SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Amendment No. 1
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
March 5, 1998
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Date of Report (Date of earliest event reported)
AMERICAN RESOURCES OF DELAWARE, INC.
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(Exact name of Registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-21472 86-0713506
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(Commission File Number) (IRS Employer
Identification No.)
160 Morgan Street
P. O. Box 87
Versailles, Kentucky 40383
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(Address of principal executive offices) (Zip Code)
(606) 873-5455
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(Registrant's Telephone Number, including Area Code)
Not Applicable
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(Former name or former address, if changed since last report)
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Item 1. Changes in Control of Registrant. Not Applicable.
Item 2. Acquisition or Disposition of Assets.
Purchase of Assets of TECO:
---------------------------
On March 5, 1998, the Registrant, through its wholly
owned subsidiary, American Resources Offshore, Inc. ("ARO")
acquired offshore Gulf of Mexico developed and undeveloped oil
and gas properties, equipment, pipelines, partnership and joint
venture interest from TECO Oil & Gas, Inc. ("TECO"). The
agreement to purchase the TECO assets was previously reported by
the Registrant on Form 8-K which was filed on January 16, 1998.
The purpose of this Form 8-K/A is to report the closing of the
transaction which was effected pursuant to a Purchase and Sale
Agreement (attached hereto as Exhibit 10.89 and incorporated
herein by reference) entered into by and between the Registrant,
ARO, TECO and TECO Energy, Inc. As consideration for the assets,
the Registrant paid Fifty Seven Million Six Hundred Eighty
Thousand Dollars ($57,680,000), of which One Million Three
Hundred Thousand Dollars ($1,300,000) was paid in cash upon
execution of the Purchase and Sale Agreement, and Thirty Seven
Million Eight Hundred Eighty Dollars ($37,880,000) was paid from
funds borrowed under the Registrant's existing credit facility
and a new facility with DNB Energy Assets, Inc. (a company owned
by Den norske Bank, AS), and the balance of Eighteen Million Five
Hundred Thousand Dollars ($18,500,000) was in the form of a
promissory note (the "Note") in favor of TECO. A copy of the
Note is attached hereto as Exhibit 10.90 and incorporated herein
by reference. The Note bears interest at the initial rate of 10%
per annum and increases Two Percent (2%) each quarter commencing
July 1, 1998, with a maximum interest rate of Eighteen Percent
(18%). The Note matures on October 1, 1998 and is secured by a
lien on all properties of the Registrant and its subsidiaries.
In addition to the Note, the parties entered into a warrant
agreement (the "Warrant Agreement") granting TECO warrants to
acquire Six Hundred Thousand (600,000) shares of common stock of
the Registrant (the "First Warrants") at a price of $2.67 per
share if the Note is not paid in full by October 1, 1998.
Additionally, the Warrant Agreement grants TECO warrants to
acquire common stock equal to Ten Percent (10%) of the
outstanding common stock and options granted by the Registrant to
acquire common stock if the Note is not paid in full by October
1, 1998, such percentage increasing by an additional Five Percent
(5%) if the Note is not paid in full by January 1, 1999, and by
an additional Five Percent (5%) if the Note is not paid in full
by April 1, 1999 (collectively, the "Secondary Warrants"). The
price per share of common stock evidenced by the Secondary
Warrants is $.00001. The Warrant Agreement is attached hereto as
Exhibit 10.91 and incorporated herein by reference.
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As of the date of this Form 8-K/A, it is impracticable for
Registrant to provide the financial information required by Item
7 of Form 8-K. The required financial statements will be filed as
an amendment to this Form 8-K/A. Such filing will be made as soon
as practicable but not later than 60 days after this Form 8-K/A
is filed.
Item 3. Bankruptcy Receivership. Not Applicable.
Item 4. Change in Registrant's Certified Accountant. Not
Applicable.
Item 5. Other Events. Not Applicable.
Item 6. Resignation of Registrant's Directors. Not Applicable.
Item 7. Financial Statements and Exhibits.
Exhibit 10.89 Purchase and Sale Agreement between
American Resources of Delaware, Inc.,
American Resources Offshore, Inc., TECO
Oil & Gas, Inc. and TECO Energy, Inc.
Exhibit 10.90 Promissory Note from American Resources
Offshore, Inc. in favor of TECO Oil &
Gas, Inc.
Exhibit 10.91 Warrant Agreement between American
Resources of Delaware, Inc. and TECO Oil
& Gas, Inc.
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SIGNATURE
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.
AMERICAN RESOURCES OF DELAWARE, INC.
By: /s/Ralph Currie
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Its: Chief Financial Officer
Dated: March 16, 1998
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Exhibit 10.89
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PURCHASE AND SALE AGREEMENT
between
TECO OIL & GAS, INC.
and
AMERICAN RESOURCES OFFSHORE, INC.
and, for the limited purposes of Sections 17.1 and 17.2,
TECO ENERGY, INC.
and
AMERICAN RESOURCES OF DELAWARE, INC.
February 17, 1998
=================================================================
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PURCHASE AND SALE AGREEMENT
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . .1
ARTICLE 2
PURCHASE AND SALE
2.1 Purchase and Sale of Assets. . . . . . . . . . . . . .7
2.2 Quitclaimed Assets . . . . . . . . . . . . . . . . . .8
2.3 Excluded Assets. . . . . . . . . . . . . . . . . . . .9
ARTICLE 3
PURCHASE PRICE
3.1 Purchase Price; Method of Payment; Deposit . . . . . .9
3.2 Payment of Purchase Price. . . . . . . . . . . . . . 10
3.3 Allocation of Purchase Price . . . . . . . . . . . . 11
ARTICLE 4
TITLE MATTERS
4.1 Definition of Marketable Title . . . . . . . . . . . 11
4.2 Definition of Permitted Encumbrances . . . . . . . . 12
4.3 Notice of Title Defect . . . . . . . . . . . . . . . 13
4.4 Remedies for Title Defects; Title Increases. . . . . 13
4.5 Value of Property or Title Defect. . . . . . . . . . 14
4.6 Consents . . . . . . . . . . . . . . . . . . . . . . 14
4.7 Casualty Events. . . . . . . . . . . . . . . . . . . 15
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
5.1 Existence. . . . . . . . . . . . . . . . . . . . . . 16
5.2 Power. . . . . . . . . . . . . . . . . . . . . . . . 16
5.3 Authorization. . . . . . . . . . . . . . . . . . . . 16
5.4 Brokers. . . . . . . . . . . . . . . . . . . . . . . 16
5.5 Foreign Person . . . . . . . . . . . . . . . . . . . 16
5.6 Bankruptcy . . . . . . . . . . . . . . . . . . . . . 16
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5.7 Litigation . . . . . . . . . . . . . . . . . . . . . 17
5.8 Governmental Qualification . . . . . . . . . . . . . 17
5.9 Consents . . . . . . . . . . . . . . . . . . . . . . 17
5.10 Leases . . . . . . . . . . . . . . . . . . . . . . . 17
5.11 Contracts. . . . . . . . . . . . . . . . . . . . . . 17
5.12 Proceeds of Production . . . . . . . . . . . . . . . 18
5.13 Invoices . . . . . . . . . . . . . . . . . . . . . . 18
5.14 Gas Imbalances . . . . . . . . . . . . . . . . . . . 18
5.15 Gas Prepayments. . . . . . . . . . . . . . . . . . . 18
5.16 Access . . . . . . . . . . . . . . . . . . . . . . . 18
5.17 Wells. . . . . . . . . . . . . . . . . . . . . . . . 18
5.18 Permits. . . . . . . . . . . . . . . . . . . . . . . 18
5.19 Environmental Laws . . . . . . . . . . . . . . . . . 19
5.20 Insurance. . . . . . . . . . . . . . . . . . . . . . 19
5.21 AFEs . . . . . . . . . . . . . . . . . . . . . . . . 19
5.22 Casualty . . . . . . . . . . . . . . . . . . . . . . 19
5.23 Title. . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
6.1 Existence. . . . . . . . . . . . . . . . . . . . . . 19
6.2 Power. . . . . . . . . . . . . . . . . . . . . . . . 19
6.3 Authorization. . . . . . . . . . . . . . . . . . . . 19
6.4 Brokers. . . . . . . . . . . . . . . . . . . . . . . 20
6.5 Securities Laws. . . . . . . . . . . . . . . . . . . 20
6.6 Financial Statements . . . . . . . . . . . . . . . . 20
6.7 Bankruptcy . . . . . . . . . . . . . . . . . . . . . 20
6.8 Governmental Qualification . . . . . . . . . . . . . 20
ARTICLE 7
PRE-CLOSING COVENANTS OF SELLER
7.1 Operations . . . . . . . . . . . . . . . . . . . . . 20
7.2 Access . . . . . . . . . . . . . . . . . . . . . . . 21
7.3 No Shop. . . . . . . . . . . . . . . . . . . . . . . 21
7.4 Estimates of Closing Payments. . . . . . . . . . . . 21
ARTICLE 8
PRE-CLOSING COVENANTS OF PURCHASER
8.1 Confidentiality. . . . . . . . . . . . . . . . . . . 21
8.2 Return of Data . . . . . . . . . . . . . . . . . . . 21
8.3 Indemnity Regarding Access . . . . . . . . . . . . . 21
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ARTICLE 9
SELLER'S CONDITIONS OF CLOSING
9.1 Representations and Warranties . . . . . . . . . . . 22
9.2 Performance. . . . . . . . . . . . . . . . . . . . . 22
9.3 Proceedings. . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 10
PURCHASER'S CONDITIONS OF CLOSING
10.1 Representations and Warranties . . . . . . . . . . . 22
10.2 Performance. . . . . . . . . . . . . . . . . . . . . 22
10.3 Proceedings. . . . . . . . . . . . . . . . . . . . . 22
10.4 Casualty Event . . . . . . . . . . . . . . . . . . . 22
ARTICLE 11
CLOSING
11.1 Time and Place of Closing. . . . . . . . . . . . . . 23
11.2 Closing Obligations. . . . . . . . . . . . . . . . . 23
ARTICLE 12
POST-CLOSING COVENANTS
12.1 Allocation of Revenues . . . . . . . . . . . . . . . 24
12.2 Allocation of Expenses . . . . . . . . . . . . . . . 24
12.3 Sales Taxes. . . . . . . . . . . . . . . . . . . . . 25
12.4 Recordation of Assignment. . . . . . . . . . . . . . 25
12.5 Access to Employees. . . . . . . . . . . . . . . . . 25
12.6 Audit. . . . . . . . . . . . . . . . . . . . . . . . 25
12.7 Further Assurances . . . . . . . . . . . . . . . . . 26
12.8 Confidentiality. . . . . . . . . . . . . . . . . . . 26
ARTICLE 13
INDEMNIFICATION
13.1 Assumed Obligations. . . . . . . . . . . . . . . . . 26
13.2 Indemnification. . . . . . . . . . . . . . . . . . . 26
13.3 Limitations on Indemnification . . . . . . . . . . . 28
ARTICLE 14
INDEPENDENT INVESTIGATION AND DISCLAIMER
14.1 Independent Investigation and Disclaimer . . . . . . 29
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ARTICLE 15
TERMINATION
15.1 Right of Termination . . . . . . . . . . . . . . . . 30
15.2 Effect of Termination. . . . . . . . . . . . . . . . 31
ARTICLE 16
ARBITRATION
16.1 Disputes . . . . . . . . . . . . . . . . . . . . . . 31
16.2 Arbitration. . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 17
PARENT GUARANTIES
17.1 Guaranty by Seller's Parent. . . . . . . . . . . . . 32
17.2 Guaranty by Purchaser's Parent . . . . . . . . . . . 32
ARTICLE 18
GENERAL PROVISIONS
18.1 Governing Law. . . . . . . . . . . . . . . . . . . . 33
18.2 Rules of Construction. . . . . . . . . . . . . . . . 33
18.3 Entire Agreement; Amendments . . . . . . . . . . . . 33
18.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . 33
18.5 Transfers. . . . . . . . . . . . . . . . . . . . . . 33
18.6 Notices. . . . . . . . . . . . . . . . . . . . . . . 34
18.7 Expenses . . . . . . . . . . . . . . . . . . . . . . 35
18.8 Severability . . . . . . . . . . . . . . . . . . . . 35
18.9 Publicity. . . . . . . . . . . . . . . . . . . . . . 35
18.10 Specific Performance . . . . . . . . . . . . . . . . 35
18.11 CONSEQUENTIAL AND PUNITIVE DAMAGES . . . . . . . . . 35
18.12 No Third-Party Beneficiary . . . . . . . . . . . . . 35
18.13 Counterparts . . . . . . . . . . . . . . . . . . . . 36
EXHIBITS
2.1(a) Properties
2.1(e)(iv) Seismic Licenses
2.1(e)(v) Contracts
2.1(l) Quitclaimed Assets
3.2(b) Terms of Loan
5.21 Outstanding AFEs
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PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this "AGREEMENT") is
entered into on February 17, 1998 (the "EXECUTION DATE") by and
between TECO OIL & GAS, INC., a Florida corporation formerly
known as "TECO Gas & Oil, Inc." ("SELLER"), and AMERICAN
RESOURCES OFFSHORE, INC., a Delaware corporation ("PURCHASER")
(collectively, the "PARTIES"). In addition, this Agreement is
also entered into by TECO ENERGY, INC., a Florida corporation
("SELLER'S PARENT"), Seller's parent company, and by AMERICAN
RESOURCES OF DELAWARE, INC., a Delaware corporation ("PURCHASER'S
PARENT"), Purchaser's parent company, for the limited purposes of
Sections 17.1 and 17.2, respectively.
RECITALS
Seller desires to sell to Purchaser, and Purchaser desires
to purchase from Seller, certain Hydrocarbon properties and
related assets on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, for and in consideration of the mutual
agreements contained herein, Seller and Purchaser hereby agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. As used herein, the following terms have
the following respective meanings set forth below or in the
provision referenced below (and grammatical variants of such
terms have correlative meanings):
AAA - Section 16.2(a).
AGREEMENT - introductory paragraph.
ALLOCATED VALUE - Section 4.5.
ARBITRATOR - Section 16.2(a).
ASSETS - Section 2.1.
ASSIGNMENT - Section 11.2(a).
ASSUMED OBLIGATIONS - Section 13.1.
ATTRIBUTABLE - reasonably and properly allocable or
attributable, using applicable rules of allocability,
attribution or causation.
BUSINESS DAY - any day other than Saturday or Sunday on
which national banking associations in Tampa, Florida and
Houston, Texas are open for business.
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CASUALTY EVENT - with respect to any Asset, (a) a fire
or other catastrophic casualty event affecting such Asset,
or (b) the taking of such Asset by a Governmental Authority
through condemnation or eminent domain.
CLAIM NOTICE - Section 13.2(c)(ii).
CLOSING - Section 11.1.
CLOSING DATE - Section 11.1.
CODE - Internal Revenue Code of 1986.
COMMERCIALLY REASONABLE EFFORTS - efforts that would be
undertaken by a reasonable, similarly-situated participant
in the oil and gas industry, taking into account all
relevant commercial, legal and other considerations;
provided, however, that ACommercially Reasonable Efforts@
shall not require a Party to incur any out-of-pocket cost or
expense in connection therewith.
CONFIDENTIALITY AGREEMENT - Confidentiality Agreement,
dated December 19, 1997, between Seller and Purchaser.
CONTRACTS - Section 2.1(e).
CONTROL - the possession, directly or indirectly,
through one or more intermediaries, of (a) 50% or more of
the equity interests in an Entity, or (b) the power or
authority, through ownership of voting securities, by
contract or otherwise, to exercise a controlling influence
over the management of the Entity.
DEPOSIT - Section 3.1(c).
DISPUTE - Section 16.1.
EASEMENT - easement, right-of-way or servitude.
EFFECTIVE DATE - 12:01 a.m. Central Standard Time on
December 1, 1997.
ENCUMBRANCE - mortgage, deed of trust, lien, privilege,
security interest, pledge, collateral assignment,
conditional sales arrangement or other encumbrance.
ENTITY - a corporation, general partnership (including
a limited liability partnership), limited partnership, joint
venture, limited liability company, trust, estate,
Governmental Authority or other entity.
ENVIRONMENTAL LAWS - all Laws or Orders of any
Governmental Authority pertaining to health, the
environment, wildlife or natural resources, including the
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Clean Air Act; the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980; the Federal Water
Pollution Control Act or Clean Water Act; the Rivers and
Harbors Act of 1899; the Occupational Safety and Health Act
of 1970; the Resource Conservation and Recovery Act of 1976;
the Safe Drinking Water Act; the Toxic Substances Control
Act; the Hazardous & Solid Waste Amendments Act of 1984; the
Superfund Amendments and Reauthorization Act of 1986; the
Hazardous Materials Transportation Act; and state and local
Laws, including common law, pertaining to health, the
environment, wildlife or natural resources.
EXCLUDED ASSETS - Section 2.3.
EXECUTION DATE - introductory paragraph.
GAAP - generally accepted accounting principles
consistently applied.
GOVERNMENTAL AUTHORITY (or GOVERNMENTAL) - a federal,
state, tribal or local governmental body, agency, division,
board, department, commission, court or other authority,
including the MMS.
HED - Houston Energy & Development, Inc., a Texas
corporation.
HELIS - The William G. Helis Company, L.L.C., a
Louisiana limited liability company.
HOUSTON OFFICE - Seller's office at 1001 Fannin, Suite
220, Houston, Texas.
HYDROCARBON - gas, oil, casinghead gas, drip gasoline,
natural gasoline and all other liquid and gaseous
hydrocarbons.
INDEMNIFIED PERSON - Section 13.2(c)(i).
INDEMNIFY - indemnify, protect, defend, release and
hold harmless.
INDEMNIFYING PARTY - Section 13.2(c)(i).
INTERIM PERIOD - the period from the Execution Date
through the Closing Date.
IP PETROLEUM - IP Petroleum Company, Inc., a Delaware
corporation.
KNOWLEDGE - with respect to a Party, the current actual
knowledge of the directors, officers and employees of such
Party, with no obligation to conduct any investigation to
confirm the accuracy of such knowledge; provided, however,
that a Party's Knowledge shall also be deemed to include the
following types of knowledge: (a) knowledge as to the
contents of any notice or other written communication
actually received by such Party, even if such communication
was never opened or
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read by a director, officer or employee of such Party; and
(b) knowledge that a Party would have acquired if, after
having actually received a notice or other written
communication, such Party had sought additional information
regarding the subject matter thereof from the Person who
sent the communication (but only to the extent that a
reasonable, similarly-situated Person receiving such a
communication would have sought such additional
information).
LAW - a constitutional provision, statute, act, code,
regulation, rule, ordinance, court decision, common law, or
other law of a Governmental Authority.
LEASES - Section 2.1(a).
LOAN DOCUMENTS - Section 3.2(b).
LOSSES - losses; liabilities; demands; claims; causes
of action; Proceedings; assessments; cleanup, remediation
and restoration obligations; judgments; awards; damages;
natural resource damages; fines; fees; penalties; and costs
and expenses (including litigation costs and attorneys= and
experts= fees and expenses).
LOV PROGRAM - the program established pursuant to the
LOV Program Agreement.
LOV PROGRAM AGREEMENT - Program Agreement, dated as of
January 1, 1994, among Louisiana Offshore Ventures, Seller,
Helis, Browning Offshore, Inc. and IP Petroleum.
MARKETABLE TITLE - Section 4.1.
MMS - United States Minerals Management Service.
NOTICE PERIOD - Section 13.2(c)(ii).
ORDER - a Governmental or arbitral order, judgment,
ruling, decree, decision, notice, writ, injunction or award.
PARTY - introductory paragraph.
PENDING MMS CONSENTS - Section 4.6(c).
PERMIT - a Governmental permit, certificate, license,
franchise or authorization.
PERMITTED ENCUMBRANCES - Section 4.2.
PERSON - a natural person or an Entity
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PLATFORMS - Section 2.1(b).
POST-CLOSING MMS CONSENTS - Section 4.6(d).
PROCEEDING - a judicial, administrative or arbitral
proceeding, including a lawsuit or Governmental
investigation.
PROGRAM INTEREST CONSENTS - Section 4.6(a).
PROPERTIES - Section 2.1(a).
PURCHASE PRICE - Section 3.1(a).
PURCHASER - introductory paragraph.
PURCHASER'S AFFILIATES - (a) Purchaser's Parent; (b)
any other Entity that Controls, is Controlled by, or is
under common Control with, Purchaser; (c) any director,
officer or employee of Purchaser or of an Entity described
in clause (a) or (b) of this definition; and (d) any agent,
consultant or representative that Purchaser has engaged in
connection with the ownership or operation of the Assets or
the transactions contemplated hereby.
PURCHASER'S PARENT - introductory paragraph.
QUITCLAIMED ASSETS - Section 2.1(l).
RECORDS - Section 2.1(k).
RESERVE MATTERS - the existence or extent of
Hydrocarbon reserves; the recoverability of (or the cost of
recovering) any such reserves; the value of such reserves;
any product pricing assumptions; the ability to sell
Hydrocarbon production after the Closing; and geological,
geophysical and seismic matters.
SECURITIES LAWS - the Securities Act of 1933, the
Securities Exchange Act of 1934, and all other Laws
concerning or regulating the sale or registration of
securities.
SEISMIC LICENSES - Section 2.1(e)(iv).
SEISMIC LICENSE CONSENTS - Section 4.6(b).
SELLER - introductory paragraph.
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SELLER'S AFFILIATES - (a) Seller's Parent; (b) any
other Entity that Controls, is Controlled by, or is under
common Control with, Seller; (c) any director, officer or
employee of Seller or of an Entity described in clause (a)
or (b) of this definition; and (d) any agent, consultant or
representative that Seller has engaged in connection with
the ownership or operation of the Assets or the transactions
contemplated hereby.
SELLER'S PARENT - introductory paragraph.
T3D PARTNERSHIP - Texas 3D Ventures, L.P., a Texas
limited partnership.
T3D PARTNERSHIP AGREEMENT - Agreement of Limited
Partnership of the T3D Partnership, dated as of April 1,
1995, among HED, as general partner, and Seller, Helis and
IP Petroleum, as limited partners.
T3D PROGRAM - the program established pursuant to the
T3D Program Agreement.
T3D PROGRAM AGREEMENT - Program Agreement, dated as of
April 1, 1995, among Seller, Helis, HED, IP Petroleum, MG
Oil & Gas Corp. and T3D.
TAMPA OFFICE - Seller's office at 702 North Franklin
Street, Tampa, Florida.
THIRD PARTY - a Person other than Seller, Seller's
Affiliates, Purchaser, Purchaser's Affiliates or a
Governmental Authority.
THIRD PARTY LOSS - a Loss that is asserted by a Third
Party or a Governmental Authority.
TITLE DEADLINE - Section 4.3.
TITLE DEFECT - Section 4.3.
TITLE DEFECT ADJUSTMENT AMOUNT - Section 4.4(b)(ii).
TITLE DEFECT VALUE - Section 4.3.
TITLE INCREASE - Section 4.4(c).
TITLE INCREASE ADJUSTMENT AMOUNT - Section 4.4(c).
TRANSFER - a sale, assignment, transfer, conveyance,
gift, exchange or other disposition (including an assignment
of contractual rights or a delegation of contractual
obligations), whether voluntary, involuntary or by operation
of Law.
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ARTICLE 2
PURCHASE AND SALE
2.1 PURCHASE AND SALE OF ASSETS. On the Closing Date, but
effective as of the Effective Date, subject to Sections 2.2 and
2.3 and the other provisions of this Agreement, Seller agrees to
sell, Transfer and deliver to Purchaser, and Purchaser agrees to
purchase and pay for, all of Seller's right, title and interest
in and to the following assets (the "ASSETS"):
(a) the Hydrocarbon properties described on
Exhibit 2.1(a), together with (i) all of Seller's right,
title and interest (including record title, operating
rights, overriding royalties, net profits interests and all
other types of interests) in the leases creating such
Hydrocarbon properties (the "LEASES"), and (ii) all of
Seller's right, title and interest in respect of any pooled,
communitized or unitized acreage of which any of such
Hydrocarbon properties is a part (the assets described in
this Section 2.1(a) are referred to collectively herein as
the "PROPERTIES");
(b) all platforms that are located on, or presently
used in connection with, the drilling for, or operation,
production, treatment or transportation of, Hydrocarbons
from the Properties (the "PLATFORMS");
(c) all wells, wellbores, pipe, pipelines, gathering
lines, compressors, materials, inventory, facilities (other
than Platforms), supplies and equipment and any and all
other personal, real, movable and immovable property,
fixtures or equipment that are located on, or presently used
in connection with, the drilling for, or operation,
production, treatment or transportation of, Hydrocarbons
from the Properties, and any replacements, attachments or
accessories now or hereafter attached, added or affixed;
(d) all Hydrocarbons produced on and after the
Effective Date from the Properties;
(e) all contracts and agreements (other than Leases)
that are Attributable to the ownership or operation of the
Assets, including the following:
(i) the LOV Program Agreement;
(ii) the T3D Program Agreement;
(iii) the T3D Partnership Agreement;
(iv) Seller's direct or indirect interest (through
the LOV Program Agreement, the T3D Program Agreement
and the T3D Partnership) in the seismic data licenses
described on Exhibit 2.1(e)(iv) (the "SEISMIC
LICENSES");
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(v) the contracts and agreements that are listed
on Exhibit 2.1(e)(v); and
(vi) any other operating agreements, participation
agreements, unit, pooling and communitization
agreements and declarations, Hydrocarbon purchase and
sale agreements, farmin or farmout agreements, bottom-
hole contribution agreements, balancing agreements,
processing agreements, gathering agreements,
compression agreements, transportation agreements, and
any other contracts and agreements that are
Attributable to the ownership or operation of the
Assets;
(collectively, the "CONTRACTS");
(f) Seller's 27% program interest in the LOV Program;
(g) Seller's 37% program interest in the T3D Program;
(h) Seller's 37% limited partner interest in the T3D
Partnership;
(i) all Orders, Permits and Easements that are
Attributable to the Assets;
(j) all other rights, privileges, benefits, powers and
obligations conferred or imposed upon Seller as the owner of
the Assets;
(k) to the extent Attributable to the Assets, the
following records (including software) located in the
Houston Office: (i) lease and land records, (ii) geological
and geophysical records, (iii) operations, production and
engineering records, (iv) accounting records, and
(v) facility and well records (collectively, the "RECORDS");
and
(l) the Hydrocarbon properties, pending proposals, and
other assets described on Exhibit 2.1(l) (the "QUITCLAIMED
ASSETS").
2.2 QUITCLAIMED ASSETS. NOTWITHSTANDING ANYTHING IN THIS
AGREEMENT, THE ASSIGNMENT OR THE OTHER CLOSING DOCUMENTS TO THE
CONTRARY, SELLER MAKES NO REPRESENTATIONS, WARRANTIES, COVENANTS
OR INDEMNITIES OF ANY TYPE WHATSOEVER WITH RESPECT TO THE
QUITCLAIMED ASSETS (OR ANY OTHER ASSETS THAT ARE INCLUDED IN THE
DEFINITION OF AASSETS" SOLELY BECAUSE THEY ARE ATTRIBUTABLE TO
THE QUITCLAIMED ASSETS), AND PURCHASER MAY NOT ASSERT ANY TITLE
DEFECT OR OTHER CLAIM WITH RESPECT TO ANY QUITCLAIMED ASSET; IT
BEING AGREED BY PURCHASER THAT IT IS ACQUIRING THE QUITCLAIMED
ASSETS "AS-IS," "WHERE-IS," WITH ALL FAULTS.
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2.3 EXCLUDED ASSETS. Notwithstanding Section 2.1, the
following assets and properties (the "EXCLUDED ASSETS") shall be
excluded from the sale hereunder and shall not be regarded as
"Assets":
(a) all assets (other than Records and Contracts)
located in the Houston Office;
(b) all assets located in the Tampa Office;
(c) office leases and employment contracts; and
(d) any other assets and properties that are excluded
from the transactions contemplated hereby pursuant to
another provision of this Agreement.
ARTICLE 3
PURCHASE PRICE
3.1 PURCHASE PRICE; METHOD OF PAYMENT; DEPOSIT. (a) The
purchase price for the Assets shall be $57,500,000, which amount
shall be (i) increased by the Title Increase Adjustment Amount,
and (ii) decreased by an amount equal to the sum of (A) the Title
Defect Adjustment Amount, PLUS (B) an amount equal to the
Allocated Value of all Assets that have been excluded from the
sale hereunder pursuant to Section 4.4(b)(i) (the purchase price,
as so adjusted, is referred to herein as the "PURCHASE PRICE").
(b) All amounts required under this Agreement to be paid by
either Party to the other Party shall be made by wire transfer of
immediately-available funds to the following accounts: (i) in
the case of Seller, Account Number 375 056 160 5 at NationsBank
of Texas, N.A., in Dallas, Texas, ABA Routing Number 111000012;
and (ii) in the case of Purchaser, such bank account in the
United States as Purchaser may designate in writing to Seller at
least five Business Days prior to the date on which such payment
is to be made. To avoid unnecessary wire transfers, the payments
to be made between the Parties at the Closing may be netted
against one another to yield a single net amount that Purchaser
shall pay by wire transfer to Seller, without altering the
characterization or effect of each such payment for tax,
accounting, legal or other purposes. The same process may be
undertaken with respect to any other simultaneous payments that
Seller and Purchaser are to make to one another under this
Agreement.
(c) Purchaser has paid to Seller, and Seller acknowledges
receipt of, a performance deposit in the aggregate amount of
$1,300,000 (the "DEPOSIT"), of which $300,000 was paid on January
14, 1998 and $1,000,000 was paid on the Execution Date. The
Deposit shall be held by Seller and distributed as follows:
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(i) if this Agreement is terminated by mutual consent
of the Parties in accordance with Section 15.1(a), the
Deposit shall be returned by Seller to Purchaser within five
Business Days of such termination;
(ii) if this Agreement is terminated by Seller in
accordance with Section 15.1(b) or 15.1(d) and at such time
Purchaser is not in breach of any its representations,
warranties, covenants, Indemnities or other obligations
hereunder, the Deposit shall be returned by Seller to
Purchaser within five Business Days of such termination;
(iii) if this Agreement is terminated by Seller in
accordance with Section 15.1(b) or 15.1(d) and at such time
Purchaser is in breach of any its representations,
warranties, covenants, Indemnities or other obligations
hereunder, the Deposit shall be retained by Seller;
(iv) if this Agreement is terminated by Purchaser in
accordance with Section 15.1(c) or 15.1(d) and at such time
Purchaser is not in breach of any its representations,
warranties, covenants, Indemnities or other obligations
hereunder, the Deposit shall be returned by Seller to
Purchaser within five Business Days of such termination;
(v) if this Agreement is terminated by Purchaser in
accordance with Section 15.1(c) or 15.1(d) and at such time
Purchaser is in breach of any its representations,
warranties, covenants, Indemnities or other obligations
hereunder, the Deposit shall be retained by Seller; and
(vi) if the Closing occurs, Seller shall apply the
Deposit towards the Purchase Price.
Until Seller is obligated to distribute the Deposit as provided
above, Seller may invest the Deposit in such investments as it
deems appropriate, and any income resulting therefrom shall be
the property of Seller and not of Purchaser.
(d) Purchaser agrees that if Seller becomes entitled to the
Deposit pursuant to the provisions of Section 3.1(c)(iii) or (v),
Seller shall also be entitled to pursue any other rights or
remedies it may have under this Agreement or under applicable Law
with respect to any breach of this Agreement by Purchaser, it
being understood that retention of the Deposit shall not
constitute Seller's sole remedy for any such breach.
3.2 PAYMENT OF PURCHASE PRICE. At the Closing, the Parties
shall take the following actions to provide for the payment of
the Purchase Price:
(a) Purchaser shall pay to Seller cash in the amount
of $43,700,000 (representing $45,000,000 LESS the amount of
the Deposit); and
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(b) Seller shall loan Purchaser and Purchaser's Parent
(jointly and severally) the remaining portion of the
Purchase Price on the terms set forth on Exhibit 3.2(b),
pursuant to loan documents that (i) reflect such terms and
(ii) are otherwise in form and substance acceptable to the
Parties (the "LOAN DOCUMENTS").
3.3 ALLOCATION OF PURCHASE PRICE. Prior to the Closing,
the Parties shall use Commercially Reasonable Efforts to agree
upon an allocation of the Purchase Price among the Assets.
Seller and Purchaser agree not to assert, in connection with any
tax return, tax audit or similar proceedings, any allocation of
the consideration that differs from any such agreed-upon
allocation. Seller and Purchaser shall each prepare an IRS Form
8594 in accordance with such agreed-upon allocation.
ARTICLE 4
TITLE MATTERS
4.1 DEFINITION OF MARKETABLE TITLE. (a) As used herein,
the term "MARKETABLE TITLE" shall mean, in the case of each
Property, such right, title and interest (owned beneficially or
of record) that, except for Permitted Encumbrances:
(i) entitles Seller to receive not less than the
percentage set forth on Exhibit 2.1(a) as the "Net Revenue
Interest" or "NRI" of such Property of all Hydrocarbons
produced from, or otherwise Attributable to, such Property,
without reduction, suspension or termination throughout the
productive life of such Property;
(ii) obligates Seller to bear not more than the
percentage set forth on Exhibit 2.1(a) as the "Working
Interest" or "WI" of such Property of all costs and expenses
Attributable to the ownership or operation of such Property,
without increase throughout the productive life of such
Property (unless Seller's Net Revenue Interest in such
Property is proportionately increased); and
(iii) is free and clear of any Encumbrances.
(b) In the case of a Property on which there is currently
located a Platform (other than the Platform on South Timbalier
Block 211, which Platform is not owned by Seller), the term
"MARKETABLE TITLE" shall also mean such right, title and interest
(owned beneficially or of record) that, except for Permitted
Encumbrances:
(i) entitles Seller to an ownership interest in such
Platform of not less than the percentage set forth on
Exhibit 2.1(a) as the "Net Revenue Interest" or "NRI" of the
Property on which the Platform is located, without
reduction, suspension or termination throughout the
productive life of such Property;
(ii) obligates Seller to bear not more than the
percentage set forth on Exhibit 2.1(a) as the "Working
Interest" or "WI" of the Property on which the
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Platform is located of all costs and expenses Attributable
to the ownership or operation of such Platform, without
increase throughout the productive life of such Property;
and
(iii) is free and clear of any Encumbrances.
In the case of a Property on which there is currently located a
Platform, all references in this Article 4 to "Property" shall,
MUTATIS MUTANDIS, also be deemed to be references to "Platform."
4.2 DEFINITION OF PERMITTED ENCUMBRANCES. As used herein,
the term "PERMITTED ENCUMBRANCES" shall mean, with respect to a
particular Property:
(a) lessors' royalties, overriding royalties,
reversionary interests and similar burdens affecting such
Property if the net cumulative effect of such burdens does
not reduce Seller's interest in all Hydrocarbons produced
from the Property below the "Net Revenue Interest" or "NRI"
set forth on Exhibit 2.1(a) for such Property;
(b) division orders and sales contracts terminable
without penalty upon no more than 90 days' notice to the
purchaser;
(c) operator's, tax and similar liens or Encumbrances
securing obligations that were not due and payable prior to
the Effective Date;
(d) any Encumbrances created by Law for royalty,
bonus, deferred bonus payments or rental or for compliance
with the terms of the Leases;
(e) the terms and provisions of (i) the Leases and
Contracts, and (ii) all Easements, Permits and Orders that
are included within the Assets;
(f) all rights reserved to or vested in any
Governmental Authority to control or regulate any of the
Properties in any manner, and all applicable Laws;
(g) the Pending MMS Consents, the Post-Closing MMS
Consents, the Program Interest Consents and the Seismic
License Consents; provided, however, that this Section
4.2(g) does not affect Purchaser's rights under Section 4.6;
(h) any Title Defects Purchaser may have expressly
waived in writing or that are deemed to have been waived
under Section 4.3, and any other matters that are included
in the adjustments described in Section 3.1(a); and
(i) all other matters expressly disclosed in this
Agreement or on any Exhibit, including Exhibit 2.1(a).
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4.3 NOTICE OF TITLE DEFECT. Purchaser shall notify Seller
in writing, by 5:00 p.m. Central Standard Time on February 19,
1998 (the "TITLE DEADLINE"), of any matter ("TITLE DEFECT") that
would cause Seller's title to any of the Properties not to be
Marketable Title, in each case together with a reasonably
detailed explanation of (a) the nature of such Title Defect,
(b) the Property affected thereby, (c) Purchaser's proposed
Allocated Value (as hereinafter defined) for such Property, and
(d) Purchaser's proposed Title Defect Value (as hereinafter
defined) for such Title Defect. Any matters that would otherwise
constitute Title Defects but that are not specifically raised in
writing (with the explanation as contemplated in the immediately-
preceding sentence) by Purchaser on or before the Title Deadline
shall conclusively be deemed waived by Purchaser, unless such
matters would also constitute a breach of a representation or
warranty of Seller in this Agreement or the Assignment. As used
herein, the term "TITLE DEFECT VALUE" shall mean with respect to
each Title Defect, the reduction in the "Allocated Value" of the
affected Property that results from the existence of such Title
Defect, as determined pursuant to Section 4.5, taking into
account all relevant considerations (including the nature of the
Title Defect; the probability that the Title Defect will ever be
successfully asserted against Purchaser; and the consequences of
any such successful assertion).
4.4 REMEDIES FOR TITLE DEFECTS; TITLE INCREASES. (a)
Seller shall have the right, but not the obligation, to attempt
to cure any Title Defect for which it receives notice from
Purchaser on or before the Title Deadline.
(b) With respect to any Title Defect for which Seller
receives notice from Purchaser on or before the Title Deadline,
Purchaser, at its option, may elect any of the following options:
(i) to exclude the Property subject to the Title
Defect from the sale hereunder, in which event the Purchase
Price shall be reduced by the Allocated Value of such
Property; or
(ii) to purchase the Property subject to such Title
Defect at the Closing, in which event the Purchase Price
shall be reduced by the Title Defect Value for such Title
Defect. The aggregate amount of all reductions to the
Purchase Price under this Section 4.4(b)(ii) is referred to
as the "TITLE DEFECT ADJUSTMENT AMOUNT."
Such remedies shall constitute Purchaser's sole remedies for
Title Defects, unless such matters would also constitute a breach
of a representation or warranty of Seller in this Agreement or
the Assignment. Notwithstanding the other provisions of this
Section 4.4(b), (I) there shall be no reductions to the Purchase
Price under this Section 4.4(b) unless and until the aggregate
amount of all Title Defect Values shall exceed a threshold of
$500,000; and (II) the Title Defect Adjustment Amount shall not
exceed $25,000,000.
(c) To the extent that same are discovered by either Party
prior to the Title Deadline, the Purchase Price shall be
increased (a "TITLE INCREASE") by an amount equal to the value
allocated to the following:
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(i) any increase in Seller's interest in all
Hydrocarbons produced from, or otherwise Attributable to, a
Property above the "Net Revenue Interest" or "NRI" set forth
on Exhibit 2.1(a) for such Property; and
(ii) any reduction in Seller's obligation to bear costs
and expenses Attributable to the ownership or operation of a
Property below the "Working Interest" or "WI" set forth on
Exhibit 2.1(a) for such Property (unless Seller's Net
Revenue Interest in such Property is proportionately
reduced);
in each case with such values to be agreed upon by Seller and
Purchaser (taking into account the Allocated Value for such
Property) or otherwise determined pursuant to the procedures set
forth in Section 4.5. The aggregate amount of all increases to
the Purchase Price under this Section 4.4(c) is referred to as
the "TITLE INCREASE ADJUSTMENT AMOUNT." Notwithstanding the
other provisions of this Section 4.4(c), (A) there shall be no
increases to the Purchase Price under this Section 4.4(c) unless
and until the aggregate amount of all Title Increases shall
exceed a threshold of $500,000; and (B) the Title Increase
Adjustment Amount shall not exceed $25,000,000.
4.5 VALUE OF PROPERTY OR TITLE DEFECT. As used herein, the
term "ALLOCATED VALUE" shall mean, with respect to any Asset, the
amount agreed upon by Seller and Purchaser as the value of such
Asset (including pursuant to Section 3.3, if applicable). If the
Parties are unable to agree upon (a) the Allocated Value of a
Asset, (b) whether a Title Defect exists, (c) a Title Defect
Value, or (d) the value allocated to a Title Increase, then such
Dispute shall be resolved pursuant to Article 16, and the Closing
shall be postponed until the fifth Business Day following the
resolution of such Dispute.
4.6 CONSENTS. The Parties acknowledge that the Transfer of
certain Assets to Purchaser requires the consent of Third Parties
and Governmental Authorities, and that the following provisions
shall govern the Parties' efforts to obtain such consents:
(a) PROGRAM INTEREST CONSENTS. The Parties
acknowledge that (i) the Transfer of Seller's program
interest in the LOV Program requires the consent, and waiver
of preferential purchase rights, of each participant under
the LOV Program Agreement; (ii) the Transfer of Seller's
program interest in the T3D Program requires the consent of
each participant under the T3D Program Agreement; and (iii)
the Transfer of Seller's interest in the T3D Partnership
requires the consent of each partner in the T3D Partnership
(collectively, "PROGRAM INTEREST CONSENTS"). The Parties
also acknowledge that all of the Program Interest Consents
have been obtained prior to the Execution Date.
(b) SEISMIC LICENSE CONSENTS. The Parties acknowledge
that the Transfer of certain Seismic Licenses requires the
consent of the applicable licensor (collectively, the
"SEISMIC LICENSE CONSENTS"). The Parties also acknowledge
that all of the Seismic License Consents have been obtained
prior to the Execution Date.
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<PAGE>
(c) PENDING MMS CONSENTS. The Parties acknowledge
that the MMS has not yet approved Transfers to Seller for
Ship Shoal Block 97, West Cameron Blocks 94 and 311, and
Galveston Block 297 (collectively, the "PENDING MMS
CONSENTS"). The Parties shall use Commercially Reasonable
Efforts before and after the Closing to obtain all of the
Pending MMS Consents; but the failure to obtain a Pending
MMS Consent prior to the Closing shall not cause the
Property affected thereby to be excluded from the sale
hereunder or the Purchase Price to be reduced. If any
Pending MMS Consent is not obtained on or before the 180th
day following the Closing, however, the Property for which
such Pending MMS Consent has not been obtained shall be
Transferred by Purchaser to Seller (with a special warranty
of title as to matters arising by, through and under
Purchaser); and Seller shall refund to Purchaser a portion
of the Purchase Price equal to the Allocated Value of such
Property.
(d) POST-CLOSING MMS CONSENTS. The Parties acknowledge
that the Transfer of the Properties that are located in
federal offshore waters requires the approval, after the
Closing, of the MMS (the "POST-CLOSING MMS CONSENTS"). The
Parties shall use Commercially Reasonable Efforts to obtain
all of the Post-Closing MMS Consents after the Closing.
Purchaser hereby assumes the risk, however, that any such
Post-Closing MMS Consents will not be obtained; and
Purchaser shall have no recourse against Seller with respect
thereto, except for damages caused by Seller's breach of (i)
its obligations under the immediately-preceding sentence or
(ii) its representation in the last sentence of Section 5.9.
4.7 CASUALTY EVENTS. If a Casualty Event occurs during the
Interim Period, or it is determined that a Casualty Event had
occurred since the Effective Date, Purchaser, at its option, may
elect any of the following options:
(a) to exclude the Asset affected by such Casualty
Event from the sale hereunder, in which event the Purchase
Price shall be reduced by the Allocated Value of such Asset;
(b) to purchase the Asset at the Closing, in which
event (i) the Purchase Price shall not be reduced but (ii)
Purchaser shall be entitled to receive all insurance
proceeds or condemnation awards Attributable to such
Casualty Event; or
(c) not to close this transaction pursuant to Section
10.4, but only in the circumstances described in such
Section 10.4.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser that:
5.1 EXISTENCE. Seller is a corporation duly organized,
validly existing and in good standing under the Laws of the State
of Florida, and it is duly qualified to carry on its business in
the State of Texas.
5.2 POWER. Seller has the corporate power and authority to
enter into and perform this Agreement and the transactions
contemplated hereby. Subject to the Program Interest Consents,
the Seismic License Consents, the Pending MMS Consents and the
Post-Closing MMS Consents, the execution, delivery and
performance of this Agreement by Seller, and the transactions
contemplated hereby, will not violate (a) any provision of the
certificate of incorporation or bylaws of Seller, (b) any
material agreement or instrument to which Seller is a party or by
which Seller or any of the Assets are bound (including any
Lease), or (c) any Permit, Order or Law applicable to Seller.
5.3 AUTHORIZATION. The execution, delivery and performance
of this Agreement and the transactions contemplated hereby have
been duly and validly authorized by all requisite corporate
action on the part of Seller. This Agreement has been duly
executed and delivered on behalf of Seller, and at the Closing
all documents and instruments required hereunder to be executed
and delivered by Seller will have been duly executed and
delivered. This Agreement does, and such documents and
instruments shall, constitute legal, valid and binding
obligations of Seller enforceable in accordance with their terms,
subject, however, to the effect of bankruptcy, insolvency,
reorganization, moratorium and similar Laws from time to time in
effect relating to the rights and remedies of creditors, as well
as to general principles of equity (regardless of whether such
enforceability is considered in a Proceeding in equity or at
law).
5.4 BROKERS. Seller has incurred no obligation or
liability, contingent or otherwise, for brokers', finders' or
investment bankers' fees in respect of the matters provided for
in this Agreement that will be the responsibility of Purchaser;
and any such obligation or liability that might exist shall be
the sole obligation of Seller.
5.5 FOREIGN PERSON. Seller is not a "foreign person"
within the meaning of Section 1445 and 7701 of the Code, because
Seller is not a nonresident alien, foreign corporation, foreign
partnership, foreign trust or foreign estate, as those terms are
defined in the Code and any regulations promulgated thereunder.
5.6 BANKRUPTCY. There are no bankruptcy, reorganization or
arrangement proceedings pending, being contemplated by or, to
Seller's Knowledge, threatened against Seller.
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5.7 LITIGATION. To Seller's Knowledge, there is no
Proceeding pending or threatened against Seller or directly
involving the Assets, in either case with respect to which Seller
has received service of process or other written notice.
5.8 GOVERNMENTAL QUALIFICATION. Seller is qualified with
the MMS to own interests in federal Hydrocarbon leases on the
Outer Continental Shelf, including the Properties.
5.9 CONSENTS. Except for the Program Interest Consents,
the Seismic License Consents, the Pending MMS Consents and the
Post-Closing MMS Consents, the Transfer of the Assets to
Purchaser does not require (a) a consent, approval or
authorization of a Third Party or a Governmental Authority, (b) a
registration, declaration or other filing with a Governmental
Authority (except for a filing with the Texas General Land Office
for the Transfer of one Lease issued by the State of Texas), or
(c) the offer of the Assets to any Third Party pursuant to any
preferential purchase right or right of first refusal. To
Seller's Knowledge, there is no reason to believe that the MMS
will not grant the Pending MMS Consents or the Post-Closing MMS
Consents.
5.10 LEASES. To Seller's Knowledge: (a) the Leases are in
full force and effect, by operations approved by the MMS in
accordance with 30 C.F.R. Section 250.13; (b) Seller has made
available to Purchaser true and correct copies of the Leases,
including any amendments thereto; (c) Seller has duly performed
all of the material obligations under the Leases that are now or
will prior to the Closing be required to be performed by Seller;
(d) Seller has not received any notice of default under the
Leases, nor is any such notice pending; and (e) all rentals and
royalties (including minimum royalties, shut-in or otherwise)
required to be paid to perpetuate the Leases to the Execution
Date have been timely and properly paid to the proper Persons and
in the proper amounts.
5.11 CONTRACTS. (a) To Seller's Knowledge: (i) the only
Contracts are the LOV Program Agreement, the T3D Program
Agreement, the T3D Partnership Agreement, the Seismic Licenses,
and the contracts and agreements described on Exhibit 2.1(e)(v),
and (ii) Seller has made available to Purchaser true and correct
copies of the contracts and agreements described in the
immediately-preceding clause, including any amendments thereto.
(b) To Seller's Knowledge, the LOV Program Agreement, the
T3D Program Agreement and the T3D Partnership Agreement are in
full force and effect. Seller is not in breach or default of its
obligations under such agreements. Seller has paid all amounts
required to be paid by it under such agreements (including
capital contributions to the T3D Partnership) to maintain its
interest under such agreements and to participate in any current
extensions thereof. The LOV Program has been validly extended
until September 30, 1998, and the T3D Program has been validly
extended until October 1, 1998. Seller owns the following
interests, free and clear of any Encumbrances: a 27% program
interest in the LOV Program; a 37% program interest in the T3D
Program; and a 37% limited partner interest in the T3D
Partnership.
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(c) To Seller's Knowledge, Seller has complied with all of
its obligations under the Exchange Agreement, dated August 21,
1997, between Chevron U.S.A. Inc. and IP Petroleum.
5.12 PROCEEDS OF PRODUCTION. To Seller's Knowledge: (a)
all proceeds of production of Hydrocarbons from the Properties
are currently being paid to the operator of such Properties, for
Seller's account, without the furnishing of indemnity (other than
customary warranties contained in division orders, transfer
orders or production sales contracts); and (b) no material
portion of such proceeds are being held in suspense.
5.13 INVOICES. To Seller's Knowledge, Seller has paid all
joint-interest billings and other invoices Attributable to the
ownership or operation of the Properties, to the extent that such
billings and invoices have been received by Seller and have
become due and payable.
5.14 GAS IMBALANCES. To Seller's Knowledge, Seller was
materially in balance as of the Effective Date under gas
balancing or similar arrangements affecting the Properties.
5.15 GAS PREPAYMENTS. To Seller's Knowledge, Seller is not
obligated, by virtue of a prepayment, take-or-pay, production
payment or other arrangement, to deliver Hydrocarbons produced
from the Properties on or after the Effective Date without
receiving full payment for such production.
5.16 ACCESS. Seller has afforded Purchaser access to all of
the Records in Seller's possession.
5.17 WELLS. To Seller's Knowledge: (a) all of the wells
located on the Properties have been drilled and completed within
the boundaries of the applicable Leases or within the limits
otherwise permitted by contract, pooling or unitization agreement
or applicable Law; (b) all drilling, completion, development,
operation, plugging and abandonment of the wells located on the
Properties have been conducted in material compliance with all
applicable Laws; and (c) none of the wells is subject to reduced
allowables or penalties because of any overproduction or any
material violation of Laws, that would prevent such well from
being entitled to its full allowable under applicable Law.
5.18 PERMITS. To Seller's Knowledge: (a) either Seller or
the current operator of the Properties has all Permits that it
requires, or is required to have, to operate, own or lease the
Assets; (b) such Permits are in full force and effect; (c) there
exist no material violations of such Permits; (d) there are no
Proceedings that are pending or threatened that may result in a
civil or criminal penalty or the revocation, cancellation,
suspension or adverse modification of such Permits; and (e)
neither the terms and conditions relating to such Permits, nor
the Laws pursuant to which the same were issued, require that any
consent or approval of, or filing with or notice to, any
Governmental Authority or other Person be made to assure the
continued holding by Seller or such operator of such Permits
after the Closing.
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5.19 ENVIRONMENTAL LAWS. To Seller's Knowledge, the
Properties have been, and are being, operated in material
compliance with all applicable Environmental Laws.
Notwithstanding the foregoing, Seller makes no representation or
warranty under this Section 5.19 (or under Sections 5.17 or 5.18,
insofar as they relate to Environmental Laws or Permits issued
under Environmental Laws) regarding West Cameron Blocks 171 and
172.
5.20 INSURANCE. Seller has provided Purchaser with
certificates of insurance reflecting the insurance presently
maintained by Seller with respect to the Properties. Such
insurance is in full force and effect, and Seller has paid all
premiums that have become due thereunder.
5.21 AFEs. To Seller's Knowledge, and except as set forth
on Exhibit 5.21, there are no outstanding authorizations for
expenditure that (a) require the drilling of wells or other
material development operations to earn or to continue to hold
all or any portion of the Properties or (b) obligate Seller to
make payments of any material amounts in connection with the
drilling of wells or other material capital expenditures
affecting the Properties.
5.22 CASUALTY. To Seller's Knowledge, no Casualty Event has
occurred since the Effective Date.
5.23 TITLE. Subject to Permitted Encumbrances: (a) Seller
has not Transferred or Encumbered the Properties or the Platforms
(other than the Platform on South Timbalier Block 211, which
Platform is not owned by Seller); and (b) Seller shall defend
title to the Properties and such Platforms against all claims and
demands of all Persons whomsoever claiming title to the
Properties and such Platforms, or any part thereof, by, through
or under Seller, but not otherwise.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that:
6.1 EXISTENCE. Purchaser is a corporation duly organized,
validly existing and in good standing under the Laws of the State
of Delaware, and it is duly qualified to carry on its business in
the states where the Assets are located.
6.2 POWER. Purchaser has the corporate power and authority
to enter into and perform this Agreement and the transactions
contemplated hereby. The execution, delivery and performance of
this Agreement by Purchaser, and the transactions contemplated
hereby, will not violate (a) any provision of the certificate of
incorporation or bylaws of Purchaser, (b) any material agreement
or instrument to which Purchaser is a party or by which Purchaser
is bound, or (c) any Permit, Order or Law applicable to
Purchaser.
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6.3 AUTHORIZATION. The execution, delivery and performance
of this Agreement and the transactions contemplated hereby have
been duly and validly authorized by all requisite corporate
action on the part of Purchaser. This Agreement has been duly
executed and delivered on behalf of Purchaser, and at the Closing
all documents and instruments required hereunder to be executed
and delivered by Purchaser will have been duly executed and
delivered. This Agreement does, and such documents and
instruments shall, constitute legal, valid and binding
obligations of Purchaser enforceable in accordance with their
terms, subject, however, to the effect of bankruptcy, insolvency,
reorganization, moratorium and similar Laws from time to time in
effect relating to the rights and remedies of creditors, as well
as to general principles of equity (regardless of whether such
enforceability is considered in a Proceeding in equity or at
law).
6.4 BROKERS. Purchaser has incurred no obligation or
liability, contingent or otherwise, for brokers', finders' or
investment bankers' fees in respect of the matters provided for
in this Agreement that will be the responsibility of Seller; and
any such obligation or liability that might exist shall be the
sole obligation of Purchaser.
6.5 SECURITIES LAWS. Purchaser is an experienced and
knowledgeable investor in the oil and gas business. Purchaser is
not acquiring the Properties with a view to, or for offer of
resale in connection with, a non-exempt distribution thereof
within the meaning of the Securities Act of 1933, or a
distribution thereof in violation of any applicable Securities
Laws.
6.6 FINANCIAL STATEMENTS. Purchaser has heretofore
delivered to Seller copies of Purchaser's most recent audited
financial statements. Such financial statements present fairly
the financial position, results of operations and changes in
financial position of Purchaser as of the dates, or for the
periods, as applicable, indicated thereon, and such financial
statements have been prepared in conformity with GAAP (except as
otherwise noted therein). Since the date of such financial
statements, there has been no material adverse change in the
financial condition of Purchaser.
6.7 BANKRUPTCY. There are no bankruptcy, reorganization or
arrangement proceedings pending, being contemplated by or, to
Purchaser's Knowledge, threatened against Purchaser.
6.8 GOVERNMENTAL QUALIFICATION. Purchaser is qualified
with the MMS to own interests in federal Hydrocarbon leases on
the Outer Continental Shelf.
ARTICLE 7
PRE-CLOSING COVENANTS OF SELLER
7.1 OPERATIONS. During the Interim Period, except as
otherwise approved by Purchaser in writing (which approval shall
not be unreasonably withheld), Seller (a) shall maintain the
Assets in accordance with past practices (it being understood,
however, that Seller is not the operator of the Assets), (b)
shall not Transfer or Encumber any Assets
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(other than as required under any Contracts), and (c) shall
maintain in full force and effect the insurance described in
Section 5.20.
7.2 ACCESS. During the Interim Period, Seller shall (a)
provide Purchaser access during Seller's normal business hours
(by appointment only) to the Assets (including the Records) that
are in Seller's possession and the employees of Seller, and (b)
use Commercially Reasonable Efforts to provide Purchaser access
to the Properties (it being acknowledged by Purchaser that Seller
is not the operator of the Properties) and any other Assets that
are not in Seller's possession.
7.3 NO SHOP. During the Interim Period, Seller shall not,
directly or indirectly, initiate or participate in discussions
with, or otherwise solicit from, any Person any proposals or
offers relating to, or deliver information to any Person for
purposes of evaluating, one or more transactions of the type
contemplated hereby involving the Assets, except as may be
contemplated by this Agreement or required by applicable Law.
7.4 ESTIMATES OF CLOSING PAYMENTS. Seller shall prepare
and deliver to Purchaser, at least five Business Days prior to
the Closing Date, Seller's estimate of the payments described in
Sections 11.2(j) and 11.2(k). The Parties shall negotiate in
good faith and attempt to agree on such estimated amounts prior
to the Closing. If any such estimated amounts are not agreed
upon prior to the Closing, the payments described in such
Sections shall be based on the arithmetic average of the Parties'
respective proposed amounts, with appropriate adjustments and
reconciling payments (if necessary) being made within 90 days
following the Closing.
ARTICLE 8
PRE-CLOSING COVENANTS OF PURCHASER
8.1 CONFIDENTIALITY. The Parties hereby ratify their
obligations under the Confidentiality Agreement.
8.2 RETURN OF DATA. Purchaser agrees that if this
Agreement is terminated for any reason whatsoever, Purchaser
shall, at Seller's request, promptly return to Seller all
information and data furnished by or on behalf of Seller to
Purchaser or Purchaser's Affiliates in connection with this
Agreement or Purchaser's investigation of the Assets, and
Purchaser shall deliver to Seller or destroy all copies, extracts
or excerpts of such information and data and all documents
generated by Purchaser that contain any portion of such
information or data.
8.3 INDEMNITY REGARDING ACCESS. Purchaser shall Indemnify
Seller and Seller's Affiliates from and against all Losses that
are Attributable to the exercise by Purchaser or Purchaser's
Affiliates of the access rights granted by Section 7.2, WITHOUT
REGARD TO THE SOLE, PARTIAL OR CONCURRENT NEGLIGENCE, GROSS
NEGLIGENCE, STRICT LIABILITY, WILLFUL MISCONDUCT OR OTHER FAULT
OF SELLER OR SELLER'S AFFILIATES.
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ARTICLE 9
SELLER'S CONDITIONS OF CLOSING
Seller's obligation to consummate the transactions
contemplated hereby is subject to the satisfaction or waiver of
the following conditions on or before the scheduled date of the
Closing:
9.1 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Purchaser contained in Article 6 shall be true
and correct in all material respects on the Closing Date as
though made on and as of the Closing Date.
9.2 PERFORMANCE. Purchaser shall have performed in all
material respects the obligations, covenants and agreements
required hereunder to be performed by it at or prior to the
Closing (including under Section 11.2).
9.3 PROCEEDINGS. No Proceeding by a Third Party or a
Governmental Authority shall be pending or threatened that seeks
to restrain, enjoin or otherwise prohibit, the consummation of
the transactions contemplated hereby.
ARTICLE 10
PURCHASER'S CONDITIONS OF CLOSING
Purchaser's obligation to consummate the transactions
contemplated hereby is subject to the satisfaction or waiver of
the following conditions on or before the scheduled date of the
Closing:
10.1 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Seller contained in Article 5 shall be true and
correct in all material respects on the Closing Date as though
made on and as of the Closing Date.
10.2 PERFORMANCE. Seller shall have performed in all
material respects the obligations, covenants and agreements
required hereunder to be performed by it at or prior to the
Closing (including under Section 11.2).
10.3 PROCEEDINGS. No Proceeding by a Third Party or a
Governmental Authority shall be pending or threatened that seeks
to restrain, enjoin or otherwise prohibit, the consummation of
the transactions contemplated hereby.
10.4 CASUALTY EVENT. No Casualty Event shall have occurred
during the Interim Period that materially and adversely affects
the value of (a) a Property that is producing Hydrocarbons at the
time such Casualty Event occurs, (b) any other material Property
or (c) a Platform.
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ARTICLE 11
CLOSING
11.1 TIME AND PLACE OF CLOSING. Subject to the conditions
stated in this Agreement, the consummation of the transactions
contemplated hereby (the "CLOSING") shall occur on February 17,
1998; provided, however, that if all of the conditions to the
Closing set forth in Articles 9 and 10 have not been satisfied or
waived by such scheduled date or any extended scheduled date for
the Closing, the Party whose obligations are subject to the
conditions that have not been satisfied or waived shall have the
right to extend the scheduled date of the Closing for successive
periods of up to seven days each until such conditions shall have
been satisfied or waived; and provided further, that the Closing
is subject to postponement pursuant to Section 4.5. The date the
Closing actually occurs is referred to herein as the "CLOSING
DATE." The Closing shall be held at Seller's offices located at
1001 Fannin, Suite 220, Houston, Texas, or at such other location
as may be mutually agreed upon by Seller and Purchaser.
11.2 CLOSING OBLIGATIONS. At the Closing, the following
events shall occur:
(a) Seller and Purchaser shall execute and
acknowledge, and Seller shall deliver to Purchaser,
Assignment, Conveyance and Bill of Sales, which shall (i) be
in form and substance acceptable to the Parties, (ii)
contain a special warranty of title, and (iii) Transfer the
Assets to Purchaser (collectively, the "ASSIGNMENT");
(b) Seller and Purchaser shall execute and
acknowledge, and Seller shall deliver to Purchaser, transfer
orders or letters in lieu thereof directing all Third
Parties paying for production of Hydrocarbons from the
Properties to make payment to Purchaser of proceeds
attributable to such production on and after the Effective
Date;
(c) Seller shall, as soon as is reasonably possible
after the Closing, deliver to Purchaser, at Seller's
offices, the Records;
(d) Seller shall deliver to Purchaser (i) an opinion
of Vinson & Elkins L.L.P., counsel to Seller, as to
customary corporate matters of Seller (including due
incorporation, existence, authorization, execution and
delivery), in form and substance acceptable to the Parties,
it being agreed that such opinion may rely on an opinion of
in-house counsel to Seller; and (ii) such other evidence of
such corporate matters (including good-standing
certificates, certified organizational documents and Board
resolutions, and incumbency certificates) as Purchaser may
reasonably request;
(e) Seller shall deliver to Purchaser an opinion of
Vinson & Elkins L.L.P., counsel to Seller, with respect to
the due formation and existence of the T3D Partnership, in
form and substance acceptable to the Parties;
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(f) Purchaser shall make the payment described in
Section 3.2(a);
(g) Seller, Purchaser and Purchaser's Parent shall
execute and acknowledge, and Purchaser and Purchaser's
Parent shall deliver to Seller, the Loan Documents;
(h) Purchaser shall deliver to Seller (i) an opinion
of David Stetson, General Counsel of Purchaser, as to
customary corporate matters of Purchaser (including due
incorporation, existence, authorization, execution and
delivery), in form and substance acceptable to the Parties,
and (ii) such other evidence of such corporate matters
(including good-standing certificates, certified
organizational documents and Board resolutions, and
incumbency certificates) as Seller may reasonably request;
(i) Purchaser shall execute, acknowledge and deliver
to Seller such instruments as Seller shall reasonably
request to evidence Purchaser's assumption of the Assumed
Obligations;
(j) Purchaser shall pay to Seller the amount of all
costs and expenses that (i) have actually been paid by
Seller to Third Parties or Governmental Authorities prior to
the Closing and (ii) are Attributable to the ownership or
operation of the Assets for the period on and after the
Effective Date; and
(k) Seller shall pay to Purchaser the amount of all
revenues that (A) have actually been received by Seller
prior to the Closing and (B) are Attributable to the Assets
for the period on and after the Effective Date.
ARTICLE 12
POST-CLOSING COVENANTS
12.1 ALLOCATION OF REVENUES. Subject to the terms hereof
and except to the extent same have already been taken into
account as a payment under Section 11.2(k), (a) all revenues that
are (i) received by either Party before or after the Closing and
(ii) Attributable to the Assets for the period prior to the
Effective Date, shall be the sole property and entitlement of
Seller, and, to the extent received by Purchaser, Purchaser shall
fully disclose, account for and transmit same to Seller promptly;
and (b) all revenues that are (i) received by either Party before
or after the Closing and (ii) Attributable to the Assets for the
period on and after the Effective Date shall be the sole property
and entitlement of Purchaser and, to the extent received by
Seller, Seller shall fully disclose, account for and transmit
same to Purchaser promptly. All uncollected accounts receivable
as of the Closing Date that are Attributable to the Assets on and
after the Effective Date shall be Transferred to Purchaser, and
all uncollected accounts receivable as of the Closing Date that
are Attributable to the Assets prior to the Effective Date shall
be retained by Seller.
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12.2 ALLOCATION OF EXPENSES. Subject to the other terms of
this Agreement, and except to the extent costs and expenses have
already been taken into account as a payment under Section
11.2(j), (a) all costs and expenses that are (i) to be paid to
Third Parties or Governmental Authorities before or after the
Closing and (ii) Attributable to ownership or operation of the
Assets for the period prior to the Effective Date, shall be the
sole obligation of Seller, and Seller shall promptly pay, or if
paid by Purchaser, promptly reimburse Purchaser for same; and (b)
all costs and expenses that are (i) to be paid to Third Parties
or Governmental Authorities before or after the Closing and (ii)
Attributable to ownership or operation of the Assets for the
period on and after the Effective Date, shall be the sole
obligation of Purchaser, and Purchaser shall promptly pay, or if
paid by Seller, promptly reimburse Seller for same. Examples of
such costs and expenses are capital expenditures, royalties,
rentals and similar charges, amounts billed under applicable
operating agreements and prepaid expenses.
12.3 SALES TAXES. The Parties intend that the sale
hereunder be exempt from any sales or use taxes, and the Purchase
Price does not include any such taxes. If the sale hereunder is
found to be subject to any sales or use taxes, however, Purchaser
shall be liable for such taxes.
12.4 RECORDATION OF ASSIGNMENT. Purchaser shall (a) record
the Assignment in the appropriate county and parish records, (b)
file the Assignment with the MMS and any other appropriate
Governmental Authorities, and (c) pay all recordation fees and
filing fees in connection therewith. Within a reasonable period
after the Closing, Purchaser shall furnish Seller with a schedule
setting forth recording or filing information for each county,
parish or other Governmental Authority in whose records the
Assignment was recorded or filed.
12.5 ACCESS TO EMPLOYEES. Seller and Purchaser each shall
use Commercially Reasonable Efforts to afford the other access to
(a), in the case of Seller, employees of Seller who remain
employees of Seller after the Closing and are familiar with the
ownership and operation of the Assets and (b) in the case of
Purchaser, employees of Purchaser that Seller shall reasonably
request for its proper corporate purposes, including the defense
of Proceedings. Such access may include interviews or attendance
at depositions or legal proceedings; provided, however, that in
any event all out-of-pocket expenses (including wages and
salaries) reasonably incurred by either Party in connection with
this Section 12.5 shall be paid or promptly reimbursed by the
Party requesting such services.
12.6 AUDIT. Seller acknowledges that, as a result of the
transactions contemplated hereby, Purchaser will be required to
file certain disclosure documents with the U.S. Securities and
Exchange Commission and other Governmental Authorities. Seller
agrees to submit to an audit of its financial statements as of,
and for the fiscal years ended, December 31, 1996 and December
31, 1997 as they pertain to the Assets. Such audit shall be
conducted by KPMG Peat Marwick LLP, or by such other independent
accounting firm as may be mutually acceptable to Seller and
Purchaser, and shall be conducted during Seller's normal business
hours at Purchaser's sole expense. Seller agrees to cooperate
with such firm to the extent reasonably necessary for such firm
to perform the audit described
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above under GAAP for the purpose of rendering an opinion on
Purchaser's and Purchaser's Parent's financial statements for
such periods and for Purchaser and Purchaser's Parent to comply
with regulatory reporting requirements; provided, however, that
Seller shall not be required to make any additional
representations or warranties to Purchaser, Purchaser's Parent or
such firm in connection with such audit.
12.7 FURTHER ASSURANCES. After the Closing, Seller and
Purchaser shall take such further actions and execute,
acknowledge and deliver such additional documents and instruments
as may be necessary or useful in carrying out the transactions
contemplated hereby.
12.8 CONFIDENTIALITY. After the Closing and until the third
anniversary thereof, Seller shall maintain as confidential, and
shall not disclose or show to any Third Party, any Records or
other confidential information regarding the Assets. This
Section 12.8 shall not apply to the extent that any particular
information (a) becomes generally available to the oil and gas
industry other than through the breach of the foregoing
obligation, or (b) must be disclosed by Seller to comply with
applicable Law, Orders or stock exchange requirements.
ARTICLE 13
INDEMNIFICATION
13.1 ASSUMED OBLIGATIONS. If the Closing occurs, Purchaser
shall be deemed to have assumed, and shall pay, perform or
otherwise discharge, the following liabilities and obligations
(collectively, the "ASSUMED OBLIGATIONS"), IN EACH CASE WITHOUT
REGARD TO THE SOLE, PARTIAL OR CONCURRENT NEGLIGENCE, GROSS
NEGLIGENCE, STRICT LIABILITY, WILLFUL MISCONDUCT OR OTHER FAULT
OF SELLER OR SELLERS' AFFILIATES:
(a) all liabilities and obligations that are
Attributable to the ownership or operation of the Assets on
and after the Effective Date, including such liabilities and
obligations arising under (i) the Leases and Contracts, (ii)
the Easements, Permits and Orders that are included in the
Assets, and (iii) Laws (including Environmental Laws)
applicable to the Assets; and
(b) the following liabilities and obligations,
regardless of whether they arise or accrue before, on or
after the Effective Date, and regardless of whether they are
Attributable to events occurring, or conditions existing,
before, on or after the Effective Date: (i) all liabilities
and obligations to properly plug and abandon all wells and
remove all related facilities and equipment located on West
Cameron Blocks 171 and 172, and to clean up and restore such
Properties in accordance with applicable Laws, and (ii) all
other liabilities and obligations arising under (or
otherwise Attributable to) Environmental Laws with respect
to West Cameron Blocks 171 and 172.
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13.2 INDEMNIFICATION.
(a) SELLER'S INDEMNITIES. Seller shall Indemnify Purchaser
and Purchaser's Affiliates from and against (i) all Losses that
are Attributable to (A) any breach or falsity of Seller's
representations or warranties in this Agreement or the special
warranty of title in the Assignment or (B) any breach or non-
performance by Seller of its covenants or agreements under this
Agreement, and (ii) all Third Party Losses that are Attributable
to the ownership or operation of the Assets prior to the
Effective Date, including such Third Party Losses arising under
(A) the Leases and Contracts, (B) the Easements, Permits and
Orders that are included in the Assets, and (C) Laws (including
Environmental Laws) applicable to the Assets; IN EACH CASE
WITHOUT REGARD TO THE SOLE, PARTIAL OR CONCURRENT NEGLIGENCE,
GROSS NEGLIGENCE, STRICT LIABILITY, WILLFUL MISCONDUCT OR OTHER
FAULT OF PURCHASER OR PURCHASER'S AFFILIATES; provided, however,
that this Section 13.2(a) shall not apply to any Losses or Third
Party Losses that are Attributable to the Assumed Obligations.
(b) PURCHASER'S INDEMNITIES. Purchaser shall Indemnify
Seller and Seller's Affiliates from and against (i) all Losses
that are Attributable to (A) any breach or falsity of Purchaser's
representations or warranties in this Agreement or (B) any breach
or non-performance by Purchaser of its covenants or agreements
under this Agreement, and (ii) all Third Party Losses that are
Attributable to the Assumed Obligations; IN EACH CASE WITHOUT
REGARD TO THE SOLE, PARTIAL OR CONCURRENT NEGLIGENCE, GROSS
NEGLIGENCE, STRICT LIABILITY, WILLFUL MISCONDUCT OR OTHER FAULT
OF SELLER OR SELLERS' AFFILIATES.
(c) EXCLUSIVITY; ASSERTION OF CLAIMS. The Indemnities in
Section 13.2(a) shall constitute the sole and exclusive remedy of
Purchaser and Purchaser's Affiliates for the matters described
therein; and the Indemnities in Section 13.2(b) constitute the
sole and exclusive remedy of Seller and Seller's Affiliates for
the matters described therein, other than Purchaser's and
Purchaser's Parent's obligations under the Loan Documents. All
claims for Indemnification by any Person that is Indemnified
under Section 13.2(a) or (b) must be asserted and resolved in
accordance with the following provisions:
(i) Any Person claiming Indemnification hereunder is
referred to as the "INDEMNIFIED PERSON," and any Party from
whom Indemnification is sought is referred to as the
"INDEMNIFYING PARTY."
(ii) If any Third Party Losses are asserted against or
sought to be collected from an Indemnified Person, the
Indemnified Person shall with reasonable promptness notify
the Indemnifying Party of the Third Party Losses, specifying
the nature of and specific basis for such Losses and the
amount or the estimated amount thereof to the extent then
feasible (the "CLAIM NOTICE"). The Indemnifying Party will
have 30 days from the date the Claim Notice is delivered
(the "NOTICE PERIOD") to notify the Indemnified Person
(A) whether or not it disputes the liability of the
Indemnifying Party to the Indemnified Person with respect to
such Third Party
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Losses and (B) whether or not it desires, at the sole cost
and expense of the Indemnifying Party, to defend the
Indemnified Person against such Third Party Losses;
provided, however, that any Indemnified Person is hereby
authorized prior to and during the Notice Period to file any
motion, answer or other pleading that it shall deem
necessary or appropriate to protect its interests or those
of the Indemnifying Party (and of which it has given notice
and opportunity to comment to the Indemnifying Party) and
that are not prejudicial to the Indemnifying Party. If the
Indemnifying Party does not notify the Indemnified Person
within the Notice Period that it disputes its liability to
the Indemnified Person with respect to such Third Party
Losses, the amount of such Third Party Losses will be
conclusively deemed a liability of the Indemnifying Party.
If the Indemnifying Party notifies the Indemnified Person
within the Notice Period that it desires to defend the
Indemnified Person against such Third Party Losses and
except as hereinafter provided, the Indemnifying Party will
have the right to defend by all appropriate Proceedings, and
with counsel of its own choosing. If the Indemnified Person
desires to participate in, but not control, any such defense
or settlement, it may do so at its sole cost and expense.
If requested by the Indemnifying Party, the Indemnified
Person agrees to cooperate with the Indemnifying Party and
its counsel in contesting any Third Party Losses that the
Indemnifying Party elects to contest, or, if appropriate and
related to the claim in question, in making any counterclaim
against the Third Party or Governmental Authority asserting
the Third Party Losses, or any cross-complaint against any
Person. No claim may be settled or otherwise compromised
without the prior consent of the Indemnifying Party.
(iii) If any Indemnified Person has a claim for
Losses against any Indemnifying Party hereunder that does
not involve a Third Party Loss, the Indemnified Person must
send a Claim Notice with respect to such claim to the
Indemnifying Party. If the Indemnifying Party does not
notify the Indemnified Person within the Notice Period that
it disputes its liability to the Indemnified Person with
respect to such Losses, the amount of such Losses will be
conclusively deemed a liability of the Indemnifying Party.
(d) EXCEPTIONS. The Indemnification obligations set forth
in Sections 13.2(a) and (b) shall not apply to (i) a matter for
which the Indemnified Person has received credit as an adjustment
described in Section 3.1(a); (ii) either Party's costs and
expenses with respect to the negotiation and consummation of this
Agreement and the transactions contemplated hereby; or (iii) any
Title Defect claims of Purchaser, which are governed exclusively
by Sections 4.1 through 4.5 (but Section 13.2(a)(i)(A) shall
apply to the special warranty of title in the Assignment).
13.3 LIMITATIONS ON INDEMNIFICATION. The Parties'
liabilities under this Article 13 shall be limited as follows:
(a) THRESHOLDS AND DEDUCTIBLES. Seller shall have no
liability under Section 13.2(a)(i) unless and until the
aggregate amount paid by Seller thereunder shall
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exceed a threshold of $500,000. Purchaser shall have no
liability under Section 13.2(b)(i) unless and until the
aggregate amount paid by Purchaser thereunder shall exceed a
threshold of $500,000. There shall be no similar
limitations on Seller's and Purchaser's liability under
Sections 13.2(a)(ii) and 13.2(b)(ii), respectively.
(b) MAXIMUM LIABILITY. Seller's maximum aggregate
liability under Section 13.2(a) shall not exceed
$25,000,000, LESS the Title Defect Adjustment Amount.
Purchaser's maximum aggregate liability under Section
13.2(b) shall not exceed $25,000,000, LESS the Title
Increase Adjustment Amount.
(c) SURVIVAL PERIODS. The Indemnities in Sections
13.2(a)(i) and 13.2(b)(i) shall survive until the first
anniversary of the Closing; provided, however, that the
Indemnities in Sections 13.2(a)(i)(B) and 13.2(b)(i)(B) with
respect to covenants to be performed after the Closing shall
survive until the first anniversary of the date on which
each such covenant is to each be performed (or, if no date
is specified, until the third anniversary of the Closing).
Following the applicable date described in the immediately-
preceding sentence, neither Party shall have any rights
thereunder, except with respect to matters for which a Claim
Notice has been delivered on or prior to such date. There
shall be no similar limitations on the survival of the
Indemnities in Sections 13.2(a)(ii) and 13.2(b)(ii), which
shall survive for the applicable statute-of-limitations
period.
(d) LOAN DOCUMENTS. The limitations in this Section
13.3 do not apply to Purchaser's and Purchaser's Parent's
obligation under the Loan Documents.
ARTICLE 14
INDEPENDENT INVESTIGATION AND DISCLAIMER
14.1 INDEPENDENT INVESTIGATION AND DISCLAIMER. (a)
Purchaser acknowledges that (i) it has had, and pursuant to this
Agreement will have prior to the Closing, access to the Assets
and the employees of Seller and the opportunity to inspect the
Assets, and (ii) in making its decision to enter into this
Agreement and consummate the transactions contemplated hereby,
Purchaser has relied solely on the basis of its own independent
investigation of the Assets and upon the representations and
warranties of Seller set forth in Article 5 and the special
warranty of title to be made by Seller in the Assignment.
Accordingly, Purchaser acknowledges that, except as expressly set
forth herein, Seller has not made, AND SELLER HEREBY EXPRESSLY
DISCLAIMS AND NEGATES, ANY REPRESENTATION OR WARRANTY, EXPRESSED
(ORALLY OR IN WRITING), IMPLIED, AT COMMON LAW, BY STATUTE, OR
OTHERWISE, OR OTHER RIGHT OF RECOURSE (EVEN AS TO RETURN OF THE
PURCHASE PRICE) RELATING TO (A) THE CONDITION OF THE ASSETS
(INCLUDING ANY IMPLIED OR EXPRESSED WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, ABSENCE OF LATENT DEFECTS OR
REDHIBITORY VICES, OR OF CONFORMITY TO MODELS OR SAMPLES OF
MATERIALS, OR ENVIRONMENTAL CONDITION),
-29-
<PAGE>
(B) ANY INFRINGEMENT BY SELLER OF ANY PATENT OR PROPRIETARY RIGHT
OF ANY THIRD PARTY, AND (C) ANY INFORMATION, DATA OR OTHER
MATERIALS (WRITTEN OR ORAL) FURNISHED TO PURCHASER BY OR ON
BEHALF OF SELLER (INCLUDING WITH RESPECT TO RESERVE MATTERS,
SUCCESS OF WELLS (INCLUDING WELLS THAT ARE DRILLED AFTER THE
EFFECTIVE DATE), COMPLIANCE WITH LAWS, ENVIRONMENTAL CONDITIONS
AND OTHER MATTERS); IT BEING AGREED BY PURCHASER THAT IT IS
ACQUIRING THE ASSETS "AS-IS," "WHERE-IS," WITH ALL FAULTS;
provided, however, that (a) the foregoing disclaimer and negation
of representations and warranties, (b) Purchaser's independent
investigation of the Assets, (c) any failure on Purchaser's part
to conduct such investigation, or (d) the occurrence of the
Closing, shall not affect or impair the representations,
warranties, covenants, Indemnities or other obligations of Seller
under this Agreement or under the agreements to be executed by
Seller at the Closing, including the special warranty of title to
be made by Seller in the Assignment, Purchaser's Title Defect
remedies and any other express rights of Purchaser hereunder or
thereunder.
(b) The Parties acknowledge that Articles 9 and 10 (as
applicable) constitute the only conditions to each Party's
obligation to consummate this transaction, and that no other
event, matter or circumstance (including (i) Reserve Matters,
(ii) the success or failure of wells, including wells that are
drilled after the Effective Date, or (iii) Purchaser's failing to
obtain financing with respect to all or any part of the Purchase
Price) shall constitute such a condition.
(c) Each Party hereby waives any rights it may have under
applicable Law to rescind this transaction, including for failure
of consideration, redhibitory vices, lesion beyond moiety or
otherwise; provided, however, that the foregoing waiver shall not
affect or impair Purchaser's rights under Section 4.6(c).
ARTICLE 15
TERMINATION
15.1 RIGHT OF TERMINATION. This Agreement and the
transactions contemplated hereby may be terminated:
(a) by mutual consent of Seller and Purchaser, at any
time at or prior to the Closing;
(b) by Seller, at its option, if the conditions in
Article 9 have not been satisfied by the scheduled date of
the Closing;
(c) by Purchaser, at its option, if the conditions in
Article 10 have not been satisified by the scheduled date of
the Closing; or
(d) by either Seller or Purchaser, by notice to the
other Party at any time on or after June 1, 1998, if the
Closing shall not have occurred by such date.
-30-
<PAGE>
provided, however, that a Party may not exercise any right of
termination pursuant to Section 15.1(b), (c) or (d) if the event
giving rise to such termination right shall be due to the breach
by such Party of its obligations under this Agreement.
15.2 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 15.1, this Agreement shall become void and of
no further force or effect (except for the provisions of this
Section 15.2; Sections 3.1(c), 3.1(d), 5.4 and 6.4; and Articles
8, 16 and 18; all of which shall survive such termination and
continue in full force and effect); provided, however, that, if
either Party is in breach of its obligations under this Agreement
at the time this Agreement is so terminated, such defaulting
Party shall continue to be liable to the other Party for damages
in respect of such breach, and such liability shall not be
affected by such termination.
ARTICLE 16
ARBITRATION
16.1 DISPUTES. This Article 16 shall apply to any dispute
arising under or otherwise Attributable to this Agreement or the
transactions contemplated hereby (whether arising in contract,
tort or otherwise, and whether arising at law or in equity),
including (a) any dispute regarding the construction,
interpretation, performance, validity or enforceability of any
provision of this Agreement or whether any Person is in
compliance with, or breach of, any provisions of this Agreement,
and (b) the applicability of this Article 16 to a particular
dispute (collectively, a "DISPUTE"). The provisions of this
Article 16 shall be the exclusive method of resolving Disputes.
16.2 ARBITRATION. (a) If a Dispute arises, the Parties
shall attempt to resolve it through negotiations. If the Parties
are unable to resolve the Dispute within 20 days of the
commencement of such negotiations, either Party may submit the
Dispute to binding arbitration before a sole arbitrator (the
"ARBITRATOR") pursuant to this Article 16 by notifying the other
Party and designating a proposed Arbitrator. If the other Party
objects to such proposed Arbitrator, it may, on or before the
10th day following delivery of such notice, notify the other
Party of its objection. The Parties shall then attempt to agree
upon a mutually-acceptable Arbitrator. If they are unable to do
so within 10 days following delivery of the notice described in
the immediately-preceding sentence, either Party may request the
American Arbitration Association (or successor body) (the "AAA")
to designate the Arbitrator. Each Party and each proposed
Arbitrator shall disclose to the other Party any business,
personal or other relationship or Affiliation that may exist
between such Party and such proposed Arbitrator, and any Party
may disapprove of such proposed Arbitrator on the basis of such
relationship or Affiliation. If the Arbitrator so chosen shall
die, resign or otherwise fail or become unable to serve as
Arbitrator, a replacement Arbitrator shall be chosen in
accordance with this Section 16.2.
(b) The Arbitrator shall expeditiously (and, if possible,
within 45 days after the Arbitrator's selection) hear and decide
all matters concerning the Dispute. Any arbitration hearing
shall be held in Houston, Texas. The arbitration shall be
conducted in accordance
-31-
<PAGE>
with the then-current Commercial Arbitration Rules of the AAA
(excluding rules governing the payment of arbitration,
administrative or other fees or expenses to the Arbitrator or the
AAA), to the extent that such Rules do not conflict with the
terms of this Agreement. Except as expressly provided to the
contrary in this Agreement, the Arbitrator shall have the power
(i) to gather such materials, information, testimony and evidence
as it deems relevant to the dispute before it (and each Party
will provide such materials, information, testimony and evidence
requested by the Arbitrator, except to the extent any information
so requested is proprietary, subject to a third-party
confidentiality restriction or to an attorney-client or other
privilege) and (ii) to grant injunctive relief and enforce
specific performance.
(c) If it deems necessary, the Arbitrator may propose to
the Parties that one or more other experts be retained to assist
it in resolving the Dispute. The retention of such other experts
shall require the consent of both Parties, which shall not be
unreasonably withheld. Each Party, the Arbitrator and any
proposed expert shall disclose to the other Party any business,
personal or other relationship or affiliation that may exist
between such Party (or the Arbitrator) and such proposed expert;
and either Party may disapprove of such proposed expert on the
basis of such relationship or affiliation.
(d) The decision of the Arbitrator (which shall be rendered
in writing) shall be final, nonappealable and binding upon the
Parties and may be enforced in any court of competent
jurisdiction. The responsibility for paying the costs and
expenses of the arbitration, including compensation to the
Arbitrator and any experts retained by the Arbitrator, shall be
allocated between the Parties in a manner determined by the
Arbitrator to be fair and reasonable under the circumstances.
Each Party shall be responsible for the fees and expenses of its
respective counsel, consultants and witnesses, unless the
Arbitrator determines that compelling reasons exist for
allocating all or a portion of such costs and expenses to one or
more other Parties.
ARTICLE 17
PARENT GUARANTIES
17.1 GUARANTY BY SELLER'S PARENT. Seller's Parent hereby
guarantees the full and punctual payment and performance by
Seller of each and every representation, warranty, covenant,
Indemnity and other obligation of Seller under this Agreement and
the agreements to be executed by Seller at the Closing, subject
to any limitations on such representations, warranties,
covenants, Indemnities and other obligations set forth hereunder
or thereunder. Seller's Parent hereby agrees that it will
indirectly benefit from the consummation of the transactions
contemplated hereby (as a result of its ownership of Seller), and
that such indirect benefit constitutes good and valuable
consideration for this Section 17.1.
17.2 GUARANTY BY PURCHASER'S PARENT. Purchaser's Parent
hereby guarantees the full and punctual payment and performance
by Purchaser of each and every representation, warranty,
covenant, Indemnity and other obligation of Purchaser under this
Agreement and the agreements to be executed by Purchaser at the
Closing (including the Loan Documents),
-32-
<PAGE>
subject to any limitations on such representations, warranties,
covenants, Indemnities and other obligations set forth hereunder
or thereunder. Purchaser's Parent hereby agrees that it will
indirectly benefit from the consummation of the transactions
contemplated hereby (as a result of its ownership of Purchaser),
and that such indirect benefit constitutes good and valuable
consideration for this Section 17.2.
ARTICLE 18
GENERAL PROVISIONS
18.1 GOVERNING LAW. This Agreement and all instruments
executed in accordance with it shall be governed by and
interpreted in accordance with the Laws of the State of Texas,
without regard to conflict-of-law rules that would direct
application of the Laws of another jurisdiction, except to the
extent that it is mandatory that the Law of some other
jurisdiction, wherein the Assets are located, shall apply.
18.2 RULES OF CONSTRUCTION. In construing this Agreement,
the following rules shall be used (unless the context clearly
requires otherwise): (a) any references to a Law, Lease,
Contract, Order or Permit refer to such Lease, Contract, Order or
Permit as it has been amended, restated, modified or
supplemented; (b) any references to "Articles" or "Sections"
refer to Articles or Sections of this Agreement; (c) the titles
of the Articles and Sections are for convenience only and shall
not be used in construing this Agreement; (d) any references to
"Exhibits" refer to the Exhibits attached hereto, each of which
is made a part hereof for all purposes; (e) if there is any
conflict or inconsistency between the text of this Agreement and
any Exhibit, the text of this Agreement shall control; and (f)
because both Parties have participated in the preparation and
negotiation of this Agreement, the rule that ambiguities in
agreements are to be construed against the party that prepared
them is inapplicable.
18.3 ENTIRE AGREEMENT; AMENDMENTS. This Agreement,
including all Exhibits attached hereto and made a part hereof,
together with the Confidentiality Agreement, constitute the
entire agreement between the Parties with respect to the
transactions contemplated hereby and supersede all prior
agreements, understandings, negotiations and discussions, whether
oral or written, of the Parties with respect to such
transactions, including that certain letter agreement, dated
January 9, 1998, between Seller and Purchaser. No amendment of
this Agreement shall be binding unless executed in writing by
both Parties.
18.4 WAIVER. No waiver by a Party of any of the provisions
of this Agreement (a) shall be binding on unless executed in
writing by such Party, (b) shall be deemed or shall constitute a
waiver by such Party of any other provisions hereof (whether or
not similar), and (c) shall not constitute a continuing waiver by
such Party.
18.5 TRANSFERS. Except as expressly provided herein to the
contrary, neither Party hereto shall Transfer this Agreement or
any of its rights or obligations hereunder without the prior
written consent of the other Party, and any such Transfer made
without such consent shall be void. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and
permitted
-33-
<PAGE>
Transferees. Seller agrees that the restrictions in this
Section 18.5 shall not, after the Closing, obligate Purchaser to
obtain the written consent of Seller prior to any Transfer by
Purchaser of its ownership interest in the Assets, and Purchaser
agrees that any such Transfer shall not release Purchaser from
any of its liabilities or obligations hereunder.
18.6 NOTICES. Any notice, request, consent, approval,
waiver or other communication provided or permitted to be given
under this Agreement shall be in writing and shall be delivered
in person or sent by U.S. mail, overnight courier or fax to the
appropriate address set forth below. Any such communication
shall be effective upon actual receipt; provided, however, that,
in the case of delivery by fax after the normal business hours of
the recipient, such communication shall be effective on the next
Business Day following the transmission of such fax. For
purposes of notice, the addresses of the parties shall be as
follows:
FOR SELLER:
TECO Oil & Gas, Inc.
702 North Franklin Street
Tampa, Florida 33602
Attn: Roy K. Eustace
Fax: (813) 228-4811
WITH A COPY TO:
TECO Oil & Gas, Inc.
1001 Fannin, Suite 220
Houston, Texas 77002
Attn: Joseph L. Pritchett, III
Fax: (713) 659-7979
FOR PURCHASER:
American Resources Offshore, Inc.
3850 North Causeway Blvd., Suite 1145
Metairie, Louisiana 70002
Attn: William Gray
Fax: (504) 831-1528
WITH A COPY TO:
American Resources of Delaware, Inc.
160 Morgan Street
P.O. Box 87
Versailles, Kentucky 40383
Attn: David J. Stetson
Fax: (606) 873-4689
-34-
<PAGE>
Each Party shall have the right, upon giving 10 days' prior
notice to the other Party in the manner provided in this Section
18.6, to change its address for purposes of notice.
18.7 EXPENSES. Except as otherwise provided herein, each
Party shall be solely responsible for all costs and expenses
incurred by it in connection with the transactions contemplated
hereby (including fees and expenses of its own counsel and
consultants).
18.8 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by
any rule of Law or public policy, 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 any
adverse manner with respect to any Party. Upon such
determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall
negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible.
18.9 PUBLICITY. Seller and Purchaser shall consult with
each other with regard to all publicity and other releases issued
concerning this Agreement and the transactions contemplated
hereby and, except as required by applicable Law or the stock
exchange requirements, neither Party shall issue any such
publicity or other release without the prior written consent of
the other Party.
18.10 SPECIFIC PERFORMANCE. Because of the unique
nature of the Assets and the difficulty of calculating damages
for breach of this Agreement, each Party shall have the right
(pursuant to Section 16.2(b)) to enforce specific performance by
the other Party of its obligations under this Agreement.
18.11 CONSEQUENTIAL AND PUNITIVE DAMAGES. THE PARTIES
(FOR THEMSELVES AND THEIR RESPECTIVE AFFILIATES) WAIVE ANY RIGHTS
TO CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES RESULTING FROM A
BREACH OF THIS AGREEMENT, INCLUDING LOSS OF PROFITS.
18.12 NO THIRD-PARTY BENEFICIARY. Except as expressly
provided herein, this Agreement is not intended to create, nor
shall it be construed to create, any rights in any Third Party,
under doctrines concerning third-party beneficiaries or
otherwise.
-35-
<PAGE>
18.13 COUNTERPARTS. This Agreement may be executed in
counterparts (including faxed counterparts). Each such
counterpart shall be deemed an original, but all such
counterparts together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the Execution Date.
SELLER
TECO OIL & GAS, INC.
By: /S/Royston K. Eustace
--------------------------------
Royston K. Eustace
President
SELLER'S PARENT
(for the limited purposes of Section 17.1)
TECO ENERGY, INC.
By: /S/Royston K. Eustace
--------------------------------
Royston K. Eustace
Vice President of Strategic
Planning and Business Development
PURCHASER
AMERICAN RESOURCES OFFSHORE, INC.
By: /S/William Gray
--------------------------------
William Gray
President
PURCHASER'S PARENT
(for the limited purposes of Section 17.2)
AMERICAN RESOURCES OF DELAWARE INC.
By: /S/Rick G. Avare
--------------------------------
Rick G. Avare
Chief Executive Officer
-36-
<PAGE>
Exhibit 10.90
NOTE
$18,500,000.00 March 5, 1998
American Resources Offshore, Inc., a Delaware corporation
(the "Borrower"), for value received, promises and agrees to pay
--------
on or before October 1, 1998, to the order of TECO Oil & Gas,
Inc. ("Lender") to Account Number 3750561605 at NationsBank of
------
Texas, N.A., in Dallas, Texas, ABA Routing Number 111000012 in
United States Dollars the principal sum of Eighteen Million Five
Hundred Thousand and No/100 Dollars ($18,500,000.00).
All capitalized terms which are used but not defined in this
Note shall have the same meanings as in the Agreement dated March
5, 1998, by and among American Resources of Delaware, Inc., as
Guarantor, American Resources Offshore, Inc., as Borrower,
Southern Gas Co. of Delaware, Inc., as Subsidiary Guarantor and
TECO Oil & Gas, Inc., as Lender (such Agreement, together with
all amendments or supplements thereto, being the "Credit
------
Agreement").
- ---------
In addition to the principal sum referred to in the first
paragraph of this Note, the Borrower also agrees to pay interest
on the principal sum until the payment in full of all
Indebtedness hereunder. Interest on the principal sum shall
accrue hereunder at the following rate per annum as is applicable
for each of the following periods, but in no event to exceed the
Highest Lawful Rate:
Period Rate
------ ----
April 1, 1998 - June 30, 1998 10%
July 1, 1998 - September 30, 1998 12%
October 1, 1998 - December 31, 1998 14%
January 1, 1999 - March 30, 1999 16%
April 1, 1999 and thereafter 18%
Accrued interest is due and payable quarterly on the first
day of each January, April, July and October, commencing on
October 1, 1998.
All payments of interest shall be computed on the per annum
basis of a year of 360 days and for the actual number of days
(including the first day but excluding the last day) elapsed
unless such calculation would result in a usurious rate, in which
case interest shall be calculated on the per annum basis of a
year of 365 or 366 days, as the case may be.
The Borrower may at its option prepay the principal amount
of this Note outstanding at any time in whole or from time to
time in part without premium or penalty, upon giving the holder
of this Note at least one (1) Business Day's prior notice of the
aggregate principal amount to be prepaid, and in the event of any
such notice being given, the amount so notified shall be due and
payable on the said day, together with accrued interest thereon
to the date of prepayment.
The Lender is hereby authorized to record all payments and
prepayments hereunder on account of principal and interest on the
schedule attached hereto and made a part hereof for all purposes
and to provide continuations to such schedule as may be
necessary. The failure of the Lender to record any such
Page 1 of 3
<PAGE>
amounts shall not diminish or impair the Borrower's obligation to
repay all principal advanced and to pay all interest accruing
under this Note.
Each payment and prepayment made by the Borrower under this
Note shall be made by wire transfer in immediately available
funds before 12:00 noon, Florida time on the date that such
payment or prepayment is required to be made. Any payment or
prepayment received and accepted by the Lender after such time
shall be considered for all purposes (including the calculation
of interest, to the extent permitted by law) as having been made
on the Lender's next following Business Day.
If the date for any payment or prepayment hereunder falls on
a day which is not a Business Day, then for all purposes of this
note the same shall be deemed to have fallen on the next
following Business Day, and such extension of time shall in such
case be included in the computation of payments of interest.
This Note is not subject to set-off, reduction or
counterclaim by ARI or the Borrower; and each of ARI and the
Borrower covenant and agree that they shall not be entitled to
set-off or apply any amount to which any of them may be entitled
under the terms of the Purchase Agreement or otherwise, including
any indemnity obligation of the Lender thereunder; it being the
unequivocal intent of Guarantor and the Borrower that such
amounts are separate and distinct, independent obligations.
The Borrower and any and each co-borrower, guarantor,
accommodation party, endorser or other Person liable for the
payment or collection of this Note expressly waive demand and
presentment for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, notice of intent to accelerate,
notice of acceleration, bringing of suit, and diligence in taking
any action to collect amounts called for hereunder and in the
handling of Property at any time existing as security in
connection herewith, and shall be directly and primarily liable
for the payment of all sums owing and to be owing hereon,
regardless of and without any notice, diligence, act or omission
as or with respect to the collection of any amount called for
hereunder or in connection with any Lien at any time had or
existing as security for any amount called for hereunder.
If default is made in the payment of this Note (whether of
principal, interest or other amounts) when due (regardless of how
the maturity of this Note may be brought about) and the same is
placed in the hands of an attorney for collection, or suit is
filed hereon, or proceedings are had in bankruptcy, probate,
receivership, or other judicial proceedings for the establishment
or collection of any amount called for hereunder, or any amount
payable or to be payable hereunder is collected through any such
proceedings, the Borrower agrees and is also to pay to the owner
and holder of this Note the reasonable attorneys' fees incurred
by the holder in connection therewith.
Page 2 of 3
<PAGE>
This Note is issued pursuant to and is entitled to the
benefits of this Agreement. Reference is made to this Agreement
for provisions for the acceleration of the maturity hereof on the
occurrence of certain events specified therein and for all other
pertinent purposes.
The rights and duties of the parties to this Note are
subject to the Intercreditor Agreement. Any subsequent holder of
this Note agrees by its acceptance hereof to be bound by the
terms of the Intercreditor Agreement.
AMERICAN RESOURCES OFFSHORE, INC.
By: /S/David J. Stetson
------------------------------
Name: David J. Stetson
Title: Secretary
Page 3 of 3
<PAGE>
SCHEDULE
OF
PAYMENTS OF PRINCIPAL AND INTEREST
----------------------------------
Amount of Unpaid
Principal Amount of Principal
Paid or Interest Balance Notation
Date Prepaid Paid of Loan Made by
- --------- ---------- ---------- ---------- ---------
- -------- --------- --------- --------- ---------
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<PAGE>
Exhibit 10.91
WARRANT AGREEMENT
BETWEEN
AMERICAN RESOURCES OF DELAWARE, INC.
AND
TECO OIL & GAS, INC.
Dated as of March 5, 1998
<PAGE>
TABLE OF CONTENTS
1. ISSUANCE OF WARRANT; FORM OF WARRANT. . . . . . . . . . . .1
------------------------------------
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. .2
--------------------------------------------------------
(a) EXISTENCE. . . . . . . . . . . . . . . . . . . . . . .2
---------
(b) POWER AND AUTHORITY. . . . . . . . . . . . . . . . . .2
-------------------
(c) RESERVATION, ISSUANCE AND DELIVERY OF COMMON STOCK . .2
--------------------------------------------------
(d) EXECUTION AND DELIVERY . . . . . . . . . . . . . . . .2
----------------------
(e) VALID AND BINDING OBLIGATIONS. . . . . . . . . . . . .2
-----------------------------
(f) AUTHORIZATION AND CONSENTS . . . . . . . . . . . . . .3
--------------------------
(g) NO MATERIAL MISSTATEMENTS. . . . . . . . . . . . . . .3
-------------------------
3. REGISTRATION. . . . . . . . . . . . . . . . . . . . . . . .3
------------
4. EXCHANGE OF WARRANT CERTIFICATES. . . . . . . . . . . . . .3
--------------------------------
5. TRANSFER OF WARRANT . . . . . . . . . . . . . . . . . . . .3
-------------------
6. TERM OF WARRANT; CONDITIONS PRECEDENT TO EXERCISE;
--------------------------------------------------
EXERCISE OF WARRANT . . . . . . . . . . . . . . . . . . . .4
-------------------
7. COMPLIANCE WITH GOVERNMENT REGULATIONS. . . . . . . . . . .6
--------------------------------------
8. PAYMENT OF TAXES. . . . . . . . . . . . . . . . . . . . . .6
----------------
9. MUTILATED OR MISSING WARRANT. . . . . . . . . . . . . . . .6
----------------------------
10. RESERVATION OF WARRANT SHARES; PURCHASE AND
-------------------------------------------
CANCELLATION OF WARRANT . . . . . . . . . . . . . . . . . .6
-----------------------
11. ADJUSTMENT TO NUMBER OF WARRANT SHARES. . . . . . . . . . .7
--------------------------------------
11.1. PRESERVATION OF PURCHASE RIGHTS UPON MERGER,
--------------------------------------------
CONSOLIDATION, ETC. . . . . . . . . . . . . . . . . .7
-------------------
11.2. STATEMENT ON WARRANT. . . . . . . . . . . . . . . . .7
--------------------
11.3. COMPANY TO PREVENT DILUTION . . . . . . . . . . . . .7
---------------------------
12. FRACTIONAL INTERESTS. . . . . . . . . . . . . . . . . . . .7
--------------------
13. REGISTRATION UNDER THE SECURITIES ACT OF 1933 . . . . . . .7
---------------------------------------------
14. CERTIFICATE TO BEAR LEGENDS . . . . . . . . . . . . . . . .8
---------------------------
15. REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . .9
-------------------
(a) DEMAND REGISTRATION RIGHTS. . . . . . . . . . . . . .9
--------------------------
(b) PIGGY-BACK REGISTRATION RIGHTS. . . . . . . . . . . 10
------------------------------
(c) OTHER MATTERS . . . . . . . . . . . . . . . . . . . 11
-------------
-i-
<PAGE>
(d) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY
------------------------------------------
AND THE WARRANT HOLDER. . . . . . . . . . . . . . . 11
----------------------
(e) RULE 144. . . . . . . . . . . . . . . . . . . . . . 12
--------
(f) OTHER REGISTRATION RIGHTS . . . . . . . . . . . . . 12
-------------------------
16. BOARD SEATS . . . . . . . . . . . . . . . . . . . . . . . 12
-----------
17. NO RIGHTS AS STOCKHOLDERS; NOTICE TO WARRANT HOLDER . . . 12
---------------------------------------------------
18. RIGHT TO INSPECTION . . . . . . . . . . . . . . . . . . . 13
-------------------
19. RIGHT TO INFORMATION. . . . . . . . . . . . . . . . . . . 13
--------------------
20. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------
21. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 14
-------------
22. AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . 14
----------
23. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS . . 14
-----------------------------------------------------
24. SUCCESSORS. . . . . . . . . . . . . . . . . . . . . . . . 14
----------
25. MERGER OR CONSOLIDATION OF THE COMPANY. . . . . . . . . . 14
--------------------------------------
26. BENEFITS OF THIS WARRANT AGREEMENT. . . . . . . . . . . . 14
----------------------------------
27. CAPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 14
--------
28. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . 14
------------
29. DEFINED TERMS.. . . . . . . . . . . . . . . . . . . . . . 14
-------------
-ii-
<PAGE>
WARRANT AGREEMENT dated as of March 5, 1998, between
American Resources of Delaware, Inc., a Delaware corporation (the
"Company"), and TECO Oil & Gas, Inc., a Florida corporation
("TECO" and, together with any transferee of the Warrant or
Warrant Shares, the "Warrant Holders").
WHEREAS, TECO and the Company have entered into a certain
Credit Agreement and related Loan Documents (the "Credit
Agreement") dated March 5, 1998; and
WHEREAS, capitalized terms that are used but not defined
herein shall have the respective meanings given them in the
Credit Agreement; and
WHEREAS, the Company, as a condition precedent and to induce
TECO to enter into the Credit Agreement, has agreed (a) to issue
to TECO a common stock purchase warrant (the "Warrant") to
purchase shares (the "Warrant Shares") representing up to 20% of
the Company's common stock authorized and outstanding at the time
of exercise of the Warrant, par value [$0.0001] per share (the
"Common Stock"), entitling the holder thereof to purchase, upon
the occurrence of the conditions precedent described in Section
6, certain percentages of the Company's then authorized and
outstanding Common Stock, (b) to purchase an additional 600,000
shares of authorized and outstanding Common Stock upon the
occurrence of the conditions precedent described in Section 6
(the "Additional ARI Shares), and (b) to permit TECO to appoint
two members of the Board of Directors of the Company (the
"Board") upon the occurrence of the condition precedent described
in Section 16.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein and in the Agreement set forth and for
other good and valuable consideration, the parties hereto agree
as follows:
1. ISSUANCE OF WARRANT; FORM OF WARRANT. The Company
------------------------------------
will issue and deliver the Warrant to TECO, or to an affiliate
thereof designated by TECO, on the Closing Date referred to in
the Credit Agreement. One Warrant shall be issued and delivered.
The text of the Warrant, the purchase form and the assignment
form to be printed on the reverse thereof shall be substantially
as set forth in Exhibit A attached hereto. The Warrant shall be
executed on behalf of the Company by the signature of the present
or any future Chairman of the Board, President, Treasurer or Vice
President of the Company, under its corporate seal, affixed or in
facsimile, attested by the signature of the present or future
Secretary or an Assistant Secretary of the Company. A Warrant
bearing the signature of individuals who were at any time the
proper officers of the Company shall bind the Company
notwithstanding that such individuals or any of them shall have
ceased to hold such offices prior to the delivery of such Warrant
or did not hold such offices on the date of this Warrant
Agreement.
The Warrant shall be dated as of the date of execution
thereof by the Company either upon initial issuance or upon
division, exchange, substitution or transfer.
The number of shares of Common Stock purchasable hereunder
is subject to adjustment as hereinafter set forth.
-1-
<PAGE>
The demand and the piggy-back registration rights set forth
in Section 15 hereof may be exercised at any time during the term
of the Warrant.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
------------------------------------------------
COMPANY. The Company hereby represents, warrants and covenants
- -------
as follows:
(a) EXISTENCE. The Company is a corporation, duly
---------
organized and validly existing under the laws of the State
of Delaware and is authorized to do business and is in good
standing as a foreign corporation in every jurisdiction in
which it owns or leases real property or in which the nature
of its business requires it to be so qualified, except where
the failure to so qualify, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse
Effect.
(b) POWER AND AUTHORITY. The Company has all
-------------------
requisite corporate power and authority, and has taken all
corporate action necessary, to execute, deliver and perform
this Warrant Agreement, to grant, issue and deliver the
Warrant and to authorize and reserve for issuance and, upon
payment from time to time of the Purchase Price, to issue
and deliver the shares of Common Stock or other securities
issuable upon exercise of the Warrant. This Warrant
Agreement has been duly executed and delivered by the
Company.
(c) RESERVATION, ISSUANCE AND DELIVERY OF COMMON
--------------------------------------------
STOCK. There have been reserved for issuance, and the
-----
Company shall at all times keep reserved, out of the
authorized and unissued shares of Common Stock, a number of
shares of Common Stock sufficient to provide for the
exercise of the rights of purchase represented by the
Warrant, and such shares of Common Stock, when issued upon
receipt of payment therefor in accordance with the terms of
the Warrant and of this Warrant Agreement, will be legally
and validly issued, fully paid and non-assessable and will
be free of any preemptive rights of shareholders or any
other restrictions.
(d) EXECUTION AND DELIVERY. Neither the execution or
----------------------
delivery of this Warrant Agreement nor the consummation of
the transactions herein contemplated does or will result in
a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to
which the Company is a party or by which the Company is
bound or to which any of the property or assets of the
Company is subject, nor will such action result in any
violation of any provision of the Certificate of
Incorporation or Bylaws of the Company or any statute or any
order, rule or regulation or any court or Governmental
Authority having jurisdiction over the Company or any of its
properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or
Governmental Authority is required for the issuance and sale
of the Warrant or the consummation by the Company of the
transactions contemplated by this Warrant Agreement or the
Warrant.
(e) VALID AND BINDING OBLIGATIONS. This Warrant
-----------------------------
Agreement, the Warrant and all related documents, when duly
executed and delivered, will be legal, valid and binding
obligations of the Company, enforceable in accordance with
their respective
-2-
<PAGE>
terms, subject to any applicable bankruptcy, insolvency or
other laws of general application affecting creditors'
rights and judicial decisions interpreting any of the
foregoing.
(f) AUTHORIZATION AND CONSENTS. No authorization,
--------------------------
consent, approval, exemption, franchise, permit or license
of, or filing with, any Governmental Authority or other
Person is required to authorize, or is otherwise required in
connection with, the valid execution and delivery by the
Company of this Warrant Agreement, the Warrant and all
related documents and the performance by the Company of its
obligations hereunder or thereunder.
(g) NO MATERIAL MISSTATEMENTS. No information,
-------------------------
statement, certificate, document, exhibit or report prepared
by or at the direction or with the supervision of the
Company and furnished to TECO in connection with the
negotiation and preparation of this Warrant Agreement or of
the Credit Agreement and all related documents contains any
material misstatements of fact or omits to state a material
fact necessary to make the statements contained therein not
misleading as of the date made or deemed made.
3. REGISTRATION. The Warrant shall be numbered and shall
------------
be registered on the books of the Company (the "Warrant
Register") when it is issued. The Warrant shall be registered
initially in such name and such denomination as TECO has
specified to the Company.
4. EXCHANGE OF WARRANT CERTIFICATES. Subject to any
--------------------------------
restriction upon transfer set forth in this Warrant Agreement,
the Warrant certificate may be exchanged at the option of the
Warrant Holder thereof for another certificate or certificates of
different denominations entitling the Warrant Holder thereof to
purchase, subject to the conditions precedent set forth herein,
upon surrender to the Company or its duly authorized agent a like
aggregate number of Warrant Shares as the certificate surrendered
then entitles such Warrant Holder to purchase. If the Warrant
Holder desires to exchange a Warrant certificate, it shall make
such request in writing delivered to the Company, and shall
surrender, properly endorsed, the certificate to be so exchanged.
Thereupon, the Company shall execute and deliver to the Person
entitled thereto a new Warrant certificate, as the case may be,
as so requested. Any Warrant issued upon exchange, transfer or
partial exercise of the Warrant shall be the valid obligation of
the Company, evidencing the same generic rights and entitled to
the same generic benefits under this Warrant Agreement as the
Warrant surrendered for such exchange, transfer or exercise.
5. TRANSFER OF WARRANT. Subject to the provisions of
-------------------
Section 15 hereof, the Warrant shall be transferable only on the
Warrant Register upon delivery to the Company of the Warrant
certificate duly endorsed by the Warrant Holder or by his duly
authorized attorney-in-fact or legal representative, or
accompanied by proper evidence of succession, assignment or
authority to transfer. In all cases of transfer by an attorney-
in-fact, the original power of attorney, duly approved, or an
official copy thereof, duly certified, shall be deposited with
the Company. In case of transfer by executors, administrators,
guardians or other legal representatives, duly authenticated
evidence of their authority shall be produced, and may be
required to be deposited with the Company in its discretion.
Upon any registration of transfer, the Company shall deliver a
new Warrant to the Person entitled thereto.
-3-
<PAGE>
6. TERM OF WARRANT; CONDITIONS PRECEDENT TO EXERCISE;
--------------------------------------------------
EXERCISE OF WARRANT.
- -------------------
(a) Subject to satisfaction of the conditions
precedent set forth in Section 6(b), the Warrant entitles the
Warrant Holder to purchase up to 20% of the then authorized and
outstanding Common Stock of the Company plus an additional
600,000 shares of the authorized and outstanding Common Stock of
the Company for a period beginning on October 1, 1998 and
continuing until 90 days following April 1, 1999. If either the
Company or the Borrower shall have paid in full all Indebtedness
outstanding under the Credit Agreement and the Note on or prior
to October 1, 1998, this Warrant Agreement and the Warrant shall,
without any further action, be null and void and the obligations
of the Company hereunder and thereunder shall terminate.
(b) The rights of TECO under this Warrant Agreement
and the Warrant are subject to the following conditions
precedent:
(i) The right of TECO to purchase under the
Warrant, and to exercise corollary rights under this Warrant
Agreement with respect to, shares of Common Stock
representing, as of the date of exercise, 10% of the then
outstanding Common Stock of the Company and the Additional
ARI Shares is subject to the condition precedent that
neither the Company nor the Borrower shall have paid in full
all Indebtedness outstanding under the Credit Agreement and
the Note on or prior to October 1, 1998. From and after
October 1, 1998, if neither the Company nor the Borrower
shall have paid in full all Indebtedness then outstanding
under the Credit Agreement and the Note, then the rights of
TECO under this Warrant Agreement and the Warrant with
respect to the Warrant Shares described in this paragraph
(i) shall be vested, unconditional and irrevocable.
(ii) The right of TECO to purchase under the
Warrant, and to exercise corollary rights under this Warrant
Agreement with respect to, shares of Common Stock
representing, as of the date of exercise, an additional 5%
of the then outstanding Common Stock of the Company is
subject to the condition precedent that neither the Company
nor the Borrower shall have paid in full all Indebtedness
outstanding under the Credit Agreement and the Note on or
prior to January 1, 1999. From and after January 1, 1999,
if neither the Company nor the Borrower shall have paid in
full all Indebtedness then outstanding under the Credit
Agreement and the Note, then the rights of TECO under this
Warrant Agreement and the Warrant with respect to the
Warrant Shares described in this paragraph (ii) shall be
vested, unconditional and irrevocable.
(iii) The right of TECO to purchase under the
Warrant, and to exercise corollary rights under this Warrant
Agreement with respect to, shares of Common Stock
representing, as of the date of exercise, an additional 5%
of the then outstanding Common Stock of the Company is
subject to the condition precedent that neither the Company
nor the Borrower shall have paid in full all Indebtedness
outstanding under the Credit Agreement and the Note on or
prior to April 1, 1999. From and after April 1, 1999, if
neither the Company nor the Borrower shall have paid in full
all Indebtedness then outstanding under the Credit Agreement
and the Note, then the rights of TECO under this Warrant
Agreement and the Warrant with respect to the Warrant Shares
described in this paragraph (iii) shall be vested,
unconditional and irrevocable.
-4-
<PAGE>
(iv) For the avoidance of doubt, the effect of the
foregoing will be to vest in TECO, upon satisfaction of the
relevant condition precedent for each period, rights to
purchase Warrant Shares under the Warrant and this Warrant
Agreement which aggregate as follows:
Date: Then Outstanding Common Stock of the Company
October 1, 1998 10% plus the Additional ARI Shares
January 1, 1999 15% plus the Additional ARI Shares
April 1, 1999 20% plus the Additional ARI Shares.
(v) The number of shares of Common Stock of the
Company issuable upon the exercise of the Warrant is subject
to adjustment upon the occurrence of certain events pursuant
to the provision of Section 11 of this Warrant Agreement.
(c) For the purposes of assessing the number of
Warrant Shares purchasable upon the occurrence of the conditions
precedent set forth above, authorized and outstanding Common
Stock of the Company shall include the Common Stock of the
Company outstanding at any given time plus any options or rights
to purchase Common Stock of the Company, but shall not include
shares owned or held by or for the account of the Company or the
Additional ARI Shares.
(d) Subject to the provisions of this Warrant
Agreement, the Warrant Holder shall have the right, which may be
exercised as expressed in the Warrant, to purchase from the
Company (and the Company shall issue and sell to such Warrant
Holder) the number of fully paid and nonassessable shares of
Common Stock specified in the Warrant, upon surrender to the
Company, or its duly authorized agent, of such Warrant, with the
purchase form on the reverse thereof duly filled in and signed,
and upon payment to the Company of a purchase price equal to
$2.593 per share for the Additional ARI Shares (the "Additional
Shares Exercise Price") and $0.0001 per share (individually, the
"Exercise Price" and together with the Additional Shares Exercise
Price, the "Purchase Price" ), for the any other shares in
respect of which such Warrant is then exercised. The Warrant
Holder shall pay the Purchase Price in cash, by certified or
official bank check payable to the order of the Company.
Upon such surrender of Warrant, and payment of the Purchase
Price, with cash, by certified or official bank check payable to
the order of the Company, the Company at its expense shall issue
and cause to be delivered with all reasonable dispatch (but in
any event within 5 business days) to or upon the written order of
the Warrant Holder and in such name or names as the Warrant
Holder may designate, a certificate or certificates for the
number of fully paid and nonassessable shares of Common Stock so
purchased upon the exercise of such Warrant, together with cash,
as provided in Section 12 of this Warrant Agreement, in respect
of any fraction of a share of such stock otherwise issuable upon
such surrender. Such certificate or certificates shall be deemed
to have been issued and any Person so designated to be named
therein shall be deemed to have become a holder of record of such
shares as of the date of the surrender of the Warrant and payment
of the Purchase Price. The rights of purchase represented by the
Warrant shall be exercisable, at the election of the Warrant
Holder thereof, either in full or in part, from time to time
during the term set forth in Section 6(a) (but not as to a
fractional share of Common
-5-
<PAGE>
Stock) and, in the event that any Warrant is exercised in respect
of less than all of the shares purchasable on such exercise at
any time, a new certificate evidencing the remaining Warrant will
be issued.
7. COMPLIANCE WITH GOVERNMENT REGULATIONS. The Company
--------------------------------------
covenants that if any shares of Common Stock required to be
reserved for purposes of exercise or conversion of the Warrant
require, under any Federal or state law or applicable governing
rule or regulation of any national securities exchange,
registration with or approval of any Governmental Authority, or
listing on any such national securities exchange, before such
shares may be issued upon exercise, the Company will use its best
efforts to cause such shares to be duly registered, approved or
listed on the relevant national securities exchange, as the case
may be.
8. PAYMENT OF TAXES. The Company will pay all documentary
----------------
stamp taxes, if any, attributable to the initial issuance of
Warrant Shares upon the exercise of Warrant and any securities
issued pursuant to Section 11 hereof; provided, however, that the
Company shall not be required to pay any tax or taxes which may
be payable in respect of any transfer involved in the issue or
delivery of the Warrant or certificates for Warrant Shares and
any securities issued pursuant to Section 11 hereof in a name
other than that of the Warrant Holder of such Warrant.
9. MUTILATED OR MISSING WARRANT. In case the Warrant
----------------------------
shall be mutilated, lost, stolen or destroyed, the Company shall
issue and deliver in exchange and substitution for and upon
cancellation of the mutilated Warrant, or in lieu of and in
substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent right or
interest.
10. RESERVATION OF WARRANT SHARES; PURCHASE AND
-------------------------------------------
CANCELLATION OF WARRANT. The Company shall at all times reserve,
- -----------------------
out of the authorized and unissued shares of Common Stock, a
number of shares sufficient to provide for the exercise of the
rights of purchase represented by the Warrant and every transfer
agent for any shares of the Company's capital stock issuable upon
the exercise of any of the rights of purchase aforesaid are
hereby irrevocably authorized and directed at all times until the
expiration of the Warrant under Section 6(a) to reserve such
number of authorized and unissued shares as shall be requisite
for such purpose. The Company will keep a copy of this Warrant
Agreement on file with every transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the rights
of purchase represented by the Warrant. The Company will supply
any transfer agent with duly executed stock certificates for such
purpose and will itself provide or otherwise make available any
cash which may be issuable as provided by Section 12 of this
Warrant Agreement. The Company will furnish to the Transfer
Agent and any such subsequent transfer agent a copy of all
notices of adjustments, and certificates related thereto,
transmitted to the Warrant Holder. If the Warrant is surrendered
in the exercise of the rights thereby evidenced shall be
canceled, and such canceled Warrant shall constitute sufficient
evidence of the number of shares of stock which have been issued
upon the exercise of such Warrant (subject to adjustment as
herein provided).
11. ADJUSTMENT TO NUMBER OF WARRANT SHARES. The number of
--------------------------------------
Warrant Shares purchasable upon the exercise of the Warrant shall
be subject to adjustment from time to time and such adjustments
will be subject to the following provisions:
-6-
<PAGE>
11.1. PRESERVATION OF PURCHASE RIGHTS UPON MERGER,
--------------------------------------------
CONSOLIDATION, ETC. In case of any consolidation of the Company
- ------------------
with or merger of the Company into another Person or in case of
any sale, transfer or lease to another Person of all of or
substantially all the assets of the Company, the Company or such
successor or purchaser, as the case may be, shall execute with
the Warrant Holder an agreement that the Warrant Holder shall
have the right thereafter upon payment of the Purchase Price to
purchase upon exercise of the Warrant the kind and amount of
shares and other securities and property which the Warrant Holder
would have owned or have been entitled to receive after the
happening of such consolidation, merger, sale, transfer or lease
had such Warrant been exercised immediately prior to such action
regardless of whether the Warrant is exercisable at the time of
such action. Such agreement shall provide for adjustments, which
shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 11. The provisions of
this Section 11.1 shall similarly apply to successive
consolidations, mergers, sales, transfers or leases.
11.2. STATEMENT ON WARRANT. Even though the Warrant
--------------------
heretofore or hereafter issued may continue to express the same
price and number and kind of shares as are stated in the Warrant
initially issuable pursuant to this Warrant Agreement; the
parties understand and agree that such Warrant will represent
rights consistent with any adjustments in the number or kind of
shares purchasable upon the exercise of the Warrant.
11.3. COMPANY TO PREVENT DILUTION. If any event or
---------------------------
condition occurs as to which the provisions of this Agreement
would not fairly protect the exercise or purchase rights of this
Warrant Agreement or the Warrant in accordance with the essential
intent and principles of such provisions, or which might
materially and adversely affect the exercise or purchase rights
of the Warrant Holder under any provision of the Warrant, then
the Company shall make an adjustment in the application of such
provisions, in accordance with such essential intent and
principles, so as to protect such exercise and purchase rights as
aforesaid, and any adjustment necessary with respect to the
number of Warrant Shares or types of securities purchasable
hereunder so as to preserve without dilution the rights of the
Warrant Holder.
12. FRACTIONAL INTERESTS. The Company shall not be
--------------------
required to issue fractional Warrant Shares on the exercise of
the Warrant. If any calculation would result in the issuance of
a fractional share, the Company shall, in lieu of issuing a
fractional share, pay to TECO cash for such fractional share at a
price equal to the closing price for the Common Stock of the
Company on the date of exercise of the Warrant.
13. REGISTRATION UNDER THE SECURITIES ACT OF 1933. TECO
---------------------------------------------
represents and warrants to the Company that (a) it will not
dispose of the Warrant or Warrant Shares except pursuant to (i)
an effective registration statement or (ii) an applicable
exemption from registration under the Securities Act of 1933 (the
"Act"), and (b) it is acquiring the Warrant and Warrant Shares
for its own account for investment and not with a view to the
distribution or resale thereof. In connection with any sale by
TECO pursuant to clause (ii) of the preceding sentence, it shall
furnish to the Company an opinion of counsel reasonably
satisfactory to the Company to the effect that such exemption
from registration is available in connection with such sale.
-7-
<PAGE>
14. CERTIFICATE TO BEAR LEGENDS. The Warrant shall be
---------------------------
subject to a stop-transfer order and the certificate or
certificates therefor shall bear the following legend by which
the Warrant Holder shall be bound:
"THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE
SHARES OF COMMON STOCK OR OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT OR
(ii) AN APPLICABLE EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933. ANY SALE PURSUANT TO
CLAUSE (ii) OF THE PRECEDING SENTENCE MUST BE
ACCOMPANIED BY AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH
EXEMPTION FROM REGISTRATION IS AVAILABLE IN CONNECTION
WITH SUCH SALE."
The Warrant Shares or other securities issued upon exercise
of the Warrant shall, unless issued pursuant to an effective
registration statement, be subject to a stop-transfer order and
the certificate or certificates evidencing any such Warrant
Shares or securities shall bear the following legend by which the
Warrant Holder thereof shall be bound:
"THE SHARES OR OTHER SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO (i) AN EFFECTIVE REGISTRATION STATEMENT, OR (ii) AN
APPLICABLE EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933. ANY SALE PURSUANT TO CLAUSE
(ii) OF THE PRECEDING SENTENCE MUST BE ACCOMPANIED BY
AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH EXEMPTION
FROM REGISTRATION IS AVAILABLE IN CONNECTION WITH SUCH
SALE."
Any certificate issued at any time in exchange or
substitution for any certificate bearing such legend (except a
new certificate issued upon completion of a public distribution
under a registration statement of the securities represented
thereby) shall also bear such legend unless, in the opinion of
counsel satisfactory to the Company, the securities represented
thereby need no longer be subject to the restrictions contained
herein. The provisions of this Section 14 shall be binding upon
all subsequent holders of certificates bearing the above legend
and shall also be applicable to all subsequent holders of the
Warrant.
15. REGISTRATION RIGHTS.
-------------------
(a) DEMAND REGISTRATION RIGHTS. The Company
--------------------------
covenants and agrees with TECO and any subsequent holders of
the Warrant and/or Warrant Shares that within forty-five
(45) days after receipt of a written request from the
Warrant Holder and/or the holder of 60% of the Warrant
Shares issued pursuant to this Warrant Agreement (the
"Initiating Holders"), the Company shall file a registration
statement (and thereafter use its best efforts to cause such
registration statement to become effective under the Act)
-8-
<PAGE>
with respect to the offering and sale or other disposition
of the Warrant and/or any number of the Warrant Shares
(including any securities received by the Warrant Holder
pursuant to Section 11 hereof) (all such securities,
together with the Piggy Back Securities, when the context
requires, the "Registrable Securities"). The Company shall
continuously maintain the effectiveness of such registration
statement for the lesser of (i) 180 days after the effective
date of the registration statement or (ii) the consummation
of the distribution by the holders of the Registrable
Securities covered by such registration statement (the
"Termination Date"); provided, however, that if at the
-------- -------
Termination Date, the securities offered are covered by a
registration statement which also covers other securities
and which is required to remain in effect beyond the
Termination Date, the Company shall maintain in effect such
registration statement as it relates to the Registrable
Securities for so long as such registration statement (or
any subsequent registration statement) remains or is
required to remain in effect for any of such other
securities. Except with respect to requests to register on
Form S-3 (or any successor or similar short-form
registration statement ("Short-form Registration")), the
Company shall not be required to comply with more than three
requests for registration pursuant to this Section 15(a).
The Company shall be required to comply with an unlimited
number of Short-form Registrations. All expenses of such
registration shall be borne by the Company, except that
underwriting commissions and expenses attributable to the
Registrable Securities will be borne by the Warrant Holder
or holders of Warrant Shares requesting that such
securities be offered.
If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their
request made pursuant to this Section 15(a). The right of any
other holder to registration pursuant to this Section 15(a) shall
be conditioned upon such holder's participation in such
underwriting and the inclusion of such holder's Registrable
Securities in the underwriting (unless otherwise mutually agreed
by a majority in interest of the Initiating Holders and such
holder with respect to such participation and inclusion) to the
extent provided herein. A holder may elect to include in such
underwriting all or a part of the Registrable Securities it
holds. If other holders of registration rights request inclusion
in any registration statement pursuant to this Section 15(a),
such holders may be included in the underwriting conditioned on
their acceptance of the further applicable provisions of this
Section 15(a). The Company shall (together with other holders
proposed to distribute their securities through such
underwriting) enter into an underwriting agreement in customary
form with a representative of the underwriter or underwriters
selected for such underwriting by a majority in interest of the
Initiating Holders. If the representative advises the Initiating
Holders in writing that marketing factors require a limitation on
the number of shares to be underwritten, then securities held by
holders other than the Initiating Holders shall be excluded from
such registration to the extent so required by such limitation.
(b) PIGGY-BACK REGISTRATION RIGHTS. The Company
------------------------------
covenants and agrees with TECO and any subsequent holders of the
Warrant and/or Warrant Shares that, in the event the Company
proposes to file a registration statement under the Act with
respect to the firm commitment offering of Common Stock (other
than in connection with an exchange offer or a registration
statement on Form S-4 or S-8 or other similar registration
statements not available to register securities so requested to
be included), the Company shall in each case give written notice
of such proposed filing to (i) the holders of the Warrant Shares
and (ii) the Warrant
-9-
<PAGE>
Holder, in each case at least 30 days before the earlier of the
anticipated or the actual effective date of the registration
statement and at least ten days before the initial filing of such
registration statement and such notice shall offer to such
Warrant Holder the opportunity to include in such registration
statement the Warrant and/or Warrant Shares (and any securities
received by the Warrant Holder pursuant to Section 11 hereof)
(the "Piggy-back Securities" as they may request. If the Warrant
Holder desires inclusion of Piggy-back Securities in such
registration statement, it shall so inform the Company by written
notice, given within 10 days of the giving of such notice by the
Company in accordance with the provisions of Section 20 hereof.
The Company shall permit, or shall cause the managing underwriter
of a proposed offering to permit, the holders of Piggy-back
Securities requested to be included in the registration to
include such securities in the proposed offering on the same
terms and conditions as applicable to securities of the Company,
if any, included therein for the account of any Person other than
the Company and the Warrant Holder and/or the holder Warrant
Shares. Notwithstanding the foregoing, if any such managing
underwriter shall advise the Company in writing that, in its
opinion, the distribution of securities by holders thereof,
including all or a portion of the Piggy-back Securities,
requested to be included in the registration concurrently with
the securities being registered by the Company would materially
adversely affect the distribution of such securities by the
Company for its own account, then the holders of such Warrant
and/or Warrant Shares shall delay their offering and sale of
Piggy-back Securities (or the portions thereof so designated by
such managing underwriter) for such period, not to exceed 120
days, as the managing underwriter shall request, provided that if
any other securities are included in such registration statement
for the account of any Person other than the Company and the
holders of Warrant and/or Warrant Shares, then such securities,
including the Warrant and/or Warrant Shares, so included shall be
apportioned among holders who wish to be included therein pro
rata according to amounts so requested to be included by each
such Person. No such delay shall in any event impair any right
granted hereunder to make subsequent requests for inclusion
pursuant to the terms of this Section 15(b). The Company shall
continuously maintain in effect any registration statement with
respect to which the Piggy-back Securities have been requested to
be included (and so included) for a period of not less than (i)
180 days after the effectiveness of such registration statement
or (ii) the consummation of the distribution by the Warrant
Holder or the holder of the Piggy-back Securities ("Piggy-back
Termination Date"); provided, however, that if at the Piggy-back
-------- -------
Termination Date, the Piggy-back Securities are covered by a
registration statement which is, or is required to remain, in
effect beyond the Piggy-back Termination Date, then the Company
shall maintain in effect the registration statement as it relates
to the Piggy-back Securities for so long as such registration
statement remains or is required to remain in effect for any of
such other securities. All expenses of such registration shall
be borne by the Company, except that underwriting commissions and
expenses attributable to the Piggy-back Securities and fees and
distributions of counsel (if any) to the Warrant Holder or holder
of Warrant shares requesting that the Piggy-back Securities be
offered will be borne by such Warrant Holder.
(c) OTHER MATTERS. In connection with the
-------------
registration of Registrable Securities in accordance with
Paragraph (a) or (b) above, the Company agrees to:
(i) use its best efforts to register or qualify
the Registrable Securities for offer or sale under state
securities or Blue Sky laws of such jurisdictions in which
the holders of such Warrant and/or Warrant Shares shall
designate; provided, that in no event
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<PAGE>
shall the Company be obligated to qualify to do business in
any jurisdiction where it is not now so qualified or to take
any action which would subject it to general service of
process in any jurisdiction where it is not now so subject,
and use its best efforts to do any and all other acts and
things which may be necessary or advisable to enable the
Warrant Holder to consummate the sale, transfer or other
disposition of such securities in any jurisdiction;
(ii) enter into indemnity and contribution
agreements, each in customary form, with each underwriter,
if any, and each holder of Registrable Securities included
in such registration statement; and, if requested, enter
into an underwriting agreement containing customary
representations, warranties, covenants, allocation of
expenses, and customary closing conditions including, but
not limited to, opinions of counsel, accountants' cold
comfort letters and petroleum engineers' reports, with any
underwriter who participates in the offering of Registrable
Securities;
(iii) pay all expenses in connection with the
registration of the Warrant and/or Warrant Shares under the
Act and compliance with the provisions of clause (i) above,
except to the extent otherwise provided in Sections 15(a)
and 15(b); and
(iv) list the Warrant Shares on each securities
exchange on which the Common Stock is listed.
In connection with the registration of Registrable
Securities in accordance with Paragraph (b) above, the Warrant
Holder agrees to enter into an underwriting agreement containing
customary representations, warranties, covenants, allocation of
expenses (not otherwise inconsistent with this Warrant
Agreement), and customary closing conditions, with any
underwriter who participates in the offering of Registrable
Securities.
(d) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY AND THE
--------------------------------------------------
WARRANT HOLDER. The Company agrees (i) not to effect any public
- --------------
sale or distribution of any securities similar to the Registrable
Securities or any securities convertible into or exchangeable or
exercisable for such securities (or any option or other right for
such securities)during the 15-day period prior to, and during the
60-day period beginning on the effective date of any registration
statement under which the Registrable Securities are registered
in accordance with Section 15(a) (other than as part of such
registration).
(e) RULE 144. With a view to making available to the
--------
Warrant Holder the benefits of certain rules of the Securities
and Exchange Commission (the "Commission") that may permit the
sale of Registrable Securities to the public without
registration, the Company hereby covenants and agrees to use its
best efforts to: (i) file in a timely manner all reports and
other documents required to be filed by it under the Act and the
Securities Exchange Act of 1934 and the rules and regulations
adopted by the Commission thereunder necessary to permit sales
under Rule 144 under the Act, and the Company will take such
further action to the extent required from time to time to enable
the Warrant Holder to sell Registrable Securities (whether or not
any such securities have been the subject of a demand or piggy-
back request under Section 15 hereof) without registration under
the Act within the limitation of the exemptions provided by
(a) Rule 144 under the Act, as such Rule may be amended from time
to time, or
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<PAGE>
(b) any similar rule or regulation hereafter adopted by the
Commission and (ii) promptly furnish the Warrant Holder a copy of
all such reports and documents. Upon the request of a Warrant
Holder, the Company will deliver to such Warrant Holder a written
statement as to whether it has complied with such requirements.
(f) OTHER REGISTRATION RIGHTS. The Company hereby
-------------------------
agrees that it shall not issue any additional registration rights
with respect to shares of its Common Stock, warrants to purchase
its Common Stock or securities convertible into its Common Stock,
which are inconsistent with the provisions of this Agreement.
16. BOARD SEATS. If the Indebtedness is not paid in full
-----------
to the TECO on or before the Final Maturity Date, then until the
Indebtedness is paid in full, the number of directors on the
board of directors of the Company shall be increased by two (2),
and TECO shall be entitled to appoint two (2) directors (the
ATECO Designees@) to the Board of Directors of the Company to
fill such new board positions thereby created. Until the
Indebtedness is paid in full, the Company shall take all actions
in its control to maintain the TECO Designees as directors of the
Company, including (a) not removing the TECO Designees as
directors, and (b) in connection with any election of directors,
nominating the TECO Designees for re-election and recommending
such re-election.
17. NO RIGHTS AS STOCKHOLDERS; NOTICE TO WARRANT HOLDER.
---------------------------------------------------
Except as set forth in Section 16, nothing contained in this
Warrant Agreement or the Warrant shall be construed as conferring
upon the Warrant Holder or its transferees the right to vote or
to receive dividends or to consent or to receive notice as
stockholders in respect of any meeting of stockholders for the
election of directors of the Company or any other matter, or any
rights whatsoever as stockholders of the Company prior to such
time as the Warrant shall have been exercised. If at any time
prior to the expiration of the Warrant and prior to their
exercise, any of the following events shall occur:
(a) the Company shall declare any dividend payable in
any securities upon its shares of Common Stock or make any
distribution (other than a cash dividend) to the holders of its
shares of Common Stock; or
(b) the Company shall offer to the holders of its
shares of Common Stock any additional shares of Common Stock or
securities convertible into or exchangeable for shares of Common
Stock or any right to subscribe to or purchase any thereof; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation, merger,
sale, transfer or lease of all or substantially all of its
property, assets, and business as an entirety) shall be proposed,
then in any one or more of said events the Company shall give
notice in writing of such event to the Warrant Holder as provided
in Section 20 hereof, such giving of notice and publication to be
completed at least 15 days prior to the date fixed as a record
date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend,
distribution, or subscription rights, or for the determination of
stockholders entitled to vote on such proposed dissolution,
liquidation or winding up. Such notice shall specify such record
date or the date of
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<PAGE>
closing the transfer books, as the case may be. Failure to
publish, mail or receive such notice or any defect therein or in
the publication or mailing thereof shall not affect the validity
of any action taken in connection with such dividend,
distribution or subscription rights, or such proposed
dissolution, liquidation or winding up.
18. RIGHT TO INSPECTION. The Company will permit the
-------------------
Warrant Holder to inspect its properties, its books and records,
and will promptly respond to and discuss with such Warrant Holder
inquiries regarding the management, business and affairs of the
Company.
19. RIGHT TO INFORMATION. The Company, in accordance with
--------------------
Section 15 above, will provide to the Warrant Holder and to all
holders of Warrant Shares, on a timely basis, copies of all
documents and reports, filed with the Commission; and
additionally will provide such additional financial or other
information concerning the assets, liabilities, operations and
transactions of the Company as the Warrant Holder may from time
to time reasonably request; provided that such information is
available to shareholders generally.
20. NOTICES. Any notice pursuant to this Warrant Agreement
-------
to be given or made by the Warrant Holder or holder of Warrant
Shares to or on the Company shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed as
follows:
American Resources of Delaware, Inc.
Attention: David J. Stetson
160 Morgan Street
P.O. Box 87
Versailles, Kentucky 40383
Telephone: (606) 873-5455
Fax: (606) 873-4689
Notices or demands authorized by this Warrant Agreement to be
given or made to or on the Warrant Holder or any holder of
Warrant Shares shall be sufficiently given or made (except as
otherwise provided in this Warrant Agreement) if sent by
registered mail, return receipt requested, postage prepaid,
addressed to such Warrant Holder at the address of such Warrant
Holder as shown on the Warrant Register or the Common Stock
Register, as the case may be.
21. GOVERNING LAW. THIS WARRANT AGREEMENT, THE WARRANT AND
-------------
ALL RELATED DOCUMENTS SHALL BE DEEMED TO BE CONTRACTS MADE UNDER
AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
22. AMENDMENTS. This Warrant Agreement may not be amended
----------
except by a written instrument executed by the Company and the
Warrant Holder.
23. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
-----------------------------------------------------
All representations and warranties of the Company and all
covenants and agreements made herein shall survive the execution
and delivery of this Warrant Agreement and the Warrant and shall
remain in force and effect until this Warrant Agreement has
expired under Section 6(a).
-13-
<PAGE>
24. SUCCESSORS. All representations and warranties of the
----------
Company and all covenants and agreements of this Warrant
Agreement and the Warrant by or for the benefit of the Company or
the Warrant Holder shall bind and inure to the benefit of their
respective successors and assigns hereunder.
25. MERGER OR CONSOLIDATION OF THE COMPANY. So long as
--------------------------------------
this Warrant Agreement remains in effect, the Company will not
merge or consolidate with or into, or sell, transfer or lease all
or substantially all of its property to, any other Person unless
the successor or purchaser, as the case may be (if not the
Company), shall expressly assume, by supplemental agreement
executed and delivered to the Warrant Holder, the due and
punctual performance and observance of each and every covenant
and condition of this Warrant Agreement and the Warrant to be
performed and observed by the Company.
26. BENEFITS OF THIS WARRANT AGREEMENT. Nothing in this
----------------------------------
Warrant Agreement shall be construed to give to any Person other
than the Company and the Warrant Holder, any legal or equitable
right, remedy or claim under this Warrant Agreement, but this
Warrant Agreement shall be for the sole and exclusive benefit of
the Company and the holders of the Warrant and Warrant Shares.
27. CAPTIONS. The captions of the sections and subsections
--------
of this Warrant Agreement have been inserted for convenience and
shall have no substantive effect.
28. COUNTERPARTS. This Warrant Agreement may be executed
------------
in any number of counterparts, each of which so executed shall be
deemed to be an original; but such counterparts together shall
constitute but one and the same instrument.
29. DEFINED TERMS. Capitalized terms used herein but not
-------------
defined shall have the meanings attached to such terms in the
Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Warrant Agreement to be duly executed on the day, month and year
first above written.
AMERICAN RESOURCES OF DELAWARE,
INC., A DELAWARE CORPORATION
By: /S/David J. Stetson
--------------------------------
Name: David J. Stetson
Title: General Counsel
(CORPORATE SEAL)
Attest:
/S/Karen M. Underwood
- ------------------------------
Name: Karen M. Underwood
Title: Corporate Secretary
-14-
<PAGE>
TECO OIL & GAS, INC., A FLORIDA
CORPORATION
By: /S/Joseph L. Pritchett, III
--------------------------------
Name: Joseph L. Pritchett, III
Title: Vice President
-15-
<PAGE>
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF
COMMON STOCK OR OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT, OR (ii) AN APPLICABLE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933. ANY SALE PURSUANT
TO CLAUSE (ii) OF THE PRECEDING SENTENCE MUST BE ACCOMPANIED BY
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO
THE EFFECT THAT SUCH EXEMPTION FROM REGISTRATION IS AVAILABLE IN
CONNECTION WITH SUCH SALE.
THE TRANSFER OR EXCHANGE OF THE WARRANT AND COMMON STOCK
UNDERLYING SUCH WARRANT REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO
HEREIN.
No.1 Warrant Warrant
VOID AFTER 5:00 P.M. FLORIDA TIME
ON July 1, 1999
AMERICAN RESOURCES OF DELAWARE, INC.
WARRANT CERTIFICATE
THIS CERTIFIES THAT for value received TECO Oil and Gas,
Inc., the registered holder hereof or registered assigns (the
"Warrant Holder"), is the owner of the Warrant set forth above,
which entitles the owner thereof to purchase certain percentages
of the authorized and outstanding shares of the Common Stock as
set forth in the Warrant Agreement, par value $0.0001 per share
(the "Common Stock"), of American Resources of Delaware, Inc. a
Delaware corporation (the "Company"), at the purchase price of
$0.0001 per share (the "Exercise Price"), and an additional
600,000 shares of authorized and outstanding shares of Common
Stock of American Resources of Delaware, Inc. a Delaware
corporation, at the purchase price of $2.67 (the "Additional ARI
Shares" and together with the Exercise Price, the "Purchase
Price"), subject to adjustment as described in the Warrant
Agreement referred to below on such dates and in such amounts as
described in the Warrant Agreement. The Warrant Holder may pay
the Purchase Price in cash, or by certified or official bank
check.
This Warrant Certificate is subject to, and entitled to the
benefits of, all of the terms, provisions and conditions of an
agreement dated March 5, 1998 (the "Warrant Agreement") between
the Company and TECO Oil & Gas, Inc., which Warrant Agreement is
hereby incorporated herein by reference and made a part hereof
and to which Warrant Agreement reference is hereby made for a
full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Company and
the Warrant Holder. Copies of the Warrant Agreement are on file
at the principal office of the Company.
The Warrant Holder hereof may be treated by the Company and
all other persons dealing with this Warrant Certificate as the
absolute owner hereof for any purpose and as the person
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<PAGE>
entitled to exercise the rights represented hereby, or to the
transfer hereof on the books of the Company, any notice to the
contrary notwithstanding, and until such transfer on such books,
the Company may treat the Warrant Holder hereof as the owner for
all purposes.
The Warrant Certificate, upon surrender at the principal
office of the Company, may be exchanged for another Warrant
Certificate of like tenor and date evidencing a Warrant entitling
the Warrant Holder to purchase a like aggregate number of shares
of Common Stock as the Warrant evidenced by the Warrant
Certificate surrendered entitled to such Warrant Holder to
purchase. If this Warrant Certificate shall be exercised in
part, the Warrant Holder shall be entitled to receive upon
surrender hereof, another Warrant Certificate evidencing the
portion of the Warrant not exercised.
No fractional shares of Common Stock will be issued upon the
exercise of the Warrant evidenced hereby, but in lieu thereof a
cash payment will be made, as provided in the Warrant Agreement.
Neither the Warrant nor the Warrant Certificate entitles the
Warrant Holder hereof to any of the rights of a stockholder of
the Company except as set forth in the Warrant Agreement.
THIS WARRANT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW, AND, WITH RESPECT TO USURY, THE LAWS OF ANY
OTHER JURISDICTION WHOSE LAWS MAY BE APPLICABLE PURSUANT TO THE
PROVISIONS OF TITLE 12, SECTION 85 OF THE UNITED STATES CODE.
-17-
<PAGE>
IN WITNESS WHEREOF, American Resources of Delaware, Inc. has
caused the signature of its Vice President and Secretary to be
printed hereon and its corporate seal to be printed hereon.
AMERICAN RESOURCES OF DELAWARE,
INC., A DELAWARE CORPORATION
By: /s/ David J. Stetson
--------------------------------
Name: David J. Stetson
Title: General Counsel
ATTEST:
/s/ Karen M. Underwood
- ------------------------------
Name: Karen M. Underwood
Title: Corporate Secretary
-18-
<PAGE>
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, hereby sells, assigns and
------------
transfers unto the within Warrant Certificate,
------------
together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint , attorney,
------------
to transfer said Warrant Certificate on the books of the within-
named Company, with full power of substitution in the premises.
Dated: , 19
-------------- ---
-----------------------------------
NOTE: The above signature should
correspond exactly with the name on
the face of this Warrant
Certificate.
-19-
<PAGE>
PURCHASE FORM
(To be executed upon exercise of Warrant). To American
Resources of Delaware, Inc.:
The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the Warrant Certificate for, and
to purchase thereunder, shares of Common Stock, as provided
-----
for therein, and tenders herewith payment of the purchase price
in full in the form of cash or a certified or official bank check
in the amount of $ .
----------
Please issue a certificate or certificates for such shares
of Common Stock in the name of, and pay any cash for any
fractional share to:
Name:
-----------------------------
(Please Print Name, Address
and Social Security No.)
Signature:
------------------------
NOTE: The above signature should
correspond exactly with the name on
the face of this Warrant
Certificate or with the name of
assignee appearing in the
assignment form below.
And, if said number of shares shall not be all the shares
purchasable under the within Warrant Certificate, a new Warrant
Certificate is to be issued in the name of said undersigned for
the balance remaining of the shares purchasable thereunder less
any fraction of a share paid in cash.
Dated: , 19 Signature:
--------------- --- --------------------
------------------------------
Please Print Name
-20-
