EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of this 4th day of August, 1998, by and between Atlantic Richfield
Company, a Delaware corporation ("Seller"), and Vastar Resources, Inc., a
Delaware corporation ("Purchaser").
RECITALS
WHEREAS, Seller owns all of the issued and outstanding shares of
capital stock (the "Shares") of Western Midway Company, a Delaware corporation
(the "Company"); and
WHEREAS, Seller desires to sell the Shares and Purchaser desires to
purchase the Shares, pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 Purchase. Upon the terms and subject to the conditions of this
Agreement, at the Closing (as hereinafter defined), Seller shall sell, transfer,
convey and assign to Purchaser without recourse, representation or warranty
except as provided herein, and Purchaser shall purchase and receive from Seller,
the Shares for the purchase price specified in Section 1.2.
1.2 Purchase Price. The purchase price to be paid by Purchaser for
the Shares shall be One Hundred Seventy Million Dollars ($170,000,000) (the
"Purchase Price"), subject to adjustment under Section 1.3 below.
1.3 Purchase Price Adjustment. If the Purchase Price Adjustment, as
defined below, is a positive number, then Seller shall pay Purchaser the
Purchase Price Adjustment. If the Purchase Price Adjustment is a negative
number, then Purchaser shall pay Seller the absolute value of the Purchase Price
Adjustment. "Purchase Price Adjustment" shall mean an amount equal to (i) the
amount owed by the Company to Mobil under Section 16.01(b) of the Exchange
Agreement minus (ii) the amount owed by Mobil (as defined in Section 2.1) to the
Company under Section 16.01(a) of the Exchange Agreement. All capitalized terms
not otherwise defined in this Agreement shall have the meanings given to them in
the Exchange Agreement (as defined in Section 2.1).
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1.4 Payment of Purchase Price Adjustment.
(a) Estimated Amount. Seller shall deliver to Purchaser promptly
upon preparation or receipt by the Company, as applicable, (but in no event more
than 24 hours thereafter) the estimate of adjustments described in Section
16.01(a) of the Exchange Agreement and any supporting materials prepared or
received by the Company or Seller, together with Seller's estimate of the amount
of the Purchase Price Adjustment under this Agreement based upon such estimate
of adjustments and supporting materials. Each party shall furnish the other
party with copies of any statements, reports and other information that is
received by such party and relates to the calculation of the Adjustment Amount.
Seller shall notify Purchaser of and permit Purchaser to attend and participate
in all substantive discussions with Mobil concerning the calculation, payment
and final settlement of the Adjustment Amount; it being understood and agreed
that subject to Purchaser's obligations under Section 6.4, Purchaser shall be
ultimately responsible for handling all negotiations and discussions regarding
the calculation of the cash settlement amounts referred to in Sections 16.01(c)
and (d) of the Exchange Agreement, and shall ensure that Seller remains fully
involved in and informed of such negotiations and discussions. Immediately
following such discussions, Seller and Purchaser shall then jointly calculate
the estimated Purchase Price Adjustment based on the estimated Adjustment Amount
determined under Section 16.02(b) of the Exchange Agreement, and the party
preliminarily determined to owe such estimated Purchase Price Adjustment shall
pay such amount to the other party in immediately available funds.
(b) Final Calculation. Purchaser shall deliver to Seller the
reports described in Sections 16.02(c) and 16.02(d) of the Exchange Agreement
and any supporting materials prepared by or received by the Company or
Purchaser. Based upon the Adjustment Amount determined under Section 16.02(f) of
the Exchange Agreement, the parties shall jointly determine the actual Purchase
Price Adjustment, and the party owing such amount shall promptly pay the other
party the actual Purchase Price Adjustment minus the estimated Purchase Price
Adjustment paid under subparagraph (a) above, together with interest at the rate
specified in Section 16.02(g)(i) of the Exchange Agreement. If the estimated
Purchase Price Adjustment paid under subparagraph (a) above exceeds the actual
Purchase Price Adjustment, then the party that received the estimated payment
shall refund the difference to the party that paid it, together with interest at
the rate specified in Section 16.02(g)(i) of the Exchange Agreement. If the
estimated Purchase Price Adjustment paid under subparagraph (a) above was paid
by the party other than the party that owes the Purchase Price Adjustment, then
the party that owes the Purchase Price Adjustment shall refund to the other
party both the estimated Purchase Price Adjustment paid under subparagraph (a)
above and pay such other party the Purchase Price Adjustment, together with
interest at the rate specified above.
ARTICLE 2
CLOSING
2.1 Time, Place of Closing. The closing of the sale by Seller and
purchase by Purchaser of the Shares (the "Closing") shall take place at the
offices of Purchaser located at 15375
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Memorial Drive, Houston, Texas, or at such other place as shall be mutually
agreeable to the parties hereto, on the later to occur of (i) the first day the
Closing may occur without violation of the Hart Scott Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), or (ii) the day of, but not before,
the closing of the exchange by the Company of certain assets located in the Gulf
of Mexico ("Gulf Assets") for certain assets located in the San Joaquin Valley
of California ("California Assets"), as more specifically described in, and in
accordance with, that certain the Exchange Agreement dated as of August 4, 1998,
by and among Mobil Exploration & Producing U.S., Inc., as agent for Mobil Oil
Exploration & Producing Southeast Inc. and Mobil Producing Texas & New Mexico
Inc. (collectively, "Mobil"), and the Company (the "Exchange Agreement"). The
date on which the Closing occurs shall be referred to as the "Closing Date."
2.2 Deliveries To Be Made By Seller. At the Closing, Seller shall
deliver to Purchaser each of the following:
(a) A certificate or certificates evidencing the Shares, together
with all endorsements for transfer or assignment instruments reasonably required
by Purchaser.
(b) The Company's minute book and stock record book.
(c) The officer's certificate described in Section 8.8.
2.3 Deliveries To Be Made By Purchaser. At the Closing, Purchaser
shall deliver to Seller each of the following:
(a) The Purchase Price paid in immediately available funds in
accordance with Seller's written wire transfer instructions.
(b) The officer's certificate described in Section 7.7.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
3.1 Organization and Good Standing. (a) Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Seller has delivered or made available to Purchaser true, correct and
complete copies of Company's certificate of incorporation and bylaws.
(b) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own and lease the properties it
currently owns and leases and to carry on its business as
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that business is now being conducted. The Company is duly licensed or qualified
to do business as a foreign corporation and is in good standing in all
jurisdictions in which the character of the properties now owned or leased by it
or the nature of the business now conducted by it requires it to be so
qualified.
3.2 Authority. Seller has all requisite corporate power and
authority to execute and deliver and perform its obligations under this
Agreement. The execution and delivery of this Agreement and the performance by
Seller of its obligations under this Agreement have been duly authorized and
approved by all necessary corporate action on the part of Seller. This
Agreement constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except to the extent
that such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws relating to creditors' rights generally and
to general principles of equity.
3.3 No Violation. Neither the execution or delivery by Seller of
this Agreement nor the performance by Seller of its obligations under this
Agreement will conflict with, result in a breach of, or require any filing,
consent or waiver under, (i) any provision of Seller's certificate of
incorporation or bylaws, (ii) any law, statute, rule or regulation or judgment,
order, writ, injunction or decree of any Governmental Authority (as hereafter
defined) by which Seller or the Company is bound, except for compliance with the
applicable requirements of the HSR Act, or (iii) any provision of any contract,
agreement, arbitration award, judgement, or decree to which Seller is a party or
by which Seller or the Company is bound. "Governmental Authority" shall mean
any federal, state, local or foreign government, authority, instrumentality,
department, commission, board, bureau, agency or court.
3.4 Ownership of the Shares. Seller is the lawful owner, of record
and beneficially, of the Shares, and has good title to such Shares, free and
clear of any and all Encumbrances (as defined below) other than under applicable
federal or state securities laws. "Encumbrances" means any interests, mortgages,
liens, charges, options, restrictions of any kind and all other encumbrances,
whether or not relating to the extension of credit or the borrowing of money.
3.5 Capitalization of Company. The authorized capital stock of the
Company consists solely of one thousand (1,000) shares of common stock, with a
par value of ten dollars ($10.00) per share, of which one hundred (100) shares
are issued and outstanding. The Shares comprise all of the issued and
outstanding capital stock of the Company. The Shares have been duly authorized,
validly issued and are fully paid and nonassessable. The issuance of the Shares
to Seller did not violate any preemptive rights of any Company shareholder.
There are no subscriptions, options, convertible securities, calls, puts,
rights, warrants or other agreements, claims or commitments of any nature
whatsoever obligating the Company to purchase, issue, transfer, deliver or sell
or cause to be purchased, redeemed, issued, transferred, delivered or sold,
additional shares of the capital stock or other securities of the Company or
obligating the Company to grant, extend or enter into any such agreement or
commitment. There are no voting trusts, proxies or similar agreements with
respect to the Shares.
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3.6 Interests in Other Entities. Except for ownership interests of 2%
or less in entities whose securities are publicly traded, as of the Closing,
the Company will not own or have any contractual right to acquire any
outstanding equity or other ownership interest in any other corporation,
partnership, limited liability company, joint venture or other entity
(collectively, "Entity").
3.7 Brokers. Seller has not, directly or indirectly, employed any
broker, finder or intermediary that might be entitled to a fee or commission
upon the execution of this Agreement or the sale and purchase of the Shares
under this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
4.1 Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
4.2 Authority. Purchaser has all requisite corporate power and
authority to execute and deliver and perform its obligations under this
Agreement. The execution and delivery of this Agreement and the performance by
Purchaser of its obligations under this Agreement have been duly authorized and
approved by all necessary corporate action on the part of Purchaser. This
Agreement constitutes the legal, valid and binding obligations of Purchaser,
enforceable against Purchaser in accordance with its terms, except to the extent
that such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws relating to creditors' rights generally and
to general principles of equity.
4.3 No Violation. Neither the execution or delivery by Purchaser of
this Agreement nor the performance by Purchaser of its obligation under this
Agreement will (i) conflict with or result in a breach of any provision of
Purchaser's certificate of incorporation or bylaws, (ii) violate any law,
statute, rule or regulation or judgment, order, writ, injunction or decree of
any Governmental Authority by which Purchaser is bound, except for compliance
with the applicable requirements of the HSR Act, or (iii) conflict with or
result in a default or breach of any provision of any contract or agreement to
which Purchaser is a party or by which Purchaser's assets are bound.
4.4 Brokers. Purchaser has not, directly or indirectly, employed any
broker, finder or intermediary that might be entitled to a fee or commission
upon the execution of this Agreement or the sale and purchase of the Shares
under this Agreement.
4.5 Operation of Acquired Properties. Purchaser shall cause the
Company to operate the Gulf Assets from and after the Closing, in compliance in
all material respects with all
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applicable requirements of Government Authorities, including any laws that are
applicable to the plugging and abandonment of any wells and the removal of any
platforms.
4.6 Transfer Restrictions. Purchaser is acquiring the Shares for its
own account and not with a view to the distribution or resale thereof in any
transaction not exempt from the registration requirements of the Securities Act
and applicable state securities laws. Purchaser acknowledges that the Shares
are subject to transfer restrictions imposed by the Securities Act of 1933, as
amended, and state securities law. Purchaser recognizes that it will not be
able to transfer the Shares unless such security is registered under the
Securities Act of 1933, as amended, or resold pursuant to an exemption under
applicable securities laws.
ARTICLE 5
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser that throughout the period
of time between the date of this Agreement and the Closing:
5.1 Certain Actions. Except as contemplated by this Agreement or the
Exchange Agreement, without the prior written consent of Purchaser, which
consent Purchaser shall not unreasonably withhold or delay, Seller shall not
take any of the following actions with respect to the Company or cause the
Company to take any of the following actions:
(a) issue or grant any equity securities, options, convertible
securities, warrants or calls or repurchase, redeem or otherwise acquire any
such securities of the Company or make or propose to make any other change in
the Company's capitalization;
(b) merge or consolidate with any other Entity or acquire all or
substantially all of the assets or equity interests or business of any entity or
person;
(c) incur any indebtedness for borrowed money other than in the
ordinary course of business consistent with past practice;
(d) amend, exercise or fail to exercise or waive any of its or
the Company's rights under the Exchange Agreement or that certain Promissory
Note in the principal amount of $300 million payable by the Company to Seller
(the "ARCO Note") in a way which impairs or, with the passage of time, is
reasonably likely to impair, the rights or benefits which Purchaser has or would
otherwise have under this Agreement, the Exchange Agreement or the ARCO Note,
either in Purchaser's capacity as a party to this Agreement or by virtue of
Purchaser's ownership commencing on the Closing Date of the Shares; provided,
however, nothing in this subparagraph (d) shall prohibit Seller from causing the
Company to terminate the Exchange Agreement in the event that Purchaser
terminates, or notifies Seller that Purchaser intends to terminate, this
Agreement pursuant to Section 9.1(e) below;
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(e) accept or permit the Company to make any distribution or
dividend to Seller as its sole shareholder of any payments paid to the Company
by Mobil under Section 16.02 of the Exchange Agreement;
(f) except as required by order of a court of competent
jurisdiction or by applicable securities laws or stock exchange requirements,
make any public announcement or issue any press release with respect to this
Agreement, the Exchange Agreement or the transactions contemplated under either
such agreement, which materially differs from the form or content of a public
announcement which is mutually agreed upon by Seller and Purchaser; or
(g) commit to do any of the foregoing.
5.2 Distributions Prior to Closing. Prior to Closing, (i) Seller
will cause the Company to distribute to Seller or Seller's designee any and all
equity or other ownership interests in any other Entity, held by Company as of
the Closing Date, and any assets or properties held by the Company as of the
Closing Date (other than the California Assets or the Gulf Assets), and (ii)
subject to Section 5.1(e) above, Seller may cause the Company to distribute to
Seller's or Seller's designee all cash and cash equivalent instruments held by
the Company at any time up until the Closing Date, including without limitation
monies generated from the operation by the Company of the California Assets
during the period of time between the Effective Date and the Closing Date.
5.3 Notice of Developments. Seller shall promptly inform Purchaser
of any Material Development as hereafter defined. For purposes of this Section
5.3, "Material Development" shall mean a development which could reasonably be
expected to affect the Company, the Gulf Assets or the California Assets, of
which Seller becomes aware; provided, however, Seller shall not be obligated to
inform Purchaser (i) of any significant developments which are known within or
affect the oil and gas industry generally, or (ii) if to do so could reasonably
be expected to result in the violation by Seller of any federal or state law or
confidentiality commitment to which Seller became a party prior to the date of
this Agreement.
5.4 Exchange Agreement Matters.
(a) As between Seller and Purchaser, Seller shall permit
Purchaser to be primarily responsible for the conduct of due diligence with
respect to the Gulf Assets and the preparation and delivery to Mobil of any
notices in connection with such due diligence, at Purchaser's sole cost and
expense. Without limiting Seller's obligations under Section 5.1 above, Seller
shall consult with, and solicit input from, Purchaser prior to causing the
Company to take any actions under the Exchange Agreement with respect to the
Gulf Assets or the Company, which impairs or is reasonably likely to impair, the
rights or benefits which Purchaser has or would otherwise have under this
Agreement, the Exchange Agreement or the ARCO Note, either in Purchaser's
capacity as a party to this Agreement or by virtue of Purchaser's ownership
commencing on the Closing Date of the Shares.
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(b) Without limiting Seller's obligations under Section 5.1,
Seller shall consult with and solicit input from Purchaser prior to (i) causing
the Company to take any actions under the Exchange Agreement with respect to the
Gulf Assets or (ii) taking any action with respect to the Company that could
reasonably be expected to have an adverse impact on the Company, excluding any
adverse impact with respect to which Seller has agreed to indemnify, defend and
hold harmless Purchaser. Seller shall promptly furnish or cause the Company to
furnish Purchaser with a copy of all notices received by the Company under the
Exchange Agreement.
5.5 Reasonable Efforts. Seller shall at all times use commercially
reasonable efforts to cause the transactions contemplated by the Exchange
Agreement to be consummated and to cause those conditions to Closing under the
Exchange Agreement and under this Agreement which are within the reasonable
control of Seller to be satisfied; provided, however, Seller shall not be
required to waive any of its conditions to Closing under Article 7.
5.6 Fluctuation Protection. Seller and Mobil shall enter an option
agreement (the "Option Agreement") for NYMEX WTI Light Sweet Crude Oil in the
form attached as an exhibit to the Exchange Agreement, as contemplated under
Section 5.11 of the Exchange Agreement. Seller shall calculate and promptly
advise Mobil of the "Breakage Amount" as defined in and determined in accordance
with Section 5.11(e) of the Exchange Agreement. If there occurs a "Shared
Breakage Event" under Section 5.11(c)(vii) of the Exchange Agreement, then
Purchaser shall pay Seller 50% of Seller's share of the Breakage Amount (as
defined in and calculated under Section 5.11(e) of the Exchange Agreement),
promptly upon Purchaser's receipt of notice thereof.
ARTICLE 6
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller that throughout the period
of time between the date of this Agreement and the Closing:
6.1 Public Announcement. Except as contemplated by this Agreement or
the Exchange Agreement or as required by order of a court of competent
jurisdiction or by applicable securities laws or stock exchange requirements,
Purchaser will not make any public announcement or issue any press release with
respect to this Agreement, the Exchange Agreement or the transactions
contemplated under either such agreement, which materially differs from the form
or content of a public announcement which is mutually agreed upon by Seller and
Purchaser.
6.2 Notice of Developments. Purchaser shall promptly inform Seller
of any Material Development as hereafter defined. For purposes of this Section
6.2, "Material Development" shall mean a development which could reasonably be
expected to affect the Company, the Gulf Assets or the California Assets, of
which Purchaser becomes aware; provided, however, Purchaser shall not be
obligated to inform Seller (i) of any significant developments which are known
within or affect the oil and gas industry generally, or (ii) if to do so could
reasonably be expected to result
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in the violation by Purchaser of any federal or state law or confidentiality
commitment to which Purchaser became a party prior to the date of this
Agreement.
6.3 Exchange Agreement Matters. Purchaser shall be primarily
responsible for the conduct of due diligence with respect to the Gulf Assets and
the preparation and delivery to Mobil of any notices in connection with such due
diligence at Purchaser's sole cost and expense; provided, however, (i) Purchaser
shall not deliver to Mobil any written notifications without Seller's prior
written consent which consent shall not be unreasonably withheld or delayed, and
(ii) Purchaser shall not take any action which would be inconsistent with its
obligation under Section 6.4 below. PURCHASER SHALL INDEMNIFY, DEFEND, SAVE,
DISCHARGE, RELEASE, AND HOLD HARMLESS SELLER INDEMNIFIED PARTIES (AS DEFINED IN
SECTION 11.2 BELOW) FROM AND AGAINST, AND PAY OR REIMBURSE SELLER INDEMNIFIED
PARTIES ON A CURRENT BASIS FOR ANY AND ALL LOSSES, LIABILITIES, LIENS OR
ENCUMBRANCES FOR LABOR OR MATERIALS, CLAIMS, AND CAUSES OF ACTION ARISING OUT
OF, OR IN ANY WAY CONNECTED WITH OR RELATED TO, ANY PERSONAL INJURY TO OR DEATH
OF ANY PERSONS OR DAMAGE TO PROPERTY OCCURRING TO OR ON THE GULF ASSETS AS A
RESULT OF ANY OF PURCHASER'S DUE DILIGENCE ACTIVITIES AS DESCRIBED IN THIS
SECTION 6.3, WHETHER LATENT OR PATENT AND WHETHER OR NOT SUCH PERSONAL INJURY,
DEATH, OR PROPERTY DAMAGE IS CAUSED BY THE (A) ACTIVE, PASSIVE, JOINT,
CONCURRENT, OR SOLE NEGLIGENCE, (B) STRICT LIABILITY, OR (C) WILLFUL MISCONDUCT,
OF ANY SELLER INDEMNIFIED PARTIES OR MOBIL OR MOBIL'S AFFILIATES OR ITS OR
THEIR DIRECTORS, OFFICERS, EMPLOYEES, SUCCESSORS OR ASSIGNS. PURCHASER
ACKNOWLEDGES AND AGREES THAT PURCHASER HAS READ AND UNDERSTANDS ARTICLE 5.02 OF
THE EXCHANGE AGREEMENT, AND PURCHASER AGREES TO CONDUCT DUE DILIGENCE OF THE
GULF ASSETS IN ACCORDANCE WITH THE TERMS THEREOF.
6.4 Reasonable Efforts. Purchaser shall at all times use
commercially reasonable efforts to cause the transactions contemplated by the
Exchange Agreement to be consummated and to cause those conditions to Closing
under the Exchange Agreement and this Agreement which are within the reasonable
control of Purchaser (including without limitation as a result of Purchaser's
role in the conduct of due diligence on the Gulf Assets) to be satisfied;
provided, however, Purchaser shall not be required to waive any of its
conditions to Closing under Article 8.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF SELLER
Seller's obligation to sell the Shares under this Agreement is subject
to the satisfaction on or before the Closing of the following conditions, unless
waived in writing by Seller:
7.1 No Governmental Action or Order. As of the Closing, there shall
not be any action by any Governmental Authority which prevents or makes illegal
the sale and purchase of the
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Shares contemplated by this Agreement. In addition, the Closing shall not
violate any order or decree of any Governmental Authority having competent
jurisdiction over the transactions contemplated by this Agreement.
7.2 Special Committee Approval. The special committee of the Board
of Directors of Purchaser that was established for the purpose of reviewing the
transactions contemplated by this Agreement (the "Special Committee") shall have
approved the purchase of the Shares by Purchaser in accordance with the terms of
this Agreement.
7.3 Exchange Consummated. The closing under the Exchange Agreement
shall have occurred.
7.4 Representations and Covenants. The representations of Purchaser
contained in Article 4 shall be true and correct in all material respects as of
the Closing Date with the same effect as though such representations had been
made on and as of such date. In addition, Purchaser shall have performed and
complied in all material respects with all covenants and obligations required to
be performed by it on or before the Closing Date pursuant to the terms of this
Agreement.
7.5 HSR Act. All applicable waiting periods (or any extensions
thereof) under the HSR Act shall have expired or otherwise been terminated.
7.6 Payment of Purchase Price. Purchaser shall have paid to Seller
the Purchase Price.
7.7 Officer's Certificate. Purchaser shall have delivered to Seller
a certificate of an authorized corporate officer of Purchaser, dated as of the
Closing Date, certifying as to the matters specified in Sections 7.1, 7.2, and
7.4, as of the Closing.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF PURCHASER
Purchaser's obligation to purchase this Shares under this Agreement is
subject to the satisfaction on or before the Closing of the following
conditions, unless waived in writing by Purchaser:
8.1 No Governmental Action or Order. As of the Closing, there shall
not be any action by any Governmental Authority which prevents or makes illegal
the sale and purchase of the Shares contemplated by this Agreement. In
addition, the Closing shall not violate any order or decree of any Governmental
Authority having competent jurisdiction over the transactions contemplated by
this Agreement.
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8.2 Special Committee Approval. The Special Committee shall have
approved the purchase of the Shares by Purchaser in accordance with the terms of
this Agreement and the undertakings of Purchaser set forth in the Tax Sharing
Agreement.
8.3 Resignations. Each of the officers and directors of the Company
shall have tendered their resignations as officers and directors, respectively,
and the Company shall have accepted all resignations.
8.4 Exchange Consummated. The closing under the Exchange Agreement
shall have occurred.
8.5 Representations and Covenants. The representations of Seller
contained in Article 3 shall be true and correct in all material respects as of
the Closing Date with the same effect as though such representations had been
made on and as of such date. In addition, Seller shall have performed and
complied in all material respects with all covenants and obligations required to
be performed by it on or before the Closing Date pursuant to the terms of this
Agreement.
8.6 HSR Act. All applicable waiting periods (or any extensions
thereof) under the HSR Act shall have expired or otherwise been terminated.
8.7 Delivery of Stock Certificate. Seller shall have delivered to
Purchaser a certificate or certificates evidencing the Shares and all reasonably
required endorsements of transfer or assignment instruments.
8.8 Officer's Certificate. Seller shall have delivered to Purchaser
a certificate of an authorized corporate officer of Seller, dated as of the
Closing Date, certifying as to the matters specified in Sections 8.1, 8.2, 8.3
and 8.5, as of the Closing.
ARTICLE 9
TERMINATION
9.1 Grounds for Termination. This Agreement and the rights and
obligations of the parties hereunder may be terminated at any time prior to the
Closing under any of the following circumstances; provided, however, that a
party shall not be allowed to exercise any right of termination pursuant to this
Section 9.1 if the event giving rise to such right shall be due to the failure
of such party to perform or observe in any material respect any of the covenants
or agreements set forth herein to be performed or observed by such party:
(a) by the mutual written agreement of Seller and Purchaser;
(b) by either Seller or Purchaser, upon written notice thereof to
the other party if the Closing shall not have occurred on or before January 1,
1999;
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(c) by either Seller or Purchaser, by written notice thereof to
the other party if the consummation of the transactions contemplated hereby
would violate any non-appealable final order, decree or judgment of any
Governmental Authority having competent jurisdiction enjoining, restraining or
otherwise preventing the Closing;
(d) by either Seller or Purchaser, by written notice thereof to
the other party if the Exchange Agreement shall have been terminated in
accordance with its terms; or
(e) subject to Section 6.4, by Purchaser if and so long as the
Company is entitled to terminate the Exchange Agreement in accordance with
Section 4.01(d) (and Section 5.03) or 4.01(e) thereof.
9.2 Effect of Termination. If this Agreement and the rights and
obligations of the parties hereunder are terminated pursuant to Section 9.1,
this Agreement and the rights and obligations of the parties hereunder shall
become void and of no further force or effect, except (i) if any party is in
default of its obligations hereunder at the time such termination occurs, then
such defaulting party shall continue to be liable hereunder for damages in
respect of such default; and (ii) the provisions of this Section 9.2 and
Sections 3.7, 4.4, 10.5 and Article 12 and Purchaser's indemnification
obligation under Section 6.3 shall survive any such termination.
ARTICLE 10
TAX MATTERS
10.1 Liability for Income and Franchise Taxes. Seller shall bear and
be responsible for all of the Company's income and franchise taxes for the
period ending on the Closing Date (the "Closing Date Period") and shall be
entitled to any refunds of such taxes. If the Company pays any income or
franchise taxes attributable to the Closing Date Period after the Closing Date,
Seller shall reimburse the Company for such taxes, including all penalties and
interest thereon. If any refunds of such taxes are received by the Company
after the Closing Date, the Company shall pay Seller the amount of such refunds
including any interest thereon. Purchaser shall bear and be responsible for all
of the Company's income and franchise taxes for the period commencing on the
date after the Closing Date and for all taxable periods thereafter ("Post-
Closing Date Period") and shall be entitled to any refunds of such taxes with
respect to Post-Closing Date Periods.
10.2 Liability for Other Taxes. Seller shall bear and be responsible
for all taxes other than income and franchise taxes ("Non-Income Taxes")
attributable to the properties relinquished by the Company pursuant to the
Exchange Agreement, and shall be entitled to any refunds of such taxes.
Purchaser shall bear all Non-Income Taxes owed by the Company with respect to
properties received by the Company pursuant to the Exchange Agreement and
Purchaser shall be entitled to any refunds of such taxes. If any Non-Income
Taxes for which Seller is liable under this Agreement are paid by the Company
after the Closing Date, Seller shall reimburse the Company for the payment of
such taxes. If the Company receives after the Closing Date any refunds of Non-
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Income Taxes to which Seller is entitled pursuant to this Section 10.2, the
Company shall pay to Seller such refunds.
10.3 Interest. If any of the payments described in Sections 10.1 and
10.2 are made within 60 days of (i) the date of request for the reimbursement of
payment of tax or (ii) the receipt of the refund of tax, then no interest will
accrue and be due and payable in respect of such amounts. Otherwise, the balance
owed shall bear interest at the rate specified in the Tax Sharing Agreement by
and among Atlantic Richfield Company and Affiliated Corporations dated effective
as of October 1, 1993, as amended (the "Tax Sharing Agreement") from the date of
the request for reimbursement of payment of the tax or, in the case of a refund,
from the date of receipt of the refund, through and including the date of
confirmation of receipt of the funds by the bank or financial institution of the
party entitled to payment.
10.4 Tax Sharing Agreement Pro Forma Tax Return. In each case where
Purchaser files a federal, state or local consolidated, combined or unitary
income and franchise tax return with Seller, Purchaser's pro-forma returns
required pursuant to the Tax Sharing Agreement for each Post-Closing Date Period
shall be prepared in the manner set forth in the Tax Sharing Agreement, taking
into account all items of income, gain, loss, deduction and credit of the
Company attributable to each Post-Closing Date Period except as provided herein:
(i) for purposes of computing its income tax liabilities, the Purchaser shall
use $470 million as adjusted pursuant to Section 1.3 as the total tax basis in
the Gulf Assets of the Company as of the Closing Date, allocated pro rata to
each real, tangible and intangible property on the basis of the fair market
value of such properties to the total value of all Gulf Assets, (ii) for the
sake of clarity, any item of tax paid to Purchaser pursuant to Sections 10.1 and
10.2 shall not be an item of income or gain in the computation of Purchaser's
pro-forma returns, and (iii) Purchaser and Seller shall amend the Tax Sharing
Agreement in due course to incorporate the terms of this Section 10.4.
10.5 Covenant Regarding Transfer. So long as Purchaser is part of
Seller's consolidated tax group, for a period of ten years from the Closing Date
Purchaser shall not merge or liquidate, or cause the merger or liquidation of,
the Company or transfer (by operation of law or otherwise) of any or all of the
Shares to any other Person or Entity.
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification By Seller.
(a) Subject to paragraph (c) below, Seller agrees to release,
indemnify, defend and hold harmless Purchaser and Affiliates (as defined below)
and its and their directors, officers, employees, successors and assigns
(collectively, "Purchaser Indemnified Parties") from and against any and all
liability, loss, damage, fine, penalty, reasonable expense, claim, cause of
action, investigation, proceeding, settlement or compromise (collectively,
"Damages") sustained by such
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Purchaser Indemnified Parties, arising out of or attributable to a "Purchaser
Indemnified Loss", as hereafter defined. "Purchaser Indemnified Loss" shall mean
any or all of the following:
(i) the inaccuracy of any representation made by the Company
under the Exchange Agreement as a result of which under Article 18 of
the Exchange Agreement the Company indemnifies an Assignee Indemnified
Party for Claims or Damages, as such capitalized terms are defined in
the Exchange Agreement;
(ii) the failure of the Company prior to Closing to perform or
comply with any covenant or obligation required to be performed by it
under the Exchange Agreement, or any other breach by the Company of
any provision of the Exchange Agreement as a result of which under
Article 18 of the Exchange Agreement the Company indemnifies an
Assignee Indemnified Party for Claims or Damages, as such capitalized
terms are defined in the Exchange Agreement;
(iii) the ownership, use or operation by the Company or its
predecessors in interest of any assets or properties other than the
Gulf Assets, or the conduct by the Company or its predecessors in
interest of any business activities of any type whatsoever prior to
the Closing Date; it being the intent of Seller and Purchaser that
Seller shall be ultimately responsible under the indemnity set forth
in this Section 11.1(a)(v) for all liabilities and obligations of the
Company (whether accrued, contingent, absolute, known, unknown or
otherwise) as of the Closing Date other than the liability of the
Company under the ARCO Note for the payment of principal and interest
accruing from and after the Closing Date and those liabilities and
obligations that the Company would be responsible for if it were a
newly formed entity whose sole properties and assets as of the Closing
Date consisted of the Gulf Assets;
(iv) all income, franchise and other taxes of the Company,
including penalties and interest thereon, for which Seller is liable
pursuant to Article 10; and
(v) if as a result of Seller's disposition of all or some of the
Shares, Purchaser becomes the "Common Parent" of its own "Affiliated
Group" (as such terms are defined in Section 1504 of the Internal
Revenue Code of 1986, as amended) ("Deconsolidation"), the tax
consequences of a final and non-appealable determination with respect
to any year of or after the event of Deconsolidation, by the Internal
Revenue Service that the Company's tax basis in the Gulf Assets as of
the Closing Date was less than $470 million as adjusted pursuant to
Section 1.3.
(b) In the event that Seller and Purchaser determine in advance
of Deconsolidation that Purchaser's basis for federal income tax purposes in the
Gulf Assets as of the Closing Date is less than $470 million, as adjusted
pursuant to Section 1.3, then upon the event of Deconsolidation, Seller shall
pay to Purchaser an amount equal to the discounted present value (based on a
discount rate of 10%) of (i) the dollar amount of deductions for depreciation
and depletion which Purchaser would have enjoyed had the basis equalled or
exceeded $470 million, as adjusted pursuant to Section 1.3, minus (ii) the
dollar amount of deductions for the depreciation and depletion which
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Purchaser will have based on such actual basis as determined in a commercially
reasonable manner.
(c) Seller shall not be obligated to indemnify the Purchaser
Indemnified Parties unless and until the Closing has occurred. The
indemnification set forth in this section shall be the sole remedy of the
Purchaser Indemnified Parties with respect to each Purchaser Indemnified Loss.
11.2 Indemnification By Purchaser. Subject to the last sentence of
this Section 11.2, Purchaser agrees to release, indemnify, defend and hold
harmless Seller and Affiliates (as defined below) and its and their directors,
officers, employees, successors and assigns (collectively, "Seller Indemnified
Parties") from and against any and all Damages sustained by such Seller
Indemnified Parties, arising out of or attributable to a "Seller Indemnified
Loss", as hereafter defined. "Seller Indemnified Loss" shall mean any or both
of (i) the ownership, use or operation of the Gulf Assets, (ii) the conduct of
the Company's business from and after the Closing Date, and (iii) all income,
franchise and other taxes of the Company, including penalties and interest
thereon, for which Purchaser is liable under Article 10, or arising from the
Purchaser's breach of Section 10.5, provided that the Seller Indemnified Loss
arising from Purchaser's breach of its covenant in Section 10.5 shall be
discounted to its present value as of the Closing Date using a discount rate of
10%. The indemnification set forth in this section shall be the sole remedy of
the Seller Indemnified Parties with respect to each Seller Indemnified Loss.
Notwithstanding the foregoing but except with respect to Purchaser's
indemnification obligation under Section 6.3, Purchaser shall not be obligated
to indemnify the Seller Indemnified Parties unless and until the Closing has
occurred.
11.3 Indemnification Procedure. Any claim for indemnity under
Sections 11.1 or 11.2 above shall be made by written notice form the party
seeking indemnification (the "Indemnified Party") to the indemnifying party,
together with a written description of any third-party claim against the
indemnified party, stating the nature and basis of such claim and, if
ascertainable, the amount thereof. The indemnifying party shall have a period
of thirty (30) days after receipt of such notice within which to respond thereto
or, in the case of a third-party claim that requires a shorter time for
response, such shorter period as specified by the indemnified party in such
notice (the "Notice Period"). If the indemnifying party denies liability or
fails to respond to the notice within the Notice Period, the Indemnified Party
may defend or compromise the claim as it deems appropriate without prejudice to
any of the Indemnified Party's rights hereunder, with no further obligation to
inform the indemnifying party of the status of the claim and no right of the
indemnifying party to approve or disapprove any actions taken in connection
therewith by the Indemnified Party. If the indemnifying party accepts
liability, it shall so notify the Indemnified Party within the Notice Period and
elect either (a) to undertake the defense or compromise of such third-party
claim with counsel selected by the indemnifying party and reasonably approved by
the Indemnified Party or (b) to instruct the Indemnified Party to defend or
compromise such claim. If the indemnifying party undertakes the defense or
compromise of such third-party claim, the Indemnified Party shall be entitled,
at its own expense, to participate in such defense. No compromise or settlement
of any third-party claim shall be made without reasonable notice to the
Indemnified Party and, unless such compromise or settlement includes a general
release of the Indemnified Party in respect of the matter with no
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admission of liability on the part of the Indemnified Party and no constraints
on the future conduct of its business, without the prior written approval of the
Indemnified Party.
11.4 Affiliates Defined. For purposes of this Article 11, Affiliates
shall mean, with respect to a person or Entity (the "Subject"), any other person
or Entity that (a) owns or controls the Subject, (b) is owned or controlled by
the Subject or (c) is under common ownership or control with Subject, where
"owned" means direct or indirect ownership of more than 50% of the equity
interests or rights to distributions on account of equity of the Subject and
"control" means the direct or indirect power to direct the management or
policies of the Subject, whether through the ownership of voting securities, by
contract or otherwise; provided, however, that (i) subject to clauses (iii) and
(iv), Purchaser and any persons or Entities owned or controlled by Purchaser
shall be deemed not to be Affiliates of Seller for purposes of this Article 11,
(ii) subject to clauses (iii) and (iv), Seller and any persons or Entities owned
or controlled by Seller (other than Purchaser and its Affiliates) shall be
deemed not to be Affiliates of Purchaser for purposes of this Article 11, (iii)
with respect to the period of time before the Closing, the Company shall be
deemed to be an Affiliate of Seller, and (iv) with respect to the period of time
after the Closing, the Company shall be deemed to be an Affiliate of Purchaser.
ARTICLE 12
MISCELLANEOUS
12.1 Negotiation and Mediation. Seller and Purchaser shall attempt in
good faith to resolve any dispute, controversy or claim arising out of or
relating to this Agreement (each a "Dispute") promptly by negotiation and then
by mediation in accordance with the following procedures:
(a) In the event of a Dispute, each party shall promptly
designate a senior executive to endeavor to negotiate a resolution of the
Dispute, and each party's designated executive shall promptly meet and in good
faith attempt a resolution.
(b) If senior executives are unable to negotiate a resolution,
then either party may commence the mediation process by notifying the other
party in writing ("Mediation Notice") of such party's desire that the Dispute be
resolved through mediation.
(c) The mediation shall be conducted in New York, New York.
(d) The mediation shall be conducted by a single mediator. The
parties may select any mutually acceptable member from the CPR Institute for
Dispute Resolution ("CPR") New York Panel of Distinguished Neutrals as a
mediator. If the parties cannot agree on a mediator within 10 days after the
date of the Mediation Notice, then the CPR administrator shall send a list and
resumes of five (5) available mediators to the parties. Each party shall number
the candidates in order of preference, shall note any objection it may have to
any candidate, and shall deliver the list so
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marked to CPR. Any party failing, without good cause, to return the candidate
list so marked to CPR within 10 days of receiving the list shall be deemed to
have assented to all candidates on the list. CPR shall designate as mediator the
nominee for whom the parties collectively have indicated the highest preference
and who does not appear to have a conflict of interest or any affiliation, past
or present, with any of the parties. If a tie should result between two
candidates, CPR may designate either candidate. If the designated mediator shall
die, become incapable of, unwilling to, or unable to serve or proceed with the
mediation, a substitute mediator shall be appointed in accordance with the
selection procedure described above in this paragraph, and such substitute
mediator shall have all such powers as if he or she had been originally
appointed herein. If CPR is not in existence at the time the Dispute arises, the
mediator shall be a member of the panel of neutrals of the organization which is
the successor to CPR. If there is no successor to CPR, the mediator shall be a
member of the panel of neutrals of the Alternative Dispute Resolution
organization which is most similar to CPR.
(e) The mediation shall consist of one or more informal,
nonbinding meetings between the parties' representatives and the mediator,
jointly and in separate caucuses, out of which the mediator will seek to guide
the parties to a resolution of the Dispute. The mediation process shall continue
until the resolution of the Dispute, or the termination of the mediation process
pursuant to paragraph (h) below.
(f) The costs of the mediation, including fees and expenses,
shall be borne equally by the parties.
(g) All verbal and written communications between the parties and
issued or prepared in connection with this Section shall be deemed prepared and
communicated in furtherance, and in the context, of dispute settlement, and
shall be exempt from discovery and production, and shall not be admissible in
evidence (whether as admission or otherwise) in any arbitration or other
proceedings for the resolution of the Dispute.
(h) The initial mediation meeting between the parties'
representatives and the mediator shall be held within 30 days after the
Mediation Notice. Either party may terminate the mediation process and commence
litigation upon the earliest to occur of (i) the failure of the initial
mediation meeting to occur within 30 days after the date of the Mediation
Notice, (ii) the passage of 45 days from the date of the Mediation Notice
without the Dispute having been resolved, or (iii) such time as the mediator
makes a finding that there is no possibility of resolution through mediation.
12.2 Assignment. No party to this Agreement shall convey, assign or
otherwise transfer any of its rights or obligations under this Agreement without
the express written consent of the other party except to an affiliate of such
party.
12.3 Entire Agreement. This Agreement, together with its exhibits and
schedules, the Tax Sharing Agreement and the Exchange Agreement contain the
entire agreement between the parties with respect to the transaction
contemplated hereby and no modification or waiver of any provision hereof shall
be valid unless set forth in writing executed by both parties hereto. In the
event
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of any contradiction between the terms of this Agreement (together with its
exhibits and schedules) and the Exchange Agreement, the terms of this Agreement
shall control.
12.4 Severability. If any provision of this Agreement should be
determined by any court of competent jurisdiction to be invalid, illegal or
unenforceable in whole or in part, such provision shall be deemed to be severed
or limited, but only to the extent required to render the remaining provisions
fully enforceable, and the Agreement as thus amended shall be enforced to give
effect to the intention of the parties insofar as that is possible.
12.5 Successors and Assigns. All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
12.6 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and is not intended to confer any rights or
benefits to any third parties.
12.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts) of the State
of Delaware.
12.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the day and year first written above.
ATLANTIC RICHFIELD COMPANY
By: /s/ Terry G. Dallas
---------------------------
Name: Terry G. Dallas
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Title: Treasurer
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VASTAR RESOURCES, INC.
By: /s/ Charles D. Davidson
---------------------------
Name: Charles D. Davidson
---------------------
Title: President and CEO
---------------------
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