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OMB APPROVAL
SECURITIES AND EXCHANGE COMMISSION --------------------
Washington, D.C. 20549 OMB Number 3235-0145
Expires:
SCHEDULE 13D October 31, 1997
Estimated E average
burden hours per
form...... 14.90
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Under the Securities Exchange Act of 1934
(Amendment No. __)*
Territorial Resources, Inc.
(Name of Issuer)
Common Stock, no par value
(Title of Class of Securities)
881469209
(CUSIP Number)
Daniel A. Mercier, 734 7th Ave. S.W., Suite 1345, Calgary, Alberta, Canada T2P
3P8; (403)233-7914
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
June 30, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP NO. 881469209 PAGE 2 OF 2 PAGES
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
JIMMY M. MCCARROLL
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [_]
(b) [_]
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SEC USE ONLY
3
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SOURCE OF FUNDS
4
00
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) OR 2(e)
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
UNITED STATES
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SOLE VOTING POWER
7
NUMBER OF 550,000
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY
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EACH SOLE DISPOSITIVE POWER
9
REPORTING 250,000
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
300,000*
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
550,000*
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
5.42%
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TYPE OF REPORTING PERSON*
14
IN
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*See 3, 4 and 6, below.
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1. SECURITY AND ISSUER
This Schedule 13D relates to shares of common stock, no par value (the
"Territorial Common Stock"), of Territorial Resources, Inc., a Colorado
corporation ("Territorial"). The principal executive offices and mailing address
of Territorial are 734 7th Ave. S.W., Suite 1345, Calgary, Alberta,
Canada T2P 3P8.
2. IDENTITY AND BACKGROUND
This Schedule 13D is filed on behalf of Jimmy M. McCarroll ("McCarroll"),
whose business address is 1030 Townplace, Houston, Texas 77057-1942. McCarroll's
current principal occupation or employment is serving as President of McCarroll
Energy, Inc., Houston, Texas, an independent oil and gas operator on the Texas
Gulf Coast, whose address is 1030 Townplace, Houston, Texas 77057-1942.
McCarroll is also a director of Territorial.
During the period beginning five years prior to June 30, 1997, McCarroll (a)
has not been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) and (b) has not been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
McCarroll is a citizen of the United States.
3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On June 30, 1997, McCarroll sold to Territorial his right to receive a 2.5%
undivided working interest (the "2.5% Working Interests") in two oil and gas
concessions (the "Concessions") granted by the Government of Thailand relating
to so-called Block B8/38 and Block B4/32 located in the Gulf of Thailand. Such
sale was made pursuant to an Asset Purchase Agreement by and among Territorial,
McCarroll and two affiliates of SOCO International plc, a company formed under
the laws of England ("SOCO International"), which affiliates are parties to the
Concessions. McCarroll earned his right to receive the 2.5% Working Interests by
completing certain consulting services in favor of such affiliates of SOCO
International relating to a farm-out of interests in the Concessions to MMC
Exploration & Production (Thailand) Ltd.
In exchange for the sale of McCarroll's right to receive the 2.5% Working
Interests, Territorial paid to McCarroll an aggregate of (US)$210,000 in cash
and issued to McCarroll an aggregate of 550,000 shares (the "McCarroll Shares")
of Territorial Common Stock. The 550,000 McCarroll Shares represent
approximately 5.4% of the issued and outstanding shares of Territorial Common
Stock. Three hundred thousand (300,000) of such McCarroll Shares are held in
escrow (the "Escrowed Shares"), pursuant to the terms of an Escrow Agreement,
dated as of June 30, 1997 (the "Escrow Agreement"), by and among McCarroll,
Territorial and an escrow agent (the "Escrow Agent"), and are to be released as
follows:
(a) One hundred thousand (100,000) Escrowed Shares are to be released from
escrow and delivered:
(i) to McCarroll upon the completion on or before June 30, 2000, of
a "Successful Test" of a well on either Block B8/38 or Block B4/32. A
"Successful Test" is defined in the Escrow Agreement as a test in which the
average production rate from a well during a continuous 48-hour period
exceeds 500 barrels per day at well head flowing conditions which are
consistent with good oil field practice; or
(ii) to Territorial if the condition described in clause (i) of this
paragraph (a) has not occurred on or before June 30, 2000.
(b) One hundred thousand (100,000) Escrowed Shares are to be released from
escrow and delivered:
(i) to McCarroll when the drilling and testing of another well (in
addition to the well described in clause (a) above) located on either Block
B8/38 or Block B4/32 has been completed, and both (A) all of the other work
required to be completed in order to fulfill the work commitments through
the end of the second year of the First Obligation Period, as defined in the
Concession relating to Block B8/38, including any extensions of such second
year
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(the "End of the B8/38 Second Year"), has in fact been completed and (B) all
of the other work required to be completed in order to fulfill the work
commitments under the Concession relating to Block B4/32 through the period
ending at the End of the B8/38 Second Year has been completed; provided,
however, that if Territorial elects not to complete the work described in
this clause (B) or not to fulfill its proportionate obligations with respect
to such work, then the requirement set forth in clause (B) will be deemed to
have been fulfilled for purposes of the Escrow Agreement); and provided
further that there is no requirement for a Successful Test on this second
well prior to release of such 100,000 Escrowed Shares in accordance with the
provisions of this clause (i); or
(ii) to Territorial if the condition described in clause (i) of this
paragraph (b) has not occurred on or before June 30, 2001.
(c) One hundred thousand (100,000) Escrowed Shares are to be released from
escrow and delivered:
(i) to McCarroll if "Commercial Production," during a continuous 30-
day period, of one or more wells on either Block B8/38 or Block B4/32 has
commenced. "Commercial Production" is defined in the Escrow Agreement as
production of either crude oil at an average daily rate of 1,000 barrels or
natural gas at an average daily rate of 10 million cubic feet (10 MMCF); or
(ii) to Territorial if the condition described in clause (i) of this
paragraph (c) has not occurred on or before June 30, 2002.
The Escrow Agreement provides that McCarroll shall have all voting rights with
respect to the Escrowed Shares so long as they are held in escrow.
McCarroll currently serves as a Director of Territorial, a position he has
held since October 1996.
4. PURPOSE OF TRANSACTION
McCarroll acquired the McCarroll Shares for investment purposes. See Item 3,
above .
5. INTEREST IN SECURITIES OF THE ISSUER
(a) The aggregate number of shares of the class of securities identified
pursuant to Item 1, above beneficially owned by McCarroll is 550,000 shares
(previously defined as the "McCarroll Shares") of Territorial Common Stock,
which represent approximately 5.4% of the outstanding shares of Territorial
Common Stock as of the date hereof.
(b) McCarroll has the sole power to vote all of the McCarroll Shares.
McCarroll has the right to dispose of 250,000 of the McCarroll Shares. So long
as any of the 300,000 Escrowed Shares are held in escrow, such Escrowed Shares
may not be disposed of by McCarroll. See Item 3, above.
(c) Not applicable.
(d) Dividends accruing with respect to the 300,000 Escrowed Shares during
the period when such shares are held in escrow are required to be deposited with
the Escrow Agent. Such deposited dividends are to be released to McCarroll or
Territorial, as applicable, upon the release of the Escrowed Shares to which
such dividends relate, all upon the terms and conditions set out in the Escrow
Agreement. See Item 3, above.
(e) Not applicable.
6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Three hundred thousand (300,000) of the McCarroll Shares, defined above as
the Escrowed Shares, are held in escrow and are subject to the provisions of the
Escrow Agreement. See Item 3, above.
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7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 99.1 Escrow Agreement, dated as of June 30, 1997.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: July 8, 1997
/s/ Jimmy M. McCarroll
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JIMMY M. MCCARROLL
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EXHIBIT 99.1
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is made and entered into as of June
30, 1997, by and between JIMMY M. MCCARROLL, a resident of Harris County, Texas
("McCarroll"), TERRITORIAL RESOURCES (DELAWARE), INC., a corporation organized
under the laws of the State of Delaware in the United States of America
("Territorial Delaware"), and THEODORE J. LEE, solely in his capacity as escrow
agent (the "Escrow Agent") hereunder.
RECITALS
SOCO Exploration (Thailand) Company Limited, a juristic person organized
and exiting under the laws of Thailand, SOCO Thaitex, Inc., a Delaware
corporation (together, the "SOCO Parties"), McCarroll and Territorial Delaware
have entered into that certain Asset Purchase Agreement, dated as of May 30,1997
(as amended from time to time, the "Asset Purchase Agreement"), pursuant to
which among other things McCarroll agreed to sell to Territorial Delaware, and
Territorial Delaware agreed to purchase from McCarroll, his rights to receive
certain working interests in two concessions granted by the Ministry of Industry
of Thailand that relate to the exploitation of two blocks in the Gulf of
Thailand. Capitalized terms used and not otherwise defined herein have the
meanings given them in the Asset Purchase Agreement, a copy of which is attached
hereto as Exhibit A and made a part hereof.
Article II of the Asset Purchase Agreement contemplates that, at the
Closing of the transactions thereunder, among other things three (3) Escrowed
Certificates, each of which is to represent 100,000 Territorial Shares (for an
aggregate of 300,000 Territorial Shares), will be issued in the name of
McCarroll, and all of which are to be delivered at the Closing to the Escrow
Agent pursuant to the terms and provisions of an Escrow Agreement. This
Agreement is the Escrow Agreement referred to in the Asset Purchase Agreement.
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. ITEMS PLACED INTO ESCROW. Contemporaneously with the execution hereof,
Territorial Delaware has caused to be issued, among other things, the three (3)
Escrowed Certificates in the name of McCarroll, representing in the aggregate
300,000 Territorial Shares (the "Escrowed Shares"), all of which Escrowed
Certificates have been exhibited to McCarroll on or before the date hereof.
Each of the Escrowed Certificates is delivered to the Escrow Agent in accordance
with the Asset Purchase Agreement and this Agreement. In addition, McCarroll is
delivering to the Escrow Agent three (3) separate written stock powers (the
"Stock Powers") duly signed in blank by him, with signature guaranteed, each
relating to a separate Escrowed Certificates, and together, relating to total of
the Territorial Shares evidenced by the Escrowed Certificates. The Escrow Agent
hereby acknowledges receipt of the Escrowed Certificates and the Stock Powers
and agrees to hold and deliver them in accordance with this Agreement.
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2. VOTING RIGHTS AND DISTRIBUTIONS WITH RESPECT TO ESCROWED SHARES. The
record owner of the Escrowed Shares shall be entitled to exercise all voting
rights with respect to all Escrowed Shares that are not released from escrow in
accordance with Section 3 hereof. All securities issued in exchange for the
Escrowed Shares (together with separate stock powers duly signed in blank, with
signatures guaranteed), if any, and all distributions and dividends (excluding
dividends in cash or property, other than stock dividends) made with respect to
the Escrowed Shares ("Related Property"), if any, shall be delivered forthwith
to the Escrow Agent, shall be held and delivered by the Escrow Agent together
with the Escrowed Shares in accordance with the terms of this Agreement and
shall constitute a part of the Escrowed Shares. All dividends in cash and
property, other than stock dividends made with respect to the Escrowed Shares,
shall be delivered to the record owner of the Escrowed Shares.
In the event of any merger, consolidation or other extraordinary
transaction (each an "Extraordinary Transaction") involving Territorial
Resources as a result of which all outstanding shares of common stock of
Territorial Resources are to be sold, exchanged for or converted into other
consideration, then (a) McCarroll shall have the right to determine whether or
not to exercise dissenters' rights of appraisal or other similar rights, if any
are then available, with respect to the Escrowed Shares and (b) any
consideration, whether consisting of other securities, cash or other assets, or
a combination of any of the foregoing, resulting from such Extraordinary
Transaction (and/or the exercise of any dissenters' rights of appraisal or
similar rights) shall constitute Escrowed Shares and Related Property, shall be
delivered to the Escrow Agent and shall be held by the Escrow Agent as Escrowed
Shares and Related Property. Any action to be taken with respect to the
conversion or exchange of Escrowed Shares and/or Related Property in connection
with such Extraordinary Transaction shall be taken by the Escrow Agent only upon
his receipt of written instructions delivered by McCarroll and reasonably
acceptable to Territorial Delaware. Any portion of such consideration
consisting of cash shall be invested and reinvested by the Escrow Agent only
pursuant to specific written instructions jointly executed by McCarroll and
Territorial Delaware.
3. RELEASE OF THE ESCROWED SHARES. The Escrow Agent shall maintain the
Escrowed Shares and any Related Property in escrow until the occurrence of any
of the following events, at which time (unless the parties agree otherwise) the
Escrowed Shares and the Related Property then held by him with respect to such
Escrowed Shares shall be disbursed by the Escrow Agent in the following manner:
(a) One Escrowed Certificate representing 100,000 Escrowed Shares (together
with all Related Property relating to such 100,000 Escrowed Shares in the
possession of the Escrow Agent) shall be released from escrow and delivered:
(i) to McCarroll within 30 days of the Escrow Agent's receipt of a
McCarroll Notice (as defined below) to the effect that a "Successful Test"
of a well on either Block B8/38 or Block B4/32 has been completed within
three (3) years of the date of this Agreement, and that he is therefore
entitled to receive such 100,000 Escrowed Shares and Related Property. A
"Successful Test" shall be defined as a test
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occurring within three years of the date of this Agreement in which the
average production rate from the well during a continuous 48-hour period
exceeds 500 barrels per day at well head flowing conditions which are
consistent with good oil field practice. Upon the completion in full of the
condition described in the this clause (i), Territorial Delaware shall have
no further right, title or interest in or to any such 100,000 Escrowed
Shares or Related Property; or
(ii) to Territorial Delaware within 30 days of the Escrow Agent's receipt
of a Territorial Delaware Notice to the effect that the condition described
in clause (i) of this Section 3(a) (the completion of a Successful Test of
a well on either Block B8/38 or Block B4/32 within three (3) years of the
date of this Agreement) has not occurred, and that Territorial Delaware is
therefore entitled to receive such 100,000 Escrowed Shares and Related
Property. McCarroll shall have no further right, title or interest in or
to any such 100,000 Escrowed Shares or Related Property in such event.
(b) One Escrowed Certificate representing 100,000 Escrowed Shares (together
with all Related Property relating to such 100,000 Escrowed Shares in the
possession of the Escrow Agent) shall be released from escrow and delivered:
(i) to McCarroll within 30 days of the Escrow Agent's receipt of a
McCarroll Notice (as defined below) to the effect that the drilling and
testing of another well (in addition to the well described in Section 3(a)
above) located on either Block B8/38 or Block B4/32 has been completed, and
that both (A) all of the other work required to be completed in order to
fulfill the work commitments through the end of the second year of the
First Obligation Period, as defined in the Block B8/38 Concession
Agreement, including any extensions of such second year (the "End of the
B8/38 Second Year"), has in fact been completed and (B) all of the other
work required to be completed in order to fulfill the work commitments
under the Block B4/32 Concession Agreement through the period ending at the
End of the B8/38 Second Year has been completed; provided, however, that if
Territorial Delaware elects not to complete the work described in this
clause (B) or not to fulfill its proportionate obligations with respect to
such work, then the requirement set forth in clause (B) shall be deemed to
have been fulfilled); and provided further that there shall be no
requirement for a Successful Test on this second well prior to release of
such 100,000 Escrowed Shares and Related Property in accordance with the
provisions of this clause (i). Such McCarroll Notice shall also state that
McCarroll is entitled to receive such 100,000 Escrowed Shares and Related
Property as a result of the completion in full of the condition described
in the preceding sentence. Upon the completion in full of the condition
described in the this clause (i), Territorial Delaware shall have no
further right, title or interest in or to any such 100,000 Escrowed Shares
or Related Property; or
(ii) to Territorial Delaware within 30 days of the Escrow Agent's receipt
of a Territorial Delaware Notice to the effect that the condition described
in clause (i) of this Section 3(b) (the drilling and testing of a second
well in accordance with the terms and conditions of such clause (i)) within
four (4) years of the date of this Agreement)
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has not occurred, and that Territorial Delaware is therefore entitled to
receive such 100,000 Escrowed Shares and Related Property. McCarroll shall
have no further right, title or interest in or to any such 100,000 Escrowed
Shares or Related Property in such event.
(c) One Escrowed Certificate representing 100,000 Escrowed Shares (together
with all Related Property relating to such 100,000 Escrowed Shares in the
possession of the Escrow Agent) shall be released from escrow and delivered:
(i) to McCarroll within 30 days of the Escrow Agent's receipt of a
McCarroll Notice (as defined below) to the effect that Commercial
Production, during a continuous 30- day period, of one or more wells on
either Block B8/38 or Block B4/32 has commenced, and that McCarroll is
therefore entitled to receive such 100,000 Escrowed Shares and Related
Property. As used herein, the term "Commercial Production" shall be
defined as production of either crude oil at an average daily rate of 1,000
barrels or natural gas at an average daily rate of 10 million cubic feet
(10 MMCF); or
(ii) to Territorial Delaware within 30 days of the Escrow agent's receipt
of a Territorial Delaware Notice to the effect that the condition described
in clause (i) of this Section 3(c) has not been fulfilled in full for any
reason within five (5) years of the date of this Agreement, and that
Territorial Delaware is therefore entitled to receive such 100,000 Escrowed
Shares and Related Property. McCarroll shall have no further right, title
or interest in or to any such 100,000 Escrowed Shares or Related Property
in such event.
4. MCCARROLL NOTICE AND RELATED MATTERS.
(a) Upon the occurrence of the condition described in clause (i) of
Sections 3(a), (b) or (c), McCarroll shall deliver written notice (the
"McCarroll Notice") to the Escrow Agent and to Territorial Delaware which
McCarroll Notice shall include the statements required in such clause (i).
Following receipt of such McCarroll Notice, in the event Territorial Delaware
determines in good faith that such condition has not occurred, then it shall
promptly (and in no event later than 15 days after its receipt of such McCarroll
Notice) notify the Escrow Agent and McCarroll in writing (a "Territorial
Delaware Notice") of such determination, whereupon McCarroll and Territorial
Delaware agree to meet and attempt to settle any disagreements with respect
thereto in accordance with the arbitration and other provisions of Section 6(c)
hereof.
(b) Upon the failure of the condition described in clause (i) of Sections
3(a), (b) or (c), Territorial Delaware shall deliver a Territorial Delaware
Notice to the Escrow Agent and to McCarroll which Territorial Delaware Notice
shall include the statements required in the related clause (ii). Following
receipt of such Territorial Delaware Notice, in the event McCarroll determines
in good faith that the same is incorrect or he otherwise disagrees in good faith
with the statements therein, then he shall promptly (and in no event later than
15 days after his receipt of such Territorial Delaware Notice) deliver a
McCarroll Notice to the Escrow
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Agent and Territorial Delaware of such determination or disagreement, whereupon
McCarroll and Territorial Delaware agree to meet and attempt to settle any
disagreements or disputes with respect thereto in accordance with the
arbitration and other provisions of Section 6(c) hereof.
(c) Notwithstanding the provisions of Section 3 hereof, in the event the
Escrow Agent has received contradicting or disputed instructions in a McCarroll
Notice and a Territorial Delaware Notice relating to the same Escrowed Shares
and Related Property, or he is otherwise made aware of any dispute with respect
to the release of any Escrowed Shares and Related Property, the Escrow Agent
shall continue to hold the Escrowed Shares and any Related Property relating to
such dispute in accordance with the other provisions of this Agreement, and
shall only release any of the same in accordance with the instruction of the
arbitrators as contemplated by Section 6(c) hereof or upon the joint written
instruction of both parties hereto, whichever he receives first.
5. CERTAIN MATTERS RELATING TO ESCROW AGENT.
(a) The Escrow Agent shall not be entitled to a fee in connection with his
holding the Escrowed Shares and any Related Property hereunder; provided,
however, that (i) in the event any party hereto requests the Escrow Agent, in
his capacity as escrow agent, take any action other than simply holding the
Escrowed Shares and any Related Property in connection herewith, the Escrow
Agent shall be entitled to a fee of $150 per hour for each hour of actual time
spent by him in connection with such request, which fee shall be paid by
Territorial Delaware; (ii) if any Escrowed Shares and Related Property continue
to be held by the Escrow Agent pursuant to this Agreement on or after August 1,
2003, then he shall be entitled to an additional fee for his services under this
Agreement equal to $250 per month during such period beyond August 1, 2003,
which fee shall be paid by Territorial Delaware; and (iii) the Escrow Agent
shall be entitled to joint and several compensation from the other parties
hereto for all out-of-pocket and other costs and expenses he shall incur
(including without limitation any costs and expenses incurred in connection with
his consulting with counsel as provided in the last sentence of Section 5(b),
below) with respect to the performance of his obligations under this Agreement,
some or all of which may be required, at the request of the Escrow Agent, to be
paid in advance.
(b) The Escrow Agent shall have no responsibility in his capacity as Escrow
Agent hereunder to any party hereto, except as specifically provided herein or
as he shall otherwise agree in writing, and shall not be responsible for
anything done or omitted to be done by him, except for his own gross negligence
or willful default. No action shall be commenced against the Escrow Agent, in
his capacity as the escrow agent hereunder, at law, in equity or otherwise as a
result of any action taken or thing done by the Escrow Agent pursuant to this
Agreement, or for any disbursement made as authorized herein, except in the
event of his own gross negligence or willful default. The Escrow Agent, in his
capacity as escrow agent, may consult with counsel of his own choice and shall
have full and complete authorization and protection for any action taken or
suffered by him hereunder in good faith and in accordance with the opinion of
such counsel.
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(c) The Escrow Agent undertakes to perform only such duties as are
expressly set forth herein. The Escrow Agent may rely and shall be protected in
acting or refraining from acting upon any written notice, instruction or request
furnished to him hereunder and believed by him to be genuine and to have been
signed or presented by the proper party or parties. From time to time, the
Escrow Agent may request, and the other parties hereto hereby agree to provide
promptly to him, such further notices, instructions or assurances as he may
reasonably determine in order to, and prior to, his performance of any duty or
obligation hereunder.
(d) The Escrow Agent may resign and be discharged from his duties or
obligations hereunder by giving notice to the other parties hereto in writing of
such resignation specifying a date no earlier than fifteen (15) days from the
date of such notice when such resignation shall take effect. Upon their mutual
written consent, Territorial Delaware and McCarroll may immediately remove the
Escrow Agent at any time and substitute another party agreed to by them as
Escrow Agent. Upon any such removal, the Escrow Agent shall promptly deliver
any Escrowed Shares and Related Property then in his possession to the party or
parties as directed jointly by Territorial Delaware and McCarroll. Thereafter,
and without further action, such removed Escrow Agent shall be discharged of all
liability hereunder. The Escrow Agent shall have no obligation to cause
interest to accrue or be paid on any funds constituting Related Property
delivered to him in accordance with the provisions of this Agreement, absent his
written agreement to the contrary, except as provided in the last sentence of
Section 2 hereof.
(e) The other parties hereto hereby agree jointly and severally to
indemnify, defend and hold harmless the Escrow Agent, in his capacity as escrow
agent hereunder, from and against any loss, liability, cost or expense
(including all legal expenses described herein) incurred without gross
negligence or bad faith on his part, arising out of or in connection with his
preparing, negotiating or entering into this Agreement and carrying out his
duties and rights hereunder, including the costs and expenses of defending
himself against any claim or liability in the premises.
(f) Each of McCarroll and Territorial Delaware acknowledges that Theodore
J. Lee has also acted as legal counsel to Territorial Delaware in connection
with the negotiation, preparation, execution and delivery of the Asset Purchase
Agreement and this Agreement, has acted and/or may in the future act as legal
counsel to either of the parties hereto or their affiliates, and is acting as
the Escrow Agent at the request of both of the other parties to this Agreement.
Each of McCarroll and Territorial, for such party and for all of such party's
affiliates, to the maximum extent permitted by law, hereby waives all claims of
conflict of interest or otherwise that may arise or exist as a result of
Theodore J. Lee also acting as the Escrow Agent pursuant to this Escrow
Agreement.
6. MISCELLANEOUS.
(a) This Agreement shall become effective as of the date hereof, and shall
continue in force until the final disbursement of all Escrowed Shares and
Related Property held by the Escrow Agent hereunder, or until terminated by an
instrument in writing signed by the parties hereto, whichever occurs first.
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(b) All notices, requests, demands, waivers and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally or mailed,
certified or registered mail with postage prepaid, or sent by telex, telegram or
telecopier, as follows (or at such other address or facsimile number for a party
as shall be specified by like notice):
if to McCarroll, at: If to Territorial Delaware, at:
Jimmy M. McCarroll Territorial Resources (Delaware), Inc.
McCarroll Energy, Inc. c/o Territorial Resources, Inc.
1030 Townplace 734 7th Avenue S.W., Suite 1345
Houston, Texas 77057-1942 Canada T2P 3P8
(Fax No.) 713.785.8245 (Fax No.) 403.233.7354
Attn: Daniel A. Mercier
if to the Escrow Agent, at:
Theodore J. Lee, Attorney at Law
3104 Edloe, Suite 204
Houston, Texas 77027
(Fax No.) 713.623.0990
(c) If any dispute or claim between or among the parties hereto arising out
of this Agreement, or the rights and duties of the parties arising out of this
Agreement, has not been resolved by mutual agreement on or before the 30th day
following the first notice of the subject matter of the dispute or claim from
one party to another, then any party to such dispute may refer the dispute to
arbitration under the following provisions: to refer a dispute to arbitration,
a disputing party must provide notice to the other parties hereto stating (i) a
general description of the dispute and (ii) that the dispute is being submitted
to arbitration pursuant to this clause. Each party to such dispute shall then
appoint one arbitrator. The two arbitrators so appointed shall endeavor to
promptly appoint a third arbitrator. If the two arbitrators have not designated
the third arbitrator by the 15th day following appointment of the second
arbitrator, or if a second arbitrator has not been designated by the 15th day
following the designation of the first, either party to such dispute may request
the American Arbitration Association to designate the remaining arbitrator(s).
If any arbitrator resigns, becomes incapacitated or otherwise refuses or fails
to serve or to continue to serve as an arbitrator, then whoever is entitled to
designate that arbitrator shall designate a successor. The arbitration shall be
conducted in Houston, Texas, or such other place as the parties to such dispute
may agree, using the Commercial Arbitration Rules of the American Arbitration
Association. The decisions of the arbitrators shall be final and binding on the
parties to such dispute and are not subject to appeal. The decisions of the
arbitrators may be enforced in any court of competent jurisdiction, and the
parties hereto authorize any such court to enter judgment on the arbitrators'
decisions. EACH PARTY AGREES THAT ARBITRATION UNDER THIS CLAUSE IS THE
EXCLUSIVE METHOD FOR RESOLVING ANY DISPUTE ARISING UNDER THIS AGREEMENT AND THAT
IT WILL NOT COMMENCE AN ACTION OR PROCEEDING BASED ON A DISPUTE, EXCEPT TO
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ENFORCE THE ARBITRATORS' DECISIONS AS PROVIDED IN THIS CLAUSE OR TO COMPEL THE
OTHER PARTY TO PARTICIPATE IN ARBITRATION UNDER THIS CLAUSE.
(d) Except as otherwise expressly provided in this Agreement, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and expenses
whether or not the transactions contemplated hereby are consummated; provided,
however, that except as otherwise expressly provided herein, all costs and
expenses of the Escrow Agent shall be paid jointly and severally by McCarroll
and Territorial Delaware.
(e) This Agreement, including all exhibits hereto, (i) constitutes the
entire agreement among the parties with respect to its subject matter and
supersedes all prior agreements and understandings, both written and oral,
between or among the parties hereto, their affiliates or any of them with
respect to such subject matter and (ii) shall not be assigned by operation of
law or otherwise without the express prior written consent of the other parties
hereto, except as otherwise provided herein.
(f) Subject to the provisions of Section 6(e), this Agreement shall inure
to the benefit of and be binding upon the parties and their respective
successors and assigns. Nothing in this Agreement is intended to confer on any
person other than the parties to this Agreement or their respective successors
and assigns any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
(g) The descriptive headings of the articles, sections, subsections,
exhibits and schedules of this Agreement are inserted for convenience only, do
not constitute a part of this Agreement and shall not affect in any way the
meaning or interpretation of this Agreement.
(h) This Agreement may be executed in counterparts, each of which shall be
deemed to be an original, and all of which together shall be deemed to be one
and the same instrument. Execution of this Agreement may be evidenced by a
signature delivered by or on behalf of such party via facsimile, which facsimile
signature shall be confirmed by telephone, and once so confirmed, shall
constitute an effective signature of the party on whose behalf such facsimile
signature is provided.
(i) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to the laws that might
otherwise govern under principles of conflicts of laws applicable thereto.
(j) If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid,
void, unenforceable or against
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its regulatory policy, the remainder of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, each of the parties have caused this Agreement to be
duly executed by or on behalf of such party, all as of the date first written
above.
"Territorial Delaware" TERRITORIAL RESOURCES (DELAWARE), INC.
By: /s/ Daniel A. Mercier
----------------------
Name: Daniel A. Mercier
As Its Authorized: President
"McCarroll" JIMMY M. MCCARROLL
/s/ Jimmy M. McCarroll
----------------------
"Escrow Agent" THEODORE J. LEE, in his capacity
as Escrow Agent
/s/ Theodore J. Lee
-------------------
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