Form 8-K/A
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1
CURRENT REPORT
Pursuant to Section 13 or (15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported) July 23,1996
(June 28, 1996)
FORCENERGY INC
(Exact name of registrant as specified in its charter)
Delaware 0-26444 65-0429338
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2730 SW 3rd Avenue, Suite 800, Miami, Florida 33129-2237
(Address of principal executive offices)
Registrant's telephone number, including area code 305-856-8500
Item 7. Financial Statements and Exhibits
(c) Exhibit 2 - Agreement for Purchase And Sale
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
FORCENERGY INC
Date: July 23, 1996 E.JOSEPH GRADY
----------------------
E. Joseph Grady
Vice President - Chief
Financial Officer
THIS DOCUMENT IS A COPY OF EXHIBIT 2 TO FORM 8-K FILED ON JULY 16,
1996 PURSUANT TO A TEMPORARY HARDSHIP EXEMPTION.
AGREEMENT FOR PURCHASE AND SALE
dated as of April 19, 1996
by and between
AMERADA HESS CORPORATION
as Seller
and
FORCENERGY GAS EXPLORATION, INC.
as Buyer
TABLE OF CONTENTS
ARTICLE PAGE
- ------- ----
ARTICLE I............................................. 1
DEFINITIONS
ARTICLE II............................................ 11
SALE AND PURCHASE
ARTICLE III........................................... 11
PURCHASE PRICE AND PAYMENT
ARTICLE IV............................................ 14
SELLER'S REPRESENTATIONS
ARTICLE V............................................. 17
BUYER'S REPRESENTATIONS
ARTICLE VI............................................ 19
ACCESS TO INFORMATION AND INSPECTION
ARTICLE VII........................................... 20
TITLE
ARTICLE VIII.......................................... 23
PREFERENTIAL PURCHASE RIGHTS AND CONSENTS
ARTICLE IX............................................ 25
COVENANTS OF SELLER
ARTICLE X............................................. 28
CLOSING CONDITIONS
ARTICLE XI............................................ 30
CLOSING
ARTICLE XII........................................... 31
EFFECT OF CLOSING
ARTICLE XIII.......................................... 35
SETTLEMENT OF PRORATIONS
ARTICLE XIV........................................... 36
ENVIRONMENTAL
ARTICLE XV............................................ 42
CASUALTY LOSS AND CONDEMNATION
ARTICLE XVI........................................... 43
DEFAULT AND REMEDIES
ARTICLE XVII.......................................... 44
MISCELLANEOUS
EXHIBITS
- --------
A - Net Revenue and Working Interests in Subject Interests
A-1 - Seller's Subject Interests
B - Purchase Price Allocation
C - Preferential Rights and Consents
D - Production Payments and Certain Agreements
E - Litigation and Other Liabilities
F - Assignment, Bill of Sale and Conveyance
G - Advance Payments and Prepayments
H - Overproduction and Underproduction
I - Excluded Assets
J - Oil and Gas Purchase and Processing Agreements
K - Basic Documents
L - Reversionary Rights
The above exhibits to the Agreement for Purchase and Sale are
excluded from this document. Any omitted exhibits will be
furnished to the Commission upon request.
AGREEMENT FOR PURCHASE AND SALE
THIS AGREEMENT dated as of the 19th day of April, 1996,
between Amerada Hess Corporation, a Delaware corporation
(hereinafter referred to as "Seller"), and Forcenergy Gas
Exploration, Inc., a Delaware corporation (herein referred to as
"Buyer").
WITNESSETH:
WHEREAS, Seller owns certain oil and gas leasehold interests
and related equipment situated in certain areas of the United
States of America; and
WHEREAS, Seller desires to sell and Buyer desires to
acquire these interests and related assets on the terms and
conditions hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants
and agreements hereinafter set forth, the parties hereby
agree as follows:
ARTICLE I.
DEFINITIONS
The following terms, as used herein, shall have
the following meanings:
1.1 "Agreement" shall mean this Agreement for Purchase
and Sale between Seller and Buyer.
1.2 "Assets" shall mean the following described assets
and properties (except to the extent constituting Excluded
Assets):
(a) the Subject Interests;
(b) the Lands;
(c) the Incidental Rights;
(d) the Claims;
(e) the Royalty Accounts;
(f) the Facilities and Equipment;
(g) the Basic Documents; and
(h) all Hydrocarbons produced from or attributable
to the Subject Interests with respect to all periods
subsequent to the Effective Time, together with all proceeds
from or of such Hydrocarbons.
1.3 "Assumed Obligations" shall mean (i) all liabilities
and obligations of Seller with respect to the Royalty
Accounts and the Claims, (ii) all liabilities and obligations
of Seller arising or accruing under or with respect to the
Assets from and after the Effective Time, (iii) all liabilities
and obligations of Seller, whether accrued or not, with respect
to plugging and abandoning any wells, removing platforms and
facilities and the restoration of the surface relating to
operations pertaining to the Assets, (iv) all liabilities and
obligations of Seller with respect to the matters disclosed
in Exhibits "D", "E", "F", "G" and "H" attached hereto, (v) a
pro-rata share of Property Taxes with respect to the Assets
for the Tax Period in which Closing occurs and all
Transfer Taxes, (vi) all liabilities and obligations of
Seller arising or accruing under or with respect to the Oil
and Gas Purchase and Processing Agreements from and after the
Effective Time, (vii) all liabilities and obligations under
the Basic Documents from and after the Effective Time
except to the extent that a particular obligation is otherwise
expressly retained by Seller hereunder, and (viii) all
other liabilities and obligations assumed by Buyer
under this Agreement, including but not limited to liabilities
and obligations assumed by Buyer under Article XIV.
1.4 "Basic Documents" shall mean all material
contracts, agreements, and other legally binding rights and
obligations to which the Assets may be subject, or that may
relate to the Assets including, without limitation, leases,
assignments in the chain of title, overriding royalty assignments,
farmout and farmin agreements, option agreements,pooling and
unitization agreements, operating agreements, production sales and
marketing agreements, processing agreements, transportation
agreements, production purchasing agreements, permits, licenses
and orders.
1.5 "Buyer's Credits" shall be as defined in Section 3.2.
1.6 "Claims" shall mean (i) all claims of Seller
against gas purchasers for "take or pay" obligations with respect
to the Assets to the extent such claims accrue at or after the
Effective Time (but not for obligations accruing prior thereto)
and (ii) all obligations and benefits with respect
to gas production, pipeline, transportation or processing
imbalances which are to be assumed or received by Buyer
pursuant to this Agreement.
1.7 "Closing" shall be as defined in Section 11.1.
1.8 "Closing Date" shall be as defined in Section 11.1.
1.9 "Defensible Title" shall mean such title to a
Subject Interest that, subject to and except for Permitted
Encumbrances, (a) entitles Seller to receive not less than
the net revenue interest of Seller for the well or unit as
set forth in Exhibit "A" of all Hydrocarbons produced,
saved and marketed from or attributable to a Subject
Interest and (b) obligates Seller to bear the costs and expenses
relating to the maintenance, development and operation of such
well or unit in an amount not greater than the working
interest of Seller for such Subject Interest as set forth in
Exhibit "A" (unless Seller's net revenue interest therein is
proportionately increased) it being understood that the existence
of Permitted Encumbrances affecting any Asset shall not form the
basis for a claim that Seller does not have Defensible Title to
such Asset.
1.10 "Deposit" shall be as defined in Section 3.1.
1.11 "Effective Time" shall mean 7:00 a.m., Central
Standard Time on January 1, 1996; however, with respect to Assets
not located in the Central Standard Time Zone, the Effective
Time shall mean 7:00 a.m., local time, said time to be determined
for each locality in which the Assets are located in accordance
with the time generally observed in said locality.
1.12 "Excluded Assets" shall mean the following:
(a) all rights, interests, assets and properties
of Seller which are expressly excluded from this sale under
other provisions of this Agreement or which are set forth in
Exhibit "I";
(b) (i) except to the extent constituting or
attributable to Claims, all trade credits, accounts receivable,
notes receivable and other receivables attributable to Seller's
interest in the Assets with respect to any period of time prior
to the Effective Time, and (ii) except to the extent constituting
the Royalty Accounts, all deposits, cash, checks in process of
collection, cash equivalents and funds attributable to Seller's
interest in the Assets with respect to any period of time prior
to the Effective Time;
(c) all corporate, financial, tax and legal
(other than title) records of Seller; however, Buyer shall be
entitled to receive copies of any financial, tax (subject
to Section 12.2(d) of this Agreement) or legal records which
directly relate to the Subject Interests; provided, however,
that Buyer's said entitlement shall not extend to any records
whose disclosure may expose Seller to any possible claim of
breach of privilege or confidentiality under any agreement
or under federal or state laws;
(d) except to the extent constituting Claims
and except as otherwise provided in this Agreement, all claims and
causes of action of Seller (i) arising from acts, omissions
or events, or damage to or destruction of property, occurring
prior to the Effective Time, or (ii) with respect to any
of the Excluded Assets;
(e) except as otherwise provided in clause (vi) of
the definition of Incidental Rights or in Article XV hereof,
all rights, titles, claims and interests of Seller (i) under
any policy or agreement of insurance or indemnity, (ii) under
any bond or (iii) to any insurance or condemnation proceeds
or awards;
(f) all (i) Hydrocarbons produced from or
attributable to the Assets with respect to all periods prior to
the Effective Time, together with all proceeds from or of such
Hydrocarbons, and (ii) Hydrocarbons which, at the Effective
Time, are owned by Seller or to which Seller has title and are
in storage, within processing plants, or in pipelines;
(g) Seller's share of any and all claims, as well
as Seller's claims, for refund of or loss carry forwards
with respect to (i) federal, state and local, sales and
use, ad valorem, property, excise, production, severance, gross
receipts, payroll, withholding or other taxes attributable to
any period prior to the Effective Time; (ii) federal, state and
local income or franchise taxes; or (iii) any taxes
attributable to the Excluded Assets;
(h) all amounts due or payable to Seller as
adjustments or refunds under any audit pertaining to periods
prior to the Effective Time;
(i) all amounts due or payable to Seller as
adjustments or refunds under any contracts or agreements
respecting periods prior to the Effective Time, other than
Claims;
(j) all amounts due or payable to Seller as
adjustments to insurance premiums related to the Assets
with respect to any period prior to the Effective Time;
(k) except to the extent included in the Claims,
all proceeds, benefits, income or revenues accruing (and any
security or other deposits made) with respect to (i) the Assets
prior to the Effective Time or (ii) any Excluded Assets;
(l) any logo, service mark, copyright, trade name
or trademark associated with Seller or any business of Seller;
and
(m) all files, information and data expressly
excluded from the definition of Incidental Rights.
1.13 "Facilities and Equipment" means all facilities,
equipment, compressors, pipelines, separators, meters, dehydrators,
tanks, fixtures and all other items used in connection with
the operation of the Subject Interests and all material on the
Subject Interests as of the Effective Time.
1.14 "GAAP" shall mean generally accepted
accounting principles, consistently applied.
1.15 "Hart-Scott-Rodino Act" shall be as defined in
Section 17.2.
1.16 "Hydrocarbons" shall mean crude oil, natural gas,
casinghead gas, condensate, sulphur, natural gas liquids and
other liquid or gaseous hydrocarbons (including CO2), and
shall also refer to all other minerals of every kind and
character which may be covered by or included in the Subject
Interests.
1.17 "Incidental Rights" shall mean all right, title and
interest of Seller in and to or derived from the following
insofar as the same directly relate to the Subject Interests:
(i) all unitization, communitization and pooling designations,
declarations, agreements and orders covering Hydrocarbons in or
under the Lands or any portion thereof and the units and pooled
or communitized areas created thereby; (ii) all easements,
rights-of-way, surface leases, permits, licenses, servitudes or
other interests; (iii) all equipment and other personal
property, fixtures and improvements situated upon the Lands
and used or held for use in connection with the exploration,
development or operation of the Subject Interests or Lands
or the production, treatment, storage, compression, processing
or transportation of Hydrocarbons from or in the Subject
Interests or Lands; (iv) all Hydrocarbon sales, purchase,
exchange and processing contracts and agreements, farmout or
farmin agreements, joint operating agreements and all other
contracts and agreements insofar as the same affect or relate
to the Subject Interests or Lands or any part thereof; (v)
all lease files, land files, well files, gas and oil sales
contract files, gas processing files, division order files,
maps, abstracts, title opinions, and all other books,
files and records, information and data (including copies of
engineering, geological and geophysical data to the extent
same may be transferred, but subject in all events to any and
all consents concerning ownership and transfer), and all
rights thereto, of Seller insofar as the same are directly
related to and necessary to the realization of value by Buyer
of any of the Subject Interests or Lands and to the extent the
transfer thereof is not prohibited by existing contractual
obligations with third parties; and (vi) to the extent
transferable and subject to Article XV hereof, all
interest of Seller in and to all claims and causes of
action which Seller may have against insurance companies and
others by reason of injury or damage to or destruction
or loss of all or any part of the Assets by reason of events
occurring subsequent to the Effective Time.
1.18 "Lands" shall mean, except to the extent
constituting Excluded Assets, each and every kind and
character of right, title, claim or interest which Seller
has in and to the lands covered by the Subject Interests.
1.19 "Oil and Gas Purchase and Processing Agreements"
shall mean all existing contracts and agreements set forth on
Exhibit "J".
1.20 "Permitted Encumbrances" shall mean any of
the following matters, except to the extent such matters
are the result of transactions between Seller and an
affiliate of Seller at the time of the transaction:
(a) the terms, conditions, restrictions,
exceptions, reservations, limitations and other matters
contained in the agreements, instruments and documents which
create or reserve to Seller its interests in any of the
Assets provided they do not operate to reduce the net
revenue interest, nor increase the working interest (unless
Seller's net revenue interest therein is proportionately
increased) of Seller in the Subject Interests as reflected in
Exhibit "A" hereto;
(b) any (i) undetermined or inchoate liens or
charges constituting or securing the payment of expenses
which were incurred incidental to maintenance, development,
production, or operation of the Assets or for the
purpose of developing, producing or processing Hydrocarbons
therefrom or therein and (ii) materialman's, mechanics',
repairman's, employees', contractors', operators' or other
similar liens or charges for liquidated amounts arising in the
ordinary course of business (x) which Seller has agreed to
assume or pay pursuant to the terms hereof, (y) for which Seller
is responsible for paying or releasing at Closing or (z) for
which Buyer has agreed to assume or pay pursuant to the terms
hereof;
(c) any liens for taxes, tax assessments not
yet delinquent, or tax assessments that are being contested in
good faith, and other assessments not yet delinquent, or if
delinquent, that are being contested in good faith;
(d) any liens or security interests created by law
or reserved in oil and gas leases for royalty, bonus or rental
or for compliance with the terms of the Subject Interests;
(e) any obligations or duties affecting the Assets
to any municipality or public authority with respect to
any franchise, grant, license or permit, and all applicable
laws, rules and orders of governmental authority;
(f) any (i) easements, rights-of-way, servitudes,
permits, surface leases and other rights in respect of surface
operations, pipelines, grazing, hunting, fishing, logging,
canals, ditches, reservoirs, or the like, or (ii) easements
for streets, alleys, highways, pipelines, telephone lines, power
lines, railways and other similar rights-of-way, on, over, or in
respect of property owned or leased by Seller or over which Seller
owns rights-of-way, easements, permits, or licenses, to the extent
such matters, individually or in the aggregate, do not interfere
materially with oil and gas operations currently
conducted on the Subject Interests;
(g) all lessors' royalties, overriding royalties,
net profits interests, carried interests, reversionary
interests and other burdens to the extent that the net
cumulative effect of such burdens does not operate to reduce
the net revenue interest of Seller in any of the Subject
Interests to below the applicable net revenue interest set
forth in Exhibit "A" hereto;
(h) all defects and irregularities affecting title
to the Subject Interests which individually or in the
aggregate do not operate to reduce the net revenue interest,
nor increase the working interest (unless Seller's net
revenue interest is increased proportionately) of Seller in
the Subject Interests as reflected in Exhibit "A" hereto or
otherwise interfere materially with the operation, value,
marketability or use of the Subject Interests;
(i) preferential rights to purchase and required
third party consents to assignments and similar agreements with
respect to which waivers or consents are obtained from the
appropriate parties with respect to the sale contemplated hereunder
or the appropriate time period for asserting such rights has
expired without an exercise of such rights with respect to such
sale;
(j) all rights to consent by, required notices
to, filings with, or other actions by governmental
entities in connection with the sale or conveyance of oil and
gas leases or interests therein if the same are customarily
obtained contemporaneously with or subsequent to such sale or
conveyance;
(k) (i) production sales contracts, division
orders, contracts for sale, purchase, exchange, refining, or
processing of Hydrocarbons, unitization and pooling designations,
declarations, orders and agreements, operating agreements,
agreements of development, area of mutual interest
agreements, gas balancing or deferred production
agreements, processing agreements, plant agreements,
pipeline, gathering and transportation agreements,
injection, repressuring and recycling agreements, carbon
dioxide purchase or sale agreements, salt water or
other disposal agreements, seismic or geophysical
permits or agreements, and other agreements which are
customary in the oil, gas, sulphur and other mineral exploration,
development or extraction business or in the business
of processing of gas and gas condensate production for
the extraction of products therefrom, and (ii) contracts
and agreements with affiliates of Seller of the kind enumerated
in subclause (i) of this clause (k) that have been disclosed
to Buyer in Exhibit "J" hereto;
(l) any encumbrance, title defect or matter
(whether or not constituting a Title Defect) waived or deemed
waived by Buyer pursuant to Article VII hereof;
(m) any agreement, contract, lease,
instrument, permit, amendment or extension entered into
by Seller in accordance with Article IX hereof; and
(n) the Oil and Gas Purchase and Processing
Agreements.
1.21 "Property Taxes" shall be as defined in Section 12.2.
1.22 "Purchase Price" shall be as defined in Section 3.1.
1.23 "Royalty Accounts" shall mean those separately
identifiable accounts of Seller or any third party operator
in which Seller or any third party operator is holding as of
the Effective Time monies which (i) are owing to third party
owners of royalty, overriding royalty, working or other
interests in respect of past production of Hydrocarbons
attributable to the Assets or (ii) may be subject to refund
by royalty owners or other third parties to purchasers of past
production of Hydrocarbons attributable to the Assets.
1.24 "Seller's Credits" shall be as defined in Section
3.2.
1.25 "Subject Interests" shall mean, except to the
extent constituting Excluded Assets, any and all interests
owned by Seller and set forth in Exhibit "A-1" or which
Seller is now entitled to receive by reason of any
existing participation, joint venture, farm-in or other
agreement, in and to the oil, gas and/or mineral leases,
permits, licenses, concessions, leasehold estates, fee,
royalty and overriding royalty interests described in Exhibit
"A-1" attached hereto.
1.26 "Tax Period" shall be as defined in Section 12.2.
1.27 "Title Defect" shall be as defined in Section 7.3.
1.28 "Transfer Taxes" shall be as defined in Section 12.2.
ARTICLE II.
SALE AND PURCHASE
Subject to the terms and conditions of this Agreement
and the Permitted Encumbrances, Seller agrees to sell and
convey to Buyer and Buyer agrees to purchase and pay for the
Assets.
ARTICLE III.
PURCHASE PRICE AND PAYMENT
3.1 Purchase Price. The total consideration for the sale
and conveyance of the Assets to Buyer is Buyer's payment
of Twenty Million Seven Hundred Eighty-Eight Thousand Two
Hundred Dollars ($U.S. 20,788,200.00) (the "Purchase
Price"). The Purchase Price, subject to such adjustments,
if any, as are expressly provided for elsewhere in this Agreement,
shall be paid by Buyer to Seller at Closing by means of a
completed Federal Funds transfer to Seller's account in Chase
Manhattan Bank, New York, New York, ABA No. 021000021,
Amerada Hess Corporation Account Number 910-2-475200.
Contemporaneously with the execution hereof, Buyer has deposited
the sum of $2,000,000.00 with Seller as a deposit hereunder (the
"Deposit"), to be held by Seller and, upon Closing, the amount
thereof (without interest) shall be credited toward the Purchase
Price.
3.2 Purchase Price Credits.
(a) With respect to the period commencing at
the Effective Time and ending at 7:00 a.m. (local time for
each Asset) on the Closing Date, the parties shall
calculate the revenues from production and other operating
sources (excluding interest income), from or attributable to
the Assets for such period received by Seller as of the
Closing Date ("Buyer's Credits") and shall calculate all
exploration, production, development, operating, overhead,
general and administrative and other costs paid or incurred by
Seller with respect to the Assets applicable, then under the most
recent COPAS Accounting Procedure Joint Operations ("Seller's
Credits"), excluding interest expense not paid in connection with
matters identified in Exhibit "D" and all non-cash charges
attributable to depletion, depreciation, bad debt losses,
lease abandonment, etc.; provided that with respect to any
properties operated by Seller, the Seller's Credits with
respect to the Subject Interests in such properties shall
also include (i) the overhead charges payable to Seller on
account of such Subject Interests under existing operating
agreements or (ii) if no overhead charge is applicable to
a Subject Interest under an existing operating agreement, an
overhead charge to such Subject Interest equal to the Average
Drilling and Producing Well Rates in the area as indicated
in the most recent Survey of Combined Fixed Rate Overhead
Charges for Oil and Gas Producers conducted by Ernst &
Young or the prevailing rate in the area if the foregoing
survey is not available. Only items of revenue, cost and
expense attributable to the Assets shall be included in the
foregoing calculations. Amounts constituting the Buyer's
Credits shall be retained by Seller. If Seller's Credits
exceed Buyer's Credits, the difference shall be due Seller by
Buyer with simple interest thereon calculated at the then
generally prevailing prime rate of interest of Citibank, N.A.
on such net amounts as they accrue. If Buyer's Credits
exceed Seller's Credits, the difference shall be due Buyer
by Seller with simple interest thereon calculated at the then
generally prevailing prime rate of interest of Citibank, N.A.
on such net amounts as they accrue. Prior to Closing, Seller
shall furnish Buyer with an estimated accounting showing the
estimated amount of Seller's Credits and the estimated amount
of Buyer's Credits, subject to being finally adjusted within
one hundred twenty (120) days after the Closing as
hereinafter provided. An estimated credit due Seller shall
increase the Purchase Price paid at Closing by that amount and
an estimated credit due Buyer shall reduce the Purchase Price
paid at Closing by that amount (together with interest as
provided above). The amount of the final credit, as adjusted,
shall be paid in cash on final adjustment by the party owing
it. If within one hundred twenty (120) days following Closing
the parties are unable to agree as to whether an item of
income or expense belongs in the period before or after the
Effective Time, or is properly included in Seller's Credits
or Buyer's Credits, or as to any other accounting matters,
then such item or matter may be submitted for determination
by the accounting firm of Ernst & Young LLP in accordance
with Section 13.2 hereof. Final settlement shall be made
within ten (10) business days following agreement by the Buyer
and Seller or final determination by said accounting firm (which
final determination shall be binding upon Buyer and Seller).
(b) Seller and Buyer or representatives of each
shall determine the amount of the Hydrocarbons existing in
storage tanks, gathering lines, pipelines, gasoline plants,
and other facilities as of the Effective Date using the point
or points of delivery to Seller's purchasers as a zero
reference point. Seller shall receive a credit in the final
adjustment of the Purchase Price as provided for in paragraph
(a) above equal to an amount calculated by multiplying the
volume of such Hydrocarbons by (i) in the case of oil, the
posted price in the field, as of the Effective Time (or if
none, at a price to be mutually agreed upon) or (ii) in the
case of gas, the prevailing spot market price in the
vicinity, as of the Effective Time.
3.3 Purchase Price Allocations.
Seller and Buyer mutually agree to allocate
the Purchase Price among the Assets as set forth in
Exhibit "B" attached hereto. Seller and Buyer agree that said
allocation as set forth in Exhibit "B" is the proper
allocation of the Purchase Price in accordance with the fair
market value of the Assets, and that said allocation of the
Purchase Price of the Assets as set forth in Exhibit "B" shall
apply for purposes of Sections 755 and 1060 of the Internal
Revenue Code of 1986 (as amended and together with any regulations
promulgated thereunder, the "Code"). Seller and Buyer agree (and
each agrees to cause its affiliates) to report the federal, state
and local income and other tax consequences of the transactions
contemplated herein, and in particular to report the information
required under Section 1060(b) of the Code (and any
regulations promulgated thereunder), in a manner consistent
with such allocation. Seller and Buyer further agree (and each
agrees to cause its affiliates) to not take any tax position
inconsistent with such allocation in connection with the
examination of any of their tax returns, refund claims or
litigation, investigations or other proceedings involving any
of their tax returns. Seller and Buyer each further
agree that they will not take any position inconsistent with
this allocation in preparing financial statements, tax
returns, reports to shareholders or government authorities
or otherwise.
Buyer and Seller each agree to furnish the other a
copy of IRS Form 8594 (Asset Acquisition Statement under
Section 1060 of the Code) as filed with the Internal Revenue
Service by such party or any affiliate thereof, pursuant to
Sections 755 and 1060 of the Code, as a result of the
consummation of the transactions contemplated hereby, within
thirty (30) days of the filing of such form with the
Internal Revenue Service.
ARTICLE IV.
SELLER'S REPRESENTATIONS
4.1 Seller's Representations. Seller represents to
Buyer as of the date hereof and as of the Closing Date that:
(a) Seller is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware;
(b) Seller has all requisite power and authority
to carry on its business as presently conducted, to enter into
this Agreement and the other documents and agreements
contemplated hereby, and to perform its obligations under this
Agreement and the other documents and agreements contemplated
hereby. Subject to Sections 8.1, 8.2, 17.1 and 17.2, the
consummation of the transactions contemplated by this
Agreement will not violate, nor be in conflict with, any
provision of Seller's charter, by-laws or governing documents
or any material agreement or instrument to which it is a
party or by which it is bound, or any judgment, decree, order,
statute, rule or regulation applicable to Seller;
(c) The execution, delivery and performance of
this Agreement and the transactions contemplated hereunder
have been duly and validly authorized by all requisite
corporate action on the part of Seller;
(d) This Agreement constitutes, and all documents
and instruments required hereunder to be executed and delivered
by Seller at Closing will constitute, legal, valid and binding
obligations of Seller in accordance with their respective
terms, subject to applicable bankruptcy and other similar
laws of general application with respect to creditors;
(e) There are no bankruptcy, reorganization
or arrangement proceedings pending, being contemplated by, or
to the actual knowledge of the officers of Seller, threatened
against Seller;
(f) No broker or finder other than Goldman, Sachs
& Co. has acted for or on behalf of Seller in connection with
this Agreement or the transactions contemplated by this
Agreement, and no broker or finder other than Goldman, Sachs &
Co. is entitled to any brokerage or finder's fee or commission
in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of Seller;
(g) Except as shown on Exhibit "E" hereto, there is
no demand or suit, action or other judicial or administrative
proceeding or investigation pending of which Seller has
notice, or to Seller's knowledge threatened, before any court
or governmental agency which if adversely decided could
reasonably be expected to result in a material impairment or
loss of title to any material part of the Assets taken as a
whole or the value thereof taken as a whole or which might
materially hinder or impede the operation of the Assets taken
as a whole;
(h) Except as shown on Exhibit "E" and as may
be referred to in Article XIV, Seller, to its knowledge, has
not violated, and to Seller's knowledge there are no
alleged violations by Seller of, any applicable rules, regulations
or orders of any governmental agency having jurisdiction over
the Assets which would affect in any material respect the
value of the Assets taken as a whole; and
(i) Seller is a United States person within
the meaning of Section 7701(a)(30) of the Internal Revenue
Code of 1986, as amended.
(j) Subject to Buyer's obligations under and
the provisions of Article XIV of this Agreement, to
Seller's knowledge, neither the operator of the Assets nor
Seller is in violation of any applicable law, regulation,
ordinance or other applicable and lawful requirements of any
governmental body or court, in effect as of the date of this
Agreement, which violation would have a material adverse effect
upon the Assets or the continued operation thereof, and no
notice has been received by Seller alleging any such violation.
(k) Seller has not given nor been given notice of
any material default under, or action to alter, terminate,
rescind or procure a judicial reformation of, any material
provision of any Basic Document.
(l) With respect to marketing arrangements relating
to the Assets, Seller has not received any advance, "take-or-
pay", production payments, or other similar payments under any
contract that entitles any third party to "make-up" or
otherwise receive deliveries of hydrocarbons at any time
after the Effective Time without paying at such time the full
contract price thereof and there are no calls on production
which would entitle any entity to purchase production from the
Assets.
(m) Exhibit "K" hereto is a complete list of the
Basic Documents.
(n) Except as disclosed in Exhibit "L", no entity
has a reversionary right in the Assets or any portion
thereof pursuant to a farmin agreement or the operation of a
non-consent provision of an agreement or otherwise.
(o) Subject to the adjustments required under
Section 17.9, to the knowledge of Seller the only gas
imbalances relating to the Assets are set forth in Exhibit "H".
ARTICLE V.
BUYER'S REPRESENTATIONS
5.1 Buyer's Representations. Buyer represents to Seller
as of the date hereof and as of the Closing Date that:
(a) It is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware, and Buyer is or prior to Closing will be
duly qualified pursuant to any and all applicable laws,
statutes and regulations to own and operate the Assets;
(b) It has all requisite power and authority to
carry on its business as presently conducted, to enter
into this Agreement and the other documents and agreements
contemplated hereby, to purchase the Assets on the terms
described in this Agreement, and to perform its other
obligations under this Agreement and the other documents
and agreements contemplated hereby. Subject to Sections 17.1,
and 17.2, the consummation of the transactions contemplated by
this Agreement will not violate, nor be in conflict with, any
provision of Buyer's charter, bylaws or governing
documents, or any material agreement or instrument to
which Buyer is a party or by which it is bound, or any
judgment, decree, order, statute, rule or regulation
applicable to Buyer;
(c) The execution, delivery and performance of
this Agreement and the transactions contemplated hereunder
have been duly and validly authorized by all requisite
corporate action on the part of Buyer;
(d) This Agreement constitutes, and all documents
and instruments required hereunder to be executed and
delivered by Buyer at Closing will constitute, legal,
valid and binding obligations of Buyer in accordance with
their respective terms, subject to bankruptcy and other similar
laws of general application with respect to creditors;
(e) There are no bankruptcy, reorganization
or arrangement proceedings pending, being contemplated by, or
to the actual knowledge of the officers of Buyer, threatened
against Buyer;
(f) No broker or finder has acted for or on behalf
of Buyer in connection with this Agreement or the
transactions contemplated by this Agreement, and no broker
or finder is entitled to any brokerage or finder's fee
or commission in respect thereof based in any way on
agreements, arrangements or understandings made by or on
behalf of Buyer;
(g) Buyer is now or prior to Closing will be,
and after Closing shall continue to be, qualified to own
Federal and State oil, gas and mineral leases in all
jurisdictions where any such Subject Interests are located,
and the consummation of the transactions contemplated hereby
will not cause Buyer to be disqualified as such an owner
or to exceed any acreage limitation imposed by any law,
statute, rule or regulation;
(h) Buyer is directly engaged in the business
of exploration and production of oil, gas or other valuable
minerals and derives at least $5,000,000 of annual gross
income from such business. Prior to entering into this
Agreement, Buyer was advised by and has relied solely on its
own legal, tax and other professional counsel concerning this
Agreement, the Assets and the value thereof. Buyer is acquiring
the Assets for its own account and not for distribution or resale
in any manner that would violate any state or federal
securities law, rule, regulation or order. Buyer understands
and acknowledges that, if any of the Assets were held to be
securities, they would be restricted securities which must
be held indefinitely; and
(i) Buyer has arranged to have available by
the Closing Date sufficient funds to enable the Buyer to pay in
full the Purchase Price, together with all costs and expenses
relative thereto, and otherwise to perform its obligations
under this Agreement.
ARTICLE VI.
ACCESS TO INFORMATION AND INSPECTION
6.1 Title Files. Promptly after the execution of this
Agreement and until the Closing Date, Seller shall permit
Buyer and its representatives at reasonable times during
normal business hours to examine, in Seller's offices, all
abstracts of title, title opinions, title files, ownership
maps, lease files, assignments, division orders, check
vouchers, payout statements and agreements pertaining to the
Assets insofar as the same may now be in existence and in the
possession of Seller.
6.2 Other Files. Prior to Closing, Seller shall make
available to Buyer for inspection by Buyer at reasonable
times during normal business hours at their actual location,
all geological, geophysical, production and engineering books,
records and data in possession of Seller, except such records
or data which Seller is prevented by contractual obligations
with third parties from disclosing.
6.3 Confidentiality Agreement. All such information
made available to Buyer shall be maintained confidential by
Buyer as provided in that certain Confidentiality Agreement dated
January 3, 1996, between Seller and Buyer, the terms of
which are incorporated herein by reference and made a
part of this Agreement. Buyer shall further take whatever
reasonable steps may be necessary to ensure that Buyer's
employees, consultants and agents comply with the provisions
of this Article VI and the provisions of said Confidentiality
Agreement.
6.4 Inspections. Promptly after the execution of
this Agreement and for a period not to exceed sixty
(60) days thereafter, Seller, subject to third party
operator approval, shall permit Buyer and its
representatives at reasonable times and at their sole risk,
cost and expense, to conduct reasonable inspections of the
Assets; provided, however, Buyer shall repair any damage to
the Assets resulting from such inspections and Buyer does
hereby indemnify and hold harmless Seller from and against
any and all losses, costs, damages, obligations, claims,
liabilities, expenses or causes of action arising from
Buyer's inspection of the Assets, including, without
limitation, claims for personal injuries, property damage and
reasonable attorney's fees and further including claims
arising in whole or part from Seller's negligence.
ARTICLE VII.
TITLE
7.1 No Warranty or Representation. Seller shall
convey Seller's interests in and to the Assets to Buyer subject
to the Permitted Encumbrances and without any warranty of
title, express or implied, except that Seller shall warrant
title to the Assets by, through and under Seller, but not
otherwise, as provided in the form of Assignment, Bill of
Sale and Conveyance attached as Exhibit "F" hereto. Seller
makes no warranty or representation, express or implied, with
respect to the accuracy or completeness of the information,
records and data now, heretofore or hereafter made available
to Buyer in connection with this Agreement (including,
without limitation, any description of the Assets, pricing
assumptions, potential for production of Hydrocarbons from
the Subject Interests or any other matters contained in any
other material furnished to Buyer by Seller or by Seller's
agents or representatives).
7.2 Buyer's Title Review.
(a) Immediately upon execution by both parties
hereto of this Agreement Buyer may at Buyer's sole cost and
expense commence and diligently pursue such examination of
title to the Subject Interests as Buyer desires. Seller
shall fully cooperate with Buyer and shall make available to
Buyer at Seller's offices in Houston, Texas, all documents,
records and material in Seller's possession (except to the
extent disclosure of same is prohibited pursuant to
agreements with third parties) and all assistance
reasonably necessary to assist Buyer in determining the
validity of Seller's title in and to the Subject Interests. In
no event, however, does Seller warrant or represent the
sufficiency, completeness or accuracy of such documents,
records and materials, and Buyer's reliance thereon shall be
at Buyer's sole risk and expense. Immediately upon
completion of Buyer's title review of each property, Buyer
shall notify Seller of any Title Defects associated with
such property in accordance with Section 7.3 below. Buyer
will conclude Buyer's title review and give notice to Seller
of all asserted Title Defects not later than sixty (60) days
subsequent to the execution of this Agreement. To be effective,
Buyer's written notice of a Title Defect must include (i) a brief
description of the matter constituting the asserted Title Defect
and (ii) supporting documents reasonably necessary for Seller (or
a title attorney or examiner hired by Seller) to verify the
existence of such asserted Title Defect. Any matters not
described in a written notice of Title Defect within said
sixty (60) day period shall conclusively be deemed to have been
waived and accepted by Buyer, and shall be deemed Permitted
Encumbrances hereunder.
(b) Upon receipt of the notice set forth under Section
7.2(a) Seller shall have the right, but not the obligation,
until the Closing Date to cure all or any portion of asserted
Title Defects, such curative costs to be borne solely by
Seller, provided, however that if the value, as calculated
pursuant to Section 3.3, of the Assets affected by asserted
Title Defects equals or exceeds five percent (5%) of the Purchase
Price, then Seller may, at its option and in its sole discretion
exercised by the giving of written notice to Buyer within ten
(10) days of receipt of Buyer's final notice of asserted
Title Defects elect to terminate this Agreement in which event
Seller and Buyer shall be under no obligation to each other
with regard to the purchase and sale of any of the Assets
or Subject Interests, such termination to be without
liability to either party. Failure of Seller to give notice
of an election to terminate this Agreement shall be deemed an
election not to terminate this Agreement and to adopt the
procedures and remedies concerning asserted Title Defects set
forth herein. If Buyer elects to waive or is deemed to have
waived any asserted or unasserted Title Defects, such waived
or unasserted Title Defects shall be deemed Permitted
Encumbrances hereunder. If Seller within the time provided
above is unable, elects not or refuses to cure such asserted
Title Defects, Buyer may, by written notice delivered to Seller
within ten (10) days after the expiration of Seller's right
to cure asserted Title Defects, and as Buyer's sole and
exclusive remedy, elect to reduce the Purchase Price by an
amount attributable to the reserves to which title has failed
as mutually agreed upon by the parties and based upon the
allocations made pursuant to Section 3.3., whereupon the
interest covered by such Title Defect shall be deemed to be an
Excluded Asset for the purposes of this Agreement; provided
however, the Purchase Price shall not be reduced unless the
amount attributable to the reserves to which title has
failed exceeds One Hundred Thousand Dollars
($100,000.00), provided further that if the value of the
Assets affected by uncured Title Defects exceeds ten percent
(10%) of the Purchase Price, then Buyer may cancel this
Agreement whereupon Seller shall refund the deposit without
interest. Failure by Buyer to timely assert a claim for an
adjustment to the Purchase Price shall be deemed an election
by Buyer to waive such claim and retain the interest covered
by the asserted but uncured Title Defect and such uncured
Title Defect shall thereupon be deemed a Permitted Encumbrance.
In the event Buyer and Seller are unable to agree upon the amount
of the downward adjustment of the Purchase Price attributable to
a Title Defect for the purposes of the foregoing, then the
same shall be submitted for determination to DeGolyer and
MacNaughton whose determination shall be final.
7.3 Title Defects. For the purposes of this Agreement,
a portion of the Subject Interests shall be deemed to have a
"Title Defect" if any one or more of the following statements is
untrue in any material respect with respect to such portion
of the Subject Interests as of the Effective Time:
(i) Seller has Defensible Title thereto.
(ii) All royalties, rentals, Pugh clause payments,
shut-in gas payments and other payments due with respect to
such portion of the Subject Interests have been properly and
timely paid, except for payments held in suspense for title
or other reasons which are customary in the industry and
which will not result in grounds for cancellation of
Seller's rights in such portion of the Subject Interests.
(iii) Except as set forth in any of the Exhibits hereto,
Seller is not in default under the material terms of any leases,
farmout agreements or other contracts or agreements respecting
such portion of the Subject Interests which could (1) materially
interfere with the operation, value or use thereof, (2) materially
prevent Seller from receiving the proceeds of production attributable
to Seller's interest therein, or (3) result in cancellation of
Seller's interest therein.
(iv) There is no lien, charge, encumbrance, defect
or objection (other than a Permitted Encumbrance) against, in
or to Seller's title thereto or right or interest therein, and
no fact or circumstance relative thereto exists of such
significance that a reasonable and prudent person engaged in
the business of the ownership, development and operation of
oil and gas properties with knowledge of all the facts and
appreciation of their legal significance would be unwilling to
accept and pay for the Subject Interest or portion thereof
which is affected thereby.
Subject to Section 17.1 below, the failure of any
governmental office to approve or consent to any assignment
or other conveyance of a Subject Interest filed with such
office shall not constitute a Title Defect; provided that
such office has not expressly and specifically refused to
grant such consent or approval as a result of the existence of
a Title Defect.
7.4 Title Indemnification. Notwithstanding any other
provisions of this Article VII, Seller shall have the option
to execute and deliver to Buyer a title indemnity whereby
Seller shall keep Buyer indemnified from and against any
and all liability, loss, costs (including legal costs), suits,
judgments, causes of action, claims or damages arising or
incurred in connection with any uncured Title Defects, to the
extent the same relate to acts, omissions or other matters
occurring prior to the Effective Time. The title indemnity
shall be limited to the amount determined in accordance
with this Article VII with respect to the particular Asset
for which the indemnity is given and no claim for
indemnification of Buyer shall be made or be enforceable,
whether by legal proceedings or otherwise, unless written
notice of the claim, setting out reasonable details
thereof is given by Buyer to Seller on or before January 1,
2006. If Seller provides such a title indemnity, the relevant
uncured Title Defects shall be deemed to be cured and removed
for the purposes of this Agreement.
ARTICLE VIII.
PREFERENTIAL PURCHASE RIGHTS AND CONSENTS
8.1 Purchase Rights. To Seller's knowledge, all
agreements affecting the Assets containing consent to
assignment obligations and preferential right to purchase
provisions that must be complied with prior to the
assignment of the Assets to Buyer are set forth in Exhibit
"C" hereto (except such agreements with respect to which all
necessary consents to assignment or waivers of preferential
purchase rights have already been obtained by Seller).
Seller shall send such notices and other documents as may be
required in order to trigger preferential purchase rights
which have been identified prior to Closing, or Seller
shall obtain a waiver of the exercise of any preferential
purchase rights. If a third party who has been offered an
interest in a Subject Interest pursuant to a preferential
right to purchase, elects prior to Closing to purchase all
or part of such Subject Interest pursuant to the aforesaid
offer and Seller receives written notice of such election
prior to the Closing Date, the interest or part thereof so
affected will be eliminated from the Assets and the
Purchase Price reduced by the portion of the Purchase Price
allocated to such interest or part thereof under Section 3.3
hereof. If third parties exercise preferential rights on
the Assets the aggregate value of which exceed forty percent
(40%) of the Purchase Price, then Buyer may cancel this
Agreement, and Seller shall refund the Deposit, without
interest. In the event of such termination by Buyer, Seller
shall have the right to terminate any agreement with respect
to a party which has exercised preferential rights.
8.2 Consents. Seller shall use reasonable efforts,
but without any obligation to incur any cost or expense in
connection therewith, to obtain all consents to assignment
prior to the Closing. If a lessor or other third party who
has the right to consent to the assignment of a Subject Interest
(or portion thereof) refuses such consent prior to Closing, the
interest or part thereof so affected will be eliminated from
the Assets and the Purchase Price reduced by the portion of
the Purchase Price allocated to such interest or part
thereof under Section 3.3 hereof. If a request for a
consent to assign is outstanding as of Closing, such
circumstance shall constitute a Title Defect.
ARTICLE IX.
COVENANTS OF SELLER
9.1 Covenants of Seller Pending Closing. From and
after the date of execution of this Agreement and until the
Closing, except as otherwise consented to by Buyer in writing
and subject to Section 9.2 below and the terms of applicable
operating and other agreements, Seller shall:
(a) Subject to Seller's right to obtain
Seller's Credits pursuant to Section 3.2, continue to operate
the Assets owned by it for the account of Buyer in a manner
consistent with past practices;
(b) Maintain in full force and effect all policies
of insurance covering the Assets now maintained by Seller;
(c) Use reasonable efforts to preserve in full
force and effect all material leases, operating agreements,
easements, rights-of-way, permits, licenses, contracts and
other material agreements included in the Incidental Rights
which relate to the Assets in which it owns an interest and
perform all material obligations of Seller in or under any
such agreement relating to such Assets;
(d) Use Seller's reasonable efforts to maintain
its relationships with suppliers, customers and others
having material business relations with Seller with respect
to the Assets so that they will be preserved for Buyer on and
after the Closing Date;
(e) Not enter into any agreement or
arrangement granting any preferential right to purchase any of
the Assets or requiring the consent of any person to
the transfer and assignment of any of the Assets hereunder, except
in connection with the performance by Seller of an obligation
or agreement existing on the date hereof or pursuant to this
Agreement;
(f) Not dedicate, sell, farm out, encumber or
dispose of any Assets without Buyer's written consent except
(i) sales of oil and gas production in the ordinary course
of business and (ii) as to a portion of the Assets that do
not, in the aggregate, constitute a material portion of the
Assets; and
(g) Maintain all material equipment included in
the Assets in accordance with customary industry operating
practices and procedures.
Notwithstanding the other provisions of this Article IX,
(i) Seller may take any action with respect to the
Assets if reasonably necessary under emergency circumstances
and provided Buyer is notified as soon thereafter as
reasonably practical, (ii) Seller shall have no liability to
Buyer for the incorrect payment of delay rentals, royalties,
shut-in royalties or similar payments or for any failure to
pay any such payments through mistake or oversight
(including Seller's negligence), and (iii) Seller's non-willful
failure to comply with any of the requirements of this
Article IX shall not be deemed a default by Seller hereunder,
serve as a basis for a claim by Buyer for damages, afford Buyer
the right to make a claim for damages or permit Buyer not to
close this sale if such failure does not have a material
adverse effect on the value of the Assets taken as a whole.
Any consent requested of Buyer with respect to the matters
covered by this Article IX shall not be unreasonably withheld
or action with respect thereto unduly delayed.
9.2 Limitations on Seller's Covenants Pending Closing.
(a) To the extent Seller is not the operator of any
of the Assets, the obligations of Seller in Section 9.1 above,
which have reference to operations or activities which
normally or pursuant to existing contracts are carried out
or performed by the operator, shall be construed to require
only that Seller use reasonable efforts (without being
obligated to incur any expense or institute any cause of
action) to cause the operator of such Assets to take such
actions or render such performance within the constraints of
the applicable operating agreements and other applicable
agreements.
(b) Notwithstanding anything to the contrary in
this Article IX, should Seller not wish to participate
in any reworking, deepening, drilling, completion, equipping
or other operation on or with respect to any well or other
Asset which may otherwise be required by Section 9.1 above,
Seller shall give Buyer written or oral notice thereof as
soon as reasonably practicable after Seller receives written
notice thereof from the operator of such property (or if
Seller is the operator, after Seller gives written notice
thereof to the non-operators of such property); and Seller
shall not be obligated to make any such payment or to
elect to participate in any such operation which Seller does
not wish to make or participate in unless Seller receives
from Buyer, within a reasonable time prior to the date when
such payment or election is required to be made by Seller, (i)
the written election and agreement of Buyer to require Seller
to take such action and to indemnify Seller therefrom and
(ii) all funds necessary for such action. Notwithstanding
the foregoing, Seller shall not be obligated to elect to
participate in any operation if the third party operator of the
property involved recommends that such action not be taken. If
Buyer advances any funds pursuant to this Section 9.2(b) and the
Assets to which such payments relate are not conveyed to Buyer
at Closing, and Seller does not reimburse Buyer for all
advances made by Buyer with respect to such Assets
pursuant to this Section 9.2(b) within thirty (30) days
after this Agreement terminates with respect to such Assets,
then (i) Buyer shall own and be entitled to any right of
Seller that would have lapsed but for such payment, and (ii) in
the case of operations, Buyer shall be entitled to receive the
penalty which Seller, as nonconsenting party, would have suffered
under the applicable operating agreement with respect to such
operations as if Buyer were a consenting party thereunder.
(c) Notwithstanding anything to the contrary in
this Article IX, Seller shall not dispose of any of the Assets
other than in the ordinary course of business.
(d) In such situations where Seller is the operator
of an Asset, Seller shall make a good faith effort to help
Buyer succeed to the operatorship.
ARTICLE X.
CLOSING CONDITIONS
10.1 Seller's Closing Conditions. The obligations of
Seller under this Agreement are subject, at the option of
Seller, to the satisfaction at or prior to the Closing
of the following conditions:
(a) All representations and warranties of Buyer
contained in this Agreement shall be true in all material
respects at and as of the Closing as if such representations
and warranties were made at and as of the Closing, and Buyer
shall have performed and satisfied all agreements required
by this Agreement to be performed and satisfied by Buyer at or
prior to the Closing;
(b) Seller shall have received a certificate dated
as of the Closing, executed by a duly authorized officer of
Buyer, to the effect that to such officer's knowledge the
statements made under Article V above are true at and as of the
Closing;
(c) Except for approvals covered by Section 17.1
hereof, all necessary consents of and filings with the
Federal Trade Commission and any other state or federal
governmental authority or agency relating to the
consummation of the transactions contemplated by this
Agreement shall have been obtained, accomplished or waived,
and the applicable waiting periods prescribed in connection
with the Hart-Scott-Rodino Act shall have elapsed or terminated
(by early termination or otherwise) since the dates of the filings
by the parties with respect thereto; and
(d) As of the Closing Date, no suit, action or
other proceeding (excluding any such matter initiated by Seller)
shall be pending or threatened before any court or
governmental agency seeking to restrain Seller or prohibit
the Closing or seeking damages against Seller as a result of
the consummation of this Agreement.
10.2 Buyer's Closing Conditions. The obligations of
Buyer under this Agreement are subject, at the option of Buyer,
to the satisfaction at or prior to the Closing of the
following conditions:
(a) All representations and warranties of Seller
contained in this Agreement shall be true in all material
respects at and as of the Closing as if such representations
and warranties were made at and as of the Closing, and Seller
shall have performed and satisfied all agreements required by
this Agreement to be performed and satisfied by Seller at or
prior to the Closing;
(b) Buyer shall have received a certificate dated
as of the Closing, executed by a duly authorized officer of
Seller, to the effect that to such officer's knowledge the
statements made under Article IV above by Seller are true at
and as of the Closing;
(c) Except for approvals covered by Section 17.1
hereof, all necessary consents and filings with the Federal
Trade Commission and any other state or federal governmental
authority or agency relating to the consummation of the
transactions contemplated by this Agreement shall have
been obtained, accomplished or waived, and the
applicable waiting periods prescribed in connection with
the Hart-Scott-Rodino Act shall have elapsed or terminated
(by early termination or otherwise) since the dates of the
filings by the parties with respect thereto; and
(d) As of the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by Buyer)
shall be pending or threatened before any court or governmental
agency seeking to restrain Buyer or prohibit the Closing or
seeking damages against Buyer as a result of the consummation of
this Agreement.
(e) All preferential rights shall have been waived
or the time within which the holders of said rights had to
exercise them shall have expired.
ARTICLE XI.
CLOSING
11.1 Closing. The closing of this transaction
(the "Closing") shall be held at 10:00 a.m., Central Standard
Time, at the offices of Seller at One Allen Center, 500
Dallas Street, Houston, Texas, on June 20, 1996, or at such
other date or place as the parties may agree in writing
(herein called "Closing Date"). Regardless of when the
Closing shall occur, Closing shall be effective with respect
to each Asset as of the Effective Time.
11.2 Seller's Closing Obligations. At Closing
(except Seller shall have thirty (30) days after the Closing
for items e, f and g), Seller shall deliver to Buyer the
following:
(a) The Assignments, Bills of Sale and Conveyances
substantially in the form attached hereto as Exhibit "F" and
such other documents as may be reasonably necessary to
convey all Seller's interest in the Assets to Buyer in
accordance with the provisions hereof;
(b) The certificate of Seller referred to in
Section 10.2(b) hereof;
(c) Evidence of Seller's compliance with the
Hart-Scott-Rodino Act (if necessary);
(d) Transfer or division orders, or letters-in-
lieu thereof in a form to be mutually agreed upon, to be effective
at the Effective Time;
(e) All title opinions, abstracts of title,
lease records, data sheets, status and other reports pertaining to
the Subject Interests heretofore received by Seller or to
which Seller has access;
(f) All of the Basic Documents, and the
files pertaining thereto, and all other contracts, documents and
files affecting title to the Subject Interests to which
Seller has access; and
(g) All lease files, land files, well files, gas
and oil sales contract files, gas processing files, division
order files, maps, abstracts, title opinions, and all other
books, files and records information and data, except insofar
as Seller is prevented from transferring same by contractual
obligations to third parties or applicable law.
11.3 Buyer's Closing Obligations. At Closing, Buyer
shall deliver to Seller the following:
(a) The Purchase Price (subject to such adjustments,
if any, as are expressly provided for in this Agreement)
in immediately available funds to Seller as provided in Section
3.1 hereof (or to such other account within the continental
United States of America designated by Seller to Buyer at least
five (5) days prior to the Closing Date);
(b) The certificate of Buyer referred to in
Section 10.1(b) hereof; and
(c) Evidence of Buyer's compliance with the Hart-
Scott Rodino Act (if necessary).
ARTICLE XII.
EFFECT OF CLOSING
12.1 Revenues. To the extent not included in
the reimbursements under Section 3.2 hereof, all proceeds,
accounts receivable, notes receivable, revenues, monies and
other items included in or attributable to the Excluded Assets
and all other Excluded Assets shall belong to and be paid over
to Seller and all other proceeds, accounts receivable,
notes receivable, revenues, monies and other items relating to
the period of time after the Effective Time and included in
or attributable to the Assets shall belong to and be paid over
to Buyer.
12.2 Taxes.
(a) Apportionment of Ad Valorem and Property
Taxes. All ad valorem, real property taxes and personal property
taxes, including interest and penalties attributable
thereto (hereinafter "Property Taxes"), attributable to the
Assets with respect to the tax assessment period ("Tax Period")
during which the Effective Time occurs shall be
apportioned as of the Effective Time between Seller and
Buyer, with Seller paying a fraction thereof based upon the
number of days in the Tax Period prior to the Effective Time
and Buyer paying the balance thereof. The owner of record on the
assessment date shall file or cause to be filed all required
reports and returns incident to the Property Taxes and
shall pay or cause to be paid to the taxing authorities all
Property Taxes relating to the Tax Period during which the
Effective Time occurs. If Seller is the owner of record on the
assessment date, then Buyer shall pay to Seller Buyer's pro rata
portion of Property Taxes within thirty (30) days after receipt
of Seller's invoice therefor, except to the extent taken into
account as an adjustment to the Purchase Price pursuant to
Section 3.2. If Buyer is the owner of record as of the assessment
date then Seller shall pay to Buyer Seller's prorata portion of
Property Taxes within thirty (30) days after receipt of Buyer's
invoice therefor, except to the extent taken into account as an
adjustment to the Purchase Price pursuant to Section 3.2.
(b) Sales Taxes. The Purchase Price provided
for hereunder excludes, and Buyer shall be liable for, any
Transfer Taxes (as defined below) required to be paid in connection
with the sale of the Assets pursuant to this Agreement. To the
extent required by applicable law, Seller shall collect and
remit any Transfer Taxes that are required to be paid as a result
of the transfer of the Assets by Seller to the Buyer. If the
transfer of the Assets pursuant to this Agreement is exempt
from any Transfer Taxes, Buyer shall, at Closing, provide Seller
with properly executed exemption certificates or other
documentation acceptable under applicable law. As used here, the
term "Transfer Taxes" shall mean any sales, use, excise, stock,
stamp, document, filing, recording, registration, authorization
and similar taxes, fees and charges.
(c) Other Taxes. With the exception of income
and franchise taxes, all other federal, state and local
taxes (including interest and penalties attributable thereto)
on the ownership or operations of the Assets which are imposed
with respect to periods or portions of periods prior to the
Effective Time shall be paid by Seller and all such taxes
imposed with respect to periods or portions of periods
beginning on or after the Effective Time shall be paid by
Buyer.
(d) Cooperation. After the Closing, each party to
this Agreement shall provide the other party with reasonable
access to all relevant documents, data and other information
(other than that which is subject to any attorney-
client privilege) which may be required by the other party for
the purpose of preparing tax returns, filing refund claims
and responding to any audit by any taxing jurisdiction. Each
party to this Agreement shall cooperate with all reasonable requests
of the other party made in connection with contesting the
imposition of taxes. Notwithstanding anything to the contrary in
this Agreement, neither party to this Agreement shall be required
at any time to disclose to the other party any Tax Return or
other confidential tax information. Except where disclosure is
required by applicable law or judicial order, any information
obtained by a party pursuant to this Section 12.2(d) shall be
kept confidential by such party, except to the extent
disclosure is required in connection with the filing of any
Tax Returns or claims for refund or in connection with the
conduct of an audit, or other proceedings in response to an audit,
by a taxing jurisdiction.
12.3 Expenses. To the extent not included in the
reimbursements under Section 3.2 hereof or in the
Assumed Obligations, all accounts payable and other costs and
expenses (other than taxes described in Section 12.2) with
respect to the Seller's interest in the Assets which are
attributable under GAAP to the period prior to the Effective Time
shall be the obligation of and be paid by Seller, and those which
are attributable under GAAP to the period commencing with the
Effective Time, as well as all Assumed Obligations, shall be the
obligation of and be paid by Buyer.
12.4 Shared Obligations. If monies are received by
any party hereto which, under the terms of this Article XII,
belong to another party, the same shall immediately be paid
over to the proper party. If an invoice or other evidence of
an obligation is received which under the terms of this
Article XII is partially the obligation of Seller and
partially the obligation of Buyer, then the parties shall
consult each other and each shall promptly pay its portion of
such obligation to the obligee, provided that if either party
hereto shall fail promptly to pay its portion of such
obligation to the obligee, the other party hereto shall have
the right (but not the obligation) to pay such portion of such
obligation, whereupon the defaulting party shall promptly
reimburse such other party for the defaulting party's portion
so paid, plus interest on said amounts until reimbursed, at
the prime rate of interest of Citibank, NA, in effect at the
time of the default.
12.5 Seller Operated Properties. It is expressly
understood and agreed that Seller shall not be obligated
to continue operating any of the Assets following the
Closing and Buyer hereby assumes full responsibility for
operating (or causing the operation of) all Assets following
the Closing. Without implying any obligation on Seller's part
to continue operating any Assets after the Closing, if
Seller continues to operate any Assets following the Closing
at the request of Buyer or any third party working interest
owner, due to constraints of applicable operating
agreements, failure of a successor operator to take over
operations or other reasonable cause, such continued
operation by Seller shall be for the account of Buyer, at
the sole risk, cost and expense of Buyer and, as part of the
Assumed Obligations, Buyer hereby releases and indemnifies
Seller from all claims, losses, damages, costs, expenses,
causes of action and judgments of any kind or character
(INCLUDING SELLER'S NEGLIGENCE) with respect to such continued
operations by Seller. In connection with any such continued
operation of the Assets by Seller, Seller shall be reimbursed
by Buyer for all costs and expenses incurred by Seller
with respect thereto, including a charge for overhead in
the same manner as provided in the calculation of
Seller's Credits for the period prior to the Closing. In
the event that Seller continues operating any Assets after
Closing pursuant to this Section 12.5, Buyer and Seller
shall enter into a mutually agreed upon nominee agreement
which will contain the release, indemnification and
reimbursement provisions set forth in this Section 12.5
and will further provide that, with respect to any Assets
affected thereby, Seller shall act as Buyer's nominee but shall
be authorized to act only upon and in accordance with Buyer's
specific written instructions and Seller shall have no
authority, responsibility or discretion to perform any tasks
or functions with respect to such Assets other than those
which are purely administrative or ministerial in nature,
unless otherwise specifically requested and authorized by Buyer
in writing.
12.6 Royalty Accounts. Seller shall fund and pay over
to Buyer at Closing the Royalty Accounts existing with
respect to Seller-operated Subject Interests or any other
Subject Interests as to which Seller is responsible for the
disbursement of the sales proceeds of Hydrocarbon production
to the persons entitled thereto. At Closing, Buyer assumes
the obligation to correctly, properly and timely disburse to
the persons entitled thereto all monies comprising the Royalty
Accounts.
ARTICLE XIII.
SETTLEMENT OF PRORATIONS
13.1 Accounting. Prior to Closing, Seller shall furnish
Buyer with an estimated accounting showing in reasonable detail
the prorating of any amounts described in and subject to Article
XII of this Agreement. If pursuant to such estimated accounting
either Seller or Buyer shall owe any obligation to the other which
is not included in the reimbursements under Section 3.2, then the
Purchase Price paid at Closing shall be further adjusted to reflect
such charges and credits which are necessary to accomplish such
adjustment. Promptly after the Closing Date (but not later than
one hundred twenty (120) days thereafter), Seller shall furnish Buyer
with a final accounting showing in reasonable detail the prorating
of any amounts described in and subject to Article XII hereof.
13.2 Settlement of Disputes. If within thirty (30) days
after Seller furnishes such final accounting to Buyer, Buyer
and Seller are unable to agree on such final accounting
or the adjustments provided for in Section 3.2 hereof,
then either Seller or Buyer may submit such proration or
allocation dispute to the accounting firm of Ernst &
Young, LLP, and the determination made as to such proration
or allocation by such accounting firm shall be final and binding
upon Seller and Buyer. Final settlement shall be made within ten
(10) business days following agreement by the Buyer and Seller
or final determination by said accounting firm. All determinations
and adjustments with respect to allocating items to the
periods before or after the Effective Time shall be in accordance
with GAAP. The fees charged by said accounting firm for making
determinations under Section 3.2 or this Section 13.2 shall
be paid one-half (1/2) by Buyer and one-half (1/2) by Seller.
ARTICLE XIV.
ENVIRONMENTAL
14.1 Availability of Data to Buyer: The Assets which
are the subject of this Agreement have been utilized by Seller
for the purposes of exploration, development and production
of oil and gas, for related oilfield operations and possibly
for the storage and disposal of waste materials or hazardous
substances. Seller shall make available to Buyer, during the
environmental assessment period described in Section 14.3
below, Seller's historical files regarding the foregoing
operations, to the extent available and to the extent
Seller is authorized to disclose same (excepting documents
which Seller is contractually prohibited from disclosing or are
subject to legal privilege).
14.2 Spills and NORM: Buyer acknowledges that in the
past there may have been spills of wastes, crude oil, produced
water, or other materials (including, without limitation,
any toxic, hazardous or extremely hazardous substances) onto
the Lands. In addition, some production equipment may
contain asbestos and/or Naturally Occurring Radioactive
Material (hereinafter referred to as "NORM"). In this regard
Buyer expressly understands that NORM may affix or attach
itself to the inside of wells, materials and equipment as
scale or in other forms, that said wells, materials and
equipment located on the Lands or included in the Assets
described herein may contain NORM and that NORM-
containing material may have been buried or otherwise disposed
of on the Lands. Buyer also expressly understands that
special procedures may be required for the remediation,
removal, transportation and disposal of asbestos, NORM or other
materials from the Assets and Lands where such material may be
found and that Buyer assumes all liability for or in connection
with the assessment, containment, removal, remediation, transportation
and disposal of any such materials, in accordance with
all past, present or future applicable laws, rules,
regulations and other requirements of any governmental or
judicial entities having jurisdiction and also with the
terms and conditions of all applicable leases and other
contracts.
14.3 Access to Conduct Assessment: Buyer shall have
the right for a period of up to sixty (60) days after
execution of this Agreement by both parties, but ending five
days prior to Closing, to conduct an environmental assessment
of the Assets, at its own risk and expense.
Seller will provide Buyer (and its representatives) with
reasonable access to the Assets operated by Seller to conduct
the environmental assessment; provided that Seller may require
Buyer and its representatives to comply with Seller's safety
procedures. Buyer shall provide Seller three days written notice
of a desired date(s) for such assessment,the proposed locations,
and the anticipated scope of any testing or other activities.
Seller shall have the right to be present during any assessment
and, if any testing is conducted, Seller may require splitting
of all samples. Buyer shall provide Seller copies of all reports,
results, data and analyses in connection therewith, within three
days of Buyer's receipt of same.
BUYER AGREES TO RELEASE, INDEMNIFY, DEFEND AND
HOLD SELLER HARMLESS FROM ANY CLAIM, CAUSE OF ACTION,
JUDGMENT, LIABILITY, LOSS, DAMAGE OR OTHER COST WHATSOEVER
BROUGHT BY OR IN FAVOR OF ANY PERSON FOR INJURY, ILLNESS OR
DEATH, DAMAGE TO OR LOSS OF PROPERTY, FOR DAMAGE OR HARM TO
THE ENVIRONMENT OR FOR ANY OTHER MATTER CAUSED BY BUYER'S
ACCESS TO THE LANDS OR THE ENVIRONMENTAL ASSESSMENT OR
TESTING THEREOF, EVEN IF SUCH LIABILITY IS ATTRIBUTABLE
TO THE CONTRIBUTORY NEGLIGENCE OF SELLER.
14.4 Material Adverse Environmental Conditions: Buyer
shall advise Seller of any material adverse environmental
condition ("Condition") of the Assets which it finds
unacceptable and shall provide evidence thereof on or before
the earlier of the end of the sixty-day period provided for
in Section 14.3 or five days prior to the Closing Date.
For the purpose of this Section, a Condition shall be
"material" only if (1) it is required to be remediated under
applicable environmental laws or other directive of any
applicable governmental or judicial entity, or it is a
material violation of any law or governmental regulation
regarding the safe operation of the Assets, and (2) the cost
to remediate said Condition to levels required by applicable
laws or other directives exceeds two percent (2%) of the
Purchase Price, and (3) said Condition was not disclosed to or
known by Buyer on or before Buyer's execution of this
Agreement. Buyer shall treat all information regarding any
Condition as confidential, whether material or not, and
shall not make any contact with any governmental
authority or third party regarding same without Seller's
written consent, unless required by applicable law or other
directive.
Within fifteen days after receipt of such notice
with respect to each Condition identified by Buyer, Seller may,
at its sole election, either: (1) agree with Buyer on an
adjustment to the Purchase Price, which adjustment shall
reflect the cost to remediate such Condition; (2) remove the
affected Asset(s) from the Assets being conveyed and
adjust the Purchase Price accordingly; (3) in a mutually
acceptable agreement, agree to indemnify Buyer from any and all
damages, claims and losses pertaining to remediating such
Condition as to the period prior to the Effective Time; or (4)
cancel this Agreement and have no further obligations hereunder
except to refund the performance deposit (if any) to Buyer without
interest. In no event will Seller have any obligation to
remediate any Condition unless Seller expressly agrees in
writing to do so.
If Seller and Buyer agree to an adjustment of
the Purchase Price, said adjustment shall be made only for
the net present value of the most cost effective means to
achieve the remediation required by applicable federal, state
or local law or other governmental or judicial directive and
not for any other cost. In addition, if Seller and Buyer
agree to an adjustment of the Purchase Price, Buyer agrees to
accept all responsibility and liability for the then-existing
and future environmental condition of the Lands and Assets,
including but not limited to, all existing and prospective claims,
causes of action, fines, losses, costs and expenses, including,
but not limited to, costs to cleanup or remediate in accordance
with and to the extent required by applicable law or other directive.
14.5 "As Is, Where Is" Purchase: Buyer shall acquire the
Assets (including Assets for which a notice was given under
Section 14.4 above) in an "AS IS, WHERE IS" condition and shall
assume all risks that the Assets may contain waste materials
(whether toxic, hazardous, extremely hazardous or otherwise)
or other adverse physical conditions, including, but not limited to,
the presence of unknown abandoned oil and gas wells, water wells,
sumps, pits, pipelines or other waste or spill sites which may
not have been revealed by Buyer's investigation. On and after
the Effective Time, all responsibility and liability related to all
such conditions, whether known or unknown, fixed or contingent,
will be transferred from Seller to Buyer.
WITHOUT LIMITING THE ABOVE, BUYER WAIVES ITS RIGHT
TO RECOVER FROM SELLER AND FOREVER RELEASES AND DISCHARGES
SELLER AND AGREES TO DEFEND, INDEMNIFY AND HOLD SELLER HARMLESS
FROM ANY AND ALL DAMAGES, CLAIMS, LOSSES, LIABILITIES,
PENALTIES, FINES, LIENS, JUDGMENTS, COSTS AND EXPENSES
WHATSOEVER (INCLUDING, WITHOUT LIMITATION, REASONABLE
ATTORNEYS' FEES AND COSTS), WHETHER DIRECT OR INDIRECT,
KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN, THAT MAY ARISE OR
MAY HAVE ARISEN PRIOR TO, FROM OR AFTER THE EFFECTIVE TIME
ON ACCOUNT OF OR IN ANY WAY CONNECTED WITH THE ENVIRONMENTAL
OR OTHER PHYSICAL CONDITION OF THE ASSETS AND LANDS OR ANY
VIOLATION BY SELLER, BUYER OR ANY OTHER PARTY OF ANY
APPLICABLE LEASE, CONTRACT OR OTHER INSTRUMENT OR OF ANY
APPLICABLE EXISTING OR FUTURE LAW, REGULATION, ORDER OR
OTHER DIRECTIVE OF ANY GOVERNMENTAL OR JUDICIAL ENTITY,
HAVING JURISDICTION APPLICABLE THERETO, INCLUDING WITHOUT
LIMITATION, THE COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED (42 U.S.C.
9601 ET. SEQ.), THE RESOURCE CONSERVATION AND RECOVERY ACT OF
1976 (42 U.S.C. 6901 ET. SEQ.), THE CLEAN WATER ACT (33 U.S.C.
466 ET. SEQ.), THE SAFE DRINKING WATER ACT (14 U.S.C.
1401-1450), THE HAZARDOUS MATERIALS TRANSPORTATION ACT (49
U.S.C. 1801 ET. SEQ.), THE TOXIC SUBSTANCE CONTROL ACT (15 U.S.C.
2601-2629), THE CLEAN AIR ACT (42 U.S.C. 7401 ET. SEQ.) AS
AMENDED, THE CLEAN AIR ACT AMENDMENTS OF 1990 AND ALL STATE
AND LOCAL LAWS, AND ANY REPLACEMENT OR SUCCESSOR
LEGISLATION OR REGULATION THERETO.
14.6 Disposal of Materials, Substances and Wastes: Buyer
shall properly handle, remove, transport and dispose of
any material, substance or waste (whether toxic, hazardous,
extremely hazardous or otherwise) from the Assets or Lands (including,
but not limited to, produced water, drilling fluids and
other associated wastes), whether present before or after the
Effective Time, in accordance with applicable local, state and
federal laws and regulations. To the extent that the Lands
are not sold in fee to Buyer, Buyer shall keep records of
the types, amounts and location of materials, substances and
wastes which are transported, handled, discharged, released
or disposed onsite and offsite. When and if any lease, an
interest in which has been assigned pursuant to this Agreement,
is terminated, Buyer shall take whatever additional testing,
assessment, closure, reporting or remedial action with respect
to the Assets or Lands as is necessary to meet any local,
state or federal requirements directed at protecting human health
or the environment in effect at that time, and any other action
as necessary to restore the Lands or Assets to their original
condition.
14.7 INDEMNITY: (a) BUYER SHALL INDEMNIFY, HOLD
HARMLESS, RELEASE AND DEFEND SELLER FROM AND AGAINST ALL
DAMAGES, LOSSES, CLAIMS, DEMANDS, CAUSES OF ACTION,
JUDGMENTS AND OTHER COSTS (INCLUDING BUT NOT LIMITED TO ANY
CIVIL FINES, PENALTIES, COSTS OF ASSESSMENT, CLEAN-UP,
REMOVAL AND REMEDIATION OF POLLUTION OR CONTAMINATION, AND
EXPENSES FOR THE MODIFICATION, REPAIR OR REPLACEMENT OF
FACILITIES ON THE LANDS) BROUGHT BY ANY AND ALL PERSONS
(INCLUDING, BUT NOT LIMITED TO, BUYER'S AND SELLER'S
RESPECTIVE EMPLOYEES, AGENTS OR REPRESENTATIVES, ANY
PRIVATE CITIZENS OR ORGANIZATIONS, AND ANY AGENCY OR OTHER
BODY OF FEDERAL, STATE OR LOCAL GOVERNMENT) ON ACCOUNT OF
ANY PERSONAL INJURY, ILLNESS OR DEATH, ANY DAMAGE TO,
DESTRUCTION OR LOSS OF PROPERTY, AND ANY CONTAMINATION OR
POLLUTION OF NATURAL RESOURCES (INCLUDING SOIL, AIR, SURFACE
WATER OR GROUNDWATER) TO THE EXTENT ANY OF THE FOREGOING
DIRECTLY OR INDIRECTLY IS CAUSED BY OR OTHERWISE INVOLVES
ANY ENVIRONMENTAL CONDITION OF THE ASSETS OR LANDS, WHETHER
CREATED OR EXISTING BEFORE, ON OR AFTER THE EFFECTIVE
TIME, INCLUDING, BUT NOT LIMITED TO, THE PRESENCE, DISPOSAL
OR RELEASE OF ANY MATERIAL (WHETHER HAZARDOUS, EXTREMELY
HAZARDOUS, TOXIC OR OTHERWISE) OF ANY KIND IN, ON OR UNDER
THE ASSETS OR THE LANDS.
(b) BUYER'S INDEMNIFICATION OBLIGATIONS SHALL EXTEND
TO AND INCLUDE, BUT NOT BE LIMITED TO (I) THE NEGLIGENCE OR
OTHER FAULT OF SELLER, BUYER AND THIRD PARTIES, WHETHER SUCH
NEGLIGENCE IS ACTIVE OR PASSIVE, GROSS, JOINT, SOLE OR
CONCURRENT, (II) SELLER'S OR BUYER'S STRICT LIABILITY, AND
(III) SELLER'S OR BUYER'S LIABILITIES OR OBLIGATIONS
UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION
AND LIABILITY ACT OF 1980, AS AMENDED (42 U.S.C. 9601 ET.
SEQ.), THE RESOURCE CONSERVATION AND RECOVERY ACT OF 1976 (42
U.S.C. 6901 ET. SEQ.), THE CLEAN WATER ACT (33 U.S.C. 466
ET. SEQ.), THE SAFE DRINKING WATER ACT (14 U.S.C. 1401-
1450), THE HAZARDOUS MATERIALS TRANSPORTATION ACT (49 U.S.C.
1801 ET. SEQ.), THE TOXIC SUBSTANCES CONTROL ACT (15 U.S.C.
2601-2629), THE CLEAN AIR ACT (42 U.S.C. 7401 ET. SEQ.) AS
AMENDED, THE CLEAN AIR ACT AMENDMENTS OF 1990 AND ALL STATE
AND LOCAL LAWS AND ANY REPLACEMENT OR SUCCESSOR LEGISLATION OR
REGULATION THERETO. THIS INDEMNIFICATION SHALL BE IN ADDITION
TO ANY OTHER INDEMNITY PROVISIONS CONTAINED IN THIS
AGREEMENT, AND IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT ANY
TERMS OF THIS ARTICLE SHALL CONTROL OVER ANY CONFLICTING OR
CONTRADICTING TERMS OR PROVISIONS CONTAINED IN THIS AGREEMENT.
ARTICLE XV.
CASUALTY LOSS AND CONDEMNATION
15.1 No Termination. (a) Buyer shall assume all risk of
loss with respect to, and any change in the condition of,
the Assets from the Effective Time until Closing for production of
oil, gas and/or other hydrocarbons through normal depletion
(including the watering-out of any well, collapsed casing or sand
infiltration of any well) and the depreciation of personal
property due to ordinary wear and tear.
(b) If after the Effective Time and prior to
the Closing any part of the Assets shall be destroyed by fire or
other casualty or if any part of the Assets shall be taken
in condemnation or under the right of eminent domain or
if proceedings for such purposes shall be pending or
threatened, this Agreement shall remain in full force and
effect notwithstanding any such destruction, taking or
proceeding or the threat thereof.
15.2 Proceeds and Awards. In the event of any
loss described in Section 15.1(b), Seller shall either (i)
at the Closing pay to Buyer all sums paid to Seller by reason
of such destruction less any costs and expenses incurred by Seller
in collecting same, or (ii) commit, use, or apply such sums
(less any costs and expenses incurred by Seller in collecting
same) to repair, restore or replace such damaged or taken Assets.
To the extent the insurance proceeds, condemnation awards or other
payments are not committed, used or applied by Seller prior
to the Closing Date to repair, restore or replace such damaged
or taken Assets, Seller shall at the Closing pay to Buyer all
sums paid to Seller by reason of such destruction or taking,
less any costs and expenses incurred by Seller in collecting
same. In addition and to the extent such proceeds, awards or
payments have not been committed, used or applied by Seller in
repair, restoration or replacement as aforesaid, Seller shall
assign, transfer and set over unto Buyer, without recourse
against Seller, all of the right, title and interest of Seller
in and to any claims against third parties with respect to the
event or circumstance causing such loss and any unpaid insurance
proceeds, condemnation awards or other payments arising out of
such destruction or taking, less any costs and expenses incurred
by Seller in collecting same. Any such funds which have
been committed by Seller for repair, restoration or replacement
as aforesaid shall be paid by Seller for such purposes or,
at Seller's option, delivered to Buyer upon Seller's receipt
from Buyer of adequate assurance and indemnity from Buyer that
Seller shall incur no liability or expense as a result of such
commitment. Notwithstanding anything to the contrary in this
Section 15.2, Seller shall not be obligated to carry or maintain,
and shall have no obligation or liability to Buyer for its failure
to carry or maintain, any insurance coverage with respect to any
of the Assets, except as required by Section 9.1(b).
ARTICLE XVI.
DEFAULT AND REMEDIES
16.1 Seller's Remedies. Upon failure of Buyer to
comply herewith by the Closing Date, as it may be extended in
accordance herewith, Seller, at its sole option, may (i)
enforce specific performance or (ii) terminate this Agreement
and retain the Deposit together with any interest earned thereon,
all other remedies (except as expressly retained in Section 16.3)
being expressly waived by Seller.
16.2 Buyer's Remedies. Upon failure of Seller to
comply herewith by the Closing Date, as it may be extended in
accordance herewith, Buyer, at its sole option, may (i)
enforce specific performance or (ii) terminate this Agreement
and receive back the Deposit together with any interest earned
thereon, all other remedies (except as expressly retained in
Section 16.3) being expressly waived by Buyer.
16.3 Other Remedies. Notwithstanding the foregoing,
termination of this Agreement shall not prejudice or
impair Buyer's obligations under Sections 6.3 (and the
Confidentiality Agreement referenced therein), 6.4 and 9.2(b)
and such other portions of this Agreement as are necessary
to the enforcement and construction of Sections 6.3, 6.4 and
9.2(b). The prevailing party in any legal proceeding brought
under or to enforce this Agreement shall be additionally
entitled to recover court costs and reasonable attorney's fees
from the non-prevailing party.
ARTICLE XVII.
MISCELLANEOUS
17.1 Certain Governmental Consents. At the Closing,
Seller shall execute and deliver to Buyer such assignments of
Federal and State leases as require consent to assignment, on
the forms required by the governmental agency having
jurisdiction thereof. Seller and Buyer will use reasonable
efforts after Closing to obtain approval of such assignments.
17.2 Antitrust Laws. This Agreement is subject in
all respects to and conditioned upon compliance by the parties
with Title II of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "Hart-Scott-Rodino Act"), and rules and
regulations promulgated pursuant thereto, to the extent that
said act, rules and regulations are applicable to the
transaction or transactions contemplated by this Agreement.
Buyer and Seller agree to make such filings with and
provide such information to the Federal Trade Commission and
the Department of Justice with respect to the transactions
contemplated by this Agreement as are required in connection
with the Hart-Scott-Rodino Act sufficiently in advance of
the Closing Date to permit the lapse of the normal waiting
periods prescribed in connection with the Hart-ScottRodino
Act prior to the Closing Date.
17.3 Public Announcements. The parties hereto agree
that prior to making any public announcement or statement with
respect to the transaction contemplated by this Agreement,
the party desiring to make such public announcement or
statement shall consult with the other party hereto and
exercise reasonable efforts to (i) agree upon the text of a
joint public announcement or statement to be made by both of
such parties or (ii) obtain approval of the other party
hereto to the text of a public announcement or statement to
be made solely by Seller or Buyer, as the case may be.
Nothing contained in this paragraph shall be construed to
require either party to obtain approval of the other party
hereto to disclose information with respect to the
transaction contemplated by this Agreement to any state
or federal governmental authority or agency to the extent
required by applicable law or by any applicable rules,
regulations or orders of any governmental authority or agency
having jurisdiction or necessary to comply with disclosure
requirements of the New York Stock Exchange, the NASDAQ
Stock Exchange and applicable securities laws.
17.4 Filing and Recording of Assignments, etc. Buyer
shall be solely responsible for all filings and recording of
assignments and other documents related to the Assets and for
all fees connected therewith, and upon request Buyer shall
advise Seller of the pertinent recording data. Seller shall not
be responsible for any loss to Buyer because of Buyer's
failure to file or record documents correctly or promptly.
Buyer shall promptly file all appropriate forms, declarations
or bonds with Federal, State and Indian agencies relative to
its assumption of operations and Seller shall cooperate with
Buyer in connection with such filings.
17.5 Assumption and Indemnity. Buyer shall assume all
risk of loss with respect to any change in the condition of the
Assets from the Effective Time until Closing (EVEN THOUGH DUE
IN WHOLE OR IN PART TO SELLER'S NEGLIGENCE BUT NOT
SELLER'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT). Buyer
agrees to assume and pay, perform, fulfill and discharge all
Assumed Obligations, and agrees to indemnify, defend and
hold Seller harmless from and against any and all claims,
losses, damages, costs, expenses, causes of action or
judgments of any kind or character with respect to all
liabilities and obligations or alleged or threatened
liabilities and obligations attributable to or arising out
of the Assumed Obligations, including, without limitation,
any interest, penalty, reasonable attorney's fees and other
costs and expenses incurred in connection therewith or the
defense thereof. To the extent not included in Assumed
Obligations, Seller agrees to pay, perform, fulfill and
discharge all costs, expenses and liabilities incurred by
Seller with respect to the ownership or operation of Seller's
interest in the Assets and accruing prior to the Effective
Time, and agrees to indemnify, defend and hold Buyer harmless
from and against any and all claims, losses, damages, costs,
expenses, causes of action or judgments of any kind or
character with respect to all liabilities and obligations
or alleged or threatened liabilities and obligations attributable
to or arising out of such obligations of Seller, including,
without limitation, any interest, penalty, reasonable attorney's
fees and other costs and expenses incurred in connection therewith
or the defense thereof. For example, with respect to operations
committed to by Seller and commenced prior to the Effective Time,
but not completed until after the Effective Time, the costs
accruing with respect thereto prior to the Effective Time
shall be the obligation of Seller and the costs accruing
with respect thereto after the Effective Time shall be
the obligation of Buyer. Without limiting the parties'
respective representations in Sections 4.1(f) and 5.1(f)
hereof, each party hereby agrees to indemnify and hold
the other harmless from and against any claim for
a brokerage or finder's fee or commission in connection with
this Agreement or the transactions contemplated by this
Agreement to the extent such claim arises from or is
attributable to the actions of such indemnifying
party, including, without limitation, any and all losses,
damages, attorney's fees, costs and expenses of any kind or
character arising out of or incurred in connection with any
such claim or defending against the same.
17.6 Further Assurances and Records.
(a) After the Closing, each of the parties
will execute, acknowledge and deliver to the other such
further instruments, and take such other action, as may be
reasonably requested in order to more effectively assure to
said party all of the respective properties, rights, titles,
interests, estates, and privileges intended to be assigned,
delivered or inuring to the benefit of such party in
consummation of the transactions contemplated hereby.
(b) Prior to Closing, Seller may, at Seller's
expense, make and retain copies of any or all files or Basic
Documents, the originals of which are to be delivered to Buyer.
(c) Buyer agrees that, as soon as practicable
after the Closing, it will remove or cause to be removed the
names and marks used by Seller and all variations and
derivatives thereof and logos relating thereto from the
Assets and will not thereafter make any use whatsoever of
such names, marks and logos.
(d) To the extent not obtained or satisfied as
of Closing, Seller agrees to continue to use reasonable
efforts, but without any obligation to incur any cost or
expense in connection therewith, and to cooperate with Buyer's
efforts to obtain for Buyer (i) access to files, records
and data relating to the Assets in the possession of third
parties; (ii) access to wells constituting a part of the
Assets operated by third parties for purposes of inspecting same;
and (iii) the waiver of confidentiality or other restrictions on
the review by and/or transfer to Buyer of seismic, geophysical,
engineering or other data pertaining to the Subject Interests.
17.7 Limitations. The express representations and
warranties of Seller contained in this Agreement are exclusive
and are in lieu of all other representations and warranties,
express, implied or statutory, including without limitation any
representation or warranty with respect to title to the Assets or
the quality, quantity or volume of the reserves of oil, gas or
other Hydrocarbons in or under the Subject Interests and unless
specifically provided otherwise in this Agreement, such express
representations and warranties of Seller shall terminate at
Closing and be of no further force and effect. The items of
personal property, equipment, fixtures and appurtenances conveyed
as part of the Assets are sold hereunder "AS IS, WHERE IS" and no
warranties or representations of any kind or character,
express or implied, including any warranty of quality,
merchantability, fitness for a particular purpose or condition,
are given by or on behalf of Seller. THE WARRANTIES OF
SELLER CONTAINED IN THIS AGREEMENT ARE EXCLUSIVE AND IN
LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, AND
BUYER HEREBY WAIVES ALL WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
CONDITION. BUYER ACKNOWLEDGES THAT SELLER HAS NOT MADE,
AND SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES, AND BUYER
HEREBY EXPRESSLY WAIVES, ANY REPRESENTATION OR WARRANTY,
EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE
RELATING TO (a) PRODUCTION RATES, RECOMPLETION OPPORTUNITIES,
DECLINE RATES, OR THE QUALITY, QUANTITY OR VOLUME OF THE
RESERVES OF HYDROCARBONS, IF ANY, ATTRIBUTABLE TO THE ASSETS,
(b) THE ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION,
DATA OR OTHER MATERIALS (WRITTEN OR ORAL) NOW, HERETOFORE
OR HEREAFTER FURNISHED TO BUYER BY OR ON BEHALF OF SELLER,
AND (c) THE ENVIRONMENTAL CONDITION OF THE ASSETS. NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS AGREEMENT, SELLER EXPRESSLY
DISCLAIMS AND NEGATES, AND BUYER HEREBY WAIVES, AS TO
PERSONAL, MOVABLE AND IMMOVABLE PROPERTY, EQUIPMENT AND
FIXTURES CONSTITUTING A PART OF THE ASSETS (i) ANY
IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (ii)
ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE, (iii) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY
TO MODELS OR SAMPLES OF MATERIALS, (iv) ANY RIGHTS OF PURCHASERS
UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION
OR RETURN OF THE PURCHASE PRICE, (v) ANY IMPLIED OR EXPRESS
WARRANTY OF FREEDOM FROM VICES OR DEFECTS, WHETHER KNOWN OR
UNKNOWN, AND (vi) ANY AND ALL IMPLIED WARRANTIES EXISTING UNDER
APPLICABLE LAW INCLUDING, WITHOUT LIMITATION, THE
PROVISIONS OF LOUISIANA CIVIL CODE ARTICLES 2475 THROUGH
2548, INCLUSIVE (WEST 1952 AND SUPP. 1992), AND (vii) ANY
IMPLIED OR EXPRESS WARRANTY REGARDING ENVIRONMENTAL LAWS,
THE RELEASE OF MATERIALS INTO THE ENVIRONMENT OR PROTECTION
OF THE ENVIRONMENT OR HEALTH, IT BEING THE EXPRESS INTENTION OF
BUYER AND SELLER THAT (EXCEPT TO THE EXTENT EXPRESSLY
PROVIDED IN ARTICLE IV) THE REAL PROPERTY, IMMOVABLE
PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY, MACHINERY,
FIXTURES AND PERSONAL PROPERTY SHALL BE CONVEYED TO BUYER AS
IS AND IN THEIR PRESENT CONDITION AND STATE OF REPAIR, AND
BUYER REPRESENTS TO SELLER THAT BUYER HAS MADE OR CAUSED TO
BE MADE SUCH INSPECTIONS WITH RESPECT TO THE REAL PROPERTY,
IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT,
INVENTORY, MACHINERY, FIXTURES AND PERSONAL PROPERTY AS
BUYER DEEMS APPROPRIATE AND BUYER WILL ACCEPT THE REAL
PROPERTY, IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT,
INVENTORY, MACHINERY, FIXTURES AND PERSONAL PROPERTY AS IS, IN
THEIR PRESENT CONDITION AND STATE OF REPAIR, IT BEING THE EXPRESS
INTENTION OF BOTH BUYER AND SELLER THAT THE PERSONAL
PROPERTY, EQUIPMENT AND FIXTURES INCLUDED WITHIN THE ASSETS
ARE HEREBY CONVEYED TO BUYER IN THEIR PRESENT CONDITION AND
STATE OF REPAIR, "AS IS" AND "WHERE IS" WITH ALL FAULTS, AND
THAT BUYER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS
BUYER DEEMS APPROPRIATE. SELLER AND BUYER AGREE THAT, TO THE
EXTENT REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE, THE
DISCLAIMERS OF CERTAIN WARRANTIES CONTAINED IN THIS SECTION
ARE "CONSPICUOUS" DISCLAIMERS FOR THE PURPOSES OF ANY
APPLICABLE LAW, RULE OR ORDER. To the maximum extent
permitted by law, Buyer waives all provisions of the
Texas Deceptive Trade Practices Act, Chapter 17, Texas
Business and Commerce Code (other than Section 17.555
thereof), insofar as the provisions of such act may be
applicable to this Agreement or the transactions contemplated
hereby. To evidence its ability to grant such waiver, Buyer
hereby represents and warrants to Seller that the Buyer (i) is
seeking or acquiring, by purchase or lease, goods or services
for commercial or business use, (ii) has assets of $5 million
or more according to its most recent financial statement
prepared in accordance with GAAP, (iii) has knowledge and
experience in financial and business matters that enable it to
evaluate the merits and risks of the transaction contemplated
hereby and (iv) is not in a significantly disparate
bargaining position.
17.8 Survival. No representation, warranty, covenant or
agreement made herein shall survive the Closing except
as provided in this Section 17.8. It is expressly agreed that
the terms and provisions of Articles I, III, V, VIII, XII,
XIII, XIV, XV, XVI, and XVII and Sections 4.1(a) through
4.1(f), inclusive, 6.3, 6.4 and 7.1 shall survive the
Closing; Section 4.1(k) and 4.1(o) shall survive the Closing
for a period of one (1) year thereafter; and Section 4.1(l)
and 4.1(n) shall survive the Closing for a period of two (2)
years thereafter.
17.9 Gas Imbalance: Buyer acknowledges and agrees to
the following regarding gas imbalances as of the Effective Time
on any of the Assets to be transferred pursuant to this
Agreement:
(a) Gas Underproduction: In the event Seller is
underproduced as to any wells located on the Lands or if
any amounts are owed Seller with respect to any
pipeline, transportation or processing imbalances, Buyer agrees
not to hold Seller liable for such underproduction or such amounts.
Seller, however, agrees to assign to Buyer all of its contractual
rights to make up such underproduction, and to recover all amounts
owed.
(b) Gas Overproduction: In the event Seller is
overproduced as to any wells located on the Lands or if
any amounts are due from Seller with respect to any
pipeline, transportation or processing imbalances, Buyer
acknowledges and agrees that its share of gas from any such
overproduced wells may at some point be curtailed by
underproduced working interest owners and it may be required
to satisfy, in kind or in value, such third party transporters
and processors for such imbalances. Seller shall not be liable
to Buyer in the event such curtailment occurs or satisfaction
is required.
(c) Gas Balancing Statements: Seller has
furnished Buyer with statements in its possession showing the
most current status of the beforementioned imbalances and these
statements are summarized in Exhibit "H".
(d) Future Liability: From and after the
Effective Time, any and all benefits, obligations and
liabilities associated with such imbalance accounts shall
accrue to and be the responsibility of Buyer. Buyer
shall assume Seller's overproduced or underproduced position
in the Assets as of the Effective Time, including but not
limited to Buyer's responsibility for payment of royalties on
the volume of such gas which Seller took in excess of its
entitlement and any obligation to balance whether in cash or
in kind. Except as provided in Section 17.9(e), there shall
be no adjustment to the Purchase Price as a result of the
imbalance accounts attributable to the Assets.
(e) Adjustment to Purchase Price: In the event
either Seller or Buyer determines no later than one (1) year
after the Closing Date that a "material" error was made with
the imbalance account set forth in Exhibit "H" or that a
material change (either increase or decrease) exists
between the imbalance represented in Exhibit "H" and the
imbalance as of the Effective Time in such an account, the
Purchase Price shall be adjusted to compensate for the
economic impact of the error or change. Such an error
or change is material only if the total difference in
the value of the imbalance accounts as set forth in Exhibit
"H" and the correct or changed imbalance accounts exceeds ten
percent (10%) of the value of the imbalance accounts as set
forth in Exhibit "H", but in no event less than $100,000.00.
For the purposes of this Section only, the value of such an
imbalance account adjustment shall be calculated by multiplying
the applicable volume of gas by $1.75 per MCF (thousand cubic
feet) and then making appropriate adjustments for royalties and
severance taxes and similar taxes, if any, actually paid on
such amount or which will be required to be paid. The Purchase
Price shall be reduced or increased by the adjustments for such gas
imbalance changes on the Closing Date for material errors
discovered prior to the Closing Date. Adjustments for
material errors discovered after the Closing Date shall be
included in a final settlement statement as provided herein.
17.10 Notices. All notices authorized or required
by any of the provisions of this Agreement, unless
otherwise specifically provided, shall be in writing and
delivered in person or by United States mail, courier
service, telegram, telex, telecopier, or any other form of
facsimile, postage or charges prepaid, and addressed to the
parties at the addresses set forth below:
If to Seller: Amerada Hess Corporation
One Allen Center, 500 Dallas
Houston, Texas 77002
Attention: D. G. Stevenson
Fax Number: (713) 609-4463
If to Buyer: Forcenergy Gas Exploration,Inc.
2730 Southwest 3rd Avenue, Suite 800
Miami, Florida 33129
Attention: President
Fax Number: (305) 856-4300
Any party may, by written notice so delivered to the
other, change the address to which delivery shall thereafter be
made.
17.11 Incidental Expenses. Buyer shall bear and pay
(i) any and all Federal, State or local Transfer Taxes as
defined in Section 12.2(b) hereof incident to the transfer,
assignment or other conveyance of the Assets to Buyer, and
(ii) all costs or fees required to obtain consent to assign
any Federal, State or Indian leases included in the Assets.
Each party shall bear its own respective expenses incurred in
connection with the Closing of this transaction, including its
own consultants' fees, attorneys' fees, accountants' fees, and
other similar costs and expenses.
17.12 Entire Agreement. Except for the Confidentiality
Agreement referenced in Section 6.3, this Agreement embodies
the entire agreement between the parties (superseding all
prior agreements, arrangements and understandings related
to the subject matter hereof), and may be supplemented,
altered, amended, modified or revoked by writing only, signed
by all of the parties hereto. No supplement, amendment,
modification, waiver or termination of this Agreement shall be
binding unless in writing and executed by both parties
hereto. The headings herein are for convenience only and
shall have no significance in the interpretation hereof.
17.13 Governing Law. THIS AGREEMENT AND OTHER
DOCUMENTS DELIVERED PURSUANT TO THIS AGREEMENT AND THE
LEGAL RELATIONS BETWEEN THE PARTIES SHALL BE GOVERNED AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICT OF
LAWS.
17.14 Exhibits. All Exhibits and Schedules hereto
which are referred to herein are hereby made a part
hereof and incorporated herein by reference.
17.15 Prime Rate: References to "prime rate" shall
mean a rate per annum equal to the lesser of (a) a varying
rate per annum that is equal to the interest rate publicly
quoted by CitiBank, N.A. from time to time as its prime
commercial or similar reference interest rate, with
adjustments in that varying rate to be made on the same date as
any change in that rate, and (b) the maximum rate permitted by
applicable law.
17.16 Certain Terms. As used in this Agreement,
the term "knowledge" means actual knowledge of any fact,
circumstance or condition by the officers or management
employees of the party involved at a supervisory or higher
level, but does not include (i) knowledge imputed to the
party involved by reason of knowledge of or notice to any
person, firm or corporation other than its officers or
employees at a supervisory or higher level or (ii) knowledge
deemed to have been constructively given by reason of any
filing, registration or recording of any document or
instrument in any public record or with any governmental
entity. As used in this Agreement, the term "day" means
any calendar day, and the term "business day" means any day
exclusive of Saturdays, Sundays and national holidays.
17.17 Counterparts. This Agreement may be executed
in any number of counterparts, and each and every counterpart
shall be deemed for all purposes one (1) agreement.
17.18 Waiver. Any of the terms, provisions, covenants,
representations, warranties or conditions hereof may be waived,
only by a written instrument executed by the party
waiving compliance. Except as otherwise expressly provided
in this Agreement, the failure of any party at any time or
times to require performance of any provision hereof shall in
no manner affect such party's right to enforce the same. No
waiver by any party of any condition, or of the breach of any
term, provision, covenant, representation or warranty contained
in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be or construed as
a further or continuing waiver of any such condition or
breach or a waiver of any other condition or of the breach
of any other term, provision, covenant, representation or
warranty.
17.19 Binding Effect; Assignment. All the terms,
provisions, covenants, representations, warranties and
conditions of this Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and
their respective successors; but this Agreement and the
rights and obligations hereunder shall not be assignable
or delegable by any party without the express written
consent of the non-assigning or nondelegating parties. Any
assignment or delegation without such consent will be void.
17.20 No Recordation. Without limiting any party's
right to file suit to enforce its rights under this Agreement
and except as to those portions of this Agreement set forth
in the Assignment, Bill of Sale and Conveyance, Exhibit "F",
Buyer and Seller expressly covenant and agree not to record
or place of record this Agreement or any copy or memorandum
hereof.
17.21 Independent Investigation. Buyer represents and
acknowledges that it is knowledgeable of the oil and gas
business and of the usual and customary practices of producers
such as Seller and that it has had access to the
Assets, the offices and employees of Seller, and the books,
records and files of Seller relating to the Assets and in
making the decision to enter into this Agreement and
consummate the transactions contemplated hereby, Buyer has
relied solely on the basis of its own independent due
diligence investigation of the Assets and upon the
representations and warranties made in Article IV.
Accordingly, Buyer acknowledges that Seller has not made,
and Seller hereby expressly disclaims and negates any
representation or warranty (other than those express
representations and warranties made in Article IV), express,
implied, at common law, by statute or otherwise, relating to
the Assets.
17.22 Access to Eugene Island Facilities. As
between Buyer and Seller, Buyer shall grant to Seller such
rights of way, easements and the right to use the Facilities and
Equipment and the platform, under terms and conditions and for
fees (consisting of Buyer's proportionate ownership share of
a one-time usage charge and a share of monthly operating
and maintenance costs, pursuant to the basic structure
referenced below) comparable to those charged by the owners
of facilities in the Gulf of Mexico for similar access and
services, for the exploration, development and production of
the portion of Eugene Island Area Blocks 57, 38, 58 and 56
(collectively "Block 57") which is a part of the Excluded
Assets and for the handling of production therefrom. All
such rights granted to Seller shall be subservient to Buyer's
use of the Facilities and Equipment for exploration,
development and production of that portion of Block 57 which
is part of the Assets and for the handling of production
therefrom. The one-time slot usage charge shall be that
portion of the total platform costs which one slot bears to
the total number of slots on the platform, subject to payment
of the same proportion of the platform's monthly operating and
maintenance costs. For Facilities (other than platform costs)
and Equipment, the one-time usage charge shall be that portion
of the total Facilities (other than platform costs) and Equipment
cost which the subject well(s) bear to all wells served by
such Facilities and Equipment, with a corresponding share of
monthly operating and maintenance costs.
To the extent that any working interest partner
of Seller in the portion of Block 57 which is a part of the
Excluded Assets has the right to and uses the platform and
Facilities and Equipment thereon for the exploration,
development, production or handling of production as to rights
in Block 57 to which Seller is not transferring an interest to
Buyer hereunder, and Buyer is not compensated by such working
interest partner for such exploration, development, production
or handling of production (because of Seller's election not to
participate in such activities or otherwise), Seller shall
compensate Buyer for such use by such working interest partner
in accordance with the payment structure set forth above.
To the extent possible, Buyer agrees to cooperate
in helping Seller retain operatorship of the Block 57 interest
being reserved by Seller in the Excluded Assets.
17.23 Allocation. In the event a third party elects
to acquire any of the Assets as a result of the exercise
of preferential rights, Buyer and Seller agree that various
amounts set forth in this Agreement will be allocated between
Buyer and such third party and that such allocation shall be
made on the basis of the allocation set forth in Exhibit "B".
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by their duly authorized officers as
of the date first above written.
AMERADA HESS CORPORATION
By: ___________________________
Name: J. BARCLAY COLLINS, II
Title: EXECUTIVE VICE PRESIDENT
& GENERAL COUNSEL
"SELLER"
FORCENERGY GAS EXPLORATION, INC.
By: __________________________
Name: __________________________
Title:__________________________
