EXHIBIT 99.1
SALE OF NOTES
ISSUED BY
TRANSTEXAS GAS CORPORATION
.
.
.
TABLE OF CONTENTS
PAGE
ARTICLE I SALE OF NOTES AND RIGHTS, AND CLOSING................................. 1
1.1 Purchase and Sale......................................................... 1
1.2 Purchase Price............................................................ 1
1.3 Closing................................................................... 1
1.4 Actions at the Closing.................................................... 1
ARTICLE II REPRESENTATIONS AND WARRANTIES REGARDING SELLER...................... 1
2.1 Organization of Seller.................................................... 2
2.2 Authority................................................................. 2
2.3 Title..................................................................... 2
2.4 No Conflicts.............................................................. 2
2.5 Consents and Approvals.................................................... 2
2.6 Brokers................................................................... 2
2.7 Accuracy of Statements.................................................... 3
ARTICLE III REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY................ 3
3.1 Due Incorporation of Company.............................................. 3
3.2 Capitalization............................................................ 3
3.3 Subsidiaries.............................................................. 3
3.4 Consents and Approvals.................................................... 3
3.5 Financial Statements...................................................... 4
3.6 No Adverse Effects or Changes............................................. 4
3.7 Title to Properties....................................................... 4
3.8 Litigation................................................................ 4
3.9 Claims Against Officers and Directors..................................... 5
3.10 Insurance................................................................. 5
3.11 Compliance with Law....................................................... 5
3.12 Undisclosed Liabilities................................................... 5
3.13 Related Parties........................................................... 5
3.14 Intellectual Property..................................................... 6
3.15 Environmental Matters..................................................... 6
3.16 Employees, Labor Matters, etc............................................. 7
3.17 Employee Benefit Plans.................................................... 7
3.18 Property.................................................................. 9
3.19 Loan Agreement............................................................ 9
i
3.20 Tax....................................................................... 9
3.21 Security Interests........................................................ 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER.......................... 10
4.1 Organization of Purchaser................................................. 10
4.2 Authority................................................................. 10
4.3 No Conflicts.............................................................. 10
ARTICLE V ASSIGNMENT AND ASSUMPTION............................................. 11
ARTICLE VI INDEMNIFICATION...................................................... 11
6.1 Indemnification by Seller................................................. 11
6.2 Claims.................................................................... 11
6.3 Notice of Third Party Claims; Assumption of Defense....................... 12
6.4 Settlement or Compromise.................................................. 12
6.5 Failure of Indemnifying Person to Act..................................... 13
6.6 Tax Character............................................................. 13
ARTICLE VII DEFINITIONS......................................................... 13
7.1 Defined Terms............................................................. 13
ARTICLE VIII MISCELLANEOUS...................................................... 17
8.1 Investigation............................................................. 17
8.2 Survival of Representations and Warranties................................ 17
8.3 Entire Agreement.......................................................... 17
8.4 Waiver.................................................................... 17
8.5 Amendment................................................................. 18
8.6 No Third Party Beneficiary................................................ 18
8.7 Assignment; Binding Effect................................................ 18
8.8 Headings.................................................................. 18
8.9 Invalid Provisions........................................................ 18
8.10 Governing Law............................................................. 18
8.11 Counterparts.............................................................. 18
8.12 Waiver of Jury Trial...................................................... 18
8.13 Consent to Jurisdiction................................................... 19
8.14 Expenses.................................................................. 19
8.15 Notices................................................................... 19
ii
8.16 Further Assurances........................................................ 20
iii
This PURCHASE AGREEMENT (the or this "Agreement") dated as of December 6,
2004 is made and entered into by Thornwood Associates L.P., a Delaware limited
partnership, ("Seller") and AREP Oil & Gas LLC, a Delaware limited liability
company ("Purchaser"). Capitalized terms not otherwise defined herein have the
meanings set forth in Article XIII.
WHEREAS, Seller is the owner of $27,500,000 in principal amount of term
notes (the "Notes") issued by TransTexas Gas Corporation ("Company") under an
Amended and Restated Oil & Gas Term Loan Agreement dated as of August 28, 2003
(the "Loan Agreement") constituting 100% of the indebtedness issued under the
Loan Agreement, the original issuance of $32,500,000 having been reduced by a
principal payment of $5 million; and
WHEREAS, Seller desires to sell the Notes together with all rights of
lender under the Loan Agreement and under all related security and other
documents (collectively, the "Documents"), and all related claims, powers and
causes of action (collectively, the "Rights") to Purchaser, and Purchaser
desires to purchase the same, on the terms and subject to the conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of 4which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
SALE OF NOTES AND RIGHTS, AND CLOSING
1.1 Purchase and Sale. Seller agrees to sell to Purchaser the Notes and
Rights and Purchaser agrees to purchase from Seller the Notes and Rights, at the
Closing on the terms and subject to the conditions set forth in this Agreement.
1.2 Purchase Price The purchase price is $28,245,890.41 (the "Purchase
Price").
1.3 Closing. Upon the terms and subject to the conditions of this
Agreement, the closing of the transactions contemplated hereby (the "Closing")
shall take place simultaneously with the execution and delivery of this
Agreement. The date on which the Closing occurs is herein referred to as the
"Closing Date."
1.4 Actions at the Closing. At the Closing, (i) Purchaser shall pay the
Purchase Price to Seller; (ii) Seller shall cause the Company to deliver to
Purchaser the Note representing the debt underlying the Notes; and (iii) the
parties shall enter into the Assignment Agreement attached hereto as Exhibit A.
ARTICLE II
REPRESENTATIONS AND WARRANTIES REGARDING SELLER
As an inducement to Purchaser to enter into this Agreement, Seller hereby
makes the following representations and warranties to Purchaser:
2.1 Organization of Seller. Seller is a limited partnership duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. Seller has full organizational power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby, including without limitation to
sell and transfer (pursuant to this Agreement) the Notes and Rights.
2.2 Authority. The execution and delivery by Seller of this Agreement, and
the performance by Seller of its obligations hereunder, have been duly and
validly authorized by Seller and no other action on the part of Seller, its
general partner, its limited partners or its board is necessary for such
execution, delivery or performance. This Agreement has been duly and validly
executed and delivered by Seller and constitutes a legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
2.3 Title. The delivery of the Assignment Agreement and other instruments
of transfer delivered by Seller to Purchaser at the Closing will transfer to
Purchaser good and valid title to the Notes and Rights, free and clear of all
Liens other than Liens created by Purchaser.
2.4 No Conflicts. The execution and delivery by Seller of this Agreement
do not, and the performance by Seller of its obligations under this Agreement
and the consummation of the transactions contemplated hereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the organizational documents of Seller;
(b) conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to Seller or any of its Assets and
Properties; or
(c) (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require Seller to obtain any consent, approval or action of, make any
filing with or give any notice to any Person as a result or under the terms of,
(iv) result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, or (v) result in the
creation or imposition of any Lien upon Seller or any of its Assets and
Properties under, any Contract or License to which Seller is a party or by which
any of its Assets and Properties is bound.
2.5 Consents and Approvals. No consent, authorization or approval of,
filing or registration with, or cooperation from, any Governmental Authority or
any other Person not a party to this Agreement is necessary in connection with
the execution, delivery and performance by Seller of this Agreement or the
consummation of the transactions contemplated hereby.
2.6 Brokers. Neither Seller nor the Company nor any Subsidiary has used
any broker or finder in connection with the transactions contemplated hereby,
and neither Purchaser nor any Affiliate of Purchaser has or shall have any
liability or otherwise suffer or incur any Loss as a result of or in connection
with any brokerage or finder's fee or other commission of any Person retained or
purporting to be retained by Seller or by the Company or any Subsidiary in
connection with any of the transactions contemplated by this Agreement.
2
2.7 Accuracy of Statements. Neither this Agreement nor any schedule,
exhibit, statement, list, document, certificate or other information furnished
or to be furnished by or on behalf of the Company, any Subsidiary or Seller to
Purchaser or any representative or Affiliate of Purchaser in connection with
this Agreement or any of the transactions contemplated hereby contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they are made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
As an inducement to Purchaser to enter into this Agreement, Seller hereby
makes the following representations to Purchaser.
3.1 Due Incorporation of Company.
(a) The Company and each of the Subsidiaries is duly organized and
validly existing under the laws of the state in which it is incorporated or
organized, as the case may be, with all requisite power and authority to own,
lease and operate its properties and to carry on its business as they are now
being owned, leased, operated and conducted. The Company and each of the
Subsidiaries is licensed or qualified to do business and is in good standing
(where the concept of "good standing" is applicable) as a foreign corporation in
each jurisdiction where the nature of the properties owned, leased or operated
by it and the business transacted by it require such licensing or qualification
(except, with respect to the Subsidiaries, where the failure to be so licensed
or qualified or be in good standing will not in the aggregate adversely affect
the validity or enforceability of this Agreement or have a Material Adverse
Effect on any of the Subsidiaries).
(b) The Seller has delivered to Purchaser true, correct and complete
copies of the organizational documents of the Company and the Subsidiaries,
which organizational documents are in full force and effect.
3.2 Capitalization. The Seller owns 100% of the stock of the Company, free
and clear of all Liens. No Person holds any option, warrant, convertible
security or other right to acquire any interest in the Company or any of the
Subsidiaries. There are no obligations, contingent or otherwise, of the Company
or the Subsidiaries to repurchase, redeem or otherwise acquire any ownership
interests of the Company or any Subsidiary or to provide funds to or make any
material investment (in the form of a loan, capital contribution or otherwise)
in any Subsidiary or any other Person.
3.3 Subsidiaries. The Company has no subsidiaries other than Galveston Bay
Pipeline Company and Galveston Bay Processing Corporation.
3.4 Consents and Approvals. No consent, authorization or approval of,
filing or registration with, or cooperation from, any Governmental Authority or
any other Person not a party to this Agreement is necessary in connection with
the execution, delivery and performance
3
by Seller of its respective obligations under this Agreement or the consummation
by Seller of its respective transactions contemplated hereby.
3.5 Financial Statements.
(a) The Seller has delivered to Purchaser true, correct and complete
copies of the Financial Statements. The Audited 2003 Financial Statements have
been prepared in accordance with GAAP consistently applied and present fairly
the financial position, assets, liabilities and retained earnings of the
respective companies as of the dates thereof and the revenues, expenses, results
of operations, and cash flows of the respective companies for the periods
covered thereby. The Financial Statements are in accordance with the books and
records of the respective companies, do not reflect any transactions which are
not bona fide transactions and do not contain any untrue statement of a material
fact (whether or not required to be disclosed under GAAP) or omit to state any
material fact necessary to make the statements contained therein, in light of
the circumstances in which they were made, not misleading.
(b) The Seller have delivered to Purchaser true and complete copies
of all Interim 2004 Financial Statements. The Interim 2004 Financial Statements
present fairly the financial position, assets, liabilities and retained earnings
of the respective companies as of the dates thereof and the revenues, expenses,
results of operations, and cash flows of the respective companies for the
periods covered thereby. The Interim 2004 Financial Statements are in accordance
with the books and records of the respective companies, do not reflect any
transactions which are not bona fide transactions and do not contain any untrue
statement of a material fact (whether or not required to be disclosed under
GAAP) or omit to state any material fact necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.
3.6 No Adverse Effects or Changes. Since December 31, 2003, (i) neither
the Company nor any of the Subsidiaries has suffered any Material Adverse
Effect; (ii) there has been no change, event, development, damage or
circumstance affecting the Company or the Subsidiaries that, individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect on
the Company or any of the Subsidiaries; (iii) there has not been any change by
the Company or any of the Subsidiaries in its accounting methods, principles or
practices, or any revaluation by the Company or any of the Subsidiaries of any
of its assets, including writing down the value of inventory or writing off
notes or accounts receivable; and (iv) the Company and each of the Subsidiaries
has conducted its business only in the ordinary course of business consistent
with past practice.
3.7 Title to Properties. Each of the Company and its Subsidiaries has good
and marketable title to, and each Subsidiary is the lawful owner of, all of the
tangible and intangible assets, properties and rights used in connection with
its respective businesses and all of the tangible and intangible assets,
properties and rights reflected in the Financial Statements, except for changes
accruing in the ordinary course of business that would not, individually or in
the aggregate, adversely affect the ability of the Company or any of the
Subsidiaries to conduct its business in the ordinary course, consistent with
past practice.
3.8 Litigation. Except as disclosed in the Financial Statements, there are
no actions, suits, arbitrations, regulatory proceedings or other litigation,
proceedings or governmental
4
investigations, with such exceptions as are individually, or in the aggregate,
not material in nature or amount, pending or, to the knowledge of Seller,
threatened against or affecting the Company, the Subsidiaries or any of their
respective officers, directors, employees or agents in their capacity as such,
or any of the Company's Assets and Properties or businesses of the Company or
any of the Subsidiaries, and to Seller' knowledge, any facts or circumstances
which may give rise to any of the foregoing. Except as disclosed in the
Financial Statements, neither the Company nor any of the Subsidiaries is subject
to any order, judgment, decree, injunction, stipulation or consent order of or
with any court or other Governmental Authority.
3.9 Claims Against Officers and Directors. There are no pending or, to the
knowledge of Seller, threatened claims against any director, officer, employee
or agent of the Company, the Subsidiaries or any other Person, which could give
rise to any claim for indemnification against the Company or the Subsidiaries or
cause the Company or the Subsidiaries to incur any material liability or
otherwise suffer or incur any material Loss.
3.10 Insurance. The Subsidiaries maintain insurance policies that provide
adequate and suitable insurance coverage for the business of the Subsidiaries
and are on such terms, cover such risks and are in such amounts as the insurance
customarily carried by comparable companies of established reputation similarly
situated and carrying on the same or similar business.
3.11 Compliance with Law. Except as set forth in the Financial Statements,
the Company and the Subsidiaries are in compliance and, at all times, have been
in compliance in all respects with all applicable Laws relating to the Company
or the Subsidiaries or their respective Assets and Properties or businesses.
Except as disclosed in the Financial Statements, no investigation or review by
any governmental authority or self-regulatory authority is pending or, to the
knowledge of the Seller, threatened, nor has any such authority indicated orally
or in writing to the Seller, the Company or any of the Subsidiaries an intention
to conduct an investigation or review of the Company or any of the Subsidiaries
or, with respect to the Company or any of the Subsidiaries, of the Seller.
3.12 Undisclosed Liabilities. Except as disclosed in the Financial
Statements and the Interim 2004 Financial Statements, neither the Company nor
any of the Subsidiaries has any material liabilities or obligations of any
nature, whether known or unknown, absolute, accrued, contingent or otherwise and
whether due or to become due, other than liabilities and obligations incurred
after September 30, 2004 in the ordinary course of business consistent with past
practice (including as to amount and nature).
3.13 Related Parties. Except as disclosed in the Financial Statements and
except for transactions between the Company and the Subsidiaries or between the
Company's Subsidiaries, (i) no Affiliate of the Company is a party to any
Contract with the Company or any of the Subsidiaries; (ii) no Affiliate of the
Company owes any material amount of money to, nor is such Affiliate owed any
material amount of money by, the Company or any of the Subsidiaries, (iii)
neither the Company nor any of the Subsidiaries has, directly or indirectly,
guaranteed or assumed any indebtedness for borrowed money or otherwise for the
benefit of an Affiliate of the Company or any of the Subsidiaries; and (iv)
neither the Company nor any of the Subsidiaries has made any material payment
to, or engaged in any material transaction with, an Affiliate of
5
the Company, other than the existing management agreement with National Energy
Group, Inc. ("NEG"), as disclosed in the public disclosure documents of NEG.
3.14 Intellectual Property. The Company and the Subsidiaries own, or
possess adequate rights to use, all material patents, trade names, trademarks,
copyrights, inventions, processes, designs, formulae, trade secrets, know-how
and other intellectual property rights necessary for, used or held for use in
the conduct of their businesses. All material intellectual property necessary
for used or held for use in the conduct of the businesses of the Company and any
of the Subsidiaries has been duly registered with, filed in or issued by the
relevant filing offices, domestic or foreign, to the extent necessary or
desirable to ensure full protection under any applicable Law, and such
registrations, filings or issuances remain in full force and effect.
The conduct of the business of the Company and the Subsidiaries does not
infringe or otherwise conflict with any rights of any Person in respect of
intellectual property rights. None of the intellectual property rights owned by
the Company or the Subsidiaries is being infringed or otherwise, in any way,
used or available for use by any Person without a license or permission from the
Company and the Subsidiaries and neither the Company nor any of the Subsidiaries
has taken or omitted to take any action which would have the effect of waiving
any of its rights thereunder. Neither the Company nor any of the Subsidiaries
has received a claim of infringement or conflict by any third party in respect
of any intellectual property used by the Company or the Subsidiaries.
3.15 Environmental Matters. Except as set forth in the Financial
Statements:
(a) The Company and each of the Subsidiaries have obtained all
material Environmental Permits that are required with respect to their
respective Assets and Properties and businesses, either owned or leased;
(b) The Company, each of the Subsidiaries, and their respective
Assets and Properties and businesses, are and have been in compliance in all
material respects with all terms and conditions of all applicable Environmental
Laws and Environmental Permits;
(c) There are no Environmental Claims pending or, to the knowledge
of the Seller, threatened against the Company or any of the Subsidiaries.
Neither the Company nor any of the Subsidiaries has received any notice from any
Governmental or Regulatory Authority or any person of any violation or liability
arising under any Environmental Law or Environmental Permit in connection with
its Assets and Properties, businesses or operations;
(d) Neither the Company, nor any of its Subsidiaries, nor any other
Person has caused or taken any action that will result in any material
liability, obligation or cost on the part of the Company or any of its
Subsidiaries relating to (x) environmental conditions on, above, under or from
any properties or assets currently or formerly owned, leased, operated or used
by the Company or any of its Subsidiaries, or (y) the past or present use,
management, transport, treatment, generation, storage, disposal, release or
threatened release of Hazardous Materials.
(e) Neither the Company nor any of the Subsidiaries owns, leases or
operates or has owned, leased or operated, any property listed on the National
Priorities List pursuant to
6
CERCLA or on the CERCLIS or on any other federal or state list as sites
requiring investigation or cleanup;
(f) Neither the Company nor any of the Subsidiaries is transporting,
has transported, or is arranging for the transportation of, any Hazardous
Material to any location which is listed on the National Priorities List
pursuant to CERCLA, on the CERCLIS, or on any similar federal or state list or
which is the subject of federal, state or local enforcement actions or other
investigations that may lead to material claims against the Company or the
Subsidiaries for investigative or remedial work, damage to natural resources,
property damage or personal injury including claims under CERCLA;
(g) There are no sites, locations or operations at which the Company
or any of the Subsidiaries is currently undertaking, or has completed, any
investigative, remedial, response or corrective action as required by
Environmental Laws;
(h) There are no physical or environmental conditions existing on
any property owned or leased by the Company or the Subsidiaries resulting from
their respective operations or activities, past or present, at any location,
that would give rise to any material on-site or off-site investigative or
remedial obligations or any corrective action under any applicable Environmental
Laws; and
(i) The Seller has provided to Purchaser all material environmental
site assessments, audits, investigations and studies in its possession, custody
or control.
3.16 Employees, Labor Matters, etc. Except as set forth in the Financial
Statements, neither the Company nor any of the Subsidiaries is a party to or
bound by, and none of their employees is subject to, any collective bargaining
agreement, and there are no labor unions or other organizations representing,
purporting to represent or attempting to represent any employees employed by the
Company or any of the Subsidiaries. There has not occurred or been threatened
any material strike, slow down, picketing, work stoppage, concerted refusal to
work overtime or other similar labor activity with respect to any employees of
the Company or any of the Subsidiaries. There are no labor disputes currently
subject to any grievance procedure, arbitration or litigation and there is no
representation petition pending or threatened with respect to any employee of
the Company or any of the Subsidiaries. The Company and the Subsidiaries have
complied with all applicable Laws pertaining to the employment or termination of
employment of their respective employees, including, without limitation, all
such Laws relating to labor relations, equal employment opportunities, fair
employment practices, prohibited discrimination or distinction and other similar
employment activities; except for any failure to comply that, individually and
in the aggregate, is not reasonably likely to result in any Company Material
Adverse Effect.
3.17 Employee Benefit Plans.
(a) Except as set forth in the Financial Statements or accrued
thereafter in accordance with the terms of the Plans as of the date hereof,
neither the Company nor any of the Subsidiaries has incurred any material
liability, and no event, transaction or condition has occurred or exists that
could result in any material liability, on account of any Plans, including but
not limited to liability for (i) additional contributions required to be made
under the terms of
7
any Plan or its related trust, insurance contract or other funding arrangement
with respect to periods ending on or prior to the date hereof which are not
reflected, reserved against or accrued in the Financial Statements; (ii)
breaches by the Company or any of the Subsidiaries, or any of their employees,
officers, directors, stockholders, or, to the knowledge of Seller, the trustees
under the trusts created under the Plans, or any other Persons under ERISA or
any other applicable Law; or (iii) income taxes by reason of non-qualification
of the Plans. Each of the Plans has been operated and administered in all
material respects in compliance with its terms, all applicable Laws and all
applicable collective bargaining agreements. Except with respect to the increase
in employer matching contributions under the Subsidiaries' 401(k) plans, since
the date of the Financial Statements, neither the Company nor any of the
Subsidiaries has communicated to any current or former director, officer,
employee or consultant thereof any intention or commitment to amend or modify
any Plan, or to establish or implement any other employee or retiree benefit or
compensation plan or arrangement, which would materially increase the cost to
the Company or any Subsidiary.
(b) Each Plan which is intended to be "qualified" within the meaning
of section 401 (a) of the Code, and the trust (if any) forming a part thereof
has received a favorable determination letter or is covered by an opinion letter
from the Internal Revenue Service and no event has occurred and no condition
exists which could reasonably be expected to result in the revocation of any
such determination. All amendments and actions required to bring each Plan into
conformity with the applicable provisions of ERISA, the Code, and any other
applicable Laws have been made or taken.
(c) There are no pending or threatened claims (and no facts or
circumstances exist that could give rise to any such claims) by or on behalf of
any participant in any of the Plans, or otherwise involving any such Plan or the
assets of any Plan, other than routine claims for benefits in the ordinary
course. The Plans are not presently under audit or examination (nor has notice
been received of a potential audit or examination) by the IRS, the Department of
Labor, or any other Governmental or Regulatory Authority.
(d) None of the Plans provides benefits of any kind with respect to
current or former employees, officers, or directors (or their beneficiaries) of
the Company and the Subsidiaries beyond their retirement or other termination of
employment, other than (i) coverage for benefits mandated by Section 4980B or
the Code, (ii) death benefits or retirement benefits under an employee pension
benefit plan (as defined by section 3(2) of ERISA), or (iii) benefits, the full
cost of which is borne by such current or former employees, officers, directors,
or beneficiaries.
(e) No Plan sponsored by the Company and the Subsidiaries is a
"multiemployer plan" within the meaning of Section 4001 (a)(3) of ERISA or a
"multiple employer plan" as addressed in section 4063 or 4064 of ERISA. No Plan
sponsored by the Company and the Subsidiaries is subject to Title IV of ERISA.
(f) The consummation of the transactions contemplated by this
Agreement will not (alone or in combination with any other event, including,
without limitation, the passage of time) result in (i) any payment (including,
without limitation, severance, unemployment compensation, golden parachute,
bonus payments or otherwise) becoming due under any agreement or oral
arrangement to any current or former director, officer, employee or consultant
8
of the Company and the Subsidiaries, (ii) any increase in the amount of salary,
wages or other benefits payable to any director, officer, employee or consultant
of the Company and the Subsidiaries, or (iii) any acceleration of the vesting or
timing of payment of any benefits or compensation (including, without
limitation, any increased or accelerated funding obligation) payable to any
director, officer, employee or consultant of the Company and the Subsidiaries.
3.18 Property. The Company and the Subsidiaries are in possession of and
have good title to, or have valid leasehold interests in or valid rights under
contract to use, all of the material, real and tangible personal property used
or held for use in the business of the Company or the Subsidiaries. All such
personal property is in good working order and condition, ordinary wear and tear
excepted, and its use complies in all material respects with all applicable
Laws.
3.19 Loan Agreement. The representations and warranties of the Company and
its Subsidiaries set forth in the Loan Agreement are true and correct. The
Company and its Subsidiaries have complied in all material respects with all of
the terms and conditions of the Loan Agreement and the other Documents. There is
no event of default, as defined in the Loan Agreement.
3.20 Tax.
(a) The Company and the Subsidiaries have duly and timely filed with
the appropriate taxing authorities all material federal, state and local income
Tax Returns and all other material Tax Returns required to be filed through the
date hereof and will duly and timely file any such returns required to be filed
on or prior to the Closing. Such Tax Returns and other information filed are
(and, to the extent they will be filed prior to the Closing, will be) complete
and accurate in all material respects. Neither the Company nor the Subsidiaries
have pending any request for an extension of time within which to file federal,
state or local income Tax Returns.
(b) All Taxes of the Company and the Subsidiaries in respect of
periods (or portions thereof) ending at or prior to the Closing (i) have been
paid by the Company and the Subsidiaries or, (ii) after the Closing, will be
paid by the Seller, or such Taxes (other than income Taxes) are shown as due and
payable after the Closing on the financial statements of the Companies and the
Subsidiaries in accordance with GAAP.
(c) No federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any material Taxes or material Tax Returns of the Company or the
Subsidiaries. Neither the Company nor any of the Subsidiaries has received a
written notice of any such pending audits or proceedings. There are no
outstanding waivers extending the statutory period of limitation relating to the
payment of Taxes due from the Company or any of the Subsidiaries.
(d) Neither the IRS nor any other taxing authority (whether domestic
or foreign) has asserted in writing, or to the best knowledge of the Company and
the Subsidiaries, is threatening to assert, against the Company or any of the
Subsidiaries any material deficiency or material claim for Taxes in excess of
the reserves established therefor.
9
(e) There are no Liens for Taxes upon any property or assets of the
Company or any of the Subsidiaries, except for Liens for Taxes not yet due and
payable and liens for Taxes that are being contested in good faith by
appropriate proceedings as set forth on Schedule 3.20(e) and as to which
adequate reserves have been established in accordance with GAAP.
(f) Neither the Company nor the Subsidiaries has any obligation
under any Tax sharing agreement or similar arrangement with any other Person
with respect to Taxes of such other Person.
3.21 Security Interests. As of the Closing, the Purchaser shall have a
legal, valid and enforceable, first priority perfected security interest in all
right, title and interest of each of the Company and the guarantor in the
"Collateral" described in the Documents. All liens granted under the Loan
Agreement are and will be as of the Closing, for all purposes, valid, perfected,
enforceable, non-avoidable and effective as of the Closing without any further
action by the Purchaser, the Seller, the Company or any other party.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
4.1 Organization of Purchaser. Purchaser is a limited liability company
duly formed, validly existing and in good standing under the Laws of the State
of Delaware. Purchaser has full organizational power and authority to execute
and deliver this Agreement and to perform Purchaser's obligations hereunder and
to consummate the transactions contemplated hereby, including without limitation
to buy pursuant to this Agreement the Notes and the Rights.
4.2 Authority. The execution and delivery by Purchaser of this Agreement,
and the performance by Purchaser of its obligations hereunder, have been duly
and validly authorized and, no other limited liability company action on the
part of Purchaser is necessary. This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes a legal, valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with its
terms.
4.3 No Conflicts. The execution and delivery by Purchaser of this
Agreement do not, the performance by Purchaser of its obligations under this
Agreement and the consummation of the transactions contemplated hereby, will
not:
(a) conflict with, or result in a violation or breach of, any of the
terms, conditions or provisions of the organizational documents of Purchaser;
(b) conflict with, or result in a violation or breach of, any term
or provision of any Law or Order applicable to Purchaser or any of its Assets
and Properties (other than such conflicts, violations or breaches which will not
have a Material Adverse Effect on Purchaser); or
(c) (i) conflict with, or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require Purchaser to obtain any
10
consent, approval or action of, make any filing with or give any notice to any
Person as a result or under the terms of, (iv) result in or give to any Person
any right of termination, cancellation, acceleration or modification in or with
respect to, or (v) result in the creation or imposition of any Lien upon
Purchaser or any of its Assets and Properties under, any Contract or License to
which Purchaser is a party or by which any of its Assets and Properties is
bound.
ARTICLE V
ASSIGNMENT AND ASSUMPTION
At the Closing, Seller and Purchaser shall enter into the Assignment Agreement
pursuant to which Seller will transfer, assign, convey and grant to Purchaser,
its successors and assigns forever 100% of the Notes and the Rights.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by Seller. Seller agrees to indemnify Purchaser, its
Affiliates and their respective officers, directors, employees independent
contractors, stockholders, principals, partners, agents, or representatives
(each an "Indemnified Person" and collectively, the "Indemnified Persons")
against, and to hold each Indemnified Person harmless from, any and all Losses
incurred or suffered by any Indemnified Person relating to or arising out of or
in connection with (a) any breach of or any inaccuracy in any representation or
warranty made by Seller in this Agreement, or (b) any breach of or failure by
any Seller to perform any of its covenants or obligations set out or
contemplated in this Agreement.
6.2 Claims. As promptly as is reasonably practicable after becoming aware
of a claim for indemnification under this Agreement, the Indemnified Person
shall promptly give notice to the Seller ("Indemnifying Person") of such claim
and the amount the Indemnified Person will be entitled to receive hereunder from
the Indemnifying Person; provided that the failure of the Indemnified Person to
promptly give notice shall not relieve the Indemnifying Person of its
obligations except to the extent (if any) that the Indemnifying Person shall
have been prejudiced thereby. If the Indemnifying Person does not object in
writing to such indemnification claim within 30 days of receiving notice
thereof, the Indemnified Person shall be entitled to recover, on the
thirty-fifth day after such notice was given, from the Indemnifying Person the
amount of such claim, and no later objection by the Indemnifying Person shall be
permitted; if the Indemnifying Person agrees that it has an indemnification
obligation but objects that it is obligated to pay only a lesser amount, the
Indemnified Person shall nevertheless be entitled to recover, on the thirty-
fifth day after such notice was given, from the Indemnifying Person the lesser
amount, without prejudice to the Indemnified Person's claim for the difference.
In addition to the amounts recoverable by the Indemnified Person from the
Indemnifying Person pursuant to the foregoing provisions, the Indemnified Person
shall also be entitled to recover from the Indemnifying Person interest on such
amounts at the rate of Two Times Prime from, and including, the thirty- fifth
day after such notice of an indemnification claim is given to, but not
including, the date such recovery is actually made by the Indemnified Person.
11
6.3 Notice of Third Party Claims; Assumption of Defense. The Indemnified
Person shall give notice as promptly as is reasonably practicable to the
Indemnifying Person of the assertion of any claim, or the commencement of any
suit, action or proceeding, by any Person not a party hereto (a "Third Party
Claim") in respect of which indemnity may be sought under this Agreement;
provided that the failure of the Indemnified Person to promptly give notice
shall not relieve the Indemnifying Person of its obligations except to the
extent (if any) that the Indemnifying Person shall have been prejudiced thereby.
The Indemnifying Person may, at its own expense, participate in the defense of
any Third Party Claim, suit, action or proceeding (a) upon notice to the
Indemnified Person and (b) upon delivery by the Indemnifying Person to the
Indemnified Person a written agreement that the Indemnified Person is entitled
to indemnification for all Losses arising out of such Third Party Claim, suit,
action or proceeding and that the Indemnifying Person shall be liable for the
entire amount of any Loss, at any time during the course of any such Third Party
Claim, suit, action or proceeding, assume the defense thereof; provided,
however, that (i) the Indemnifying Person's counsel is reasonably satisfactory
to the Indemnified Person, and (ii) the Indemnifying Person shall thereafter
consult with the Indemnified Person upon the Indemnified Person's reasonable
request for such consultation from time to time with respect to such Third Party
Claim, suit, action or proceeding. If the Indemnifying Person assumes such
defense, the Indemnified Person shall have the right (but not the duty) to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnifying Person. If, however, the
Indemnified Person reasonably determines in its judgment that representation by
the Indemnifying Person's counsel of both the Indemnifying Person and the
Indemnified Person would present such counsel with a conflict of interest, then
such Indemnified Person may employ separate counsel to represent or defend it in
any such Third Party Claim, action, suit or proceeding and the Indemnifying
Person shall pay all of the fees and disbursements in connection with the
retention of such separate counsel. If the Indemnifying Person fails to promptly
notify the Indemnified Party that the Indemnifying Party desires to defend the
Third Party Claim pursuant, or if the Indemnifying Person gives such notice but
fails to prosecute vigorously and diligently or settle the Third Party Claim,
then the Indemnified Party will have the right to defend, at the sole cost and
expense of the Indemnifying Person, the Third Party Claim by all appropriate
proceedings, which proceedings will be prosecuted by the Indemnifying Person in
good faith or will be settled at the discretion of the Indemnifying Person (with
the consent of the Indemnifying Person, which consent will not be unreasonably
withheld). The Indemnifying Person will have full control of such defense and
proceedings, including any compromise or settlement thereof. Whether or not the
Indemnifying Person chooses to defend or prosecute any such Third Party Claim,
suit, action or proceeding, all of the parties hereto shall cooperate in the
defense or prosecution thereof.
6.4 Settlement or Compromise. Any settlement or compromise made or caused
to be made by the Indemnified Person or the Indemnifying Person, of any claim,
suit, action or proceeding shall also be binding upon the Indemnifying Person or
the Indemnified Person, as the case may be, in the same manner as if a final
judgment or decree had been entered by a court of competent jurisdiction in the
amount of such settlement or compromise thereof; provided, however, that no
obligation, restriction or Loss shall be imposed on the Indemnified Person as a
result of such settlement without its prior written consent. The Indemnified
Person will give the Indemnifying Person at least 30 days' notice of any
proposed settlement or compromise of any Third Party Claim, suit, action or
proceeding it is defending, during which time the Indemnifying Person may reject
such proposed settlement or compromise; provided, however, that from and
12
after such rejection, the Indemnifying Person shall be obligated to assume the
defense of and full and complete liability and responsibility for such Third
Party Claim, suit, action or proceeding and any and all Losses in connection
therewith in excess of the amount of unindemnifiable Losses which the
Indemnified Person would have been obligated to pay under the proposed
settlement or compromise.
6.5 Failure of Indemnifying Person to Act. In the event that the
Indemnifying Person does not assume the defense of any Third Party Claim, suit,
action or proceeding brought against an Indemnified Person, then any failure of
the Indemnified Person to defend or to participate in the defense of any such
Third Party Claim, suit, action or proceeding or to cause the same to be done,
shall not relieve the Indemnifying Person of any of its obligations under this
Agreement.
6.6 Tax Character. Seller and Purchaser agree that any payments pursuant
to this Article VI will be treated for federal and state income tax purposes as
adjustments to the purchase price of the Membership Interest, and that they will
report such payments on all Tax Returns consistently with such characterization.
ARTICLE VII
DEFINITIONS
7.1 Defined Terms. As used in this Agreement, the following defined terms
have the meanings indicated below:
"Affiliate" means, with respect to any specified Person, any other Person
that, directly or indirectly, owns or controls, is under common ownership or
control with, or is owned or controlled by, such specified Person.
"Agreement" has the meaning ascribed to it in the recitals.
"Assets and Properties" of any Person means all assets and properties of
every kind, nature, character and description (whether real, personal or mixed,
whether tangible or intangible, and wherever situated), including the goodwill
related thereto, operated, owned or leased by such Person.
"Assignment Agreement" has the meaning ascribed to it in Section 1.4.
"Audited 2003 Financial Statements" means the audited financial statements
of the Company as of December 31, 2003, consisting of the balance sheet at such
date and the related statements of operations, statement of members' equity, and
cash flows for the year then ended, each accompanied by the audit report of its
independent public auditors of the Company.
"Business Day" means any day of the year other than (i) any Saturday or
Sunday or (ii) any other day on which commercial banks located in New York City
are generally closed for business.
13
"Business or Condition" of any Person means the business, condition
(financial or otherwise), properties, assets or results of operations or
prospects of such Person, taken as a whole.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or any successor statutes and any regulations
promulgated thereunder.
"CERCLIS" means the Comprehensive Environmental Response, Compensation and
Liability Information System List.
"Closing" has the meaning ascribed to it in Section 1.3.
"Closing Date" means the closing date of the transactions contemplated by
Section 1.3.
"Contract" means any contract, lease, commitment, understanding, sales
order, purchase order, agreement, indenture, mortgage, note, bond, right,
warrant, instrument, plan, permit or license, whether written or oral, which is
intended or purports to be binding and enforceable.
"Documents" has the meaning ascribed to it in the Recitals.
"Dollars" or numbers proceeded by the symbol "$" means amounts in United
States Dollars.
"Environmental Claim" means any third party (including, without
limitations, governmental agencies and employees) action, lawsuit, claim or
proceeding (including claims or proceedings under OSHA or similar laws relating
to safety of employees) that seeks to impose liability for (a) pollution or
contamination of the ambient air, surface water, ground water or land; (b)
solid, gaseous or liquid waste generation, handling, treatment, storage,
disposal or transportation; (c) exposure to hazardous or toxic substances; (d)
the safety or health of employees; or (e) the transportation, processing,
distribution in commerce, use or storage of hydrocarbons or chemical substances.
An Environmental Claim includes, but is not limited to, a common law action, as
well as a proceeding to issue, modify or terminate an Environmental Permit.
"Environmental Law" means any law, rule, regulation or order of other
requirements of law (including common law) any federal, foreign, state or local
executive, legislative, judicial, regulatory or administrative agency, board or
authority with jurisdiction over the Company or any of the Subsidiaries or any
of their respective properties or assets that relates to (a) pollution or
protection of human health, natural resources and the environment, including
ambient air, surface water, ground water or land; (b) solid, gaseous or liquid
waste generation, treatment, storage, disposal or transportation; (c) exposure
to Hazardous Materials; (d) the safety or health of employees; or (e) regulation
of the manufacture, processing, distribution in commerce, use or storage of
Hazardous Materials, including hydrocarbons or chemical substances.
Environmental Laws include but are not limited to OSHA, CERCLA, the Clean Air
Act, as amended, the Federal Water Pollution Control Act, as amended, the Rivers
and Harbors Act of 1899, as amended, the Safe Drinking Water Act, as amended,
the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), as amended,
the Resource Conservation and Recovery
14
Act of 1976 ("RCRA"), as amended, the Hazardous and Solid Waste Amendments Act
of 1984, as amended, the Toxic Substances Control Act, as amended, the Oil
Pollution Act of 1990 ("OPA"), as amended, the Hazardous Materials
Transportation Act, as amended, and any other federal, foreign, state and local
law whose purpose is to conserve or protect human health, the environment,
wildlife or natural resources.
"Environmental Permit" means any permit, license, approval or other
authorization under any Environmental Law, applicable law, regulation and other
requirement of the United States or any foreign country or of any state,
municipality or other subdivision thereof relating to pollution or protection of
health or the environment, including laws, regulations or other requirements
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants or hazardous substances or toxic materials or wastes
into ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transportation or handling of hydrocarbons or chemical subsidiaries, pollutants,
contaminants or hazardous or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Financial Statements" means the Audited 2003 Financial Statements and the
Interim 2004 Financial Statements.
"GAAP" means U.S. generally accepted accounting principles at the time in
effect.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, administrative or other agency, commission, gaming
authority, licensing board official or other instrumentality of the United
States or any state, county, city or other political subdivision.
"Hazardous Material" means (a) any "hazardous substance," as defined by
CERCLA; (b) any "hazardous waste" or "solid waste," in either case as defined by
the Resource Conservation and Recovery Act, as amended; (c) any hazardous,
dangerous or toxic chemical, material, waste or substance, regulated by any
Environmental Law; (d) any radioactive material, including any naturally
occurring radioactive material, and any source, special or byproduct material as
defined in 42 U.S.C. 2011 et seq. and any amendments or authorizations thereof;
(e) any asbestos-containing materials in any form or condition; (f) any
polychlorinated biphenyls in any form or condition; (g) petroleum, petroleum
hydrocarbons, or any fraction or byproducts thereof; (h) any air pollutant which
is so designated by the U.S. Environmental Protection Agency as authorized by
the Clean Air Act; or (i) any mold or microbial/microbiological contaminants
that pose a risk to human health or the environment.
"Interim 2004 Financial Statements" means the unaudited internal financial
statements of the Company for the nine months ended September 30, 2004,
consisting of the balance sheet at such date and the related statements of
operations for the period then ended.
"Knowledge" or "knowledge" means, with respect to the Seller, the Company
and/or the Subsidiaries, in each case the knowledge of any director, officer,
senior executive, or member of any of Seller, Company or any Subsidiary or Carl
C. Icahn.
15
"Laws" means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of the United States or any state,
county, city or other political subdivision or of any Governmental or Regulatory
Authority.
"License" means licenses, permits, certificates of authority,
authorizations, approvals, registrations, findings of suitability, variances,
exemptions, certificates of occupancy, orders, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Lien" means any mortgage, lien (except for any lien for Taxes not yet due
and payable), charge, restriction, pledge, security interest, option, lease or
sublease, claim, right of any third party, easement, encroachment, encumbrance
or other adverse claim of any kind or description.
"Loss" or "Losses" means any and all liabilities, losses, costs, claims,
damages (including consequential damages), penalties and expenses (including
attorneys' fees and expenses and costs of investigation and litigation).
"Material Adverse Effect" or "Material Adverse Change," as to any Person,
means a material adverse change (or circumstance involving a prospective change)
in the Business or Condition of such Person.
"National Priorities List" means the list of priority contaminated sites
maintained by the United States Environmental Protection Agency as contemplated
by Section 105 of CERCLA.
"Notes" has the meaning ascribed to it in the Recitals.
"Order" means any writ, judgment, decree, injunction or similar order of
any Governmental or Regulatory Authority (in each such case whether preliminary
or final).
"OSHA" means the Occupational Safety and Health Act, as amended, or any
successor statute, and any regulations promulgated thereunder.
"Person" means any natural person, corporation, limited liability company,
general partnership, limited partnership, proprietorship, other business
organization, trust, union, association or Governmental or Regulatory Authority.
"Plans" shall mean all material pension and profit sharing, retirement and
post retirement welfare benefit, health insurance benefit (medical, dental and
vision), disability, life and accident insurance, sickness benefit, vacation,
employee loan and banking privileges, bonus, incentive, deferred compensation,
workers compensation, stock purchase, stock option, phantom stock and other
equity-based, severance, employment, change of control or fringe benefit plans,
programs, arrangements or agreements, whether written or oral, including any
employee benefit plans defined in Section 3(3) of ERISA, maintained or
contributed to by the Company or any of the Subsidiaries.
"Purchaser" has the meaning ascribed to it in the recitals of this
Agreement.
"Rights" has the meaning ascribed to it in the Recitals.
"Seller" has the meaning ascribed to it in the recitals of this Agreement.
16
"Subsidiary" means Galveston Bay Pipeline Company and Galveston Bay
Processing Corporation.
"Tax Return" means any report, return, document, declaration or other
information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes, including attachments
thereto and amendments thereof, and including, without limitation, information
returns, any documents with respect to or accompanying payments of estimated
Taxes, or with respect to or accompanying requests for the extension of time in
which to file any such report, return, document, declaration or other
information.
"Taxes" means any and all taxes, charges, fees, levies, duties,
liabilities, impositions or other assessments, including, without limitation,
income, gross receipts, profits, excise, real or personal property,
environmental, recapture, sales, use, value-added, withholding, social security,
retirement, employment, unemployment, occupation, service, license, net worth,
payroll, franchise, gains, stamp, transfer and recording taxes, fees and
charges, imposed by the Internal Revenue Service ("IRS") or any other taxing
authority (whether domestic or foreign including, without limitation, any state,
county, local or foreign government or any subdivision or taxing agency thereof
(including a United States possession)), whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term shall include
any interest whether paid or received, fines, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such taxes, charges,
fees, levies, duties, liabilities, impositions or other assessments.
"Tax" shall have a correlative meaning.
"Third Party Claim" has the meaning ascribed to it in Section 6.3.
"Two Times Prime" means two times the prime rate published by Citibank,
N.A.
ARTICLE VIII
MISCELLANEOUS
8.1 Investigation. It shall be no defense to an action for breach of this
Agreement that Purchaser or its agents have (or have not) made investigations
into the affairs of the Company or that the Company or Seller could not have
known of the misrepresentation or breach of warranty.
8.2 Survival of Representations and Warranties. The representations and
warranties of the parties hereunder shall survive the Closing.
8.3 Entire Agreement. This Agreement, including the schedules and exhibits
hereto, which are incorporated herein and made an integrated part hereof,
constitutes the entire agreement between the parties hereto and supersedes any
and all prior discussions and agreements between the parties relating to the
subject matter hereof.
8.4 Waiver. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the party waiving such term or
17
condition. No waiver by any party of any term or condition of this Agreement, in
any one or more instances, shall be deemed to be or construed as a waiver of the
same or any other term or condition of this Agreement on any future occasion.
All remedies, either under this Agreement or by Law or otherwise afforded, will
be cumulative and not alternative.
8.5 Amendment. This Agreement may be amended, supplemented or modified
only by a written instrument duly executed by or on behalf of each party hereto.
8.6 No Third Party Beneficiary. The terms and provisions of this Agreement
are intended solely for the benefit of each party hereto and their respective
successors or permitted assigns, and it is not the intention of the parties to
confer third party beneficiary rights upon any other Person, except that each
Indemnified Persons shall be a third party beneficiary of Article VIII.
8.7 Assignment; Binding Effect. No party may assign this Agreement or any
right, interest or obligation hereunder without the prior written consent of the
other Parties. This Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and assigns.
8.8 Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
8.9 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, and (c)
the remaining provisions of this Agreement will remain in full force and effect
and will not be affected by the illegal, invalid or unenforceable provision or
by its severance here from.
8.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
conflicts of laws principles thereof.
8.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
8.12 Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY OF THEM AGAINST ANY
OTHER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, OR ANY OTHER
AGREEMENTS EXECUTED IN CONNECTION HEREWITH OR THE ADMINISTRATION THEREOF OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN. No party to this Agreement
shall seek a jury trial in any lawsuit, proceeding, counterclaim, or any other
litigation procedure based upon, or arising out of, this Agreement or any
related instruments or the relationship between the parties. No party will seek
to consolidate any such action in which a jury trial has been waived with any
other action in which a jury trial cannot be or has not been waived. THE
PROVISIONS OF
18
THIS SECTION HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND THESE
PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED
WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL
NOT BE FULLY ENFORCED IN ALL INSTANCES.
8.13 Consent to Jurisdiction. Each party irrevocably submits to the
exclusive jurisdiction of any NY State Court in the County of New York or any
courts of the United States of America located in the Southern District of New
York, and each party hereby agrees that all suits, actions and proceedings
brought by such party hereunder shall be brought in any such court. Each party
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding brought in any such court, any claim that any such suit, action or
proceeding brought in such a court has been brought in an inconvenient forum and
the right to object, with respect to any such suit, action or proceeding brought
in any such court, that such court does not have jurisdiction over such party or
the other party. In any such suit, action or proceeding, each party waives, to
the fullest extent it may effectively do so, personal service of any summons,
complaint or other process and agrees that the service thereof may be made by
any means permitted by Section 0 (other than facsimile transmission). Each party
agrees that a final non-appealable judgment in any such suit, action or
proceeding brought in such a court shall be conclusive and binding.
8.14 Expenses. All expenses, costs and fees in connection with the
transactions contemplated hereby (including fees and disbursements of counsel,
consultants and accountants) incurred by (a) Seller shall be paid and borne
exclusively by Seller, and (b) Purchaser shall be paid and borne exclusively by
Purchaser.
8.15 Notices. All notices, request, demands and other communications
hereunder shall be in writing and shall be delivered personally, by certified or
registered mail, return receipt requested, and postage prepaid, by courier, or
by facsimile transmission, addressed as follows:
If to Seller:
Thornwood Associates L.P.
100 South Bedford Road Suite 210
Mt. Kisco, NY 10549
If to Purchaser:
c/o American Real Estate Partners, L.P. 100
South Bedford Rd.
Mt. Kisco, NY 10549
19
With a copy to:
Debevoise & Plimpton LLP
919 Third Avenue
New York, NY 10022
Attention: William D. Regner
or to such other address as a party may from time to time designate in writing
in accordance with this Section. Each notice or other communication given to any
party hereto in accordance with the provisions of this Agreement shall be deemed
to have been received (a) on the Business Day it is sent, if sent by personal
delivery, (b) the earlier of receipt of three Business Days after having been
sent by certified or registered mail, return receipt requested and postage
prepaid, (c) on the Business Day it is sent, if sent by facsimile transmission
and an activity report showing the correct facsimile number of the party on whom
notice is served and the correct number of pages transmitted is obtained by the
sender (provided, however, that such notice or other communication is also sent
by some other means permitted by this Section 8.15, or (d) on the first Business
Day after sending, if sent by courier or overnight delivery.
8.16 Further Assurances. Seller covenants and agrees that, from time to
time subsequent to Closing, it will, at the request of Purchaser, execute and
deliver all such documents, including, without limitation, all such additional
conveyances, transfers, consents and other assurances and do all such other acts
and things as Purchaser may from time to time request be executed or done in
order to better evidence, perfect or effect any provision of this Agreement, or
of any agreement or other document executed pursuant to this Agreement, or any
of the respective obligations intended to be created hereby or thereby.
[SIGNATURE PAGE FOLLOWS]
20
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officer of each party hereto as of the date first above
written.
THORNWOOD ASSOCIATES L.P.
By: Barberry Corp., its general
partner
By: /s/ Edward E. Mattner
----------------------------------
Name: Edward E. Mattner
Title: Vice President
AREP OIL & GAS LLC
By: American Real Estate Holdings
Limited Partnership, its member
By: American Property Investors,
Inc., its general partner
By: /s/ John P. Saldarelli
-----------------------------
Name: John P. Saldarelli
Title: Chief Financial Officer
[Signature Page to the Purchase Agreement by AREP Oil & Gas LLC and
Thornwood Associates L.P.]
21
Exhibit A
Assignment and Assumption Agreement
Assignment and Assumption Agreement, dated as of December___, 2004,
between Thornwood Associates L.P. (the "Seller") and AREP Oil & Gas LLC (the
"Purchaser"). Capitalized terms used herein shall have the meanings attributed
to them in the Purchase Agreement, dated as of even date herewith, between
Purchaser and Seller (the "Purchase Agreement").
In consideration of the purchase and sale of the Notes and Rights in
accordance with the Purchase Agreement, Purchaser and Seller agree as follows:
1. Seller hereby transfers and conveys all of its right, title and
interest in and to the Notes and Rights to Purchaser.
2. Purchaser hereby accepts all of Seller's right, title and interest in
and to the Notes and Rights.
3. As a result of the foregoing, Purchaser is the sole owner of the Notes
and Rights.
4. Seller hereby assigns to Purchaser all rights under all UCC filings,
mortgages and similar security or perfection documents relating to the Notes and
Rights and, following the date hereof and at the sole cost and expense of Seller
will, at the request of Purchaser, promptly file all assignments and other
documents so requested by Purchaser in respect of the foregoing.
IN WITNESS WHEREOF, the parties have executed this document on
___________________, 2004.
THORNWOOD ASSOCIATES L.P.
By: Barberry Corp., its general partner
By:____________________________________
Name:
Title:
AREP OIL & GAS LLC
By:____________________________________
Name:
Title:
22