Attached files
| file |
filename |
| EX-10.01 - FORM OF SUBSCRIPTION AGREEMENT - Topaz Resources, Inc. | ex10-01.txt |
| EX-10.02 - FORM OF DEED OF TRUST, SECURITY AGREEMENT, AND ASSIGNMENT OF PRODUCTION - Topaz Resources, Inc. | ex10-02.txt |
| EX-10.04 - RMJ SUBSCRIPTION AGREEMENT- MONTAGUE LEASE - Topaz Resources, Inc. | ex10-04.txt |
| EX-10.06 - RMJ SUBSCRIPTION AGREEMENT- DENTON WELL - Topaz Resources, Inc. | ex10-06.txt |
| EX-31.2 - CFO SECTION 302 CERTIFICATION - Topaz Resources, Inc. | ex31-2.txt |
| 10-K - ANNUAL REPORT FOR THE YEAR ENDED 12-31-11 - Topaz Resources, Inc. | g4971a.txt |
| EX-4.03 - FORM OF NOTE - Topaz Resources, Inc. | ex4-03.txt |
| EX-32.2 - CFO SECTION 906 CERTIFICATION - Topaz Resources, Inc. | ex32-2.txt |
| EX-32.1 - CEO SECTION 906 CERTIFICATION - Topaz Resources, Inc. | ex32-1.txt |
| EX-4.04 - FORM OF PROMISSORY NOTE - Topaz Resources, Inc. | ex4-04.txt |
| EX-4.02 - FORM OF STOCK GRANT AGREEMENT - Topaz Resources, Inc. | ex4-02.txt |
| EX-31.1 - CEO SECTION 302 CERTIFICATION - Topaz Resources, Inc. | ex31-1.txt |
| EX-4.01 - FORM OF WARRENT - Topaz Resources, Inc. | ex4-01.txt |
| EX-14.1 - CODE OF ETHICS - Topaz Resources, Inc. | ex14-1.txt |
| EX-10.10 - POLAR PARTICIPATION AGREEMENT - Topaz Resources, Inc. | ex10-10.txt |
| EX-10.09 - EEI AGREEMENT TO PURCHASE AGREEMENT - Topaz Resources, Inc. | ex10-09.txt |
| EX-10.05 - RMJ SUBSCRIPTION AGREEMENT- WITCHITA WELL - Topaz Resources, Inc. | ex10-05.txt |
| EX-10.07 - VIEJO LETTER AGREEMENT - Topaz Resources, Inc. | ex10-07.txt |
| EX-10.03 - RMJ SUBSCRIPTION AGREEMENT- MONTAGUE WELL - Topaz Resources, Inc. | ex10-03.txt |
| EX-10.08 - EEI PURCHASE AGREEMENT - Topaz Resources, Inc. | ex10-08.txt |
Exhibit 10.11
ASSET
PURCHASE AND SALE AGREEMENT
BETWEEN
DARK HORSE OPERATING CO., L.L.C.,
as Seller,
and
TOPAZ RESOURCES, INC.
as Buyer
April 12, 2011
Table Of Contents
Page
----
ARTICLE I. DEFINITIONS AND INTERPRETATION .................................. 2
1.1 Defined Terms ...................................................... 2
1.2 References ......................................................... 2
1.3 Articles and Sections .............................................. 2
1.4 Number and Gender .................................................. 2
ARTICLE II. PURCHASE AND SALE .............................................. 3
2.1 Purchase and Sale .................................................. 3
2.2 Closing ............................................................ 3
ARTICLE III. Consideration; Assumption of Liabilities 3
3.1 Considerations ..................................................... 3
3.2 Cash Consideration Payment ......................................... 4
3.3 Delivery and Facilitation of Stock Consideration ................... 4
3.4 Cancellation of Notes; Assumption of Well Expenses ................. 5
3.5 Assumption of Obligations .......................................... 5
3.6 Retained Liabilities ............................................... 6
3.7 Possession; Risk of Loss ........................................... 6
3.8 Allocation of Considerations ....................................... 7
ARTICLE IV. REPRESENTATIONS AND WARRANTIES ................................. 7
4.1 Representations and Warranties of DHOPCO ........................... 7
4.2 Representations and Warranties of Buyer ............................ 9
4.3 Disclaimers ........................................................ 10
ARTICLE V. ACCESS; DUE DILIGENCE ........................................... 10
5.1 Access to Records; Title Due Diligence and Curative ................ 10
5.2 Operational and Environmental Assessment ........................... 11
5.3 Environmental Conditions ........................................... 11
5.4 Matters Relating to Title .......................................... 12
ARTICLE VI. OTHER MATTERS PRIOR TO AND FOLLOWING CLOSING ................... 12
6.1 Additional Leases .................................................. 12
6.2 Publicity .......................................................... 12
6.3 Maintenance of Existence ........................................... 12
6.4 Mutual Assurances .................................................. 13
6.5 Publicity .......................................................... 13
6.5 Notification of Certain Matters .................................... 13
6.6 Designation as Operator ............................................ 13
6.7 Financial Matters .................................................. 13
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ARTICLE VII. CLOSING ....................................................... 14
7.1 Closing ............................................................ 14
7.2 Preliminary Settlement Statement ................................... 14
7.3 Actions at Closing ................................................. 14
ARTICLE VIII. SURVIVAL; INDEMNIFICATION .................................... 15
8.1 Survival ........................................................... 15
8.2 Indemnity as Sole Remedy ........................................... 15
8.3 Indemnities of Buyer ............................................... 15
8.4 Indemnities of Seller .............................................. 15
8.5 Limitations on Indemnities ......................................... 16
8.6 Assertion of Claims; Notices; Defense; Settlement .................. 16
8.7 Limitation on Damages .............................................. 17
ARTICLE IX. MISCELLANEOUS .................................................. 17
9.1 Exhibits ........................................................... 17
9.2 Expenses ........................................................... 18
9.3 Proration of Taxes ................................................. 18
9.4 Assignment ......................................................... 18
9.5 Notices ............................................................ 18
9.6 Amendment .......................................................... 19
9.7 Waiver; Rights Cumulative .......................................... 19
9.8 GOVERNING LAW; CONSENT TO JURISDICTION ............................. 19
9.9 Severability ....................................................... 20
9.10 Arbitration ........................................................ 20
9.11 Counterparts ....................................................... 21
ii
SCHEDULES
Schedule 1.1 - Defined Terms
EXHIBITS
Exhibit A - Description of Lease and Well
Exhibit B - Form of Assignment, Bill of Sale and Conveyance
Exhibit C - Closing Note form
Exhibit D - Subscription, Issuance Resolution; Authorization Letter
Exhibit E - To-be-Cancelled Promissory Notes (description/listing)
iii
ASSET PURCHASE AND SALE AGREEMENT
This ASSET PURCHASE AND SALE AGREEMENT (hereinafter the "Agreement") is
entered into by and between DARK HORSE OPERATING CO., L.L.C., a Texas limited
liability company whose address is P.O. Box 2184, Denton, Texas 76202-2184
(hereinafter referred to as "DHOPCO" or "SELLER"), party of the first part, and
TOPAZ RESOURCES, INC., a Florida corporation whose address is 1012 N. Masch
Branch Road, Denton, Texas 76207-3640 (hereinafter referred to as "TOPAZ" or
"BUYER").
RECITALS
WHEREAS, DHOPCO is the owner and holder of (and the lessee under the terms
of) that certain written Oil, Gas and Mineral Lease (the "Lease"), dated July
15, 2005, with Browning Children's Management Trust, Wells Fargo Bank, N.A.,
Trustee, as lessor (herein the "Trust"), a memorandum of which is recorded in
Volume 355, Page 507, Real Records of Montague County, Texas, covering all of
the Trust's right, title and interest in and to that certain 1,187.75 acres of
land, more or less, situated in Montague County, Texas, consisting of five (5)
non-communitized tracts and as more completely described in said Lease, with the
terms and conditions of said Lease being incorporated herein by this reference
as if set forth verbatim (as supplemented by that certain letter agreement,
dated July 15, 2005, as executed by both DHOPCO and Trust); and
WHEREAS, DHOPCO and Trust have executed and entered into that certain
written First Ratification and Amendment of Oil, Gas and Mineral Lease,
dated/effective July 15, 2005 (the "First Amendment"), a written notice of
which, entitled "Notice of First Ratification and Amendment of Oil, Gas and
Mineral Lease", is recorded in Volume 453, Page 783, Real Records of Montague
County, Texas (the "Notice"), wherein said First Amendment the parties (among
other things) extended the primary term of the Lease and modified/added certain
terms, as more expressly set forth therein; and
WHEREAS, DHOPCO and Trust have executed and entered into that certain
written Correction of First Ratification and Amendment of Oil, Gas and Mineral
Lease, also dated/effective July 15, 2005 (the "Correction of First Amendment"),
a written notice of which, entitled "Correction of Notice of First Ratification
and Amendment of Oil, Gas and Mineral Lease" is recorded in Volume 475, Page
473, Real Records of Montague County, Texas (the "Corrected Notice"), wherein
the parties thereto modified and corrected the First Amendment and the Lease, as
more expressly set forth therein; and
WHEREAS, DHOPCO has, at its own expense, heretofore commenced and concluded
the actual drilling (to a depth sufficient to test and produce the Barnett Shale
formation), casing and logging of that certain vertical well known as the
Browning #1 Well, API #42-337-34192, Permit #677196, located on Tract One
described in and covered by the Lease, with the working interest in said
Browning #1 Well (and Tract One of the Lease) having been heretofore conveyed of
record to a third party; and
WHEREAS, DHOPCO, as a prelude to the closing of the transactions
contemplated by this Agreement, using partial funding from TOPAZ supplied in the
form of borrowed monies (and promissory notes therefore) has drilled, cased and
logged that certain Browning #2 vertical Barnett Shale well (API #42-337-34339)
on Tract Three of the lands covered by the Lease, and has otherwise acted to
maintain the said Lease by virtue of continuous development; and
WHEREAS, TOPAZ is desirous of purchasing and acquiring from DHOPCO and
DHOPCO is desirous of selling and assigning unto TOPAZ all of its right, title
and interest in and to the Lease and the subject Browning #2 Well (as defined
below), pursuant to the terms and conditions of this Agreement and in exchange
for and of certain cash and stock considerations cited herein (and as originally
contemplated by that certain written TOPAZ memorandum to DHOPCO, dated October
23, 2010, with this Agreement serving to formalize the transaction manifested in
said October 23, 2010 memorandum);
NOW, THEREFORE, in consideration of the payment of Ten Dollars ($10.00) and
other good and valuable considerations, the receipt and sufficiency of which are
hereby acknowledged, DHOPCO and TOPAZ agree as follows:
ARTICLE I.
DEFINITIONS AND INTERPRETATION
1.1 DEFINED TERMS. In addition to the terms defined in the introductory
paragraph and the Recitals of this Agreement, for purposes hereof, the
capitalized expressions and terms set forth in Schedule 1.1 shall have the
meanings set forth therein, unless expressly indicated otherwise. Other terms
may be defined elsewhere in this Agreement and shall, for purposes hereof, have
the meanings so specified, unless expressly indicated otherwise.
1.2 REFERENCES. The words "hereby," "herein," "hereinabove," "hereinafter,"
"hereinbelow," "hereof," "hereto," "hereunder," and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular article, section, or provision of this Agreement. References in this
Agreement to articles, sections, exhibits, or schedules are to such articles,
sections, exhibits, or schedules of this Agreement unless otherwise specified.
In the event this Agreement makes reference to paragraphs or references within
other documents or agreements, such references shall have the same or similar
meaning and effect.
1.3 ARTICLES AND SECTIONS. This Agreement, for convenience only, has been
divided into articles and sections. The rights and other legal relations of the
parties hereto shall be determined from this Agreement as an entirety and
without regard to the aforesaid division into articles and sections and without
regard to headings prefixed to such articles and sections.
1.4 NUMBER AND GENDER. Whenever the context requires, reference herein made
to a single number shall be understood to include the plural; and likewise, the
plural shall be understood to include the singular. Words denoting sex shall be
2
construed to include the masculine, feminine, and neuter, when such construction
is appropriate; and specific enumeration shall not exclude the general but shall
be construed as cumulative. Definitions of terms defined in the singular or
plural shall be equally applicable to the plural or singular, as applicable,
unless otherwise indicated.
ARTICLE II.
PURCHASE AND SALE
2.1 PURCHASE AND SALE. Subject to the terms hereof, DHOPCO agrees to sell
and convey to TOPAZ, and TOPAZ agrees to purchase from DHOPCO and pay for, the
following properties and assets (collectively, the "Assets"):
(a) All of DHOPCO's right, title and interest in and to the oil, gas
and mineral lease described in the recitals hereto and more particularly on
Exhibit A and the leasehold estate(s) created thereby (whether one or more, the
"Lease");
(b) All of DHOPCO's right, title and interest in and to the oil and/or
gas well also described more particularly on Exhibit A and all oil, gas and
other hydrocarbons produced, saved, and marketed from such oil and/or gas well
(the foregoing interests in and to the Lease and the referenced well and
production therefrom being referred to collectively as the "Assets");
(c) All of DHOPCO's right, title, and interest in and to all surface
and subsurface equipment and facilities, water and oil and gas pipelines (if
any), transportation equipment, rights-of-way, surface leases, structures, and
other property, real or personal, located on or provided in the field in
connection with the operation of the Assigned Property; and
(d) All of DHOPCO's right, title, and interest in and to all
easements, permits, licenses, servitudes, and rights whatsoever that are useful
or appropriate for the development, gathering, treatment, dehydration,
processing, storage, sale, and transportation of oil, gas, and other
hydrocarbons in, under, and that may be produced from the Assets.
2.2 CLOSING. The Closing of the transaction(s) contemplated by this
Agreement shall take place on or before April 14, 2011. At such Closing, in
addition to the delivery of the consideration(s) provided in Article III below,
DHOPCO shall execute and deliver unto TOPAZ that certain written Assignment,
Bill of Sale and Conveyance of Oil, Gas and Mineral Lease(s) (the "Assignment"),
in a form or format similar to the attached Exhibit B, which is incorporated
herein by this reference.
ARTICLE III.
CONSIDERATION; ASSUMPTION OF LIABILITIES
3.1 CONSIDERATIONS. In addition to the reconciliation of certain prior
intra-party money advances for Well and Lease-related matters (see Section 3.4
below), consideration for the Assets hereunder shall be in the form of cash and
TOPAZ common stock, as more completely set forth herein. The total cash
consideration shall be delivered by TOPAZ at Closing for DHOPCO's Assets in the
3
amount of TWO HUNDRED SEVENTY FIVE THOUSAND AND NO/100 U.S. DOLLARS
($275,000.00) (the "CASH CONSIDERATION"). The stock consideration shall be
delivered by TOPAZ for DHOPCO's interests in the Assets in the amount of THREE
MILLION (3,000,000) shares (par value $0.001) of common stock of TOPAZ, a
publicly-traded Florida corporation organized under the laws of the State of
Florida (OTCBB: TOPZ), deliverable as set forth below (the "STOCK
CONSIDERATION").
3.2 CASH CONSIDERATION PAYMENT. The aggregate Cash Consideration is due and
payable from TOPAZ to DHOPCO following the Closing "on demand" from DHOPCO,
pursuant to that certain written Demand Promissory Note (the "Closing Note"), in
the principal amount of the Cash Consideration, to be executed at Closing as
part and parcel to the execution of this Agreement. A true and correct copy of
the Closing Note is attached hereto as Exhibit C, which is incorporated herein
by this reference.
3.3 DELIVERY AND FACILITATION OF STOCK CONSIDERATION. The Stock
Consideration shall be deliverable and payable to DHOPCO at Closing as follows:
TOPAZ warrants and represents to DHOPCO that TOPAZ has arranged for the delivery
to DHOPCO's credit at Closing of a written subscription agreement (the
"SUBSCRIPTION") for the Stock Consideration, which DHOPCO and TOPAZ will execute
in duplicate, original format at Closing, accompanied by a written resolution of
TOPAZ's board of directors (the "ISSUANCE RESOLUTION") approving the issuance of
the subject TOPAZ shares and, in addition, an authorization letter (the
"AUTHORIZATION LETTER"), executed by a properly authorized TOPAZ officer,
instructing TOPAZ's stock registration agent (the "AGENT") to immediately issue
and deliver the Stock Consideration shares in DHOPCO's name. True and correct
copies of the forms of the Subscription, Issuance Resolution, and Authorization
Letter are attached hereto as Exhibit D and made a part hereof. DHOPCO's
ultimate receipt of the certificate for the Stock Consideration shares following
the Closing shall be requisite for the title to DHOPCO's ownership or
interest(s) in the Assets to vest with TOPAZ hereunder. The Parties agree to
communicate and cooperate to the extent possible to (a) facilitate the
certificate's delivery as soon as practicable after Closing, and (b) afford all
Parties notice of DHOPCO's physical receipt of such certificate. DHOPCO
understands that the subject Stock Consideration shares are not registered under
the Securities Exchange Act of 1933, as amended (the "ACT"), on the grounds that
the issuance of securities in relation to this Agreement is exempt from
registration under the Act. DHOPCO further understands that the shares
comprising the Stock Consideration may not be sold, transferred or otherwise
disposed of without registration under the Act or an exemption therefrom, and
that said shares may not be sold pursuant to Rule 144 promulgated under the Act
unless all of the conditions of that Rule are met or established. When issued by
the Agent in the name of "Dark Horse Operating Co., L.L.C." in accordance with
this Agreement, the said shares shall be validly issued, as fully paid and
nonassessable and shall be free and clear of all liens imposed by or through
TOPAZ or the Agent; and neither the issuance nor the delivery of the said Stock
Consideration shares is subject to any preemptive or any similar right of any
stockholder of TOPAZ or of any other Person.
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3.4 CANCELLATION OF NOTES; ASSUMPTION OF WELL EXPENSES. Further, any and
all advances, payments and other transfers from TOPAZ to DHOPCO, manifested in
the form of checks from TOPAZ to DHOPCO and/or written promissory notes from
DHOPCO to TOPAZ (representing advance payment of Well or Lease-related expenses
from TOPAZ), shall be deemed cancelled and otherwise satisfied in full. Such
notes and advances are inclusive of, but not limited to, the promissory notes
cited in the attached Exhibit E, which is incorporated herein by this reference.
The above-described note cancellation(s) is not intended as an income event for
DHOPCO as the underlying expenditures and use of funds has been intended for
TOPAZ's benefit for the Well and Lease acquired herein. TOPAZ, if not already,
further agrees to indemnify and hold DHOPCO harmless from and against (and
otherwise pay) any previously-incurred or pre-Closing expenses and expenditures
(unpaid to date) and third party invoicing for field services on the Well and/or
padsite thereof and for legal fees incurred in the evaluation of title to the
Lease (all totaling $21,233.90 as of the Effective Time).. It is the intent of
this Agreement (among other things) for TOPAZ to release DHOPCO from any and all
claims and indebtedness relating to the Well and Lease and TOPAZ, by its
execution hereof, does hereby release and discharge DHOPCO from all such claims
and indebtedness, except as otherwise expressly stated herein (if any and at
all).
3.5 ASSUMPTION OF OBLIGATIONS. Subject to the terms of this Agreement and
upon Closing, TOPAZ assumes and agrees to pay, perform and/or discharge the
following duties, obligations, and Liabilities (collectively, the "Assumed
Liabilities") with respect to the Assets conveyed by DHOPCO to TOPAZ at such
Closing, effective as of the Effective Time, as set forth below:
(a) the performance of the terms, conditions, and covenants of, and
the discharge of the share attributable to the interests of DHOPCO to be
transferred of the duties, obligations, and liabilities (other than obligations
or liabilities for the payment of money) arising under the terms of the Lease,
the Permits and the Contracts conveyed by DHOPCO to TOPAZ at such Closing for
the period from and after the Effective Time;
(b) all obligations of DHOPCO regarding the plugging and abandonment
of all Well conveyed by DHOPCO to TOPAZ at such Closing and the performance of
all related salvage, site clearance, and surface restoration operations in
accordance with applicable Law and the terms of the relevant Lease;
(c) ALL ENVIRONMENTAL LIABILITIES;
(d) ALL OTHER CLAIMS AND LIABILITIES FOR INJURY TO OR DEATH OF ANY
PERSON, PERSONS, OR OTHER LIVING THINGS, OR LOSS OR DESTRUCTION OF OR DAMAGE TO
PROPERTY AFFECTING OR RELATING TO THE LEASES, THE WELL AND PERSONAL PROPERTY (IF
ANY) CONVEYED BY DHOPCO TO TOPAZ AT SUCH CLOSING AND ALLOCABLE TO THE INTERESTS
THEREIN BEING TRANSFERRED, REGARDLESS OF WHETHER SUCH CLAIM OR LIABILITY
RESULTS, IN WHOLE OR IN PART, FROM THE NEGLIGENCE OR STRICT LIABILITY OF DHOPCO
5
OR ITS AFFILIATES, EMPLOYEES, AGENTS, OR REPRESENTATIVES, TO THE EXTENT THAT
SUCH CLAIM OR LIABILITY, OR THE ACTS, OMISSIONS, EVENTS, OR CONDITIONS GIVING
RISE THERETO, ARISES, OCCURS, OR EXISTS BEFORE, AT OR AFTER THE APPLICABLE
EFFECTIVE TIME;
(e) all Claims and Liabilities relating to the payment of taxes
(including interest, penalties, and additions to tax) for which TOPAZ has agreed
to be responsible under the terms hereof;
(f) the responsibility for compliance with applicable Laws relating to
the Assets conveyed by Seller to Buyer at such Closing, and the maintenance and,
when necessary, procurement of Permits required by any Governmental Authority in
connection with such Assets, in each case for the period from and after the
applicable Effective Time; and
(g) all other duties, obligations, Liabilities, and Claims, whether in
contract, in tort, or arising by operation of Law, accruing or resulting from,
arising out of, or otherwise associated with the Assets conveyed by DHOPCO to
TOPAZ at such Closing for the period from and after the applicable Effective
Time.
3.6 RETAINED LIABILITIES. Subject to the terms of this Agreement, as
between DHOPCO and TOPAZ, TOPAZ hereby expressly receives and agrees to pay,
perform, and discharge all duties, obligations, and Liabilities with respect to
the Assets conveyed by DHOPCO to TOPAZ at Closing, it being the express intent
of the parties that commensurate with the divestiture and sale hereunder, DHOPCO
(a) shall retain no liabilities whatsoever arising out of or relating or
pertaining to the Assets, and (b) is hereby indemnified by TOPAZ from any and
all claims and Liabilities, costs and expenses and demands arising out of or
relating or pertaining to the said Assets, whether in contract, in tort, or
arising by operation of Law, against or suffered by DHOPCO that relate in any
way to, the Assets conveyed by DHOPCO to TOPAZ at Closing, INCLUDING, WITHOUT
LIMITATION, INJURY TO OR DEATH OF ANY PERSON, PERSONS, OR OTHER LIVING THINGS,
OR LOSS OR DESTRUCTION OF OR DAMAGE TO PROPERTY AFFECTING OR RELATING TO SUCH
ASSETS, REGARDLESS OF WHETHER SUCH CLAIM OR LIABILITY RESULTS, IN WHOLE OR IN
PART, FROM THE NEGLIGENCE OR STRICT LIABILITY OF DHOPCO OR TOPAZ OR ITS/THEIR
AFFILIATES, EMPLOYEES, AGENTS, OR REPRESENTATIVES, to extent that any such Claim
or Liability, or the acts, omissions, events, or conditions giving rise thereto,
arose, occurred, or existed prior to the applicable Effective Time, regardless
of whether such Claim or Liability has been asserted as of the applicable
Effective Time.
3.7 POSSESSION; RISK OF LOSS. As of the Effective Time, DHOPCO shall
deliver to TOPAZ exclusive possession and control of the Assets conveyed by
DHOPCO to TOPAZ at Closing (although DHOPCO shall remain the operator of the
Well following such Closing, for the benefit of TOPAZ). DHOPCO agrees to
cooperate with TOPAZ to facilitate the transition of the ownership and (if
applicable) operation of such Assets to TOPAZ. As between DHOPCO and TOPAZ, and
6
subject to the terms of Sections 2.6 and 2.7, TOPAZ shall assume and bear all
risk of loss associated with the Assets conveyed by DHOPCO to TOPAZ at Closing
prior to the applicable Possession Time, and TOPAZ shall assume and bear all
risk of loss associated with such Assets from and after the applicable
Possession Time.
3.8 ALLOCATION OF CONSIDERATION. TOPAZ and DHOPCO shall use commercially
reasonable efforts to agree, if not already and within thirty (30) days from or
after the Closing, upon an allocation of the Consideration among the Assets for
financial accounting and tax purposes in accordance with Section 1060 of the
Code. TOPAZ and DHOPCO shall each file a Form 8594 (Asset Acquisition Statement
Under Section 1060) on a timely basis, reporting the allocation of the
Consideration consistent with such allocation. TOPAZ and DHOPCO shall not take
any position on their respective income tax returns that is inconsistent with
the allocation of the Consideration as so agreed. If TOPAZ and DHOPCO are unable
to agree on the allocation of the Consideration provided for in this Section 3.8
by the agreed timetable or date, either TOPAZ or DHOPCO may initiate arbitration
of such dispute pursuant to the terms of Section 11.10.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF DHOPCO. DHOPCO represents and
warrants to TOPAZ as follows:
(a) DHOPCO is a limited liability company, duly organized and validly
existing under the Laws of the State of Texas. DHOPCO has all requisite power
and authority to own and operate its property (including, without limitation,
the Assets) and to carry on its business as now conducted.
(b) As an entity, DHOPCO has full capacity, power, and authority to
enter into and perform this Agreement and the transactions contemplated herein.
The execution, delivery, and performance by DHOPCO of this Agreement has been
duly and validly authorized and approved by all necessary action on the part of
DHOPCO, and this Agreement and the documents executed in connection herewith
are, or upon their execution and delivery will be, the valid and binding
obligations of DHOPCO and enforceable against DHOPCO in accordance with their
terms, subject to the effects of bankruptcy, insolvency, reorganization,
moratorium, and similar Laws, as well as to principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(c) The execution, delivery, and performance by DHOPCO of this
Agreement and the consummation of the transactions contemplated herein will not
(i) conflict with or result in a breach of any provisions of the organizational
documents of DHOPCO, (ii) result in a default or the creation of any Lien or
give rise to any right of termination, cancellation, or acceleration under any
of the terms of any Lease, Contract, Real Property Interest, Permit, note, bond,
mortgage, indenture, license, or other agreement, document, or instrument to
which DHOPCO is a party or by which DHOPCO or any of the Assets or Retained
Interests may be bound (except as known to TOPAZ), or (iii) violate any order,
7
writ, injunction, judgment, decree, or Law applicable to DHOPCO, the Assets, or
the Retained Interests.
(d) Except as otherwise known by or disclosed previously to TOPAZ,
there is no Claim by any Person or Governmental Authority (including, without
limitation, expropriation or forfeiture proceedings), and no legal,
administrative, or arbitration proceeding pending or, to DHOPCO's Knowledge,
threatened against DHOPCO or the Assets, or to which DHOPCO is a party, that
reasonably may be expected to (i) challenge DHOPCO's title to any of the Assets,
(ii) subject the owner or operator of the Assets to liability in favor of any
Governmental Authority or other Person as the result of the alleged violation
of, or non-compliance with, any Environmental Law by DHOPCO or any other
Affiliate of DHOPCO 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 (iii)
otherwise adversely affect the Assets in any material respect or the ability of
DHOPCO to consummate the transactions contemplated in this Agreement (except as
may have been previously disclose to TOPAZ, if any).
(e) Except for approvals by Governmental Authorities customarily
obtained after the Closings, no authorization, consent, approval, exemption,
franchise, permit, or license of, or filing with, any Governmental Authority is
required to authorize, or is otherwise required by any Governmental Authority in
connection with, the valid execution and delivery by DHOPCO of this Agreement or
the transfer of the Assets to TOPAZ, or the performance by DHOPCO of its other
obligations hereunder.
(f) DHOPCO has heretofore furnished to TOPAZ true and correct copies
of all of the Contracts, and there are no contracts, agreements, instruments, or
documents affecting the Assets other than the Contracts disclosed to or
otherwise known by TOPAZ, if any. With respect to the Contracts: (i) all
Contracts are in full force and effect; (ii) neither DHOPCO nor any of DHOPCO's
Predecessors (if any) is in material breach or material default, and there has
occurred no event, fact, or circumstance that, with the lapse of time or the
giving of notice, or both, would constitute such a material breach or material
default by DHOPCO, with respect to the terms of any Contract; (iii) to DHOPCO's
Knowledge, no other party is in material breach or material default with respect
to the terms of any Contract; and (iv) neither DHOPCO, nor, to DHOPCO's
Knowledge, any other party to any Contract has given or threatened to give
notice of any action to terminate, cancel, rescind, or procure a judicial
reformation of any Contract or any provision thereof.
(g) There are no material operations on the Lease under any of the
Contracts with respect to which DHOPCO or any other Person has become a
non-consenting party.
(h) DHOPCO has not engaged any other financial advisor, broker, agent
or finder (including, without limitation, TOPAZ, its principals/members or
affiliates), or incurred any liability, contingent or otherwise, in favor of any
other such Person relating to the transactions contemplated by this Agreement.
Further, DHOPCO, its officers, directors and/or affiliates have not entered into
any agreement, arrangement or understanding to exchange or deliver any
8
additional consideration, monies or the like to, between and/or amongst TOPAZ,
any of its individual officers, directors or shareholders or their directives or
affiliates, which are not fully disclosed or identified within the body of this
Agreement.
(i) There are no bankruptcy, insolvency, reorganization, or
arrangement proceedings pending, being contemplated by, or to DHOPCO' Knowledge,
threatened against DHOPCO or any other Affiliate that controls DHOPCO.
4.2 REPRESENTATIONS AND WARRANTIES OF TOPAZ. TOPAZ represents and warrants
to DHOPCO as follows:
(a) TOPAZ is a corporation duly organized, validly existing, and in
good standing under the Laws of the State of Florida (and is duly qualified to
transact business in the State of Texas). TOPAZ has all requisite power and
authority to own and operate its property and to carry on its business as now
conducted.
(b) As an entity, TOPAZ has full capacity, power, and authority to
enter into and perform this Agreement and the transactions contemplated herein.
The execution, delivery, and performance by TOPAZ of this Agreement have been
duly and validly authorized and approved by all necessary action of TOPAZ. This
Agreement and the documents executed in connection herewith are, or upon their
execution and delivery will be, the valid and binding obligations of TOPAZ and
enforceable against TOPAZ in accordance with their terms, subject to the effects
of bankruptcy, insolvency, reorganization, moratorium, and similar Laws, as well
as to principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) The execution, delivery, and performance by TOPAZ of this
Agreement and the consummation of the transactions contemplated herein will not
(i) conflict with or result in a breach of any provision of the organizational
documents of TOPAZ, (ii) result in a default or the creation of any Lien or give
rise to any right of termination, cancellation, or acceleration under any of the
terms of any note, bond, mortgage, indenture, license, or other agreement to
which TOPAZ is a party or by which TOPAZ or any of its property may be bound, or
(iii) violate any order, writ, injunction, judgment, decree, or Law applicable
to TOPAZ or its property.
(d) There is no Claim by any Person or Governmental Authority
(including, without limitation, expropriation or forfeiture proceedings), and no
legal, administrative, or arbitration proceeding pending or, to TOPAZ's
Knowledge, threatened against TOPAZ, or to which TOPAZ is a party, that
reasonably may be expected to have a material adverse effect upon the ability of
TOPAZ to consummate the transactions contemplated in this Agreement.
(e) Except for approvals by Governmental Authorities customarily
obtained after the Closing, no authorization, consent, approval, exemption,
franchise, permit, or license of, or filing with, any Governmental Authority or
any other Person is required to authorize, or is otherwise required in
9
connection with, the valid execution and delivery by TOPAZ of this Agreement or
the performance by TOPAZ of its obligations hereunder and thereunder.
(f) TOPAZ has not engaged any other financial advisor, broker, agent
or finder (including, without limitation, DHOPCO, its principals/members or
affiliates), or incurred any liability, contingent or otherwise, in favor of any
other such Person relating to the transactions contemplated by this Agreement.
Further, TOPAZ, its officers, directors and/or affiliates have not entered into
any agreement, arrangement or understanding to exchange or deliver any
additional consideration, monies or the like to, between and/or amongst DHOPCO,
any of its individual managers/members or their directives or affiliates, which
are not fully disclosed or identified within the body of this Agreement.
(g) There are no bankruptcy, insolvency, reorganization, or
arrangement proceedings pending, being contemplated by, or, to TOPAZ's
Knowledge, threatened against TOPAZ or any Affiliate that controls TOPAZ.
(h) TOPAZ is acquiring the Assets for its own account, for investment,
and not with a view to, or for offer or resale in connection with, a
distribution thereof (including, without limitation, the transfer of fractional
undivided interests therein) within the meaning of the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder, or a
distribution thereof in violation of any applicable securities Law. If, in the
future, TOPAZ sells, transfers, or otherwise disposes of the Assets, or any
portion thereof, or any fractional undivided interest therein, TOPAZ will do so
in full compliance with any applicable securities Laws.
(i) TOPAZ has reason to believe and does believe that it can timely
and fully comply with all conditions and obligations to DHOPCO, as set forth in
this Agreement.
4.3 DISCLAIMERS. To the extent required by applicable Law to be operative,
the disclaimers of certain warranties contained in this Section 4.3 are
"conspicuous disclaimers" for purposes of any applicable Law. EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT AND THE CONVEYANCE, TOPAZ AGREES THAT
DHOPCO IS CONVEYING THE ASSETS WITHOUT REPRESENTATION, WARRANTY, OR INDEMNITY,
EITHER EXPRESSED OR IMPLIED AT COMMON LAW, BY STATUTE, OR OTHERWISE (ALL OF
WHICH DHOPCO HEREBY DISCLAIMS), RELATING TO (I) TITLE, (II) MERCHANTABILITY,
DESIGN, OR QUALITY, OR (III) FITNESS FOR ANY PARTICULAR PURPOSE.
ARTICLE V.
ACCESS; DUE DILIGENCE
5.1 ACCESS TO RECORDS; TITLE DUE DILIGENCE AND CURATIVE. Prior to the
Effective Time (and from and after the date of execution hereof), DHOPCO has and
will make available to TOPAZ and its representatives, during normal business
hours (and, if reasonably requested, such other times as TOPAZ may deem
necessary to complete pre-Closing and/or further its ongoing due diligence
within the time period provided herein) at Seller's offices, all books, records,
10
documents, and information of every kind and character (including, without
limitation, originals or photocopies, as available, of the Lease, the Contracts,
the Permits and the Records in the possession of DHOPCO relating in any way to
the Assets. DHOPCO has and shall also cause its employees, counsel, accountants,
and other consultants to cooperate with and assist TOPAZ in connection with such
due diligence review. Unless prohibited from doing so by confidentiality or
other contractual arrangements between DHOPCO and third Persons, TOPAZ shall
have the right to photocopy such books, records, documents, and information, or
any portion thereof, at TOPAZ's expense. If TOPAZ requests information not in
the possession of DHOPCO, DHOPCO shall use reasonable efforts to obtain the
requested information, at TOPAZ's expense, from the applicable operators or
other Persons. Notwithstanding anything contained in this Agreement to the
contrary, TOPAZ has undertaken a complete and adequate analysis, investigation
and review of any and all documentation and matters relating or pertaining to
the Assets and acknowledges its full and complete understanding (and disclosure
by DHOPCO) of all agreements, Contracts, Permits and other material matters
affecting or relating or pertaining to the Assets and accepts such Assets with
the full knowledge thereof (waiving any and all claims to the contrary).
5.2 OPERATIONAL AND ENVIRONMENTAL ASSESSMENT. Prior to the execution of
this Agreement, TOPAZ and its authorized representatives, at the sole cost,
risk, and expense of TOPAZ or its representatives, as applicable, have conducted
such on-site inspections, inventories, and assessments of the Assets (including,
without limitation, the witnessing of well tests, the examination of well logs
and other geological and geophysical data, and the performance of soil and water
tests and other tests, inspections, examinations, investigations, and studies
selected by TOPAZ), and interviewed such employees or contract personnel of
DHOPCO, in each case as TOPAZ deems necessary to permit TOPAZ to prepare reserve
engineering (if any) and other reports relating to, and assess the operational
and environmental condition of, the Assets.
5.3 ENVIRONMENTAL CONDITIONS.
(a) As the result of the inspections, tests, examinations,
investigations, and studies relating to the environmental status of the Assets
conducted by TOPAZ prior to the execution hereof, TOPAZ has identified no
Environmental Conditions requiring remedial action.
(b) TOPAZ hereby accepts the Assets subject to such any remedied or
unremedied Environmental Condition (if any) and assumes the resulting
Environmental Liability for all purposes. TOPAZ further agrees to indemnify and
hold DHOPCO harmless from any and all claims arising out of an Environmental
Condition(s) on the lands comprising the Lease.
11
5.4 MATTERS RELATING TO TITLE.
(a) Prior to the date of execution of this Agreement, TOPAZ has
conducted such examinations of DHOPCO's title to the Assets as TOPAZ deems
necessary and, by virtue of such due diligence and prior discussions and
disclosures, TOPAZ is thoroughly familiar with any and all known circumstances
involving title to the Assets. As the result of such title examinations and
related past title curative efforts (if any) of DHOPCO and TOPAZ agree to use
reasonable commercial efforts to cure any and all defects (if any) at TOPAZ's
sole cost, risk and expense. DHOPCO and TOPAZ shall pursue such curative efforts
diligently and in good faith.
(b) Notwithstanding the foregoing, DHOPCO shall have no liability to
TOPAZ if, despite DHOPCO' and/or TOPAZ's reasonable commercial efforts pursued
diligently and in good faith, DHOPCO and/or TOPAZ is/are unable to obtain
whatever curative items or elements needed or requested by TOPAZ or in
connection with a defect (if any) asserted by Topaz.
(c) If an Asset (including, without limitation, a Contract) is subject
to a preferential right to purchase, right of first refusal, right of first
offer, or similar right that is exercised prior to the Closing for such Asset,
or a third Person consent to assignment required to be obtained before the
relevant Asset may be assigned and that is not obtained prior to the Closing for
such Asset, TOPAZ shall not be deemed to have suffered a complete failure of
title with respect to the affected Asset, such Asset shall not be excluded from
the Assets conveyed to TOPAZ at Closing.
ARTICLE VI.
OTHER MATTERS PRIOR TO AND FOLLOWING CLOSING
6.1 ADDITIONAL LEASES. DHOPCO agrees to cooperate with TOPAZ in TOPAZ's
pursuit of oil, gas and/or mineral leases involving undivided mineral interests
in component tracts comprising the lands covered by the Lease, at the request of
TOPAZ and at TOPAZ's reasonable expense.
6.2 PUBLICITY. DHOPCO and TOPAZ shall consult with each other with regard
to all press releases or other public or private announcements (if any) issued
or made at or after the date of execution hereof concerning this Agreement or
the transactions contemplated herein, and, except as may be required by
applicable Laws or the applicable rules and regulations of any stock exchange
(if any), neither DHOPCO nor TOPAZ shall issue any such press release or other
publicity without the prior written consent of the other party, which shall not
be unreasonably withheld.
6.3 MAINTENANCE OF EXISTENCE. Until the final payment of all Considerations
hereunder and contemplated herein, DHOPCO and TOPAZ shall each maintain its
respective existence and its rights and franchises and procure the extension or
renewal of any right, franchise, or privilege expiring as the result of the
lapse of time.
12
6.4 MUTUAL ASSURANCES. Subject to the terms of this Agreement, each Party
will use reasonable commercial efforts to take, or to cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective the
transactions contemplated by this Agreement, including (a) cooperation in
determining whether any action, approval, or waiver by or in respect of, or
filing with, any Governmental Authority is required in connection with the
consummation of the transactions contemplated by this Agreement; (b) cooperation
in seeking and obtaining any such actions, approvals, waivers, or filings; and
(c) the execution of any additional instruments necessary to consummate the
transactions contemplated hereby.
6.5 NOTIFICATION OF CERTAIN MATTERS. Each Party shall give prompt notice to
the other Party of (a) the occurrence or nonoccurrence of any event that would
be likely to cause any representation or warranty of such Party contained in
this Agreement to be untrue or inaccurate in any material respect at or prior to
Closing (or within one year following the Closing), and (b) any material failure
of such Party to comply with or satisfy any covenant, condition, or agreement to
be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 6.6 shall not limit or otherwise
affect the remedies available hereunder to the Party receiving such notice.
6.6 DESIGNATION AS OPERATOR. Except as otherwise provided in herein or
otherwise agreed by the Parties, DHOPCO shall remain as the contracted operator
of all Assets conveyed by DHOPCO to TOPAZ at Closing until otherwise agreed
between the Parties. DHOPCO shall act as operator pursuant to such existing or
to-be-executed Operating Agreement as the Parties may, from time to time,
implement.
6.7 FINANCIAL MATTERS. To permit TOPAZ to perform the required audit of the
revenues and direct operating expenses attributable to the Assets pursuant to
SEC regulations, and notwithstanding anything contrary in this Agreement,
DHOPCO, after Closing, shall afford to TOPAZ and TOPAZ's counsel, internal and
independent auditors, and other authorized representatives, from and after the
date of execution hereof, reasonable access (no later than two (2) Business Days
after TOPAZ's request therefor) to DHOPCO's financial accounting books and
records relating to the Assets conveyed by DHOPCO to TOPAZ at such Closing
(including, without limitation, (a) joint interest billings for Working
Interests by Lease and/or Well, (b) vendor invoices, (c) lease operating expense
statements, (d) revenue database and records for distributions to Net Revenue
Interest owners, (e) check stubs, cancelled checks, and other evidence of
payments made, (f) vendor and joint interest owner correspondence, (g) AFEs for
drilling, completion, workover, and other capital projects and reconciliations
thereof against actual costs incurred, (h) filings, returns, and other materials
relating to Property-Related Taxes, and (i) the Leases and the Contracts) for
the calendar years ending December 31, 2005, through December 31, 2010, and the
period beginning January 1, 2011, through the Closing Date. Such access shall
include the right of TOPAZ to photocopy, at TOPAZ's expense, such financial
accounting books and records and reasonable access during normal business hours
to the independent auditors and consulting petroleum engineers of DHOPCO, at
13
TOPAZ's expense and on terms specified by such auditors and engineers, and the
internal accounting, financial, engineering, and other personnel of DHOPCO who
are knowledgeable about the Assets, as well as permission to contact vendors and
joint interest owners (if any). TOPAZ shall cooperate with DHOPCO to minimize
the disruption of DHOPCO's business and office operations as the result of
TOPAZ's activities under this Section 6.8. Upon TOPAZ's request, DHOPCO shall
provide a signed representative letter to TOPAZ's independent auditors
confirming, to the Knowledge of DHOPCO, the accuracy of the financial and other
data provided for such audit.
ARTICLE VII.
CLOSING
7.1 CLOSING. The Closing shall be held at the offices of TOPAZ, at 1012 N.
Masch Branch Road, Denton, Texas 76207-3640 (or via electronic or overnight
physical courier as applicable) on the relevant Closing Date.
7.2 ACTIONS AT CLOSING. At Closing, DHOPCO and TOPAZ shall take the
following actions:
(a) DHOPCO and TOPAZ shall each execute and deliver (i) the Assignment
covering the Assets to be conveyed at such Closing, in sufficient counterparts
to facilitate an eventual recording in the relevant jurisdiction.
(b) TOPAZ shall deliver and pay unto DHOPCO the Cash Consideration and
otherwise act to execute documents and facilitate the actions relative to the
Stock Consideration, as set forth in Section 3.3 above.
(c) DHOPCO shall deliver to TOPAZ a statement that satisfies the
requirements of Treas. Reg. ss.1.1445-2(b)(2), certifying that DHOPCO is not a
"foreign" Person for federal income tax purposes.
(d) TOPAZ shall return any and all original promissory notes from
DHOPCO (as cited in Exhibit E to this Agreement), marked "CANCELLED" (or the
like).
(e) DHOPCO and TOPAZ shall execute such other documents and take such
other actions as are provided for elsewhere in this Agreement or as may be
necessary to consummate the transactions contemplated herein to be consummated
at such Closing.
7.3 RECORDS. At any time after Closing, pursuant to TOPAZ's reasonable
instructions and if not already delivered, DHOPCO shall deliver to TOPAZ the
Records relating to the Assets conveyed at the relevant Closing. TOPAZ shall be
entitled to all original Records affecting all of such Assets. Prior to the
delivery thereof to TOPAZ, DHOPCO may make and retain, at its expense, copies of
the Records for DHOPCO's use. TOPAZ agrees to maintain all original Records
until the fifth (5th) anniversary of the relevant Closing Date (or such longer
period of time as DHOPCO may request for those Records relevant for tax audit
14
purposes), or, if any of such Records pertain to a Claim pending at such fifth
anniversary date, until such Claim is finally resolved and the time for all
appeals has been exhausted. TOPAZ will provide to DHOPCO reasonable access to
the Records for purposes of obtaining information for the preparation of tax
returns, financial statements, and other legitimate business purposes of DHOPCO.
ARTICLE VIII.
SURVIVAL; INDEMNIFICATION
8.1 SURVIVAL. All representations, warranties, covenants, agreements, and
indemnities of DHOPCO and TOPAZ under this Agreement shall survive the Closing
and the delivery of the Assignment, shall not be merged with or into the
Assignment, and shall remain in force and effect as provided in this Section
8.1, as applicable, regardless of any investigation at any time made by or on
behalf of DHOPCO or TOPAZ, or of any information that DHOPCO or TOPAZ may have
with respect thereto. Such survival does not obligate any Party to make any
further representation or warranty after the final Closing established pursuant
to this Agreement, or to cause any representation or warranty made hereunder to
remain true and correct after such final Closing Date.
8.2 INDEMNITY AS SOLE REMEDY. Except to the extent otherwise provided
elsewhere in this Agreement, the indemnity provided by each Party to the other
under this Article VIII shall constitute the sole and exclusive remedy for such
Party and its Indemnity Group after each Closing with respect to (a) the
inaccuracy or breach of any representation or warranty made by the other Party
hereunder in connection with the relevant Closing and (b) a breach or default in
the performance by such other Party of any covenant or agreement of such other
Party contained in this Agreement and made in connection with such Closing.
Except as otherwise provided elsewhere in this Agreement and this Article VIII,
each Party hereby waives any Claim arising under common law, any statute, or
otherwise against the other Party arising from or out of the inaccuracy or
breach of any representation or warranty made by the other Party hereunder or
the breach or default in the performance by such other Party of any covenant or
agreement of such other Party contained in this Agreement.
8.3 INDEMNITIES OF TOPAZ. Regardless of any investigation made at any time
by or on behalf of any Party or any information any Party may have, and
regardless of the presence or absence of insurance, TOPAZ shall indemnify and
hold harmless DHOPCO and its Indemnity Group from and against any and all Claims
and Liabilities caused by, arising out of, resulting from, or relating in any
way to, and to pay to DHOPCO or its Indemnity Group any sum that DHOPCO or its
Indemnity Group pays, or becomes obligated to pay, on account of: (a) any breach
or default in the performance by TOPAZ of any covenant or agreement of TOPAZ
contained in this Agreement or any document executed in connection herewith; (b)
any breach of a warranty or an inaccurate or erroneous representation made by
TOPAZ in this Agreement (provided, however, that for purposes of this Section
8.3, all qualifications relating to materiality contained in such
representations and warranties shall be disregarded); and (c) all Assumed
Liabilities.
8.4 INDEMNITIES OF DHOPCO. Regardless of any investigation made at any time
by or on behalf of any Party or any information any Party may have, and
regardless of the presence or absence of insurance, DHOPCO shall indemnify and
hold harmless TOPAZ and its Indemnity Group from and against any and all Claims
15
and Liabilities caused by, arising out of, resulting from, or relating in any
way to, and to pay TOPAZ or its Indemnity Group any sum that TOPAZ or its
Indemnity Group pays or becomes obligated to pay, on account of: (a) any breach
or default in the performance by any DHOPCO of any covenant or agreement of
DHOPCO contained in this Agreement or any document executed in connection
herewith; and (b) any breach of a warranty or an inaccurate or erroneous
representation made by DHOPCO in this Agreement (provided, however, that for
purposes of this Section 8.4, all qualifications relating to materiality
contained in such representations and warranties shall be disregarded).
8.5 LIMITATIONS ON INDEMNITIES.
(a) Except as provided hereinafter, after the Closing Date, neither
TOPAZ nor DHOPCO shall be entitled to seek indemnification from the other Party
with respect to the inaccuracy or breach of any representation or warranty made
by such Party hereunder unless the Party seeking indemnification gives written
notice of the alleged breach or inaccuracy to the Party against whom enforcement
is sought no later than the expiration of twelve (12) months after the Closing
Date.
(b) After the Closing Date, neither TOPAZ nor DHOPCO shall be entitled
to seek indemnification from the other Party with respect to a breach or default
in the performance by such Party of any covenant or agreement of that Party
contained in this Agreement (including, without limitation, the provisions
relating to taxes) unless the Party seeking indemnification gives written notice
of the alleged breach or default to the Party from whom indemnification is
sought on or before the one hundred eightieth (180th) day after the expiration
of the statute of limitations applicable to the relevant breach or default.
8.6 ASSERTION OF CLAIMS; NOTICES; DEFENSE; SETTLEMENT.
(a) Upon the discovery by a Party entitled to indemnification under
any provision of this Agreement (the "Indemnified Party") of facts believed to
entitle such Party to indemnification hereunder, including the receipt by any
such Party of notice of a Claim from any third Person, the Indemnified Party
shall give prompt written notice of any such Claim to the Party obligated to
provide the requested indemnification (the "Indemnifying Party"). Each such
notice shall set forth the facts known to the Indemnified Party pertaining to
the relevant Claim and shall specify the manner in which the Indemnified Party
proposes to respond to such Claim.
(b) Within ten (10) days after the receipt by the Indemnifying Party
of such notice, the Indemnifying Party shall state in writing to the Indemnified
Party: (i) whether the Indemnified Party may proceed to respond to the Claim in
the manner set forth in its notice, or (ii) whether the Indemnifying Party shall
assume responsibility for and conduct the negotiation, defense, or settlement of
the Claim, and if so, the specific manner in which the Indemnifying Party
proposes to proceed. If the Indemnifying Party assumes control of the Claim, the
Indemnified Party shall at all times have the right to participate in the
defense thereof and to be represented, at its sole expense, by counsel selected
by it. No such Claim shall be compromised or settled by either the Indemnifying
Party or the Indemnified Party, as applicable, in any manner that admits
16
liability on the part of the other Party or that might otherwise adversely
affect the interest of such other Party without the prior written consent of
such other Party, which consent will not be unreasonably withheld or delayed. As
a condition precedent to indemnification under this Agreement, the Indemnified
Party shall assign to the Indemnifying Party, and the Indemnifying Party shall
become subrogated to, all rights and Claims, up to the amount of
indemnification, of the Indemnified Party against third Persons arising out of
or pertaining to the matters for which the Indemnifying Party shall provide
indemnification. The amount of the Indemnified Party's Claim for indemnification
shall be reduced by the amount of any insurance reimbursement paid to the
Indemnified Party pertaining to the Claim.
8.7 LIMITATION ON DAMAGES. For the breach or non-performance by any Party
of any representation, warranty, covenant, or agreement contained in this
Agreement, the liability of the obligor shall be limited to direct actual
damages only, except to the extent that the obligee is entitled to specific
performance or injunctive relief. AS BETWEEN THE PARTIES, NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NEITHER DHOPCO NOR TOPAZ SHALL BE
LIABLE TO THE OTHER PARTY AS THE RESULT OF A BREACH OR A VIOLATION OF ANY
REPRESENTATION, WARRANTY, COVENANT, AGREEMENT, OR CONDITION CONTAINED IN THIS
AGREEMENT FOR SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY, OR
INDIRECT DAMAGES, LOST PROFITS, OR OTHER BUSINESS INTERRUPTION DAMAGES, IN TORT,
IN CONTRACT, UNDER ANY INDEMNITY PROVISION, ARISING BY OPERATION OF LAW
(INCLUDING, WITHOUT LIMITATION, STRICT LIABILITY), OR OTHERWISE. WITH RESPECT TO
CLAIMS BY THIRD PERSONS, A PARTY MAY RECOVER FROM THE OTHER PARTY ALL COSTS,
EXPENSES, OR DAMAGES (INCLUDING, WITHOUT LIMITATION, SPECIAL, CONSEQUENTIAL,
INCIDENTAL, PUNITIVE, EXEMPLARY, OR INDIRECT DAMAGES), LOST PROFITS, AND OTHER
BUSINESS INTERRUPTION DAMAGES IN ADDITION TO ACTUAL DIRECT DAMAGES PAID OR OWED
TO ANY SUCH THIRD PERSON IN SETTLEMENT OR SATISFACTION OF CLAIMS AS TO WHICH THE
RELEVANT PARTY IS ENTITLED TO INDEMNIFICATION HEREUNDER.
ARTICLE IX.
MISCELLANEOUS
9.1 EXHIBITS. All exhibits and schedules referred to in this Agreement are
hereby incorporated into this Agreement by reference and constitute a part of
this Agreement for all purposes. Each Party and/or its counsel has received a
complete set of exhibits and schedules prior to and as of the date of execution
of this Agreement.
9.2 EXPENSES. Except as otherwise specifically provided herein, all fees,
costs, and expenses incurred by TOPAZ and DHOPCO in negotiating this Agreement
and in consummating the transactions contemplated by this Agreement shall be
paid by the Party incurring the same, including, without limitation, legal and
accounting fees, costs, and expenses. All required documentary, filing, and
17
recording fees and expenses in connection with the eventual filing and recording
of the Assignment (or its replacement) and other instruments required to convey
title to the Assets to TOPAZ shall be borne by TOPAZ.
9.3 PRORATION OF TAXES. Each Party shall assume responsibility for, and
shall bear and pay, all federal income taxes, state income taxes, franchise
taxes, and other similar taxes (including any applicable interest or penalties)
incurred by or imposed upon such Party with respect to the transactions
described in this Agreement. TOPAZ shall assume responsibility for, and shall
bear and pay, all Transfer Taxes incurred or imposed with respect to the
transfer of the Assets from DHOPCO to TOPAZ. TOPAZ shall further assume
responsibility for (and, if applicable, reimburse DHOPCO for), and shall bear
and pay, all Property-Related Taxes (including any applicable penalties and
interest) based upon or measured by the ownership of the Assets or the receipt
of proceeds therefrom, but exclusive of income taxes, and assessed against the
Assets by any taxing authority for the period prior to the Effective Time. TOPAZ
shall be responsible for, and shall bear and pay, all such Property-Related
Taxes assessed against the Assets by any taxing authority for any period that
begins on or after the Effective Time (but inclusive of the entirety of 2010 and
thereafter). For purposes of this Agreement, the foregoing prorations of
Property-Related Taxes (or lack thereof) shall be accomplished (if needed) as an
adjustment to the Consideration and, in the case of ad valorem and other
property taxes, shall be based upon the ad valorem and other property taxes
actually assessed against the Assets for the applicable tax year, or, in the
absence of such assessments, the ad valorem and other property taxes actually
assessed against the Assets for 2010. In the event of a conflict between the
terms of this Section 10.3 and any other provision of this Agreement, the terms
of this Section 10.3 shall govern and control.
9.4 ASSIGNMENT. Neither DHOPCO nor TOPAZ shall assign this Agreement,
except to an Affiliate of the assigning Party by assignment, transfer of equity,
merger, reorganization, or consolidation, without the prior written consent of
the non-assigning Party, which shall not be unreasonably withheld or delayed.
Any such assignment of rights shall provide for the assumption by the transferee
of the obligations of the assigning Party under this Agreement. No assignment of
any rights hereunder shall relieve the assigning Party of any obligations or
responsibilities hereunder. Upon the assumption by such a transferee of the
obligations of the assigning Party under this Agreement, such transferee shall
become primarily liable for all such obligations assumed. Notwithstanding any
such assumption, however, if such a transferee fails to perform any of the
obligations thus assumed, the assigning Party shall remain liable for the
performance thereof. Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors and
assigns.
9.5 NOTICES. All notices and communications required or permitted to be
given hereunder shall be in writing and shall be delivered personally, or sent
by bonded overnight courier, or by telex, e-mail or facsimile transmission
(provided any such telegram, telex, or facsimile transmission is confirmed
either orally or by written confirmation), addressed to the appropriate Party at
the address for such Party shown below or at such other address as such Party
shall have theretofore designated by written notice delivered to the Party
giving such notice:
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If to TOPAZ:
------------
Topaz Resources, Inc.
1012 N. Masch Branch Road
Denton, Texas 76207-3640
Attention: Mr. Bill A. Williamson and Mr. Edward J. Munden
Telephone No.: (940) 243-1122
Facsimile No.: (940) 243-8643
E-mail: tmunden@topazresourcesinc.com
If to DHOPCO:
-------------
Dark Horse Operating Co., L.L.C.
P.O. Box 2184 Denton, Texas 76202-2184
Attention: Mr. Robert P. Lindsay and Mr. S. Rand Stinnett
Telephone No.: (940) 243-3038
Facsimile No.: (940) 243-8643
E-mail: lindsayroberttx@msn.com and rstinnett@usa.net
Any notice given in accordance herewith shall be deemed to have been given on
the Business Day when delivered to the addressee in person or by telex,
facsimile, or bonded overnight courier; provided, however, that if any such
notice is received after normal business hours, the notice will be deemed to
have been given on the next succeeding Business Day. Any Party may change the
address, telephone number, and facsimile number to which such communications to
such Party are to be addressed by giving written notice to the other Party in
the manner provided in this Section 9.5.
9.6 AMENDMENT. This Agreement may be amended only by an instrument in
writing executed by the Parties.
9.7 WAIVER; RIGHTS CUMULATIVE. Any of the terms, covenants,
representations, warranties, or conditions hereof may be waived only by a
written instrument executed by or on behalf of the Party waiving compliance. No
course of dealing on the part of DHOPCO or TOPAZ, or their respective officers,
employees, agents, or representatives, or any failure by DHOPCO or TOPAZ to
exercise any of its rights under this Agreement, shall operate as a waiver
thereof or affect in any way the right of such Party at a later time to enforce
the performance of such provision. No waiver by any Party of any condition, or
any breach of any term, covenant, representation, or warranty contained in this
Agreement, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such condition or breach or a waiver of any
other condition or of any breach of any other term, covenant, representation, or
warranty. The rights of DHOPCO and TOPAZ under this Agreement shall be
cumulative, and the exercise or partial exercise of any such right shall not
preclude the exercise of any other right.
9.8 GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT AND THE LEGAL
RELATIONS AMONG THE PARTIES SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICTS OF LAW RULE OR PRINCIPLE
THAT MIGHT REFER CONSTRUCTION OF SUCH PROVISIONS TO THE LAWS OF ANOTHER
JURISDICTION. ALL OF THE PARTIES CONSENT TO THE EXERCISE OF JURISDICTION IN
PERSONAM BY THE COURTS OF THE STATE OF TEXAS FOR ANY ACTION ARISING OUT OF THIS
AGREEMENT. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO, ARISING DIRECTLY OR
19
INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR FROM THIS AGREEMENT SHALL
BE LITIGATED IN COURTS HAVING SITUS IN DENTON COUNTY, TEXAS.
9.9 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any rule of Law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any adverse manner to
any Party. Upon such determination that any term or other provision is invalid,
illegal, or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
9.10 ARBITRATION.
(a) Any disagreement, difference, or dispute among the Parties
provided in this Agreement to be resolved by arbitration shall be resolved
pursuant to arbitration according to the procedures set forth in this Section
9.10. Either Party may commence an arbitration proceeding hereunder by giving
written notice to the other Party. No later than five (5) Business Days after
the delivery of the notice commencing the arbitration proceeding, DHOPCO and
TOPAZ shall each select an arbitrator. Promptly following their selection, the
arbitrators selected by Seller and Buyer jointly shall select a third
arbitrator. All arbitrators selected under this Agreement shall have at least
eight (8) years of professional experience in the oil, gas, or accounting
industries, as applicable, and shall not previously have been employed by either
Party and shall not have a direct or indirect interest in either Party or the
subject matter of the arbitration. The arbitration hearing shall commence as
soon as is practical, but in no event later than thirty (30) days after the
selection of the third arbitrator. If any arbitrator selected under this Section
9.10(a) should die, resign, or otherwise be unable to perform his duties
hereunder, a successor arbitrator shall be selected pursuant to the procedures
set forth in this Section 9.10(a).
(b) The arbitrators shall settle all disputes in accordance with the
Federal Arbitration Act and the Commercial Arbitration Rules of the American
Arbitration Association, to the extent that such Rules do not conflict with the
terms of such Act or the terms of this Agreement. Any arbitration hearing shall
be held in Denton, Denton County, Texas. The decision of the arbitrators shall
be final and binding on the Parties and, if necessary, may be enforced in any
court of competent jurisdiction. The Law governing all such disputes shall be
the Laws of the State of Texas, including, without limitation, the Uniform
Commercial Code as in effect in the State of Texas, as the same may be amended
from time to time, but without regard to conflicts of laws principles. The fees
and expenses of the arbitrators shall be shared one-half by DHOPCO and one-half
by TOPAZ. Any payment to be made as the result of any dispute resolved by
arbitration hereunder shall be accomplished pursuant to the Final Settlement
Statement, with the final payments due thereunder being deferred until the
arbitrators have rendered their decisions on all matters to be resolved by
arbitration hereunder.
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9.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all of such counterparts shall constitute for all purposes one
agreement. This Agreement may be executed by the Parties in different locations
and shall become binding upon both Parties upon the exchange by the Parties of
executed signature pages by facsimile; provided, however, that no later than
five (5) Business Days after such execution hereof by facsimile, the Parties
shall have executed and delivered each to the other a fully executed original
counterpart of this Agreement.
IN WITNESS WHEREOF, DHOPCO and TOPAZ have executed this Agreement on the
dates set forth below.
DHOPCO:
DARK HORSE OPERATING CO., L.L.C.
By: /s/ S. Rand Stinnett
---------------------------------------
S. Rand Stinnett, Manager
DATE:
-------------------------------------
21
SIGNATURE PAGE FOR TOPAZ PETROLEUM, INC., TO ASSET PURCHASE AND SALE AGREEMENT,
DATED AS OF APRIL 12, 2011, BETWEEN DARK HORSE OPERATING CO., L.L.C., AS SELLER,
AND TOPAZ RESOURCES, INC., AS BUYER.
TOPAZ:
TOPAZ RESOURCES, INC.
By: /s/ Edward J. Munden
---------------------------------------
Edward J. Munden,
Its Chief Executive Officer & President
By: /s/ Bill A. Williamson
---------------------------------------
Bill A. Williamson,
Its Vice President
DATE:
--------------------------------------
22
SCHEDULE 1.1
DEFINED TERMS
In addition to specific terms defined elsewhere in the Agreement, the
following terms and expressions (if used in this Agreement) shall have the
meanings set forth hereinafter:
"Affiliate" means, with respect to a Party, any Person that directly or
indirectly controls, is controlled by, or is under common control with, the
relevant Party. For purposes of this definition, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, contract, voting trust, membership in management or in the
group appointing or electing management, or otherwise through formal or informal
arrangements or business relationships.
"Assumed Environmental Liabilities" means, collectively, ALL CLAIMS AND
LIABILITIES (INCLUDING, WITHOUT LIMITATION, ANY CLAIMS AND LIABILITIES RELATING
TO ENVIRONMENTAL CONDITIONS THAT BECOME "ASSUMED ENVIRONMENTAL LIABILITIES" BY
OPERATION OF SECTION 4.3(C), ARISING OUT OF, RESULTING FROM, OR RELATING IN ANY
WAY TO THE EXISTENCE OF AN ENVIRONMENTAL CONDITION ON OR RELATING TO ONE OR MORE
ASSETS CONVEYED BY DHOPCO TO TOPAZ PURSUANT HERETO (INCLUDING, WITHOUT
LIMITATION, CLAIMS AND LIABILITIES FOR INJURY TO OR DEATH OF ANY PERSON,
PERSONS, OR OTHER LIVING THINGS, OR LOSS OR DESTRUCTION OF OR DAMAGE TO PROPERTY
OCCURRING AS THE RESULT THEREOF), REGARDLESS OF WHETHER SUCH ENVIRONMENTAL
CONDITION IS KNOWN, ANTICIPATED, OR SUSPECTED AS OF THE POSSESSION TIME FOR THE
RELEVANT ASSET, OR RESULTS, IN WHOLE OR IN PART, FROM THE NEGLIGENCE OR STRICT
LIABILITY OF DHOPCO OR ITS AFFILIATES, EMPLOYEES, AGENTS, OR REPRESENTATIVES,
AND REGARDLESS OF WHETHER SUCH ENVIRONMENTAL CONDITION, OR THE ACTS, OMISSIONS,
EVENTS, OR CONDITIONS GIVING RISE THERETO AROSE, OCCURRED, OR EXISTED BEFORE,
AT, OR AFTER THE EFFECTIVE TIME FOR THE RELEVANT ASSET.
"Business Day" means any day other than a Saturday, Sunday, or other day on
which commercial banks in Dallas or Denton, Texas, are required or authorized by
Law to be closed.
"Casualty Event" means (a) any fire, explosion, accident, earthquake, act
of the public enemy, act of God, or other similar event or occurrence that
results in damage to or the destruction of any Asset, and (b) any taking of any
Asset by condemnation or under the right of eminent domain.
"Central Time" means Central Standard Time or Central Daylight Savings
Time, as in effect in Denton, Texas, on the date in question.
"Claims", for purposes of this Agreement, means any and all claims,
demands, Liens, notices of non-compliance or violation, notices of liability or
potential liability, investigations, actions (whether judicial, administrative,
or arbitrational), causes of action, suits, and controversies.
"Closing" means, for each Asset conveyed by DHOPCO to TOPAZ pursuant
hereto, the consummation of the transactions contemplated in this Agreement,
with respect to such Asset.
"Closing Date" means, for each Asset conveyed by DHOPCO to TOPAZ pursuant
thereto, the date on which the Closing occurs with respect to such Asset,
determined in accordance with Section 2.2.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Contracts" means all seismic or other exploration agreements; farm-in,
farm-out, and participation agreements; dry hole, acreage contribution, and
bottom hole agreements; partnership, joint venture, and similar agreements;
Hydrocarbon purchase, sale, exchange, gathering, storage, transportation, and
marketing agreements; acquisition agreements; operating agreements; area of
interest agreements; balancing agreements; pooling, communization, and
unitization agreements; processing, fractionation, condensate removal and
handling, dehydration, treatment, and separation agreements; saltwater, water,
and waste injection and disposal agreements; options; service agreements;
communications, facilities, and equipment leases and licenses, to the extent
transferable; and other contracts, agreements, and rights owned by Seller, in
whole or in part, or to which DHOPCO is a party, to the extent that they are (i)
appurtenant to or affect the properties and rights comprising the Assets, or
(ii) used or held for use in connection with the use, ownership, or operation
thereof.
"Conveyance" means the Assignment, Bill of Sale, and Conveyance
substantially in the form attached hereto as Exhibit B.
"Effective Time" means 7:00 a.m., Central Time, on April 12, 2011.
"Environmental Contaminants" means "hazardous substances" and "pollutants
or contaminants", as those terms are defined in Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), petroleum,
including any fraction thereof," and "natural gas, natural liquids, liquefied
natural gas, or synthetic gas usable for fuel" as those terms are used in
Section 101 of CERCLA, any "solid or hazardous waste" as those terms are defined
or used in the Resource Conservation and Recovery Act, and any wastes regulated
by applicable rules of the Railroad Commission of Texas. The term also includes
naturally occurring radioactive material ("NORM") concentrated, disposed of,
released or present on, resulting from, or in association with Hydrocarbon
activities.
"Environmental Condition" means: (a) any event or condition (including,
without limitation, any 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 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 in favor of any Governmental Authority
as the result of the alleged violation by such owner or operator or any other
Person of 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, in each case in all material respects 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 to any
Governmental Authority for any 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 3.1(d)(iii) or Section
3.1(j) (insofar only as such representation and warranty relates to
environmental matters) shall constitute an Environmental Condition. The term
"Environmental Condition" includes, without limitation, any release, disposal,
spilling, leaking, pouring, emission, emptying, discharge, injection, escape,
transmission, leaching, or dumping (collectively, a "Release"), or any
threatened Release, of any Environmental Contaminants from, or related in any
way to the use, ownership, or operation of, the Assets that has not been
remedied in accordance with all applicable Environmental Laws.
"Environmental Laws" means all applicable Laws (including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act, the Resource Conservation and Recovery Act, and the Oil Pollution
Act of 1990, the Texas Solid Waste Disposal Act, and applicable rules of the
Texas Railroad Commission relating to the management or disposal of oilfield
waste, in each case as amended from time to time) relating to the protection of
the public health, welfare, and environment, worker protection, emergency
planning, and/or a community's right to know, including, without limitation,
those Laws relating to the storage, handling, and use of chemicals and other
hazardous materials, those relating to the Release, generation, processing,
treatment, storage, transportation, disposal, or other management of waste
materials of any kind, those relating to the protection of environmentally
sensitive areas, and employee health and safety.
"Governmental Authority" means any governmental or quasi-governmental
federal, state, provincial, county, city, or other political subdivision of the
United States, any foreign country, or any department, bureau, agency,
commission, court, or other statutory or regulatory body or instrumentality
thereof.
"Indemnity Group" means, for either Party, the Affiliates, officers,
directors, managers, members, partners, employees, agents, and representatives
of the relevant Party.
"Knowledge", means (a) with respect to either Party, knowledge of those
matters of which the relevant Party is charged with constructive notice under
applicable Law, (b) with respect to TOPAZ, the actual knowledge of the current
directors and officers of TOPAZ, and (c) with respect to DHOPCO, the actual
knowledge of the current managers and/or officers of DHOPCO.
"Laws" means all constitutions, laws, statutes, ordinances, rules,
regulations, orders, and decrees of the United States, any foreign country, and
any local, state, provincial, or federal political subdivision or agency
thereof, as well as all judgments, decrees, orders, and decisions of courts
having the effect of law in each such jurisdiction, including, without
limitation, all Environmental Laws.
"Liabilities" means, for purposes of this Agreement, any and all losses,
judgments, damages, liabilities, injuries, costs, expenses, interest, penalties,
taxes, fines, obligations, and deficiencies. As used herein, the term
"Liabilities" includes, without limitation, reasonable attorneys' fees and other
costs and expenses of any Party receiving indemnification hereunder incident to
the investigation and defense of any Claim that results in litigation, or the
settlement of any Claim, or the enforcement by any Party receiving
indemnification hereunder of the provisions of Article IX, as applicable.
"Lien" means any mortgage, deed of trust, pledge, security interest,
encumbrance, lien, or charge of any kind (including any agreement to grant any
of the foregoing), any conditional sale or title retention agreement, any lease
in the nature thereof, or the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction.
"Net Revenue Interest" means, with respect to the Lease and Well, the
interest in and to all Hydrocarbons produced and saved from or attributable to
the Lease(s) on which such Well is located, after giving effect to all valid
royalties, overriding royalties, production payments, net profits interests,
carried interests, reversionary interests, and other similar interests
constituting burdens upon, measured by, or payable out of Hydrocarbons produced
and saved from or attributable to such Lease(s) and Wells.
"Parties" means, collectively, DHOPCO and TOPAZ.
"Permits" means the permits, licenses, authorizations, certificates,
registrations, or other approvals (other than permits and licenses constituting
Real Property Interests) granted by any Governmental Authority that pertain or
relate in any way to the Assets, described more particularly on Exhibit E.
"Person" means any individual, corporation, limited liability company,
partnership, trust, unincorporated organization, Governmental Authority, or any
other form of entity.
"Property-Related Taxes" means any and all ad valorem, property, severance,
generation, conversion, Btu or gas, transportation, utility, gross receipts,
privilege, consumption, excise, lease, transaction, and other taxes, franchise
fees, governmental charges or fees, licenses, fees, permits, and assessments, or
increases therein, and any interest or penalties thereon, other than Transfer
Taxes and taxes based on or measured by net income or net worth.
"SEC" means the Securities Exchange Commission or any successor
Governmental Authority.
"Transfer Taxes" means any sales, use, stock, stamp, document, filing,
recording, registration, and similar tax or charge, including, without
limitation, any interest or penalties thereon.
"Working Interest" means, with respect to each Lease or Well, the interest
of DHOPCO that is burdened with the obligation to bear and pay costs of
operations on or in respect of such Lease or Well.
