WESTERN STOCK PURCHASE
Published on April 2, 2001
Exhibit 2.3
STOCK PURCHASE AGREEMENT
BETWEEN
WESTERN ATLAS INTERNATIONAL, INC.
AS SELLER,
AND
VAALCO GABON (ETAME), INC.
AS PURCHASER,
Dated as of January 4, 2001.
TABLE OF CONTENTS
ARTICLE 1. PURCHASE AND SALE.......................................... 1
Section 1.1 Purchase and Sale.......................................... 1
Section 1.2 Certain Definitions........................................ 1
ARTICLE 2. CONSIDERATION.............................................. 3
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SELLER................... 3
Section 3.1 Disclaimers................................................ 3
Section 3.2 Seller..................................................... 4
Section 3.3 The Company................................................ 5
Section 3.4 Hydrocarbon Interest....................................... 6
Section 3.5 Litigation................................................. 7
Section 3.6 Taxes and Assessments...................................... 7
Section 3.7 Outstanding Capital Commitments............................ 7
Section 3.8 Compliance with Laws....................................... 7
Section 3.9 Contracts.................................................. 8
Section 3.10 Advance Sale of Production................................. 8
Section 3.11 Consents and Preferential Purchase Rights.................. 8
Section 3.12 Liability for Brokers' Fees................................ 8
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER................ 9
Section 4.1 Existence and Qualification................................ 9
Section 4.2 Power...................................................... 9
Section 4.3 Authorization and Enforceability........................... 9
Section 4.4 No Conflicts............................................... 9
Section 4.5 Consents, Approvals or Waivers............................. 9
Section 4.6 Litigation................................................. 10
Section 4.7 Financing.................................................. 10
Section 4.8 Liability for Brokers' Fees................................ 10
ARTICLE 5. COVENANTS OF THE PARTIES................................... 10
Section 5.1 Access..................................................... 10
Section 5.2 Notification of Breaches................................... 11
Section 5.3 Public Announcements....................................... 11
Section 5.4 Operation of Business...................................... 12
Section 5.5 Conduct of the Company..................................... 12
Section 5.6 Indemnity Regarding Access................................. 13
Section 5.7 Consents and Preferential Rights........................... 13
Section 5.8 Governmental Reviews....................................... 13
Section 5.9 Further Assurances......................................... 14
ARTICLE 6. CONDITIONS TO CLOSING...................................... 14
Section 6.1 Conditions of Seller to Closing............................ 14
Section 6.2 Conditions of Purchaser to Closing......................... 14
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ARTICLE 7. CLOSING.................................................... 15
Section 7.1 Time and Place of Closing.................................. 15
Section 7.2 Obligations of Seller at Closing........................... 15
Section 7.3 Obligations of Purchaser at Closing........................ 16
Section 7.4 Casualty or Condemnation Loss.............................. 16
ARTICLE 8. TAX MATTERS................................................ 17
Section 8.1 Liability for Taxes........................................ 17
Section 8.2 Preparation and Filing of Tax Returns...................... 18
Section 8.3 Allocation Arrangements.................................... 18
Section 8.4 Access to Information...................................... 18
Section 8.5 Tax Proceedings............................................ 19
Section 8.6 Refunds.................................................... 19
Section 8.7 Conflict................................................... 19
ARTICLE 9. TERMINATION................................................ 19
Section 9.1 Termination................................................ 19
Section 9.2 Effect of Termination...................................... 19
ARTICLE 10. INDEMNIFICATION; LIMITATIONS............................... 20
Section 10.1 Indemnification............................................ 20
Section 10.2 Indemnification Actions.................................... 22
Section 10.3 Limitation on Actions...................................... 24
ARTICLE 11. MISCELLANEOUS.............................................. 24
Section 11.1 Counterparts............................................... 24
Section 11.2 Notices.................................................... 24
Section 11.3 Sales or Use Tax, Recording Fees and Similar Taxes and Fees 25
Section 11.4 Expenses................................................... 25
Section 11.5 Change of Name............................................. 26
Section 11.6 Replacement of Bonds, Letters of Credit and Guarantees..... 26
Section 11.7 Records.................................................... 26
Section 11.8 Governing Law.............................................. 27
Section 11.9 Arbitration................................................ 27
Section 11.10 Captions................................................... 27
Section 11.11 Waivers.................................................... 27
Section 11.12 Assignment................................................. 28
Section 11.13 Amendment.................................................. 28
Section 11.14 No Third-Person Beneficiaries.............................. 28
Section 11.15 References................................................. 28
Section 11.16 Construction............................................... 29
Section 11.17 Limitation on Damages...................................... 29
Section 11.18 Severability............................................... 29
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EXHIBITS:
Exhibit A - Hydrocarbon Interest
iv
INDEX OF DEFINED TERMS
----------------------
Defined Term Section
- ------------ -------
AAA..................................................................11.9
Accounting Principles................................................3.3(g)
Affiliate............................................................1.2(b)
Agreement............................................................Preamble
Assets...............................................................1.2(a)
Balance Sheet........................................................3.3(g)
Business Day.........................................................1.2(c)
Claim................................................................10.2(b)
Claim Notice.........................................................10.2(b)
Closing..............................................................7.1
Closing Date.........................................................7.1
Company..............................................................Recitals
Contract Area........................................................1.2(a)(iii)
Contracts............................................................1.2(a)(iv)
Damages..............................................................10.1(d)
Effective Time.......................................................8.1(a)
Equipment............................................................1.2(a)(vi)
Excluded Records.....................................................1.2(a)(vii)
Governmental Authority...............................................1.2(d)
Hydrocarbon Interest.................................................1.2(a)(i)
Hydrocarbons.........................................................1.2(a)(iv)
Indemnified Person...................................................10.2(a)
Indemnifying Person..................................................10.2(a)
Laws.................................................................1.2(e)
Material Adverse Effect..............................................3.1(d)
Party; Parties.......................................................Preamble
Person...............................................................1.2(f)
Post-Effective Time Period...........................................8.1(b)
Pre-Effective Time Period............................................8.1(a)
Purchaser............................................................Preamble
Records..............................................................1.2(a)(vi)
Seller...............................................................Preamble
Shares...............................................................Recitals
Tax..................................................................1.2(g)
Tax Items............................................................8.2(a)
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STOCK PURCHASE AGREEMENT
------------------------
This Stock Purchase Agreement (this "Agreement"), is dated as of January
____, 2001, by and between Western Atlas International, Inc., a company
organized under the laws of Delaware ("Seller"), and VAALCO Gabon (Etame), Inc.,
a company organized under the laws of Delaware ("Purchaser"). Seller and
Purchaser are sometimes referred to collectively as the "Parties" and
individually as a "Party."
RECITALS:
Seller desires to sell and Purchaser desires to purchase all of the issued
and outstanding shares (the "Shares") of Western Atlas Afrique, Ltd., a company
organized under the laws of Bermuda (the "Company").
NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations, warranties, covenants, conditions and agreements
contained herein, and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1. PURCHASE AND SALE
SECTION 1.1 PURCHASE AND SALE. On the terms and conditions
contained in this Agreement, Seller agrees to sell to Purchaser and Purchaser
agrees to purchase, accept and pay for the Shares.
SECTION 1.2 CERTAIN DEFINITIONS. As used herein:
(a) "Assets" means all of the Company's right, title, and interest
in and to the following:
(i) The Exploration and Production Sharing Contract described
in Exhibit A (the "Hydrocarbon Interest"),
(ii) All units that include all or a part of the area subject
to the Hydrocarbon Interest (the "Contract Area");
(iii) All presently existing contracts, agreements and
instruments to which the Company's interest in the Hydrocarbon Interest is
subject, including operating agreements, unitization, pooling and
communitization agreements, joint venture agreements, farmin and farmout
agreements, exchange agreements, transportation agreements, processing
agreements, agreements for the sale and purchase of oil, gas and/or other
liquid or gaseous hydrocarbons or any combination thereof ("Hydrocarbons"),
all of which are hereinafter collectively referred to as "Contracts",
provided that "Contracts" shall not include the Hydrocarbon Interest;
(iv) All easements, permits, licenses, servitudes, rights-of-
way, surface leases and other rights appurtenant to, and used or held for
use solely in connection with, the Hydrocarbon Interest;
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(v) Equipment, machinery, fixtures and other tangible
personal property and improvements located on the Contract Area or used or
held for use solely in connection with the operation of the Hydrocarbon
Interest (the "Equipment");
(vi) All books, records, data, files, maps and accounting
records related solely to the Hydrocarbon Interests, or used or held for
use solely in connection with the maintenance or operation thereof, but
excluding (i) any books, records, data, files, maps and accounting records
licensed from a third Person which are not transferable or cannot be
disclosed under the terms of the license in the event of a sale of the
Company or for which the license will terminate or a transfer fee or
similar payment will be incurred upon a sale of the Company, (ii) any
computer software that is proprietary to any Affiliate of the Company,
(iii) attorney-client communications with, and work product of, legal
counsel for the Company or any Affiliate of the Company other than
Contracts and correspondence of such legal counsel with third Persons,
including Governmental Authorities, who are not employed by or acting for
such Affiliates or counsel for such Affiliates; and (iv) records relating
to the sale of the Shares, including bids received from and records of
negotiations with third Persons (the "Excluded Records")(subject to such
exclusions, the "Records").
(b) "Affiliate" means, with respect to any Person, a Person that
directly or indirectly controls, is controlled by or is under common control
with such Person, with control in such context meaning the ability to direct the
management or policies of a Person through ownership of voting shares or other
securities, pursuant to a written agreement, or otherwise.
(c) "Business Day" means any day other than a Saturday, a Sunday,
or a day on which banks are closed for business in Houston, Texas, United States
of America.
(d) "Governmental Authority" means any government, including
without limitation the governments of the United States of America, Bermuda and
Gabon, and/or any political subdivision thereof or therein, including
departments, courts, commissions, boards, bureaus, ministries, agencies or other
instrumentalities.
(e) "Laws" means all laws, statutes, rules, regulations,
ordinances, orders, decrees, requirements, judgments and codes of Governmental
Authorities.
(f) "Person" means any individual, corporation, partnership,
limited liability company, trust, estate, Governmental Authority or any other
entity.
(g) "Tax" means all federal, state, local and foreign taxes,
including income tax, surtax, remittance tax, presumptive tax, net worth tax,
special contribution, production tax, pipeline transportation tax, value added
tax, withholding tax, gross receipts tax, windfall profits tax, profits tax,
severance tax, personal property tax, real property tax, sales tax, service tax,
transfer tax, use tax, excise tax, premium tax, customs duties, stamp tax, motor
vehicle tax, entertainment tax, insurance 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 other
assessments, duties, fees, levies or other charges
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imposed by a Governmental Authority together with any interest, fine or penalty
thereon, or addition thereto.
ARTICLE 2. CONSIDERATION
The Parties have entered into this Agreement in consideration of the mutual
promises contained herein, and other good and valuable consideration.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SELLER
SECTION 3.1 DISCLAIMERS.
(a) Except as and to the extent expressly set forth in this
Article 3 or in the certificate of Seller to be delivered pursuant to Section
7.2(c), (i) Seller makes no representations or warranties, express or implied,
and (ii) Seller expressly disclaims all liability and responsibility for any
representation, warranty, statement or information made or communicated (orally
or in writing) to Purchaser or any of its Affiliates, employees, agents,
consultants or representatives (including, without limitation, any opinion,
information, projection or advice that may have been provided to Purchaser by
any officer, director, employee, agent, consultant, representative or advisor of
Seller or any of its Affiliates).
(b) EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN THIS ARTICLE 3 OR
IN THE CERTIFICATE OF SELLER TO BE DELIVERED AT CLOSING PURSUANT TO SECTION
7.2(c), WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLER EXPRESSLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO (I) TITLE TO
ANY OF THE ASSETS, (II) THE CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE
MEMORANDUM, OR ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT, OR ANY
GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION, RELATING TO THE ASSETS, (III) THE
QUANTITY, QUALITY OR RECOVERABILITY OF PETROLEUM SUBSTANCES IN OR FROM THE
ASSETS, (IV) ANY ESTIMATES OF THE VALUE OF THE ASSETS OR FUTURE REVENUES
GENERATED BY THE ASSETS, (V) THE PRODUCTION OF PETROLEUM SUBSTANCES FROM THE
ASSETS, OR WHETHER PRODUCTION HAS BEEN CONTINUOUS, OR IN PAYING QUANTITIES, (VI)
THE MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR
MARKETABILITY OF THE ASSETS, OR (VII) ANY OTHER MATERIALS OR INFORMATION THAT
MAY HAVE BEEN MADE AVAILABLE OR COMMUNICATED TO PURCHASER OR ITS AFFILIATES, OR
ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY
DISCUSSION OR PRESENTATION RELATING THERETO, AND FURTHER DISCLAIMS ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY
EQUIPMENT, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT
PURCHASER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS PURCHASER DEEMS
APPROPRIATE.
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(c) Any representation "to the knowledge of Seller" or "to Seller's
knowledge" is limited to matters within the actual conscious awareness of
Seller's current officers and directors.
(d) Inclusion of a matter on a schedule attached hereto with
respect to a representation or warranty that addresses matters having a Material
Adverse Effect shall not be deemed an indication that such matter does, or may,
have a Material Adverse Effect. Matters may be disclosed on a schedule for
purposes of information only. As used herein, "Material Adverse Effect" means a
material adverse effect on the ownership, operation or value of the Company or
the Assets, taken as a whole; provided, however, that "Material Adverse Effect"
shall not include material adverse effects resulting from general changes in
Hydrocarbon prices; general changes in industry, economic or political
conditions; civil unrest, insurrection or similar disorders; or changes in Laws.
(e) Subject to the foregoing provisions of this Section 3.1, and
the other terms and conditions of this Agreement, Seller represents and warrants
to Purchaser the matters set out in Sections 3.2 through 3.12.
SECTION 3.2 SELLER.
(a) Existence and Qualification. Seller is a company duly
organized and validly existing under the laws of Delaware and is duly qualified
to do business as a foreign company in each jurisdiction in which it is required
to qualify in order to conduct its business, except where the failure to so
qualify would not, individually or in the aggregate, have a Material Adverse
Effect.
(b) Power. Seller has the corporate power to enter into and
perform this Agreement (and all documents required to be executed and delivered
by Seller at Closing) and to consummate the transactions contemplated by this
Agreement (and such documents).
(c) Authorization and Enforceability. The execution, delivery and
performance of this Agreement (and all documents required to be executed and
delivered by Seller at Closing), and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary corporate action on the part of Seller. This Agreement has been duly
executed and delivered by Seller (and all documents required to be executed and
delivered by Seller at Closing shall be duly executed and delivered by Seller)
and this Agreement constitutes, and at the Closing such documents shall
constitute, the valid and binding obligations of Seller, enforceable in
accordance with their terms except as such enforceability may be limited by
applicable bankruptcy or other similar Laws affecting the rights and remedies of
creditors generally as well as to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(d) No Conflicts. The execution, delivery and performance of this
Agreement by Seller, and the consummation of the transactions contemplated by
this Agreement shall not (i) violate any provision of the certificate of
incorporation or bylaws of Seller, (ii) result in default (with due notice or
lapse of time or both) or the creation of any lien or encumbrance or give rise
to any right of termination, cancellation or acceleration under any material
note, bond, mortgage,
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indenture, license or agreement to which Seller is a party or by which it is
bound, (iii) violate any judgment, order, ruling, or decree applicable to Seller
as a party in interest or (iv) violate any Laws applicable to Seller, or any of
the Assets, except any matters described in clauses (ii), (iii), or (iv) above
which would not have a Material Adverse Effect.
SECTION 3.3 THE COMPANY.
(a) Title to Shares. Seller has good and valid title to the
Shares, free and clear of any liens, claims, encumbrances, security interests,
options, charges and restrictions of any kind. Assuming Purchaser has the
requisite power and authority to be the lawful owner of the Shares, upon
delivery to Purchaser at the Closing of certificates representing the Shares,
duly endorsed by Seller for transfer to Purchaser, and upon Seller's receipt of
any agreed consideration for the transactions contemplated by this Agreement,
good and valid title to the Shares shall pass to Purchaser, free and clear of
any liens, claims, encumbrances, security interests, options, charges and
restrictions of any kind, other than those arising from acts of Purchaser or its
Affiliates. Other than this Agreement, the Shares are not subject to any voting
agreement or other contract, agreement, arrangement, commitment or
understanding, including any such agreement, arrangement, commitment or
understanding restricting or otherwise relating to the voting, dividend rights
or disposition of the Shares.
(b) Existence and Qualification. The Company is a company duly
organized and validly existing under the Laws of Bermuda and is duly qualified
to do business as a foreign company in each jurisdiction where it does business,
except where the failure to so qualify would not, individually or in the
aggregate, have a Material Adverse Effect.
(c) Power. The Company has the corporate power and authority to
own, lease or otherwise hold the Assets and conduct its business in the manner
presently conducted.
(d) No Conflicts. The consummation of transactions contemplated
by this Agreement shall not (i) violate any provision of the certificate of
incorporation or bylaws of the Company, (ii) result in default (with due notice
or lapse of time or both) or the creation of any lien or encumbrance or give
rise to any right of termination, cancellation or acceleration under any
material note, bond, mortgage, indenture, license or agreement to which the
Company is a party or by which it is bound, (iii) violate any judgment, order,
ruling, or decree applicable to the Company as a party in interest, or (iv)
violate any Laws applicable to the Company, or any of the Assets.
(e) Charter and Bylaws. Seller has delivered to Purchaser true
and complete copies of the charter and by-laws (or equivalent governing
instruments), each as amended to the Closing Date, of the Company. The stock
certificates and transfer books, and the minute books of the Company (which have
been made available for inspection by Purchaser prior to the date hereof) are
true, complete and current.
(f) The Shares. The entire authorized capital stock of the
Company is the Shares, consisting of 12,000 shares of common stock, par value
$1.00, and all the Shares are duly authorized and validly issued and
outstanding, fully paid, non-assessable and not issued in violation of any
preemptive rights. Except for the Shares, there are no outstanding shares of
5
capital stock or other equity securities of the Company, or any contractual
arrangements giving any person a right to receive any benefits or rights similar
to the rights enjoyed by or accruing to the holders of any capital stock of the
Company. Other than this Agreement, there are no outstanding warrants, options,
rights, convertible or exchangeable securities or other commitments pursuant to
which Seller or the Company is or may become obligated to issue or sell any
shares of capital stock or other equity securities of the Company.
(g) Balance Sheet. The consolidated, unaudited balance sheet
(the "Balance Sheet") of the Company as of the Effective Time attached hereto as
Schedule 3.3(g) has been prepared from the books and records of the Company in
conformity with United States generally accepted accounting principles as
published by the Financial Accounting Standards Board (the "Accounting
Principles") and fairly presents the financial position of the Company as of the
date thereof.
(h) Subsidiaries. Except as disclosed on Schedule 3.3(h), the
Company does not directly or indirectly own any capital stock or other equity
interest in any Person.
(i) Employees. The Company has no employees and no employee
benefit plans. The Company's directors and officers are not directly compensated
by the Company.
(j) Company History. The Company was formed by Seller's
predecessor in interest in 1997, and since the date of its formation the sole
activity of the Company has been to own the Assets, participate under the
Hydrocarbon Interest and undertake activities related thereto. The Company does
not own any material property (real, personal or mixed) other than the Assets
and any bank account balances. The Company is not engaged in and is not
otherwise a party to any joint venture, partnership or enterprise other than as
directly regards and concerns the Assets.
SECTION 3.4 HYDROCARBON INTEREST.
The Hydrocarbon Interest is in full force and effect, and neither the Company
nor, to the knowledge of Seller, any other Person is in default thereunder
except as disclosed on Schedule 3.4 and except such defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The Company
owns a 65.000% undivided interest in the "Contractor's" rights to the
Hydrocarbon Interest free and clear of any liens, mortgages, security interests,
charges, pledges or other encumbrances or ownership rights of third Persons of
any kind or character except (a) rights of Governmental Authorities in the
Republic of Gabon and their assignees under the terms of the Hydrocarbon
Interest or the Contracts or applicable Law, (b) preferential rights, similar
rights and rights to consent, if any, held by third Persons under the operating
agreement or other agreements applicable to the Hydrocarbon Interest as
described on Schedule 3.11 and (c) those encumbrances or ownership rights
described on Exhibit A.
SECTION 3.5 LITIGATION.
Except as disclosed on Schedule 3.5, there are no actions, suits or proceedings
pending, or to Seller's knowledge threatened in writing, before any Governmental
Authority or arbitrator with respect to the Company or the Assets.
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SECTION 3.6 TAXES AND ASSESSMENTS.
Except as disclosed on Schedule 3.6, the Company has filed all Tax returns
required to be filed by the Company. Except as disclosed on Schedule 3.6, the
Company has withheld and paid all Taxes that were required to be withheld or due
and payable by the Company. Except as disclosed on Schedule 3.6, the Company
has not received written notice of any threatened or pending claim against the
Company from any applicable taxing authority for assessment of Taxes. The
Company is not the beneficiary of any extension of time to file any Tax return.
The Company has not expressly waived any statute of limitations in respect of
Taxes or agreed to an extension of time with respect to a Tax assessment or
deficiency. The Company has not received any written notice of a claim made by
a tax authority in a jurisdiction where the Company has not filed Tax returns
that the Company is or may be subject to taxation in that jurisdiction. The
Company has no obligation to pay the Taxes of any other Person as a transferee
or successor, by contract or otherwise.
SECTION 3.7 OUTSTANDING CAPITAL COMMITMENTS.
Except as provided in the current approved work program and budget under the
joint operating agreement for the Contract Area, or as otherwise disclosed on
Schedule 3.7, there are no outstanding AFEs or other commitments to make capital
expenditures which are binding on the Company and which Seller reasonably
anticipates will individually require expenditures after the Effective Time in
excess of fifty thousand U.S. dollars (U.S.$50,000).
SECTION 3.8 COMPLIANCE WITH LAWS.
To Seller's knowledge, the Company has complied with all applicable Laws, except
as disclosed on Schedule 3.6 and except such failures to comply as would not,
individually or in the aggregate, have a Material Adverse Effect. Neither the
Company, nor the officers or directors of the Company, in any unlawful manner,
have offered, paid, promised to pay, or authorized the payment of any money, or
offered, given, promised to give, or authorized the paying of anything of value
to foreign governmental officials, political parties, political officials or
candidates for political office, or to any person while knowing that all or a
portion of such money or thing of value would be offered, given or promised,
directly or indirectly, to any foreign officials, for the purpose of influencing
such foreign officials acting in their official capacity, inducing such foreign
officials to do or omit to do any acts in violation of the lawful duty of such
foreign officials or securing any improper advantage, in order to assist the
Company in obtaining or retaining business for or with, or directing business
to, any Person. The Company has complied with all applicable import/export laws
and regulations, including obtaining, to the extent required, applicable export
license and permits and refraining from participating in illegal boycotts,
except such failures to comply as would not, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 3.9 CONTRACTS.
Neither the Company, nor to the knowledge of Seller, any other Person is in
default under any Contract except as disclosed on Schedule 3.9 and except such
defaults as would not, individually or in the aggregate, have a Material Adverse
Effect. Except as disclosed on Schedule 3.9, there
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are no Contracts with Affiliates of Seller that will be binding on the Company
or the Assets after Closing.
SECTION 3.10 ADVANCE SALE OF PRODUCTION.
The Company is not obligated by virtue of a take or pay payment, advance payment
or other similar payment (other than royalties, overriding royalties and similar
arrangements established in the Hydrocarbon Interest or reflected on Exhibit A),
to deliver Hydrocarbons, or proceeds from the sale thereof, attributable to the
Company's interest in the Hydrocarbon Interest at some future time without
receiving payment therefor at or after the time of delivery.
SECTION 3.11 CONSENTS AND PREFERENTIAL PURCHASE RIGHTS.
The Hydrocarbon Interest is not subject to any preferential rights to purchase
or similar rights or required third Person consents to assignment, which may be
applicable to the transactions contemplated by this Agreement, except as set
forth on Schedule 3.11.
SECTION 3.12 LIABILITY FOR BROKERS' FEES.
Purchaser shall not directly or indirectly have any responsibility, liability or
expense, as a result of undertakings or agreements of Seller or the Company, for
brokerage fees, finder's fees, agent's commissions or other similar forms of
compensation to an intermediary in connection with the negotiation, execution or
delivery of this Agreement or any agreement or transaction contemplated hereby.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller the following:
SECTION 4.1 EXISTENCE AND QUALIFICATION. Purchaser is a
corporation organized, validly existing and in good standing under the laws of
Delaware; and Purchaser is duly qualified to do business as a foreign
corporation in every jurisdiction in which it is required to qualify in order to
conduct its business except where the failure to so qualify would not have a
material adverse effect on Purchaser or its properties.
SECTION 4.2 POWER. Purchaser has the corporate power to enter
into and perform this Agreement (and all documents required to be executed and
delivered by Purchaser at Closing) and to consummate the transactions
contemplated by this Agreement (and such documents).
SECTION 4.3 AUTHORIZATION AND ENFORCEABILITY. The execution,
delivery and performance of this Agreement (and all documents required to be
executed and delivered by Purchaser at Closing), and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action on the part of Purchaser. This
Agreement has been duly executed and delivered by Purchaser (and all documents
required to be executed and delivered by Purchaser at Closing will be duly
executed and delivered by Purchaser) and this Agreement constitutes, and at the
Closing such documents will constitute, the valid and binding obligations of
Purchaser, enforceable in accordance with
8
their terms except as such enforceability may be limited by applicable
bankruptcy or other similar laws affecting the rights and remedies of creditors
generally as well as to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 4.4 NO CONFLICTS. The execution, delivery and performance
of this Agreement by Purchaser, and the consummation of the transactions
contemplated by this Agreement, will not (i) violate any provision of the
certificate of incorporation or bylaws of Purchaser, (ii) result in a material
default (with due notice or lapse of time or both) or the creation of any lien
or encumbrance or give rise to any right of termination, cancellation or
acceleration under any material note, bond, mortgage, indenture, license or
agreement to which Purchaser is a party or by which it is bound, (iii) violate
any judgment, order, ruling, or regulation applicable to Purchaser as a party in
interest or (iv) violate any Law applicable to Purchaser or any of its assets,
except any matters described in clauses (ii), (iii) or (iv) above which would
not have a material adverse effect on Purchaser or its properties.
SECTION 4.5 CONSENTS, APPROVALS OR WAIVERS. The execution,
delivery and performance of this Agreement by Purchaser will not be subject to
any consent, approval or waiver from any Governmental Authority or other third
Person except, as set forth on Schedule 4.5.
SECTION 4.6 LITIGATION. There are no actions, suits or proceedings
pending, or to Purchaser's knowledge, threatened in writing before any
Governmental Authority or arbitrator against Purchaser or any subsidiary of
Purchaser which are reasonably likely to impair materially Purchaser's ability
to perform its obligations under this Agreement.
SECTION 4.7 FINANCING. Purchaser has sufficient cash, available
lines of credit or other sources of immediately available funds (in United
States dollars) to enable it to pay to Seller at the Closing the amount of any
agreed cash consideration for the transactions contemplated by this Agreement.
SECTION 4.8 LIABILITY FOR BROKERS' FEES. Seller shall not directly
or indirectly have any responsibility, liability or expense, as a result of
undertakings or agreements of Purchaser, for brokerage fees, finder's fees,
agent's commissions or other similar forms of compensation to an intermediary in
connection with the negotiation, execution or delivery of this Agreement or any
agreement or transaction contemplated hereby.
ARTICLE 5. COVENANTS OF THE PARTIES
SECTION 5.1 ACCESS. Seller will give Purchaser and its
representatives access to the Assets and access to and the right to copy, at
Purchaser's expense, the Records in Seller's and its Affiliates' possession, for
the purpose of conducting an investigation of the Assets, but only to the extent
that Seller may do so without violating any obligations to any third Person and
to the extent that Seller has authority to grant such access without breaching
any restriction binding on Seller. Such access by Purchaser shall be limited to
Seller's normal business hours, and Purchaser's investigation shall be conducted
in a manner that minimizes interference with the operation of the Assets. Unless
and until the Closing occurs, Purchaser shall keep all
9
information obtained by Purchaser and its representatives from Seller and its
representatives with respect to the Company or the Assets, except information
that was already in Purchaser's possession (and not subject to any
confidentiality restrictions in favor of Seller), confidential and not disclose
the same except that Purchaser may disclose such information:
(a) to its Affiliates;
(b) to employees, officers and directors of Purchaser and its
Affiliates;
(c) to professional consultants, agents or advisors retained by
Purchaser for purposes of evaluating such information;
(d) to Governmental Authorities and third Persons holding
preferential rights to purchase or similar rights or rights of consent that may
be applicable to the transactions contemplated by this Agreement, as reasonably
necessary to obtain waivers of such rights, or such consents;
(e) to the extent disclosure is required by applicable Law or the
applicable rules of any stock exchange having jurisdiction over Purchaser or its
Affiliates; and
(f) which is acquired independently from a third Person who is not
under any obligation of confidentiality to Seller or its Affiliates.
Purchaser shall require any Person to whom information is disclosed under
Section 5.1(c) to agree in writing to keep such information confidential for the
benefit of Seller. Purchaser shall be responsible for insuring that all Persons
to whom it discloses such information under Sections 5.1(a), (b) or (c) keep
such information confidential and shall be liable for any breach of that
confidentiality obligation by any such disclosee.
SECTION 5.2 NOTIFICATION OF BREACHES. Until the Closing,
(a) Purchaser shall notify Seller promptly after Purchaser obtains
actual knowledge that any representation or warranty of Seller contained in this
Agreement is untrue in any material respect or will be untrue in any material
respect as of the Closing Date or that any covenant or agreement to be performed
or observed by Seller prior to or on the Closing Date has not been so performed
or observed in any material respect.
(b) Seller shall notify Purchaser promptly after Seller obtains
actual knowledge that any representation or warranty of Purchaser contained in
this Agreement is untrue in any material respect or will be untrue in any
material respect as of the Closing Date or that any covenant or agreement to be
performed or observed by Purchaser prior to or on the Closing Date has not been
so performed or observed in any material respect.
If any of Purchaser's or Seller's representations or warranties is untrue or
shall become untrue in any material respect between the date of execution of
this Agreement and the Closing Date, or if any of Purchaser's or Seller's
covenants or agreements to be performed or observed prior to or on the Closing
Date shall not have been so performed or observed in any material respect, but
if such breach of representation, warranty, covenant or agreement shall (if
curable) be cured by the
10
Closing (or, if the Closing does not occur, by the date set forth in Section
9.1), then such breach shall be considered not to have occurred for all purposes
of this Agreement.
SECTION 5.3 PUBLIC ANNOUNCEMENTS. Until the Closing, neither Party
shall make any press release or other public announcement regarding the
existence of this Agreement, the contents hereof or the transactions
contemplated hereby without the prior written consent of the other Party;
provided, however, the foregoing shall not restrict disclosures by Purchaser or
Seller (i) that are required by applicable securities or other Laws or the
applicable rules of any stock exchange having jurisdiction over the disclosing
Party or its Affiliates or (ii) to Governmental Authorities and third Persons
holding preferential rights to purchase or rights of consent that may be
applicable to the transactions contemplated by this Agreement, as reasonably
necessary to obtain waivers of such rights, or such consents.
SECTION 5.4 OPERATION OF BUSINESS. Except as provided in the
current approved work program and budget under the joint operating agreement for
the Contract Area, or as otherwise set forth on Schedule 3.7 or Schedule 5.4,
until the Closing, Seller will cause the Company to (i) operate its business in
the ordinary course, (ii) not, without the prior written consent of Purchaser,
which consent shall not be unreasonably conditioned or withheld, commit to any
operation reasonably anticipated to require future capital expenditures by the
Company in excess of U.S.$100,000, or terminate, materially amend, execute or
extend any material Contracts affecting the Assets, (iii) maintain insurance
coverage on the Assets in the amounts and of the types presently in force, (iv)
use commercially reasonable efforts to maintain in full force and effect the
Hydrocarbon Interest, (v) maintain all material governmental permits and
approvals affecting the Assets, and (vi) not transfer, sell, hypothecate,
encumber or otherwise dispose of any Assets except for (A) transfers of Assets
pursuant to valid third Person exercises of preferential purchase rights or
similar rights and (B) sales and dispositions of Equipment made in the ordinary
course of business consistent with past practices. Purchaser's approval of any
action restricted by this Section 5.4 shall not be unreasonably withheld and
shall be considered granted within ten (10) days (unless a shorter time is
reasonably required by the circumstances and such shorter time is specified in
Seller's notice) of Seller's notice to Purchaser requesting such consent unless
Purchaser notifies Seller to the contrary during that period. In the event of an
emergency, Seller may take such action as a prudent operator would take and
shall notify Purchaser of such action promptly thereafter.
SECTION 5.5 CONDUCT OF THE COMPANY. The Seller shall not permit
the Company to do any of the following without the prior written consent of the
Purchaser: (i) amend its charter, by-laws or equivalent governing instruments;
(ii) issue, redeem or otherwise acquire any shares of its capital stock or issue
any option, warrant or right relating to its capital stock or any securities
convertible into or exchangeable for any shares of capital stock or declare or
pay any dividend (whether in cash, stock, property, or any combination thereof),
or declare or pay any stock-split; (iii) incur or assume any liabilities,
obligations or indebtedness for borrowed money or guarantee any such
liabilities, obligations or indebtedness, other than accounts payable incurred
in the ordinary course of business; (iv) lend to any Person (except as set forth
in Section 5.5 (ix)) or make an equity investment in any other Person; (v) make
any change in any method of accounting or accounting practice or policy other
than those required by the Accounting Principles; (vi) acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
11
or other business organization or division thereof; (vii) enter into any lease
of real property, except any renewals of existing leases in the ordinary course
of business; (viii) enter into any settlement of any issue with respect to any
assessment or audit or other administrative or judicial proceeding with respect
to Taxes; (ix) make any loan (other than (A) accounts receivable in the ordinary
course of business, (B) advances or cash call payments to the operator as
required under applicable operating agreements, or (C) advances on behalf of co-
owners for costs under applicable operating agreements) to any Person; (x)
terminate or voluntarily relinquish any permit, license or other authorization
from any Governmental Authority necessary for the conduct of the Company's
business or operations or which relates in any way to any Asset or (xi) agree to
do any of the foregoing. Purchaser's approval of any action restricted by this
Section 5.5 shall not be unreasonably withheld and shall be considered granted
within 10 days (unless a shorter time is reasonably required by the
circumstances and such shorter time is specified in Seller's notice) of Seller's
notice to Purchaser requesting such consent unless Purchaser notifies Seller to
the contrary during that period.
SECTION 5.6 INDEMNITY REGARDING ACCESS. Purchaser agrees to
indemnify, defend and hold harmless Seller, its Affiliates, and all such
Persons' directors, officers, employees, agents and representatives from and
against any and all claims, liabilities, losses, costs and expenses (including
court costs and reasonable attorneys' fees), including claims (including without
limitation contribution or indemnity claims by other owners of the Hydrocarbon
Interest), liabilities, losses, costs and expenses attributable to personal
injury, death, or property damage, arising out of or relating to access to the
Assets prior to the Closing by Purchaser, its Affiliates, or its or their
directors, officers, employees, agents or representatives under Section 5.1
hereof (to which Purchaser was not otherwise entitled as a co-owner of the
Hydrocarbon Interest), EVEN IF CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE
(WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT OF
ANY INDEMNIFIED PERSON.
SECTION 5.7 CONSENTS AND PREFERENTIAL RIGHTS.
(a) Promptly after the date hereof, Seller shall prepare and
send (i) notices to the holders of any required consents to assignment that are
set forth on Schedule 3.11 requesting consents to the transactions contemplated
by this Agreement and (ii) notices to the holders of any applicable preferential
rights to purchase or similar rights that are set forth on Schedule 3.11 in
compliance with the terms of such rights and requesting waivers of such rights.
Any preferential purchase right must be exercised subject to all terms and
conditions set forth in this Agreement. Seller shall use commercially reasonable
efforts to cause such consents to assignment and waivers of preferential rights
to purchase or similar rights (or the exercise thereof) to be obtained and
delivered prior to Closing, provided that Seller shall not be required to make
payments or undertake obligations to or for the benefit of the holders of such
rights in order to obtain the required consents and waivers. Purchaser shall
cooperate with Seller in seeking to obtain such consents to assignment and
waivers of preferential rights and similar rights.
(b) Should any preferential right to purchase any portion of the
Assets be exercised prior to Closing, or should any Person holding a right of
first opportunity deliver a binding offer on terms more favorable to Seller than
the terms of this Agreement, this Agreement shall terminate in accordance with
Article 9.
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SECTION 5.8 GOVERNMENTAL REVIEWS. Seller and Purchaser shall each
in a timely manner make (a) all required filings, if any, and prepare
applications to and conduct negotiations, with each Governmental Authority as to
which such filings, applications or negotiations are necessary or appropriate in
the consummation of the transactions contemplated hereby and (b) provide such
information as the other may reasonably request in order to make such filings,
prepare such applications and conduct such negotiations. Each Party shall
cooperate with and use all reasonable efforts to assist the other with respect
to such filings, applications and negotiations.
SECTION 5.9 FURTHER ASSURANCES. After Closing, Seller and
Purchaser each agrees to take such further actions and to execute, acknowledge
and deliver all such further documents as are reasonably requested by the other
Party for carrying out the purposes of this Agreement or of any document
delivered pursuant to this Agreement.
ARTICLE 6. CONDITIONS TO CLOSING
SECTION 6.1 CONDITIONS OF SELLER TO CLOSING. The obligations of
Seller to consummate the transactions contemplated by this Agreement are
subject, at the option of Seller, to the satisfaction on or prior to Closing of
each of the following conditions:
(a) Representations. The representations and warranties of
Purchaser set forth in Article 4 shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date (other than representations and warranties
that refer to a specific date, which need only be true and correct on and as of
such specified date);
(b) Performance. Purchaser shall have performed and observed, in
all material respects, all covenants and agreements to be performed or observed
by it under this Agreement prior to or on the Closing Date;
(c) No Action. On the Closing Date, no suit, action, or other
proceeding (excluding any such matter initiated by Seller or any of its
Affiliates) shall be pending or threatened before any Governmental Authority or
body of competent jurisdiction seeking to enjoin or restrain the consummation of
the transactions contemplated by this Agreement or recover substantial damages
from Seller or any Affiliate of Seller resulting therefrom; and
(d) Consents and Waivers. All necessary consents and approvals
required from Governmental Authorities and all material consents and approvals
required from other third Persons for the consummation of the transactions
contemplated by this Agreement shall have been granted, and all preferential
purchase rights, rights of first opportunity and similar rights with respect to
such transactions shall have been waived, expired without exercise, or, in the
case of rights of first opportunity, resulted in an offer which was properly
rejected by Seller or the Company, as applicable.
SECTION 6.2 CONDITIONS OF PURCHASER TO CLOSING. The obligations of
Purchaser to consummate the transactions contemplated by this Agreement are
subject, at the option of Purchaser, to the satisfaction on or prior to Closing
of each of the following conditions:
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(a) Representations. The representations and warranties of Seller
set forth in Article 3 shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date (other than representations and warranties that refer to a specified date,
which need only be true and correct on and as of such specified date), except
for such breaches, if any, as would not have a Material Adverse Effect;
(b) Performance. Seller shall have performed and observed, in all
material respects, all covenants and agreements to be performed or observed by
it under this Agreement prior to or on the Closing Date;
(c) No Action. On the Closing Date, no suit, action, or other
proceeding (excluding any such matter initiated by Purchaser or any of its
Affiliates) shall be pending or threatened before any Governmental Authority or
body of competent jurisdiction seeking to enjoin or restrain the consummation of
the transactions contemplated by this Agreement or recover substantial damages
from Purchaser or any Affiliate of Purchaser resulting therefrom;
(d) Consents and Waivers. All necessary consents and approvals
required from Governmental Authorities and all material consents and approvals
required from other third Persons for the consummation of the transactions
contemplated by this Agreement shall have been granted, and all preferential
purchase rights, rights of first opportunity and similar rights with respect to
such transactions shall have been waived, expired without exercise, or, in the
case of rights of first opportunity, resulted in an offer which was properly
rejected by Seller or the Company, as applicable; and
(e) Material Adverse Change. There shall have been no material
adverse changes since the Effective Time in the business, operations, assets or
condition of the Company, taken as a whole, except as may have resulted from
general changes in Hydrocarbon prices; general changes in industry, economic or
political conditions; civil unrest, insurrection or similar disorders; or
changes in Laws.
ATICLE 7. CLOSING
SECTION 7.1 TIME AND PLACE OF CLOSING. The consummation of the
purchase and sale of the Shares contemplated by this Agreement (the "Closing")
shall, unless otherwise agreed to in writing by Purchaser and Seller, take place
at the offices of Baker Botts L.L.P. located at 910 Louisiana Street, Houston,
Texas, at 10:00 a.m., local time, on January __, 2001 or if all conditions in
Article 6 to be satisfied prior to Closing have not yet been satisfied or
waived, as soon thereafter as such conditions have been satisfied or waived,
subject to the provisions of Article 9. The date on which the Closing occurs is
referred to herein as the "Closing Date."
SECTION 7.2 OBLIGATIONS OF SELLER AT CLOSING. At the Closing,
upon the terms and subject to the conditions of this Agreement, and subject to
the simultaneous performance by Purchaser of its obligations pursuant to Section
7.3, Seller shall deliver or cause to be delivered to Purchaser, among other
things, the following:
(a) A duly executed share transfer form for transfer of the Shares
to Purchaser;
14
(b) Resignations of the directors and officers of the Company;
(c) A certificate duly executed by an authorized corporate officer
of Seller, dated as of the Closing, certifying on behalf of Seller that the
conditions set forth in Sections 6.2(a) and 6.2(b) have been fulfilled; and
(d) A certificate duly executed by the secretary or any assistant
secretary of Seller, dated as of the Closing, (i) attaching and certifying on
behalf of Seller complete and correct copies of (A) the certificate of
incorporation and the bylaws of Seller, each as in effect as of the Closing, (B)
the resolutions of the Board of Directors of Seller authorizing the execution,
delivery, and performance by Seller of this Agreement and the consummation of
the transactions contemplated hereby, and (C) any required approval by the
stockholders of Seller of this Agreement and the transactions contemplated
hereby and (ii) certifying on behalf of Seller the incumbency of each officer of
Seller executing this Agreement or any document delivered in connection with the
Closing.
SECTION 7.3 OBLIGATIONS OF PURCHASER AT CLOSING. At the Closing,
upon the terms and subject to the conditions of this Agreement, and subject to
the simultaneous performance by Seller of its obligations pursuant to Section
7.2, Purchaser shall deliver or cause to be delivered to Seller, among other
things, the following:
(a) A wire transfer of any agreed cash consideration in same-day
funds;
(b) A certificate by an authorized corporate officer of Purchaser,
dated as of the Closing, certifying on behalf of Purchaser that the conditions
set forth in Sections 6.1(a) and 6.1(b) have been fulfilled; and
(c) A certificate duly executed by the secretary or any assistant
secretary of Purchaser, dated as of the Closing, (i) attaching and certifying on
behalf of Purchaser complete and correct copies of (A) the certificate of
incorporation and the bylaws of Purchaser, each as in effect as of the Closing,
(B) the resolutions of the Board of Directors of Purchaser authorizing the
execution, delivery, and performance by Purchaser of this Agreement and the
consummation of the transactions contemplated hereby, and (C) any required
approval by the stockholders of Purchaser of this Agreement and the transactions
contemplated hereby and (ii) certifying on behalf of Purchaser the incumbency of
each officer of Purchaser executing this Agreement or any document delivered in
connection with the Closing.
SECTION 7.4 CASUALTY OR CONDEMNATION LOSS. If, after the date of
this Agreement but prior to Closing Date, any portion of
the Assets is destroyed by fire or other casualty or is expropriated or taken in
condemnation or under right of eminent domain, Purchaser shall nevertheless be
required to close and Seller shall elect by written notice to Purchaser prior to
Closing either (i) to cause the Assets affected by any casualty to be repaired
or restored, at Seller's sole cost, as promptly as reasonably practicable (which
work may extend after the Closing Date), or (ii) to indemnify Purchaser through
a document reasonably acceptable to Seller and Purchaser against any costs or
expenses that Purchaser reasonably incurs to repair the Assets subject to any
casualty. In each case, Seller shall retain all rights to insurance and other
claims against third parties with respect to the casualty or taking except to
the extent the
15
Parties otherwise agree in writing. Notwithstanding the preceding, if the loss
caused by such casualty or taking exceeds U.S. $500,000, either Party may, by
notice to the other at least one (1) Business Day prior to Closing, elect to
terminate this Agreement under Section 9.1.
ARTICLE 8. TAX MATTERS
SECTION 8.1 LIABILITY FOR TAXES.
(a) Seller shall be liable for, and shall indemnify and hold
harmless Purchaser and the Company from and against, any Taxes imposed on or
incurred by the Company and attributable to any taxable period ending prior to
12:01 a.m. local time on October 1, 2000 (the "Effective Time"), and the
portion, determined as described in Section 8.1(c), of any such Taxes for any
taxable period beginning prior to the Effective Time and ending after the
Effective Time which is allocable to the portion of such period occurring prior
to the Effective Time (the "Pre-Effective Time Period").
(b) Purchaser shall be liable for, and shall indemnify and hold
harmless Seller and its Affiliates from and against, any Taxes imposed on or
incurred by the Company and attributable to any taxable period beginning on or
after the Effective Time, and the portion, determined as described in Section
8.1(c), of any such Taxes for any taxable period beginning prior to the
Effective Time and ending after the Effective Time which is allocable to the
portion of such period occurring on or after the Effective Time (the "Post-
Effective Time Period").
(c) Whenever it is necessary for purposes of this Agreement to
determine the portion of any Taxes of or with respect to the Company for a
taxable period beginning prior to and ending after the Effective Time which is
allocable to the Pre-Effective Time Period or the Post-Effective Time Period,
the determination shall be made (i) in the case of property, ad valorem or
similar Taxes (which are not based on or measured by production), by allocating
all such Taxes on a per diem basis, (ii) in the case of franchise, capital or
similar Taxes (which are not based on or measured by income or profit), by
allocating all such Taxes on a per diem basis, and (iii) in the case of other
Taxes, by assuming that each of the Pre-Effective Time Period and the Post-
Effective Time Period constitutes a separate taxable period and by taking into
account the actual taxable events occurring during each such period.
(d) Any claim for indemnification under this Section 8.1 shall,
except to the extent otherwise provided in this Article 8, be resolved in
accordance with the procedures described in Section 10.2.
SECTION 8.2 PREPARATION AND FILING OF TAX RETURNS.
(a) With respect to each Tax return for, by or with respect to the
Company, Purchaser shall cause such Tax return to be prepared, shall cause to be
included in such Tax return all items of income, gain, loss, deduction and
credit or other items (collectively, "Tax Items") required to be included
therein, and shall cause the Company to file timely such Tax return with the
appropriate taxing authority and shall (subject to any right of indemnification
under Section 8.1) pay timely the amount of Taxes shown to be due on such Tax
return, provided that any Tax returns required to be filed before Closing but
not yet filed shall be filed as promptly as practicable, but in any event within
sixty (60) days after Closing. No Tax return for
16
any taxable period which includes any period occurring prior to the Effective
Time shall be filed without the prior written consent of Seller, such consent
not to be unreasonably withheld. Purchaser shall submit to Seller a draft copy
of any such Tax return for Seller's review at least thirty (30) days before the
date on which Purchaser plans to file such return and shall furnish a final copy
of any such Tax return within thirty (30) days after filing.
(b) Notwithstanding Section 8.2(a), Seller or its Affiliates will
file any United States Internal Revenue Service Form 5471 for the Company which
they are required to file by applicable Law.
SECTION 8.3 ALLOCATION ARRANGEMENTS. Effective as of the Closing
Date, any tax indemnity, sharing, allocation or similar agreement or arrangement
that may be in effect prior to the Closing Date between or among the Seller and
the Company, shall be extinguished in full, and any liabilities or rights
existing under any such agreement or arrangement shall cease to exist and shall
no longer be enforceable.
SECTION 8.4 ACCESS TO INFORMATION.
(a) Seller and Seller's Affiliates shall grant to Purchaser (or its
designees) access at all reasonable times to all of the information, books and
records relating to the Company within the possession of Seller or Seller's
Affiliates (including without limitation work papers and correspondence with
taxing authorities), and shall afford Purchaser (or its designees) the right (at
Purchaser's expense) to take extracts therefrom and to make copies thereof, to
the extent reasonably necessary to permit Purchaser (or its designees) to
prepare Tax returns, to conduct negotiations with Tax authorities, and to
implement the provisions of, or to investigate or defend any claims between the
Parties arising under, this Agreement.
(b) Purchaser shall grant to Seller (or its designees) access at
all reasonable times to all of the information, books and records relating to
the Company within the possession of Purchaser or the Company (including without
limitation work papers and correspondence with taxing authorities), and shall
afford Seller (or its designees) the right (at Seller's expense) to take
extracts therefrom and to make copies thereof, to the extent reasonably
necessary to permit Seller (or its designees) to prepare Tax returns, to conduct
negotiations with Tax authorities, and to implement the provisions of, or to
investigate or defend any claims between the Parties arising under, this
Agreement.
(c) Each of the Parties hereto will preserve and retain all
schedules, work papers and other documents relating to any Tax returns of or
with respect to the Company or to any claims, audits or other proceedings
affecting the Company until the expiration of the statute of limitations
(including extensions) applicable to the taxable period to which such documents
relate or until the final determination of any controversy with respect to such
taxable period, and until the final determination of any payments that may be
required with respect to such taxable period under this Agreement.
SECTION 8.5 TAX PROCEEDINGS. In the event Purchaser, the Company,
or any of their Affiliates receives notice of any examination, claim, adjustment
or other proceeding with respect to the liability of the Company for Taxes for
any taxable period for which Seller is or
17
may be liable under Section 8.1, Purchaser shall, within ten (10) days, notify
Seller in writing thereof and Seller shall be entitled, at its expense, to
control or settle the contest of such examination, claim, adjustment or other
proceeding. Seller and Purchaser shall cooperate with each other, and with their
respective Affiliates, and will consult with each other in the settlement of any
proceeding described in this Section 8.5 that could affect the other. Purchaser
will provide, or cause to be provided, to Seller and its Affiliates necessary
authorizations, including powers of attorney, to control any such proceeding.
SECTION 8.6 REFUNDS. Purchaser agrees to pay to Seller any refund
(whether by payment, credit, offset or otherwise, and together with any interest
thereon) received after the Closing by Purchaser or its Affiliates, including
the Company, in respect of any Taxes for which Seller is liable under Section
8.1. Purchaser shall cooperate with Seller and its Affiliates in order to take
all necessary steps to claim any such refund. Any such refund received by
Purchaser or its Affiliates or the Company shall be paid to Seller within thirty
(30) days after such refund is received.
SECTION 8.7 CONFLICT. In the event of a conflict between the
provisions of this Article 8 and any other provision of this Agreement, this
Article 8 shall control.
ARTICLE 9. TERMINATION
SECTION 9.1 TERMINATION. This Agreement may be terminated at any
time prior to Closing: (i) by the mutual prior written consent of Seller and
Purchaser; or (ii) by either Seller or Purchaser, if Closing has not occurred on
or before March 1, 2001, provided, however, that no Party shall be entitled to
terminate this Agreement under this Section 9.1(ii) if the Closing has failed to
occur because such Party negligently or willfully failed to perform or observe
in any material respect its covenants and agreements hereunder. This Agreement
shall also terminate in the circumstances described in Section 5.7(b).
SECTION 9.2 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 9.1, this Agreement shall become void and of no further
force or effect (except for the provisions of Sections 3.12, 4.8, 5.3, 5.6,
11.4, 11.8, 11.9, 11.16 and 11.17 and the confidentiality obligation in Section
5.1, all of which shall continue in full force and effect). Notwithstanding
anything to the contrary in this Agreement, the termination of this Agreement
under Section 9.1(ii) shall not relieve any Party from liability (including
liability for consequential damages) for any willful or negligent failure to
perform or observe in any material respect any of its agreements or covenants
contained herein that are to be performed or observed at or prior to Closing. In
the event this Agreement terminates under Section 9.1(ii) and any Party has
willfully or negligently failed to perform or observe in any material respect
any of its agreements or covenants contained herein which are to be performed at
or prior to Closing, then the other Party shall be entitled to all remedies
available at law or in equity and shall be entitled to recover court costs and
attorneys' fees in addition to any other relief to which such Party maybe
entitled.
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ARTICLE 10. INDEMNIFICATION; LIMITATIONS
SECTION 10.1 INDEMNIFICATION.
(a) From and after Closing, Purchaser shall indemnify, defend and
hold harmless Seller from and against all Damages incurred or suffered by Seller
(i) caused by or arising out of or resulting from the
ownership, use or operation of the Assets, whether before or after the
Effective Time or the Closing Date,
(ii) caused by or arising out of or resulting from
Purchaser's breach of any of Purchaser's covenants or agreements contained
in Article 5, or
(iii) caused by or arising out of or resulting from any breach
of any representation or warranty made by Purchaser contained in Article 4
of this Agreement or in the certificate delivered by Purchaser at Closing
pursuant to Section 7.3(b),
EVEN IF SUCH DAMAGES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE
(WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT
OF ANY INDEMNIFIED PERSON, but excepting Damages to the extent caused by
the gross negligence or willful misconduct of such Indemnified Person and
further excepting in each case Damages against which Seller would be
required to indemnify Purchaser under Section 10.1(b) at the time the claim
notice is presented by Purchaser.
(b) From and after Closing, Seller shall indemnify, defend and
hold harmless Purchaser against and from all Damages incurred or suffered by
Purchaser
(i) attributable to or arising out of the Company's obligations
and liabilities with respect to the actions, suits or proceedings, if any,
set forth on Schedule 3.5;
(ii) caused by or arising out of or resulting from Seller's breach
of any of Seller's covenants or agreements contained in Article 5, or
(iii) caused by or arising out of or resulting from any breach of
any representation or warranty made by Seller contained in Article 3 of
this Agreement, or in the certificate delivered by Seller at Closing
pursuant to Section 7.2(c),
EVEN IF SUCH DAMAGES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE
(WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT
OF ANY INDEMNIFIED PERSON, but excepting Damages to the extent caused by
the gross negligence or willful misconduct of such Indemnified Person.
(c) Notwithstanding anything to the contrary contained in this
Agreement, this Section 10.1 contains the Parties' exclusive remedy against each
other with respect to breaches of the representations, warranties, covenants and
agreements of the Parties contained in Articles 3, 4 and 5 (excluding Section
5.6, which shall be separately enforceable by Seller pursuant to whatever rights
and remedies are available to it outside of this Article 10) and the
affirmations of such representations, warranties, covenants and agreements
contained in the certificate delivered by each Party at Closing pursuant to
Sections 7.2(c) or 7.3(b), as applicable. From and after Closing, except for the
remedies contained in this Section 10.1, and any other remedies available to the
Parties at law or in equity for breaches of provisions of this Agreement other
than Articles 3, 4 and 5 (excluding Section 5.6), Seller and Purchaser each
releases, remises and forever
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discharges the other and its Affiliates and all such Persons' stockholders,
officers, directors, employees, agents, advisors and representatives from any
and all suits, legal or administrative proceedings, claims, demands, damages,
losses, costs, liabilities, interest, or causes of action whatsoever, in law or
in equity, known or unknown, which such Parties might now or subsequently may
have, based on, relating to or arising out of this Agreement or the Company's
ownership, use or operation of the Assets, including without limitation any
rights under insurance policies issued or underwritten by the other Party or any
of its Affiliates and any rights under agreements between the Company and the
Seller or any other Affiliate of the Company, EVEN IF CAUSED IN WHOLE OR IN PART
BY THE NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER
LEGAL FAULT OF ANY RELEASED PERSON, but excepting suits, legal or administrative
proceedings, claims, demands, damages, losses, costs, liabilities, interest or
causes of action caused by the gross negligence or willful misconduct of such
released Person and further excepting any existing contractual rights under
service contracts entered into in the ordinary course of business between the
Company and Affiliates of the Company relating to the provision of geological,
geophysical, engineering or well services.
(d) "Damages", for purposes of this Article 10, shall mean the
amount of any actual liability, loss, cost, expense, claim, award or judgment
incurred or suffered by any Indemnified Person arising out of or resulting from
the indemnified matter, whether attributable to personal injury or death,
property damage, contract claims, torts or otherwise including reasonable fees
and expenses of attorneys, consultants, accountants or other agents and experts
reasonably incident to matters indemnified against, and the costs of
investigation and/or monitoring of such matters, and the costs of enforcement of
the indemnity; provided, however, that Purchaser and Seller shall not be
entitled to indemnification under this Section 10.1 for, and "Damages" shall not
include, (i) loss of profits or other consequential damages suffered by the
Party claiming indemnification, or any punitive damages, or (ii) any liability,
loss, cost, expense, claim, award or judgment to the extent resulting from or
increased by the actions or omissions of any Indemnified Person after the
Closing Date.
(e) The indemnity to which each Party is entitled under this
Section 10.1 shall be for the benefit of and extend to such Party's present and
former Affiliates, and its and their respective directors, officers, employees,
and agents. Any claim for indemnity under this Section 10.1 by any such
Affiliate, director, officer, employee or agent must be brought and administered
by the applicable Party to this Agreement. No Indemnified Person other than
Seller and Purchaser shall have any rights against either Seller or Purchaser
under the terms of this Section 10.1 except as may be exercised on its behalf by
Purchaser or Seller, as applicable, pursuant to this Section 10.1(e). Each of
Seller and Purchaser may elect to exercise or not exercise indemnification
rights under this Section on behalf of the other Indemnified Persons affiliated
with it in its sole discretion and shall have no liability to any such other
Indemnified Person for any action or inaction under this Section.
(f) Purchaser and Seller agree that any remediation activities
undertaken with respect to any claimed Damages relating to a breach of Seller's
representation and warranty pursuant to Section 3.8 or any Claim related to
environmental matters covered by such representation and warranty, whether
conducted by Purchaser or Seller, shall be reasonable in extent and cost
effective and shall not be designed or implemented in such a manner as to exceed
what is required to cause a condition to be brought into compliance with
applicable Laws.
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SECTION 10.2 INDEMNIFICATION ACTIONS.
(a) All claims for indemnification under Section 10.1 shall be
asserted and resolved as follows: For purposes of this Article 10, the term
"Indemnifying Person" when used in connection with particular Damages shall mean
the Person having an obligation to indemnify another Person or Persons with
respect to such Damages pursuant to this Article 10, and the term "Indemnified
Person" when used in connection with particular Damages shall mean a Person
having the right to be indemnified with respect to such Damages pursuant to this
Article 10.
(b) To make claim for indemnification under Section 10.1, subject
to Section 10.1(e), an Indemnified Person shall notify the Indemnifying Person
of its claim, including the specific details of and specific basis under this
Agreement for its claim (the "Claim Notice"). In the event that the claim for
indemnification is based upon a claim by a third Person against the Indemnified
Person (a "Claim"), the Indemnified Person shall provide its Claim Notice
promptly after the Indemnified Person has actual knowledge of the Claim and
shall enclose a copy of all papers (if any) served with respect to the Claim;
provided that the failure of any Indemnified Person to give notice of a Claim as
provided in this Section 10.2 shall not relieve the Indemnifying Person of its
obligations under Section 10.1 except to the extent such failure results in
insufficient time being available to permit the Indemnifying Person to
effectively defend against the Claim or otherwise prejudices the Indemnifying
Person's ability to defend against the Claim. In the event that the claim for
indemnification is based upon an inaccuracy or breach of a representation,
warranty, covenant or agreement, the Claim Notice shall specify the
representation, warranty, covenant or agreement that was inaccurate or breached.
(c) In the case of a claim for indemnification based upon a Claim,
the Indemnifying Person shall have thirty (30) days from its receipt of the
Claim Notice to notify the Indemnified Person whether it admits or denies its
liability to defend the Indemnified Person against such Claim under this Article
10. If the Indemnifying Person does not notify the Indemnified Person within
such thirty (30) day period regarding whether the Indemnifying Person admits or
denies its liability to defend the Indemnified Person, the Damages for which the
Indemnified Person is seeking indemnity shall be conclusively deemed a liability
of the Indemnifying Person hereunder. The Indemnified Person is authorized,
prior to and during such thirty (30) day period, to file any motion, answer or
other pleading that it shall deem necessary or appropriate to protect its
interests or those of the Indemnifying Person and that is not prejudicial to the
Indemnifying Person.
(d) If the Indemnifying Person admits its liability to indemnify the
Indemnified Person, it shall have the right and obligation to diligently defend,
at its sole cost and expense, the Claim. The Indemnifying Person shall have full
control of such defense and proceedings, including any compromise or settlement
thereof. If requested by the Indemnifying Person, the Indemnified Person agrees
to cooperate in contesting any Claim which the Indemnifying Person elects to
contest (provided, however, that the Indemnified Person shall not be required to
bring any counterclaim or cross-complaint against any Person). The Indemnified
Person may participate in, but not control, any defense or settlement of any
Claim controlled by the Indemnifying Person pursuant to this Section 10.2(d). An
Indemnifying Person shall not, without the written consent of the Indemnified
Person, settle any Claim or consent to the entry of any judgment with respect
thereto that (i) does not result in a final resolution of the Indemnified
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Person's liability with respect to the Claim (including, in the case of a
settlement, an unconditional written release of the Indemnified Person from all
liability in respect of such Claim) or (ii) may materially and adversely affect
the Indemnified Person (other than as a result of money damages covered by the
indemnity).
(e) If the Indemnifying Person does not admit its liability to
indemnify the Indemnified Person or admits its liability but fails to diligently
defend or settle the Claim, then the Indemnified Person shall have the right to
defend against the Claim (at the sole cost and expense of the Indemnifying
Person, if the Indemnified Person is entitled to indemnification hereunder),
with counsel of the Indemnified Person's choosing, subject to the right of the
Indemnifying Person to admit its liability to indemnify the Indemnified Person
and assume the defense of the Claim at any time prior to settlement or final
determination thereof. If the Indemnifying Person has not yet admitted its
liability to indemnify the Indemnified Person, the Indemnified Person shall send
written notice to the Indemnifying Person of any proposed settlement and the
Indemnifying Person shall have the option for ten (10) days following receipt of
such notice to (i) admit in writing its liability for indemnification with
respect to such Claim and (ii) if liability is so admitted, assume the defense
of the Claim, including the power to reject the proposed settlement. If the
Indemnified Person settles any Claim over the objection of the Indemnifying
Person after the Indemnifying Person has timely admitted its liability for
indemnification in writing and assumed the defense of the Claim, the Indemnified
Person shall be deemed to have waived any right to indemnity therefor.
(f) In the case of a claim for indemnification not based upon a
Claim, the Indemnifying Person shall have thirty (30) days from its receipt of
the Claim Notice to (i) cure the Damages complained of, (ii) admit its liability
for such Damages or (iii) dispute the claim for such Damages. If the
Indemnifying Person does not notify the Indemnified Person within such thirty
(30) day period that it has cured the Damages or that it disputes the claim for
such Damages, the amount of such Damages shall conclusively be deemed a
liability of the Indemnifying Person hereunder.
SECTION 10.3 LIMITATION ON ACTIONS.
(a) The representations and warranties of the Parties in
Articles 3 and 4 and the covenants and agreements of the Parties in Article 5,
and the corresponding representations and warranties given in the certificates
delivered at Closing pursuant to Sections 7.2(c) and 7.3(b), as applicable,
shall survive the Closing for a period of one year, except the representations
and warranties of Seller set forth in Sections 3.3(a) and 3.3(j), and the
corresponding representations and warranties given in the certificate delivered
by Seller at Closing, which shall survive the Closing for a period of two years.
The remainder of this Agreement shall survive the Closing without time limit
except as may otherwise be expressly provided herein. Representations,
warranties, covenants and agreements shall be of no further force and effect
after the date of their expiration, provided that there shall be no termination
of any bona fide claim asserted pursuant to this Agreement with respect to such
a representation, warranty, covenant or agreement prior to its expiration date.
(b) The indemnities in Sections 10.1(a)(ii), 10.1(a)(iii),
10.1(b)(ii) and 10.1(b)(iii) shall terminate as of the termination date of each
respective representation, warranty,
22
covenant or agreement that is subject to indemnification, except in each case as
to matters for which a specific written claim for indemnity has been delivered
to the Indemnifying Person on or before such termination date. The indemnities
in Sections 10.1(a)(i) and 10.1(b)(i) shall continue without time limit.
(c) Seller shall not have any liability for any indemnification
under Section 10.1 until and unless the aggregate amount of the liability for
all Damages for which Claim Notices are delivered by Purchaser exceeds two
hundred twenty thousand dollars ($220,000) U.S. and then only to the extent such
Damages exceed two hundred twenty thousand dollars ($220,000), provided,
however, that this Section 10.3(c) shall not limit Seller's liability under
Section 10.1(b)(i).
(d) The amount of any Damages for which an Indemnified Person is
entitled to indemnity under this Article 10 shall be reduced by the amount of
insurance proceeds realized by the Indemnified Person or its Affiliates with
respect to such Damages (net of any collection costs, and excluding the proceeds
of any insurance policy issued or underwritten by the Indemnified Person or its
Affiliates).
ARTICLE 11. MISCELLANEOUS
SECTION 11.1 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original instrument, but all such
counterparts together shall constitute but one agreement.
SECTION 11.2 NOTICES. All notices that are required or may be
given pursuant to this Agreement shall be sufficient in all respects if given in
writing, in English and delivered personally, by telecopy or by recognized
courier service, as follows:
If to Seller: Deputy General Counsel
Baker Hughes, Inc.
3900 Essex Lane, Suite 1200
Houston, Texas 77027
Telephone: 713-439-8600
Telecopy: 713-439-8472
with a copy to: (which shall not constitute notice)
Assistant Secretary
Baker Hughes, Inc.
3900 Essex Lane, Suite 1200
Houston, Texas 77027
Telephone: 713-439-8600
Telecopy: 713-439-8472
If to Purchaser: VAALCO Gabon (Etame), Inc.
4600 Post Oak Place, Suite 309
23
Houston, Texas 77027
Telephone: 713-623-0801
Telecopy: 713-623-0982
Attn: President
Either Party may change its address for notice by notice to the other in the
manner set forth above. All notices shall be deemed to have been duly given at
the time of receipt by the Party to which such notice is addressed.
SECTION 11.3 SALES OR USE TAX, RECORDING FEES AND SIMILAR TAXES AND
FEES. Purchaser shall bear any sales, use, excise, gross receipts,
registration, capital, documentary, stamp or transfer Taxes, recording fees and
similar Taxes and fees incurred and imposed upon, or with respect to, the
transfer of the Shares or other transactions contemplated hereby. If such
transfer or transactions are exempt from any such Taxes or fees upon the filing
of an appropriate certificate or other evidence of exemption, Purchaser shall
timely furnish to Seller such certificate or evidence.
SECTION 11.4 EXPENSES. Except as provided in Section 11.3, all
expenses incurred by Seller in connection with or related to the authorization,
preparation or execution of this Agreement, and the Exhibits and Schedules
hereto and thereto, and all other matters related to the Closing, including
without limitation, all fees and expenses of counsel, accountants and financial
advisers employed by Seller, shall be borne solely and entirely by Seller, and
all such expenses incurred by Purchaser shall be borne solely and entirely by
Purchaser.
SECTION 11.5 CHANGE OF NAME. Purchaser shall, effective as of the
Closing Date, amend the charter and bylaws (or equivalent governing documents)
of the Company to change the Company's name to a name not containing "Baker
Hughes", "Western" or any abbreviations or variants thereof and make any filings
necessary to change the name of all local branches through which the Company
does business accordingly. As promptly as practicable, but in any case within
thirty (30) days after the Closing Date, Purchaser shall eliminate the names
"Baker Hughes", "Western" and any abbreviations or variants thereof from the
Assets and, except with respect to such grace period for eliminating existing
usage, shall have no right to use any logos, trademarks or trade names belonging
to Seller or any of its Affiliates.
SECTION 11.6 REPLACEMENT OF BONDS, LETTERS OF CREDIT AND GUARANTEES.
The Parties understand that none of the bonds, letters of credit and guarantees,
if any, posted by Seller or any other Affiliate of the Company with any
Governmental Authority or third Person and relating to the Company or the Assets
are to be transferred to Purchaser. On or before Closing, Purchaser shall
obtain, or cause to be obtained in the name of Purchaser, replacements for such
bonds, letters of credit and guarantees, to the extent such replacements are
necessary to permit the cancellation of the bonds, letters of credit and
guarantees posted by Seller and such Affiliates or to consummate the
transactions contemplated by this Agreement.
SECTION 11.7 RECORDS.
(a) Within ten (10) days after the Closing Date, Seller shall
deliver or cause to be delivered to Purchaser any Records that are in the
possession of Seller or its Affiliates, and not already in the possession of
Purchaser or its Affiliates, subject to Section 11.7(b).
24
(b) Seller may retain the originals of those Records relating to
tax, and accounting matters or ongoing litigation, if any, for which Seller is
retaining responsibility and provide Purchaser with copies thereof and may also
retain the originals of those Records already in the possession of Purchaser or
its Affiliates. Seller may retain copies of any other Records.
(c) Purchaser, for a period of seven (7) years following the
Closing, shall (i) retain the Records, (ii) provide Seller, its Affiliates, and
its and their respective officers, employees and representatives with access to
the Records during normal business hours for review and copying at Seller's
expense and (iii) provide Seller, its Affiliates, and its and their respective
officers, employees and representatives with access, during normal business
hours, to materials received or produced after Closing relating to any claim for
indemnification made under Section 10.2 of this Agreement (excluding, however,
attorney work product and attorney-client communications with respect to any
such claim being brought by Purchaser under this Agreement) for review and
copying at Seller's expense and to Seller's and its Affiliates' respective
officers, employees and representatives for the purpose of discussing any such
claim, provided that Purchaser shall have the right to have its own
representatives present during any such meeting.
SECTION 11.8 GOVERNING LAW. This Agreement and the legal relations
between the Parties shall be governed by and construed in accordance with the
laws of the State of Texas, United States of America without regard to
principles of conflicts of laws that would direct the application of the laws of
another jurisdiction.
SECTION 11.9 ARBITRATION. It is agreed, as a severable and
independent arbitration agreement separately enforceable from the remainder of
this Agreement, that any dispute, controversy or claim arising out of or in
relation to or in connection with this Agreement, including, without limitation,
any dispute as to the construction, validity, interpretation, enforceability, or
breach of this Agreement, shall be exclusively and finally settled by
arbitration in accordance with this Section 11.9. Either Party may submit such a
dispute, controversy, or claim to arbitration by notice to the other Party and
the administrator for the American Arbitration Association ("AAA"). The
arbitration proceedings shall be conducted in Houston, Texas, United States of
America in accordance with the International Arbitration Rules of the American
Arbitration Association as in effect on the date hereof. The arbitration shall
be heard and determined by three (3) arbitrators. Each Party shall appoint an
arbitrator of its choice within twenty (20) days of the submission of the notice
of arbitration. The Party appointed arbitrators shall in turn appoint a
presiding arbitrator for the tribunal within twenty (20) days following the
appointment of the second Party appointed arbitrator. If the Party appointed
arbitrators cannot reach agreement on a presiding arbitrator for the tribunal
and/or one Party fails to appoint its Party appointed arbitrator within the
applicable period, the AAA shall act as appointing authority to appoint an
independent arbitrator with at least ten (10) years experience in the legal
and/or commercial aspects of the petroleum industry. None of the arbitrators
shall have been an employee of or consultant to either Party to this Agreement
or any of its Affiliates within the five (5) year period preceding the
arbitration, or have any financial interest in the dispute, controversy, or
claim. All decisions of the arbitral tribunal shall be by majority vote. The
arbitration shall be conducted in the English language. The arbitrators may not
award special punitive damages except those claimed by Persons other than
Indemnified Persons under this Agreement for which responsibility is being
allocated between the Parties. Each Party shall
25
pay its own expenses in connection with the arbitration, but the compensation
and expenses of the arbitrators shall be borne in such manner as may be
specified in the arbitral award. Privileges protecting attorney-client
communications and attorney work product from compelled disclosure or use in
evidence, as recognized by the courts of the State of Texas, United States of
America, shall apply to and be binding in any arbitration proceeding conducted
under this Section 11.9.
SECTION 11.10 CAPTIONS. The captions in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement.
SECTION 11.11 WAIVERS. Any failure by any Party to comply with
any of its obligations, agreements or conditions herein contained may be waived
by the Party to whom such compliance is owed by an instrument signed by the
Party to whom compliance is owed and expressly identified as a waiver, but not
in any other manner. No waiver of, or consent to a change in, any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of, or
consent to a change in, other provisions hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
SECTION 11.12 ASSIGNMENT. No Party shall assign or otherwise
transfer all or any part of this Agreement, nor any of its rights or duties
hereunder, without the prior written consent of the other Party and any transfer
made without such consent shall be void. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the Parties hereto
and their respective successors and assigns.
SECTION 11.13 AMENDMENT. This Agreement may be amended or
modified only by an agreement in writing signed by both Parties and expressly
identified as an amendment or modification.
SECTION 11.14 NO THIRD-PERSON BENEFICIARIES. Nothing in this
Agreement shall entitle any Person other than Purchaser and Seller to any claim,
cause of action, remedy or right of any kind, except the rights expressly
provided to the Persons described in Section 10.1(e).
SECTION 11.15 REFERENCES.
In this Agreement:
(a) References to any gender includes a reference to all other
genders;
(b) References to the singular includes the plural, and vice versa;
(c) Reference to any Article or Section means an Article or
Section of this Agreement;
(d) Reference to any Exhibit or Schedule means an Exhibit or
Schedule to this Agreement, all of which are incorporated into and made a part
of this Agreement;
26
(e) Unless expressly provided to the contrary, "hereunder",
"hereof", "herein" and words of similar import are references to this Agreement
as a whole and not any particular Section or other provision of this Agreement;
and
(f) "Include" and "including" shall mean include or including
without limiting the generality of the description preceding such term.
SECTION 11.16 CONSTRUCTION. Purchaser is a party capable of making
such investigation, inspection, review and evaluation of the Assets as a prudent
purchaser would deem appropriate under the circumstances, including with respect
to all matters relating to the Assets, their value, operation and suitability.
Each of Seller and Purchaser has had the opportunity to exercise business
discretion in relation to the negotiation of the details of the transaction
contemplated hereby. This Agreement is the result of arm's-length negotiations
from equal bargaining positions.
SECTION 11.17 LIMITATION ON DAMAGES. Notwithstanding anything to
the contrary contained herein, none of Purchaser, Seller or any of their
respective Affiliates shall be entitled to special or punitive damages in
connection with this Agreement and the transactions contemplated hereby (other
than special or punitive damages suffered by third Persons for which
responsibility is allocated between the Parties) and each of Purchaser and
Seller, for itself and on behalf of its Affiliates, hereby expressly waives any
right to special or punitive damages in connection with this Agreement and the
transactions contemplated hereby. After Closing, none of Purchaser, Seller or
any of their respective Affiliates shall be entitled to consequential damages in
connection with this Agreement and the transactions contemplated hereby (other
than consequential damages suffered by third Persons for which responsibility is
allocated between the Parties) and each of Purchaser and Seller, for itself and
on behalf of its Affiliates, hereby waives any right to consequential damages
after Closing in connection with this Agreement and the transactions
contemplated hereby.
SECTION 11.18 SEVERABILITY. If any provision of this Agreement
(or any part of such provision) is unenforceable, all other provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any provision (or any part of such provision) is unenforceable, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled.
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IN WITNESS WHEREOF, this Agreement has been signed by each of the Parties
as of the date first above written.
SELLER: WESTERN ATLAS INTERNATIONAL, INC.
---------------------------------
Name:
Title:
PURCHASER: VAALCO GABON (ETAME), INC.
---------------------------------
Name:
Title:
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