Attached files
file | filename |
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8-K/A - TXCO Resources Inc | v171216_8ka.htm |
EXHIBIT
10.1
PURCHASE
AND SALE AGREEMENT
BETWEEN
TXCO
RESOURCES INC.,
TXCO
ENERGY CORP.,
TEXAS
TAR SANDS INC.,
OUTPUT
ACQUISITION CORP.,
OPEX
ENERGY, LLC,
CHARRO
ENERGY, INC.,
TXCO
DRILLING CORP.,
EAGLE
PASS WELL SERVICE, L.L.C.,
PPL
OPERATING, INC.,
MAVERICK
GAS MARKETING, LTD., AND
MAVERICK-DIMMIT
PIPELINE, LTD.
AS
SELLERS
AND
ANADARKO
E&P COMPANY LP AND
NEWFIELD
EXPLORATION COMPANY
AS
PURCHASERS
EXECUTED
ON JANUARY 11, 2010
TABLE
OF CONTENTS
Page
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ARTICLE 1 PURCHASE AND SALE
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2
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Section 1.1
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Purchase and Sale
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2
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Section 1.2
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Assets
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2
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Section 1.3
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Excluded Assets
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4
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Section 1.4
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Effective Time; Proration of Costs and
Revenues
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4
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Section 1.5
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Delivery and Maintenance of
Records
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6
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ARTICLE 2 PURCHASE PRICE
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6
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Section 2.1
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Purchase Price
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6
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Section 2.2
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Deposit
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7
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Section 2.3
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Adjustments to Purchase
Price
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7
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Section 2.4
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Allocation of Purchase
Price
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9
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ARTICLE 3 CONSENT TO ASSIGNMENT; PREFERENTIAL
RIGHTS TO PURCHASE; CASUALTY AND CONDEMNATION LOSS
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9
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Section 3.1
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Consents to Assignment and Preferential Rights to
Purchase
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9
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Section 3.2
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Casualty and Condemnation
Loss
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10
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ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF
SELLERS
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10
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||
Section 4.1
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Disclaimers
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10
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Section 4.2
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Existence and Qualification
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11
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Section 4.3
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Power
|
11
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Section 4.4
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Authorization and
Enforceability
|
11
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Section 4.5
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No Conflicts
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12
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Section 4.6
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Liability for Brokers' Fees
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12
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Section 4.7
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Litigation and Claims
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12
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Section 4.8
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Taxes and Assessments
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12
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Section 4.9
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Preferential Rights;
Consents
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13
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Section 4.10
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Consents
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13
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Section 4.11
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Contracts
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13
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Section 4.12
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Wells; Facilities
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14
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Section 4.13
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Marketing; Calls on
Production
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15
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Section 4.14
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Imbalances
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15
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Section 4.15
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AFEs
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15
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Section 4.16
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Suspense Account
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15
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Section 4.17
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Capital Expenditures
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15
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Section 4.18
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Equipment
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15
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ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF
NEWFIELD
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16
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Section 5.1
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Existence and Qualification
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16
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Section 5.2
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Power
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16
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Section 5.3
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Authorization and
Enforceability
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16
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Section 5.4
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No Conflicts
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16
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i
Section 5.5
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Liability for Brokers' Fees
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16
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Section 5.6
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Litigation
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16
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Section 5.7
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Financing
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17
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Section 5.8
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Independent Investigation
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17
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Section 5.9
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Consents, Approvals or
Waivers
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17
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ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF
ANADARKO
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17
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Section 6.1
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Existence and Qualification
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17
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Section 6.2
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Power
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17
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Section 6.3
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Authorization and
Enforceability
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17
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Section 6.4
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No Conflicts
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18
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Section 6.5
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Liability for Brokers' Fees
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18
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Section 6.6
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Litigation
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18
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Section 6.7
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Financing
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18
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Section 6.8
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Independent Investigation
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18
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Section 6.9
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Consents, Approvals or
Waivers
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18
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ARTICLE 7 COVENANTS OF THE
PARTIES
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19
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Section 7.1
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Access
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19
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Section 7.2
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Government Reviews
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19
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Section 7.3
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Notification of Breaches
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19
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Section 7.4
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Public Announcements
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20
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Section 7.5
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Operation of Business
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20
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Section 7.6
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Indemnity Regarding Access
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21
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Section 7.7
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Assumption of Obligations
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22
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Section 7.8
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Solicitation Provisions
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22
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Section 7.9
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Tax Matters
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22
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Section 7.10
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[Intentionally Omitted]
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22
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Section 7.11
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Further Assurances
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22
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Section 7.12
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Recording
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23
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Section 7.13
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Transition Services
Agreements
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23
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Section 7.14
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Schedule Updates
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23
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Section 7.15
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Peregrine Claims
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23
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Section 7.16
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Sale Order
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24
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ARTICLE 8 CONDITIONS TO
CLOSING
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24
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Section 8.1
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Conditions of Sellers to
Closing
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24
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Section 8.2
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Conditions of Purchasers to
Closing
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25
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ARTICLE 9 CLOSING
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25
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Section 9.1
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Time and Place of Closing
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25
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Section 9.2
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Obligations of Sellers at
Closing
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26
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Section 9.3
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Obligations of Purchasers at
Closing
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27
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Section 9.4
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Closing Payment and Post-Closing Purchase Price
Adjustments
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27
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Section 9.5
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Further Assurances
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28
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ARTICLE 10 TERMINATION AND
AMENDMENT
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28
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ii
Section 10.1
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Termination
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28
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Section 10.2
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Effect of Termination
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29
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ARTICLE 11 INDEMNIFICATION;
LIMITATIONS
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29
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Section 11.1
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Indemnification.
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29
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Section 11.2
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Indemnification Actions
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33
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Section 11.3
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Limitation on Actions
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34
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ARTICLE 12 MISCELLANEOUS
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35
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Section 12.1
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Receipts
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35
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Section 12.2
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Property Costs
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36
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Section 12.3
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Counterparts
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36
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Section 12.4
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Notice
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36
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Section 12.5
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Sales or Use Tax, Recording Fees and Similar Taxes
and Fees
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37
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Section 12.6
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Expenses
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38
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Section 12.7
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Change of Name
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38
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Section 12.8
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Replacement of Bonds, Letters of Credit and
Guarantees
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38
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Section 12.9
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Governing Law; Submission to
Jurisdiction
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38
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Section 12.10
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Caption
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38
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Section 12.11
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Waivers
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38
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Section 12.12
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Assignment
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38
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Section 12.13
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Entire Agreement
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39
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Section 12.14
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Amendment
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39
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Section 12.15
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No Third Party
Beneficiaries
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39
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Section 12.16
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References
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39
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Section 12.17
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Construction
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39
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Section 12.18
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Limitation on Damages
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39
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Section 12.19
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Waiver of Fees and Expenses
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40
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Section 12.20
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Purchasers’ Liability
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40
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Section 12.21
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Agreed Subordination by
Newfield
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40
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ARTICLE 13 DEFINITIONS
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40
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iii
EXHIBITS:
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Exhibit
A
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-
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Leases
and Lands
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Exhibit
A-1
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-
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Interests
in Wells
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||
Exhibit
A-2
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-
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Gathering
Systems
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||
Exhibit
A-3
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-
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Contracts
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||
Exhibit
A-4
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-
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Equipment
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||
Exhibit
A-5
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-
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Inventory
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Exhibit
A-6
|
-
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Surface
Rights
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Exhibit
A-7
|
-
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Seismic
Data
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Exhibit
A-8
|
-
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Capital
Expenditure Budget
|
||
SCHEDULES:
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Schedule
4.7
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-
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Litigation
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||
Schedule
4.8
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-
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Taxes
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||
Schedule
4.9
|
-
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Consents
to Assignment; Preferential Rights
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||
Schedule
4.10
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-
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Consents
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||
Schedule
4.11
|
-
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Material
Contracts
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Schedule
4.12
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-
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Plugged
and Abandoned Wells
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Schedule
4.14
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-
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Imbalances
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Schedule
4.15
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-
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AFEs
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Schedule
4.16
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-
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Suspense
Revenues
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Schedule
4.17
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-
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Unbudgeted
Capital Expenditures
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||
Schedule
5.9
|
-
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Newfield
Consents, Approvals and Waivers
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||
Schedule
6.9
|
-
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Anadarko
Consents, Approvals and Waivers
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||
Schedule
6.10
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-
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Employees
|
iv
PURCHASE
AND SALE AGREEMENT
This
Purchase and Sale Agreement (the “Agreement”),
is executed on January 11, 2010, by and between TXCO
Resources Inc., a Delaware corporation, TXCO Energy
Corp., a Texas
corporation, Texas Tar
Sands Inc., a
Texas corporation, Output
Acquisition Corp., a Texas corporation, OPEX Energy, LLC, a Texas limited
liability company, Charro
Energy, Inc., a
Texas corporation, TXCO
Drilling
Corp., a Texas
corporation, Eagle Pass
Well Service,
L.L.C., a Texas limited liability company, PPL Operating,
Inc., a Texas
corporation, Maverick
Gas Marketing, Ltd., a Texas limited
partnership, and Maverick-Dimmit
Pipeline, Ltd., a
Texas limited partnership, (collectively, the “Sellers”),
and Anadarko
E&P Company LP, a Delaware limited partnership (“Anadarko”)
and Newfield
Exploration Company, a Delaware corporation (“Newfield”
and together with Anadarko, the “Purchasers”). Each
Seller and each Purchaser is sometimes referred to individually as a “Party”
and collectively as the “Parties.”
RECITALS:
WHEREAS,
Sellers are debtors in possession under the protection of Chapter 11 of the
United States Bankruptcy Code pursuant to jointly administered cases under Case
Number 09-51807 filed with the United States Bankruptcy Court for the Western
District of Texas (San Antonio Division) (the “Bankruptcy
Court”); and
WHEREAS,
Sellers own certain interests in oil and gas properties, rights and related
assets that are defined and described herein; and
WHEREAS,
Sellers filed with the Bankruptcy Court a First Amended Plan of Reorganization
on December 18, 2009 (the “Plan”);
and
WHEREAS,
subject to the Bankruptcy Court’s entry of an Order of the Court authorizing the
transactions contemplated herein containing terms in form and substance
reasonably satisfactory to Sellers and Purchasers and providing among other
things, for the purchase and sale of Sellers’ Assets (hereinafter defined)
pursuant to the terms of this Agreement (the “Sale
Order”), Sellers desire to sell to Purchasers and Purchasers desire to
purchase from Sellers the Assets, in the manner and upon the terms and
conditions hereafter set forth; and
WHEREAS,
capitalized terms used herein shall have the meanings ascribed to them in this
Agreement as such terms are defined in Article 13
hereof.
NOW,
THEREFORE, in consideration of the premises and of the mutual promises,
representations, warranties, covenants, conditions and agreements contained
herein, and for other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties hereto, intending to be legally bound
by the terms hereof, agree as follows:
1
ARTICLE
1
PURCHASE
AND SALE
Section
1.1 Purchase and
Sale. At
the Closing, and upon the terms and subject to the conditions of this Agreement,
Sellers agree to sell and convey to Purchasers and Purchasers agree to purchase,
accept and pay for the Assets (as defined in Section 1.2).
Section
1.2 Assets As
used herein, the term “Assets”
means all of Sellers’ right, title, and interest in and to the
following:
(a) The
oil, gas and mineral leases, subleases and other leaseholds, royalties,
overriding royalties, net profits interests, mineral fee interests, carried
interests, Contractual Prospects, and other properties and interests described
on Exhibit A
(collectively, the “Leases
and Lands”), and any and all oil, gas, water, CO2 or
injection wells thereon, including the working interests and net revenue
interests in Leases and the wells located thereon shown on Exhibit A-1
attached hereto (the “Wells”);
(b) All
pooled, communitized or unitized acreage which includes all or a part of any
Lease or includes any Well (the “Units”),
and all tenements, hereditaments and appurtenances belonging to the Leases and
Lands and Units;
(c) All
gathering and transportation pipelines, compressors, stabilizers, processing
facilities, disposal facilities, treatment facilities, interconnects, and other
systems, facilities and plants used solely in connection with the Units, Leases
and Lands and Wells, including the gas gathering and transportation pipelines,
processing facilities, treatment facilities, interconnects, and other systems
and facilities described on Exhibit A-2 (the
“Gathering
Systems”);
(d) All
surface fee interests (including the Mula Creek Ranch), easements, permits,
licenses, servitudes, rights-of-way, surface leases and other surface rights and
water rights appurtenant to, and used or held for use solely in connection with,
the Properties, but excluding any permits and other appurtenances to the extent
transfer is restricted by third-party agreement or applicable law (the “Surface
Rights” and,
together with the Units, Leases, Lands, Wells and Gathering Systems, the “Properties”);
(e) To
the extent transferable pursuant to Applicable Law, all governmental (whether
federal, state or local) Permits, licenses, Orders, authorizations, franchises
and related instruments or rights required of Sellers under applicable Law for
the ownership, operation or use of the Leases, Lands, Wells, Gathering Systems,
Surface Rights (the “Permits”),
including Environmental Permits
(f) All
Hydrocarbons (or the proceeds from the sale of Hydrocarbons) in storage on the
Properties or in the Gathering Systems at the Effective Time and all
Hydrocarbons produced and saved attributable to the Properties after the
Effective Time and all Imbalances owed to Sellers by a Third Party as of the
Effective Time;
2
(g) All
rights attributable to the period of time after the Effective Time under all
presently existing contracts, agreements and instruments by which the Assets are
bound, to the extent applicable to the Properties (the “Contracts”),
including operating agreements, unitization, pooling and communitization
agreements, declarations and orders, area of mutual interest agreements, joint
venture agreements, farmin and farmout agreements, exchange agreements,
transportation agreements, agreements for the sale and purchase of Hydrocarbons
and processing agreements, to the extent applicable to the Properties or the
production of Hydrocarbons from the Properties, and confidentiality agreements,
to the extent applicable to the Properties or the production of Hydrocarbons
from the Properties, including those described on Exhibit A-3, but
excluding any contracts, agreements and instruments to the extent transfer is
restricted by third-party agreement or applicable law;
(h) All
equipment, machinery, fixtures and other tangible personal property and
improvements located on the Properties or used or held for use in connection
with the operation of the Properties including the Equipment described on Exhibit A-4 (the
“Equipment”);
(i) All
surplus equipment, materials and inventory owned, leased or held for use by
Sellers, in connection with operations on the Properties including such surplus
equipment, materials and inventory, if any, described on Exhibit A-5;
(j) All
surface leases for real property used by Sellers in connection with the
operation of the Properties (including leases for field office, supply yards,
warehouses or buildings, if any, described on Exhibit A-6);
(k) All
geophysical and geological data, engineering and consulting reports, computer
data, seismic data (including raw data and any interpretative data or
information relating so such geologic, geophysical and seismic data) and other
proprietary data (in each case whether in written or electronic format) owned by
Sellers, together with any rights of Sellers to such types of intellectual
property owned or prepared by third parties and not subject to licensing
arrangements requiring purchase of a proprietary license by each successor-user,
in each case to the extent relating to the operation of the Leases, Lands,
Wells, Gathering System, Units, and Surface Rights, including the seismic data
described on Exhibit A-7;
(l) All
operating revenues and accounts receivable relating to the period after the
Effective Time, in each case associated with the Properties or the production of
Hydrocarbons attributable thereto; and
(m) The
records of Sellers relating solely to the Properties or other Assets, excluding however, (A) any
records to the extent disclosure or transfer is restricted by any third-party
license agreement, other third-party agreement or applicable law;
(B) non-transferable computer software; (C) all legal records and
legal files of Sellers and all other work product of and attorney-client
communications with any of Sellers’ legal counsel (other than
(w) environmental assessments and compliance reports (x) title
opinions, (y) Contracts and (z) records and files with respect to the
matters described on Schedule 4.7);
and (D) any other records to the extent constituting Excluded Assets (as
defined in Section 1.3)
(clauses (A) through (D) shall hereinafter be referred to as the “Excluded
Records” and subject to such exclusions, the records described in this
Section 1.2(m) shall
hereinafter be referred to as the “Records”).
3
Section
1.3 Excluded
Assets Notwithstanding
the foregoing, the Assets shall not include, and there is excepted, reserved and
excluded from the purchase and sale contemplated hereby (collectively, the
“Excluded
Assets”):
(a) all
corporate, financial, income and franchise tax and legal records of Sellers that
relate to Sellers’ business generally (whether or not relating to the Assets),
all Excluded Records and all books, records and files that relate to the
Excluded Assets;
(b) all
of Sellers’ other mineral fee interests, royalties and/or overriding royalty
interests to the extent not specifically described in Section 1.2;
(c) all
of Sellers’ other (i) equipment, machinery, fixtures and other tangible
personal property and improvements to the extent not described on Exhibit A-4,
including all drilling rigs, and (ii) any computers and related peripheral
equipment and any inventory to the extent not described on Exhibit A-5;
(d) all
rights to any refund of Taxes or other costs or expenses borne by Sellers or
Sellers’ predecessors in interest and title attributable to periods prior to the
Effective Time;
(e) all
rights attributable to the period of time prior to the Effective Time relating
to claims, causes of action, choses in action, rights of recovery, rights of set
off, and rights of recoupment (other than claims or causes of action for
proceeds to which Purchasers are entitled under Section 1.4(b));
(f) Sellers’
area-wide bonds, permits and licenses or other permits, licenses or
authorizations used in the conduct of Sellers’ business generally and not
specifically limited to the Assets;
(g) Subject
to Section
7.15, all Sellers’ interests in, and all assets of any and all of
Sellers’ Benefit Plans; and
(h) all
rights and interests of the Sellers in and to the confidentiality agreement
between TXCO Resources Inc. and Peregrine Oil & Gas and all rights relating
to claims, causes of action, choses in action, rights of recovery, rights of set
off, and rights of recoupment in connection with such confidentiality agreement,
whether arising or relating to any period prior to or after the Effective
Time.
Section
1.4 Effective Time; Proration of
Costs and Revenues.
(a) Possession
and ownership of the Assets shall be transferred from Sellers to Purchasers at
the Closing, but, subject to consummation of the Closing, certain financial
benefits and burdens of the Assets shall be transferred effective as of 7:00
a.m., local time, where the respective Assets are located, on January 1,
2010 (the “Effective
Time”), as described below.
4
(b) Purchasers
shall be entitled to all production of Hydrocarbons from or attributable to the
Leases and Lands, Units and Wells at and after the Effective Time (and all
products and proceeds attributable thereto), and to all other income, proceeds,
receipts and credits earned with respect to the Assets at or after the Effective
Time, and shall be responsible for (and entitled to any refunds with respect to)
all Property Costs incurred at and after the Effective Time. Sellers
shall be entitled to all production of Hydrocarbons from or attributable to
Leases and Lands, Units and Wells prior to the Effective Time (and all products
and proceeds attributable thereto), and to all other income, proceeds, receipts
and credits earned with respect to the Assets prior to the Effective Time, and
shall be responsible for (and entitled to any refunds with respect to) all
Property Costs incurred prior to the Effective Time. “Earned”
and “incurred”,
as used in this Agreement, shall be interpreted in accordance with generally
accepted accounting principles and Council of Petroleum Accountants Society
(“COPAS”)
standards, and expenditures which are cash-called or advanced pursuant to a
joint operating agreement, unit agreement or similar agreement shall be deemed
incurred when expended by the operator of the applicable Leases and Lands, Unit
or Well, in accordance with Sellers’ current practice.
(c) “Property
Costs” means all operating expenses (including costs of insurance,
rentals, shut-in payments, title examination and curative actions, and
ad valorem, property, severance, production and similar Taxes based upon or
measured by the ownership or operation of the Assets or the production of
Hydrocarbons therefrom, but excluding any other Taxes) and capital expenditures
(including bonuses, broker's fees, and other lease acquisition costs, costs of
drilling and completing wells and costs of acquiring equipment) incurred in the
ownership and operation of the Assets in the ordinary course of business, and
overhead costs charged to the Assets under the applicable operating agreement or
if none, charged to the Assets on the same basis as charged on the date of this
Agreement (excluding any such costs and expenses to be paid which are excused,
rejected or otherwise no longer payable by Sellers pursuant to an Order of the
Bankruptcy Court).
(d) For
purposes of allocating production (and accounts receivable with respect
thereto), under this Section 1.4,
(i) liquid hydrocarbons shall be deemed to be “from or attributable to” the
Leases and Lands, Units and Wells when they pass through the pipeline connecting
into the storage facilities into which they are run or, if there are no such
storage facilities, when they pass through the meters at the point of entry into
the pipelines through which they are transported from the field, and
(ii) gaseous hydrocarbons shall be deemed to be “from or attributable to”
the Leases and Lands, Units and Wells when they pass through the delivery point
sales meters on the pipelines through which they are transported. Sellers shall
utilize reasonable interpolative procedures to arrive at an allocation of
production when exact meter readings or gauging and strapping data is not
available. Sellers shall provide to Purchasers, no later than ten
(10) Business Days prior to Closing, evidence of all meter readings and all
gauging and strapping procedures conducted on or about the Effective Time in
connection with the Assets, together with all data necessary to support any
estimated allocation, for purposes of establishing the adjustment to the
Purchase Price pursuant to Section 2.3
hereof. Taxes that are included in Property Costs, right-of-way fees,
insurance premiums and other Property Costs that are paid periodically shall be
prorated based on the number of days in the applicable period falling before and
the number of days in the applicable period falling at or after the Effective
Time, except that production, severance and similar Taxes measured by the
quantity of or the value of production shall be prorated based on the number of
units or value of production actually produced and sold, as applicable, before,
and at or after, the Effective Time. In each case, Purchasers shall
be responsible for the portion allocated to the period at and after the
Effective Time and Sellers shall be responsible for the portion allocated to the
period before the Effective Time.
5
(e) For
the avoidance of doubt, all of Sellers’ costs and expenses relating to the
filing, administration, pendency or consummation of the Bankruptcy Case shall be
the responsibility of Sellers and shall not be chargeable to Purchasers nor be
an upward adjustment to the Purchase Price.
Section
1.5 Delivery and Maintenance of
Records. Sellers,
at Purchasers’ cost, shall deliver the Records to Purchasers within ten (10)
days following Closing. Sellers may retain the copies of such Records
at their discretion. With respect to originals or last remaining
copies of any Records provided by Sellers to Purchasers, Purchasers, for a
period of seven (7) years following Closing, will (i) retain the Records,
(ii) provide Sellers with access to the Records following reasonable
advance notice and during normal business hours for review and copying at
Sellers’ expense in connection with any tax audit or investigation related to
Sellers, and (iii) provide Sellers with access, following
reasonable notice and during normal business hours, to (A) materials
received or produced after Closing relating to any claim for indemnification
made under Section 11.1 of
this Agreement (excluding, however, attorney work product and attorney-client
communications with respect to any such claim being brought by Purchasers under
this Agreement) for review and copying at Sellers’ expense and
(B) Purchasers’ and their Affiliates’ officers, employees and
representatives for the purpose of discussing any such claim, provided that
Purchasers shall have the right to have its own representatives present during
any such meeting. In addition, for a period of two (2) years
following the Closing, Purchasers will provide Sellers with access to the
Records following reasonable advance notice and during normal business hours for
review and copying at Sellers’ expense in connection with matters related to the
ownership or operation of the Excluded Assets.
ARTICLE
2
PURCHASE
PRICE
Section
2.1 Purchase
Price. The
purchase price for the Assets (the “Purchase
Price”) shall be the sum of an amount sufficient to (i) repay the
Sellers’ bank lenders (including the Sellers' debtor-in-possession financing and
revolver and/or term loan credit facilities) in full, (ii) pay all other
creditors in full, including interest thereon, as permitted by applicable law,
and (iii) pay any cure amounts of executory contracts assumed upon effectiveness
of the Sellers’ Plan of Reorganization (except the amount to cure the Claim of
Anadarko Petroleum Corporation for breach of the Confidentiality Agreement which
shall be waived at Closing) as allowed by the Bankruptcy Court; provided, however, that such
amount in total shall not exceed $310,000,000. The Purchase Price
shall be adjusted as provided in Section 2.3.
6
Section
2.2 Deposit.
(a) The
Parties agree to execute the documents necessary to (i) return to Newfield,
concurrently with the payment of the Deposit, the $20,000,000 (including the
interest and investment income earned thereon) deposited by Newfield pursuant to
that certain Escrow Agreement, dated November 10, 2009, by and among Sellers,
Wells Fargo Bank and Newfield and (ii) return to Anadarko, concurrently with the
payment of the Deposit, the $20,000,000 (including the interest and investment
income earned thereon) deposited by Anadarko pursuant to that certain Escrow
Agreement, dated January 5, 2010, by and among Sellers, JPMorgan Chase Bank and
Anadarko.
(b) Within
two (2) Business Days following the execution of this Agreement, Purchasers
shall deposit with an Escrow Agent mutually satisfactory to the Parties an
earnest money deposit (“Deposit”)
in the amount of $20,000,000. The Deposit shall be held by the Escrow
Agent pursuant to an Escrow Agreement in form and substance satisfactory to the
Parties. In the event that the Closing does not occur, the Deposit shall be paid
over by Escrow Agent to Purchasers with interest accrued or investment income
earned thereon promptly upon termination of this Agreement, unless such Closing
fails to occur as a result of Purchasers’ breach of this Agreement, in which
case the Deposit shall be paid over by Escrow Agent to Sellers with interest
accrued or investment income earned thereon promptly upon termination of this
Agreement. Otherwise, the Deposit shall be paid over by Escrow Agent
to Sellers and credited against the Purchase Price at Closing.
Section
2.3 Adjustments to Purchase
Price. The
Purchase Price for the Assets shall be adjusted as follows with all such amounts
being determined in accordance with generally accepted accounting principles,
consistently applied, and COPAS standards:
(a) Reduced
by the aggregate amount of the following proceeds received by Sellers between
the Effective Time and the Closing Date, as defined below (with the period
between the Effective Time and the Closing Date referred to as the “Adjustment
Period”): (i) proceeds from the sale of Hydrocarbons (net
of any (A) royalties, overriding royalties or other burdens on or payable
out of production, (B) gathering, processing and transportation costs not
included in Property Costs and any (C) production, severance, sales or
excise Taxes not reimbursed to Sellers by the purchaser of production) produced
from or attributable to the Properties during the Adjustment Period, and
(ii) other proceeds earned with respect to the Assets during the Adjustment
Period (provided that for purposes of this adjustment, “proceeds”
shall not be considered to include funds received by Sellers for the account of
third Persons);
(b)
Reduced as a result of casualty or condemnation
loss by the amount determined under Section
3.2;
(c) Reduced
or increased by the amount of any positive or negative imbalance of as set forth
on Schedule 4.14
based on a price determined based on the applicable basis differential offered
to Sellers off the current prompt month futures price for natural gas as
reported on the NYMEX for the next month succeeding the Closing;
7
(d)
Increased by the amount of all Property Costs and
other costs attributable to the ownership and operation of the Assets which are
paid by Sellers and incurred at or after the Effective Time, except any Property
Costs and other such costs already deducted in the determination of proceeds in
Section 2.3(a)(i);
(e) Increased
by the amount of capital expenditures incurred after December 11, 2009, up
to the Effective Time in connection with fracturing operations on the
O’Meara-Webb 687 Unit 1-H Well, Dimmit County, Texas, to the extent required to
maintain Sellers’ contractual rights under the Joint Exploration Agreement dated
September 28, 2007, by and between EnCana Oil & Gas (USA), Inc. and
TXCO Energy Corp. to the extent Sellers are unable to negotiate an extension for
such operation with EnCana Oil & Gas (USA), Inc. after the Effective Time;
and
(f) Increased
by the value (determined by the price most recently paid prior to the Effective
Time for such oil less all applicable deductions) of all oil and other liquid
hydrocarbons in storage or existing in stock tanks above the pipeline connection
as of the Effective Time which is credited to the Properties, less applicable
production taxes, royalty and other burdens on the production payable on such
oil, the amount of oil in storage as of the Effective Time to be based on gauge
reports to the extent available or on alternative methods to be agreed by the
Parties.
(g) As
promptly as reasonably practicable following the effectiveness of the Plan, the
Sellers shall provide to the Purchasers a final accounting of all allowed claims
paid by the Debtors under the Plan, plus applicable interest and cure amounts
for assumed contracts (“Covered
Claims”) and, to the extent the aggregate amount of the Purchase Price
exceeds the amount paid to the holders of Covered Claims, the Sellers shall
return to the Purchasers therewith the difference between the amount paid for
the Covered Claims and the Purchase Price.
The
adjustment described in Section 2.3(a)
shall serve to satisfy, up to the amount of the adjustment, Purchasers’
entitlement under Section 1.4 to
Hydrocarbon production from or attributable to the Leases and Lands, Units and
Wells during the Adjustment Period, and to the value of other income, proceeds,
receipts and credits earned with respect to the Assets during the Adjustment
Period, and Purchasers shall not have any separate rights to receive any
production or income, proceeds, receipts and credits with respect to which an
adjustment has been made. Similarly, the adjustment described in
Section 2.3(d)
shall serve to satisfy, up to the amount of the adjustment, Purchasers’
obligation under Section 1.4 to
pay Property Costs and other costs attributable to the ownership and operation
of the Assets which are incurred during the Adjustment Period, and Purchasers
shall not be separately obligated to pay for any Property Costs or other such
costs with respect to which an adjustment has been made.
Each
adjustment to the Purchase Price described in Sections 2.3(a)
through (f)
shall be applied to the portion of the Purchase Price payable to the Sellers
which owns the affected Asset.
8
Section
2.4 Allocation of Purchase
Price. Except
as provided in Section
3.1(a), at least ten (10) days prior to the Closing, Purchasers shall
prepare and deliver to Sellers an allocation of the unadjusted Purchase Price
among each of the Assets (the “Allocated
Values”). Any adjustments to the Purchase Price pursuant to
Sections 2.3(a)
through (f)
shall be applied to the Allocated Values for the particular affected
Assets. Sellers and Purchasers will accept such Allocated Values for
purposes of this Agreement only and the transactions contemplated hereby, but
will otherwise make no representation or warranty as to the accuracy of such
values. Sellers and Purchasers agree that (i) the purchase and
sale described herein is not a transaction subject to the provisions of section
1060 of the Internal Revenue Code of 1986, as amended (the “Code”),
and (ii) the Allocated Values agreed for purposes of this Section 2.4 are
not necessarily those that would be determined in accordance with the principles
of section 1060 of the Code and the Treasury Regulations thereunder. Further, if
any Party later determines that it is required to file Internal Revenue Service
Form 8594 as a result of this purchase and sale transaction, such Party will
notify the other Party prior to filing said form with the Internal Revenue
Service.
ARTICLE
3
CONSENT
TO ASSIGNMENT; PREFERENTIAL RIGHTS TO PURCHASE;
CASUALTY
AND CONDEMNATION LOSS
Section
3.1 Consents to Assignment and
Preferential Rights to Purchase.
(a) Promptly
after the date hereof, Sellers shall prepare and send (i) notices to those third
parties from whom any required consents to assignment requesting consents to the
Conveyances must be obtained, and (ii) notices to the holders of any applicable
preferential rights to purchase or similar rights in compliance with the terms
of such rights and requesting waivers of such rights. Any preferential purchase
right must be exercised subject to all terms and conditions set forth in this
Agreement, including the successful Closing of this Agreement pursuant to Article
9. The consideration payable under this Agreement for any
particular Asset for purposes of preferential purchase right notices shall be
the Allocated Value for such Asset. Upon notice to Sellers from a
holder of any preferential rights to purchase that such holder desires to
exercise such preferential rights to purchase, Purchasers shall within five (5)
business days provide to Sellers the Allocated Value for the Assets subject to
such preferential rights. Sellers shall use commercially reasonable
efforts to cause such consents to assignment and waivers of preferential rights
to purchase or similar rights (or the exercise thereof) to be obtained and
delivered prior to Closing, provided that Sellers shall not be required to make
payments or undertake obligations to or for the benefit of the holders of such
rights in order to obtain the required consents and
waivers. Alternatively, Sellers may seek an order of the Bankruptcy
Court to permit the Conveyances over the objections of third
parties. Purchasers shall use commercially reasonable efforts to
cooperate with Sellers in seeking to obtain such consents to assignment, waivers
of preferential rights, or orders of the Bankruptcy Court.
(b) If
any preferential right to purchase any Assets is exercised prior to Closing,
then, for the purposes of this Agreement, such Assets shall not be included in
the transaction at Closing as Assets purchased by Purchasers and Sellers shall
either (i) pay Purchasers at Closing the Allocated Value for such Assets paid by
such holder or (ii) reduce the Purchase Price due Sellers at Closing by the
amount of the Allocated Value for such Assets.
9
(c) Should
a third Person fail to exercise its preferential right to purchase as to any
portion of the Assets prior to Closing and the time for exercise or waiver has
not yet expired, or, should a third Person holding a consent right fail to give
its consent to the transfer of any portion of the Assets prior to Closing, then
subject to the remaining provisions of this Section 3.1, such
Assets shall be included in the transaction at Closing, and there shall be no
adjustment to the Purchase Price at Closing with respect to such preferential
right to purchase or consent requirement; provided that should the holder of a
preferential purchase right later validly exercise same, Purchasers agree to transfer the
affected Asset to the holder of the preferential purchase right on the terms and
provisions set out herein and in the applicable preferential purchase right
provision, and Purchasers shall be entitled to the consideration paid by such
holder.
Section
3.2 Casualty and Condemnation
Loss. If,
after the date of this Agreement but prior to the Closing Date, any portion of
the Assets is damaged or destroyed by fire or other casualty or is taken in
condemnation or under right of eminent domain, Purchasers shall nevertheless be required to
close and Purchasers shall elect by written notice to Sellers prior to Closing
either (i) to cause the Assets affected by any casualty to be repaired or
restored, at Sellers’ sole cost, as promptly as reasonably practicable (which
work may extend after the Closing Date), or (ii) to accept an assignment of
Sellers’ insurance proceeds and other claims against third parties with respect
to the casualty or taking. Notwithstanding the preceding, (i) if the
aggregate losses caused by such casualties and takings exceed ten percent (10%)
of the Purchase Price, any Seller or Purchasers may, by
notice to the other at least one Business Day prior to Closing, elect to
terminate this Agreement under Section 10.1 or (ii)
if the losses caused by such casualties and takings exceed ten percent (10%) of
the Allocated Value of any Lease, Purchasers may by notice to Sellers at least
one Business Day prior to Closing elect to accept an assignment of Sellers’
insurance proceeds and other claims against third parties with respect to such
casualty and takings
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF SELLERS
Section
4.1 Disclaimers.
(a) EXCEPT
AS EXPRESSLY REPRESENTED OTHERWISE IN THIS ARTICLE 4,
SELLERS EXPRESSLY DISCLAIM ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
ORAL OR WRITTEN, INCLUDING ANY REPRESENTATION OR WARRANTY AS TO (I) TITLE
TO ANY OF THE ASSETS, (II) THE CONTENTS, CHARACTER OR NATURE OF ANY
DESCRIPTIVE MEMORANDUM, OR ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT,
OR ANY GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION, RELATING TO THE ASSETS,
(III) THE QUANTITY, QUALITY OR RECOVERABILITY OF HYDROCARBONS IN OR FROM
THE ASSETS, (IV) ANY ESTIMATES OF THE VALUE OF THE ASSETS OR FUTURE
REVENUES GENERATED BY THE ASSETS, (V) THE PRODUCTION OF PETROLEUM
SUBSTANCES FROM THE ASSETS, OR WHETHER PRODUCTION HAS BEEN CONTINUOUS, OR IN
PAYING QUANTITIES, (VI) THE MAINTENANCE, REPAIR, CONDITION, QUALITY,
SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS, OR (VII) ANY OTHER
MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE OR COMMUNICATED TO
PURCHASERS OR THEIR AFFILIATES, OR THEIR EMPLOYEES, AGENTS, CONSULTANTS,
REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO, AND FURTHER
DISCLAIM ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES
OF MATERIALS OF ANY EQUIPMENT, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE
PARTIES HERETO THAT PURCHASERS SHALL BE DEEMED TO BE OBTAINING EQUIPMENT AND
OTHER TANGIBLE PROPERTY IN ITS PRESENT STATUS, CONDITION AND STATE OF REPAIR,
“AS IS” AND “WHERE IS” WITH ALL FAULTS AND THAT PURCHASERS HAVE MADE OR CAUSED
TO BE MADE SUCH INSPECTIONS AS PURCHASERS DEEM APPROPRIATE.
10
(b) Inclusion
of a matter on a Schedule attached hereto with respect to a representation or
warranty which addresses matters having a Material Adverse Effect shall not be
deemed an indication that such matter does, or may, have a Material Adverse
Effect. Matters may be disclosed on a Schedule to this Agreement for
purposes of information only.
(c) Subject
to the foregoing provisions of this Section 4.1, and
the other terms and conditions of this Agreement, Sellers represent and warrant
to Purchasers the matters set out in Sections 4.2
through 4.18.
Section
4.2 Existence and
Qualification. Each
Seller is an entity duly created, formed, or organized and validly existing
under the laws of its state of organization and is duly authorized to conduct
its business and is in good standing in each jurisdiction where such
qualification is required, except where the failure to so qualify would not,
individually or in the aggregate, have a Material Adverse Effect.
Section
4.3 Power. Subject
to Bankruptcy Court approval, each Seller has the requisite entity power to
enter into and perform this Agreement (and all documents required to be executed
and delivered by Sellers at Closing) and consummate the transactions
contemplated by this Agreement (and such documents).
Section
4.4 Authorization and
Enforceability. The
execution, delivery and performance of this Agreement (and all documents
required to be executed and delivered by Sellers at Closing), and the
performance of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all necessary corporate or entity action on the part
of each Seller. This Agreement has been duly executed and delivered
by each Seller (and all documents required hereunder to be executed and
delivered by such Seller at Closing will be duly executed and delivered by such
Seller) and subject to the approval of the Bankruptcy Court, this Agreement
constitutes, and at the Closing such documents will constitute, the valid and
binding obligations of each Seller, enforceable in accordance with their terms
except as such enforceability may be limited by applicable bankruptcy or other
similar laws affecting the rights and remedies of creditors generally as well as
by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
11
Section
4.5 No
Conflicts. Subject
to Bankruptcy Court approval, and any applicable preferential rights to purchase
and consents to assignment, the execution, delivery and performance of this
Agreement by each Seller, and the transactions contemplated by this Agreement
will not (a) violate any provision of such Seller’s Organizational
Documents, (b) result in default (with due notice or lapse of time or both)
or the creation of any lien or encumbrance other than Permitted Encumbrances or
give rise to any right of termination, cancellation or acceleration under any
note, bond, mortgage, indenture, license or agreement to which any of the
Sellers is a party or which affects the Assets, (c) violate any judgment,
order, ruling, or decree applicable to such Seller as a party in interest, or
(d) violate any Laws applicable to Sellers or any of the Assets, except any
matters described in clauses (b), (c) or (d) above which would not have a
Material Adverse Effect.
Section
4.6 Liability for Brokers'
Fees. Purchasers
shall not directly or indirectly have any responsibility, liability or expense,
as a result of undertakings or agreements of Sellers, for brokerage fees,
finder's fees, agent's commissions or other similar forms of compensation in
connection with this Agreement or any agreement or transaction contemplated
hereby.
Section
4.7 Litigation and
Claims. Except
as set forth in Schedule 4.7,
there is no claim by any Person or Governmental Body (including expropriation or
forfeiture proceedings), joint venture audits, and no legal, administrative, or
arbitration proceeding pending or, to any Sellers’ Knowledge, threatened against
any Seller or the Assets, or to which any Seller is a party, that reasonably may
be expected to (a) impair such Sellers’ title to any of the Assets,
(b) hinder or impede the operation of all or any portion of the Assets,
(c) subject the owner or operator of the Assets to liability in favor of
any Governmental Body or other Person as the result of the alleged violation of,
or non-compliance with, any Environmental Law by any Seller or any Affiliate of
any Seller with respect to the Assets or require the owner or operator of the
Assets to remediate, remove, or respond to an Environmental Condition, or a
threatened Environmental Condition, on or affecting the Assets, or
(d) otherwise adversely affect the Assets or the ability of Sellers to
consummate the transactions contemplated in this Agreement. Further,
except as otherwise reflected in Schedule 4.7, to
each Seller’s Knowledge there has been no Release or Threatened Release of
Environmental Contaminants at, to, from or about the Assets that requires
remediation under Applicable Law.
Section
4.8 Taxes and
Assessments. To
each Seller’s Knowledge, each Seller has filed all material Tax returns required
to be filed by such Seller with respect to the Assets. Except as
disclosed on Schedule 4.8, to
Sellers’ Knowledge, Sellers have paid or caused to be paid all ad valorem,
property, production, severance and similar Taxes that are currently due and
payable based upon or measured by the ownership of or the production of
Hydrocarbons from the Assets required to be shown on such returns, except those
being contested in good faith. Except as disclosed on Schedule 4.8, no
Seller has received written notice of any pending claim against any Seller from
any applicable taxing authority for assessment of Taxes with respect to the
Assets.
12
Section
4.9 Preferential Rights;
Consents. Except
as otherwise reflected in Schedule 4.9,
none of the Properties is subject to a preferential right to purchase, third
Person consent to assignment requirement, right of first refusal, right of first
offer, or similar right or restriction.
Section
4.10 Consents. Except
for Bankruptcy Court approval and approvals by Governmental Bodies customarily
obtained after the Closing and as otherwise reflected on Schedule 4.10,
no authorization, consent, approval, exemption, franchise, permit, or license
of, or filing with, any Governmental Body is required to authorize, or is
otherwise required by any Governmental Body in connection with, the valid
execution and delivery by Sellers of this Agreement, the transfer of the Assets
to Purchaser, or the performance by Sellers of their other obligations
hereunder.
Section
4.11 Contracts. Schedule 4.11 describes, with respect
to each Contract to which any Seller is a party that directly relates to or
affects the Properties including:
(a) all
existing area of mutual interests agreements and agreements that include
non-competition restrictions or other similar restrictions on doing business,
all existing purchase or sale agreements (other than with respect to production
of Hydrocarbons and the disposition of field equipment in the ordinary course),
partnership (other than tax partnerships), joint venture and/or exploration or
development program agreements;
(b) all
of the existing production sales, transportation, marketing and processing
agreements, other than such agreements which are terminable by Sellers without
penalty on sixty or fewer days’ notice;
(c) any
Contracts or agreements burdening the Properties which could reasonably be
expected to obligate any Sellers to expend in excess of $100,000 in any calendar
year;
(d) all
insurance Contracts maintained by Seller and in force upon the execution date of
this Agreement;
(e) any
Contract to sell, lease (other than the Leases) or otherwise dispose of any of
Sellers’ interest in any of the Properties;
(f)
any existing tax partnership or tax sharing
agreement;
(g) any
material operating agreement that is in effect as of the date hereof and to
which any of the Sellers interest in any of the Properties is
subject;
(h) any
existing Contract to which any Seller is a party providing for forced or
voluntary pooling, forced or voluntary unitization, a carry, a backing, earnout,
reversionary Working Interest in favor of third parties, or other contingent
payment or obligation;
13
(i) any
Contract to which any Seller is a party for drilling or well workover services
or other well services that is in effect as of the date hereof or the Closing
Date;
(j) any
Contract providing for the use, processing and/or analysis of seismic or
geophysical data or similar Contract relating to the Properties that is in
effect as of the date hereof or the Closing Date;
(k) any
Contract to which any Seller is a party relating to indebtedness for borrowed
money, letter of credit or guarantee of the indebtedness of for borrowed money
of Persons that is in effect as of the date hereof or the Closing Date for which
any of the Assets have been pledged or mortgaged as collateral
therefor;
(l) any
lease (other than the Leases) under which any Seller is the lessor or lessee of
real or personal property, which lease (i) cannot be terminated by such
Seller without penalty with less than 180 days notice, and (ii) involves an
annual base rental in excess of $100,000;
(m) any
firm transportation Contract for the transportation of Hydrocarbons or disposal
of produced waters or other oilfield waste, which requires in accordance with
its terms, payments by such Seller in excess of $100,000 within the twelve month
period ending December 31, 2009, and any interruptible transportation Contract
that any Seller reasonably anticipates will, in accordance with its terms,
involve payments by such Seller in excess of $100,000 within the twelve month
period ending December 31, 2009 (collectively “Transportation
Contracts”); and
(n) any
joint exploration agreements between Sellers and any other person related to the
Assets containing a commitment to fund, loan or pay amounts in excess of
$100,000; ((a)-(n) collectively, the “Material
Contracts”).
Sellers
have furnished to Purchasers true and correct copies of all of the Material
Contracts.
Section
4.12 Wells;
Facilities. Except
as set forth in Schedule 4.12,
as of the date of this Agreement, to each Seller’s Knowledge, the Wells
described on Exhibit A-1 are
the only wells for the production of Hydrocarbons currently located on the
Leases. All of such Wells have been drilled, completed, and operated
within the boundaries of the Leases or within the limits otherwise permitted by
the applicable Contracts and all Applicable Laws. The production of
Hydrocarbons from such Wells has not been in excess of the allowable production
established for each Well. Except as set forth on Schedule 4.12, all Hydrocarbon wells
located on the Leases that have permanently ceased the production of
Hydrocarbons in paying quantities, as well as all plants, pipelines, personal
property, pits, equipment, materials, appurtenances, and facilities located on
or used in connection with the Properties and that any Seller has abandoned or
otherwise permanently ceased to use, have been plugged and/or abandoned, and all
related salvage, site clearance, and surface restoration operations have been
completed, in accordance with applicable Laws (including Environmental Laws) and
in accordance with the terms of the Leases, and all costs and expenses incurred
in connection therewith have been paid in full. Except as otherwise
provided in Schedule 4.12,
none of the Wells have been plugged or abandoned.
14
Section
4.13 Marketing; Calls on
Production. All
proceeds from the sale of Hydrocarbons attributable to the interests of Sellers
in the Assets have been and are being disbursed to Sellers under appropriate
division orders, transfer orders, or similar documents signed by or otherwise
binding on Sellers, and no portion of any such proceeds is being held in
suspense, subject to a claim for refund by the purchaser of production, used as
an offset or as collateral for other obligations (whether disputed or
undisputed), or otherwise not being paid to Sellers as it becomes due in the
ordinary course of business. There are no calls on production,
options to purchase, or similar rights in effect with respect to any portion of
Sellers’ shares of the Hydrocarbons, and all Contracts for the sale of
Hydrocarbons are terminable without penalty on no more than thirty (30) days’
prior notice. Sellers are currently receiving the prices provided for
under such sales Contracts with respect to the
Hydrocarbons.
Section
4.14 Imbalances. Except
as shown in Schedule 4.14,
as of the date of execution of this Agreement, no Seller has a claim
constituting an Asset, or is subject to any obligation, with respect to any
Imbalance that relates to any of the Assets. Except for the
Imbalances (if any) shown in Schedule 4.14,
no Seller is, on the date of execution of this Agreement, nor will be after the
Effective Time, obligated by virtue of any prepayment made under any sales
contract or other contract containing a “take-or-pay” clause, or under any
production payment, forward sale, balancing, deferred production, or similar
arrangement, to deliver Hydrocarbons produced from or allocable to any Asset at
some future time without receiving full payment therefor at or after the time of
delivery.
Section
4.15 AFEs. Except
as shown on Schedule 4.15,
as of the date of execution of this Agreement, there are no unfunded AFE’s owing
by Sellers or any other working interest owners with respect to any of the
Assets.
Section
4.16 Suspense
Account. Set
forth on Schedule 4.16 is a
true and correct description, as of the date of execution of this Agreement, of
all amounts held by Sellers attributable to third-parties with respect to
proceeds from production attributable to the Wells (as used in Schedule 4.16,
the “Suspended
Revenues”).
Section
4.17 Capital
Expenditures. Except
as shown on Sellers’ budget for Fourth Quarter 2009 and First Quarter 2010
attached hereto as Exhibit A-8 or
as set forth on Schedule 4.17, Sellers
do not anticipate and have not budgeted for any capital expenditures from the
date of this Agreement until the end of the first quarter 2010, in excess of
$100,000 with respect to any Well, any Lease or with respect to any Gathering
System.
Section
4.18 Equipment. Set
forth on Exhibit A-4 is a
true and correct description of the Equipment.
15
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES OF NEWFIELD
Newfield
represents and warrants to Sellers the following:
Section
5.1 Existence and
Qualification. Newfield
is a corporation duly organized and validly existing under the laws of the state
of Delaware; and Newfield is duly authorized to conduct its business and is in
good standing in each jurisdiction where such qualification is required, except
where the failure to so qualify would not, individually or in the aggregate,
have a Material Adverse Effect; and Newfield is duly authorized to do business
and is in good standing in each jurisdiction where the Assets to be transferred
to it hereunder are located.
Section
5.2 Power. Newfield
has the corporate power to enter into and perform this Agreement (and all
documents required to be executed and delivered by Newfield at Closing) and
consummate the transactions contemplated by this Agreement (and such
documents).
Section
5.3 Authorization and
Enforceability. The
execution, delivery and performance of this Agreement (and all documents
required to be executed and delivered by Newfield at Closing), and the
performance of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all necessary corporate action on the part of
Newfield. This Agreement has been duly executed and delivered by
Newfield (and all documents required hereunder to be executed and delivered by
Newfield at Closing will be duly executed and delivered by Newfield) and this
Agreement constitutes, and at the Closing such documents will constitute, the
valid and binding obligations of Newfield, enforceable in accordance with their
terms except as such enforceability may be limited by applicable bankruptcy or
other similar laws affecting the rights and remedies of creditors generally as
well as by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
Section
5.4 No
Conflicts. The
execution, delivery and performance of this Agreement by Newfield, and the
transactions contemplated by this Agreement will not (a) violate any provision
of Newfield’s Organizational Documents, (b) result in a material default
(with due notice or lapse of time or both) or the creation of any lien or
encumbrance or give rise to any right of termination, cancellation or
acceleration under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license or agreement to which Newfield is a party,
(c) violate any judgment, order, ruling, or regulation applicable to
Newfield as a party in interest, or (d) violate any Laws applicable to
Newfield or any of its assets, except any matters described in clauses (b), (c),
or (d) above which would not have a Material Adverse Effect on
Newfield.
Section
5.5 Liability for Brokers'
Fees. Sellers
shall not directly or indirectly have any responsibility, liability or expense,
as a result of undertakings or agreements of Newfield, for brokerage fees,
finder's fees, agent's commissions or other similar forms
of compensation in connection with this Agreement or any agreement or
transaction contemplated hereby.
Section
5.6 Litigation. There
are no actions, suits or proceedings pending, or to Newfield's Knowledge,
threatened in writing before any Governmental Body against Newfield which are
reasonably likely to impair materially Newfield’s ability to perform its
obligations under this Agreement or any document required to be executed and
delivered by Newfield at Closing.
16
Section
5.7 Financing. Newfield
has sufficient cash, available lines of credit or other sources of immediately
available funds (in United States dollars) to enable it to pay the Closing
Payment to Sellers at the Closing.
Section
5.8 Independent
Investigation. Except
for the representations and warranties expressly made by Sellers in Articles 3 and
4 of this
Agreement, or in any certificate furnished or to be furnished to Newfield
pursuant to this Agreement, Newfield acknowledges that there are no
representations or warranties, express or implied, as to the Assets or prospects
thereof, and that in making its decision to enter into this Agreement and to
consummate the transactions contemplated hereby, Newfield has relied solely upon
its own independent investigation, verification, analysis and
evaluation.
Section
5.9 Consents, Approvals or
Waivers. Newfield's
execution, delivery and performance of this Agreement (and any document required
to be executed and delivered by Newfield at Closing) is not and will not be
subject to any consent, approval, or waiver from any Governmental Body or other
third Person, except (i) consents and approvals of assignments by
Governmental Bodies that are customarily obtained after Closing and (ii) as
set forth on Schedule 5.9.
ARTICLE
6
REPRESENTATIONS
AND WARRANTIES OF ANADARKO
Anadarko
represents and warrants to Sellers the following:
Section
6.1 Existence and
Qualification. Anadarko
is a limited partnership duly organized and validly existing under the laws of
the state of Delaware; and Anadarko is duly authorized to conduct its business
and is in good standing in each jurisdiction where such qualification is
required, except where the failure to so qualify would not, individually or in
the aggregate, have a Material Adverse Effect; and Anadarko is duly authorized
to do business and is in good standing in each jurisdiction where the Assets to
be transferred to it hereunder are located.
Section
6.2 Power. Anadarko
has the corporate power to enter into and perform this Agreement (and all
documents required to be executed and delivered by Anadarko at Closing) and
consummate the transactions contemplated by this Agreement (and such
documents).
Section
6.3 Authorization and
Enforceability. The
execution, delivery and performance of this Agreement (and all documents
required to be executed and delivered by Anadarko at Closing), and the
performance of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all necessary corporate action on the part of
Anadarko. This Agreement has been duly executed and delivered by
Anadarko (and all documents required hereunder to be executed and delivered by
Anadarko at Closing will be duly executed and delivered by Anadarko) and this
Agreement constitutes, and at the Closing such documents will constitute, the
valid and binding obligations of Anadarko, enforceable in accordance with their
terms except as such enforceability may be limited by applicable bankruptcy or
other similar laws affecting the rights and remedies of creditors generally as
well as by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
17
Section
6.4 No Conflicts. The
execution, delivery and performance of this Agreement by Anadarko, and the
transactions contemplated by this Agreement will not (a) violate any
provision of Anadarko’s Organizational Documents, (b) result in a material
default (with due notice or lapse of time or both) or the creation of any lien
or encumbrance or give rise to any right of termination, cancellation or
acceleration under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license or agreement to which Anadarko is a party,
(c) violate any judgment, order, ruling, or regulation applicable to
Anadarko as a party in interest, or (d) violate any Laws applicable to
Anadarko or any of its assets, except any matters described in clauses (b), (c),
or (d) above which would not have a Material Adverse Effect on
Anadarko.
Section
6.5 Liability for Brokers'
Fees. Sellers
shall not directly or indirectly have any responsibility, liability or expense,
as a result of undertakings or agreements of Anadarko, for brokerage fees,
finder's fees, agent's commissions or other similar forms of compensation in
connection with this Agreement or any agreement or transaction contemplated
hereby.
Section
6.6 Litigation. There
are no actions, suits or proceedings pending, or to Anadarko’s Knowledge,
threatened in writing before any Governmental Body against Anadarko which are
reasonably likely to impair materially Anadarko’s ability to perform its
obligations under this Agreement or any document required to be executed and
delivered by Anadarko at Closing.
Section
6.7 Financing. Anadarko
has sufficient cash, available lines of credit or other sources of immediately
available funds (in United States dollars) to enable it to pay the Closing
Payment to Sellers at the Closing.
Section
6.8 Independent
Investigation. Except
for the representations and warranties expressly made by Sellers in Articles 3 and
4 of this
Agreement, or in any certificate furnished or to be furnished to Anadarko
pursuant to this Agreement, Anadarko acknowledges that there are no
representations or warranties, express or implied, as to the Assets or prospects
thereof, and that in making its decision to enter into this Agreement and to
consummate the transactions contemplated hereby, Anadarko has relied solely upon
its own independent investigation, verification, analysis and
evaluation.
Section
6.9 Consents, Approvals or
Waivers. Anadarko’s
execution, delivery and performance of this Agreement (and any document required
to be executed and delivered by Anadarko at Closing) is not and will not be
subject to any consent, approval, or
waiver from any Governmental Body or other third Person, except
(i) consents and approvals of assignments by Governmental Bodies that are
customarily obtained after Closing and (ii) as set forth on Schedule 6.9.
18
ARTICLE
7
COVENANTS
OF THE PARTIES
Section
7.1 Access. Between
the date of execution of this Agreement and the Closing Date, each Seller will
give Purchasers and its representatives access to the Assets and access to and
the right to copy, at Purchasers’ expense, the Records in such Seller’s
possession, for the purpose of conducting an investigation of the Assets, but
only to the extent that Sellers may do so without violating any obligations to
any third party and to the extent that such Seller has authority to grant such
access without breaching any restriction binding on such Seller. Such
access by Purchasers shall be limited to such Seller’s normal business hours,
and Purchasers’ investigation shall be conducted in a manner that minimizes
interference with the operation of the Assets. All information
obtained by Purchasers and their representatives under this Section 7.1
shall be subject to the terms of those certain respective confidentiality
agreements between TXCO Resources Inc. and each Purchaser, as may be amended
from time to time (the “Confidentiality
Agreements”).
Section
7.2 Government
Reviews. Sellers
and Purchasers shall in a timely manner (a) make all required filings, if
any, with and prepare applications to and conduct negotiations with, each
governmental agency as to which such filings, applications or negotiations are
necessary or appropriate in the consummation of the transactions contemplated
hereby, and (b) provide such information as each may reasonably request to
make such filings, prepare such applications and conduct such
negotiations. Each Party shall cooperate with and use all reasonable
efforts to assist the other with respect to such filings, applications and
negotiations.
Section
7.3 Notification of
Breaches. Until
the Closing:
(a) Purchasers
shall notify Sellers promptly after Purchasers obtain actual Knowledge that any
representation or warranty of Sellers contained in this Agreement is untrue in
any material respect or will be untrue in any material respect as of the Closing
Date or that any covenant or agreement to be performed or observed by Sellers
prior to or on the Closing Date has not been so performed or observed in any
material respect.
(b) Sellers
shall notify Purchasers promptly after Sellers obtain actual Knowledge that any
representation or warranty of either Purchaser contained in this Agreement is
untrue in any material respect or will be untrue in any material respect as of
the Closing Date or that any covenant or agreement to be performed or observed
by either Purchaser prior to or on the Closing Date has not been so performed or
observed in a material respect.
If any of
Purchasers’ or Sellers’ representations or warranties is untrue or shall become
untrue in any material respect between the date of execution of this Agreement
and the Closing Date, or if any of Purchasers’ or Sellers’ covenants or
agreements to be performed or observed prior to or on the Closing Date shall not
have been so performed or observed in any material respect, but if such breach
of representation, warranty, covenant or agreement shall (if curable) be cured
by the Closing (or, if the Closing does not occur, by the date set forth in
Section 9.1),
then such breach shall be considered not to have occurred for all purposes of
this Agreement.
19
Section
7.4 Public
Announcements. No
Party shall make any press release or other public announcement regarding the
existence of this Agreement, the contents hereof or the transactions
contemplated hereby without the prior written consent of the other; provided, however, the
foregoing shall not restrict disclosures by either Purchaser or any Seller
(i) that are required by applicable securities or other laws or regulations
or the applicable rules of any stock exchange having jurisdiction over the
disclosing Party or its Affiliates, or (ii) to Governmental Bodies and
third Persons holding preferential rights to purchase or rights of consent that
may be applicable to the transactions contemplated by this Agreement, as
reasonably necessary to obtain waivers of such right or such consents. The
Parties acknowledge and understand that this Agreement will be filed with the
Bankruptcy Court and will be made available to third parties. The
Parties agree that such disclosure shall not be deemed to violate any
confidentiality obligations owing to a Party, whether pursuant to this
Agreement, the Confidentiality Agreements, or
otherwise. Notwithstanding anything to the contrary in the
Confidentiality Agreements, to the extent of any conflict between the provisions
of the Confidentiality Agreements and the terms hereof, the terms hereof shall
prevail.
Section
7.5 Operation of
Business.
(a) Until
the Closing, each Seller (i) will continue to conduct its business related
to the Assets in the ordinary course consistent with its past practices,
including incurring expenditures associated with lease acquisitions, renewals
and extensions, landmen, independent contractors, vendors, title opinions,
curative material, road, drillsite and pipeline construction, acquisition of
road and pipeline right-of-ways, drilling, and completing wells, construction of
gathering, compression and treating facilities, and marketing costs,
(ii) will furnish Purchasers with copies of all third-party and any
Seller-generated drilling, completion and workover AFEs in excess of $100,000
within five (5) Business Days of receipt of third-party AFEs or the approval of
any Seller generated AFE, (iii) will furnish Purchasers, on the 15th day of
each month, with a schedule setting forth the actual expenditures incurred
during the previous calendar month and an estimate of the expenditures that
Sellers believes that it will incur during the following reporting period,
(iv) will not after the Effective Time, without prior written approval of
Purchasers (which approval will not be unreasonably withheld), make capital or
workover expenditures with respect to the Assets in excess of One Hundred
Thousand Dollars ($100,000) (net to the respective Seller’s interest), except
for those capital expenditures set forth on Exhibit A-8 and
Schedule 4.17 or
when required by an emergency when there shall have been insufficient time to
obtain advance consent (provider, that such Seller will promptly notify
Purchasers of any such emergency expenditures), (v) will not enter into any
Material Contract relating to the Assets except for agreements relating to sales
of inventory and purchases of inventory from suppliers in the ordinary course of
business and consistent with past practices, (vi) will maintain insurance
coverage on the Assets presently furnished by nonaffiliated third parties in the
amounts and of the types presently in force, (vii) subject to the terms and
conditions imposed by its lenders and other contractual obligations, will use
commercially reasonable efforts to maintain in full force and effect all Leases
and Lands that are presently producing in paying quantities, (viii) will
maintain all material governmental permits and approvals affecting the Assets,
(ix) will not transfer, sell, hypothecate, encumber or otherwise dispose of
any material Properties or Equipment except for sales and dispositions of
Equipment made in the ordinary course of business consistent with past practices
absent Bankruptcy Court approval on notice and with a reasonable opportunity to
object by Purchasers, or (x) take or omit to take any action in
contravention of any of the foregoing actions. Purchasers’ approval
of any action restricted by this Section 7.5
shall be considered granted within ten (10) days (unless a shorter time is
reasonably required by the circumstances and such shorter time is properly
specified in the notice provided to Sellers by a co-working interest owner) of
the Sellers’ notice to Purchasers requesting such consent unless Purchasers
notify Sellers to the contrary during that period. In the event of an
emergency, Sellers may take such action as a prudent operator would take and
shall notify Purchasers of such action promptly thereafter.
20
(b) Prior
to the Closing, Sellers will give Purchasers notice of all AFEs proposed either
by Sellers or any third party (each a “Proposed
AFE”). If Sellers elect not to pay or otherwise timely satisfy
a Proposed AFE, Purchasers shall have the right (but not the obligation) to fund
the Proposed AFE. In such event, the parties agree to seek an
emergency hearing with the Bankruptcy Court authorizing Purchasers to advance
the amount of the Proposed AFE as an administrative expense (an “AFE
Advance”). If the Closing does not occur and this Agreement is
terminated, the Purchaser making an AFE Advance shall be reimbursed the amount
of such AFE Advance on the effective date of a plan of reorganization for
Sellers in the Bankruptcy Court. If the Closing occurs,
(x) there will be no adjustment to the Purchase Price by reason of either
(i) any AFE Advance(s) or any amounts funded by such AFE Advance in respect
of such Proposed AFE(s) or (ii) any other damages or amounts in respect of
any proposed Proposed AFE that Sellers shall have elected not to pay or
otherwise satisfy and that Purchasers shall not have funded in accordance with
this paragraph (b), (y) Sellers shall have no obligations to repay to
Purchasers, or otherwise in respect of, any AFE Advance made in respect of a
Proposed AFE due at any time after the Effective Time, and (z) if any AFE
Advance has been made in respect of a Proposed AFE due at any time prior to the
Effective Time, the Purchase Price shall be reduced by the lesser of
(i) the amount of such AFE Advance or (ii) the Allocated Value of any
undeveloped, non-producing acreage that would have been lost or forfeited if the
subject Proposed AFE was not timely paid.
(c) Pursuant
to Agreed Order Granting Motion to Approve Lease Participation Proposal with St.
Mary Land & Exploration Company and Agreement with Newfield Exploration
Company for Purchase of Leasehold Interests Acquired Pursuant to Participation
Under Anadarko JEA, Sellers have the right to make certain elections with
respect to the St. Mary Proposal (as defined in such order). Sellers
hereby beneficially assign to Purchasers Sellers’ rights under the order to make
such elections and to receive any reimbursements for the Election Amount (as
defined in the order). Sellers shall promptly communicate any notices
required under the order to be delivered to St. Mary as may be directed by
Purchasers.
Section
7.6 Indemnity Regarding
Access. Purchasers agree to indemnify, defend and hold
harmless each Seller, its Affiliates, the other owners of interests in the
Properties, and all such Persons'’ directors, officers,
employees, agents and representatives from and against any and all claims,
liabilities, losses, costs and expenses (including court costs and reasonable
attorneys' fees), including claims, liabilities, losses, costs and expenses
attributable to personal injury, death, or property damage, arising out of or
relating to access to the Assets and to the Records and other related
information prior to the Closing by Purchasers,
their Affiliates, or their
directors, officers, employees, agents or representatives, even if caused in
whole or in part by the negligence (whether sole, joint or concurrent), strict
liability or other legal fault of any indemnified Person.
21
Section
7.7 Assumption of
Obligations. By
the consummation of the transactions contemplated by this Agreement at Closing,
and without limiting the indemnification obligations of any Party under Article 11, Purchasers assume and
agree to
pay, perform and discharge all obligations of Sellers to the extent accruing
after the Effective Time under the Leases and Lands, Contracts and applicable
Law with respect to the Assets (the “Assumed
Obligations”), including (i) obligations to furnish makeup Hydrocarbons
according to the terms of applicable sales, gathering, processing, or
Transportation Contracts or in response to Hydrocarbon production imbalances,
(ii) obligations to pay revenues, royalties or other amounts payable to third
Persons with respect to the Properties, and (iii) obligations to plug wells,
dismantle facilities, close pits and restore the surface around such wells,
facilities and pits. Other than the Assumed Obligations, Sellers
shall remain responsible, liable and obligated to pay, perform and discharge all
other obligations with respect to the Assets and the Excluded Assets (the “Retained
Obligations”), irrespective of whether such Retained Obligations have
been disclosed to Purchasers at any time prior to the Closing.
Section
7.8 Solicitation
Provisions. Following
the date hereof, Sellers agree that neither they nor any of their wholly-owned
Subsidiaries shall, and that they shall direct any of their directors, officers,
employees, investment bankers, financial advisors, attorneys, accountants or
other advisors, agents or representatives (collectively “Representatives”)
and their wholly-owned Subsidiaries’ Representatives not to, directly or
indirectly, solicit any Acquisition Proposal or engage or discuss with any Person who has made an unsolicited Acquisition Proposal (including providing access to the
Seller Data Room and access to other
non-public information for due diligence purposes to any Person).
Section
7.9 Tax
Matters. Subject
to the provisions of Section 12.5,
Sellers shall be responsible for all Taxes (other than ad valorem, property,
severance, production and similar Taxes based upon or measured by the ownership
or operation of the Assets or the production of Hydrocarbons therefrom, which
are addressed in Section 1.4)
attributable to any period of time at or prior to the Effective Time, including
income Taxes arising as a result of the gain recognized on the transfer of the
Assets, and Purchasers shall be responsible for all such Taxes attributable to
any period of time after the Effective Time. Regardless of which
Party is responsible, Sellers shall handle payment to the appropriate
Governmental Body of all Taxes with respect to the Assets which are required to
be paid prior to Closing (and shall file all returns with respect to such
Taxes).
Section
7.10 [Intentionally
Omitted].
Section
7.11 Further
Assurances. At
and after Closing, Sellers and Purchasers agree to take such further actions and
to execute, acknowledge and deliver all such further documents as are reasonably
requested by the other Party for carrying out the purposes of this Agreement or
of any document delivered pursuant to this Agreement.
22
Section
7.12 Recording. As
soon as practicable after Closing, Purchasers shall record the Conveyances and
other assignments delivered at Closing in the appropriate counties as well as
with the appropriate governmental agencies and provide Sellers with copies of
all recorded or approved instruments.
Section
7.13 Transition Services
Agreements. Prior
to the Closing, at Purchasers’ option, the Parties shall use their reasonable
efforts to negotiate and enter into Transition Services Agreements on terms and
conditions mutually acceptable to the Parties providing for Sellers’ provision
to Purchasers of certain services in connection with the operations, land and
accounting related to the Properties, including, among other terms,
reimbursement to Sellers of all direct and indirect costs associated with
providing such services, including all general and administrative
overhead.
Section
7.14 Schedule
Updates. Sellers
or Purchasers may, from time to time prior to the Closing, by written notice to
the other Parties, supplement or amend any Schedule delivered by Sellers or
Purchasers hereunder. For purposes of determining whether Purchaser’s
conditions set forth in Section 8.2(a)
have been fulfilled, Sellers’ Schedules shall be deemed to include only that
information contained therein on the date of this Agreement and shall be deemed
to exclude all information contained in any supplement or amendment thereto, but
if the Closing shall occur, then any matters disclosed to Purchasers pursuant to
any such supplement or amendment after the date of this Agreement and prior to
the Closing shall be deemed incorporated into such Schedules for purposes of
Article 11.
Section
7.15 Peregrine
Claims. Sellers
are currently considering the pursuit of certain claims and causes of action
relating to certain potential breaches of one or more confidentiality agreements
between one or more Sellers and one or more third parties, such potential claims
and causes of action relating to certain oil and gas leases and/or other Assets
located in Maverick County, Texas, and Dimmit County, Texas (the “Peregrine
Claims”). After the Closing, Newfield shall promptly pay as
incurred all costs incurred by Sellers in pursuing the Peregrine Claims
(including costs and expenses of legal counsel); provided, however, that either
Sellers, on the one hand, or Newfield, on the other hand, may upon at least 30
days’ advance written notice to the other terminate such obligations (a “Termination
Notice”), whereupon Newfield shall pay all such remaining unpaid costs
and expenses incurred in prosecution of the Peregrine Claims and, if such
Termination Notice was given by Sellers, Sellers shall promptly assign, without
recourse, their rights under and in respect of the Peregrine Claims to
Newfield. Any recoveries by Sellers in respect of the Peregrine
Claims shall be for the account of Sellers. If in connection with the
Peregrine Claims, Sellers acquire any oil and gas leases and/or other real
property interests in Maverick County, Texas, or Dimmit County, Texas, from the
counterparties in such claims, then Seller shall give Newfield written notice
thereof, whereupon Newfield shall have an option, exercisable by written notice
to Sellers for a period of sixty (60) days after Sellers’ notice to Newfield, to
acquire all of Sellers’ right, title and interest in and to such oil and gas
leases and/or other real property interests in consideration of Newfield’s
payment to Sellers of cash in an amount equal to one hundred ten percent (110%)
of the aggregate consideration, if any, paid by Sellers for same together with
any remaining unpaid costs and expenses incurred by Seller in pursuing the
Peregrine Claims; provided, however, that if Newfield shall give a Termination
Notice prior to the date on which Sellers acquire such oil and gas leases and/or
other real property interests then such option shall terminate upon the giving
of such Termination Notice.
23
Section
7.16 Sale
Order. Sellers
shall use their reasonable best efforts to secure approval of the Sale Order in
a form reasonably acceptable to Purchasers on or prior to January 31,
2010.
ARTICLE
8
CONDITIONS
TO CLOSING
Section
8.1 Conditions of Sellers to
Closing. The
obligations of Sellers to consummate the transactions contemplated by this
Agreement are subject, at the option of Sellers, to the satisfaction on or prior
to Closing of each of the following conditions:
(a) Representations. The
representations and warranties of Purchasers set forth in Articles 5 and
6 shall be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date, except for
breaches, if any, by one Purchaser as would not prevent the other Purchaser from
consummating the transactions contemplated hereunder;
(b) Performance. Purchasers
shall have performed and observed, in all material respects, all covenants and
agreements to be performed or observed by it under this Agreement prior to or on
the Closing Date, except for breaches, if any, by one Purchaser as would not
prevent the other Purchaser from consummating the transactions contemplated
hereunder;
(c) Bankruptcy Court
Approval. The Bankruptcy Court shall have issued a Final Order confirming
Sellers’ Plan of Reorganization in a form reasonably acceptable to the
Sellers.
(d) Pending
Litigation. On the Closing Date, no suit, action or other
proceeding by a third-party (including any Governmental Body) seeking to
restrain, enjoin or otherwise prohibit the consummation of the transactions
contemplated by this Agreement, or seeking substantial damages in connection
therewith, shall be pending before any Governmental Body;
(e) Deliveries. Purchasers
shall have delivered to Sellers duly executed counterparts of the Conveyances
and the other documents and certificates to be delivered by Purchasers under
Section 9.3;
(f) Casualty and Condemnation
Losses. The aggregate sum of all casualty and condemnation
losses under Section
3.2 shall not be more than ten percent (10%) of the unadjusted Purchase
Price;
(g) Payment. Purchasers
shall have paid the Closing Payment; and
(h) Plan. All
conditions precedent to the occurrence of the effectiveness of the Plan shall
have been satisfied or waived in writing in accordance with the
Plan.
24
Section
8.2 Conditions of Purchasers to Closing. The
obligations of Purchasers to consummate the transactions contemplated by this
Agreement are subject, at the option of Purchasers, to the satisfaction on or
prior to Closing of each of the following conditions:
(a) Representations. The
representations and warranties of Sellers set forth in Article 4 shall be
true and correct as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (other than representations and
warranties that refer to a specified date which need only be true and correct on
and as of such specified date), except for such breaches, if any, as would not
have a Material Adverse Effect;
(b) Performance. Sellers
shall have performed and observed, in all material respects, all covenants and
agreements to be performed or observed by them under this Agreement prior to or
on the Closing Date;
(c) Bankruptcy Court
Approval. The
Bankruptcy Court shall have issued a Final Order confirming Sellers’ Plan of
Reorganization in a form reasonably acceptable to Purchaser;
(d) Pending
Litigation. On the Closing Date, no suit, action or other
proceeding by a third-party (including any Governmental Body) seeking to
restrain, enjoin or otherwise prohibit the consummation of the transactions
contemplated by this Agreement, or seeking substantial damages in connection
therewith, shall be pending before any Governmental Body;
(e) Deliveries. Sellers
shall have delivered to Purchasers duly executed
counterparts of the Conveyances and the other documents and certificates to be
delivered by Sellers under Section 9.2;
(f) Casualty and Condemnation
Losses. The aggregate sum of all casualty and condemnation
losses under Section
3.2 shall not be more than ten percent (10%) of the unadjusted Purchase
Price;
(g) Plan.
All conditions precedent to the occurrence of the effectiveness of the Plan
shall have been satisfied or waived in writing in accordance with the Plan;
and
(h) Assignment of Contractual
Prospects. Purchasers shall receive an assignment of each of
the Material Contracts covering the Contractual Prospects in form and substance
reasonably satisfactory to Purchasers.
ARTICLE
9
CLOSING
Section
9.1 Time and Place of
Closing.
(a) Consummation
of the purchase and sale transaction as contemplated by this Agreement (the
“Closing”),
shall be governed by the Sale Order and any other applicable orders entered by
the Bankruptcy Court.
25
(b) Unless
otherwise agreed to in writing by Purchasers and Sellers, Closing shall take
place at the offices of Sellers, located at 777 Sonterra Blvd., Suite 350, San
Antonio, Texas 78258, at 10:00 a.m., local time, on January 29, 2010, or if
all conditions in Article 8 to be
satisfied prior to Closing have not yet been satisfied or waived, as soon
thereafter as such conditions have been satisfied or waived, subject to the
rights of the Parties under Article 10.
(c) The
date on which the Closing occurs is herein referred to as the “Closing
Date.”
Section
9.2 Obligations of Sellers at
Closing. At
the Closing, upon the terms and subject to the conditions of this Agreement, and
subject to the simultaneous performance by Purchasers of their obligations pursuant to Section 9.3, Sellers
shall deliver or cause to be delivered to Purchasers, among other things, the
following:
(a) Conveyances
to the Purchaser designated by Purchasers in sufficient duplicate originals to
allow recording in all appropriate jurisdictions and offices, duly executed and
acknowledged by Sellers;
(b) assignments to the Purchaser
designated by Purchasers, on appropriate forms, of state and of federal
leases comprising portions of the Assets, where applicable, duly executed and
acknowledged by Sellers;
(c) letters-in-lieu
of transfer orders to the Purchaser designated by Purchasers covering the Assets;
(d) a
certificate duly executed by an authorized officer of each Seller, dated as of
Closing, certifying on behalf of such Seller that the conditions set forth in
Sections 8.2(a)
and 8.2(b) have
been fulfilled;
(e) a
certificate duly executed by the secretary or any assistant secretary of each Seller, dated as of the
Closing, (i) attaching and certifying on behalf of such Seller complete and
correct copies of (A) the Organizational Documents of such Seller, each as in
effect as of the Closing, (B) the resolutions of the Board of Directors of such
Seller authorizing the execution, delivery, and performance by such Seller of
this Agreement and the transactions contemplated hereby, and (C) any required
approval by the stockholders of such Seller of this Agreement and the
transactions contemplated hereby and (ii) certifying on behalf of such Seller
the incumbency of each officer of Sellers executing this Agreement or any
document delivered in connection with the Closing;
(f) an
executed statement described in Treasury
Regulation § 1.1445-2(b)(2) certifying that no Seller is a foreign person within
the meaning of the Code; and
(g) executed
change-of-operator forms in favor of the
Purchaser designated by
Purchasers for each Lease and
Land, Unit or Well operated by any Seller
that each such Purchaser intends to operate
after Closing, which Sellers shall file; provided, however, that if the operator
of a Lease and Land, Unit or Well must be elected or designated after Closing,
the applicable instruments will be not be filed until after the election or
designation, as applicable, and the Purchasers
provide Sellers with notice of such election or
designation.
26
Section
9.3 Obligations of Purchasers at
Closing. At
the Closing, upon the terms and subject to the conditions of this Agreement, and
subject to the simultaneous performance by each Seller of its obligations
pursuant to Section 9.2,
Purchasers shall deliver or cause to be delivered to Sellers, among other
things, the following:
(a) a
wire transfer of the Closing Payment in same-day funds;
(b) Conveyances
of the Assets duly executed party by the Purchaser acquiring the respective
Assets, as designated by Purchasers;
(c) letters-in-lieu
of transfer orders covering the Assets, duly executed by the Purchaser acquiring
the respective Assets, as designated by Purchasers, and such change of operator
forms as may be required to reflect the change of operatorship with respect to
the Properties duly executed by such Party;
(d) a
certificate by an authorized corporate officer of each Purchaser, dated as of
Closing, certifying on behalf of such Purchaser that the conditions
set forth in Sections
8.1(a) and 8.1(b) have been
fulfilled; and
(e) a
certificate duly executed by the secretary or any assistant secretary of each
Purchaser, dated as of the Closing, (i) attaching, and certifying on behalf of
such Purchaser as complete and correct, copies of such Purchaser’s
Organizational Documents, each as in effect as of the Closing, and (ii)
certifying on behalf of such Purchaser: (A) that the Board of Directors of such
Purchaser has authorized the execution, delivery and performance by such
Purchaser of this Agreement and the transactions contemplated hereby, (B) that
no approvals are required by the stockholders or partners, as applicable, of
such Purchaser with
respect to this Agreement and the transactions contemplated hereby, and (C) the
incumbency of each officer of such Purchaser executing this Agreement or any
document delivered in connection with the Closing;
provided
that, notwithstanding anything to the contrary in this Agreement, if a Purchaser
is not participating in the transactions contemplated by this Agreement, the
foregoing deliveries will only be made by the participating
Purchaser. If Newfield does not participate in the transactions
contemplated in this Agreement and Anadarko is the sole Purchaser at Closing,
references to Newfield in Section 7.15 shall
refer to Anadarko.
Section
9.4 Closing Payment and
Post-Closing Purchase Price Adjustments.
(a) Not
later than five (5) Business Days prior to the Closing Date, Sellers shall
prepare and deliver to Purchasers, using and based upon the best information
available to Sellers, a preliminary settlement statement estimating the adjusted
Purchase Price after giving effect to all Purchase Price adjustments set forth
in Section 2.3. The
estimate delivered in accordance with this Section 9.4(a)
shall constitute the dollar amount to be paid by Purchasers to Sellers at the
Closing (the “Closing
Payment”).
27
(b) As
soon as reasonably practicable after the Closing but not later than the 90th day
following the Closing Date, Sellers shall prepare and deliver to Purchasers a
statement setting forth the final calculation of the adjusted Purchase Price and
showing the calculation of each adjustment, based, to the extent possible on
actual credits, charges, receipts and other items before and after the Effective
Time. Sellers shall at Purchasers’ request supply reasonable
documentation available to support any credit, charge, receipt or other
item. As soon as reasonably practicable but not later than the 30th
day following receipt of Sellers’ statement hereunder, Purchasers shall deliver
to Sellers a written report containing any changes that Purchasers propose be
made to such Statement. The Parties shall undertake to agree on the
final statement of the adjusted Purchase Price no later than 120 days after the
Closing Date. In the event that the Parties cannot reach agreement
within such period of time, either Party may refer the remaining matters in
dispute to the Bankruptcy Court. Upon final determination by the
Bankruptcy Court (x) Purchasers shall pay to Sellers the amount by which the
adjusted Purchase Price exceeds the Closing Payment or (y) Sellers shall
pay to Purchasers the amount by which the Closing Payment exceeds the adjusted
Purchase Price, as applicable. Any post-closing payment pursuant to this Section 9.4
shall bear interest from the Effective Time to the date of payment at the Agreed
Interest Rate.
All
payments made or to be made under this Agreement to Sellers as may be specified
by Sellers in writing; provided, however, that
$1,100,000 of the Closing Payment shall be deposited with the Escrow Agent to be
held pursuant to the Escrow Agreement until both Royalty Appeals are either
dismissed or resolved through the entry of a Final Order, after which time such
$1,100,000 amount shall be paid over by the Escrow Agent to Sellers with
interest. “Royalty Appeals” shall mean the appeals styled Weatherford International v. TXCO
Resources Inc., Case No. 5:09-cv-00569-FB, which is currently pending in
the United States District Court for the Western District of Texas and the
appeal styled, Halliburton
Energy Services, Inc. et al v. TXCO Resources Inc. et al, Case No.
5:09-cv-00580-FB, which is currently pending in the United States District Court
for the Western District of Texas, both of which involve the Bankruptcy Courts
entry of the Order on Motion for Authority to Pay or Honor Prepetition Royalty
Obligations and Other Obligations under Oil & Gas Leases, whereby the
Bankruptcy Court approved the Sellers’ request to pay all prepetition royalty
obligations in the ordinary course of their business. All payments made or to be
made hereunder to Purchasers shall be by electronic transfer of immediately
available funds to a party and bank and account specified by Purchasers in
writing to Sellers.
Section
9.5 Further
Assurances. At
the Closing and thereafter as may be necessary, each Seller and Purchasers shall
execute and deliver such other instruments and documents and take such other
actions as may be reasonably necessary to evidence and effectuate the
transactions contemplated by this Agreement.
ARTICLE
10
TERMINATION
AND AMENDMENT
Section
10.1 Termination. This
Agreement may be terminated at any time prior to Closing by:
28
(a) the
mutual prior written consent of the Sellers and Purchasers;
(b) Sellers
or Purchasers pursuant to Section
3.2;
(c) either Purchaser if the
Bankruptcy Court does not enter the Sale Order in form reasonably acceptable to
the parties on or before January 31, 2010;
(d) Purchasers,
if the Sale Order is not a Final Order by February 15, 2010; or
(e) either
Purchaser or any Seller, if Closing has not occurred on or before February 28, 2010,
provided, however, that no
Party shall be entitled to terminate this Agreement under this Section 10.1 if
the Closing has failed to occur because such Party negligently or willfully
failed to perform or observe in any material respect its covenants and
agreements hereunder.
Section
10.2 Effect of
Termination. If
this Agreement is terminated pursuant to Section 10.1,
this Agreement shall become void and of no further force or effect (except for
the provisions of Sections 7.4,
7.6, 12.6, 12.9, 12.17 and 12.18 and of the
Confidentiality Agreements which shall continue in full force and effect) and
Sellers shall be free immediately to enjoy all rights of ownership of the Assets
and to sell, transfer, encumber or otherwise dispose of the Assets to any party
without any restriction under this Agreement. Notwithstanding
anything to the contrary in this Agreement, the termination of this Agreement
under Section 10.1(e)
shall not relieve any Party from liability for any willful or negligent failure
to perform or observe in any material respect any of its agreements or covenants
contained herein which are to be performed or observed at or prior to Closing.
In the event this Agreement terminates under Section 10.1(e)
and any Party has willfully or negligently failed to perform or observe in any
material respect any of its agreements or covenants contained herein which are
to be performed at or prior to Closing, then the other Parties shall be entitled
to all remedies available at law or in equity and shall be entitled to recover
court costs and attorneys' fees in addition to any other relief to which such
Parties maybe entitled; provided, however, if Purchasers fail to close and such
failure constitutes a breach of this Agreement, Sellers’ sole remedy and
recourse shall be the retention of the Deposits as liquidated damages, and in
this regard, the Parties agree that in such event Sellers’ damages are uncertain
and speculative and the portion of the Deposits retained pursuant to Section 2.2(b) hereof
is calculated by reference to Sellers’ anticipated damages and not established
as a penalty.
ARTICLE
11
INDEMNIFICATION;
LIMITATIONS
Section
11.1 Indemnification.
(a) From
and after Closing,
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(i)
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Anadarko
shall indemnify, defend and hold harmless Sellers from and against all
Damages incurred or suffered by
Seller:
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29
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1)
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caused
by or arising out of or resulting from the ownership, use or operation of
the Anadarko Assets at any time to the extent such Damages are related
solely to Environmental Conditions of the Anadarko Assets designated on
Sellers’ Identified Environmental Conditions, and as to any other Damages
at any time after the Effective Time, including the Assumed
Obligations,
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2)
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caused
by or arising out of or resulting from Anadarko’s breach of any of its
covenants or agreements contained in Article 7,
or
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3)
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caused
by or arising out of or resulting from any breach of any representation or
warranty made by Anadarko contained in Article 6 of
this Agreement or in the certificates delivered by Anadarko at Closing
pursuant to Section 9.3(d),
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even if such Damages are caused in
whole or in part by the negligence (whether sole, joint or concurrent but not
gross negligence or willful misconduct), strict liability or other legal fault
of any Indemnified Person, but excepting in each case Damages against
which Sellers would be required to indemnify Purchasers under Section 11.1(b)
at the time the claim notice is presented by Purchasers.
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(ii)
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Newfield
shall indemnify, defend and hold harmless Sellers from and against all
Damages incurred or suffered by
Seller:
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1)
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caused
by or arising out of or resulting from the ownership, use or operation of
the Newfield Assets at any time to the extent such Damages are related
solely to Environmental Conditions of the Newfield Assets designated on
Sellers’ Identified Environmental Conditions, and as to any other Damages
at any time after the Effective Time, including the Assumed
Obligations,
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2)
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caused
by or arising out of or resulting from Newfield’s breach of any of its
covenants or agreements contained in Article 7,
or
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3)
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caused
by or arising out of or resulting from any breach of any representation or
warranty made by Newfield contained in Article 5 of
this Agreement or in the certificates delivered by Newfield at Closing
pursuant to Section 9.3(d),
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even if such Damages are caused in
whole or in part by the negligence (whether sole, joint or concurrent but not
gross negligence or willful misconduct), strict liability or other legal fault
of any Indemnified Person, but excepting in each case Damages against
which Sellers would be required to indemnify Purchasers under Section 11.1(b)
at the time the claim notice is presented by Purchasers.
30
(b) For
a period of one hundred eighty (180) days after Closing, Sellers shall
indemnify, defend and hold harmless Purchasers against and from all Damages
incurred or suffered by Purchasers:
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(i)
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caused
by or arising out of or resulting from the ownership, use or operation of
the Assets before the Effective Time, including the Retained
Obligations,
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(ii)
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caused
by or arising out of or resulting from Sellers’ breach of any of Sellers’
covenants or agreements contained in Article 7,
or
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|
(iii)
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caused
by or arising out of or resulting from any breach of any representation or
warranty made by Sellers contained in Article 4
of this Agreement (other than Sellers’ representations under Sections 4.7
and 4.12
with respect to Environmental Condition of the Assets), or in the
certificate delivered by Sellers at Closing pursuant to Section 9.2(d);
provided,
however,
that Purchasers shall be deemed to have waived in full any breach of any
Seller’s representations and warranties contained in Article 4 of
which any Purchasers have Knowledge at the date of this Agreement or, if
the Closing occurs, at the Closing and Purchasers hereby waive any right
to indemnification under this Article 11
with respect to any such breaches;
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even
if such Damages are caused in whole or in part by the negligence (whether sole,
joint or concurrent but not gross negligence or willful misconduct), strict
liability or other legal fault of any Indemnified Person.
(c) Notwithstanding
anything to the contrary contained in this Agreement, this Section 11.1
contains the Parties’ exclusive remedy against each other after the Closing with
respect to breaches of the representations, warranties, covenants and agreements
of the Parties contained in this Agreement and the certificate delivered by each
Party at Closing pursuant to Sections 9.2(d)
or 9.3(d), as
applicable. Except for the remedies contained in this Section 11.1 and
Section 3.2,
effective as of the Closing, Sellers and Purchasers each release, remise and
forever discharge the other and its Affiliates and all such Parties’
stockholders, officers, directors, employees, agents, advisors and
representatives from any and all suits, legal or administrative proceedings,
claims, demands, damages, losses, costs, liabilities, interest, or causes of
action whatsoever, in law or in equity, known or unknown, which such Parties
might now or subsequently may have, based on, relating to or arising out of this
Agreement, Sellers’ ownership, use or operation of the Assets, or the condition,
quality, status or nature of the Assets, including, without limitation, rights
to contribution under the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, or any other Environmental Law, breaches
of statutory or implied warranties, nuisance or other tort actions, rights to
punitive damages and common law rights of contribution, rights under agreements
between Sellers and any Persons who are Affiliates of Sellers, and rights under
insurance maintained by Sellers or any Person who is an Affiliate of Sellers,
even if caused in whole or in
part by the negligence (whether sole, joint or concurrent), strict liability or
other legal fault of any released Person, excluding, however, any
existing contractual rights between (i) Purchasers or any of Purchasers’
Affiliates and (ii) Sellers or any of Sellers’ Affiliates under contracts
between them relating to the Assets.
31
(d) Claims
for Property Costs shall be exclusively handled pursuant to the Purchase Price
adjustments in Section 2.3, and
pursuant to Section 11.2, and
shall not be subject to indemnification under this Section 11.1.
(e) “Damages”,
for purposes of this Article 11, shall
mean the amount of any actual liability, loss, cost, expense, claim, award or
judgment incurred or suffered by any Indemnified Person arising out of or
resulting from the indemnified matter, whether attributable to personal injury
or death, property damage, contract claims, torts, or otherwise, including
reasonable fees and expenses of attorneys, consultants, accountants or other
agents and experts reasonably incident to matters indemnified against, and the
costs of investigation and/or monitoring of such matters, and the costs of
enforcement of the indemnity; provided, however, that
Purchasers and Sellers shall not be entitled to indemnification under this Section 11.1
for, and “Damages” shall not include, (i) loss of profits or other
consequential damages suffered by the Party claiming indemnification, or any
punitive damages, (ii) any liability, loss, cost, expense, claim, award or
judgment that does not individually exceed one hundred thousand dollars
($100,000), except that such limitation shall not apply with respect to any
failure on the part of Purchasers to satisfy any liability or obligation assumed
pursuant hereto, and (iii) any liability, loss, cost, expense, claim, award
or judgment to the extent resulting from or increased by the actions or
omissions of any Indemnified Person after the Closing Date.
(f) The
indemnity of each Party provided in this Section 11.1
shall be for the benefit of and extend to such Party's present and former
Affiliates, and their and their directors, officers, employees, and
agents. Any claim for indemnity under this Section 11.1 by
any such Affiliate, director, officer, employee, or agent must be brought and
administered by the applicable Party to this Agreement. No
Indemnified Person other than Sellers and Purchasers shall have any rights
against either Sellers or Purchasers under the terms of this Section 11.1
except as may be exercised on their behalf by Purchasers or Sellers, as
applicable, pursuant to this Section 11.1(f). Sellers
and Purchasers may elect to exercise or not exercise indemnification rights
under this Section 11.1(f)
on behalf of the other parties affiliated with it in their sole discretion and
shall have no liability to any such other Indemnified Party for any action or
inaction under this Section 11.1(f).
32
(g) Purchasers
shall not conduct (or have conducted on its behalf) any material remediation
operations with respect to any claimed Damages relating to a breach of Sellers’
representation or warranty regarding compliance with Environmental Laws or any
Claim relating to the subject matter of such representation or warranty without
first giving Sellers notice of the remediation with reasonable detail at least
30 days prior thereto (or such shorter period of time as shall be required by
any Governmental Authority). Sellers shall have the option (in its
sole discretion) to conduct (or have conducted on its behalf) such remediation
operations. If Sellers shall not have notified Purchasers of their
agreement to conduct such remediation operations within such specified period,
then Purchasers may conduct (or have conducted on its behalf) such
operations. Purchasers and Sellers agree that any remediation
activities undertaken with respect to the Assets, whether conducted by
Purchasers or Sellers, shall be reasonable in extent and cost effective and
shall not be designed or implemented in such a manner as to exceed what is
required to cause a condition to be brought into compliance with Environmental
Laws. All remediation activities conducted by Sellers under this
Agreement shall be conducted to the extent reasonably possible so as not to
interfere substantially with Purchasers’ operation of the Assets.
Section
11.2 Indemnification
Actions. All
claims for indemnification under Section 11.1
shall be asserted and resolved as follows:
(a) For
purposes of this Article 11, the term
“Indemnifying
Person” when used in connection with particular Damages shall mean the
Person or Persons having an obligation to indemnify another Person or Persons
with respect to such Damages pursuant to this Article 11, and the
term “Indemnified
Person” when used in connection with particular Damages shall mean the
Person or Persons having the right to be indemnified with respect to such
Damages by another Person or Persons pursuant to this Article 11.
(b) To
make claim for indemnification under Section 11.1, an
Indemnified Person shall notify the Indemnifying Person of its claim under this
Section 11.2,
including the specific details of and specific basis under this Agreement for
its claim (the “Claim
Notice”). In the event that the claim for indemnification is
based upon a claim by a third party against the Indemnified Person (a “Claim”),
the Indemnified Person shall provide its Claim Notice promptly after the
Indemnified Person has actual knowledge of the Claim and shall enclose a copy of
all papers (if any) served with respect to the Claim; provided that the failure
of any Indemnified Person to give notice of a Claim as provided in this Section 11.2
shall not relieve the Indemnifying Person of its obligations under Section 11.1
except to the extent such failure results in insufficient time being available
to permit the Indemnifying Person to effectively defend against the Claim or
otherwise prejudices the Indemnifying Person's ability to defend against the
Claim. In the event that the claim for indemnification is based upon
an inaccuracy or breach of a representation, warranty, covenant or agreement,
the Claim Notice shall specify the representation, warranty, covenant or
agreement which was inaccurate or breached.
33
(c) If
the Indemnifying Person admits its obligation to indemnify the Indemnified
Person, it shall have the right and obligation to diligently defend, at its sole
cost and expense, the Claim. The Indemnifying Person shall have full
control of such defense and proceedings, including any compromise or settlement
thereof. If requested by the Indemnifying Person, the Indemnified
Person agrees to cooperate in contesting any Claim which the Indemnifying Person
elects to contest (provided, however, that the
Indemnified Person shall not be required to bring any counterclaim or
cross-complaint against any Person). The Indemnified Person may at
its own expense participate in, but not control, any defense or settlement of
any Claim controlled by the Indemnifying Person pursuant to this Section 11.2(d). An
Indemnifying Person shall not, without the written consent of the Indemnified
Person, settle any Claim or consent to the entry of any judgment with respect
thereto which (i) does not result in a final resolution of the Indemnified
Person's liability with respect to the Claim (including, in the case of a
settlement, an unconditional written release of the Indemnified Person) or
(ii) may materially and adversely affect the Indemnified Person (other than
as a result of money damages covered by the indemnity).
(d) If
the Indemnifying Person does not admit its obligation or admits its obligation
but fails to diligently defend or settle the Claim, then the Indemnified Person
shall have the right to defend against the Claim (at the sole cost and expense
of the Indemnifying Person, if the Indemnified Person is entitled to
indemnification hereunder), with counsel of the Indemnified Person's choosing,
subject to the right of the Indemnifying Person to admit its obligation and
assume the defense of the Claim at any time prior to settlement or final
determination thereof. If the Indemnifying Person has not yet
admitted its obligation to provide indemnification with respect to a Claim, the
Indemnified Person shall send written notice to the Indemnifying Person of any
proposed settlement and the Indemnifying Person shall have the option for 10
days following receipt of such notice to (i) admit in writing its
obligation to provide indemnification with respect to the Claim and (ii) if
its obligation is so admitted, reject, in its reasonable judgment, the proposed
settlement. If the Indemnified Person settles any Claim over the
objection of the Indemnifying Person after the Indemnifying Person has timely
admitted its obligation in writing and assumed the defense of the Claim, the
Indemnified Person shall be deemed to have waived any right to indemnity
therefor.
Section
11.3 Limitation on
Actions. Notwithstanding
the remaining provisions hereof, the provisions of this Article 11 are
subject to the following:
(a) The
representations and warranties of the Parties set forth in this Agreement or any
certificate or other instrument delivered pursuant hereto, as well as the
covenants and agreements set forth herein or therein that are contemplated to be
performed prior to the Closing, shall survive the Closing for a period of one
hundred eighty (180) days after the Closing (unless a shorter period is
expressly provided within the applicable section). The covenants and
agreements set forth herein or therein that are contemplated to be performed
after the Closing, shall survive the Closing without time limit except as may
otherwise be expressly provided herein or therein. Representations,
warranties, covenants and agreements shall be of no further force and effect
after the date of their expiration, provided that there shall be no termination
of any bona fide claim asserted pursuant to this Agreement with respect to such
a representation, warranty, covenant or agreement prior to its expiration
date.
(b) The
indemnities in Sections
11.1(a)(i)(2), 11.1(a)(i)(3), 11.1(a)(ii)(2), 11.1(a)(iii)(3) and
11.1(b) shall
terminate as of the date that is one hundred eighty (180) days after the
Closing, except in each case as to matters for which a specific written claim
for indemnity has been delivered to the Indemnifying Person on or before such
termination date. The indemnities in Sections
11.1(a)(i)(1) and 11.1(a)(ii)(1) shall
continue without time limit.
34
(c) Sellers
shall not have any liability for any indemnification under Section 11.1
until and unless the aggregate amount of the liability for all Damages for which
claim notices are delivered exceeds Two Million Five Hundred Thousand Dollars
($2,500,000) (the “Indemnity
Deductible”), and then only to the extent such damages exceed the
Indemnity Deductible. The adjustments to the Purchase Price under
Section 2.3, any
further adjustments with respect to production, income, proceeds, receipts and
credits under Section 12.1,
any further adjustments with respect to Property Costs under Section 12.2 and
any payments in respect of any of the preceding shall not be limited by this
Section
11.3(c).
(d) The
maximum aggregate amount for which Sellers may be liable for indemnification
under Section 11.1
shall be limited to Two Million Dollars ($2,000,000).
(e) The
amount of any Damages for which an Indemnified Person is entitled to indemnity
under this Article
11 shall be reduced by the amount of insurance proceeds realized by the
Indemnified Person or its Affiliates with respect to such Damages (net of any
collection costs, and excluding the proceeds of any insurance policy issued or
underwritten by the Indemnified Person or its Affiliates).
(f) In
no event shall the Purchasers have any obligation hereunder to indemnify any
Seller who does not actually convey any portion of the Assets to Purchasers
under this Agreement or otherwise have any direct or indirect interest in any
portion of the Assets. Likewise, no Seller who does not actually
convey any portion of the Assets to Purchasers under this Agreement or otherwise
have any direct or indirect interest in any portion of the Assets shall have any
obligation hereunder to indemnify the Purchasers. Upon the request of
any Party hereto, the Parties agree to enter into any amendment to this
Agreement reasonably necessary to remove any Seller who does not actually convey
any portion of the Assets to Purchasers under this Agreement or otherwise have
any direct or indirect interest in any portion of the Assets as a Party to this
Agreement.
ARTICLE
12
MISCELLANEOUS
Section
12.1 Receipts. Except
as otherwise provided in this Agreement, any production from or attributable to
the Assets (and all products and proceeds attributable thereto) and any other
income, proceeds, receipts and credits attributable to the Assets which are not
reflected in the adjustments to the Purchase Price following the final
adjustment pursuant to Section 9.4(b)
shall be treated as follows: (a) all production of Hydrocarbons
from or attributable to the Assets (and all products and proceeds attributable
thereto) and all other income, proceeds, receipts and credits earned with
respect to the Assets to which Purchasers are entitled under Section 1.4
shall be the sole property and entitlement of Purchasers, and, to the extent
received by Sellers, Sellers shall fully disclose, account for and remit the
same promptly to Purchasers, and (b) all production of Hydrocarbons from or
attributable to the Assets (and all products and proceeds attributable thereto)
and all other income, proceeds, receipts and credits earned with respect to the
Assets to which Sellers are entitled under Section 1.4
shall be the sole property and entitlement of Sellers and, to the extent
received by Purchasers, Purchasers shall fully disclose, account for and remit
the same promptly to Sellers.
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Section
12.2 Property
Costs. Except
as otherwise provided in this Agreement, any Property Costs which are not
reflected in the adjustments to the Purchase Price following the final
adjustment pursuant to Section 9.4(b)
shall be treated as follows: (a) all Property Costs for which Sellers are
responsible under Section 1.4
shall be the sole obligation of Sellers and Sellers shall promptly pay, or if
paid by Purchasers, promptly reimburse Purchasers for and hold Purchasers
harmless from and against same; and (b) all Property Costs for which
Purchasers are responsible under Section 1.4
shall be the sole obligation of Purchasers and Purchasers shall promptly pay, or
if paid by Sellers, promptly reimburse Sellers for and hold Sellers harmless
from and against same. Sellers are entitled to resolve all joint
interest audits and other audits of Property Costs covering periods for which
Sellers are in whole or in part responsible, provided that Sellers shall not
agree to any adjustments to previously assessed costs for which Purchasers are
liable without the prior written consent of Purchasers, such consent not to be
unreasonably withheld. Sellers shall provide Purchasers with a copy
of all applicable audit reports and written audit agreements received by Sellers
and relating to periods for which Purchasers are partially
responsible.
Section
12.3 Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original instrument, but all such counterparts together shall constitute but one
agreement.
Section
12.4 Notice. All
notices which are required or may be given pursuant to this Agreement shall be
sufficient in all respects if given in writing and delivered personally, by
telecopy or by registered or certified mail, postage prepaid, as
follows:
If to
Sellers:
TXCO
Resources Inc.
777 W.
Sonterra Blvd., Suite 350
San
Antonio, Texas 78258
Attn: James
E. Sigmon, Chairman of the Board and CEO
Facsimile:
(210) 496-3232
With a
copy to:
TXCO
Resources Inc.
777 W.
Sonterra Blvd., Suite 350
San
Antonio, Texas 78258
Attn: M.
Frank Russell, General Counsel
Facsimile:
(210) 496-3232
36
If to
Anadarko:
Anadarko
E&P Company LP
1201 Lake
Robbins Drive
The
Woodlands, Texas 77380
Attn:
Joseph F. Carroll, Vice President - Transactions
Facsimile: (832)
636-5889
With a
copy to:
Anadarko
E&P Company LP
1201 Lake
Robbins Drive
The
Woodlands, Texas 77380
Attn:
Robert K. Reeves, General Counsel
Facsimile: (832)
636-3214
If to
Newfield:
Newfield
Exploration Company
363 N.
Sam Houston Pkwy. E., Suite 2020
Houston,
Texas 77060
Attn: W.
Mark Blumenshine,
Vice
President – Land
Facsimile: (281)
405-4242
With a
copy to:
Newfield
Exploration Company
363 N.
Sam Houston Pkwy. E., Suite 2020
Houston,
Texas 77060
Attn: Darrell
R. Jones
Legal
Counsel
Facsimile:
(281) 405-4228
Any Party
may change its address for notice by notice to the other in the manner set forth
above. All notices shall be deemed to have been duly given at the
time of receipt by the Party to which such notice is addressed.
Section
12.5 Sales or Use Tax, Recording
Fees and Similar Taxes and Fees. Purchasers
shall bear any sales, use, excise, real property transfer or gain, gross
receipts, goods and services, registration, capital, documentary, stamp or
transfer Taxes, recording fees and similar Taxes and fees incurred and imposed
upon, or with respect to, the property transfers or other transactions
contemplated hereby. If such transfers or transactions are exempt
from any such taxes or fees upon the filing of an appropriate certificate or
other evidence of exemption, Purchasers will timely furnish to Sellers such
certificate or evidence.
37
Section
12.6 Expenses. All
expenses incurred by Sellers in connection with or related to the authorization,
preparation or execution of this Agreement, the conveyances delivered hereunder
and the Exhibits and Schedules hereto and thereto, and all other matters related
to the Closing, including all fees and expenses of counsel, accountants and
financial advisers employed by Sellers, shall be borne solely and entirely by
Sellers, and all such expenses incurred by each Purchaser shall be borne solely
and entirely by such Purchaser.
Section
12.7 Change of
Name. As
promptly as practicable, but in any case within thirty (30) days after the
Closing Date, Purchasers shall eliminate, at Purchasers’ cost, the names of
“TXCO Resources Inc.”, or any Affiliates of Sellers and any variants thereof
from the Assets acquired pursuant to this Agreement, including the removal of
any signs on the Assets that include such names, and except with respect to such
grace period for eliminating existing usage, shall have no right to use any
logos, trademarks or trade names belonging to Sellers or any of their
Affiliates.
Section
12.8 Replacement of Bonds,
Letters of Credit and Guarantees. The
Parties understand that none of the bonds, letters of credit and guarantees, if
any, posted by Sellers with Governmental Bodies and relating to the Assets will
be transferred to the parties designated by the Purchasers. Promptly
following Closing, Purchasers shall obtain, or cause to be obtained in the name
of such designated party, replacements for such bonds, letters of credit and
guarantees, to the extent such replacements are necessary to permit the
cancellation of the bonds, letters of credit and guarantees posted by Sellers or
to consummate the transactions contemplated by this Agreement..
Section
12.9 Governing Law; Submission to
Jurisdiction. This
Agreement and the legal relations between the Parties shall be governed by and
construed in accordance with the laws of the State of Texas without regard to
principles of conflicts of laws otherwise applicable to such determinations
except that the conveyances delivered hereunder shall be governed by the laws of
the state in which the transferred Assets are located. To the extent
the Bankruptcy Court does not have jurisdiction over any controversy arising
hereunder, each Party submits to the exclusive jurisdiction of the state and
federal courts located in Bexar County of the State of Texas for purposes of
resolving any dispute, claim or controversy arising out of, in relation to or in
connection with this Agreement.
Section
12.10 Caption. The
captions in this Agreement are for convenience only and shall not be considered
a part of or affect the construction or interpretation of any provision of this
Agreement.
Section
12.11 Waivers. Any
failure by any Party or Parties to comply with any of its or their obligations,
agreements or conditions herein contained may be waived by the Party or Parties
to whom such compliance is owed by an instrument signed by such Party or Parties
and expressly identified as a waiver, but not in any other manner. No
waiver of, or consent to a change in, any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of, or consent to a change in,
other provisions hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
Section
12.12 Assignment. No
party hereto shall assign all or any part of this Agreement,
nor shall any Party assign or delegate any of its rights or duties hereunder,
without the prior written consent of the other Parties. Subject to
the foregoing, this Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors and permitted
assigns.
38
Section
12.13 Entire
Agreement. The
Confidentiality Agreements, this Agreement and the documents to be executed
hereunder and the Exhibits and Schedules attached hereto constitute the entire
agreement between the Parties pertaining to the subject matter hereof, and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties pertaining to the subject matter
hereof.
Section
12.14 Amendment This
Agreement may be amended or modified only by an agreement in writing executed by
all Parties and expressly identified as an amendment or
modification.
Section
12.15 No
Third Party Beneficiaries Nothing
in this Agreement shall entitle any Person other than Purchasers and Sellers to
any claims, cause of action, remedy or right of any kind, except the rights
expressly provided to the Persons described in Section 11.1(f).
Section
12.16 References. In
this Agreement:
(a) References
to any gender includes a reference to all other genders;
(b) References
to the singular includes the plural, and vice versa;
(c) Reference
to any Article or Section means an Article or Section of this
Agreement;
(d) Reference
to any Exhibit or Schedule means an Exhibit or Schedule to this Agreement, all
of which are incorporated into and made a part of this Agreement;
(e) Unless
expressly provided to the contrary, “hereunder”,
“hereof”,
“herein”
and words of similar import are references to this Agreement as a whole and not
any particular Section or other provision of this Agreement; and
(f) “Include”
and “including”
shall mean include or including without limiting the generality of the
description preceding such term.
Section
12.17 Construction. Purchasers
are Parties capable of making such investigation, inspection, review and
evaluation of the Assets as a prudent purchaser would deem appropriate under the
circumstances including with respect to all matters relating to the Assets,
their value, operation and suitability. Each of Sellers and
Purchasers have had the opportunity to exercise business discretion in relation
to the negotiation of the details of the transaction contemplated
hereby. This Agreement is the result of arm's-length negotiations
from equal bargaining positions.
Section
12.18 Limitation on
Damages. Notwithstanding
anything to the contrary contained
herein, none of Purchasers, Sellers or any of their respective Affiliates shall
be entitled to punitive damages in connection with this Agreement and the
transactions contemplated hereby and Purchasers and Sellers, for themselves and
on behalf of their Affiliates, hereby expressly waives any right to punitive
damages in connection with this Agreement and the transactions contemplated
hereby.
39
Section
12.19 Waiver of Fees and
Expenses. Newfield
hereby irrevocably waives and releases any rights to receive, and agrees to
forego, any and all fees and expense reimbursements or payments it or its
Affiliates, agents or representatives may be entitled pursuant to section 9.2(b)
of that certain Purchase and Sale Agreement dated as of November 6, 2009, by and
among Sellers and Newfield. For the avoidance of doubt, the release contained
herein shall not be affected by Newfield’s continued participation in the
transactions contemplated herein (whether as a result of its assignment of
rights hereunder pursuant to Section 12.12 herein or otherwise).
Section
12.20 Purchasers’
Liability. Notwithstanding
anything to the contrary herein, the Parties agree that, (a) prior to
and at Closing, Anadarko and Newfield shall be jointly and severally liable for
Purchasers’ obligations and liabilities under this Agreement and (b) after
Closing, Anadarko and Newfield shall be severally, but not jointly, liable for
Purchasers’ obligations and liabilities hereunder and that post-Closing
liability relates to ownership of the Anadarko Assets and the Newfield Assets,
respectively.
Section
12.21 Agreed Subordination by
Newfield. Newfield
hereby agrees to irrevocably subordinate the rights it has as the holder of
claims and interests relating in and to preferred stock of TXCO Resources Inc.
for which a notice of redemption was sent to TXCO Resources Inc. prior to the
filing of the Debtors’ case with the Bankruptcy Court (the “Noticed
Preferred Stock”), including rights to payments, recoveries or proceeds
to which it or its Affiliates may be entitled thereunder, to the rights of the
holders of preferred stock of TXCO Resources Inc. which did not deliver a notice
of redemption to TXCO Resources Inc. prior to the filing of the Debtors’ case
with the Bankruptcy Court. Newfield further agrees to subordinate up
to $10,000,000 of its claim and interests in and to such Noticed Preferred Stock
to the rights of holders of common stock of TXCO Resources Inc. to receive
distribution under the Plan. For the avoidance of doubt, the
subordination of Newfield’s rights contained in this Section 12.21 shall
not be affected by Newfield’s failure to participate in the consummation of the
transactions completed hereunder.
ARTICLE
13
DEFINITIONS
“Acquisition
Proposal” means any proposal or offer for a merger, recapitalization,
share exchange, debt-for-equity exchange, distribution of securities for the
benefit of stakeholders of Sellers, consolidation or similar transaction
involving a sale or purchase (directly or through a proposed investment in
equity securities, debt securities or claims of creditors) of all or
substantially all of the assets of Sellers or all or substantially all of the
equity securities of Sellers, other than the transactions contemplated by the
terms of this Agreement. For the avoidance of doubt, an Acquisition
Proposal does not include a proposal or offer for an Alternative
Plan.
“Adjustment
Period” has the meaning set forth in Section 2.3(a).
“AFE
Advance” has the
meaning set forth in Section
7.5(b).
40
“Affiliate”
with respect to any Person, means any person that directly or indirectly
controls, is controlled by or is under common control with such Person, with
control in such context meaning the ability to direct the management and
policies of a Person through ownership of voting shares or other equity rights,
pursuant to a written agreement, or otherwise.
“Agreed
Interest Rate” shall be three percent (3%) per annum.
“Agreement”
has the meaning set forth in the first paragraph of this Agreement.
“Allocated
Value” has the meaning set forth in Section 2.4.
“Anadarko
Assets” means the Assets conveyed at Closing to Anadarko or any of its
Affiliates.
“Applicable
Law” means any Law to which a specified Person, or the Assets is
subject.
“Assets”
has the meaning set forth in Section 1.2.
“Assumed
Obligations” has the meaning set forth in Section
7.7.
“Bankruptcy
Cases” means the chapter 11 cases commenced by Sellers on or after May
17, 2009 (including any case commenced after the date of this Agreement),
jointly administered under Case No. 09-51807, in the Western District of Texas,
San Antonio Division.
“Bankruptcy
Code” means title 11 of the United States Code.
“Bankruptcy
Court” means the United States Bankruptcy Court for the Western District
of Texas (San Antonio Division).
“Business
Day” means each calendar day except Saturdays, Sundays, and Federal
holidays.
“Claim”
has the meaning set forth in Section 11.2(b).
“Claim
Notice” has the meaning set forth in Section 11.2(b).
“Closing”
has the meaning set forth in Section 9.1(a).
“Closing
Date” has the meaning set forth in Section 9.1(c).
“Closing
Payment” has the meaning set forth in Section 9.4(a).
“Code”
has the meaning set forth in Section 2.4.
“Committee”
shall mean the official committee of unsecured creditors of Sellers appointed in
connection with the Bankruptcy Cases.
“Confidentiality
Agreement” has the meaning set forth in Section 7.1.
41
“Contracts”
has the meaning set forth in Section 1.2(g).
“Contractual
Prospects” means such Lands and Leases pursuant to which Sellers hold the
right to acquire or earn title thereto under the Material Contracts listed under
Schedule
4.11.
“Conveyance”
means the conveyance to be delivered by Sellers to Purchasers in form and
substance mutually agreeable to the Parties.
“COPAS”
means the Council of Petroleum Accountants Society.
“Covered
Claims” has the meaning set forth in Section
2.3(g).
“Damages”
has the meaning set forth in Section 11.1(e).
“Defensible
Title” means that title of Sellers which, subject to Permitted
Encumbrances:
(a) Entitles
Sellers to receive throughout the duration of any Lease or the productive life
of any Well (in each case after satisfaction of all royalties, overriding
royalties, nonparticipating royalties, net profits interests or other similar
burdens on or measured by production of Hydrocarbons), not less than the “net
revenue interest” share shown in Exhibit A of all
Hydrocarbons produced, saved and marketed from such Lease or Well, except
decreases in connection with those operations in which Sellers may be a
nonconsenting co-owner, decreases resulting from the establishment or amendment
of pools or units, and decreases required to allow co-owners to make up past
underproduction or pipelines to make up past under deliveries and except as
stated in such Exhibit A-1;
(b) Obligates
Sellers to bear a percentage of the costs and expenses for the maintenance and
development of, and operations relating to, any Lease or Well not greater than
the “working interest” shown in Exhibit A without
increase throughout the duration of such Lease or Well, except as stated in
Exhibit A and
except increases resulting from contribution requirements with respect to
defaulting co-owners under applicable operating agreements or applicable Law and
increases that are accompanied by at least a proportionate increase in Sellers’
net revenue interest;
(c) Is
free and clear of all Encumbrances other than Permitted Encumbrances;
and
(d) Notwithstanding
(a) and (b) above, for the Lands, Leases and Wells within the Contractual
Prospects, Defensible Title shall mean (i) such title as Sellers have the right
to acquire in the Contractual Prospects in accordance with the terms of the
Material Contracts related to such Contractual Prospects and (ii) Sellers are
not in breach of any of the Material Contracts related thereto.
“Deposit”
has the meaning set forth in Section
2.2.
“Effective
Time” has the meaning set forth in Section 1.4(a).
42
“Encumbrance”
means any lien, charge, encumbrance, obligation, or other defect (including a
discrepancy in net revenue interest or working interest as set forth in Exhibit A).
“Environmental
Condition” means: (a) any event or condition (including any Release
or threatened release) with respect to air, land, soil, surface, subsurface
strata, surface water, ground water, or sediment that causes the Assets to
become subject to (or their owner or operator to have Liability or be
potentially liable for) any investigation, reporting, removal, remediation, or
response action under, or not be in compliance with, any Environmental Law or
any permit pursuant to any Environmental Law; (b) the existence of any written
or oral Claim pending or threatened that reasonably may be expected to subject
the Assets or the owner or the operator of the Assets to Liability under any
Environmental Law as it pertains to the Assets or the existence of any event or
condition on the Assets described in this definition; (c) the failure of
the Assets to be in compliance, or the owner or operator of the Assets to comply
with all applicable Environmental Laws with respect to the Assets; (d) the
failure of the owner or operator of the Assets to obtain or maintain in full
force and effect any Permit required under applicable Environmental Laws with
respect to the Assets; or (e) any event or condition described in the
preceding clauses (a), (b), (c), and (d) that results, or could reasonably be
expected to result, in Liability for any investigation, removal, remediation, or
response action, or any other Person for injury to or death of any Person,
Persons, or other living thing, or damage, loss, or destruction of property
located on the Assets. An event or circumstance that results in the
inaccuracy or breach of the representations and warranties contained in Section 4.7
(insofar only as such representation and warranty relates to environmental
matters) shall constitute an Environmental Condition. The term “Environmental
Condition” includes any release, disposal, spilling, leaking, migration,
pouring, emission, emptying, discharge, injection, escape, transmission,
leaching, or dumping (collectively, a “Release”),
or any threatened Release, of any contaminants on, to or from, or related in any
way to the use, ownership, or operation of, the Assets that has not been
remediated in accordance with all applicable Environmental Laws.
“Environmental
Laws” means, as the same have been amended to the date hereof, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
§ 9601 et
seq.; the
Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; the Federal
Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Clean Air
Act, 42 U.S.C. § 7401 et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. § 1471 et seq.; the Toxic
Substances Control Act, 15 U.S.C. §§ 2601 through 2629; the Oil Pollution Act,
33 U.S.C. § 2701 et seq.; the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq.; and the Safe
Drinking Water Act, 42 U.S.C. §§ 300f through 300j; and all similar Laws as
of the date hereof of any Governmental Body having jurisdiction over the
property in question addressing pollution or protection of the environment or
biological or cultural resources and all regulations implementing the
foregoing.
“Environmental
Permits” means
all permits required by the Sellers by Environmental Laws for the occupation of
the Properties and the operation of the Leases, Lands, Wells, Units and Surface
Rights.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
“Equipment”
has the meaning set forth in Section 1.2(h).
43
“Escrow
Agent” means the escrow agent under the Escrow Agreement.
“Escrow
Agreement” means the escrow agreement among Sellers, Purchasers and the
Escrow Agent to be entered into pursuant to Section
2.2(b).
“Excluded
Assets” has the meaning set forth in Section 1.3.
“Excluded
Records” has the meaning set forth in Section 1.2(m).
“Final
Order” means (i) an Order of the Bankruptcy Court as to which the time to
appeal, petition for certiorari or motion for re-argument or rehearing has
expired and as to which no appeal, petition for certiorari or other proceedings
or motion for re-argument or rehearing shall then be pending or (ii) if an
appeal, writ of certiorari, motion for re-argument or rehearing thereof has been
filed or sought, such order of the Bankruptcy Court shall not have been
stayed.
“Gathering
Systems” has the meaning set forth in Section 1.2(c).
“Governmental
Body” means any federal, state, local, municipal, or other governments;
any governmental, regulatory or administrative agency, commission, body or other
authority exercising or entitled to exercise any administrative, executive,
judicial, legislative, police, regulatory or taxing authority or power; and any
court or governmental tribunal.
“Hydrocarbons”
means oil, gas, condensate and other gaseous and liquid hydrocarbons or any
combination thereof and sulphur extracted from hydrocarbons.
“Imbalance”
means any imbalance between (a) the quantity of Hydrocarbons produced from any
Well and allocated to a Person from time to time and the share of such
production to which such Person is actually entitled by virtue of its ownership
interest in such Well, (b) the quantity of Hydrocarbons produced from or
allocable to the Assets delivered, and the quantity of such Hydrocarbons
received, in each case for gathering, transportation, or storage for the account
of a Person, (c) the quantity of Hydrocarbons produced from or allocable to the
Assets delivered for processing or refining, and the quantity of products or
residue Hydrocarbons redelivered, in each case for the account of a Person, and
(d) other similar types of Hydrocarbon-related imbalances attributable to the
Assets.
“Indemnified
Person” has the meaning set forth in Section 11.2(a).
“Indemnifying
Person” has the meaning set forth in Section 11.2(a).
“Indemnity
Deductible” has the meaning set forth in Section
11.3(c).
“Knowledge”
means the knowledge of a Person’s officers and directors as of the date hereof
and the Closing after inquiry of such Person’s employees charged with
responsibility for a particular area of such Person’s operations.
“Laws”
means all statutes, rules, regulations, ordinances, orders, and codes of
Governmental Bodies.
44
“Leases
and Lands” has the meaning set forth in Section 1.2(a).
“Liabilities”
means, for purposes of this Agreement, any and all losses, judgments, damages,
liabilities, injuries, costs, expenses, interest, penalties, taxes, fines,
obligations, and deficiencies.
“Material
Adverse Effect” means any material adverse effect on the ownership,
operation or value of the Assets, as currently operated, taken as a whole, provided, however, that “Material Adverse
Effect” shall not include material adverse effects resulting from general
changes in Hydrocarbon prices, general changes in industry, economic or
political conditions or general changes in Laws or in regulatory
policies.
“Material
Contracts” has the meaning set forth in Section
4.11.
“Newfield
Assets” means the Assets other than the Anadarko Assets.
“Noticed
Preferred Stock” has the meaning set forth in Section
12.21.
“Order”
means any writ, judgment, decree, injunction or similar order, writ, ruling,
directive or other requirement of any Governmental Authority (in each such case
whether preliminary or final).
“Organizational
Documents” means the articles of incorporation, certificate of
incorporation, charter, bylaws, articles of formation, regulations, operating
agreement, certificate of limited partnership, partnership agreement, and all
other similar documents, instruments, or certificates executed, adopted, or
filed in connection with the creation, formation, or organization of a Person,
including any amendments thereto.
“Party”
or “Parties”
has the meaning set forth in the first paragraph of this Agreement.
“Peregrine
Claims” has the meaning set forth in Section
7.15.
“Permits”
has the meaning set forth in Section
1.2(e).
“Permitted
Encumbrances” means any or all of the following:
(e) Lessors'
royalties and any overriding royalties, reversionary interests and other burdens
to the extent that they do not, individually or in the aggregate, reduce
Sellers’ net revenue interests below that shown in Exhibit A-1 or
increase Sellers’ working interest above that shown in Exhibit A-1 without a
corresponding increase in the net revenue interest;
(f) Third-party
consent requirements and similar restrictions with respect to which waivers or
consents are obtained by Sellers from the appropriate parties prior to the
Closing Date or the appropriate time period for asserting the right has
expired;
(g) Liens
for current Taxes or assessments not yet delinquent;
45
(h) Materialman's,
mechanic's, repairman's, employee's, contractor's, operator's and other similar
liens or charges arising in the ordinary course of business for amounts not yet
delinquent (including any amounts being withheld as provided by
law);
(i) All
rights to consent, by required notices to, filings with, or other actions by
Governmental Bodies in connection with the sale or conveyance of oil and gas
leases or interests therein if they are customarily obtained subsequent to the
sale or conveyance;
(j) Rights
of reassignment arising upon final intention to abandon or release the Assets,
or any of them;
(k) Easements,
rights-of-way, servitudes, permits, surface leases and other rights in respect
of surface operations which do not, individually or in the aggregate, materially
detract from the value of or materially interfere with the use or ownership of
the Assets subject thereto or affected thereby (as currently used or
owned);
(l) All
rights reserved to or vested in any Governmental Body to control or regulate any
of the Assets in any manner and all obligations and duties under all applicable
laws, rules and orders of any such Governmental Body or under any franchise,
grant, license or permit issued by any such Governmental Body;
(m) Any
Encumbrance on or affecting the Assets which is discharged at or prior to
Closing;
(n) The
litigation matters described in Schedule 4.7;
or
(o) Any
of the following to the extent that they do not, individually or in the
aggregate, reduce Sellers’ net revenue interests below that shown in Exhibit A-1 or
increase Sellers’ working interest above that shown in Exhibit A-1 without a
corresponding increase in the net revenue:
(p) The
occurrence of payout under any farmout agreement, joint operating agreement or
similar arrangement, or the exercise of any other back-in right or reversionary
interest held by a third Person;
(q) Any
lease amendment, or any consent by any non-participating royalty interest or
non-executive mineral interest, authorizing the lessee or executive rights
holder to pool a leasehold interest, royalty interest, or mineral interest
constituting part of any Property, or to pool another leasehold interest,
royalty interest, or mineral interest with any Property.
“Person”
means any individual, firm, corporation, partnership, limited liability company,
joint venture, association, trust, unincorporated organization, Government Body
or any other entity.
“Plan”
has the meaning set forth in the recitals to this Agreement.
“Properties”
has the meaning set forth in Section 1.2(d).
46
“Property
Costs” has the meaning set forth in Section 1.4(c).
“Proposed
AFE” has the meaning set forth in Section
7.5(b).
“Purchase
Price” has the meaning set forth in Section 2.1.
“Purchaser”
has the meaning set forth in the first paragraph of this Agreement.
“Records”
has the meaning set forth in Section 1.2(m).
“Release”
has the meaning set forth within the definition of Environmental Condition
above.
“Representatives”
has the meaning set forth in Section 7.8(a)
“Retained
Obligations” has the meaning set forth in Section
7.7.
“Sale
Order” has the meaning set forth in the recitals to this
Agreement.
“Seller”
or “Sellers”
has the meaning set forth in the first paragraph of this Agreement.
“Sellers’
Benefit Plans” mean any employee pension benefit plans as defined in
Section 3(2) of ERISA, employee welfare benefit plans as defined in Section 3(1)
of ERISA, whether or not excluded from coverage under specific titles or
subtitles of ERISA and any employee benefit programs, payroll practices,
policies, contracts, arrangement and practices that cover or are available to
employees.
“Subsidiary”
means with respect to any Person, any corporation, limited liability company,
joint venture or partnership of which such Person (a) beneficially owns, either
directly or indirectly, more than 50% of (i) the total combined voting power of
all classes of voting securities of such entity, (ii) the total combined equity
interests, or (iii) the capital or profit interest, in the case of a
partnership; or (b) otherwise has the power to vote or to direct the voting of
sufficient securities to elect a majority of the board of directors or similar
governing body.
“Surface
Rights” has the meaning set forth in Section
1.2(d).
“Suspended
Revenues” has the meaning set forth in Section
4.16.
“Taxes”
means all federal, state, local, and foreign income, profits, franchise,
margins, sales, use, ad valorem, property, severance, production, excise, stamp,
documentary, real property transfer or gain, gross receipts, goods and services,
registration, capital, transfer, or withholding taxes or other assessments,
duties, fees or charges imposed by any Governmental Body, including any
interest, penalties or additional amounts which may be imposed with respect
thereto.
“Termination
Notice” has the meaning set forth in Section
7.15.
47
“Transition
Services Agreements” means
the agreements pursuant to which Sellers agree to provide services related to
the operations, land and accounting necessary to operate the Properties during a
to-be-determined period of time following the Closing.
“Transportation
Contract” has the meaning set forth in Section
4.11.
“Units”
has the meaning set forth in Section 1.2(b).
“Wells”
has the meaning set forth in Section 1.2(a).
[signature
page follows]
48
IN WITNESS WHEREOF, this
Agreement has been signed by each of the Parties hereto on the date first above
written.
SELLERS:
|
||
TXCO
RESOURCES INC.
|
||
By:
|
/s/ James E. Sigmon
|
|
Name:
James E. Sigmon
|
||
Title:
Chairman and Chief Executive Officer
|
||
TXCO
ENERGY CORP.
|
||
By:
|
/s/ James E. Sigmon
|
|
Name:
James E. Sigmon
|
||
Title:
Chairman and Chief Executive Officer
|
||
TEXAS
TAR SANDS INC.
|
||
By:
|
/s/ James E. Sigmon
|
|
Name:
James E. Sigmon
|
||
Title:
Chairman and Chief Executive Officer
|
||
OUTPUT
ACQUISITION CORP.
|
||
By:
|
/s/ James E. Sigmon
|
|
Name:
James E. Sigmon
|
||
Title:
Chairman and Chief Executive Officer
|
||
OPEX
ENERGY, LLC
|
||
By:
|
/s/ James E. Sigmon
|
|
Name:
James E. Sigmon
|
||
Title:
Chairman and Chief Executive
Officer
|
Signature
Page to Joint Purchase and Sale Agreement - Seller
CHARRO
ENERGY, INC.
|
||
By:
|
/s/ James E. Sigmon
|
|
Name:
James E. Sigmon
|
||
Title:
Chairman and Chief Executive Officer
|
||
TXCO
DRILLING CORP.
|
||
By:
|
/s/ James E. Sigmon
|
|
Name:
James E. Sigmon
|
||
Title:
Chairman and Chief Executive Officer
|
||
EAGLE
PASS WELL SERVICE, L.L.C.
|
||
By:
|
/s/ James E. Sigmon
|
|
Name:
James E. Sigmon
|
||
Title:
Chairman and Chief Executive Officer
|
||
PPL
OPERATING, INC.
|
||
By:
|
/s/ James E. Sigmon
|
|
Name:
James E. Sigmon
|
||
Title:
Chairman and Chief Executive Officer
|
||
MAVERICK
GAS MARKETING, LTD.
|
||
By:
|
/s/ James E. Sigmon
|
|
Name:
James E. Sigmon
|
||
Title:
Chairman and Chief Executive Officer
|
||
MAVERICK-DIMMIT
PIPELINE, LTD.
|
||
By:
|
/s/ James E. Sigmon
|
|
Name:
James E. Sigmon
|
||
Title:
Chairman and Chief Executive
Officer
|
Signature
Page to Joint Purchase and Sale Agreement - Seller
PURCHASERS:
|
||
ANADARKO
E&P COMPANY LP
|
||
By:
|
/s/ Joseph F. Carroll
|
|
Name:
Joseph F. Carroll
|
||
Title:
Attorney-in-fact
|
||
NEWFIELD
EXPLORATION COMPANY
|
||
By:
|
/s/ William D. Schneider
|
|
Name:
William D. Schneider
|
||
Title:
Vice President – Onshore
|
||
Gulf
Coast & International
|
Signature
Page to Joint Purchase and Sale Agreement - Purchaser