PURCHASE AND SALE AGREEMENT
BY AND AMONG
AMOCO D.T. COMPANY, AMOCO X.T. COMPANY,
AMOCO Y.T. COMPANY, SWEPI LP,
SHELL LAND & ENERGY COMPANY, SHELL ONSHORE VENTURES INC.,
SHELL K2, INC., AND SHELL EVEREST, INC., AS SELLERS,
AND
OCCIDENTAL PETROLEUM CORPORATION, AS BUYER
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INDEX
ARTICLE 1. DEFINITIONS........................................................2
ARTICLE 2. SALE OF INTERESTS.................................................19
2.1 Sale and Purchase.................................................19
2.2 Account Balances..................................................19
2.3 Purchase Price....................................................19
2.4 Purchase Price Adjustments........................................19
2.5 Earnest Money.....................................................20
ARTICLE 3. PREFERENTIAL RIGHTS AND TITLE VALUES.............................20
3.1 Title Values......................................................20
3.2 Preferential Rights to Purchase...................................20
3.3 Consents to Assignment............................................21
ARTICLE 4. ACCOUNTING AND TAXES..............................................21
4.1 Distributions.....................................................21
4.2 Taxes. 21
4.3 Working Capital Settlement and Estimate of Adjusted Purchase
Price.............................................................22
4.4 Sales Tax and Fees................................................23
4.5 Tax Status........................................................23
4.6 Basis.............................................................23
4.7 Allocations.......................................................24
ARTICLE 5. LOSS, CASUALTY AND INSURANCE......................................24
5.1 Notice of Loss....................................................24
5.2 Casualty..........................................................24
5.3 Insurance.........................................................25
ARTICLE 6. ALLOCATION OF RESPONSIBILITIES AND INDEMNITIES....................25
6.1 Opportunity for Review............................................25
6.2 Sellers' Non-Environmental Indemnity Obligation...................25
6.3 Sellers' Environmental Indemnity Obligation.......................26
6.4 Sellers Retained Liabilities......................................26
6.5 Claim Periods and Thresholds......................................28
6.6 Third Party Claims Involving Both Sellers and the LP..............28
6.7 Notice of Claims..................................................29
6.8 Defense of Claims.................................................29
6.9 Determination of Title Defect Amounts.............................30
6.10 Waiver of Certain Damages.........................................30
6.11 Several Liability.................................................30
6.12 Sellers' Responsibility for Taxes.................................31
6.13 Cross-Release.....................................................31
6.14 Indemnity Allocation..............................................31
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ARTICLE 7. DISCLAIMERS.......................................................32
7.1 Disclaimer - Representations and Warranties.......................32
7.2 Disclaimer - Statements and Information...........................32
ARTICLE 8. SELLERS' REPRESENTATIONS AND WARRANTIES...........................33
8.1 LLC Sellers' Representations......................................33
8.2 LP Sellers' Representations.......................................35
8.3 Limitation on Sellers' Liability and Waiver.......................41
ARTICLE 9. BUYER'S REPRESENTATIONS AND WARRANTIES............................42
9.1 Organization and Good Standing....................................42
9.2 Corporate Authority; Authorization of Agreement...................42
9.3 No Violations.....................................................43
9.4 SEC Disclosure....................................................43
9.5 Funds.............................................................43
9.6 Third Party Claims, Disputes and Litigation.......................43
9.7 Bankruptcy........................................................44
9.8 Independent Evaluation............................................44
9.9 Knowledge of Sellers' Breach......................................44
ARTICLE 10. ADDITIONAL COVENANTS..............................................44
10.1 Subsequent Operations.............................................44
10.2 Rights-of-Way and Surface Leases..................................44
10.3 Buyer's Acknowledgement of Obligations............................44
10.4 Use of Certain Facilities.........................................45
10.5 Covenants of Sellers..............................................45
10.6 No-Shop...........................................................48
10.7 Financial Reporting Requirements..................................48
10.8 Certain Tax Refunds...............................................48
10.9 Further Assurances................................................48
10.10 Non-Solicitation of Employees.....................................49
10.11 Actions at Closing Date...........................................49
10.13 Additional Software Rights........................................51
ARTICLE 11. HSR ACT...........................................................51
11.1 HSR Filings.......................................................51
ARTICLE 12. PERSONNEL.........................................................51
12.1 Employee List.....................................................51
12.2 Employee Benefits.................................................52
12.3 Post-Employment Medical...........................................53
12.4 WARN Act..........................................................54
12.5 Liabilities and Indemnifications..................................54
12.6 Conflicts.........................................................55
ARTICLE 13. CONDITIONS PRECEDENT TO CLOSING...................................56
13.1 Conditions Precedent to Sellers' Obligation to Close..............56
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13.2 Conditions Precedent to Buyer's Obligation to Close...............56
13.3 Conditions Precedent to Obligation of Each Party to Close.........56
ARTICLE 14. THE CLOSING.......................................................57
14.1 Closing...........................................................57
14.2 Obligations of Sellers at Closing.................................57
14.3 Obligations of Buyer at Closing...................................58
ARTICLE 15. TERMINATION.......................................................58
15.1 Grounds for Termination...........................................58
15.2 Effect of Termination.............................................59
15.3 Dispute over Right to Terminate...................................60
ARTICLE 16. ARBITRATION.......................................................60
16.1 Arbitration.......................................................60
ARTICLE 17. MISCELLANEOUS.....................................................61
17.1 Notices...........................................................61
17.2 Brokers, Agents and Finders.......................................62
17.3 Access............................................................63
17.4 Generally Accepted Accounting Principles..........................67
17.5 Further Assurances................................................67
17.6 Amendments and Severability.......................................67
17.7 Successors and Assigns............................................67
17.8 Headings..........................................................68
17.9 Governing Law.....................................................68
17.10 No Partnership Created............................................68
17.11 Public Announcements..............................................68
17.12 No Third Party Beneficiaries......................................68
17.13 Waiver of Consumer Rights.........................................68
17.14 Not to be Construed Against Drafter...............................69
17.15 Exhibits..........................................................69
17.16 Execution in Counterparts.........................................69
17.17 Entire Agreement..................................................69
ARTICLE 18. SECOND CLOSING....................................................69
18.1 Sale and Purchase.................................................69
18.2 Purchase Price....................................................69
18.3 Conditions Precedent to Buyer's Obligation to Close...............69
18.4 Conditions Precedent to Obligation of Each Party to Close.........70
18.5 Closing...........................................................70
18.6 Obligations of Sellers at Closing.................................70
18.7 Obligations of Buyer at Closing...................................71
18.8 Remedies..........................................................71
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Exhibits
EXHIBIT A - PROPERTIES
EXHIBIT B - SELLERS RETAINED ENVIRONMENTAL LIABILITIES
EXHIBIT C-1 - THIRD PARTY CLAIMS, DISPUTES AND LITIGATION
EXHIBIT C-2 - SELLERS PRE-FORMATION LITIGATION
EXHIBIT D-1 - ASSIGNMENT OF LIMITED LIABILITY COMPANY INTEREST
EXHIBIT D-2 - ASSIGNMENT OF PARTNERSHIP INTEREST
EXHIBIT E - CERTIFICATE
EXHIBIT F - NON-FOREIGN AFFIDAVIT
EXHIBIT G - CERTAIN INSURANCE
EXHIBIT H-1 - PARTNERSHIP INTERESTS
EXHIBIT H-2 - PURCHASE PRICE ALLOCATION AMONG PARTNERSHIP INTERESTS
EXHIBIT H-3 - ADJUSTED PURCHASE PRICE ALLOCATION AMONG PARTNERSHIP/LLC
INTERESTS
EXHIBIT H-4 - EXCESS OR DEFICIENCY ALLOCATION AMONG SELLERS
EXHIBIT I - ESCROW AGREEMENT
EXHIBIT J - POLLUTION ABATEMENT AND CONTROL FACILITIES
EXHIBIT K-1 - EMPLOYEE BENEFIT PLANS, EMPLOYEE PENSION BENEFIT PLANS,
AND EMPLOYEE WELFARE BENEFIT PLANS
EXHIBIT K-2 - OTHER EMPLOYEE ARRANGEMENTS
EXHIBIT L - CERTAIN LP OFFICERS AND EMPLOYEES
EXHIBIT M - EXCEPTIONS TO LP SELLERS' REPRESENTATIONS AND WARRANTIES
EXHIBIT N-1 - RESTATED LP AGREEMENT
EXHIBIT N-2 - RESTATED LLC AGREEMENT
EXHIBIT N-3 - SHELL AFFILIATE LOAN AGREEMENT
EXHIBIT N-4 - SHELL AFFILIATE NOTE
EXHIBIT N-5 - SHELL GUARANTY
EXHIBIT N-6 - AMOCO AFFILIATE LOAN AGREEMENT
EXHIBIT N-7 - AMOCO AFFILIATE NOTE
EXHIBIT N-8 - AMOCO GUARANTY
EXHIBIT N-9 - OCCIDENTAL AGREEMENT
EXHIBIT N-10 - DEBT FINANCING TERMS
EXHIBIT O-1 - AMOCO AMENDED AND RESTATED LICENSE AGREEMENT
EXHIBIT O-2 - SHELL AMENDED AND RESTATED LICENSE AGREEMENT
EXHIBIT P - NEGOTIATING TEAMS
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PURCHASE AND SALE AGREEMENT
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THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is dated the 7th day of
March, 2000, by and among Amoco D.T. Company, a Delaware corporation
(hereinafter referred to as "Amoco LLC Seller"), SWEPI LP, a Delaware limited
partnership (hereinafter referred to as "Shell LLC Seller" when reference is
made to its role as a member of Altura Energy LLC and as "SWEPI" when reference
is made to its role as a limited partner of Altura Energy Ltd.) (Amoco LLC
Seller and Shell LLC Seller are hereinafter collectively referred to as "LLC
Sellers"), Amoco X.T. Company, a Delaware corporation (hereinafter referred to
as "Amoco XT"), Amoco Y.T. Company, a Delaware corporation (hereinafter referred
to as "Amoco YT") (Amoco XT and Amoco YT are hereinafter collectively referred
to as "Amoco LP Sellers"), Shell Land & Energy Company, a Delaware corporation
(hereafter referred to as "SLEC"), Shell Onshore Ventures Inc., a Delaware
corporation (hereinafter referred to as "SOVI"), Shell K2, Inc., a Delaware
corporation (hereinafter referred to as "SK2"), and Shell Everest, Inc., a
Delaware corporation (hereinafter referred to as ("SEI") (SWEPI, SLEC, SOVI,
SK2, and SEI are hereinafter collectively referred to as "Shell LP Sellers")
(Amoco LP Sellers and Shell LP Sellers are hereinafter collectively referred to
as "LP Sellers") (LLC Sellers and LP Sellers are hereinafter collectively
referred to as "Sellers") and Occidental Petroleum Corporation, a Delaware
corporation (hereinafter referred to as "Buyer"), and is based on the following
premises. Buyer and Sellers are sometimes hereinafter referred to individually
as a "Party" and collectively as the "Parties."
WHEREAS, the LP was formed for the purpose of holding and exploiting oil
and gas properties in the area specified in the LP Agreement;
WHEREAS, the LLC is the general partner of the LP;
WHEREAS, the Parties desire that Amoco LP Sellers and Shell LP Sellers
sell, assign and convey, and that Buyer LP purchase and accept, the Sold LP
Interests and join Amoco LP Sellers and Shell LP Sellers in ownership of the LP
as a limited partner in order to continue and enhance the LP's current
activities;
WHEREAS, the Parties desire that Shell LLC Seller sell, assign and convey,
and that Buyer Member purchase and accept, the Shell Sold LLC Interest, and that
Amoco LLC Seller sell, assign and convey, and that Buyer Member purchase and
accept, the Amoco Sold LLC Interest and join Amoco LLC Seller in ownership of
the LLC as a member in order to continue and enhance the LLC's current
activities;
WHEREAS, in conjunction with the consummation of the sale of the Sold LP
Interests and admittance of Buyer LP in the LP, the Parties desire that Buyer
LP, Amoco LP Sellers and Shell LP Sellers enter into the Restated LP Agreement;
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WHEREAS, in conjunction with the consummation of the sale of the Sold LLC
Interests and admittance of Buyer Member in the LLC, the Parties desire that
Buyer Member and Amoco LLC Seller enter into the Restated LLC Agreement, and
that Buyer Member manage, operate and control the LLC;
WHEREAS, simultaneously with the foregoing, the Parties desire that Lender
lend funds to the LP pursuant to the Debt Financing Agreement, that the LP lend
funds to Amoco Borrower pursuant to the Amoco Affiliate Loan Agreement and that
the LP lend funds to Shell Borrower pursuant to the Shell Affiliate Loan
Agreement; and
WHEREAS, the Parties have reached agreement regarding the foregoing
transactions.
NOW, THEREFORE, based on the mutual covenants and agreements herein
contained, the Parties agree as follows:
ARTICLE 1. DEFINITIONS
1. Definitions: In this Agreement capitalized terms have the meaning
provided in this Article. All defined terms include both the singular and the
plural of such terms. All references to Articles refer to Articles in this
Agreement, and all references to Exhibits and Schedules refer to Exhibits and
Schedules attached to and made a part of this Agreement.
1.1 "AAA" means the American Arbitration Association.
1.2 "Account Balances" has the meaning set forth in Article 2.2.
1.3 "Accounting Referee" means the accounting firm of Deloitte & Touche,
together with any experts such firm may require in order to settle a particular
dispute.
1.4 "Acquisition Transaction" has the meaning set forth in Article 10.6.
1.5 "Adjusted Purchase Price" has the meaning set forth in Article 2.3.
1.6 "Adverse Condition" means an individual existing condition of a
Property, or of the soil, subsurface, surface waters, groundwaters, atmosphere,
natural resources or other environmental medium, wherever located, associated
with the ownership or operation of a Property (including, without limitation,
the presence or release of Hydrocarbon or non-Hydrocarbon substances), which (a)
is not in compliance with Environmental Laws existing as of the date of this
Agreement, or (b) requires, if known, or will require, once discovered,
reporting to a Governmental Authority, investigation, monitoring, removal,
cleanup, remediation, restoration or correction in accordance with Environmental
Laws existing as of the date of this Agreement.
1.7 "Advisors" has the meaning set forth in Article 17.2.
1.8 "Affiliate" means any Person that, directly or indirectly, through one
or more entities, controls or is controlled by or is under common control with
the entity specified. For the purpose of this Article, the term "control" means
the power to direct or cause the direction of the management of such Person,
whether through the ownership of voting securities or by contract or agency or
otherwise. Prior to Closing, the LP and the LLC are Affiliates of Sellers and
from and after Closing, the LP and the LLC shall be Affiliates of Buyer and its
Affiliates and not Sellers.
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1.9 "Affiliate Contracts" has the meaning set forth in Article 6.13(a).
1.10 "Affiliated Group" means any affiliated group within the meaning of
Section 1504(a) of the Code or any similar group under a similar state or local
Law.
1.11 "Agreement" has the meaning set forth in the introductory paragraph.
1.12 "Altura Savings Plan" has the meaning set forth in Article 12.2(b).
1.13 "Altura Severance Plan" has the meaning set forth in Exhibit K-2.
1.14 "Amoco Amended and Restated License Agreement" means the agreement to
be signed at Closing contained in Exhibit O-1.
1.15 "Amoco Affiliate Loan Agreement" means the loan agreement to be
entered into between the LP and Amoco Borrower on the Closing Date,
substantially in the form attached hereto as Exhibit N-6.
1.16 "Amoco Affiliate Note" means the promissory note to be made by Amoco
Borrower in favor of the LP on the Closing Date, substantially in the form
attached hereto as Exhibit N-7.
1.17 "Amoco Aggregate Interest" means 63.915%.
1.18 "Amoco Borrower" means BP International Limited, a private limited
company organized under the laws of England.
1.19 "Amoco Guarantor" means BP Amoco p.l.c., a public limited company
organized under the laws of England.
1.20 "Amoco Guaranty" means the guaranty to be made by Amoco Guarantor in
favor of the LP on the Closing Date, substantially in the form attached hereto
as Exhibit N-8.
1.21 "Amoco Inside Basis" has the meaning set forth in Article 4.6(a).
1.22 "Amoco LLC Interest" means the Amoco Sold LLC Interest and the Amoco
Retained LLC Interest, collectively that are equal to the 63.915% Sharing Ratio
owned by Amoco LLC Seller.
1.23 "Amoco LLC Seller" has the meaning set forth in the introductory
paragraph.
1.24 "Amoco LP Interest" means the Amoco Sold LP Interest and the Amoco
Retained LP Interest, collectively that are equal to the 62.6367% Partnership
Interest owned by Amoco LP Sellers, collectively.
1.25 "Amoco LP Sellers" has the meaning set forth in the introductory
paragraph.
1.26 "Amoco Outside Basis" has the meaning set forth in Article 4.6(a).
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1.27 "Amoco Retained LLC Interest" means the percentage interest of Amoco
LLC Seller in the LLC set forth under the column titled "Retained Interest and
Post-Closing Interest" in Exhibit H-1.
1.28 "Amoco Retained LP Interests" means the aggregate of the percentage
interests of Amoco LP Sellers in the LP set forth under the column titled
"Retained Interest and Post-Closing Interest" in Exhibit H-1.
1.29 "Amoco Second Sold LLC Interest" means a 49% interest in the LLC held
by Amoco LLC Seller.
1.30 "Amoco Sellers" means Amoco LP Sellers and Amoco LLC Sellers.
1.31 "Amoco Sold LLC Interest" means the percentage interest of Amoco LLC
Seller in the LLC set forth under the column titled "Seller Interest Sold at
Closing" in Exhibit H-1.
1.32 "Amoco Sold LP Interests" means the aggregate of the percentage
interests of Amoco LP Sellers in the LP set forth under the column titled
"Seller Interest Sold at Closing" in Exhibit H-1.
1.33 "Amoco XT" has the meaning set forth in the introductory paragraph.
1.34 "Amoco YT" has the meaning set forth in the introductory paragraph.
1.35 "Arbitrable Dispute" means, except as provided otherwise in this
Agreement, any and all disputes arising under, related to, or in connection with
this Agreement or the LP Agreement.
1.36 "Assets" means those assets owned or held by the LP and the LLC,
including, without limitation, the Properties.
1.37 "Assignment of Limited Liability Company Interest" means a document in
the form of Exhibit D-1.
1.38 "Assignment of Partnership Interest" means a document in the form of
Exhibit D-2.
1.39 "Business Day" means each Day, except Days when federally chartered
banks are required to be closed.
1.40 "Buyer" has the meaning set forth in the introductory paragraph.
1.41 "Buyer Benefit Plans" has the meaning set forth in Article 12.2(e).
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1.42 "Buyer Group" means: (a) Buyer and its officers, directors, agents,
representatives, consultants and employees, and (b) Buyer's Affiliates and their
officers, directors, agents, representatives, consultants and employees.
1.43 "Buyer LP" means OXY Oil Partners, Inc., a Delaware corporation and
subsidiary of Buyer.
1.44 "Buyer Member" means OXY USA Inc., a Delaware corporation and
subsidiary of Buyer.
1.45 "Buyer's Negotiating Team" means the Persons named on Part I of
Exhibit P.
1.46 "Buyer's Representative" has the meaning set forth in Article
17.3(b)(ii).
1.47 "Casualty Loss" means any loss, damage or reduction in value of the
Assets which occurs during the period between execution of this Agreement and
Closing as a result of acts of God, fire, explosion, pipeline or gathering line
failure, earthquake, windstorm, flood, drought, blowout, but excepting downhole
mechanical failure (unrelated to the foregoing), depletion due to normal
production, depreciation of equipment through ordinary wear and tear, reservoir
changes, and transactions permitted under this Agreement.
1.48 "Certificate" means a document in the form of Exhibit E.
1.49 "Claim" means any and all claims, demands, suits, causes of action,
losses, damages, liabilities, fines, penalties and costs (including, without
limitation, attorneys' fees and costs of litigation), whether known or unknown,
including Environmental Claims and Non-Environmental Claims.
1.50 "Claimant" has the meaning set forth in Article 16.1 and means either
Buyer or Sellers collectively.
1.51 "Claiming Employees" has the meaning set forth in Article 12.5(b).
1.52 "Close" or "Closing" means the consummation of the sale of the Sold
LLC Interests from LLC Sellers to Buyer, and the consummation of the sale of the
Sold LP Interests from LP Sellers to Buyer, including execution and delivery of
all documents and other legal consideration provided in this Agreement pursuant
to Article 14.
1.53 "Closing Amount" has the meaning set forth in Article 2.3.
1.54 "Closing Date" means the later to occur of (i) the third Business Day
after satisfaction or waiver by the appropriate Parties of the conditions to
Closing set forth in Articles 14.2 and 14.3 and (ii) April 30, 2000.
1.55 "Code" means the Internal Revenue Code of 1986, as amended.
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1.56 "Compensation Claims" has the meaning set forth in Article 12.5(b).
1.57 "Computed Interest" means interest at a rate equal to LIBOR,
calculated daily.
1.58 "Confidential Information Memorandum" means that certain Confidential
Information Memorandum for Altura Energy Ltd. dated as of November, 1999,
prepared by Lehman Brothers and Credit Suisse First Boston.
1.59 "Confidentiality Agreement" means that certain Confidentiality
Agreement dated the 30th day of November, 1999, by and among BP Amoco
Corporation, Shell Exploration & Production Company, Buyer, and the LP, as it
may be amended from time to time.
1.60 "Contract" means any written or oral contract, agreement, agreement
regarding indebtedness, indenture, debenture, note, bond, loan, loan agreement,
collective bargaining agreement, lease, mortgage, franchise, license agreement,
purchase order, binding bid, commitment, letter of credit or any other legally
binding arrangement.
1.61 "Day" means a calendar day consisting of twenty-four (24) hours from
midnight to midnight.
1.62 "Debt Financing" means the loans to the LP in accordance with the Debt
Financing Terms set forth in Exhibit N.
1.63 "Debt Financing Agreements" means the agreements evidencing the Debt
Financing.
1.64 "Defensible Title" means the title held by the LP that:
1.64.1 entitles the LP to receive throughout the duration of the
productive life of any Property not less than the "net
revenue interests" set forth in Exhibit A of all
Hydrocarbons produced, saved and marketed from any Property
except decreases in connection with those operations in
which the LP may be nonconsenting co-owners, decreases
resulting from the establishment or amendment of pools or
units, and decreases required to allow other working
interest owners to make up past underproduction or pipelines
to make up past under deliveries and except as stated in
such Exhibit A; and
1.64.2 obligates the LP to bear a percentage of the costs and
expenses associated with the ownership, operation,
maintenance and repair of any Property in an amount not
greater than the "working interests" set forth in Exhibit A
without increases throughout the productive life of such
Property, except as stated in Exhibit A and except increases
resulting from contribution requirements with respect to
defaulting co-owners under applicable operating agreements
and increases that are
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accompanied by at least a proportionate increase in the LP's
net revenue interest.
1.65 "Deficiency" has the meaning set forth in Article 4.3.
1.66 "Disputing Party" has the meaning set forth in Article 15.3.
1.67 "Dollars" means United States Dollars.
1.68 "DTPA" has the meaning set forth in Article 17.13.
1.69 "Earnest Money" has the meaning set forth in Article 2.5.
1.70 "Eligible Personnel" shall have the meaning set forth in Exhibit K-2.
1.71 "Environmental Claims" means all Third Party Claims which are asserted
pursuant to Environmental Laws or which relate to, arise out of, or are
connected with, directly or indirectly, Adverse Conditions, including, without
limitation, for personal injury, death or property damage under common law or
any other non-Environmental Laws.
1.72 "Environmental Laws" means, as the same have been amended to the date
of this Agreement, or such other date as provided in this Agreement, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. Section
1251 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1471 et seq.; the Toxic
Substances Control Act, 15 U.S.C. Sections 2601 through 2629; the Oil Pollution
Act, 33 U.S.C. Section 2701 et seq.; the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. Section 11001 et seq.; and the Safe Drinking Water
Act, 42 U.S.C. Sections 300f through 300j; and all similar Laws of any
Governmental Authority having jurisdiction over the property in question
addressing pollution or protection of the environment and all regulations
implementing the foregoing.
1.73 "ERISA" has the meaning set forth in Article 8.2(u).
1.74 "ERISA Affiliates" has the meaning set forth in Article 8.2(u).
1.75 "ERISA Plans" has the meaning set forth in Article 8.2(u).
1.76 "Escrow Agreement" means that certain escrow agreement entered into
among Buyer, Sellers, and Chase Bank of Texas, National Association, the escrow
agent, the form of which is attached hereto as Exhibit I.
1.77 "Estate" has the meaning set forth in Article 3.2(b).
1.78 "Excess" has the meaning set forth in Article 4.3.
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1.79 "Excluded Assets" means assets of Sellers Group not contributed to the
LP pursuant to the Master Agreement.
1.80 "Fair Market Value" means, with respect to a Casualty Loss, the
commercially reasonable repair or comparable replacement cost of the Asset
subject to the Casualty Loss as of the date of such Casualty Loss.
1.81 "Financial Statements" has the meaning set forth in Article 8.2(p).
1.82 "Final Determination" has the meaning set forth in Article 4.6(e).
1.83 "First Party" has the meaning set forth in Article 10.12(c).
1.84 "Formation Date" means February 28, 1997.
1.85 "GAAP" has the meaning set forth in Article 17.4.
1.86 "Governmental Authority" 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, including, without
limitation, any tribal authority having jurisdiction.
1.87 "Greater Permian Area" means the lands within the counties of Chaves,
Curry, Eddy, Lea and Roosevelt, State of New Mexico, and the counties of
Andrews, Bailey, Borden, Brewster, Cochran, Coke, Concho, Cottle, Crane,
Crockett, Crosby, Culberson, Dawson, Dickens, Ector, Edwards, El Paso, Fisher,
Floyd, Gaines, Garza, Glasscock, Hale, Hockley, Howard, Hudspeth, Irion, Jeff
Davis, Kent, Kimble, King, Lamb, Loving, Lubbock, Lynn, Martin, Mason,
McCulloch, Menard, Midland, Mitchell, Motley, Nolan, Pecos, Presidio, Reagan,
Reeves, Runnels, Schleicher, Scurry, Sterling, Sutton, Terrell, Terry, Tom
Green, Upton, Val Verde, Ward, Winkler and Yoakum, State of Texas, and all Texas
and New Mexico counties contiguous to such counties.
1.88 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
1.89 "Hydrocarbons" means crude oil, natural gas, casinghead gas,
condensate, sulfur, natural gas liquids, and other liquid or gaseous
hydrocarbons and also means any other minerals of every kind or character.
1.90 "Indemnified Person" has the meaning set forth in Article 17.3(b)(ii).
1.91 "Indemnity Claim" has the meaning set forth in Article 6.7.
1.92 "Indemnity Claim Notice" means a notice of a Claim provided in
accordance with Article 6.7.
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1.93 "Interests" means the LLC Interests and the LP Interests.
1.94 "Intergroup Contributions" means capital contributions made pursuant
to and as defined in the LP Agreement by Sellers or their respective Affiliates
to the LLC or the LP, from and including the Settlement Date to, but excluding,
the Closing Date.
1.95 "Intergroup Distributions" means any dividends, equity redemptions or
repurchases, debt repayments or distributions made by the LLC or the LP to
Sellers or any of their respective Affiliates and any other amounts payable to
the LLC or the LP but received and retained by Sellers or any of their
respective Affiliates from and including the Settlement Date to, but excluding,
the Closing Date, excluding payments by the LLC or the LP to Sellers or their
respective Affiliates for goods or services delivered, performed or invoiced at
any time pursuant to written agreements or pursuant to certain informal
arrangements with a cost under such informal arrangements not to exceed Two
Hundred Thousand Dollars ($200,000) in the aggregate in the ordinary course of
business.
1.96 "IRS" has the meaning set forth in Article 8.2(y).
1.97 "IT Report" means that certain report dated November, 1999, prepared
by The IT Corporation, in conjunction with a Phase I environmental site
assessment covering the Properties.
1.98 "Laws" means any and all laws, statutes, ordinances, permits, decrees,
writs, injunctions, orders, codes, judgments, principles of common law, rules or
regulations (including, without limitation, Environmental Laws) which are
promulgated, issued or enacted by a Governmental Authority having jurisdiction.
1.99 "Lender" means one or more Third Party financial institutions that
will lend to the LP pursuant to the Debt Financing Agreements.
1.100 "LIBOR" means the London Interbank Offered Rate calculated on a per
annum basis using a three hundred sixty (360) Day year as set forth on page 3750
of the Telerate Screen for three month LIBOR (or if such screen shall cease to
be publicly available, as reported on Reuters Screen page "LIBO" or by any other
publicly available source of similar market rate). The LIBOR rate for Days other
than Business Days shall be the immediately preceding Business Day's rate.
1.101 "Licensed Technology" means Amoco Proprietary Technology, Amoco CO2
EOR Technology, Shell Proprietary Technology, Shell CO2 EOR Technology,
Partnership Technology and Partnership CO2 EOR Technology as those terms are
defined in the Amoco Amended and Restated License Agreement and the Shell
Amended and Restated License Agreement.
1.102 "LLC" means Altura Energy LLC, a Delaware limited liability company.
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1.103 "LLC Agreement" means the Limited Liability Company Agreement of
Altura Energy LLC dated as of February 20, 1997, between Amoco D. T. Company and
SWEPI LP, the successor of Shell Western E&P, Inc.
1.104 "LLC Group" means (a) the LLC and its officers, directors, agents,
representatives, consultants and employees, and (b) the LLC's Affiliates and
their officers, directors, agents, representatives, consultants and employees.
1.105 "LLC Interests" means the Amoco LLC Interest and the Shell LLC
Interest, collectively.
1.106 "LLC Sellers" has the meaning set forth in the introductory
paragraph.
1.107 "LLC Tax Matters Partner" means the tax matters partner of the LLC
designated by the parties to the LLC Agreement pursuant to Section 6231(a)(7) of
the Code.
1.108 "Lowest Cost Response" means that response to an Adverse Condition
that is reasonably expected to provide the lowest cost necessary for the
reporting, investigation, monitoring, removal, cleanup, remediation, restoration
or correction of such condition to meet Environmental Laws in effect at the time
of such response to the satisfaction of any Governmental Authorities with
jurisdiction over the Property on which such condition exists, which response
does not materially interfere with the use or operation of such Property;
provided that Buyer or the LP may, at its option, conduct a supplemental
response at its own expense.
1.109 "LP" means Altura Energy Ltd., a Texas limited partnership.
1.110 "LP Agreement" means that certain Agreement of Limited Partnership
dated as of February 25, 1997, by and among the LLC, Amoco LP Sellers, and Shell
LP Sellers.
1.111 "LP Group" means: (a) the LP and its officers, directors, agents,
representatives, consultants and employees, and (b) the LP's Affiliates and
their officers, directors, agents, representatives, consultants and employees.
1.112 "LP Interests" means the Amoco LP Interests and the Shell LP
Interests, collectively.
1.113 "LP Sellers" has the meaning set forth in the introductory paragraph.
1.114 "LP Tax Matters Partner" means the tax matters partner of the LP
designated by the parties to the LP Agreement pursuant to Section 6231(a)(7) of
the Code.
1.115 "Master Agreement" means that certain Master Agreement dated as of
February 20, 1997, among Sellers.
1.116 "Material Contracts" has the meaning set forth in Article 8.2(q).
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1.117 "Non-Environmental Claims" means all Claims, except for Environmental
Claims.
1.118 "Non-ERISA Plans" has the meaning set forth in Article 8.2(z).
1.119 "Non-Foreign Affidavit" means a document in the form of Exhibit F.
1.120 "NORM" means naturally occurring radioactive materials.
1.121 "NSAI Report" means that certain report prepared by Netherland,
Sewell & Associates, Inc. dated November 22, 1999 (as later supplemented and
corrected, copies of which supplement and correction were previously furnished
or made available to Buyer), entitled "Estimate of Reserves and Future Revenue
to the Altura Energy Ltd. Interest in Certain Oil and Gas Properties as of
January 1, 2000, Based on Escalated Prices and Costs."
1.122 "Occidental Agreement" means the agreement to be entered into between
Buyer and LP Sellers on the Closing Date, substantially in the form attached
hereto as Exhibit N-9.
1.123 "Operative Documents" means the following documents: the Restated LP
Agreement; the Restated LLC Agreement; the Shell Affiliate Loan Agreement; the
Shell Affiliate Note; the Shell Guaranty; the Amoco Affiliate Loan Agreement;
the Amoco Affiliate Note; the Amoco Affiliate Guaranty; the Occidental
Agreement; the Amoco Amended and Restated License Agreement; the Shell Amended
and Restated License Agreement; the Assignment of Limited Liability Company
Interest; the Assignment of Partnership Interest; the Certificate of each
Seller; the Certificate of Buyer; the Non-Foreign Affidavit of each Seller; and
certain modification agreements delivered pursuant to Article 14.2(f).
1.124 "Partnership Interest" means the right to a share of the profits and
losses of the LP and the right to receive distributions of the LP's assets, and
the right to vote with respect to the LP; in each case, as provided in the LP
Agreement.
1.125 "Party or Parties" has the meaning set forth in the introductory
paragraph.
1.126 "Permitted Encumbrances" means any and all of the following:
1.126.1 royalties, overriding royalties, production payments,
reversionary interests, convertible interests, net profits
interests and similar burdens encumbering the Properties to
the extent the net cumulative effect of such burdens does
not operate to reduce the net revenue interests of the
Properties to less than that set forth in Exhibit A or
increase the working interests above that set forth in
Exhibit A without a corresponding increase in the net
revenue interest above that set forth in Exhibit A;
1.126.2 consents to assignment and similar contractual provisions
affecting the Properties;
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1.126.3 preferential rights to purchase and similar contractual
provisions affecting the Properties;
1.126.4 required notices to and filings with a Governmental
Authority associated with the conveyance of the Properties;
1.126.5 rights reserved to or vested in a Governmental Authority
having jurisdiction to control or regulate the Properties in
any manner whatsoever, and all Laws of such Governmental
Authorities;
1.126.6 easements, rights-of-way, servitudes, surface leases,
sub-surface leases, grazing rights, logging rights, ponds,
lakes, waterways, canals, ditches, reservoirs, equipment,
pipelines, utility lines, railways, streets, roads and
structures on, over and through the Properties (including
such encumbrances in favor of Sellers Group entered into
pursuant to Article 10.2);
1.126.7 the terms and conditions of the unitizations,
communitizations, farmout or farmin agreements, term
assignments, poolings, licenses and permits affecting the
Properties;
1.126.8 liens for Taxes or assessments not yet delinquent or, if
delinquent, are being contested by the LP in good faith in
the normal course of business; provided, however, this
provision will not diminish or affect in any way the
Parties' rights and obligations under the indemnities
provided in this Agreement;
1.126.9 liens of operators relating to obligations not yet
delinquent or, if delinquent, are being contested by the LP
in good faith in the normal course of business; provided
however, this provision will not diminish or affect in any
way the Parties' rights and obligations under the
indemnities provided in this Agreement;
1.126.10 Third Party Claims referenced on Exhibit C-1;
1.126.11 gas imbalances associated with the Properties;
1.126.12 suspense funds associated with the Properties; and
1.126.13 such defects or irregularities in the title to the
Properties that do not materially interfere with the
ownership, operation, value or use of the Properties
affected thereby and that would not be considered material
when applying general standards in the oil and gas industry.
1.127 "Person" means an individual, group, partnership, corporation, trust
or other entity.
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1.128 "Personnel" has the meaning set forth in Article 12.1.
1.129 "Pollution Control Bonds" has the meaning set forth in Article 10.4.
1.130 "Pollution Control Facilities" has the meaning set forth in Article
10.4.
1.131 "Possible Condition Precedent Failure" has the meaning set forth in
Article 10.12(a).
1.132 "Post-Closing Notice" has the meaning set forth in Article 4.3.
1.133 "Post-March Computed Interest" means interest at a rate equal to
LIBOR minus the basis points per annum using a three hundred sixty (360) day
year in accordance with the following schedule:
<TABLE>
<S> <C>
For the period from and including March 31 to but excluding April 30 10 basis points
For the period from and including April 30 to but excluding May 31 20 basis points
For the period from and including May 31 to but excluding June 30 30 basis points
For the period from and including June 30 to but excluding July 31 40 basis points
For the period from and including July 31 to but excluding the Closing Date 50 basis points
</TABLE>
calculated on a daily basis.
1.134 "Pref Rights Holders" has the meaning set forth in Article 3.2(b).
1.135 "Process Safety Management" means Process Safety Management of Highly
Hazardous Chemicals, Explosives and Blasting Agents (29 C.F.R. 1910.119), as
amended.
1.136 "Property" or "Properties" means:
1.136.1 all oil and gas leasehold interests, royalty interests,
overriding royalty interests, mineral interests, production
payments, net profits interests and surface interests that
are attributable to the interests described in Exhibit A,
together with all non-producing interests, reversionary
interests, fee interests and leasehold interests that are
owned or held by the LP (including, without limitation,
surface interests and non-unitized horizons or zones both
below and above existing production), and the production of
Hydrocarbon and non-Hydrocarbon substances attributable to
the foregoing;
1.136.2 all unitization, communitization and pooling declarations,
orders, and agreements (including all units formed by
voluntary agreement and those formed under the rules,
regulations, orders or other official acts of any
Governmental Authority having jurisdiction) to the extent
they relate to any of the interests that are described in
Exhibit A, or to non-producing interests, reversionary
interests, fee interests and leasehold
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interests that are owned or held by the LP (including,
without limitation, surface interests and non-unitized
horizons or zones both below and above existing production),
or the production of oil, gas or other Hydrocarbon and
non-Hydrocarbon substances attributable to the foregoing;
1.136.3 all oil and/or gas sales contracts, processing contracts,
gathering contracts, transportation contracts, easements,
rights-of-way, servitudes, surface leases, subsurface
leases, farm-in and farm-out contracts, areas of mutual
interest, balancing contracts, operating agreements, and
other contracts, agreements and instruments to the extent
they relate to any of the interests that are described in
Exhibit A, or to non-producing interests, reversionary
interests, fee interests and leasehold interests that are
owned or held by the LP (including, without limitation,
surface interests and non-unitized horizons or zones both
below and above existing production), or the production of
oil, gas or other Hydrocarbon and non-Hydrocarbon substances
attributable to the foregoing; and 1.136.4 all personal
property, improvements, fixtures, wells (whether producing,
shut-in, injection, disposal, water supply or plugged and
abandoned), tanks, boilers, buildings, machinery, equipment,
pipelines, utility lines, imbalances (production, gathering,
transportation, processing or otherwise), suspense funds,
water rights, roads, permits, licenses and other
appurtenances, to the extent the same are situated upon and
used or held for use by the LP primarily associated with the
ownership, operation, maintenance or repair of the interests
that are described in Exhibit A, or with non-producing
interests, reversionary interests, fee interests and
leasehold interests that are owned or held by the LP
(including, without limitation, surface interests and
non-unitized horizons or zones both below and above existing
production), or the production of oil, gas or other
Hydrocarbon and non-Hydrocarbon substances attributable to
the foregoing.
1.137 "Properties Information" means those Records which are lease files,
land files, regulatory files, well files, gas processing files, division order
files, abstracts, title opinions, engineering, production, geological,
geophysical and other exploration data, books of accounts, records, maps,
drawings, core samples, reserve reports, engineering reports, and correspondence
with, reports to and filings with Governmental Authorities to the extent that
they are associated with the ownership or operation of the interests that are
described in Exhibit A or the production of oil, gas or other Hydrocarbon and
non-Hydrocarbon substances attributable thereto, and including any trade
secrets, know-how and copyrights in such Records. "Properties Information" shall
not include "Licensed Technology."
1.138 "Purchase Price" has the meaning set forth in Article 2.3.
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1.139 "Records" means the LLC's and the LP's books, records and files
(except that Sellers may retain copies of such records that relate to
liabilities as to which Sellers are obligated to provide indemnity that is not
subject to any thresholds in Article 6.5) (including, without limitation, the
NSAI Report and the IT Report). Buyer acknowledges that the LLC and the LP image
and retain Records in electronic format, and may provide imaged or electronic
Records as opposed to originals or hard copies. "Records" shall not include
"Licensed Technology."
1.140 "Remediation Cost" means the cost or expense of the Lowest Cost
Response of addressing an Adverse Condition (net of any operating costs that
would be incurred even in the absence of the Adverse Condition) or Environmental
Claim, including, without limitation, costs of investigation, monitoring,
reporting, removal, cleanup, remediation, restoration and correction, fines or
penalties, oversight or administrative costs of any Governmental Authority,
attorneys' fees and the cost or expense of defense against any Claim and
liabilities for any Claim, in each case related to, arising out of, or connected
with such Adverse Condition or Environmental Claim.
1.141 "Respondent" has the meaning set forth in Article 16.1 and means
either Buyer or Sellers collectively.
1.142 "Restated LLC Agreement" means the agreement and attachments thereto
substantially in the form attached hereto as Exhibit N-2.
1.143 "Restated LP Agreement" means the agreement and attachments thereto
substantially in the form attached hereto as Exhibit N-1.
1.144 "Retained Interests" means the Amoco Retained LLC Interest, the Amoco
Retained LP Interest and the Shell Retained LP Interest, collectively.
1.145 "Sales Tax" means any and all transfer, sales, use or similar taxes,
and any associated penalties and interest.
1.146 "SEC" has the meaning set forth in Article 10.7.
1.147 "Second Close" or "Second Closing" means the consummation of the
purchase and sale of the Amoco Second Sold LLC Interest from Amoco LLC Seller to
Buyer.
1.148 "Second Closing Amount" means Thirty Seven Million Five Hundred
Thousand Dollars ($37,500,000).
1.149 "Second Closing Date" means the later to occur of (i) the first
Business Day after 366 Days after the Closing Date and (ii) the first Business
Day after satisfaction or waiver by the appropriate Parties of the conditions to
the Second Closing set forth in Article 18.4.
1.150 "SEI" has the meaning set forth in the introductory paragraph.
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1.151 "Sellers" has the meaning set forth in the introductory paragraph.
1.152 "Sellers Group" means: (a) Sellers and their officers, directors,
agents, representatives, consultants and employees, and (b) Sellers' Affiliates
and their officers, directors, agents, representatives, consultants and
employees.
1.153 "Sellers Insurance Policies" has the meaning set forth in Article
5.3.
1.154 "Sellers Knowledge" means the actual knowledge of LP Sellers and LLC
Sellers and any of the individuals listed on Exhibit L.
1.155 "Sellers Negotiating Team" means, with respect to each Seller, the
Persons named on Part II of Exhibit P for such Seller.
1.156 "Sellers Retained Environmental Liabilities" means those matters set
forth in Exhibit B.
1.157 "Sellers Retained Liabilities" means the liabilities set forth in
Article 6.4.
1.158 "Settlement Date" means the 1st day of January, 2000, at 12:01 a.m.,
Central Standard Time.
1.159 "Sharing Ratio" means the right to a share of the profits and losses
of the LLC and the right to receive distributions of the LLC's assets and the
right to vote with respect to the LLC; in each case, as provided in the LLC
Agreement.
1.160 "Shell Affiliate Loan Agreement" means the loan agreement to be
entered into between the LP and Shell Borrower on the Closing Date,
substantially in the form attached hereto as Exhibit N-3.
1.161 "Shell Affiliate Note" means the promissory note to be made by Shell
Borrower in favor of the LP on the Closing Date, substantially in the form
attached hereto as Exhibit N-4.
1.162 "Shell Aggregate Interest" means 36.085%.
1.163 "Shell Amended and Restated License Agreement" means the agreement to
be signed at Closing contained in Exhibit O-2.
1.164 "Shell Borrower" means an entity designated by Shell Oil Company
prior to the Closing Date in which Shell Oil Company owns, directly or
indirectly, a substantial interest or which owns, directly or indirectly, a
substantial interest in Shell Oil Company and having its chief executive office
or principal place of business in the European Union, the United Kingdom, the
Netherlands, the United States or Canada.
1.165 "Shell Guaranty" means the guaranty made by Shell Oil Company in
favor of the LP on the Closing Date, substantially in the form attached hereto
as Exhibit N-5.
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1.166 "Shell Inside Basis" has the meaning set forth in Article 4.6(b).
1.167 "Shell LLC Interest" means the Shell Sold LLC Interest and the Shell
Retained LLC Interest, collectively, that is equal to the 36.085% Sharing Ratio
owned by Shell LLC Seller.
1.168 "Shell LLC Seller" has the meaning set forth in the introductory
paragraph.
1.169 "Shell LP Interest" means the Shell Sold LP Interests and the Shell
Retained LP Interests, collectively, that are equal to the 35.3633% Partnership
Interest owned by Shell LP Sellers, collectively.
1.170 "Shell LP Sellers" has the meaning set forth in the introductory
paragraph.
1.171 "Shell Outside Basis" has the meaning set forth in Article 4.6(b).
1.172 "Shell Retained LP Interests" means the aggregate of the interests of
Shell LP Sellers in the LP set forth under the column titled "Retained Interests
and Post-Closing Interest" in Exhibit H-1.
1.173 "Shell Sellers" means Shell LLC Sellers and Shell LP Sellers.
1.174 "Shell Sold LLC Interest" means the interest of Shell LLC Sellers in
the LLC set forth under the column titled "Seller Interest Sold at Closing" in
Exhibit H-1.
1.175 "Shell Sold LP Interests" means the aggregate of the interests of
Shell LP Sellers in the LP set forth under the column titled "Seller Interest
Sold at Closing" in Exhibit H-1.
1.176 "SK2" has the meaning set forth in the introductory paragraph.
1.177 "SLEC" has the meaning set forth in the introductory paragraph.
1.178 "Sold LLC Interests" means the Amoco Sold LLC Interests and the Shell
Sold LLC Interests, collectively.
1.179 "Sold LP Interests" means the Amoco Sold LP Interests and the Shell
Sold LP Interests, collectively.
1.180 "SOVI" has the meaning set forth in the introductory paragraph.
1.181 "Specified Representations and Warranties" has the meaning set forth
in Article 8.3(a).
1.182 "SWEPI" has the meaning set forth in the introductory paragraph.
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1.183 "Tax" means all taxes, including income tax, surtax, remittance tax,
presumptive tax, net worth tax, special contribution, production tax, pipeline
transportation tax, value added tax, withholding tax and any gross receipts tax,
windfall profits tax, profits tax, severance tax, personal property tax, real
property tax, sales tax, transfer tax, use tax, excise tax, premium tax,
environmental tax (including taxes under Section 59A of the Code), customs
duties, stamp tax, capital stock tax, franchise tax, occupation tax, payroll
tax, employment tax, social security, unemployment tax, disability tax,
alternative or add-on minimum tax, estimated tax, and any similar tax imposed by
any Governmental Authority thereof together with any interest, fine or penalty,
or addition thereto, whether disputed or not.
1.184 "Tax Return" means any return, form, declaration of estimated Tax,
report, claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
1.185 "Third Party" means (i) any Person other than Sellers and Buyer and
their respective Affiliates and the LP and the LLC, and (ii) any Governmental
Authority.
1.186 "Title Defect" means (a) any matter that would cause the LP not to
have Defensible Title to a Property or (b) other than the Permitted
Encumbrances, an individual defect in the LP's title to a Property, and as to
both (a) and (b) expressly excluding the State of New Mexico's failure to
approve certain assignments by Sellers of New Mexico State Leases to the LP upon
formation of the LP that constitute Sellers Retained Liabilities.
1.187 "Title Value" means the value for each Property determined in
accordance with Article 3.1.
1.188 "Transition Benefits" has the meaning set forth in Exhibit K-2.
1.189 "Transition Period" has the meaning set forth in Exhibit K-2.
1.190 "Unit Operating Agreement" has the meaning set forth in Article
3.2(b).
1.191 "WARN Act" has the meaning set forth in Article 12.4.
1.192 "WARN Obligations" has the meaning set forth in Article 12.4.
1.193 "Working Capital" means current assets less current liabilities
determined in accordance with GAAP.
1.194 "Working Capital Adjusted Number" means the Working Capital for the
LP as of December 31, 1999, as set forth in the December 31, 1999 balance sheet
comprising a portion of the Financial Statements, less Thirty-Four Million Five
Hundred Thousand Dollars ($34,500,000).
1.195 "Working Capital Statement" has the meaning set forth in Article 4.3.
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ARTICLE 2. SALE OF INTERESTS
2.1 Sale and Purchase. On the Closing Date, upon the terms and conditions
set forth in this Agreement, Sellers agree (i) to sell and assign to Buyer
Member the Sold LLC Interests and (ii) to sell and assign to Buyer LP the Sold
LP Interests in accordance with Exhibit H-1. Sellers will retain and not sell
the Retained Interests pursuant to this Agreement except as otherwise
contemplated by Article 18.
2.2 Account Balances. (a) The LP's standard practice is that on each
regular banking Day all cash balances in the LP's bank accounts are transferred
63.915% to an account for Affiliates of Amoco LP Sellers and 36.085% to an
account for Affiliates of Shell LP Sellers. The amounts which are transferred
are recorded and treated as accounts payable of the recipients and as accounts
receivable of the LP (the "Account Balances").
(b) All Account Balances outstanding on the Closing Date will be paid in
cash to the LP at Closing. If and to the extent that, after the Settlement Date
and from and through the Closing Date, Account Balances have been offset by
equity distributions by the LP to Sellers, these distributions will constitute
Intergroup Distributions which will be taken into account in determining the
Adjusted Purchase Price.
2.3 Purchase Price. The total purchase price, subject to adjustment in
accordance with the terms of this Agreement, paid to Sellers by Buyer for the
Sold LLC Interests and the Sold LP Interests as described in Exhibit H-2 is One
Billion One Hundred Twenty-Four Million Eighty-One Thousand Four Hundred
Thirty-Eight Dollars ($1,124,081,438) (the "Purchase Price"), payable in full
(minus the sum of the amount of Earnest Money and interest earned thereon
pursuant to the Escrow Agreement (net of any escrow costs), which sum is
received by Sellers at Closing as partial payment of the Purchase Price and is
referred to as the "Closing Amount") at Closing in immediately available funds.
The Purchase Price shall be adjusted as set forth in Article 2.4 (as so
adjusted, the "Adjusted Purchase Price"). The Adjusted Purchase Price will be
allocated to Sellers in accordance with Exhibit H-3.
2.4 Purchase Price Adjustments. The Purchase Price shall be adjusted as
follows:
(a) upward by:
(1) the Working Capital Adjusted Number; and
(2) the amount of any Intergroup Contributions; and
(3) Computed Interest on Three Billion Seven Hundred Fifty Million
Dollars ($3,750,000,000) for the period from and including January 1, 2000,
through but excluding the earlier to occur of the Closing Date and March
31, 2000, and if Closing occurs on or after March 31, 2000, the Post-March
Computed Interest on Three Billion Seven Hundred Fifty Million Dollars
($3,750,000,000) for the period from and including March 31, 2000, to but
excluding the Closing Date.
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(b) downward by:
(1) the amount of any Intergroup Distributions; and
(2) the sum of the product obtained by multiplying (x) fifty basis
points (0.50%) divided by 360 by (y) the daily Account Balance for each day
from the Settlement Date through the Closing Date owed by Affiliates of
Sellers under the terms of the respective Revolving Credit and Cash
Management Agreements dated as of February 28, 1997, among the LP and
Sellers' Affiliates.
2.5 Earnest Money. Upon execution of this Agreement and concurrent with its
delivery to Buyer, Buyer shall deposit Three Hundred Seventy-Five Million
Dollars ($375,000,000) ("Earnest Money") with Chase Bank of Texas, National
Association, who shall hold the Earnest Money in escrow pursuant to the Escrow
Agreement. The Earnest Money will be paid in accordance with the Escrow
Agreement.
ARTICLE 3. PREFERENTIAL RIGHTS AND TITLE VALUES
3.1 Title Values. Sellers and Buyer shall agree on an allocation of the
Purchase Price or the appropriate portion thereof for federal income tax and
financial accounting purposes and, if necessary, for purposes of Article 6.9, no
later than March 31, 2001. If the Parties are unable to reach an agreement by
such date, the determination of Title Values will be submitted to binding
arbitration pursuant to Article 16 of this Agreement. Upon such agreement,
Sellers shall accept such Title Values for the purposes set forth above, but
otherwise shall make no representation or warranty as to the accuracy of such
values.
3.2 Preferential Rights to Purchase. (a) If in Sellers' reasonable judgment
the transactions contemplated by this Agreement trigger a preferential purchase
right held by a Third Party, Sellers shall cause the LP (i) to provide such
notice to the Third Party as may be required after consultation with Buyer with
respect to such preferential purchase right and (ii) to comply in all other
respects with the agreement in which the preferential purchase right arises. If,
prior to Closing, such preferential purchase rightsholder notifies Sellers that
it elects to exercise its rights with respect to an Asset to which its
preferential purchase right applies (in accordance with and determined by the
agreement in which the preferential purchase right arises), Sellers shall cause
the LP to transfer such Asset to the holder of the preferential purchase right,
and the LP shall retain the consideration therefor. If the time for exercise of
the preferential right to purchase has not expired prior to Closing, the Asset
will continue to comprise part of the Assets of the LP at Closing; provided,
however, if the holder of the preferential purchase right subsequently exercises
its preferential right to purchase, Buyer shall cause the LP to transfer the
Asset subject to the preferential purchase right to such rightsholder and the LP
shall be entitled to the consideration therefor.
(b) The Parties acknowledge that the sale of the Interests pursuant to this
Agreement may trigger a preferential purchase right to that certain oil and gas
estate (the "Estate") covered by that certain Unit Operating Agreement (as
amended, the "Unit Operating Agreement"), in favor of Fasken Land and Minerals,
Ltd. and certain other Persons (the "Pref Rights Holders") covering the Midland
Farms Unit. Sellers will cause the LP to comply with the preferential
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purchase right procedures required by the Unit Operating Agreement; and the
Parties agree that the allocation of that portion of the Purchase Price
attributable to the Pref Rights Holders' interest in the Estate is Sixty-Three
Million Dollars ($63,000,000).
3.3 Consents to Assignment. Sellers shall use reasonable efforts to obtain
prior to Closing any consents from Third Parties required to consummate the
transactions contemplated hereby.
ARTICLE 4. ACCOUNTING AND TAXES
4.1 Distributions. Sellers are entitled to all distributions, if any, paid
by the LP or the LLC with respect to the LLC Interests or the LP Interests, as
applicable, and are responsible for all capital contributions to the LP or the
LLC, as applicable (as defined in the LP Agreement and the LLC Agreement,
respectively), in each case to the extent they occur between January 1, 2000 and
the Closing Date.
4.2 Taxes.
(a) Tax Returns. Sellers shall prepare and file or cause the LLC or the LP
to prepare and file, in a timely manner, all separate federal, state, local and
tribal Tax Returns required by applicable Law for the LP and the LLC for which
the Tax period ends on or before the Closing Date and pay or cause the LLC or
the LP to pay any Taxes shown as due and payable on such Tax Returns. If LP
Seller or LLC Seller is a member of an Affiliated Group, each of Sellers shall
include its share of the income or loss of the LP or the LLC, as applicable, on
the applicable consolidated federal Tax Returns and combined state Tax Returns
for all periods ending on or before the Closing Date and pay any federal and
state Taxes due on such Tax Returns. If necessary, Sellers shall cause the LP
and the LLC to prepare the federal income Tax books for the LP and the LLC in
order to close such Tax books as of the Closing Date in accordance with Section
706(c)(2) of the Code. Sellers shall prepare and file or cause the LLC or the LP
to prepare and file all Tax Returns due on or before the Closing Date on a
monthly or quarterly basis, including, but not limited to, Sales Taxes and
severance taxes, and the LP or the LLC shall pay all Taxes shown as due on such
Tax Returns. Buyer shall prepare and file or cause to be prepared and filed all
separate federal, state and local Tax Returns for the LP and the LLC for which
the Tax year commences after or includes the Closing Date and pay or cause to be
paid by the LP any Taxes shown as due and payable on such Tax Returns.
(b) Cooperation. Sellers and Buyer shall (i) each provide the other, and
Buyer shall cause the LP and the LLC to provide Sellers, with such assistance as
may reasonably be requested by any of them in connection with the preparation of
any Tax Return, audit or other examination by any taxing authority or judicial
or administrative proceedings relating to liability for Taxes, (ii) each retain
and provide the other with access at reasonable times to review and copy any
records or information which the Party requesting access may reasonably deem
relevant to such Tax Return, audit or examination, proceeding or determination,
and (iii) each provide the other with the amount of any income, deductions or
other information required to be shown on any Tax Return of the other for any
period when the Party requested to furnish such information has such information
in its possession.
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The Party requesting assistance hereunder shall reimburse the other Parties
for reasonable out-of-pocket expenses (excluding the cost of wages and benefits
of employees of such Party providing such assistance, which shall be borne
solely by the Party providing such assistance) incurred in providing such
assistance to the extent such expenses exceed an aggregate amount of $50,000;
provided, however, that Buyer shall not be required to reimburse Sellers for
expenses incurred in providing assistance regarding the period prior to the
Formation Date. Without limiting the generality of the foregoing and
notwithstanding anything in this Agreement to the contrary, Buyer shall retain,
and shall cause the LP and the LLC to retain, until the later of (A) one hundred
twenty (120) Days after the expiration of all statutes of limitations (including
any extensions) or (B) ten (10) years after Closing, copies of all Tax Returns,
supporting work schedules and other records or information in its possession
which may be relevant to such returns for all taxable periods from January 1,
1997, to the Closing Date, inclusive, and shall not destroy or otherwise dispose
of any such records without first providing Sellers with an opportunity to
review and copy the same.
(c) Tax Elections. Buyer shall cause the LP and the LLC to have in effect
for the taxable year in which Closing occurs an election under Section 754 of
the Code.
4.3 Working Capital Settlement and Estimate of Adjusted Purchase Price. No
later than ten (10) Days after execution of this Agreement, Sellers shall submit
a statement (the "Working Capital Statement") and include therewith an estimate
of the Adjusted Purchase Price to Buyer. The statement shall be prepared using
the audited balance sheet prepared by Ernst and Young. Buyer shall have fourteen
(14) Days to review the Working Capital Statement, including any access to the
LP's and the LLC's financial books and records. On the Day following expiration
of such fourteen (14) Day review period, Buyer shall submit a written report
containing any changes Buyer proposes to be made to the Working Capital
Statement. Sellers and Buyer shall attempt to agree on a final Working Capital
Statement no later than five (5) Days prior to Closing. If Sellers and Buyer are
unable to agree by that date, Sellers' estimate shall be used to determine the
adjustment to the Purchase Price pursuant to Article 2.4 to be used at Closing.
Sellers and Buyer shall use reasonable efforts to resolve any dispute under this
Article 4.3 from and after the Closing Date or refer the matter to the
Accounting Referee for resolution. Within thirty (30) Days after the Closing
Date, Sellers shall submit to Buyer a statement (the "Post-Closing Notice")
which will set forth the difference, if any, between the estimated amount of
Intergroup Contributions and Intergroup Distributions and the actual amount of
Intergroup Contributions and Intergroup Distributions. If the net amount of such
difference is positive, such amount shall be referred to as an "Excess" and if
the net amount of such difference is negative, such amount shall be referred to
as a "Deficiency." Buyer shall notify Sellers within fifteen (15) Days after
receipt of the Post-Closing Notice whether it disputes Sellers' Post-Closing
Notice. If Buyer disputes Sellers' Post-Closing Notice, Buyer and Sellers shall
attempt to resolve any such dispute within fifteen (15) Days after Sellers
receive a notice from Buyer of such dispute. If Sellers and Buyer are unable to
resolve such dispute within such fifteen (15) Day period, the matter shall be
referred to the Accounting Referee for resolution. The Accounting Referee shall
make its determination as to such dispute under this Article 4.3 within thirty
(30) Days after referral of any dispute. The scope of any disputes to be
resolved by the Accounting Referee shall be limited to whether the calculation
of Working Capital on the Working Capital Statement and the other components of
the Adjusted Purchase Price were determined using the agreed methodology and
whether there were mathematical errors in such calculation. The determination
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of the Accounting Referee shall be final and binding upon the Parties. The
amount of any Excess or Deficiency shall be paid by the appropriate Party or
Parties to the Party or Parties to which such amount is owed (which amount, if
paid to Sellers, shall be paid in the percentages as set forth on Exhibit H-4)
within fifteen (15) Days after the determination of such amount pursuant to this
Article 4.3.
4.4 Sales Tax and Fees. Buyer shall pay all Sales Taxes, if any, and all
documentary, filing and other fees required in connection with the transfer of
the LP Interests and the LLC Interests and any deemed transfer of the Properties
and provide Sellers with written copies of any such recorded instruments, other
than transfers requested by Sellers pursuant to Article 10.2, for which Sellers
shall pay any such Sales Taxes and all other fees.
4.5 Tax Status. Sellers and Buyer acknowledge that (a) the LP is governed
by the LP Agreement and is a partnership for federal income tax (as well as
state Law) purposes; (b) the LLC is governed by the LLC Agreement and is a
partnership for federal income tax purposes; (c) the LLC is the LP Tax Matters
Partner; (d) Amoco LLC Seller is the LLC Tax Matters Partner; and (e) each
Seller shall be allocated its share of the LP's and/or the LLC's, as applicable,
items of income, gain, deduction and loss for federal and state income tax
purposes as of the Closing Date in accordance with the LP Agreement and the LLC
Agreement, and applicable federal and state Tax Law.
4.6 Basis. (a) Amoco LP Sellers represent and warrant that their tax basis
in the Amoco LP Interests (the "Amoco Outside Basis") equals the LP's tax basis
in its assets related to Amoco LP Sellers (the "Amoco Inside Basis"). Amoco LP
Sellers agree that if there is a Final Determination that as of the Closing
Date, the Amoco Outside Basis exceeded the Amoco Inside Basis, then within ten
(10) Business Days after the occurrence of such Final Determination, Amoco LP
Sellers will pay the Buyer LP an amount equal to 37.5% of the difference between
the Amoco Outside Basis and the Amoco Inside Basis by wire transfer of
immediately available funds to a bank account designated by Buyer LP.
(b) Shell LP Sellers represent and warrant that their tax basis in the
Shell LP Interests (the "Shell Outside Basis") equals the LP's tax basis in its
assets related to Shell LP Sellers (the "Shell Inside Basis"). Shell LP Sellers
agree that if there is a Final Determination that as of the Closing Date, the
Shell Outside Basis exceeded the Shell Inside Basis, then within ten (10)
Business Days after the occurrence of such Final Determination, Shell LP Sellers
will pay the Buyer LP an amount equal to 37.5% of the difference between the
Shell Outside Basis and the Shell Inside Basis by wire transfer of immediately
available funds to a bank account designated by Buyer LP.
(c) The payments described in subparagraphs (a) and (b) above shall not be
required to the extent that the Buyer Partner is otherwise compensated (e.g.,
through remedial allocations or because Code Section 613A(c)(7)(d) treats the
basis of oil and gas properties as belonging to the partners in the LP).
(d) Any payments required under subparagraphs (a) and (b) above shall be
treated as an adjustment to the purchase price.
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(e) For purposes of subparagraphs (a) and (b) above, "Final Determination"
means (i) a nonappealable judgment of a court of competent jurisdiction, (ii) a
closing agreement entered into by the LP and the IRS or (iii) a consent to a
final proposed administrative adjustment executed by the LP.
4.7 Allocations. For all purposes of this Agreement and the Restated LP
Agreement, the Parties agree that the Gross Asset Value (as defined in the
Restated LP Agreement) of the Original Assets (as defined in the Restated LP
Agreement) on the Closing Date shall be allocated to such assets as follows:
(a) first, to cash, Cash Equivalents (as defined in the Restated LP
Agreement), receivables, and any other current assets based on their relative
Fair Market Values (as defined in the Restated LP Agreement); and
(b) second,
(i) 88% to assets that are eligible for depletion under Code Section
611; and
(ii) 12% to assets that are eligible for depreciation under Code
Section 167.
No portion of the Gross Asset Value of the Original Assets shall be allocated to
any other assets, including but not limited to intangible property.
ARTICLE 5. LOSS, CASUALTY AND INSURANCE
5.1 Notice of Loss. From the date of execution of this Agreement until
Closing, Sellers will promptly notify Buyer of each instance of loss or damage
to the Assets, or any part thereof, known to Sellers and estimated to exceed
Five Million Dollars ($5,000,000) net to the LP's interest in the affected
Assets.
5.2 Casualty. (a) If, after the Settlement Date but prior to the Closing
Date, any portion of the Assets suffers a Casualty Loss that individually
exceeds Ten Million Dollars ($10,000,000), Buyer shall nevertheless be required
to Close and Sellers shall elect by written notice to Buyer prior to Closing
either (i) to cause any Asset affected by Casualty Loss 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 indemnify Buyer through a
document reasonably acceptable to Sellers and Buyer against any costs or
expenses that Buyer reasonably incurs to repair or restore the Asset subject to
the Casualty Loss. In each case, Sellers shall be entitled to retain all rights
to insurance and other claims against Third Parties with respect to the Casualty
Loss except to the extent the Parties otherwise agree in writing. In no event
shall such cost of repair or restoration or any indemnity for repair or
restoration under this Article 5.2 associated with a Casualty Loss exceed, in
the case of a Property, the Title Value of the affected Property, or, in the
case of any other Asset, the Fair Market Value of the affected Asset.
(b) If, after the date of this Agreement but prior to the Closing Date, any
portion of the Assets suffers a Casualty Loss that is Ten Million Dollars
($10,000,000) or less, Buyer shall nevertheless be required to Close and the LP
shall retain all sums paid to the LP by Third Parties
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by reason of such Casualty Loss, including all of the LP's right, title and
interest (if any) in insurance proceeds, unpaid awards, and other rights against
Third Parties (other than Affiliates of Sellers and their directors, officers,
employees and agents) arising out of the Casualty Loss.
5.3 Insurance. Buyer understands and agrees that from and after the Closing
Date, except for the insurance listed on Exhibit G for which the LP or the LLC
is an express named insured, (a) no insurance coverage will be provided to the
LP or the LLC or Buyer under (i) any insurance policy issued to Sellers or any
Affiliate of any Seller, or (ii) any insurance policy (including reinsurance)
issued by any insurance company Affiliate of any Seller ((i) and (ii) being
together, "Sellers Insurance Policies"), and (b) no claims regarding any matter
whatsoever, whether or not arising from events occurring prior to Closing, shall
be made by the LP or the LLC or Buyer against or under Sellers Insurance
Policies, regardless of their date of issuance.
ARTICLE 6. ALLOCATION OF RESPONSIBILITIES AND INDEMNITIES
6.1 Opportunity for Review. Each Party represents that it has had an
adequate opportunity to review the release and indemnity provisions in this
Agreement, including, without limitation, the opportunity to submit the same to
legal counsel for review and comment. Based upon the foregoing representation,
the Parties agree to the provisions set forth below.
6.2 Sellers' Non-Environmental Indemnity Obligation. If Closing shall
occur, from and after the Closing Date each Seller shall release Buyer Group
(including, from and after the Closing Date, the LP and the LLC) from and shall,
subject to the limitations set forth in Article 6.5, fully protect, defend,
indemnify and hold Buyer Group (including, from and after the Closing Date, the
LP and the LLC) harmless from and against any and all (i) Title Defects and (ii)
Third Party Non-Environmental Claims relating to, arising out of, or connected
with, directly or indirectly (and, whether asserted before or after Closing
without extending the time limitations of Article 6.5(a)), the ownership of the
Interests or the ownership or operation of the Assets, including, without
limitation, ownership or operation of the Properties, or any part thereof, to
the extent, for both Title Defects and Third Party Non-Environmental Claims,
attributable to the period prior to the date of this Agreement, including,
without limitation, Third Party Non-Environmental Claims relating to:
(a) injury or death of any Person or Persons whomsoever,
(b) damages to or loss of any Property or resources,
(c) breach of contract,
(d) common law causes of action such as negligence, strict liability,
nuisance or trespass, or
(e) fault imposed by statute, rule, regulation or otherwise, even if caused
in whole or in part by the negligence (whether sole, joint, or concurrent),
strict liability, or other legal fault of any Person indemnified hereunder;
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provided, however, that with respect to each Property, once Sellers have paid,
in the aggregate, the Title Value to Buyer Group (including, from and after the
Closing Date, the LP and the LLC) or to a Third Party as an indemnity payment on
behalf of Buyer Group, then, except as provided with respect to Third Party
Non-Environmental Claims, Sellers shall have no further obligation to protect,
indemnify, defend or hold harmless Buyer Group (including, from and after
Closing Date, the LP and the LLC) with respect to such Title Defect or Title
Defects with respect to such Property.
6.3 Sellers' Environmental Indemnity Obligation. If Closing shall occur,
from and after the Closing Date each Seller shall release Buyer Group
(including, from and after the Closing Date, the LP and the LLC) from and shall,
subject to the limitations set forth in Article 6.5, fully protect, defend,
indemnify and hold Buyer Group (including, from and after the Closing Date, the
LP and the LLC) harmless from and against any and all Environmental Claims and
all Remediation Costs (including, without limitation, such Claims and costs
associated with asbestos or norm, plugging and abandonment, and process safety
management) relating to, arising out of, or connected with, directly or
indirectly (and, whether asserted before or after Closing without extending the
time limitations of Article 6.5(a)), the ownership of the Interests or ownership
or operation of the Assets, including, without limitation, ownership or
operation of the Properties, or any part thereof, to the extent, for both
Environmental Claims and Remediation Costs, attributable to the period prior to
the date of this Agreement, even if caused in whole or in part by the negligence
(whether sole, joint, or concurrent), strict liability, or other legal fault of
any Person indemnified hereunder.
6.4 Sellers Retained Liabilities. If Closing shall occur, from and after
the Closing Date each Seller shall release Buyer Group (including, from and
after the Closing Date, the LP and the LLC) from and shall fully protect,
defend, indemnify and hold Buyer Group harmless from and against any and all
Claims relating to, arising out of, or connected with, directly or indirectly
(and no matter when asserted):
(a) Environmental Claims and Remediation Costs with respect to Sellers
Retained Environmental Liabilities, except to the extent caused by the acts or
omissions of any member of Buyer Group (including acts or omissions on or after
the Closing Date by the LP and the LLC); provided, however, that Sellers
acknowledge that Buyer Group, the LP and the LLC have no obligation to remediate
Sellers Retained Environmental Liabilities;
(b) The ownership or operation of the Excluded Assets, including, without
limitation, (1) Environmental Claims and (2) Third Party Non-Environmental
Claims relating to: (i) injury or death of any Person or Persons whomsoever,
(ii) damages to or loss of any Property or resources, (iii) breach of contract,
(iv) common law causes of action such as negligence, strict liability, nuisance
or trespass, (v) fault imposed by statute, rule, regulation or otherwise, even
if caused in whole or in part by the negligence (whether sole, joint, or
concurrent), strict liability, or other legal fault of any Person indemnified
hereunder, or (vi) Third Party Tax Claims or disputes;
(c) Environmental Claims or Remediation Costs with respect to the
Hydrocarbons currently floating above a perched water-bearing zone in the
vicinity of Hobbs, New Mexico, that have been or are being produced by the
Windmill Oil Company; provided, however, that
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Sellers shall only be liable for Claims incurred by Buyer Group (i) for Adverse
Conditions of such zones existing on the date of this Agreement (including any
migration therefrom prior to the date of remediation of such conditions), and
(ii) in excess of Two Hundred Thousand Dollars ($200,000) in any calendar year;
provided, further however, that Sellers acknowledge that none of Buyer Group,
the LP, or the LLC have any current obligation to remediate such condition;
(d) royalties, severance Taxes, or fees owed or payable to any Governmental
Authority or Person (including, without limitation, Claims alleging
undervaluation or underpayment thereof, or wrongdoing, fault, or strict
liability relating thereto) arising therefrom or in connection therewith, or
Claims pursuant to the False Claims Act or similar state Laws to the extent
attributable to the period prior to the Closing Date in respect of Hydrocarbon
or non-Hydrocarbon substances (including, without limitation, CO2) used,
purchased, produced, transported, sold or conveyed at, to, under, across or from
the Properties or properties formerly owned by the LP, except to the extent that
(i) a specifically identifiable accrual or reserve was included as a current
liability in the December 31, 1999 balance sheet comprising a portion of the
Financial Statements for the year ended December 31, 1999, and (ii) the amount
of such Claim is taken into account as a current liability in calculating
Working Capital as set forth on such balance sheet;
(e) Environmental Claims or Remediation Costs with respect to offsite
disposal of hazardous or non-hazardous waste (including, without limitation,
NORM, asbestos and Hydrocarbon or non-Hydrocarbon substances) to the extent
attributable to the period prior to the Formation Date, and any present or
future sites identified under Environmental Laws at which materials or wastes
generated by or on behalf of Sellers prior to the Formation Date were deposited;
(f) Sellers' existing disputes with the State of New Mexico concerning
Sellers' alleged underpayment of royalties and oil severance taxes for any
period prior to Closing, including, without limitation, the State of New
Mexico's failure to approve certain assignments by Sellers of New Mexico State
Leases to the LP upon formation of the LP;
(g) all litigation with respect to the Properties filed against Sellers
prior to the Formation Date including, without limitation, that litigation
listed on Exhibit C-2;
(h) all litigation listed on Exhibit C-1 regardless of when filed, but only
to the extent of Sellers' liability with respect to any such litigation, as
determined pursuant to a final disposition with respect thereto; and
(i) all Third Party Non-Environmental Claims filed prior to the Formation
Date regarding the Assets.
Claims made under this Article 6.4 may be made whether or not a Claim also
could be asserted under Articles 6.2 or 6.3, and Claims under this Article 6.4
are not subject to any of the limitations set forth in Article 6.5 or Article
8.3.
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6.5 Claim Periods and Thresholds. Sellers will have no obligation under
Articles 6.2 or 6.3 to protect, defend, indemnify, and hold Buyer Group harmless
from and against the Claims (or Title Defects or matters with respect to which
Remediation Costs will be incurred, as applicable) described in such Articles,
and the indemnified Person is solely responsible for any and all such Claims or
matters:
(a) for which the indemnified Person has not provided Sellers with an
Indemnity Claim Notice within (i) eighteen (18) months from and after Closing
with respect to such Non-Environmental Claims or Title Defects, or (ii) the
third anniversary of the Closing Date with respect to such Environmental Claims
(or matters with respect to which Remediation Costs will be incurred, as
applicable); and
(b) to the extent the aggregate of Claims of Buyer Group against Sellers
described in Articles 6.2 and 6.3 and breaches of representations and warranties
under Article 8 (except for the Specified Representations and Warranties) do not
exceed One Hundred Fifty Million Dollars ($150,000,000) (it being acknowledged
and agreed that the indemnified Persons are solely responsible for the aggregate
of all such Claims, Remediation Costs, breaches of such representations and
warranties, and Title Defects to the extent they do not exceed One Hundred Fifty
Million Dollars ($150,000,000) of actual expenditures incurred); and
(c) for each such Claim (or Title Defect or Remediation Costs) of Two
Million Dollars ($2,000,000) or less or expenditures with respect to each such
Claim; and these Claims, Remediation Costs, breaches of representations and
warranties (except for the Specified Representations and Warranties), and Title
Defects of Two Million Dollars ($2,000,000) or less will not be counted in
determining the One Hundred Fifty Million Dollar ($150,000,000) threshold in
subparagraph (b) above, provided that in calculating such Two Million Dollar
($2,000,000) threshold, any Dollar or materiality qualifiers in the
representations or warranties shall be disregarded; and
(d) the first Two Million Dollars ($2,000,000) of expenditures with respect
to each such Claim (or Title Defect or Adverse Condition with respect to which
Remediation Costs have been incurred) which exceeds Two Million Dollars
($2,000,000); provided, however, that the first Two Million Dollars ($2,000,000)
of expenditures for each such Claim will be counted in determining the One
Hundred Fifty Million Dollar ($150,000,000) threshold in subparagraph (b) above.
6.6 Third Party Claims Involving Both Sellers and the LP. In the event
Third Party Claims relating to, arising out of, or connected with the ownership
of the Interests or the ownership or operation of the Assets, including, without
limitation, the ownership or operation of the Properties or any part thereof,
are asserted against one or more of Sellers and against Buyer Group, the LP or
the LLC (other than Claims set forth in Article 6.4), (a) Sellers shall be
responsible for, and Articles 6.2 and 6.3 shall apply to, such Third Party
Claims to the extent attributable to the period prior to the Formation Date
(subject to the limitations set forth in Article 6.5), (b) the LP shall be
responsible for such Third Party Claims to the extent attributable to the period
between the Formation Date and the date of this Agreement, subject to
indemnification under Articles 6.2 or 6.3 (subject to the limitations set forth
in Article 6.5), and
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(c) the LP shall be responsible for such Third Party Claims to the extent
attributable to the period from and after the date of this Agreement.
6.7 Notice of Claims. If a Claim for indemnity is asserted against a Person
for which a Party may have an obligation of indemnity under this Article 6 or
elsewhere under this Agreement (an "Indemnity Claim"), the indemnified Person
shall give the indemnifying Party written notice of the underlying Claim setting
forth the particulars associated with the underlying Claim (including a copy of
the written underlying Claim, if any) as then known by the indemnified Person
("Indemnity Claim Notice"). For Indemnity Claims with respect to which Article
6.5 applies, an Indemnity Claim shall be deemed to have been made (subject to
clauses (b) and (c) thereof) upon the indemnified Person's providing an initial
Indemnity Claim Notice to the indemnifying Party stating that the Claim (or
Title Defect or Remediation Costs) underlying the Indemnity Claim could
reasonably be expected to exceed Two Million Dollars ($2,000,000). The
indemnified Person shall, to the extent practicable, give an Indemnity Claim
Notice within such time as will allow the indemnifying Party a reasonable period
in which to evaluate and timely respond to the underlying Claim; provided,
however, that (i) failure to do so shall not affect an indemnified Person's
rights hereunder except to the extent the indemnifying Party is prejudiced
thereby; (ii) the foregoing shall not extend the time periods set forth in
Article 6.5(a), but if an Indemnity Claim Notice is given to an indemnifying
Party within the applicable time period set forth in Article 6.5(a), such
Indemnity Claim Notice shall be effective, subject to the other limitations in
Article 6.5 or the other provisions of Article 6, as to costs and expenses
incurred or suffered after the expiration of such time period, with respect to
the matter generally described in such Indemnity Claim Notice; and (iii) the
indemnified Person shall not be required to provide an Indemnity Claim Notice
unless and until such Person believes that the underlying Claim (or Title Defect
or Remediation Costs) underlying the Indemnity Claim could reasonably be
expected to exceed the applicable threshold, which for purposes of Article 6.5
is Two Million Dollars ($2,000,000) per underlying Claim.
6.8 Defense of Claims. Upon receipt of an Indemnity Claim Notice involving
a Third Party for which an indemnifying Party reasonably believes it may have an
obligation of indemnity under this Agreement, the indemnifying Party may
(without prejudice to its right to contest its obligation of indemnity under
this Agreement) assume the defense of the Third Party Claim with counsel
selected by the indemnifying Party and reasonably satisfactory to the
indemnified Person. The indemnified Person shall cooperate in all reasonable
respects in such defense. If any Third Party Claim involves a fact pattern
wherein Buyer may have an obligation to indemnify any Seller and such Seller may
have an obligation to indemnify Buyer, each Party may assume the defense of and
hire counsel for that portion of the Third Party Claim for which it may have an
obligation of indemnity. In all instances, the indemnified Person may employ
separate counsel and participate in the defense of any Third Party Claim;
provided, however, if the indemnifying Party has assumed the defense of a Third
Party Claim pursuant to this Article 6.8 and has agreed to indemnify the
indemnified Person, the fees and expenses of counsel employed by the indemnified
Person will be borne solely by the indemnified Person. If (a) the underlying
Third Party Claim meets any applicable per-Claim threshold, (b) the underlying
Third Party Claim plus all previously asserted underlying Claims have exceeded
the One Hundred Fifty Million Dollar ($150,000,000) aggregate threshold, if
applicable in the circumstances, and (c) the indemnifying Party does not notify
the indemnified Person within the earlier to occur of:
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(a) three (3) Business Days before the time a response is due in any
litigation matter (so long as the Indemnity Claim Notice was presented to the
indemnifying Party at least ten (10) Days prior to the date the response is
due), or
(b) thirty (30) Days after receipt of the Indemnity Claim Notice, that the
indemnifying Party elects to undertake the defense of the Third Party Claim, the
indemnified Person may defend, at the expense of the indemnifying Party, the
Third Party Claim with counsel of the indemnified Person's choice, subject to
the right of the indemnifying Party to assume the defense of the Third Party
Claim at any time prior to settlement or final determination thereof. In such
event, the indemnified Person shall promptly send written notice to the
indemnifying Party of any proposed settlement of the Third Party Claim, which
settlement the indemnifying Party may accept or reject, in its reasonable
judgment, within ten (10) Days of receipt of the notice, unless the settlement
offer is limited to a shorter period, in which case the indemnifying Party will
have such shorter period in which to accept or reject the proposed settlement.
Failure of the indemnifying Party to accept or reject such settlement within the
applicable period will be deemed a rejection of the proposed settlement.
Notwithstanding the foregoing, the indemnified Person may settle any matter over
the objection of the indemnifying Party, but in so doing the indemnified Person
will waive any right to indemnity therefor as to (and only as to) liabilities
with respect to which the indemnifying Party has acknowledged in writing its
indemnity obligation.
6.9 Determination of Title Defect Amounts. The amount of a Title Defect
shall be determined as follows:
(a) if Buyer and Sellers agree on the amount, that amount shall be the
value of the Title Defect for purposes of this Article 6; and
(b) if Buyer and Sellers cannot agree on the amount, the Title Value of the
affected Property(ies) shall be used by the Parties for determining the amount.
6.10 Waiver of Certain Damages. Each of the Parties expressly waives and
agrees not to seek indirect, consequential, punitive or exemplary damages or
damages for lost profits of any kind with respect to any dispute arising under,
related to, or in connection with this Agreement or breach hereof; provided,
however, this provision will not diminish or affect in any way the Parties'
rights and obligations under any indemnities provided in this Agreement.
6.11 Several Liability. (a) Except as otherwise expressly set forth herein,
if any one or more Sellers have an indemnity obligation or otherwise have
liability hereunder, Amoco Sellers' percentage of the total liability for
amounts asserted under this Article 6 or Article 8 or any other Article will be
limited to the Amoco Aggregate Interest, and Shell Sellers' percentage of the
total liability for amounts asserted under this Article 6 or Article 8 or any
other Article will be limited to the Shell Aggregate Interest; provided that,
(i) notwithstanding any provision of this Agreement to the contrary, Shell
Sellers will be jointly liable for any and all Shell Seller liabilities, and
Amoco Sellers will be jointly liable for any and all Amoco Seller liabilities
and (ii) Buyer shall have no obligation to determine which Seller or Sellers are
liable and may assert
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liability against all Sellers, and the allocation of Sellers' liability among
themselves (except as to the percentages stated above) shall not be a defense to
any Claim by Buyer.
(b)(i) Notwithstanding any provision of this Agreement, no agreement,
consent, approval, waiver, action, notice or other conduct of Sellers under this
Agreement shall be effective unless made or given by both Shell Sellers and
Amoco Sellers and (ii) Shell Sellers shall act only collectively and Amoco
Sellers shall act only collectively; provided that nothing in this Article
6.11(b) shall limit any representations, warranties or covenants made
individually by Shell Sellers or Amoco Sellers, respectively.
6.12 Sellers' Responsibility for Taxes. Notwithstanding anything to the
contrary in this Article 6 or Article 7, from and after the Closing Date,
Sellers shall each protect, defend, indemnify, and hold harmless Buyer Group,
the LLC and the LP from any and all Taxes imposed on the LLC or the LP with
respect to the Assets, Properties, business or operations of the LLC or the LP
for any taxable period or portion thereof ending on or prior to the Closing
Date, except to the extent such Taxes are fully reflected as a liability in the
December 31, 1999 balance sheet comprising a portion of the Financial Statements
or are accrued in the ordinary course of business after the Settlement Date. To
the extent that, following the completion and delivery of the LP's annual
financial statements for the year 2000, the amount paid for the year 2000 by the
LP or the LLC with respect to such Taxes exceeds the amount accrued for the
Taxes in the balance sheet comprising a portion of such financial statements,
Buyer shall pay to Sellers the amount of such excess, in the same proportions as
the Closing Amount was paid to Sellers. This Article 6.12 shall not modify or
otherwise limit Sellers' indemnity obligations pursuant to Article 6.4(d).
6.13 Cross-Release. (a) Effective as of Closing, except for the performance
of the obligations and covenants in this Agreement, and except with respect to
the representations and warranties in this Agreement, Buyer, on its behalf and
on behalf of Buyer Group (including, from and after the Closing Date, the LP and
the LLC), hereby releases, acquits and discharges each member of Seller Group
from any and all Claims by Buyer Group with respect to Contracts or arrangements
between the LP or the LLC, on the one hand, and any member of Sellers Group
("Affiliate Contracts") to the extent (i) not attributable to a Third Party
Claim and (ii) attributable to pre-Closing periods; provided that the foregoing
release shall not release any settlement in the ordinary course of business of
outstanding amounts under Affiliate Contracts.
(b) Effective as of Closing, except for the performance of the obligations
and covenants in this Agreement, and except with respect to the representations
and warranties in this Agreement, each Seller, on its behalf and on behalf of
Sellers Group, hereby releases, acquits and discharges each member of Buyer
Group (including, from and after the Closing Date, the LP and the LLC), from any
and all Claims by Buyer Group with respect to Affiliate Contracts to the extent
(i) not attributable to a Third Party Claim and (ii) attributable to pre-Closing
periods; provided that the foregoing release shall not release any settlement in
the ordinary course of business of outstanding amounts under Affiliate
Contracts.
6.14 Indemnity Allocation. With respect to any amounts paid for
indemnification or for breach of representation or warranty pursuant to this
Agreement, the Person or Persons entitled to such amounts shall be the Person or
Persons that are the express beneficiary or
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beneficiaries under the relevant provisions of this Agreement that suffer and
are entitled to the Claim covered by such provisions (and it is acknowledged and
agreed that, to the extent that the LP suffers and is entitled to the Claim, any
amounts payable with respect thereto shall be made to the LP and not to any
other Person within Buyer Group); and if the LP is the indemnified Person or the
Person that receives any payment for breach of representation or warranty, the
LP's allocation of the contribution, benefit, loss and/or detriment with respect
to the matter that is the subject of the indemnification or breach shall be
governed by the Restated LP Agreement.
ARTICLE 7. DISCLAIMERS
7.1 Disclaimer - Representations and Warranties. Buyer acknowledges and
agrees that, except as otherwise expressly provided in this Agreement or the
Operative Documents, (i) the Interests will be assigned and conveyed from
Sellers to Buyer LP and Buyer Member without warranty, express, statutory,
implied or otherwise and (ii) Sellers make no warranty, express, statutory,
implied, or otherwise with respect to the Properties. Except as otherwise
expressly provided in this Agreement or in the Operative Documents, Sellers
hereby expressly disclaim any and all representations and warranties associated
with the Properties, express, statutory, implied or otherwise, including,
without limitation: (a) warranty of title, (b) existence of any and all
prospects, (c) geographic, geologic or geophysical characteristics associated
with any and all prospects, (d) existence, quality, quantity or recoverability
of Hydrocarbon and non-Hydrocarbon substances associated with the Properties,
(e) costs, expenses, revenues, receipts, accounts receivable, accounts payable,
suspense fund or gas imbalances associated with the Properties, (f) contractual,
economic or financial information and data associated with the Properties, (g)
continued financial viability or productivity of the Properties, (h)
environmental or physical condition of the Properties, (i) federal, state, local
or tribal income or other Tax consequences associated with the Properties, (j)
absence of patent or latent defects, (k) safety, (l) state of repair, (m)
merchantability, (n) conformity to models, (o) any rights of any member of Buyer
Group under appropriate statutes to claim diminution of consideration or return
of the Purchase Price, (p) warranty of freedom from patent or trademark
infringement, (q) warranties existing under applicable Law now or hereafter in
effect, and (r) fitness for a particular purpose; and Buyer (on behalf of itself
and Buyer Group) irrevocably waives any and all Claims it may have against
Sellers Group with respect to same, even if caused in whole or in part by the
negligence (whether sole, joint, or concurrent), strict liability, or other
legal fault of Sellers Group.
7.2 Disclaimer - Statements and Information. Sellers expressly disclaim any
and all liability and responsibility, except as otherwise expressly provided in
this Agreement or the Operative Documents, for and associated with the quality,
accuracy, completeness or materiality of the information, data and materials
furnished (electronically, orally, by video, in writing or any other medium,
including, without limitation, in the Confidential Information Memorandum, by
compact disk, in any data room, or otherwise) at any time to Buyer Group
associated with the transactions contemplated by this Agreement, including,
without limitation: (a) title to the Properties, (b) existence of any and all
prospects, (c) geographic, geologic or geophysical characteristics associated
with any and all prospects, (d) existence, quality, quantity or recoverability
of Hydrocarbon and non-Hydrocarbon substances associated with the Properties,
(e) costs, expenses, revenues, receipts, accounts receivable, accounts payable,
suspense fund or gas imbalances associated with the Properties, (f) contractual,
economic or financial information
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and data associated with the Properties, (g) continued financial viability or
productivity of the Properties, (h) environmental or physical condition of the
Properties, (i) federal, state, local or tribal income or other Tax consequences
associated with the Properties, (j) absence of patent or latent defects, (k)
safety, (l) state of repair, (m) merchantability, (n) conformity to models, (o)
any rights of any member of Buyer Group under appropriate statutes to claim
diminution of consideration or return of the Purchase Price, (p) warranty of
freedom from patent or trademark infringement, (q) warranties existing under
applicable Law now or hereafter in effect, and (r) fitness for a particular
purpose; and Buyer (on behalf of itself and Buyer Group) irrevocably waives any
and all Claims it may have against Sellers Group with respect to same, even if
caused in whole or in part by the negligence (whether sole, joint, or
concurrent), strict liability, or other legal fault of Sellers Group.
ARTICLE 8. SELLERS' REPRESENTATIONS AND WARRANTIES
8.1 LLC Sellers' Representations. Each LLC Seller severally (and not
jointly) represents and warrants with respect to itself and/or the LLC, as
applicable, the following to Buyer:
(a) Organization and Good Standing. Amoco LLC Seller is a corporation and
Shell LLC Seller is a limited partnership, in each case duly organized, validly
existing and in good standing under the Laws of the state of its organization
and has all requisite corporate or partnership power and authority to own the
LLC Interest. LLC Seller is duly licensed or qualified to do business as a
foreign corporation and is in good standing in all jurisdictions in which the
Properties are located. The LLC is a limited liability company duly organized,
validly existing and in good standing under the Laws of the state of its
formation.
(b) Corporate or Partnership Authority; Authorization of Agreement. Each
LLC Seller has all requisite corporate or partnership power and authority to
execute and deliver this Agreement and the Operative Documents to which it is a
party, to consummate the transactions contemplated by this Agreement and the
Operative Documents to which it is a party, and to perform all of its
obligations under this Agreement and the Operative Documents to which it is a
party. This Agreement constitutes, and the Operative Documents to which it is a
party, when executed and delivered by each LLC Seller, will constitute, the
valid and binding obligations of each LLC Seller, enforceable against it in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency or other Laws relating to or affecting the
enforcement of creditors' rights and general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).
(c) No Violations. LLC Seller's execution and delivery of this Agreement
and the Operative Documents to which it is a party and the consummation of the
transactions contemplated by this Agreement or such Operative Documents will
not:
(i) conflict with or require the consent of any Person under any of
the terms, conditions or provisions of the certificate of incorporation or
bylaws or limited partnership agreement of LLC Seller or the LLC Agreement;
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(ii) violate any provision of, or, except as required in connection
with any filing under the HSR Act pursuant to Article 11.1 or Section 13.14
of the Restated LLC Agreement, require any filing, consent or approval
under any Law applicable to LLC Seller or the LLC (except for consents and
approvals of Governmental Authorities customarily obtained subsequent to
transfer of title);
(iii) conflict with, result in a breach of, constitute a default under
or constitute an event that with notice or lapse of time, or both, would
constitute a default under, accelerate or permit the acceleration of the
performance required by, or require any consent, authorization or approval
under: (a) any mortgage, indenture, loan, credit agreement or other
agreement evidencing indebtedness for borrowed money to which the LLC or
such LLC Seller is a party or by which the LLC or such LLC Seller is bound
except, in the case of LLC Seller, where such conflict, breach or default
would not materially affect LLC Seller's ability to consummate the
transactions contemplated hereby; or (b) any order, judgment or decree of
any Governmental Authority; or
(iv) result in the creation or imposition of any lien or encumbrance
upon one or more of the LLC Interests, the LLC or the Properties.
(d) Third Party Claims, Disputes and Litigation. Exhibit C-1 sets forth all
Third Party Claims, disputes or litigation pending against the LLC or, to
Sellers Knowledge, threatened. There are no Third Party Claims, disputes or
litigation pending or, to LLC Seller's knowledge, threatened against LLC Seller
or the LLC that would prevent the consummation of the transaction contemplated
by this Agreement.
(e) Bankruptcy. There are no bankruptcy, reorganization or receivership
proceedings pending, being contemplated by or, to LLC Seller's knowledge,
threatened against LLC Seller or the LLC.
(f) Foreign Person. LLC Seller is not a "foreign person" within the meaning
of Section 1445 of the Code.
(g) Liens, Mortgages and Security Interests. There are no liens, mortgages
or security interests encumbering the LLC Interests.
(h) LLC Interest. The Amoco LLC Interest represents a 63.915% Sharing Ratio
and the Shell LLC Interest represents a 36.085% Sharing Ratio. Each LLC Seller
owns of record and beneficially the LLC Interests set forth beside its name
under the column titled "Pre-Closing Interest" in Exhibit H-1, in each case free
and clear of any Taxes, security interests, equities, Third Party Claims, and
demands and any restrictions on transfer, options, warrants, purchase rights,
conversion rights, exchange rights, or other contracts or commitments that could
require any LLC Seller to sell, transfer, or otherwise dispose of its LLC
Interest, other than this Agreement, the LLC Agreement, the other Operative
Documents and federal or state securities Laws. There are no voting trusts,
proxies, or other agreements or understandings with respect to the voting of the
LLC Interests, other than the LLC Agreement.
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(i) Taxes. LLC Tax Matters Partner has timely filed or caused to be timely
filed all Tax Returns required by applicable Law for the LLC due on or prior to
the Closing Date and has timely paid or caused to be timely paid all material
Taxes shown as due and payable on such Tax Returns within the prescribed period
or any extensions thereof.
(j) Tax Liens. To LLC Seller's knowledge, there are no Tax liens burdening
the Properties, the LLC or the LP except for liens for current Taxes not yet due
and payable.
(k) Qualification as Partnership. The LLC currently is qualified, and has
since the date of its formation been qualified, to be treated as a partnership
for federal income Tax purposes.
(l) LLC Assets and Liabilities. The LLC has no assets other than its
interest in the LP, and the LLC has no liabilities other than liabilities
arising out of its status as the general partner of the LP and administrative
expenses aggregating less than Two Hundred Fifty Thousand Dollars ($250,000).
(m) Knowledge of Buyer's Breach. As of the date of this Agreement, LLC
Seller has no knowledge of any breach by Buyer of any of the representations and
warranties in Article 9.
8.2 LP Sellers' Representations. Each LP Seller severally (and not jointly)
represents and warrants with respect to itself and/or the LP, as applicable, the
following to Buyer:
(a) Organization and Good Standing. LP Seller is a corporation or limited
partnership duly organized, validly existing and in good standing under the Laws
of the state of its organization and has all requisite corporate or partnership
power and authority to own the LP Interest. LP Seller is in good standing in all
jurisdictions in which the Properties are located. The LP is a limited
partnership duly organized, validly existing and in good standing under the Laws
of the state of its formation.
(b) Corporate or Partnership Authority; Authorization of Agreement. Each LP
Seller has all requisite corporate or partnership power and authority to execute
and deliver this Agreement and the Operative Documents to which it is a party,
to consummate the transactions contemplated by this Agreement and the Operative
Documents to which it is a party and to perform all of its obligations under
this Agreement and the Operative Documents to which it is a party. This
Agreement constitutes, and the Operative Documents to which it is a party, when
executed and delivered by each LP Seller, will constitute, the valid and binding
obligations of each LP Seller, enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy,
insolvency or other Laws relating to or affecting the enforcement of creditors'
rights and general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
(c) No Violations. LP Seller's execution and delivery of this Agreement and
the Operative Documents to which it is a party and the consummation of the
transactions contemplated by this Agreement and such Operative Documents will
not:
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(i) conflict with or require the consent of any Person under any of
the terms, conditions or provisions of the certificate of incorporation or
bylaws or limited partnership agreement of LP Seller or the LP Agreement;
(ii) violate any provision of, or, except in connection with any
filing under the HSR Act pursuant to Article 11.1 or Section 14.15 of the
Restated LP Agreement, require any filing, consent or approval under any
Law applicable to LP Seller or the LP (except for consents and approvals of
Governmental Authorities customarily obtained subsequent to transfer of
title);
(iii) conflict with, result in a breach of, constitute a default under
or constitute an event that with notice or lapse of time, or both, would
constitute a default under, accelerate or permit the acceleration of the
performance required by, or require any consent, authorization or approval
under: (a) any mortgage, indenture, loan, credit agreement or other
agreement evidencing indebtedness for borrowed money to which the LP or LP
Seller is a party or by which the LP or LP Seller is bound except, in the
case of LP Seller, where such conflict, breach or default would not
materially affect LP Seller's ability to consummate the transactions
contemplated hereby, or (b) any order, judgment or decree of any
Governmental Authority; or
(iv) result in the creation or imposition of any lien or encumbrance
upon one or more of the LP Interests, the LP or the Properties.
(d) Third Party Claims, Disputes and Litigation. Exhibit C-1 sets forth all
material Third Party Claims, disputes or litigation pending against the LP or,
to Sellers Knowledge, threatened. There are no Third Party Claims, disputes or
litigation pending or, to the best of LP Seller's knowledge, threatened against
LP Seller or the LP that would prevent the consummation of the transactions
contemplated by this Agreement.
(e) Bankruptcy. There are no bankruptcy, reorganization or receivership
proceedings pending, being contemplated by or, to LP Seller's knowledge and
belief, threatened against LP Sellers or the LP.
(f) Foreign Person. LP Seller is not a "foreign person" within the meaning
of Section 1445 of the Code