Exhibit 10.36
August 22, 2000
Devon Energy Corporation
20 North Broadway
Suite 1500
Oklahoma City, Oklahoma 73102
Attention: Steve Cromwell
James Strawn
Gentlemen:
Reference is made to that certain Asset Purchase
Agreement dated October 22, 1994 between Freeport-McMoRan
Resource Partners, Limited Partnership, a predecessor of
Freeport-McMoRan Sulphur LLC ("FSC") and Pennzoil Company
("Pennzoil"), a predecessor of Devon Energy Corporation
("Devon"), (as amended, the "Purchase Agreement").
Under Section 2.7(a) of the Purchase Agreement, FSC
owes certain obligations to Devon (the "Obligations"). FSC
agrees to pay to Devon an amount equal to Nine Million Five
Hundred Thousand and No/100 Dollars ($9,500,000.00) (the
"FSC Payment") in immediately available funds on a mutually
agreed business day (the "Closing Date") in full and
complete satisfaction of the Obligations; provided that the
Closing Date shall not be more than ten (10) business days
after the date hereof. Devon hereby agrees that all
indebtedness, duties, commitments and other obligations of
FSC or any other person or entity arising under or in
connection with the Obligations shall be satisfied,
terminated and released upon Devon's receipt of the FSC
Payment. Devon further agrees that all liens and security
interests granted by FSC or any other person or entity in
favor of Devon securing the Obligations shall be terminated
and released upon Devon's receipt of the FSC Payment, and
Devon agrees to execute and deliver to FSC, any and all
termination statements, mortgage releases, assignment
releases and other agreements, in form and substance
reasonably satisfactory to FSC and Devon, and further agrees
to do such further acts as FSC may from time to time
reasonably request to more effectively evidence or give
effect to the terminations and releases contemplated hereby.
UNDER SECTIONS 2.3(f)(iii) AND 5.7(a)(i)-(iv) OF THE
PURCHASE AGREEMENT, DEVON RETAINED CERTAIN LIABILITIES MORE
FULLY DESCRIBED THEREIN (THE "LIABILITIES"). DEVON AGREES
TO PAY AN AMOUNT EQUAL TO THREE MILLION FIVE HUNDRED
THOUSAND AND NO/100 DOLLARS ($3,500,000.00) (THE "DEVON
PAYMENT") IN IMMEDIATELY AVAILABLE FUNDS ON THE CLOSING DATE
AS CONSIDERATION FOR FSC'S ASSUMPTION OF ALL OF DEVON'S
OBLIGATIONS ARISING UNDER OR IN CONNECTION WITH THE
LIABILITIES, AND, EFFECTIVE UPON FSC'S RECEIPT OF THE DEVON
PAYMENT, FSC SHALL ASSUME ALL OF DEVON'S OBLIGATIONS ARISING
UNDER OR IN CONNECTION WITH THE LIABILITIES AND FSC SHALL
COMPLETELY RELEASE, FOREVER DISCHARGE, INDEMNIFY AND HOLD
HARMLESS DEVON, ITS PARENT, ITS AND THEIR SUBSIDIARIES,
AFFILIATES, GENERAL AND LIMITED PARTNERS, ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS AND THEIR RESPECTIVE
AFFILIATES, HEIRS, SUCCESSORS AND ASSIGNS (EACH A "DEVON
PARTY") FROM AND AGAINST ANY AND ALL PAST, PRESENT AND
FUTURE CLAIMS, DEMANDS, AND CAUSES OF ACTION, DEBTS,
OBLIGATIONS, DAMAGES, COSTS, EXPENSES, ATTORNEY'S FEES,
LIABILITIES, LAW SUITS, AND JUDGMENTS OF ANY NATURE
WHATSOEVER, WHETHER KNOWN OR UNKNOWN, BASED ON STATUTE,
EQUITY, TORT, CONTRACT OR ANY OTHER THEORY OF RECOVERY,
WHICH IS IN ANY CAPACITY CLAIMED, HELD OR POSSESSED BY FSC
OR ASSERTED BY ANY OTHER PERSON OR ENTITY AGAINST ANY DEVON
PARTY RELATING TO OR ARISING UNDER OR IN CONNECTION WITH THE
LIABILITIES REGARDLESS OF THE JOINT, CONCURRENT, ACTIVE OR
PASSIVE NEGLIGENCE OR FAULT (INCLUDING STRICT LIABILITY) OF
ANY DEVON PARTY.
In order to secure its indemnification obligations
under the preceding paragraph, FSC agrees to provide
collateral security (the "Collateral") in an amount not to
exceed the Maximum Amount (as hereinafter defined) for a
period of ten years from and after the date hereof in the
form from time to time, and at all times of either (a) a
performance bond issued by an institution acceptable to
Devon, (b) a stand-by letter of credit issued by a financial
institution reasonably acceptable to Devon, (c) cash
deposited in an escrow, collateral or trust account in form
and substance reasonably acceptable to Devon, or (d) such
other collateral or performance guaranty as may be
reasonably acceptable to Devon, which Collateral shall, in
each case, provide that in the event a claim is made against
Devon with respect to the Liabilities, Devon may draw upon
such collateral in an amount not to exceed the lesser of the
amount of such claim or the Maximum Amount. As used herein,
"Maximum Amount" means at any time an amount equal to
$3,500,000.00 as reduced from time to time without
duplication by the amounts set forth opposite the assets
listed on Schedule A attached hereto in accordance with the
following paragraph. On the Closing Date, FSC shall also
cause McMoRan Exploration Co., a Delaware corporation
("MMR") and the owner of 100% of the equity ownership
interests of FSC, to execute and deliver a guaranty in form
attached, pursuant to which MMR guarantees FSC's obligations
with respect to the Liabilities; provided that Devon shall
be required to first exhaust its remedies against the
Collateral described above before it exercises its remedies
under the MMR guaranty.
Upon (a) the remediation of the Known Remedial
Conditions (as defined in the Purchase Agreement) with
respect to any asset and Known Remedial Condition described
in Sections 5.7(a)(i)-(iv) of the Purchase Agreement, or the
elimination or expiration of the risk associated with the
Assumed Liabilities (as defined in the Purchase Agreement)
with respect to the asset and Assumed Liabilities described
in Section 2.3(f)(iii) of the Purchase Agreement, as
described in greater detail on Schedule A attached hereto,
in each case to the reasonable satisfaction of Devon, or (b)
the sale or other disposition of an asset listed on Schedule
A to a buyer who agrees to assume FSC's indemnity
obligations hereunder and to provide the collateral
identified in the preceding paragraph or other substitute
collateral reasonably satisfactory to Devon securing such
obligations, the Maximum Amount shall be reduced in each
case by the amount set forth opposite the asset or risk so
remediated, eliminated or transferred.
Section 11.1(c) of the Purchase Agreement provides that
FSC may notify Devon of the existence of an Environmental
Liability that requires remediation. As an inducement to
Devon's execution hereof, FSC represents that it has made no
notification to Devon under Section 11.1(c) of the Purchase
Agreement concerning an Environmental Liability or Loss for
which FSC will request indemnification from Devon or for
which Devon shall be responsible.
Devon hereby represents and warrants to FSC that Devon
is and shall be as of the Closing Date the successor to
Pennzoil's right, title and interest in and to the Purchase
Agreement and the Obligations, that Devon has not
transferred and shall not transfer prior to the Closing Date
all or any portion thereof to any other person or entity,
and that Devon has and will have on the Closing Date the
full legal right, power and authority to enter into and
perform its obligations pursuant to the agreements contained
herein without the consent or authority of any other person
or entity. FSC hereby represents and warrants to Devon that
FSC has and will have on the Closing Date the full legal
right, power and authority to enter into and perform its
obligations pursuant to the agreements contained herein
without the consent or authority of any other person or
entity.
THE AGREEMENTS CONTAINED HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE
STATE OF DELAWARE, and shall constitute the entire agreement
between the parties with respect to the matters identified
herein, which may only be amended by written agreement
executed by both parties or their respective successors and
assigns.
By the execution of this letter agreement in the space
provided below, Devon agrees to the terms hereof.
Very truly yours,
Freeport-McMoRan Sulphur LLC
By:__________________________
Name:_______________________
Title:________________________
ACKNOWLEDGED AND AGREED as of
this ___ day of August, 2000.
Devon Energy Corporation
By:__________________________
Name: _______________________
Title: ________________________
