect. If any
such difference of opinion regarding an Alleged Title Defect ("Title Defect
Dispute") is not resolved by mutual agreement of Buyer and Seller prior to the
Closing Date, and if the total of Buyer's asserted values attributable to its
Alleged Title Defects does not exceed 5% of the unadjusted Purchase Price, the
parties shall consummate the transaction on the Closing Date using the Seller's
values with adjustments as then agreed; provided, however, either party shall
have the right, exercisable within 60 days after the Closing Date, to refer any
disputes regarding Alleged Title Defects asserted during the Title Review Period
to arbitration in accordance with this Agreement, provided, however, the
arbitrator shall be an attorney licensed in Louisiana and who has at least 15
years title experience. The decision of the arbitrator regarding any Title
Defect Dispute shall be final as between the parties. Seller shall have the
right to terminate this Agreement on the Closing Date if the value attributable
to known Alleged Title Defect(s) which remain uncured as of the Closing Date
exceeds more than 5% of the unadjusted Purchase Price. However, if Buyer
stipulates in writing that it will agree to limiting the arbitrators'
determination of the value of the Alleged Title Defects, to 5% of the unadjusted
Purchase Price minus the amount of all other Title Defects on which amounts have
already been agreed upon by the parties, then the parties shall proceed to
Closing and the arbitration shall proceed after the Closing under Section 16.17.
With respect to all Alleged Title Defects, including those that are not agreed
upon, either as to the validity or value of the Alleged Title Defect prior to
Closing, then upon such agreement or award of an arbitrator establishing the
validity and value of the Title Defect following Closing, Seller may elect, at
its option, (i) to cure the Title Defect at its cost, (ii) indemnify Buyer
against the Title Defect, or (iii) pay Buyer the agreed upon, or arbitrated,
value of the Title Defect, in which event Buyer will assume all liability with
respect to that Title Defect. Notwithstanding anything herein to the contrary,
Buyer shall not be entitled to raise Alleged Title Defects unless the aggregate
value of such Alleged Title Defects exceeds $250,000.
4.3 Waiver. All title objections not raised by Buyer within the Title
Review Period, including all Title Defects discovered at any time after the
expiration of the Title Review Period, shall be waived by Buyer for all
purposes, and Buyer shall have no right to seek an adjustment to
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the Purchase Price, make a claim against Seller or seek indemnification from
Seller associated with the same, except as to matters covered by Seller's
special warranty of title.
ARTICLE 5. ENVIRONMENTAL MATTERS
5.1 Environmental Inspection. Buyer shall engage a third-party
environmental consulting firm ("Environmental Consultant") acceptable to Seller
and Insurance Company to conduct an environmental assessment of the Properties.
The costs of the Environmental Consultant shall be paid by Buyer. To the extent
that Seller avails itself of the presence of the Environmental Consultant to
perform additional sampling to further delineate known areas of concern, Seller
shall pay Environmental Consultant for those services. Each party shall be
entitled to all reports obtained by, or prepared by the Environmental
Consultant. The results of the Environmental Consultant shall be binding on
Buyer and Seller for the purposes of this Agreement. Buyer's access, and its
Environmental Consultant's access to the Properties shall be at Buyer's sole
risk, cost and expense, and Buyer shall release Seller from and shall fully
protect, indemnify and defend Seller and its respective officers, agents,
employees and Affiliates and hold them harmless from and against any and all
Claims relating to, arising out of, or connected, directly or indirectly, with
Buyer's exercise of its rights under this Article 5.1, including without
limitation, Claims relating to (a) injury or death of any person or persons
whomsoever caused by Buyer or its agents (b) damage to or loss of any property
or resource caused by Buyer or its agents, (c) pollution, environmental damage
or violation of Environmental Laws caused by Buyer or its agents, (d) common law
causes of action such as negligence, gross negligence, strict liability,
nuisance or trespass, or (e) fault imposed by statute, rule, regulation or
otherwise; it being understood that Buyer shall not be responsible hereunder for
any pre-existing condition of such Properties discovered by such inspection.
Buyer additionally agrees to comply, and shall cause the Environmental
Consultant to comply, with Seller's safety rules and procedures while upon the
Properties.
5.2 Identified Environmental Conditions. As soon as reasonably
practical thereafter, but in no event later than 5:00 p.m., Mountain Time, on
December 5, 1999 ("Environmental Deadline"), Buyer shall notify Seller, in
writing, of any Identified Environmental Condition(s) disclosed by the
Environmental Consultant, together with a copy of the report specifying those
Identified Environmental Condition(s). Buyer's notice of Identified
Environmental Condition(s) shall include a reasonably complete description of
each individual environmental condition as to which Buyer takes exception
(including supporting documentation) and the cost that the Environmental
Consultant, in good faith, attributes to remediating the same. Seller shall work
together and with Insurance Company and the Environmental Consultant to
determine the amount necessary to fund coverage of the Identified Environmental
Conditions under the "Cost Cap" portion of the Environmental Insurance Policy.
Seller shall fully fund the Identified
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Environmental Conditions with Insurance Company; provided, however, if those
costs for which Seller is responsible exceeds 10% of the unadjusted Purchase
Price, then Seller shall have the right to terminate this Agreement without
liability to Seller. To the extent that any refunds of those funded amounts,
together with interest, are subsequently paid by Insurance Company under the
Environmental Insurance Policy, all such refunds and interest shall be the
exclusive entitlement of Seller. The costs of obtaining coverage under the
Environmental Insurance Policy for all matters not within the scope of the
Identified Environmental Conditions shall be paid by Seller; provided, at
Closing, Buyer shall pay Seller the sum of $50,000 as a contribution toward the
premium for purchase of the Pollution Legal Liability coverages under the
Environmental Insurance Policy. Such premium contribution shall entitle Buyer
coverage under Coverage A.- On-site Clean-up of Pre-existing Conditions;
Coverage D.- Third Party Claims for Off-site Clean-up Resulting from
Pre-existing Conditions; and Coverage F.- Third Party Claims for Off-site Bodily
Injury and Property Damage. It is understood that coverage afforded to Buyer
under Coverage F shall be limited to legal liability it may incur resulting from
Pollution Conditions (as defined in the Environmental Insurance Policy) which
commence prior to the effective date of this Agreement. Coverage available to
Buyer under the Pollution Legal Liability section of the Environmental Insurance
Policy shall be limited to the sum of $500,000 for Coverage Section A, D, and F,
subject to an aggregate limit of $500,000 available to Buyer for all claims.
Seller may purchase additional coverages and limits for its own protection to
which Buyer shall have no recourse. Both Buyer and Seller shall do nothing to
invalidate such coverage and shall cooperate with the Insurance Company with
respect to all terms and conditions of the Environmental Insurance Policy.
5.3 Waiver and Release. All environmental conditions, and any
Environmental Claims arising from or related thereto that were not included in
the Identified Environmental Conditions and that relate to any periods of time
before the Closing Date, shall be solely covered and remedied under the terms of
the Environmental Insurance Policy, and Buyer shall have no right to seek an
adjustment to the Purchase Price, make a claim against Seller or seek
indemnification from Seller associated with the same.
ARTICLE 6. ACCOUNTING
6.1 Revenues, Expenses and Capital Expenditures. Seller shall be
entitled to all operating revenues and related accounts receivable arising in
the ordinary course of business attributable to the Properties and shall be
responsible for all operating expenses and related accounts payable arising in
the ordinary course of business attributable to the Properties, in each case to
the extent they relate to the time prior to the Effective Time. Buyer shall be
entitled to all operating revenues and related accounts receivable arising in
the ordinary course of business attributable to the Properties and responsible
for the payment of all operating expenses and
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related accounts payable arising in the ordinary course of business, and for all
capital expenditures related to ongoing capital projects, attributable to the
Properties, in each case to the extent they relate to time after the Effective
Time. The actual amounts or values associated with the above shall be accounted
for in the Final Accounting Settlement. Buyer shall assume responsibility for
disbursing Seller's suspense funds associated with the acquired Properties as of
the Effective Time (the most recent copy attached hereto as Schedule 6.1), and
these funds shall be accounted for in the Final Accounting Settlement. Liquid
hydrocarbons and condensate in inventory as of the Effective Time shall pass
from Seller to Buyer and shall be accounted for, using a valuation based upon
Seller's prior practices, in the Final Accounting Settlement.
6.2 Taxes. All taxes and assessments, including without limitation,
excise taxes, ad valorem taxes (including, without limitation, ad valorem taxes
on reserves and personal property), gross receipts taxes and any other federal,
state, or local taxes or assessments, including penalties and interest,
attributable to the ownership or operation of the Properties prior to the
Effective Time shall remain Seller's responsibility, and all deductions, credits
and refunds pertaining to the aforementioned taxes and assessments, no matter
when received, shall belong to Seller. All taxes and assessments, including
without limitation, excise taxes, ad valorem taxes (including, without
limitation, ad valorem taxes on reserves and personal property), gross receipts
taxes and any other federal, state, or local taxes and assessments, including
penalties and interest, attributable to the ownership or operation of the
Properties after the Effective Time shall be Buyer's responsibility, and all
deductions, credits and refunds pertaining to the aforementioned taxes and
assessments, no matter when received, shall belong to Buyer. The amounts or
values associated with the above, if any, shall be accounted for in the Final
Accounting Settlement. Buyer shall be solely responsible for all transfer,
sales, use or similar taxes resulting from or associated with the transaction
contemplated under this Agreement.
6.3 Obligations and Credits. All prepaid utility charges, taxes,
rentals and any other prepaids applicable to periods of time after the Effective
Time, if any, and attributable to the Properties shall be reimbursed to Seller
by Buyer; and accrued payables and gas imbalances applicable to periods of time
prior to the Effective Time, if any, and attributable to the Properties shall be
the responsibility, or the credit of Seller. All amounts attributable to the
share of the non-operating working interest owners for premium payments towards
the Environmental Insurance Policy shall be credited to Seller and the amounts
or values associated therewith shall be accounted for at Closing, and to the
extent not known at Closing, shall be accounted for in the Final Accounting
Settlement reimbursed to Seller by Buyer. Buyer shall assume and be responsible
for, and/or be credited with, all gas imbalances affecting the Properties as of
the Effective Time (the most recent specification of which is attached hereto as
Schedule 6.3). The actual amounts or values associated with the above (based on
Inside FERC's Gas Market Report, Tennessee/Louisiana Zone 1, first of the month
Index for the month in which the Effective Time occurs) shall be accounted for
in the Final Accounting Settlement.
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6.4 Pre-Effective Time Settlements. Seller shall remain responsible for
all producer settlements for the periods of time before the Effective Time.
6.5 Final Accounting Settlement. As soon as reasonably practicable, but
in no event later than 90 days after Closing, Seller shall deliver to Buyer a
post-Closing statement setting forth a detailed final calculation of all
accounting adjustments ("Final Accounting Settlement"). As soon as reasonably
practicable, but in no event later than 30 days after Buyer receives the
post-Closing statement, Buyer shall deliver to Seller a written report
containing any changes Buyer proposes to be made to such statement. If Buyer
fails to deliver a report to Seller containing changes Buyer proposes to be made
to the post-Closing statement, the post-Closing statement delivered by Seller
shall be deemed to be true and correct and binding on and non-appealable by the
parties. As soon as reasonably practicable, but in no event later than 15 days
after Seller receives Buyer's proposed changes to the post-Closing statement,
the parties shall meet and undertake to agree on the final post-Closing
adjustments. Both before and after Seller issues its Final Accounting Statement
Seller shall allow Buyer and its representatives full access during normal
business hours to Seller's records involved or relating to the Final Accounting
Statement in the interest of cooperative communication between the parties on
the Final Accounting Statement matters. If the parties fail to agree on the
final post-Closing adjustments within such 15-day period, the disputed items
shall be resolved by submitting the same to a firm of independent nationally
recognized accountants mutually acceptable to the parties (the "Accounting
Referee"). The Accounting Referee shall resolve the dispute(s) regarding the
Final Accounting Settlement within thirty (30) Days after having the relevant
materials submitted for review. The decision of the Accounting Referee shall be
binding and non-appealable by the parties. The fees and expenses associated with
the Accounting Referee shall be borne equally by Buyer and Seller. The date upon
which all amounts associated with the Final Accounting Settlement are agreed to
by the parties, whether by decision of the Accounting Referee or otherwise,
shall be herein called the "Final Settlement Date". Any amounts owed by either
party to the other as a result of such final post-Closing adjustments shall be
paid within five (5) Business Days after the Final Settlement Date.
ARTICLE 7. CASUALTY AND CONDEMNATION
7.1 Casualty and Condemnation. If any part of the Properties shall (a)
be destroyed prior to Closing by a Casualty Loss, or (b) be taken in
condemnation or if proceedings for such purposes shall be pending then Seller
shall retain any and all sums paid to Seller, unpaid awards, insurance proceeds
and other payments associated with or attributable to such Casualty Loss or
taking and the Purchase Price shall be adjusted or the Agreement terminated as
hereinafter set forth. If a substantial part of the Properties shall be so
destroyed or taken, then either Buyer or
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Seller may terminate this Agreement prior to the Closing. For the purpose of
this Article 7.1, the term "substantial" shall be defined as 20% of the
unadjusted Purchase Price. If either party terminates this Agreement, in
accordance with this Article, neither party shall have any further obligations,
except as expressly provided in this Agreement. If the destruction or taking is
not substantial or if neither party terminates this Agreement, this Agreement
shall remain in full force and effect.
ARTICLE 8. INDEMNITIES
8.1 Opportunity for Review. Each party represents that it has had an
adequate opportunity to review the following indemnity and release provisions,
including the opportunity to submit the same to legal counsel for review and
comment. Based upon the foregoing representation, the parties agree to the
provisions set forth below.
8.2 Seller's Indemnity Obligation.
a. Non-Environmental Claims. Seller shall, subject to the limitations
set forth below, release Buyer from and shall fully protect, indemnify
and defend Buyer, its officers, agents, employees and Affiliates and
hold them harmless from and against any and all Non-Environmental Claims
relating to, arising out of, or connected, directly or indirectly, with
the ownership or operation of the Properties, or any part thereof,
pertaining to the period of time prior to the Closing Date; including
without limitation, Non-Environmental Claims relating to (a) injury or
death of any person or persons whomsoever, (b) damages to or loss of any
property or resources, (c) common law causes of action such as
negligence, gross negligence, strict liability, nuisance or trespass, or
(d) fault imposed by statute, rule, regulation or otherwise. The
indemnity obligation and release provided herein shall apply except to
the extent arising from or related to the negligent acts or omissions of
Buyer, its officers, agents, employees and Affiliates; and further,
shall not apply with respect to any Claims (1) pertaining to the title
to the Properties (without prejudice to Buyer's right to enforce
Seller's special warranty of title), or (2) pertaining to any liability
or obligation to properly plug, abandon and/or restore any well that is
part of the Properties. Notwithstanding anything contained herein to the
contrary, this Indemnity Obligation shall only apply if (i) Buyer has
provided Seller with written notice of said Non-Environmental Claims
within 1 year after the Closing Date, and (ii) such Non-Environmental
Claims equal or exceed, in the aggregate, $250,000.
b. Environmental Claims. Seller shall release Buyer from and shall fully
protect, indemnify and defend Buyer, its officers, agents, employees and
Affiliates and hold them harmless from and against any and all
Environmental Claims relating to, arising out of, or
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connected, directly or indirectly, with, and only with, Identified
Environmental Conditions.
8.3 Non-Indemnified Environmental Claims and Related Obligations.
a. With respect to all Environmental Claims, wholly or partially
relating to periods prior to the Closing Date, and not included in
Identified Environmental Conditions, the parties agree that the sole
recourse of Buyer shall be to the insurance coverage and Buyer shall
look solely to that insurance to compensate or reimburse Buyer for any
and all costs, expenses, damages and losses, of any nature, incurred by
Buyer with respect to such Environmental Claims including all costs of
remediation. Buyer expressly waives all claims it would otherwise have
against Seller with respect to any liability for such Environmental
Claims and covenants not to sue Seller, nor seek indemnification against
Seller, for any such Environmental Claims to the extent such were not
included in the Identified Environmental Conditions and whether or not
the insurance coverage and proceeds payable under the Environmental
Insurance Policy are adequate for Buyer to fully discharge any such
Environmental Claim.
b. Buyer agrees that with respect to any such Environmental Claims
relating to the Identified Environmental Conditions, Seller shall have
the right to control the negotiations with the Louisiana Department of
Environmental Quality concerning all matters related to the
establishment of a remediation plan and the implementation of the
remediation plan including any requirements or procedures under RECAP.
8.4 Buyer's Indemnity Obligation.
a. Buyer shall release Seller from and shall fully protect,
indemnify and defend Seller, its officers, agents, employees and
Affiliates and hold them harmless from and against any and all
Non-Environmental Claims relating to, arising out of, or
connected, directly or indirectly, with the ownership or
operation of the Properties, or any part thereof, pertaining to
the period of time at and after the Closing Date, and pertaining
to the period of time before the Closing Date to the extent
Seller's indemnity provisions do not apply, no matter when
asserted; including without limitation, Non-Environmental Claims
relating to (a) injury or death of any person or persons
whomsoever, (b) damages to or loss of any property or resources,
(c) common law causes of action such as negligence, gross
negligence, strict liability, nuisance or trespass, (d) fault
imposed by statute, rule, regulation or otherwise, or (e) the
obligation to properly plug, abandon and/or restore any well
that is part of the Properties (whether or not characterized as
a Non-Environmental Claim or an Environmental Claim). The
indemnity obligation and release provided herein shall apply
regardless of any cause or of any negligent acts or omissions of
Seller except
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to the extent arising from or related to the gross negligence or
willful misconduct, at any time, of Seller, its officers,
agents, employees and Affiliates, and except to the extent of
Seller's negligent acts or omissions which occur after Closing.
b. Buyer shall release Seller from and shall fully protect,
indemnify and defend Seller, its officers, agents, employees and
Affiliates and hold them harmless from and against any and all
Environmental Claims relating to, arising out of, or connected,
directly or indirectly, with the ownership or operation of the
Properties, or any part thereof, pertaining to the period of
time at and after the Closing Date; including without
limitation, Environmental Claims relating to (a) injury or death
of any person or persons whomsoever, (b) damages to or loss of
any property or resources, (c) common law causes of action such
as negligence, gross negligence, strict liability, nuisance or
trespass, or (d) fault imposed by statute, rule, regulation or
otherwise. The indemnity obligation and release provided herein
shall apply regardless of any cause or of any negligent acts or
omissions of Seller except to the extent arising from or related
to the gross negligence or willful misconduct, at any time, of
Seller, its officers, agents, employees and Affiliates, and
except to the extent of Seller's negligent acts or omissions
which occur after Closing.
8.5 NORM. The parties acknowledge that the Properties may contain NORM
and that special procedures may be required for the assessment, remediation,
removal, transportation or disposal of NORM. Notwithstanding anything herein to
the contrary, to the extent not covered by the Environmental Insurance Policy,
Buyer agrees to assume any and all liability associated with or attributable to
the assessment, remediation, removal, transportation and disposal of NORM
associated with or attributable to the Properties and will conduct said
activities in accordance with all applicable Laws. Buyer shall release Seller
from and shall fully protect, defend and indemnify Seller, its officers, agents,
employees and Affiliates and hold them harmless from and against any and all
Claims relating to, arising out of, or connected, directly or indirectly, with
the assessment, remediation, removal, transportation or disposal of NORM
associated with or attributable to the Properties, no matter when asserted,
including without limitation, Claims relating to (a) injury or death to any
person or persons whomsoever, (b) damage to or loss of property or resource, (c)
pollution, environmental damage or violation of Environmental Laws, (d) common
law causes of action such as negligence, gross negligence, strict liability,
nuisance or trespass, or (e) fault imposed by statute, rule, regulation or
otherwise. The indemnity obligation and release provided herein shall apply
regardless of cause or of any negligent acts or omissions of Seller except to
the extent arising from or related to gross negligence or willful misconduct, at
any time, of Seller, its officers, agents, employees and Affiliates, and except
to the extent of Seller's negligent acts or omissions which occur after Closing.
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8.6 Notice and Cooperation. As used in this Section 8.6 and in Section
8.7, below, a "Claim" refers to Non-Environmental Claims and to Environmental
Claims for which Seller indemnifies Buyer under the provisions of Section
8.2,b., above, and for which Buyer indemnifies Seller under the provisions of
Section 8.4, b., above. If a Claim is asserted against a party for which the
party would be liable under the provisions of this Article, it is a condition
precedent to the indemnifying party's obligations hereunder that the indemnified
party gives the indemnifying party written notice of such Claim setting forth
full particulars of the Claim, as known by the indemnified party, including a
copy of the Claim (if it was a written Claim). The indemnified party shall make
a good faith effort to notify the indemnifying party within one (1) month of
receipt of a Claim and shall in all events effect such notice within such time
as will allow the indemnifying party to defend against such Claim and no later
than three (3) calendar months after receipt of the Claim by the indemnified
party. The notice of a Claim given hereunder is referred to as a "Claim Notice".
8.7 Defense of Claims.
8.7.1 Counsel. Upon receipt of a Claim Notice, the indemnifying
party may assume the defense thereof with counsel selected by
the indemnifying party and reasonably satisfactory to the
indemnified party. The indemnified party shall cooperate in all
reasonable respects in such defense. If any Claim involves
Claims with respect to which Buyer indemnifies Seller and also
Claims for which Seller indemnifies Buyer, each party shall have
the right to assume the defense of and hire counsel for that
portion of the Claim for which it may have liability. The
indemnified party shall have the right to employ separate
counsel in any Claim and to participate in the defense thereof,
provided the fees and expenses of counsel employed by an
indemnified party shall be at the expense of the indemnified
party, unless otherwise agreed between the parties.
8.7.2 Settlement. If the indemnifying party does not notify the
indemnified party within the earlier to occur of: (a) time
response is due in any litigation matter, or (b) 3 calendar
months after receipt of the Claim Notice, that the indemnifying
party elects to undertake the defense thereof, the indemnified
party has the right to defend, at the expense of the
indemnifying party, the Claim with counsel of its own choosing,
subject to the right of the indemnifying party to assume the
defense of any Claim at any time prior to settlement or final
determination thereof. In such event, the indemnified party
shall send a written notice to the indemnifying party of any
proposed settlement of any Claim, which settlement the
indemnifying party may accept or reject, in its reasonable
judgment, within 30 days of receipt of such notice, unless the
settlement offer is limited to a shorter period of time in which
case the indemnifying party shall have such shorter period of
time in which to
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accept or reject the proposed settlement. Failure of the
indemnifying party to accept or reject such settlement within
the applicable time period shall be deemed to be its rejection
of such settlement. The indemnified party may settle any matter
over the objection of the indemnifying party but shall in so
doing be deemed to have waived any right to indemnity.
8.8 Environmental Claims Subject to Environmental Insurance Policy. With
respect to any Environmental Claims relating to any matter covered by the
Environmental Insurance Policy, the parties agree to fully comply with the
procedures and terms of the Environmental Insurance Policy.
8.9 Waiver of Certain Damages and Remedies. Each of the parties hereby
waives, and agrees not to seek consequential, punitive or special damages of any
kind with respect to any Claim or dispute, arising out of or relating to this
Agreement (including any of the foregoing to the extent not covered by the
Environmental Insurance Policy) or breach hereof, and further expressly waives
any rights of rescission. This provision does not diminish or affect in any way
the parties' rights and obligations under any indemnities provided for in this
Agreement.
ARTICLE 9. WARRANTIES AND DISCLAIMERS
9.1 Disclaimer - Representations and Warranties. Buyer acknowledges and
agrees that the Properties are being transferred, assigned and conveyed from
Seller to Buyer, and Buyer will acquire and assume the Properties "AS-IS,
WHERE-IS" and with all faults in their present condition and state of repair,
without recourse. Except as expressly set forth in this Agreement, SELLER HEREBY
DISCLAIMS ANY AND ALL REPRESENTATIONS AND WARRANTIES OF CONDITION CONCERNING THE
PROPERTIES, EXPRESS, STATUTORY, IMPLIED OR OTHERWISE, INCLUDING WITHOUT
LIMITATION, ANY WARRANTY OF TITLE OTHER THAN THE SPECIAL WARRANTY OF TITLE
CONTAINED HEREIN, THE AMOUNT OF REVENUES, THE AMOUNT OF OPERATING COSTS,
CONDITION (PHYSICAL OR ENVIRONMENTAL), ABSENCE OF DEFECTS (LATENT OR PATENT),
SAFETY, STATE OF REPAIR, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
AND BUYER EXPRESSLY RELEASES SELLER FROM THE SAME.
9.2 Disclaimer - Statements and Information. Except as expressly set
forth in this Agreement, Seller disclaims any and all liability and
responsibility for and associated with the quality, accuracy, completeness or
materiality of the data, information and materials furnished (orally or in
writing) at any time to Buyer, its officers, agents, employees and Affiliates in
connection with the transaction contemplated herein, including without
limitation, the amount of
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revenues, the amount of operating costs, the financial data, the contract data,
the environmental condition of the Properties, the physical condition of the
Properties and the continued financial viability of the Properties, and Buyer
expressly releases Seller from the same, except as expressly set forth in this
Agreement.
9.3 Special Warranty of Title. Seller will specially warrant and defend
title to the Properties as against the claims of all claiming by, through, or
under Seller and its Affiliates, but not otherwise, and subject to the Permitted
Encumbrances.
ARTICLE 10. SELLER'S REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer that on the date hereof and as
of the Closing Date:
10.1 Organization and Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware and has all requisite corporate power and authority to own and lease
the Properties. Seller is duly licensed or qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the Properties
are located.
10.2 Corporate Authority; Authorization of Agreement. Except for the
approval of Seller's board of directors, Seller has all requisite corporate
power and authority to execute and deliver this Agreement, to consummate the
transactions contemplated herein and to perform all of the terms and conditions
to be performed by it as provided for in this Agreement. Except for the approval
of Seller's board of directors, the execution and delivery of this Agreement by
Seller, the performance by Seller of all of the terms and conditions to be
performed by it and the consummation of the transactions contemplated herein
have been duly authorized and approved by all necessary corporate action. This
Agreement has been duly executed and delivered by Seller and constitutes the
valid and binding obligation of Seller, enforceable against it in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency or other Laws relating to or affecting the enforcement of creditors'
rights and general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
10.3 No Violations. The execution and delivery of this Agreement by
Seller does not, and the fulfillment and compliance with the terms and
conditions hereof and the consummation of the transactions contemplated herein,
will not:
(a) Conflict with or require the consent of any person or entity
under any of the terms, conditions or provisions of the certificate of
incorporation or bylaws of Seller;
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(b) Violate any provision of, or require any filing, consent or
approval under any Law applicable to or binding upon Seller (assuming receipt of
all consents and approvals of governmental entities or authorities customarily
obtained subsequent to the transfers of title);
(c) Conflict with, result in a breach of, constitute a default
under or constitute an event that with notice or lapse of time, or both, would
constitute a default under, accelerate or permit the acceleration of the
performance required by, or require any consent, authorization or approval
under, (i) any mortgage, indenture, loan, credit agreement or other agreement,
evidencing indebtedness for borrowed money to which Seller is a party or by
which Seller is bound or (ii) any order, judgment or decree of any governmental
entity or authority; or
(d) Result in the creation or imposition of any lien or
encumbrance upon the Properties.
10.4 Absence of Certain Changes. Between the date of execution of this
Agreement and the Closing Date, there has not been without Buyer's prior written
consent:
(a) A sale, lease or other disposition of the Properties,
provided, the consumption of inventory in the ordinary course of Seller's
business shall be permitted hereunder;
(b) Any mortgage, pledge or grant of a lien or security interest
in any of the Properties that will not be released as of the Closing; or
(c) A contract or commitment to do any of the foregoing.
10.5 Operating Costs. All costs incurred in connection with the
operation of the Properties have been fully paid and discharged by Seller,
except normal expenses incurred in operating the Properties within the previous
60 Days or as to which Seller has not yet been billed.
10.6 Litigation. Except as disclosed on Exhibit E, attached hereto and
incorporated herein by reference, there is no action, suit or proceeding pending
against Seller or that could prevent the consummation of the transaction
contemplated by this Agreement or that relates to the Properties.
10.7 Bankruptcy. There are no bankruptcy, reorganization or receivership
proceedings pending, being contemplated by, or threatened against Seller.
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10.8 Governmental Regulations. The Properties and the business
activities associated therewith have been and are currently operated or
conducted in substantial compliance with all applicable Federal, State and local
laws, regulations, orders, requirements and standards, except where the lack of
compliance would not have a Material Adverse Effect, and Seller has received no
notice of material noncompliance, or alleged material noncompliance, with any of
the foregoing which has not been disclosed in writing to Buyer. Seller has
secured all governmental permits and licenses required to conduct the business
associated with the Properties and will transfer and assign the same to Buyer to
the extent permitted by law. No proceeding or litigation is pending or, to
Seller's knowledge, threatened which would challenge, limit, or revoke any of
the aforementioned permits or licenses.
ARTICLE 11. BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Seller that to the best of Buyer's
knowledge on the date hereof and as of the Closing Date:
11.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Texas and has all requisite power and authority to own and lease the Properties.
Buyer is duly licensed or qualified to do business and is in good standing in
all jurisdictions in which the Properties are located.
11.2 Authority; Authorization of Agreement. Buyer has all requisite
power and authority to execute and deliver this Agreement, to consummate the
transactions contemplated herein and to perform all the terms and conditions to
be performed by it as provided for in this Agreement. The execution and delivery
of this Agreement by Buyer, the performance by Buyer of all the terms and
conditions to be performed by it and the consummation of the transactions
contemplated herein will have been duly authorized and approved by all necessary
action. This Agreement has been duly executed and delivered by Buyer and
constitutes the valid and binding obligation of Buyer, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency or other Laws relating to or affecting the enforcement of
creditors' rights and general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
11.3 No Violations. The execution and delivery of this Agreement by
Buyer does not, and the fulfillment and compliance with the terms and conditions
hereof and the consummation of the transactions contemplated herein, will not:
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(a) Conflict with or require the consent of any person or entity
under any of the terms, conditions or provisions of the articles of
incorporation, articles of organization, bylaws, operating agreements,
partnership agreements or other enabling instruments of Buyer;
(b) Violate any provision of, or require any filing, consent or
approval under any Law applicable to or binding upon Buyer; or
(c) Conflict with, result in a breach of, constitute a default
under or constitute an event that with notice or lapse of time, or both, would
constitute a default under, accelerate or permit the acceleration of the
performance required by, or require any consent, authorization or approval
under, (i) any mortgage, indenture, loan, credit agreement or other agreement
evidencing indebtedness for borrowed money to which Buyer is a party or by which
Buyer is bound, or (ii) any order, judgment or decree of any governmental entity
or authority.
11.4 SEC Disclosure. Buyer is acquiring the Properties for its own
account for use in its trade or business, and not with a view toward or for sale
in connection with any distribution thereof, nor with any present intention of
making a distribution thereof within the meaning of the Securities Act of 1933,
as amended.
11.5 No Representation as to Operatorship. Buyer acknowledges that any
rights to operate the Leases and related properties are subject to the
applicable Contracts and that Seller is not making any representations or
promises that Buyer will be able to assume operations thereof following Closing.
11.6 Independent Evaluation. Buyer represents that it is sophisticated
in the evaluation, purchase, operation and ownership of the type of properties
comprising the Properties. In making its decision to enter into this Agreement
and to consummate the transaction contemplated herein, Buyer represents that it
has relied on its own independent investigation and evaluation of the Properties
and on the terms and conditions of this Agreement, and that, as of Closing,
Buyer has satisfied itself as to the physical condition and the environmental
condition of the Properties.
11.7 No Financing Contingency. Buyer has all funds necessary to
consummate the transactions contemplated herein and this Agreement and the
transactions contemplated hereunder are not contingent on Buyer obtaining
financing arrangements or similar arrangements.
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ARTICLE 12. ADDITIONAL AGREEMENTS
12.1 Covenants of Seller. From the date hereof until Closing, without
first obtaining the consent of Buyer, Seller will not, to the extent any such
action would have an adverse effect on the Properties after Closing:
(a) waive any right of material value relating to the
Properties;
(b) convey, encumber, mortgage, pledge or dispose of any of
the Properties;
(c) enter into, modify or terminate any Contracts, except in
Seller's ordinary course of business; or
(d) contract or commit itself to do any of the foregoing.
12.2 Records. Except as provided for elsewhere in this Agreement,
within 30 Days after the Closing, Seller shall furnish to Buyer all Records;
provided however, Seller shall be entitled to retain copies of any or all such
Records and to retain as long as needed, (a) the originals of any Records
required in connection with litigation or other proceedings pending or
threatened against Seller or the Properties as of the Closing Date, and/or (b)
the originals of any Records required in connection with the Final Accounting
Settlement. In the event Seller is required to retain originals hereunder,
copies of such Records will be furnished to Buyer. Any and all Records retained
by Seller shall be furnished to Buyer within 30 Days after Seller's need for
said Records ceases. Buyer agrees to maintain the Records received from Seller
in accordance herewith for a period of 3 years or as may be required by law
after the Closing and to afford Seller reasonable access to the Records as
requested by Seller.
12.3 Personnel Matters.
(a) Buyer will evaluate its personnel needs and shall notify
Seller of Buyer's personnel requirements promptly upon the execution of this
Agreement. Seller has not created any obligation on Buyer to hire any person
employed in connection with the Properties, and Buyer has no obligation of any
kind to hire any such person. At least 10 days before Closing, Buyer will
conduct such interviews, if any, as it deems necessary, and offer employment to
the field employees of Seller that Buyer identifies as qualified and necessary
for Buyer's operational requirements (all of whom are currently assigned to the
Properties). Schedule 12.3.1 is a list of all field employees currently assigned
to the Properties. Those employees of Seller listed in Schedule 12.3.1 who sign
the form contained in Schedule 12.3.2 will be considered by Buyer or its
Affiliates for employment; provided however, that no employee shall be obligated
to express interest in potential employment or accept an offer of
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employment from Buyer or its Affiliates, nor shall Buyer or its Affiliates be
obligated to offer employment to any of such employees.
(b) For each employee who completes the form set forth on
Schedule 12.3.2, Seller shall furnish Buyer or its affiliate with information
from each of those employees' personnel files, historic compensation data, and
such other information as may reasonably be requested by Buyer for the purpose
of carrying out the provisions of this Section 12.3, including selection of
employees to be interviewed for potential employment with Buyer's affiliate.
(c) If any of the above referenced individuals accept
employment with Buyer, (i) Buyer agrees to provide salaries, wages and employee
benefits to any of the above referenced employees who accept an offer of
employment with Buyer or an Affiliate of Buyer (the "Employee" or "Employees")
that are the same as the salaries, wages and employee benefits (under employee
benefit plans sponsored by Buyer or Buyer's Affiliate) provided to similarly
situated employees of Buyer or Buyer's Affiliate, and (ii) Buyer agrees to cause
to be provided the same vacation and severance benefits to those hired employees
as are provided to Buyer's or its Affiliates' employees then employed by Buyer
or Buyer's Affiliate. Additionally, with regard to vacation and severance
benefits only, Buyer shall give any hired employees credit for their years of
service as accrued through the date of severance from Seller the same as if that
service was with Buyer or the hiring Buyer Affiliate. Further, Buyer agrees, to
the extent permissible under applicable plans or policies or under applicable
law, to (a) waive any preexisting condition limitations applicable to the
Employees under a Buyer's group medical plan if the Employee enrolls in Buyer's
Affiliate's group medical plan within 30 days of becoming eligible and
participated in the Seller's similar plan effective as of the Closing Date, (b)
credit the Employees under the vacation and layoff benefit plan or policy of
Buyer's Affiliate for their period of employment with Seller or its predecessors
to the extent such predecessor employment was recognized by Seller, but not in
excess of the maximum benefit or credit available to Buyer's Affiliate's
employees under those plans. Notwithstanding, nothing in this Agreement shall
obligate Buyer or its Affiliate to maintain any benefit plan, and to the extent
permitted by law, Buyer and its Affiliate shall have the ability to revise,
modify, amend, or terminate any benefit plan, policy, or practice in its sole
discretion at any time.
(d) Buyer and its Affiliates shall not be responsible for any
costs, obligations or liabilities that may arise, occur or result from the
employment by Seller of any Employee or the termination of such employment prior
to the date of hire of such Employees by Buyer or an Affiliate of Buyer, and
Seller shall be responsible for any costs, obligations and liabilities,
including without limitation, liabilities for severance payments or benefits.
Buyer or its Affiliate shall be responsible for all employment matters of
Employees arising or occurring after their hire by Buyer, including without
limitation, any liabilities for salaries, wages and employee benefits, but not
for the period prior to their employment by Buyer's Affiliate. Seller
acknowledges that the Employees who are terminated by Seller in connection with
the
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transaction contemplated by this Agreement, whether or not employed by Buyer,
will have experienced a termination of employment and be entitled from Seller to
health care continuation benefits as described in Section 4098B of the Code.
Employees who are hired by Buyer pursuant to this Agreement shall be hired on an
at-will basis, and nothing contained in this Agreement or any other document
shall be considered to constitute a contract of employment between Buyer and any
Employee.
(e) It is expressly agreed that if Buyer, any of its
affiliates, or any contractor of Buyer hires any Employee within 1 year
following Closing, either full time, part time or on a contract basis, it shall
notify Seller, and Buyer will reimburse Seller within 30 days for any severance
benefits that Seller had paid to that Employee. Further, Buyer shall certify in
writing to Seller on the 1 year anniversary from the Closing Date any and all
Employees which were hired by Buyer, any of its affiliates, or by any contractor
of Buyer, either on a full time, part time, or contractual basis and, in the
event Buyer has not previously reimbursed Seller for said hirings, then Buyer
will reimburse Seller at the time the certification is submitted.
12.5 Corporate Name; Trademark Rights. Upon or immediately following
the Closing, Buyer shall cease to use the name "Western Gas Resources, Inc." or
any similar name in operation of the Assets. Buyer understands and agrees that
nothing in this Agreement or otherwise confers upon Buyer any rights to or under
any trademarks, service marks, logos or trade names of Seller or any of its
affiliates ("Marks"). Buyer agrees that, upon the Closing, Buyer will cease all
use of the Marks, including, without limitation, any name including the words
"Western Gas Resources, Inc.", the logo of Seller and all marks, names and trade
styles confusingly similar to such words and symbols. Buyer further agrees that
it will, within 60 days following the Closing, remove all references to and
representations of any of the Marks from the Assets.
12.6 Antitrust Notification. If compliance with the HSR Act is required
in connection with the transaction contemplated under this Agreement, as
promptly as practicable and in any event on or before 10 Business Days following
the full execution hereof, both parties will file with the Federal Trade
Commission and the Department of Justice, as applicable, the notification and
report forms required for the transactions contemplated herein and will as
promptly as practicable furnish any supplemental information which may be
reasonably requested in connection therewith. Each party shall request expedited
treatment of such filing unless otherwise agreed. If failure by either party to
obtain timely authorization from the Federal Trade Commission or the Department
of Justice results in the inability of the parties to Close on the Closing Date,
the time for Closing shall automatically be extended until such date as Closing
can occur in compliance with the HSR Act, but in no event will the Closing date
be extended past 120 days. The parties agree to equally share the filing fee
associated with making this filing.
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12.7 Replacement of Bond. Schedule 12.7 describes that certain bond on
which Seller is the designated principal. At Closing, Buyer shall have made all
arrangements necessary to replace Seller on that bond and shall furnish evidence
thereof to Seller.
ARTICLE 13. CONDITIONS PRECEDENT TO CLOSING
13.1 Conditions Precedent to Seller's Obligation to Close. Seller shall
be obligated to consummate the sale of the Properties as contemplated by this
Agreement on the Closing Date, provided the following conditions precedent have
been satisfied or have been waived by Seller:
13.1.1 All representations and warranties of Buyer contained
in this Agreement shall be true and correct in all material
respects at and as of Closing as though such representations
and warranties were made at and as of such time;
13.1.2 Buyer shall have complied in all material respects with
all obligations and conditions contained in this Agreement to
be performed or complied with by Buyer on or prior to the
Closing; and,
13.1.3 Seller shall have obtained all necessary approvals from
its Board of Directors.
13.2 Conditions Precedent to Buyer's Obligation to Close. Buyer shall
be obligated to consummate the purchase of the Properties as contemplated by
this Agreement on the Closing Date, provided the following conditions precedent
have been satisfied or have been waived by Buyer:
13.2.1 All representations and warranties of Seller contained
in this Agreement shall be true and correct in all material
respects at and as of Closing as though such representations
and warranties were made at and as of such time except for
such breaches or defaults therein which do not result in a
Material Adverse Effect, excluding the value of any Alleged
Title Defects; and
13.2.2 Seller shall have complied in all material respects
with all obligations and conditions contained in this
Agreement to be performed or complied with by Seller on or
prior to the Closing.
13.3 Conditions Precedent to Obligation of Each Party. The parties
shall be obligated to consummate the sale and purchase of the Properties as
contemplated in this
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Agreement on the Closing Date, provided the following conditions precedent have
been satisfied or have been waived:
13.3.1 No suit, action or other proceedings shall be pending
before any court or governmental entity in which it is sought
by a person or entity other than the parties hereto or any of
their Affiliates, officers, directors, or employees to
restrain, enjoin or otherwise prohibit the consummation of the
transactions contemplated by this Agreement, or to obtain
substantial damages in connection with the transaction
contemplated herein, nor shall there be any investigation by a
governmental entity pending which might result in any such
suit, action or other proceedings seeking to restrain, enjoin
or otherwise prohibit the consummation of the transaction
contemplated by this Agreement;
13.3.2 All consents and approvals, if any, whether required
contractually or by applicable federal, state, or local Law,
or otherwise necessary for the execution, delivery and
performance of this Agreement by Seller (except for consents
and approvals of governmental entities or authorities
customarily obtained subsequent to the transfer of title)
shall have been obtained and delivered to Buyer by the Closing
and shall not have been withdrawn or revoked. It is provided,
however, that in the event that any such consents to assign
any of the Properties have not, despite the diligent efforts
of Seller, been obtained by Closing, then Closing shall
nevertheless proceed. Seller shall retain the portions of the
Properties for which consents have not been obtained and this
Agreement shall not be construed as a commitment to assign or
to receive assignments of agreements or rights in
contravention of any applicable assignment restrictions.
Seller will following Closing, continue to diligently pursue
obtaining those consents. In the event that Seller is unable
to obtain any such necessary authorization, consent, or waiver
within 60 days following Closing, Seller shall (a) cooperate,
at Buyer's request and at Buyer's expense, in any lawful
arrangement designed to provide Buyer with the benefits of any
such non-assignable permits and governmental authorizations,
real property Interests, and Contracts, and (b) enforce, at
the request of Buyer and for the benefit of Buyer and at
Buyer's expense, any rights of Seller arising from any
non-assignable permits and governmental authorizations,
easements, realty leases and rights-of-way, and Contracts;
provided, Seller shall have no liability to Buyer for any
Claims arising from or related to the agreements or
assignments subject to the foregoing arrangement described in
(a) and (b), above, or Claims arising from or related to the
arrangement described in (a) and (b), above;
13.3.3 All preferential purchase rights pertaining to any
portions of the Properties that arise as a result of this
transaction have either been waived or the
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time in which a party has to exercise such rights has expired
without that party exercising the right;
13.3.4 If applicable, consummation of the transaction
contemplated herein shall not have been prevented from
occurring by (and the required waiting period, if any, shall
have expired under) the HSR Act and the rules and regulations
of the Federal Trade Commission and the Department of Justice;
13.3.5 Seller shall have obtained a binder for the insurance
coverage under the Environmental Insurance Policy; and,
13.3.6 Except for the conditions expressly set forth in this
Article 13, there are no other conditions precedent to the
obligations of the parties to proceed to Closing; and, without
limiting the generality of the foregoing, the parties agree
that any changes in commodity prices, volume throughput
through the Properties or changes in the financial condition
of a party shall not be a condition on which a party may elect
not to proceed to Closing.
ARTICLE 14. TERMINATION
14.1 Grounds for Termination. This Agreement may be terminated at any
time prior to Closing:
14.1.1 By the mutual written agreement of Seller and Buyer;
14.1.2 By either Seller or Buyer if the consummation of the
transactions contemplated herein would violate any order,
decree or judgment of any governmental entity having
appropriate jurisdiction enjoining or awarding substantial
damages in connection with the consummation of the
transactions contemplated herein;
14.1.3 By either Seller or Buyer pursuant to any express
termination rights provided in this Agreement; or,
14.1.4 Notwithstanding anything contained in this Agreement to
the contrary, by Seller or Buyer if Closing shall not have
occurred by January 14, 2000.
14.2 Effect of Termination. If this Agreement is terminated in
accordance with Section 14.1, such termination shall be without liability of any
party to this Agreement or any
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officer, director, Affiliate, or employee of such party, except obligations
provided in Sections 14.3, 14.4, 14.5 and 16.3; provided, if a party is in
default of its obligations and covenants hereunder at the time of termination,
the non-defaulting party shall be entitled to all rights and remedies at law, or
in equity resulting from the defaults or breaches of the defaulting party,
whether or not this Agreement has been terminated by the non-defaulting party.
14.3 Dispute Over Right to Terminate. If there is a dispute between the
parties over either party's right to terminate this Agreement under Section
14.1, Closing shall not occur, as scheduled. The party which disputes the other
party's right to terminate may initiate arbitration proceedings in accordance
with Section 16.17 within thirty (30) Days of the date on which Closing was
scheduled to occur and, if arbitration is so initiated, the dispute will be
resolved through such arbitration proceeding. If the party which disputes the
termination right does not initiate an arbitration proceeding to resolve the
dispute within the time period specified herein above, such party shall be
deemed to have waived its right to object to such termination.
14.4 Return of Documents. If this Agreement is terminated prior to
Closing, each party shall return to the party which owns or is otherwise
entitled thereto all books, records, maps, files, papers and other property in
such party's possession relating to the transaction contemplated by this
Agreement.
14.5 Confidentiality. Notwithstanding the termination of this Agreement
or any other provision of this Agreement to the contrary, the terms of the
Confidentiality Agreement executed by Seller and Buyer, dated August 23, 1999,
shall remain in full force and effect. If Closing of the transaction is
consummated, the Confidentiality Agreement shall terminate. If requested by
Buyer, Seller, to the extent transferable, will assign to Buyer all of Seller's
rights under Confidentiality Agreements with third parties relating to the
Properties. If they are not assignable, Seller will request the return of all
Confidential Information that Seller provided pursuant to those agreements.
ARTICLE 15. THE CLOSING
15.1. Closing. Three Business Days prior to the Closing Date, Seller
shall provide Buyer with a Closing statement setting forth the adjusted Purchase
Price. Closing shall be held in Seller's office at 12200 North Pecos Street,
Denver, Colorado 80234, or any other location as mutually agreed in writing by
Seller and Buyer.
15.2 Obligations of Seller at Closing. At the Closing, Seller shall
deliver to Buyer, unless waived by Buyer, the following:
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15.2.1 A document conveying to Buyer the Properties,
substantially in the forms of the Assignment and Bill of Sale
attached hereto as Exhibit D, and the Assignment attached
hereto as Exhibit D-1 and D-2 with special warranty of title.
15.2.2 Evidence that all consents and approvals prerequisite
to the sale and conveyance of the Properties (except as
otherwise provided in Section 13.3.2 and except for consents
and approvals of governmental entities or authorities
customarily obtained subsequent to the transfer of title) have
been obtained;
15.2.3 A Certificate executed by an officer of Seller
certifying as to the matters specified in Articles 13.2.1 and
13.2.2 above substantially in the form of Exhibit F;
15.2.4 A Non-Foreign Affidavit executed by Seller
substantially in the form of Exhibit G;
15.2.5 A binder from Insurance Company binding the insurance
coverage set forth in the Environmental Insurance Policy; and,
15.2.6 Such other instruments as necessary to carry out
Seller's obligations under this Agreement.
15.3 Obligations of Buyer at Closing. At the Closing, each party Buyer
shall deliver to Seller, unless waived by Seller, the following:
15.3.1 The Assignment and Bill of Sale, executed and properly
acknowledged, referred to in Article 15.2.1;
15.3.2 The adjusted Purchase Price, by wire transfer in
accordance with Article 3 hereof;
15.3.3 A Certificate executed by an authorized officer of
Buyer certifying as to the matters specified in Articles
13.1.1 and 13.1.2 substantially in the form of Exhibit F; and,
15.3.4 Such other instruments as necessary to carry out
Buyer's obligations under this Agreement.
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ARTICLE 16. MISCELLANEOUS
16.1 Notices. All notices and other communications required, permitted
or desired to be given hereunder must be in writing and sent by U.S. mail,
properly addressed as shown below, and with all postage and other charges fully
prepaid or by hand delivery or by facsimile transmission. Date of service by
mail and hand delivery is the date on which such notice is received by the
addressee and by facsimile is the date sent (as evidenced by fax machine
confirmation of receipt), or if such date is not on a Business Day, then on the
next date which is a Business Day. Each party may change its address by
notifying the other party in writing.
If to Seller Western Gas Resources, Inc.
12200 North Pecos Street
Denver, Colorado 80234
Fax: (303) 252-3362
Attention: General Counsel
If to Buyer EXCO Resources, Inc.
5735 Pineland Dr., Suite 235
Dallas, TX 75231
(214) 368-2084
Fax: (214) 368-2087
If to Insurance Company: In accordance with the notice provisions
contained in the Environmental Insurance
Policy
16.2 Conveyance Costs. Buyer shall be solely responsible for filing and
recording documents related to the transfer of the Properties from Seller to
Buyer and for all filing and recording costs and fees associated therewith,
including filing the assignment of the Properties with appropriate federal,
state and local authorities as required by applicable Law and the payment of any
transfer fees associated therewith for any Properties. Within 90 Days after
Closing, Buyer shall furnish Seller with all recording data and evidence of all
required filings.
16.3 Brokers' Fees. Except for insurance agents or brokers in
connection with obtaining the Environmental Insurance Policy (the fees and
commissions of which shall be paid by the party retaining that agent or broker),
neither party has retained any brokers, agents or finders and none are
Affiliated with either party or authorized to act on behalf of either party in
this matter. Each party agrees to release, protect, indemnify, defend and hold
the other harmless from and against any and all Claims with respect to any
commissions, finders' fees or other remuneration due to any broker, agent or
finder claiming by, through or under such party.
16.4 Further Assurances. From and after Closing, at the request of
Seller but without further consideration, Buyer will execute and deliver or use
reasonable efforts to cause to be
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executed and delivered such other instruments of conveyance and take such other
actions as Seller reasonably may request to more effectively put Seller in
possession of any property which was not included in the Properties and was
mistakenly conveyed by Seller to Buyer. From and after Closing, at the request
of Buyer but without further consideration, Seller shall execute and deliver or
use reasonable efforts to cause to be executed and delivered such other
instruments of conveyance and take such other actions as Buyer reasonably may
request to more effectively put Buyer in possession of the Properties. If any of
the Properties are incorrectly described, the description shall be corrected
upon proof of the proper description.
16.5 Survival of Representations and Warranties. The representations
and warranties contained in this agreement shall survive for a period of 1 year
following Closing and upon the expiration of that 1-year period all
representations and warranties of Seller contained herein shall expressly
terminate and be of no further force and effect, except for Seller's special
warranty of title which shall be perpetual in duration. Except as otherwise
provided, all other indemnities, covenants and agreements contained in this
Agreement shall survive the Closing indefinitely. The parties have made no
representations or warranties except those expressly set forth in this
Agreement.
16.6 Amendments and Severability. No amendments or other changes to
this Agreement shall be effective or binding on either of the parties unless the
same shall be in writing and signed by both Seller and Buyer. The invalidity of
any one or more provisions of this Agreement shall not affect the validity of
this Agreement as a whole, and in case of any such invalidity, this Agreement
shall be construed as if the invalid provision had not been included herein.
16.7 Successors and Assigns. This Agreement, and the insurance coverage
under the Environmental Insurance Policy, shall not be assigned, either in whole
or in part, without the express written consent of the non-assigning party
except that such consent shall not be required for assignment to a Buyer
Affiliate so long as such assignment does not relieve Buyer of any of its
obligations hereunder. The terms, covenants and conditions contained in this
Agreement shall be binding upon and shall inure to the benefit of Seller and
Buyer and their respective successors and permitted assigns.
16.8 Headings. The titles and headings set forth in this Agreement have
been included solely for ease of reference and shall not be considered in the
interpretation or construction of this Agreement.
16.9 Governing Law. This Agreement shall be governed by and construed
under the Laws of the State of Colorado, excluding any choice of law rules which
may direct the application of the Laws of another jurisdiction.
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16.10 No Partnership Created. It is not the purpose or intention of
this Agreement to create (and it shall not be construed as creating) a joint
venture, partnership or any type of association, and the parties are not
authorized to act as agent or principal for each other with respect to any
matter related hereto.
16.11 Public Announcements. Neither Seller nor Buyer (including any of
its Affiliates in either case) shall issue a public statement or press release
with respect to the transaction contemplated herein (including the price and
other terms) without the prior written consent of the other party, except as
required by Law or listing agreement with a national security exchange and then
only after prior consultation with the other party.
16.12 No Third Party Beneficiaries. Nothing contained in this Agreement
shall entitle anyone other than Seller or Buyer or their authorized successors
and assigns to any claim, cause of action, remedy or right of any kind
whatsoever.
16.13 Deceptive Trade Practices. As partial consideration for the
parties agreeing to enter into this Agreement, the parties each can and do
expressly waive the provisions of the Texas Deceptive Trade Practices Consumer
Protection Act, Article 17.41 through 17.63, Texas Business and Consumer Code,
other than Article 17.555, which is not waived, and all other consumer
protection Laws of the State of Texas, or any other state, applicable to this
transaction that may be waived by the parties. It is not the intent of the
parties to waive and the parties shall not waive any applicable Law or provision
thereof which is prohibited by Law from being waived. Each party represents to
the other that such party has had an adequate opportunity to review the
preceding waiver provision, including the opportunity to submit the same to
legal counsel for review and comment, and understand the rights being waived
herein.
16.14 Not to be Construed Against Drafter. The parties acknowledge that
they have had an adequate opportunity to review each and every provision
contained in this Agreement and to submit the same to legal counsel for review
and comment, including expressly but without limitation the waivers and
indemnities contained in this Agreement. Based on said review and consultation,
the parties agree with each and every term contained in this Agreement. Based on
the foregoing, the parties agree that the rule of construction that a contract
be construed against the drafter, if any, shall not be applied in the
interpretation and construction of this Agreement.
16.15 Entire Agreement. This Agreement supersedes all prior and
contemporaneous negotiations, understandings, letters of intent and agreements
(whether oral or written) between the parties relating to the Properties and
constitutes the entire understanding and agreement between the parties with
respect to the sale and purchase of the Properties.
16.16 Conspicuousness of Provisions. The parties acknowledge that the
provisions contained in this Agreement that are set out in "bold" satisfy the
requirement of the express
32
<PAGE> 33
negligence rule and any other requirement at law or in equity that provisions
contained in a contract be conspicuously marked or highlighted.
16.17 Arbitration. Any dispute arising under this Agreement
("Arbitrable Dispute") shall be referred to and resolved by binding arbitration
in Denver, Colorado, to be administered by and in accordance with the Commercial
Arbitration Rules of the Judicial Arbitration and Mediation Service/Endispute
("JAMS"). Arbitration shall be initiated within the applicable time limits set
forth in this Agreement and not thereafter or if no time limit is given, within
the time period allowed by the applicable statute of limitations, by one party
("Claimant") giving written notice to the other party ("Respondent") and to
JAMS, that the Claimant elects to refer the Arbitrable Dispute to arbitration.
All arbitrators must be neutral parties who have never been officers, directors
or employees of the parties or any of their Affiliates, must have not less than
ten (10) years experience in the oil and gas industry, and must have a formal
financial/accounting, engineering or legal education. The hearing shall be
commenced within thirty (30) Days after the selection of the arbitrator. The
parties and the arbitrators shall proceed diligently and in good faith in order
that the arbitral award shall be made as promptly as possible. The
interpretation, construction and effect of this Agreement shall be governed by
the Laws of Colorado, and to the maximum extent allowed by law, in all
arbitration proceedings the Laws of Colorado shall be applied, without regard to
any conflicts of laws principles. All statutes of limitation and of repose that
would otherwise be applicable shall apply to any arbitration proceeding. The
tribunal shall not have the authority to grant or award indirect or
consequential damages, punitive damages or exemplary damages. The parties shall
maintain all arbitration, and the results or award thereof, confidential except
to the extent required to be disclosed by law or regulation.
16.18 Execution in Counterparts. This Agreement may be executed in
counterparts, which shall when taken together constitute one (1) valid and
binding agreement.
The parties have executed this Agreement by their duly authorized
representatives as of the day and year first set forth above.
BUYER:
EXCO RESOURCES, INC.
By: /s/ T. W. Eubank
------------------------
Name: T. W. Eubank
Title: President
SELLER:
WESTERN GAS RESOURCES, INC.
By: /s/ L. F. Outlaw
------------------------
Name: L. F. Outlaw
Title: President
33
<PAGE> 34
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A LEASES
EXHIBIT B PLANT
EXHIBIT C RIGHTS OF WAY
EXHIBIT D ASSIGNMENT AND BILL OF SALE
EXHIBIT D-1 ASSIGNMENT (RIGHTS OF WAY)
EXHIBIT D-2 ASSIGNMENT (LEASES)
EXHIBIT E LITIGATION SCHEDULE
EXHIBIT F SELLER'S/BUYER'S CERTIFICATE
EXHIBIT G NON-FOREIGN AFFIDAVIT
EXHIBIT H FORM OF ENVIRONMENTAL INSURANCE POLICY
SCHEDULE 3.2 ALLOCATION OF PURCHASE PRICE
SCHEDULE 6.1 SUSPENSE FUNDS
SCHEDULE 6.3 GAS IMBALANCES
SCHEDULE 12.3.1 EMPLOYEES
SCHEDULE 12.3.2 EXPRESSION OF INTEREST
SCHEDULE 12.7 BOND
Exhibits and schedules for this Exhibit 10.3 have not been filed
herewith. These exhibits and schedules will be filed if requested by
the Securities and Exchange Commission.
34
<PAGE> 1
EXHIBIT 10.4
AMENDMENT NO. 1
TO
PURCHASE AND SALE AGREEMENT
THIS AMENDMENT NO. 1 TO PURCHASE AND SALE AGREEMENT (this "Amendment") is
dated as of the 21st day of December, 1999, by and between WESTERN GAS
RESOURCES, INC., (hereinafter referred to as "Seller") and EXCO RESOURCES, INC.,
(hereinafter referred to as "Buyer"), and is based on the following premises:
WHEREAS, Buyer and Seller have entered into that certain Purchase and Sale
Agreement dated November 16, 1999 (the "Purchase and Sale Agreement").
WHEREAS, the parties have agreed to amend certain provisions of the Purchase and
Sale Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements contained
herein, the parties agree as follows:
1. As used herein, capitalized terms that are defined in the Purchase and Sale
Agreement shall have the meanings given them in the Purchase and Sale Agreement.
2. The definition of "Closing Date", contained in Article 1 of the Purchase and
Sale Agreement shall be deleted in its entirety and replaced by the following
revised definition:
"Closing Date" means January 7, 2000.
3. Section 3.1 of Purchase and Sale Agreement shall be deleted in its entirety
and replaced by the following revised Section 3.1:
3.1 Purchase Price. The total purchase price, subject to adjustments as set
forth herein, to be paid to Seller by Buyer for the Properties shall be
$7,800,000 U.S. ("Purchase Price"), payable as follows:
a. A deposit of $5,000,000 ("Deposit") will be paid to Seller by wire
transfer, in accordance with the wire instructions set forth in c.,
below, on December 22, 1999. The Deposit shall be non-refundable in
the event that Buyer fails, for any reason not expressly excused in
the Purchase and Sale Agreement, to Close on the Closing Date.
b. At Closing, Buyer shall pay the full Purchase Price, plus interest, in
the amount of $13,000, to Seller in immediately available funds by
wire transfer in accordance with the wire instructions set forth in
c., below; and, simultaneously, Seller shall wire transfer the Deposit
(without any interest
<PAGE> 2
thereon), to Buyer, in accordance with wire instructions to be
provided by Buyer to Seller at least 3 Business Days before Closing.
c. All wire transfers to Seller hereunder shall be in accordance with the
following instructions:
ABA Routing No.: 111000012
Bank: Bank of America, Dallas, Texas
Account No: 0180352922
4. The third to the last sentence of Section 5.2 of the Purchase and Sale
Agreement shall be deleted in its entirety and replaced with the following
revised third to the last sentence of Section 5.2:
Coverage available to Buyer under the Pollution Legal Liability section of
the Environmental Insurance Policy shall be limited to the sum of $200,000
for Coverage Section A, D, and F, subject to an aggregate limit of $200,000
available to Buyer for all claims.
5. The second sentence of Section 6.3 of the Purchase and Sale Agreement shall
be deleted in its entirety and replaced by the following revised second sentence
of Section 6.3:
All amounts attributable to the share of the non-operating working interest
owners for deposit premium payments towards the Environmental Insurance
Policy shall be credited to Seller and the amounts or values associated
therewith shall be accounted for at Closing.
6. Section 6.4 of the Purchase and Sale Agreement shall be deleted in its
entirety and replaced with the following revised Section 6.4
6.4 Pre-Effective Time Settlements. Seller shall remain responsible for all
producer settlements for the periods of time through the production month
of November, 1999.
7. Section 6.5 of the Purchase and Sale Agreement shall be amended by adding the
following sentence to the end of Section 6.5:
Notwithstanding the terms of this Section 6.5 to the contrary, this Section
6.5 shall not establish any final adjustments with respect to the matters
set forth in Section 6.6, below.
8. Article 6 of the Purchase and Sale Agreement shall be amended by adding the
following new Section 6.6, Environmental Post-Closing Accounting:
6.6 Environmental Post-Closing Accounting. The parties acknowledge that
accounting with respect to the premiums for the Environmental Insurance
Policy
<PAGE> 3
and other matters related to non-operating owners that do not participate
in the Environmental Insurance Policy may not be able to be fully settled
by the Final Settlement Date. Accordingly, Buyer agrees that, following
Closing, it shall, by its normal joint interest billing practices: (i)
continue to bill for and collect all additional amounts required for
premiums in connection with the Environmental Insurance Policy and, (ii) to
the extent that any non-operating owners did not participate in the
Environmental Insurance Policy, bill for and collect each such owners
proportionate share of actual costs incurred by Seller in connection with
any remediation undertaken with respect to the matters identified in that
certain Notice of Identified Environmental Conditions, Black Lake Field,
Natchitoches Parish, Louisiana, dated December 20, 1999, attached hereto as
Attachment I. Buyer shall submit billings for such costs and expenses to
the non-operating owners within 30 days following receipt of a statement
for such from Seller. Buyer shall remit such collected amounts to Seller
within 30 days of Buyer's receipt of those funds.
9. Except for the foregoing, all other terms and provisions of the Purchase and
Sale Agreement shall remain in full force and effect.
The parties have executed this Amendment by their duly authorized
representatives as of the day and year first set forth above.
BUYER:
EXCO RESOURCES, INC.
By: /s/ DOUGLAS H. MILLER
----------------------
Name: Douglas H. Miller
Title: Chief Executive Officer
SELLER:
WESTERN GAS RESOURCES, INC.
By: /s/ J. BURTON JONES
----------------------
Name: J. Burton Jones
Title: Vice President, Business Development
<PAGE> 4
LIST OF ATTACHMENTS
ATTACHMENT I NOTICE OF IDENTIFIED ENVIRONMENTAL
CONDITIONS, BLACK LAKE FIELD,
NATCHITOCHES PARISH, LOUISIANA,
DATED DECEMBER 20, 1999
Attachments for this Exhibit 10.4 have not been filed herewith. These
attachments will be filed if requested by the Securities and Exchange
Commission.
