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AGREEMENT OF EXCHANGE
This Agreement is dated May 10, 1996, and made by and between HarCor
Energy, Inc., a Delaware corporation (hereinafter call "HarCor") and South
Coast Exploration Company, a Texas corporation (hereinafter called "South
Coast");
R E C I T A L S:
1. HarCor has entered into, and may hereafter enter into, agreements
concerning the conduct by and participation of HarCor and certain third parties
in a 3-D survey now or to be more particularly described in such agreements
(each such agreement, together with any joint operating agreement or other
related agreements, as heretofore or hereafter amended, being herein called a
"HarCor Participation Agreement").
2. South Coast has entered into, and may hereafter enter into,
agreements concerning the conduct of and participation of South Coast and
certain third parties in a 3-D Survey now or to be more particularly described
in such agreements (each such agreement, together with any joint operating
agreement or other related agreements, as heretofore or hereafter amended,
being herein called a "South Coast Participation Agreement").
3. HarCor desires to acquire a portion of South Coast's interest in
and obligations under one or more South Coast Participation Agreements, and
South Coast desires to acquire a portion of HarCor's interest in and
obligations under one or more HarCor Participation Agreements; HarCor and South
Coast have agreed to effectuate the foregoing by entering into this Agreement
and consummating the transactions contemplated herein.
A G R E E M E N T:
NOW, THEREFORE, for a good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, HarCor and South Coast do hereby
act, agree and covenant as follows:
1. Definitions. As used herein, the following terms shall have the
following meanings:
"Affiliate" means, with respect to any Person: (a) any other Person
directly or indirectly owning, controlling or holding with power to vote
10% or more of the outstanding voting securities of such Person, (b) any
other Person 10% or more of whose outstanding voting securities are
directly or indirectly owned, controlled or held with power to vote by such
Person, and (c) any other Person directly or indirectly controlling,
controlled by or under common control with such Person.
"Closing" means any date that a HarCor/South Coast Assignment and
a South Coast/HarCor Assignment are executed in exchange for one another
pursuant hereto.
"HarCor/South Coast Assigned Rights and Interests" means the rights
and interests in and under any one or more HarCor Participation Agreement
to be assigned to South Coast pursuant hereto.
"HarCor/South Coast Assignment Effective Time" means the effective
date or effective time, as independently defined in each HarCor/South
Coast Assignment.
"HarCor/South Coast Assignment" means the Assignment and Consent
Agreement (HarCor to South Coast) by and between HarCor, South Coast and
any third party to the subject HarCor Participation Agreement whereunder
(a) HarCor will assign to South Coast any HarCor/South Coast Assigned
Rights and Interests, (b) it is specified how, as between HarCor and South
Coast, the HarCor Participation Rights are to be exercised and enjoyed,
and (c) any third party to the subject HarCor Participation Agreement
consents, to the extent necessary or advisable, to such transaction.
"HarCor Participation Rights" means any rights and remedies granted
to or otherwise created in favor of HarCor under any HarCor Participation
Agreement.
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"South Coast/HarCor Assigned Rights and Interests" means the rights
and interests in and under any South Coast Participation Agreement to be
assigned to HarCor pursuant hereto.
"South Coast/HarCor Assignment" means the Assignment and Consent
Agreement (South Coast to HarCor) by and between South Coast, HarCor and
any third party to the subject South Coast Participation Agreement
whereunder (a) South Coast will assign to HarCor any South Coast/HarCor
Assigned Rights and Interests, (b) it is specified how, as between South
Coast and HarCor, the South Coast Participation Rights are to be exercised
and enjoyed, and (c) any third party to the subject South Coast
Participation Agreement, to the extent necessary or advisable, consents to
such transaction.
"South Coast/HarCor Assignment Effective Time" means the effective
time or effective date, as independently defined in each South Coast/HarCor
Assignment.
"South Coast Participation Rights" means the rights and remedies
granted to or otherwise created in favor of South Coast under any South
Coast Participation Agreement.
"Person" means, an individual, corporation, partnership, limited
liability company, association, joint stock company, pension fund, trust
or trustee thereof, estate or executor thereof, unincorporated organization
or joint venture, court or government unit or any agency or subdivision
thereof, or any other legally recognized entity.
2. (a) Property to be Exchanged by HarCor. HarCor agrees to transfer and
South Coast agrees to acquire, for the consideration hereinafter set forth,
and subject to the terms and provisions herein contained, certain
HarCor/South Coast Assigned Rights and Interests that are comparable in
terms of capital exposure and reserve potential to certain South
Coast/HarCor Assigned Rights and Interest to be exchanged therefor.
(b) Property to be Exchanged by South Coast. South Coast agrees to
transfer and HarCor agrees to acquire, for the consideration hereinafter
set forth, and subject to the terms and provisions herein contained,
certain South Coast/HarCor Assigned Rights and Interests that are
comparable in terms of capital exposure and reserve potential to certain
HarCor/South Coast Assigned Rights and Interests to be exchanged therefor.
(c) Determination of Rights and Interests to be Exchanged. HarCor
and South Coast shall utilize good faith efforts to, on or before December
31, 1996, identify and mutually agree upon certain HarCor/South Coast
Assigned Rights and Interests that are comparable, in terms of capital
exposure and reserve potential, to certain South Coast/HarCor Assigned
Rights and interests. Once one set of such comparable items is identified,
the parties may, but are not obligated to, mutually identify and agree upon
additional items of comparable capital exposure and reserve potential to be
exchanged pursuant hereto.
3. Consideration. The consideration for the HarCor/South Coast Assigned
Rights and interest shall be the South Coast/HarCor Assigned Rights and
interests, and the consideration for the South Coast/HarCor Assigned Rights and
Interests shall be the HarCor/South Coast Assigned Rights and Interests. Further
consideration for the transactions contemplated herein are the assumptions and
reimbursement obligations contained in Section 9, below.
4. Representations of HarCor. HarCor represents to South Coast that:
(a) HarCor is a corporation duly organized and legally existing under
the laws of the State of Delaware. HarCor has full power to enter into and
perform its obligations under this Agreement and has taken all appropriate
action to authorize entering into this Agreement and performance of its
obligations hereunder. Other than requirements (if any) that there be
obtained from third parties consents to assignment (the "Consents") or
waivers of preferential rights to purchase (the "Preferential Rights"), and
except for approvals ("Routine Governmental Approvals") required to be
obtained from governmental entities who are
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lessors under leases forming a part of the HarCor/South Coast Assigned
Rights and Interests (or who administer such leases on behalf of such
lessors) which are customarily obtained post-closing and which HarCor has
no reason to believe cannot be obtained, neither the execution and delivery
of this Agreement, nor the consummation of the transactions contemplated
hereby, nor the compliance with the terms hereof, will result in any
material default under any material agreement or instrument to which HarCor
is a party, or violate any order, writ, injunction, decree, statute, rule
or regulation applicable to HarCor. This Agreement constitutes, and the
HarCor/South Coast Assignments provided for herein to be delivered by
HarCor will, when executed and delivered, constitute, the legal, valid and
binding obligation of HarCor, enforceable in accordance with their terms,
except as limited by bankruptcy or other laws applicable generally to
creditor's rights and as limited by general equitable principles.
(b) There are not suits, actions, claims, investigations, inquiries,
proceedings or demands pending (or, to the best of HarCor's knowledge,
threatened) which affect the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
(c) HarCor is a knowledgable purchaser, owner and operator of oil and
gas properties, has the ability to evaluate any South Coast/HarCor Assigned
Rights and Interests for purchase, and shall acquire the South Coast/HarCor
Assigned Rights and Interests for its own account and not with the intent
to make a distribution in violation of the Securities Act of 1933 as
amended (and the rules and regulations pertaining thereto) or in violation
of any other applicable securities laws, rules or regulations.
THIS EXPRESS REPRESENTATIONS OF HARCOR CONTAINED IN THIS SECTION OR IN ANY
HARCOR/SOUTH COAST ASSIGNMENT ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER
REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND
HARCOR EXPRESSLY DISCLAIMS ANY AND ALL SUCH OTHER REPRESENTATIONS AND
WARRANTIES. WITHOUT LIMITATION OF THE FOREGOING, THE HARCOR ASSIGNED RIGHTS
AND INTERESTS SHALL BE CONVEYED PURSUANT HERETO WITHOUT ANY WARRANTY OR
REPRESENTATION, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, RELATING TO
THE CONDITION, QUANTITY, QUALITY, FITNESS FOR A PARTICULAR PURPOSE, CONFORMITY
TO THE MODELS OR SAMPLES OF MATERIALS OR MERCHANTABILITY OF ANY EQUIPMENT OR
ITS FITNESS FOR ANY PURPOSE AND SOUTH COAST SHALL, EXCEPT AS PROVIDED OTHERWISE
HEREIN, ACCEPT ALL OF THE SAME IN THEIR "AS IS, WHERE IS" CONDITION. EXCEPT AS
EXPRESSLY PROVIDED OTHERWISE HEREIN, HARCOR MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE ACCURACY OR
COMPLETENESS OF ANY DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR
MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO SOUTH
COAST IN CONNECTION WITH THIS AGREEMENT INCLUDING, WITHOUT LIMITATION, RELATIVE
TO SEISMIC OR GEOLOGICAL MATTERS, PRICING ASSUMPTIONS, OR QUALITY OR QUANTITY
OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE HARCOR/SOUTH COAST
ASSIGNED RIGHTS AND INTERESTS OR THE ABILITY OR THE POTENTIAL OF THE HARCOR
ASSIGNED RIGHTS AND INTERESTS TO PRODUCE HYDROCARBONS OR ANY OTHER MATTERS
CONTAINED IN THE PROPRIETARY DATA OR ANY OTHER MATERIALS HERETOFORE OR
HEREAFTER FURNISHED OR MADE AVAILABLE TO SOUTH COAST BY HARCOR OR BY HARCOR'S
AGENTS OR REPRESENTATIVES. ANY AND ALL SUCH DATA, RECORDS, REPORTS,
PROJECTIONS, INFORMATION AND OTHER MATERIALS (WRITTEN OR ORAL) HERETOFORE OR
HEREAFTER FURNISHED BY HARCOR OR OTHERWISE MADE AVAILABLE OR DISCLOSED TO SOUTH
COAST ARE AND SHALL BE PROVIDED SOUTH COAST AS A CONVENIENCE AND SHALL NOT
CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST HARCOR AND ANY RELIANCE ON
OR USE OF THE SAME SHALL BE AT SOUTH COAST'S SOLE RISK TO THE MAXIMUM EXTENT
PERMITTED BY LAW.
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5. Representations of South Coast. South Coast represents to HarCor
that:
(a) South Coast is a corporation duly organized and legally existing
under the laws of the State of Texas. South Coast has full power to
enter into and perform its obligations under this Agreement and has taken
all appropriate action to authorize entering into this Agreement and
performance of it obligations hereunder. Other than requirements (if
any) that there be obtained from third parties Consents or waivers of
Preferential Rights and except for Routine Governmental Approvals which
are customarily obtained post-closing and which South Coast has no reason
to believe cannot be obtained, neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
nor the compliance with terms hereof, will result in any default under any
material agreement or instrument to which South Coast is a party, or
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to South Coast. This Agreement constitutes, and the South
Coast/HarCor Assignments provided for herein to be delivered by South
Coast will, when executed and delivered, constitute, the legal, valid and
binding obligation of South Coast, enforceable in accordance with their
terms, except at limited by bankruptcy or other laws applicable generally
to creditor's rights and as limited by general equitable principles.
(b) There can be no suits, actions, claims, investigations,
inquiries, proceedings or demands pending (or, to the best of South Coast's
knowledge, threatened) which affect the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
(c) South Coast is a knowledgeable purchaser, owner and operator of
oil and gas properties, has the ability to evaluate the HarCor/South Coast
Assigned Rights and Interests for purchase, and shall acquire the
HarCor/South Coast Assigned Rights and Interests for his own account and
not with the intent to make a distribution in violation of the Securities
Act of 1993 as amended (and the rules and regulations pertaining thereto)
or in violation of any other applicable securities laws, rules, or
regulations.
THE EXPRESS REPRESENTATIONS OF SOUTH COAST CONTAINED IN THIS SECTION OR IN ANY
SOUTH COAST/HARCOR ASSIGNMENT ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER
REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND
SOUTH COAST EXPRESSLY DISCLAIMS ANY AND ALL SUCH OTHER REPRESENTATIONS AND
WARRANTIES. WITHOUT LIMITATION OF THE FOREGOING, THE SOUTH COAST/HARCOR
ASSIGNED RIGHTS AND INTERESTS SHALL BE CONVEYED PURSUANT HERETO WITHOUT ANY
WARRANTY OR REPRESENTATION, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE,
RELATING TO THE CONDITION, QUANTITY, QUALITY, FITNESS FOR A PARTICULAR
PURPOSE, CONFORMITY TO THE MODELS OR SAMPLES OF MATERIALS OR MERCHANTABILITY
OF ANY EQUIPMENT OR ITS FITNESS FOR ANY PURPOSE HARCOR SHALL, EXCEPT AS PROVIDED
OTHERWISE HEREIN, ACCEPT ALL OF THE SAME IN THEIR "AS IS, WHERE IS"
CONDITION. EXCEPT AS EXPRESSLY PROVIDED OTHERWISE HEREIN, SOUTH COAST MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE
ACCURACY OR COMPLETENESS OF ANY DATA, REPORTS, RECORDS, PROJECTIONS,
INFORMATION OR MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR MADE
AVAILABLE TO HARCOR IN CONNECTION WITH THIS AGREEMENT INCLUDING, WITHOUT
LIMITATION, RELATIVE TO ANY SEISMIC OR GEOLOGICAL MATTERS, PRICING ASSUMPTIONS,
OR QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE
SOUTH COAST/HARCOR ASSIGNED RIGHTS AND INTERESTS OR THE ABILITY OR POTENTIAL OF
THE SOUTH COAST/HARCOR ASSIGNED RIGHTS AND INTERESTS TO PRODUCE HYDROCARBONS OR
ANY OTHER MATTERS CONTAINED IN THE PROPRIETARY DATA OR ANY OTHER MATERIALS
HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO HARCOR BY SOUTH COAST
OR BY SOUTH COAST'S AGENTS OR REPRESENTATIVES. ANY AND ALL SUCH DATA, RECORDS,
REPORTS, PROJECTIONS, INFORMATION AND OTHER MATERIALS (WRITTEN OR ORAL)
HERETOFORE OR HEREAFTER FURNISHED BY SOUTH COAST OR OTHERWISE MADE AVAILABLE OR
DISCLOSED TO HARCOR ARE AND SHALL BE PROVIDED HARCOR AS A CONVENIENCE AND SHALL
NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST SOUTH COAST AND ANY
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RELIANCE ON OR USE OF THE SAME SHALL BE AT HARCOR'S SOLE RISK TO THE MAXIMUM
EXTENT PERMITTED BY LAW.
6. Preferential Rights and Consents.
(a) HarCor shall use reasonable efforts, consistent with industry
practices in transactions of this type, to identify any Preferential Rights
or Consents which would be applicable to the HarCor Assigned Rights and
Interests and/or the transactions contemplated hereby; in attempting to
identify such Preferential Rights and Consents, HarCor is in no event
obligated to go beyond its own records. HarCor shall have no obligation
other than to so attempt to identify such Preferential Rights or Consents.
Notwithstanding the foregoing, to the extent any Preferential Right
applicable to any HarCor/South Coast Assigned right and Interest (or
portion thereof) is identified after the date hereof and is triggered by
this Agreement or by the transactions contemplated hereby and further is
validly and properly exercised by a third party or third parties after the
Closing. South Coast shall, at its option, either (a) convey the specific
HarCor/South Coast Assigned Right and Interest affected by such
Preferential Right to the exercising third party or third patires, or (b)
reconvey the specific HarCor/South Coast Assigned Right and Interest
affected by such Preferential Right to HarCor, who shall then be
responsible for conveying the affected HarCor/South Coast Assigned
Right and Interest to the exercising third party or third parties; in
either event, South Coast shall be entitled, as its sole remedy against
HarCor, to any consideration paid by such party or parties on account of
the post-Closing exercise of any Preferential Right affecting the
HarCor/South Coast Assigned Right and Interest. HarCor and South Coast
hereby recognize that any Preferential Right shall apply only to the
specific property described in the instrument creating same, and shall in
no event be construed to apply to all, or any group of, the HarCor/South
Coast Assigned Right and Interest, other than the specific property
described in the instrument creating the Preferential Right. To the extent
any Consent that is triggered by the transactions contemplated hereby is
not properly secured prior to the Closing, HarCor shall use all reasonable
efforts to secure any such Consent of which it becomes aware (whether such
Consents were identified before or after Closing), and to the extent HarCor
does so, South Coast shall have no legal redress against HarCor relating to
any Consent (or the failure to obtain same).
(b) South Coast shall use reasonable efforts, consistent with industry
practices in transactions of this type, to identify any Preferential Rights
and Consents which would be applicable to the South Coast/HarCor Assigned
Right and Interests and/or the transactions contemplated hereby; in
attempting to so identify Preferential Rights and Consents South Coast is
in no event obligated to go beyond its own records. South Coast shall have
no obligation other than to so attempt to identify such Preferential Rights
or Consents. Notwithstanding the foregoing, to the extent any Preferential
Right applicable to a South Coast/HarCor Assigned Rights and Interests (or
portion thereof) is identified after the date hereof and is triggered by
this Agreement or by the transactions contemplated hereby and further is
validly and properly exercised by a third party or third parties after the
Closing, HarCor shall, at its option, either (a) convey the specific South
Coast/HarCor Assigned Rights and Interests affected by such Preferential
Right to the exercising third party or third parties, or (b) reconvey the
South Coast/HarCor Assigned Rights and Interests affected by such
Preferential Right to South Coast, who shall then be responsible for
conveying the affected South Coast/HarCor Assigned Rights and Interests to
the exercising third party or third parties; in either event, HarCor shall
be entitled, as its sole remedy against South Coast, to any consideration
paid by such party or parties on account of the post-Closing exercise of
any Preferential Right affecting the South Coast/HarCor Assigned Rights and
Interests. HarCor and South Coast hereby recognize that any Preferential
Right shall apply only to the specific property described in the instrument
creating same, and shall in no event be construed to apply to all, or any
group of, the South Coast/HarCor Assigned Rights and Interests, other than
the specific property described in the instrument creating the
Preferential Right. To the extent any Consent that is triggered by the
transactions contemplated hereby is not properly secured prior to the
Closing, South Coast shall use all reasonable efforts to secure any such
Consent of which it becomes aware (whether such Consents were identified
before or after Closing), and to the extent South Coast does so, HarCor
shall have no legal redress against South Coast relating to any Consent
(or the failure to obtain same).
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7. Conditions Precedent.
(a) Conditions Precedent to the Obligations of South Coast. The
obligations of South Coast under this Agreement are subject to the
fulfillment, as of each Closing, of each of the following conditions,
unless any one or more of same are waived, in whole or in part, by South
Coast:
(i) Each and every representation of HarCor under this Agreement
shall be true and accurate in all material respects as of the date
when made and shall be deemed to have been made again at and as of the
time of Closing and shall at and as of such time of Closing be true
and accurate in all material respects except as to changes
specifically contemplated by this Agreement or consented to by South
Coast.
(ii) HarCor shall have performed and complied in all material
respects with (or compliance therewith shall have been waived by South
Coast) each and every covenant, agreement and condition required by
this Agreement to be performed or complied with by HarCor prior to or
at the Closing.
(iii) No suit, action or other proceeding shall, on the date of
Closing, be pending or threatened before any court or governmental
agency seeking to restrain, prohibit, or obtain damages or other
relief in connection with the consummation of the transactions
contemplated by this Agreement.
(iv) All third parties to the subject South Coast Participation
Agreement shall, to the extent necessary or advisable, have executed
the South Coast/HarCor Assignment, and all third parties to the
subject HarCor Participation Agreement shall, to the extent necessary
or advisable, have executed the HarCor/South Coast Assignment.
If any such condition on the obligations of South Coast under this Agreement
has not been satisfied as of the date of Closing, or in the event the Closing
does not occur on or before December 31, 1996, and South Coast is not in
material breach of its obligations hereunder, this Agreement may, at the option
of South Coast, be terminated, and the parties shall have no further
obligations to one another hereunder.
(b) Conditions Precedent to the Obligations of HarCor. The
obligations of HarCor under this Agreement are subject to the fulfillment
of each of the following conditions, unless any one or more of same are
waived, in whole or in part, by HarCor:
(i) Each and every representation of South Coast under this
Agreement shall be true and accurate in all material respects as of
the date when made and shall be deemed to have been made again at and
as of the time of Closing and shall at and as of such time of Closing
be true and accurate in all material respects except as to changes
specifically contemplated by this Agreement or consented to by HarCor.
(ii) South Coast shall have performed and complied in all
material respects with (or compliance therewith shall have been waived
by HarCor) each and every covenant, agreement and condition required
by this Agreement to be performed or complied with by South Coast
prior to or at the Closing.
(iii) No suit, action or other proceeding shall, on the date of
Closing, be pending or threatened before any court or governmental
agency seeking to restrain, prohibit, or obtain damages or other
relief in connection with the consummation of the transactions
contemplated by this Agreement.
(iv) All third parties to the subject South Coast Participation
Agreement shall, to the extent necessary or advisable, have executed
the South Coast/HarCor Assignment, and Cabot shall have executed the
HarCor/South Coast Assignment.
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If any such condition on the obligations of HarCor under this Agreement has not
been satisfied as of the date of Closing, or in the event the Closing does not
occur on or before December 31, 1996, and HarCor is not in material breach of
its obligations hereunder, this Agreement may, at the option of HarCor, be
terminated, and the parties shall have no further obligations to one another
hereunder.
8. The Closing. The closing (herein called the "Closing") of each
exchange transaction contemplated hereby shall take place in the offices of
HarCor, on a mutually agreeable date, at 10 o'clock a.m., Houston, Texas, Time,
or at such other place and/or time as the South Coast and HarCor may mutually
agree upon. At the Closing:
(a) HarCor shall:
(i) execute, acknowledge and deliver to South Coast the
HarCor/South Assignment, effective for all purposes as of the
HarCor/South Coast Assignment Effective Time applicable to such
transaction; and
(ii) HarCor shall execute (and, where required, acknowledge) and
deliver to South Coast forms of conveyance or assignment as required
by the applicable authorities for transfers of interests in state or
federal leases included in the subject HarCor Assigned Rights and
Interests.
(iii) HarCor shall execute the subject South Coast/HarCor
Assignment.
(b) South Coast shall:
(i) execute, acknowledge and deliver to HarCor the South
Coast/HarCor Assignment, effective for all purposes as of the South
Coast/HarCor Effective Time applicable to such transaction; and
(ii) South Coast shall execute (and, where required,
acknowledge) and deliver to HarCor forms of conveyance or assignment
as required by the applicable authorities for transfers of interests
in state or federal leases included in the subject South Coast
Assigned Rights and Interests.
(iii) South Coast shall execute the subject HarCor/South Coast
Assignment.
(c) HarCor shall pay to South Coast or South Coast shall pay to HarCor
as the case may be, the amount determined to be owing to South Coast or
HarCor, as applicable, pursuant to Section 10 hereof.
9. Assumption and Reimbursement.
(a) South Coast shall, at each Closing, but effective for all
purposes as of the HarCor/South Coast Assignment Effective Time applicable
to the particular transaction, irrevocably and unconditionally assume a
mutually agreed undivided percentage interest in and share of all duties,
liabilities, and obligations owed or to become owing by HarCor under the
subject HarCor Participation Agreement, including without limitation a
mutually agreed undivided percentage share of HarCor's obligation to pay or
reimburse any third party to such HarCor Participation Agreement for any
land costs, seismic costs and any other direct, third party costs and
expenses under the subject HarCor Participation Agreement. If, as of the
date of the Closing, HarCor has already incurred and paid certain land
costs, seismic costs and other costs and expenses under or in relation to
the subject HarCor Participation Agreement (the "Existing HarCor Costs"),
South Coast shall reimburse HarCor for a mutually agreed percentage share of
the Existing HarCor Costs at Closing; such reimbursement shall be effected
in accordance with the provisions of Section 10 below.
(b) HarCor shall, at each Closing, but effective for all purposes as
of the South Coast/HarCor Assignment Effective Time applicable to the
particular transaction, irrevocably and unconditionally assume a mutually
agreed undivided percentage interest in and share of all duties,
liabilities, and obligations owed
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or to become owing by South Coast under the subject South Coast
Participation Agreement, including without limitation a mutually agreed
undivided percentage share of South Coast's obligation to pay or reimburse
any third party to such South Coast Participation Agreement for any land
costs, seismic costs, and any other direct, third party costs and expenses
under the South Coast Participation Agreement. If, as of the date of
Closing, South Coast has already incurred and paid certain land costs,
seismic costs, and other direct, third party costs and expenses under or in
relation to the South Coast Participation Agreement (the "Existing South
Coast Costs"), HarCor shall reimburse South Coast for a mutually agreed
percentage share of the Existing South Coast Costs at Closing; such
reimbursement shall be effected in accordance with the provisions of
Section 10 below.
10. Certain Accounting Adjustments.
(a) If the amount to be reimbursed by South Coast to HarCor pursuant
to Section 9(a) hereof exceeds the amount to be reimbursed by HarCor to
South Coast pursuant to Section 9(b) hereof at any particular Closing, the
amount of the excess shall be paid over by South Coast to HarCor at such
Closing, by wire transfer to an account or accounts designated by HarCor in
writing. If the amount to be reimbursed by HarCor to South Coast pursuant
to Section 9(b) hereof exceeds the amount to be reimbursed by South Coast
to HarCor pursuant to Section 9(a) hereof at any particular Closing, the
amount of the excess shall be paid over by HarCor to South Coast at such
Closing, by wire transfer to an account or accounts designated by South
Coast in writing.
(b) On or before a date that is 120 days after each Closing, South
Coast and HarCor shall review any additional information which may then be
available pertaining to the payments and reimbursements provided for in
subsection (a) above, shall determine if any additional adjustments
(whether the same be made to account for expenses or revenues not
considered in making the payments and reimbursements made at such Closing,
or to correct errors made in any such additional adjustments by appropriate
payments from HarCor to South Coast or from South Coast to HarCor, as the
case may be; each such payment shall be made by wire transfer to the
account or accounts specified by the party entitled to receipt of such
payment.
11. Indemnifications.
(a) Indemnifications by Harcor. HarCor agrees to indemnify and hold
harmless South Coast and the other South Coast Indemnified parties, from
and against any and all claims, obligations, actions, liabilities, damages,
or expenses of any kind or character arising out of or resulting from any
agreement, arrangement or understanding alleged to have been made by, or on
behalf of, such party with any broker or finder in connection with this
Agreement or the transaction contemplated hereby.
(b) Indemnifications by South Coast. South Coast agrees to indemnify
and hold harmless HarCor and the other HarCor Indemnified Parties, from and
against any and all claims, obligation, actions, liabilities, damages, or
expenses of any kind or character arising out of or resulting from any
agreement, arrangement or understanding alleged to have been made by, or on
behalf of, such party with any broker or finder in connection with this
Agreement or the transaction contemplated hereby.
12. Elections, Consents, Waivers and Amendments.
(a) All HarCor Participation Rights shall, to the maximum extent
permitted under the applicable HarCor Participation Agreement, be exercised
independently by HarCor and South Coast. It is recognized, however, that
the relative exercise and enjoyment of HarCor Participation Rights as
between HarCor and South Coast may, in whole or in part, be dictated by or
otherwise may depend upon the terms and conditions of the subject HarCor
Participation Agreement, and HarCor and South Coast shall utilize good
faith efforts to mutually agree upon the most equitable allocation of
HarCor Participation Rights as between HarCor and South Coast that
circumstances allow.
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(b) All South Coast Participation Rights shall, to the maximum extent
permitted under the subject South Coast Participation Agreement, be exercised
independently by South Coast and HarCor. It is recognized, however, that the
relative exercise and enjoyment of South Coast Participation Rights as between
South Coast and HarCor may, in whole or in part, be dictated by or otherwise
may depend upon the terms and conditions of the subject South Coast
Participation Agreement, and South Coast and HarCor shall utilie good faith
efforts to mutually agree upon the most equitable allocation of South Coast
Participation Rights as between South Coast and HarCor that circumstances
allow.
13. Notices. All notices and other communications required under this
Agreement shall (unless otherwise specifically provided herein) be in writing
and be delivered personally, by recognized commercial courier or delivery
service (which provides a receipt), by telex or telecopier (with receipt
acknowledged), or by registered or certified mail (postage prepaid), at the
following addresses:
If to South Coast:
1980 Post Oak Blvd.
Suite 2050
Houston, Texas 77056
Attention: Ron Krenzke
If to HarCor:
HarCor Energy, Inc.
5 Post Oak Park Blvd.
Suite 2220
Houston, Texas 77027
Attention: Albert McMullin
and shall be considered delivered on the date of receipt. Either South Coast
or HarCor may specify as its proper address any other post office address
within the continental limits of the United States by giving notice to the other
party, in the manner provided in this Section, at least two (2) business days
prior to the effective date of such change of address.
14. Survival of Provisions. All representations and warranties made
herein by HarCor of South Coast shall survive the executibon hereof and each
Closing in perpetuity. The obligations, covenants, undertakings and
indemnifications contained herein, to the extent same are, by mutual agreement
of the parties, not performed on the date hereof or at atny Closing, shall
survive the execution hereof and each Closing in perpetuity.
15. Miscellaneous Matters.
(a) After each Closing, HarCor and South Coast shall each execute
and deliver, and otherwise cause to be executed and delivered, from time to
time, such further instruments, notices, division orders, transfer orders
and other documents, and shall do such other and futher acts and things, as
may be reasonably necessary or appropriate to more fully and effectively
vest in HarCor and South Coast/HarCor Assigned Rights and Interests, vest
in South Coast the HarCor Assigned Rights and Interests or otherwise to
carry out the intent of the parties as evidenced herein.
(b) Neither South Coast nor HarCor shall assign or otherwise
transfer any rights, interests or obligations under this Agreement or under
the HarCor Participation Agreement or the South Coast Participation
Agreement to any third party without first obtaining the written consent of
the other, which consent may be either granted or withheld in the sole but
reasonable discretion of the party being asked to grant consent.
(c) South Coast and HarCor may treat the exchange of the South
Coast/HarCor Assigned Rights and Interests for the HarCor Assigned Rights
and Interests as a tax-free exchange, to the extent authorized under
Section 1031 of the Internal Revenue Code of 1986, as amended.
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(d) Each party shall bear and pay all expenses (including without
limitation attorneys' fees) incurred by it in connection with the transaction
contemplated by this Agreement.
(e) This Agreement contains the entire understanding of the parties
hereto with respect to subject matter hereof and supersedes all prior a
greements, understandings, negotiations, and discussions among the parties with
respect to such subject matter. The descriptive headings contained in this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement. Within this Agreement
words of any gender shall be held and construed to cover any other gender, and
construed to cover any other gender, and words in the singular shall be held
and construed to cover the plural, unless the context otherwise requires. Time
is of the essence in this Agreement.
(f) This Agreement may be amended, modified, supplemented, restated or
discharged (and provisions hereof may be waived) only by an instrument in
writing signed by the party against whom enforcement of the amendment,
modification, supplement, restatement or discharge (or waiver) is sought.
(g) The Agreement shall be binding upon and shall enure to the benefit of
South Coast and HarCor and their respective permitted successors and assigns.
(h) HarCor and South Coast do hereby covenant and agree that the recovery
by either party hereto of any damages suffered or incurred by it as a result of
any breach by the other party of any provision of this Agreement shall be
limited to the actual damages suffered or incurred by the non-breaching party
as a result of the breach by the breaching party and in no event shall the
breaching party be liable to the non-breaching party for any interest,
consequential, special, exemplary or punitive damages suffered or incurred by
the non-breaching party as a result of the breach by the breaching party.
Notwithstanding any provision hereto the contrary, any damages South Coast may
recover for breach of a representation or warranty contained in Section 4
hereof shall be limited, as to each HarCor Property affected by such breach, to
the value allocated to such HarCor Property in Part One of Exhibit A hereto,
and further provided that South Coast shall not be entitled to recovery of any
such damages unless and until the amount of such damages in the aggregate (i.e.
relative to all of the HarCor Assigned Rights and Interests as a whole) exceeds
$100,000. Notwithstanding any provision hereto the contrary, any damages
HarCor may recover for breach of a representation or warranty contained in
Section 4 hereof shall be limited, as to each South Coast Propery affected by
such breach, to the value allocated to such South Coast Property in Part One of
Exhibit A hereto, and futher provided that HarCor shall not be entitled to
recovery of any such damages unless and until the amount of such damages unless
and until the amount of such damages in the aggregate (i.e. relative to all of
the South Coast Assigned Rights and Interests as a whole) exceeds $100,000.
(i) HarCor and South Coast shall consult with each other with regard to
all publicity and other releases at or prior to Closing concerning this
Agreement and the transactions contemplated hereby and, except as required by
applicable law or the applicable rules or regulations of any governmental body
or stock exchange, neither party shall issue any publicity or other release
without the prior written consent of the other party.
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(j) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS, EXCEPT THAT, TO THE EXTENT THAT THE LAW OF OF A STATE IN WHICH A PORTION
OF THE HARCOR/SOUTH COAST ASSIGNED RIGHTS AND INTERESTS WHICH IS OTHER
APPLICABLE TO A PORTION OF THE HARCOR/SOUTH COAST ASSIGNED RIGHTS AND INTERESTS
AND/OR THE SOUTH COAST/HARCOR ASSIGNED RIGHTS AND INTERESTS) NECESSARILY
GOVERNS, THE LAW OF SUCH STATE SHALL APPLY TO THAT PORTION OF THE HARCOR/SOUTH
COAST ASSIGNED RIGHTS AND INTERESTS AND/OR THE SOUTH COAST/HARCOR ASSIGNED
RIGHTS AND INTERESTS LOCATED IN (OR OTHERWISE SUBJECT TO THE LAWS OF) SUCH
STATE.
(k) This Agreement may be executied in counterparts, all of which are
identical and all of which constitute one and the same instrument. It shall
not be necessary for HarCor and South Coast to sign the same counterpart and
signature pages from different counterparts may be combined to form masters of
this Agreement.
This Agreement is executed by the parties hereto on the date set forth above.
SOUTH COAST EXPLORATION COMPANY
By: /s/ R.A. KRENZKE
------------------------
Name: R.A. Krenzke
Title: President
HARCOR ENERGY, INC.
By: /s/ ALBERT McMULLIN
--------------------------
Name: Albert McMullin
Title: Vice President
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