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EXHIBIT 99.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
COSTILLA ENERGY, INC. ,
AS
SELLER
AND
LOUIS DREYFUS NATURAL GAS CORP.
AS
BUYER
NOTICE: THIS AGREEMENT CONTAINS INDEMNITY PROVISIONS WHICH INDEMNIFY AND RELEASE
THE INDEMNIFIED PARTY FROM ITS OWN NEGLIGENCE AND OTHER LEGAL FAULT.
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") dated as of April 20, 2000 (the
"Execution Date") is between COSTILLA ENERGY, INC., a Delaware corporation,
whose address is 400 West Illinois, Suite 1000, Midland, Texas 79701 ("SELLER"),
and LOUIS DREYFUS NATURAL GAS CORP., an Oklahoma corporation whose address is
14000 Quail Springs Parkway, Suite 600, Oklahoma City, Oklahoma, 73134
("BUYER").
In consideration of the mutual covenants and agreements contained herein,
the benefits to be derived by each party hereunder, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
SELLER and BUYER agree as follows:
ARTICLE 1. PURCHASE AND SALE
1.1 The Properties. Subject to the terms and conditions of this Agreement,
SELLER agrees to sell and convey to BUYER, and BUYER agrees to purchase from
SELLER, effective as of 7:00 a.m. April 1, 2000, at the location of the
respective Properties (as herein defined) (the "Effective Time") all of SELLER's
right, title, and interest (the "Sale Interest") in and to all of the following
described assets and properties of SELLER, less and except the "Excluded Assets"
(as herein defined):
(a) All oil, gas and/or other mineral ownership rights and estates of
every kind and nature, wheresoever situated, including, without limitation, the
oil, gas and/or other mineral leases, leasehold estates and other oil and gas
interests, described in Exhibit "A" attached hereto (the "Leases"), in and to
the lands described in Exhibit "A" attached hereto (the "Lands");
(b) All producing, nonproducing, shut-in and abandoned oil and gas
wells, salt water disposal wells, injection wells, and water wells located on
the Lands or lands pooled or unitized therewith (the "Wells"), including,
without limitation, the wells described on Exhibit "B" attached hereto, and all
personal property, equipment, fixtures, compressors, pipelines, gathering,
disposal, transportation, storage and treating facilities and other improvements
located on, related to, appurtenant to or used or useful in connection with the
Wells, Leases or Lands;
(c) All rights, privileges, benefits and power held by or conferred
upon the Seller as to any pooled or unitized acreage included as a whole or in
part within the unit(s) for any Leases and Lands or that accrue or are
attributable to the Wells, including all production from the pooled or unitized
acreage allocated to any such Leases or Wells; all interests in any Wells within
the unit or pool associated with such Leases whether such unitized or pooled
production comes from Wells located within or without the areas covered by any
Leases; and tenements, hereditaments and appurtenances belonging to such pooled
or unitized acreage, including, without limitation, the units described on
Exhibit "B" ("Units");
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(d) Together with;
(i) That certain Due Diligence Use Agreement dated May 28, 1999,
between SELLER and Prize Energy Corp. and covering lands in Lavaca, Jackson and
Colorado Counties, Texas (the "Prize Agreement"), and to the extent transferable
by SELLER, all farmout and farmin agreements, operating agreements, joint
exploration agreements, due diligence use agreements, production sales and
purchase contracts, saltwater disposal agreements, surface leases, division and
transfer orders, licenses, rights and obligations with respect to Imbalances (as
herein defined) and other contracts or agreements covering or affecting any or
all of the interests described or referred to above (the "Contracts");
(ii) To the extent transferable, all easements, rights-of-way,
surface leases, fee estates, licenses, authorizations, permits, and similar
rights and interests applicable to, or used or useful in connection with, any or
all of the above-described interests;
(iii) All of SELLER's proprietary geophysical and seismic data
(including, but not limited to, that described on Schedule 1.1(d)(iii)),
geological and other technical data and interpretations, and to the extent
transferable without charge or cost to SELLER, all similar non-proprietary data
and information;
(iv) All oil, condensate, natural gas, natural gas liquids, other
gases (including carbon dioxide) and other minerals produced after the Effective
Time attributable to the above described interests;
(v) The Records as defined in Section 12.3.
(e) All trucks, trailers and other certificated vehicles of SELLER
(the "Vehicles"), including without limitation the Vehicles depicted on Schedule
1.1(e) hereto; and
(f) All ownership rights of SELLER in plants, yards and other
facilities, together with all structures, fixtures, tools, equipment and other
machinery situated on the above described interests, including without
limitation the lands on which the plants, yards and other facilities are
situated as described on Schedule 1.1(f) and the compressors owned by SELLER
listed on Schedule 1.1(f-l) hereto.
All of the above real and personal properties, rights, titles, and
interests described in subparagraphs (a) through (f) above (excluding the
Records), less and except the Excluded Assets are hereinafter collectively
called the "Properties" or, individually, a "Property".
1.2 Excluded Assets. All monies in bank accounts and investment accounts,
all trade credits, account receivables and note receivables, all furnishings,
fixtures, office equipment and machines, supplies, computers including all
computer software situated in SELLER's offices in Midland and Corpus Christi,
Texas, all stock and other equity interest and claims in Costilla Energy
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Pipeline Corporation and Costilla Redeco Energy, L.L.C., all employment
contracts, production proceeds from production sold, claims and causes of action
(except for any Imbalances), attributable to the Sale Interest in the Properties
with respect to any period or time prior to the Effective Time, are excluded
from this Agreement and shall remain the property of SELLER and be excluded from
this sale, unless specified otherwise elsewhere herein, ("Excluded Assets").
ARTICLE 2. PURCHASE PRICE
2.1 Purchase Price. BUYER shall pay to SELLER at Closing (as defined
herein) as consideration for the purchase of the Properties the sum of One
Hundred Million and No/100 Dollars ($100,000,000) (the "Purchase Price"), as may
be adjusted pursuant to this Agreement (the "Adjusted Purchase Price") to be
paid at Closing.
2.2 Deposit. BUYER shall deposit with SELLER $2,000,000 upon entry of an
order approving the Expense Motion (as defined herein) and an additional
$8,000,000 upon the issuance of an order approving the Sale Motion (as
hereinafter defined) (either and/or both sums upon deposit, or at such time
deposit is herein required, the "Deposit") by wire transfer of immediately
available funds to a segregated account to be established by SELLER. If Closing
occurs, the Deposit shall be applied to the Purchase Price. If Closing does not
occur, the Deposit shall be applied as provided in Section 12.7. Until disposed
of in accordance with the terms of this Agreement, the Deposit shall be held by
Seller in a segregated account, with Seller as the designated Trustee Depositor
and invested by SELLER in marketable obligations issued or unconditionally
guaranteed by the United States of America or an instrumentality or agent
thereof and entitled to the full faith and credit of the United States of
America, or in money market and/or mutual funds that invest solely in such
obligations. The Deposit shall not constitute property of the estate under
Section 541 of the Code (as herein defined) until and unless this Agreement is
terminated and SELLER is entitled to the Deposit as a remedy upon termination
pursuant to Section 12.7, at which time the Deposit will constitute property of
the estate of SELLER.
2.3 Adjustments to Purchase Price. The Purchase Price shall be adjusted by
the following:
(a) The Purchase Price shall be increased by an amount equal to the
sum of the following amounts (determined without duplication and on an accrual
basis in accordance with generally accepted accounting principles consistently
applied ["GAAP"]):
(i) The value, less taxes (other than taxes on net income), of
merchantable oil and other liquids in storage in the tanks (above the pipeline
connection, if applicable) as of the Effective Time that is credited to the Sale
Interest in the Properties, based on applicable arm's length contract prices, or
in the absence thereof, at the prevailing market value at the time of sale in
the area, adjusted for grade and gravity;
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(ii) The amount of all expenses incurred and paid or to be paid
by or on behalf of SELLER, in connection with or attributable to the ownership
or operation of the Sale Interest in the Properties during the period from the
Effective Time to the Closing Date, including, but not limited to, royalties,
rentals, and other charges and expenses billed under applicable operating
agreements, or in the absence of an operating agreement, expenses of the sort
customarily billed under such agreements, and including the customary overhead
charges billed by third party operators related to the Sale Interest in the
Properties, but exclusive of overhead charges billed by SELLER;
(iii) An amount equal to all prepaid expenses attributable to the
Sale Interest in the Properties that are paid by or on behalf of SELLER prior to
the Closing Date and that are, in accordance with GAAP, attributable to the
period after the Effective Time, including, without limitation, prepaid ad
valorem, property, production, severance, and similar taxes (but not including
income taxes) based upon or measured by the ownership of property or the
production of hydrocarbons or the receipt of proceeds therefrom (any refund of
ad valorem tax attributable to the period before the Effective Time and received
by BUYER shall be paid to SELLER);
(iv) As compensation to SELLER for operating the Properties in
accordance with this Agreement for all periods of time subsequent to the
Effective Time, but prior to the Closing Date, an amount equal to One Hundred
Ninety-seven Thousand, Two Hundred Fifty and No/100 Dollars ($197,250) per month
(proportionately reduced for any partial month based on a thirty (30) day
month), (the "Operating Fee"); and
(v) Any other amounts required under this Agreement or otherwise
agreed upon by SELLER and BUYER.
(b) The Purchase Price shall be decreased by an amount equal to the
sum of the following amounts (determined without duplication and on an accrual
basis in accordance with GAAP):
(i) The amount of all proceeds received by SELLER prior to the
Closing Date attributable to the Sale Interest in the Properties and that are
attributable to the time after the Effective Time, except the Operating Fee;
(ii) The amount of all proceeds billed and received or to be
received by SELLER from third parties for combined fixed rate overhead charges
that are attributable to the Properties for the period from the Effective Time
until the Closing Date;
(iii) An amount equal to all unpaid ad valorem, property,
production, severance, and similar taxes and assessments (but not including
income taxes) based upon or measured by the ownership of property or the
production of hydrocarbons or the receipt of proceeds therefrom accruing to the
Sale Interest in the Properties prior to the Effective Time, which to the extent
not actually assessed shall be computed based upon such taxes assessed against
the applicable
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portion of the Sale Interest in the Properties for the preceding calendar year
or, if such taxes are assessed on other than a calendar year basis, for the
tax-related year last ended;
(iv) The amount of all direct third party costs and expenditures
incurred prior to the Effective Time and chargeable to SELLER's interest and not
paid by SELLER that are attributable to the drilling, completion, recompletion,
reworking, operation and maintenance of the Properties prior to the Effective
Time, as well as lease rentals and shut-in payments due prior to the Effective
Time, bonuses, net profits interests, amounts relating to obligations arising
under the applicable contracts and transportation and marketing costs, and COPAS
charges accrued prior to the Effective Time;
(v) An amount for Properties withdrawn and Defects as determined
pursuant to Section 3.6; and
(vi) Any other amounts required under this Agreement or otherwise
agreed upon by SELLER and BUYER.
ARTICLE 3. TITLE
3.1 Definition of Acceptable Title. As used herein, the term "Acceptable
Title" shall mean, as of the Closing Date, as to each of the Properties, such
right, title and interest that as to the existing production from the currently
producing intervals in the proved developed producing ("PDP") Wells and Units,
as to the evaluated interval(s) in the proved undeveloped ("PU") Wells and Units
and as to the evaluated interval(s) in the proved developed non-producing
("BHP") Wells and Units described on Exhibit "B", (a) entitles SELLER to receive
not less than the net revenue interest for the Wells or Units, as set forth in
Exhibit "B", of all oil, gas and associated liquid and gaseous hydrocarbons
produced, saved and marketed from the Leases or Units as indicated for the
respective Wells thereon, without reduction (potential or otherwise) due to any
reversionary or back-in interest or similar rights, (b) obligates SELLER to bear
costs and expenses relating to the maintenance, development, and operation of
the Leases or Units, as indicated for the respective Wells thereon at all times
in an amount not greater than the working interest set forth on Exhibit "B",
unless there is a corresponding increase in the applicable net revenue interest,
and (c) except for Permitted Encumbrances (as herein defined), is free and clear
of: (i) all liens, claims and encumbrances; (ii) any default or potential
default under any Lease or Contract that adversely affects any Property; and
(iii) any facts or circumstances that result or could result in a restriction or
termination of BUYER's right to own, operate or use any Property; provided,
however, that (x) the presence of a preferential right to purchase provision
("Preferential Rights") shall not be considered to be a Defect (as defined in
Section 3.5 below); and (y) no Title Defect (as hereinafter defined) may be
asserted by BUYER in connection with matters that are customarily acceptable
defects, such as, but not limited to, defects that have been cured by possession
under applicable statutes of limitation, defects in the early chain of title
such as failure to recite marital status in documents, omission of heirship or
succession proceedings, lack of survey, and failure to record releases of liens,
production payments or mortgages
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that have expired by their own terms or the enforcement of which are barred by
applicable statutes of limitation. BUYER acknowledges and agrees that any net
revenue interests and working interests reflected on Exhibit "B" are for the
convenience of SELLER and BUYER and included solely for the purpose of
determining Acceptable Title. SELLER does not and shall not represent or warrant
that the Sale Interest is equal to any such interests in any respect except as
otherwise may be provided in this Agreement.
3.2 Definition of Permitted Encumbrances. As used herein, the term
"Permitted Encumbrances" shall mean the following items, provided none of the
following items shall operate to increase the working interest of SELLER as set
forth on Exhibit "B" for any of the respective Wells, without a corresponding
increase in the applicable net revenue interest, or decrease the net revenue
interest of SELLER as set forth on Exhibit "B" for any of the respective Wells:
(a) lessors' royalties, overriding royalties, production payments,
reversionary interests and similar burdens;
(b) division orders and sales contracts;
(c) Preferential Rights;
(d) rights to consent to assignments required by this Agreement held
by persons or entities (other than governmental entities) ("Consents to
Assign"), to the extent consents are obtained from the appropriate parties or
such rights are rendered unenforceable pursuant to Section 365 of the Bankruptcy
Code (as hereinafter defined);
(e) materialman's, mechanic's, repairman's, employee's, contractor's,
operator's, tax, and other similar liens or charges arising in the ordinary
course of business for obligations that are not delinquent and that will be paid
and discharged by SELLER in the ordinary course of business;
(f) rights to consent by, required notices to, filings with, or other
actions by governmental entities in connection with the sale or conveyance of
oil and gas leasehold and fee estates or interests therein, which consents,
notices, filings and/or other actions are customarily obtained after closing;
(g) easements, rights-of-way, servitudes, permits, surface leases and
other rights in respect of surface operations affecting the Properties which in
the aggregate are not such as to interfere materially with the operation or use
of any of the Properties or materially reduce the value thereof;
(h) rights reserved to or vested in any governmental, statutory or
public authority to control or regulate any of the Properties in any manner, and
all applicable laws, rules and orders of any governmental authority affecting
the Properties;
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(i) operating agreements, and unit agreements, unit operating
agreements, pooling agreements and pooling designations affecting the Properties
which are of public record or referenced in the public record or contained in
the Records;
(j) Title Defects (as defined herein) that BUYER has expressly waived
in writing;
(k) all conveyances, reservations and exceptions of public record or
referenced in the public records or contained in the Records affecting the
Properties which in the aggregate are not such as to interfere materially with
the operation or use of any of the Properties or materially reduce the value
thereof;
(l) liens and security interests in favor of SELLER's lenders, which
are to be released at Closing; and
(m) all other liens, charges, encumbrances, contracts, agreements,
instruments, obligations, defects and irregularities affecting the Properties
which in the aggregate are not such as to materially and adversely affect the
ownership, operation or use of any of the affected Properties or materially
reduce the value thereof.
3.3 Environmental Studies. BUYER shall have the right to make an
environmental and other physical assessment of the Properties during the period
beginning on the date of execution of this Agreement and ending at 5:00 P.M.
C.D.S.T. on the twenty-eighth (28th) day after the entry of an order approving
the Expense Motion (defined hereinafter) ("Examination Period"). BUYER and its
Representatives (as herein defined) shall have the right to enter upon the
Properties and all buildings and improvements thereon, inspect the same, and to
the extent that SELLER reasonably believes that the Properties will NOT be
damaged thereby, conduct soil and water tests and borings, and generally conduct
such tests, examinations, investigations and studies ("Environmental Studies")
as may be reasonably necessary or appropriate for the preparation of appropriate
environmental and other reports relating to the Properties, their condition, and
the presence of wastes or contaminants. SELLER shall be provided 24 hours
written notice of such activities and shall have the right to witness all such
tests and investigations and receive an equal distribution of all samples taken
by BUYER, or its Representatives. BUYER agrees to provide SELLER copies of each
site assessment report obtained in connection with the Environmental Studies,
and copies of any and all test results, reports or collected data obtained as to
the Properties within three (3) business days of the receipt thereof by BUYER.
To the extent necessary, SELLER hereby grants BUYER access to the Properties to
conduct its Environmental Studies UPON THE CONDITION THAT BUYER INDEMNIFIES AND
HOLDS SELLER AND ITS AFFILIATES AND THEIR RESPECTIVE REPRESENTATIVES HARMLESS
FROM AND AGAINST ANY AND ALL CLAIMS FOR OR RELATED TO PERSONAL INJURY OR
PROPERTY DAMAGE DIRECTLY ARISING OUT OF OR AS A DIRECT RESULT OF THE ACTIVITIES
OF BUYER OR ITS REPRESENTATIVES ON THE PROPERTIES IN CONDUCTING ANY TESTS OR ITS
OTHER ACTIVITIES ON THE PROPERTIES, IN CONNECTION WITH ITS ENVIRONMENTAL
STUDIES. If during the Examination Period, BUYER discovers in good faith that
(i) there is a
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condition or circumstance which constitutes an actual violation of an applicable
Environmental Law (as defined herein) that affects the value of the
Property(ies), or (ii) there is a claim, demand, filing, investigation, action,
suit or other legal or administrative proceeding asserted or otherwise initiated
by a governmental authority or any other person or entity and arising from or
related to the Properties or the ownership or operation of any thereof
("Environmental Defect"), BUYER may include notice of such Environmental Defect
in a Notice of Defects ("Notice of Defects") delivered hereunder, provided, that
any such matter not included in a Notice of Defects shall be waived by BUYER.
BUYER acknowledges that certain of the Properties may currently or have in the
past contained asbestos or natural occurring radioactive materials ("NORM") and
that special procedures may be required for the assessment, remediation,
removal, transportation or disposal of such asbestos and NORM. Notwithstanding
anything contained in this Agreement to the contrary, BUYER agrees to accept
full responsibility for and shall pay all costs and expenses associated with the
assessment, remediation, removal, transportation and disposal of the asbestos or
NORM associated with the Properties, and shall not be entitled to claim the fact
that the asbestos or NORM exists or that the assessment, remediation, removal,
transportation or disposal of the asbestos or NORM is not complete or that
additional costs will be required to complete the assessment, remediation,
removal, transportation or disposal of the asbestos or NORM as a Defect and
BUYER (on behalf of itself, its officers, agents, employees, affiliates,
successors and assigns) irrevocably waives such claims.
As used in this Agreement, "Environmental Laws" shall mean all laws,
statutes, ordinances, permits, decrees, judgments, orders, rules or regulations
which are promulgated, issued or enacted by a governmental entity, or agency
thereof that relate to: (1) the prevention of pollution or environmental
damages, (2) the abatement, remediation or elimination of pollution or
environmental damage, (3) the protection of the environment generally, and/or
(4) the protection of persons or property from actual or potential exposure (or
the effects of exposure) to pollution or environmental damage; including without
limitation, the Clean Air Act, as amended, the Clean Water Act, as amended, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Federal Water Pollution Act, as amended, the Resource Conservation
and Recovery Act of 1976, as amended, the Safe Drinking Water Act, as amended,
the Toxic Substance and Control Act, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Hazardous and the Solid Waste
Amendments Acts of 1984, as amended, and the Oil Pollution Act of 1990, as
amended.
3.4 Identified Claims. During the Examination Period SELLER (insofar as it
has the right to do so) shall make available to BUYER for examination and
copying (at BUYER's cost) any of SELLER's non-privileged accounting,
engineering, geological, geophysical, production, environmental and land records
relating to the Properties as BUYER may reasonably request. SELLER shall also
permit BUYER's Representatives to consult with SELLER's employees who have
knowledge concerning the Properties during normal business hours regarding such
records; provided, that such consultation shall not unreasonably disrupt the
performance by such employee of his or her regular duties with SELLER. If during
the Examination Period BUYER determines in good faith that (i) royalties,
rentals or other payments due in respect of the Properties prior to the
Effective Time have not been paid (except for those amounts in suspense), or
(ii) other than those discharged or to
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be discharged in the Bankruptcy Proceeding (as herein defined), there are
unsatisfied defects, claims, demands, losses, liabilities or obligations in
respect of the Properties based upon omissions, events or occurrences prior to
the Effective Time (collectively, "Identified Claims"), BUYER may include notice
of such Identified Claims in the Notice of Defects delivered hereunder;
provided, that the Prize Agreement may not be the subject of any Identified
Claim, and further any Identified Claim not included in the Notice of Defects
shall be waived by BUYER as an Identified Claim.
3.5 Notice of Defects. If during the Examination Period any matter is
discovered by BUYER that, in BUYER's reasonable, good faith opinion, would:
(a) cause any of the Sale Interest to fail to have Acceptable Title (a
"Title Defect");
(b) constitute an Environmental Defect; or
(c) constitute an Identified Claim, then the items pursuant to (a)
through (c) shall herein be individually referred to as a "Defect", and shall
herein be collectively referred to as the "Defects"; provided, however, the
items pursuant to (a) and (c) may be asserted as Defects only in the event, and
then only to the extent, that the value of each such matter, calculated on the
basis of the Allocated Value (as defined herein), exceeds a value of $10,000,
net to SELLER's interest. If the total value of all asserted Defects exceeds
$1,500,000 (the "Minimum Defect Threshold"), BUYER may cause a written notice (a
"Notice of Defects") thereof to be actually delivered to SELLER during the
Examination Period, and that, if so delivered, BUYER's sole remedy therefor
shall be as provided in Section 3.6. The Notice of Defects shall specifically
identify the Defect and to the extent reasonably possible include:
(i) BUYER's purported value of each specific Defect, which value,
except for Environmental Defects and Identified Claims, cannot exceed the
Allocated Value of the affected Well or Property;
(ii) an identification of each affected Property;
(iii) BUYER's basis for determining the existence and value of
such Defect, together with the appropriate associated reports, opinions, data,
valuations, assessments, conclusions and supporting calculations sufficient to
reasonably support the asserted Defect; and
(iv) BUYER's statement of steps necessary to cure each such
Defect to its reasonable satisfaction, all of which shall be kept strictly
confidential, except to the extent required by law, regulation or order of any
court or other governmental authority or as may be necessary to address Defects
identified in a Notice of Defects.
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3.6 Remedy for Defects Asserted in Notice of Defects.
(a) In SELLER's sole discretion, but without obligation, it may, at
its own cost, take such steps as are reasonably necessary to cure to BUYER's
reasonable satisfaction any Defects identified in a Notice of Defects. In the
event SELLER is unable or elects not to cure any or all such Defects within five
(5) business days after receipt of the Notice of Defects, SELLER and BUYER shall
use their best efforts to agree on the value of such Defect(s) and in the
absence of such agreement, the value of the Defect(s) shall be the value
asserted by BUYER in the Notice of Defects. Further, SELLER at its sole
discretion may by written notice delivered to BUYER within seven (7) business
days after receipt of the Notice of Defects, withdraw from this Agreement any
Property which BUYER asserts as affected by a Defect, and the Purchase Price
shall be adjusted by the Allocated Value for such Property. The sum of: (x) the
agreed value of each Defect not cured and, (y) the asserted value of each such
Defect (in the absence of an agreed value) remaining after SELLER has withdrawn
any Property from this Agreement, shall be herein referred to as the "Total
Defect Value". If the Total Defect Value:
(i) is less than the Minimum Defect Threshold, then, BUYER shall
accept and purchase the Properties, except Properties withdrawn by SELLER,
without any adjustment to the Purchase Price for Defects;
(ii) is equal to or greater than the Minimum Defect Threshold,
but less than $7,000,000, then, BUYER shall accept and purchase the Properties,
except Properties withdrawn by SELLER, but including any other Property subject
to any Defect, and the Purchase Price shall be adjusted for Defects by an amount
equal to the Total Defect Value less the Minimum Defect Threshold; or
(iii) equals or exceeds $7,000,000 ("Termination Threshold"),
then SELLER may by written notice delivered to BUYER within ten (10) business
days after receipt of the Notice of Defects elect to agree to accept an
adjustment to the Purchase Price for Defects in an amount equal to the Total
Defect Value less the Minimum Defect Threshold, or SELLER may elect to terminate
this Agreement. If SELLER fails to terminate, BUYER may elect to terminate this
Agreement by written notice delivered to SELLER within two (2) business days
following the end of said ten (10) business day period; provided if neither
SELLER nor BUYER elects to terminate this Agreement, then BUYER shall accept and
purchase the Properties, except Properties withdrawn by SELLER, but including
any other Property subject to any Defect, and the Purchase Price shall be
adjusted by an amount equal to the Total Defect Value less the Minimum Defect
Threshold.
(b) Post-Closing. If a claimed Defect has not been cured, waived by
BUYER or the affected Property withdrawn by SELLER prior to Closing, SELLER, at
its election made at least two (2) business days prior to Closing by giving
notice of such election to BUYER, shall have ninety (90) days after the Closing
Date (the "Cure Period") within which to cure to the reasonable satisfaction of
BUYER such Defect. If SELLER elects to cure such Defect after Closing, BUYER
shall deposit into an escrow account, mutually agreed upon, a sum equal to the
lesser of the Allocated
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Value of the Property affected by the claimed Defect, or BUYER's good faith
estimate of the Defect amount, and such amount shall be deducted from the amount
of the Purchase Price paid to SELLER at Closing and the affected Property shall
be assigned to BUYER at Closing. If such claimed Defects are cured, to the
reasonable satisfaction of BUYER, or if they are waived by BUYER, on or before
the expiration of such ninety (90) day period, the Defect amount shall be deemed
to be zero and BUYER and SELLER shall jointly instruct the escrow agent,
mutually agreed upon, to distribute to SELLER the Defect amount attributable to
the claimed Defects so cured or waived, plus all interest earned thereon, and
SELLER shall have no further liability to BUYER with respect thereto. If BUYER
does not waive such claimed Defect and SELLER is unable to cure the claimed
Defect to BUYER's reasonable satisfaction, within ninety (90) days after
Closing, SELLER may either (i) in writing elect to withdraw the affected
Property(ies) from this Agreement and BUYER shall reconvey to SELLER such
Property(ies) and the BUYER and SELLER shall jointly instruct the escrow agent
to distribute to BUYER the escrow amount for such Property(ies) and SELLER shall
pay to BUYER the difference, if any, between the escrow amount and the Allocated
Value for such Property(ies); or (ii) if SELLER fails to elect to withdraw the
affected Property(ies), the claimed Defect will be deemed to be accepted by
SELLER, the Purchase Price will be adjusted by the finally determined Defect
amount, and the BUYER and SELLER shall jointly instruct the escrow agent to
distribute to BUYER the finally determined Defect amount, plus the interest
thereon;
(c) SELLER shall have no obligation hereunder to any person to sell,
convey, deliver or otherwise transfer all or any part of the Properties if BUYER
or SELLER terminates this Agreement if Total Defect Value exceeds the
Termination Threshold. If Closing occurs, except for Defects for which monies
are escrowed pursuant to this Section paragraph (b), BUYER shall be deemed to
have waived or assumed any and all claims, known and unknown, arising from or
related to any and all Defects or title to or other condition of the Properties,
including, without limitation, whether or not identified in a Notice of Defects,
and notwithstanding the fact that SELLER may not have cured any such Defect(s)
to BUYER's satisfaction, and SELLER shall have no obligation with respect
thereto.
3.7 Allocated Value of Properties. "Allocated Value" shall mean, with
respect to any Well or Unit, the amount set forth in good faith by BUYER for the
Sale Interest in each such Well or Unit, which collectively shall total the
Purchase Price, in a letter to be delivered by BUYER to SELLER contemporaneously
with the execution of this Agreement.
3.8 Preferential Purchase Rights and Consents to Assign. On or about the
time that the Sale Motion (as herein defined) is filed, SELLER shall make a good
faith effort to send written notice of this Agreement to all persons or entities
holding Preferential Rights affecting the Properties or Consents to Assign,
other than such consents of governmental authorities which are usually obtained
in the normal course of business after Closing, (a) offering to sell to each
such person or entity the affected Property for which a Preferential Right is
held and subject to the terms hereof and for the Allocated Value for such
Property or Properties; or (b) requesting, where appropriate, consent to any
assignment required in connection herewith. In this regard, SELLER shall prepare
the typewritten notices addressed to the appropriate parties (along with an
electronic copy of same) in form and
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content acceptable to BUYER and SELLER, relative to all such Preferential Rights
and/or Consents to Assign and shall attach to each such notice a copy of the
instrument or document or the pertinent portion of each instrument or document
which created such Preferential Rights and/or Consents to Assign as the case may
be. SELLER shall also send such notices as instructed by BUYER for any
additional Preferential Rights or Consents to Assign identified by BUYER to
SELLER in writing during the Examination Period. If one (1) or more of the
holders of any Preferential Rights or Consents to Assign notifies SELLER in
writing that it commits to assert its Preferential Rights, or deny its Consent
to Assign, as the case may be, or if the holder of a Consent to Assign otherwise
fails or refuses to grant such consent, SELLER shall promptly give notice
thereof to BUYER. SELLER shall then promptly seek an order of the Bankruptcy
Court authorizing an assignment and sale of such Properties free of any
unobtained, required Consents to Assign. In the event SELLER does not obtain the
required Consents to Assign or an order of the Bankruptcy Court authorizing a
sale free of such required Consents to Assign, BUYER may at its option elect to:
(x) accept an assignment of such Property(ies) without the required Consent to
Assign, or (y) to the extent that any required Consent not obtained expressly
provides for forfeiture, or termination of the estate assigned, or substantial
liquidated damages for an assignment without consent, exclude any or all of such
Property(ies) and the Purchase Price shall be reduced by the Allocated Value
thereof. In the event a holder of a Preferential Right commits to assert such
right, then the affected Property(ies) shall be excluded from this Agreement and
the Purchase Price shall be reduced by the Allocated Value thereof. If Closing
occurs prior to the expiration of any period permitted for consideration and
exercise of a Preferential Right and BUYER pays for a Property subject to such
Preferential Right, BUYER shall be entitled to receive, and SELLER hereby
assigns to BUYER all of SELLER's rights to, all proceeds due from such holders
in connection with such Preferential Rights.
3.9 Risk of Loss. If, after the Effective Time and prior to the Closing,
any part of the Properties shall be destroyed or harmed by fire or any other
casualty or cause or shall be taken by condemnation or the exercise of eminent
domain, this Agreement shall remain in full force and effect as to each affected
Property, and SELLER shall at its election either collect (and when collected
pay over to BUYER) or assign to BUYER any and all insurance or other claims
related to such damage or loss, and BUYER shall take title to the affected
Property without claiming any Defect with respect to such loss and without
reduction in the Purchase Price.
ARTICLE 4. REPRESENTATIONS OF SELLER
SELLER represents and warrants to BUYER as follows:
4.1 Existence. SELLER is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware, and is duly
qualified to do business in Texas.
4.2 Authorization. Subject to obtaining the approval and authorization of
the United States Bankruptcy Court for the Western District of Texas (the
"Bankruptcy Court") in Cause No.
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99-70653, styled "In Re: Costilla Energy, Inc." (the "Bankruptcy Proceeding"),
SELLER has all authority necessary to enter into this Agreement and to perform
all its obligations hereunder. This Agreement has been duly executed and
delivered on SELLER's behalf, and at the Closing all documents and instruments
required hereunder to be executed and delivered by SELLER will have been duly
executed and delivered. This Agreement and all such documents and instruments
shall constitute legal, valid, and binding obligations of SELLER enforceable in
accordance with their respective terms, except to the extent enforceability may
be affected by bankruptcy, reorganization, insolvency, or similar laws affecting
creditors' rights generally.
4.3 Power. Subject to obtaining the approval and authorization of the
Bankruptcy Court, and to Preferential Rights and restrictions on assignment of
the type typically found in the oil and gas industry, and to rights to consent
by, required notices to, and filings with or actions by other governmental
entities, SELLER's execution, delivery, and performance of this Agreement and
the transactions contemplated hereby will not: (i) violate or conflict with any
provision of its articles of incorporation, bylaws or other governing documents;
(ii) result in the breach of any term or condition of, or constitute a default
or cause the acceleration of any obligation under any agreement or instrument to
which it is a party or by which it is bound; or (iii) violate or conflict with
any applicable judgment, decree, order, permit, law, rule, or regulation.
4.4 Brokers. SELLER has incurred no liability, contingent or otherwise, for
broker's or finder's fees in respect of this transaction for which BUYER shall
have any responsibility, whatsoever.
4.5 Litigation. Except as set forth on Schedule 4.5, as of the date of this
Agreement, there is no suit, action or other proceeding pending for which SELLER
has been notified or served by citation or, to the best of SELLER's knowledge
threatened, before any court or governmental body, authority or agency which
relates to the Properties or to SELLER's ability to consummate the transactions
contemplated by this Agreement.
4.6 Marketing Agreements. The existing oil and gas production attributable
to the Sale Interest in the Properties operated by SELLER is, to the knowledge
of SELLER and except as disclosed on Schedule 4.6 hereto, not committed or
dedicated to any product sales, processing or marketing agreement having a term
remaining in excess of ninety (90) days.
4.7 Permits. To the knowledge of SELLER, SELLER possesses all licenses,
permits, variances, exemptions, consents, certificates, orders, approvals and
authorizations necessary to own the Properties operated by SELLER and to carry
on its business as now being conducted.
4.8 Tax Partnerships. None of the Properties operated by SELLER is subject
to a tax partnership.
4.9 Taxes. To SELLER's knowledge, all ad valorem, property, production,
severance and similar taxes and assessments based on or measured by the
ownership of property or the production
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of hydrocarbons or the receipt of proceeds therefrom on the Properties operated
by SELLER have been or will be properly paid.
4.10 Insurance. Schedule 4.10 hereto lists all material insurance policies
covering the Properties and operations of SELLER as of the Effective Time, and
(i) all such insurance policies are in force and effect; (ii) SELLER has not
received notice from any carrier of such insurance of the intention to
discontinue any coverage afforded to SELLER; and (iii) to the knowledge of
SELLER, SELLER is not in default with respect to any such insurance policy, has
not failed to give any notice or present any claim required or permitted under
any such insurance policy in due and timely fashion, and has not waived or
released any rights thereunder.
4.11 Condemnation. To the knowledge of SELLER, it has not received notice
of any actual or threatened taking of any material part of the Properties by
reason of condemnation.
4.12 Imbalances. No hydrocarbons produced from the Properties are subject
to a material Imbalance (as herein defined), except as set forth on Schedule
4.12, which sets forth both Imbalances subject to written gas balancing
agreements and Imbalances which are not subject to written gas balancing
agreements.
4.13 Call on Production. No party has any call upon, option to purchase,
rights to match, or similar rights under any agreement with respect to the
production from the Properties operated by SELLER.
4.14 Compliance with Law. To the knowledge of SELLER, SELLER is in
compliance with all laws, ordinances, rules, regulations, judgments, decrees and
orders applicable to the Properties, except to the extent that any
non-compliance is not reasonably expected to result in a material adverse effect
on the Properties and SELLER has not received any notice of any claimed
noncompliance therewith. To the knowledge of SELLER, there are no facts,
conditions or circumstances in connection with, related to or associated with
the Properties that could reasonably be expected to give rise to any claim or
assertion that SELLER, the Properties or the ownership or operation of any
thereof is not in material compliance with any applicable law, rule, regulation,
ordinance, or order of any governmental authority or with any term or conditions
of any applicable permit, license, approval, variance, exemption, consent,
certificate or other authorization.
4.15 Environmental Matters. The Properties have been used by SELLER solely
for oil and gas and related operations; at no time have the Properties been used
by SELLER or, to the best knowledge of SELLER, by anyone else for the
generation, storage or disposal of a Hazardous Substance or as a landfill or a
waste disposal site for regulated waste. "Hazardous Substance" means any
substance defined as a hazardous substance under any Environmental Law except
any substance exempt, when used or generated in oil and gas operations, within
the jurisdiction to which such Environmental Law applies.
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4.16 Prize Agreement. SELLER is an executing party to the Prize Agreement,
and since its execution, has not sold, assigned or otherwise alienated any
rights of SELLER under such Agreement.
4.17 Definition of Knowledge. As used in this Agreement, the term "to the
knowledge of" shall mean, the actual conscious knowledge at the time the
assertion regarding knowledge is made of any officer after reasonable inquiry of
the party making such assertion.
ARTICLE 5. REPRESENTATIONS OF BUYER
BUYER represents and warrants to SELLER as follows:
5.1 Existence. BUYER is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Oklahoma and is duly qualified
to do business in each State where its business operations require such
qualification.
5.2 Authorization. BUYER has all authority necessary to enter into this
Agreement and to perform all its obligations hereunder. This Agreement has been
duly executed and delivered on BUYER's behalf, and at the Closing all documents
and instruments required hereunder to be executed and delivered by BUYER will
have been duly executed and delivered. This Agreement, and all such documents
and instruments shall constitute legal, valid, and binding obligations of BUYER
enforceable in accordance with their respective terms, except to the extent
enforceability may be affected by bankruptcy, reorganization, insolvency, or
similar laws affecting creditors' rights generally.
5.3 Power. BUYER's execution, delivery, and performance of this Agreement
and the transactions contemplated hereby will not: (i) violate or conflict with
any provision of its certificate of incorporation, by-laws, or other governing
documents; (ii) result in the breach of any term or condition of, or constitute
a default or cause the acceleration of any obligation under any agreement or
instrument to which it is a party or by which it is bound; or (iii) violate or
conflict with any applicable judgment, decree, order, permit, law, rule, or
regulation.
5.4 Brokers. BUYER has incurred no liability, contingent or otherwise, for
broker's or finder's fees in respect of this transaction for which SELLER shall
have any responsibility whatsoever.
5.5 Further Distribution. BUYER (i) is acquiring an interest in the
Properties for its own account and without a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended; and (ii) has such
knowledge and experience in business, financial, and oil and gas matters that it
is capable of evaluation of the merits and risks of entering into and of
carrying out its obligations in connection with the acquisition of an interest
in the Properties in the manner contemplated herein.
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5.6 Financial Condition. BUYER will have at Closing financial resources
sufficient to consummate the transactions contemplated by this Agreement and
fulfill its obligations hereunder.
ARTICLE 6. DISCLAIMER OF CERTAIN WARRANTIES
6.1 Information Provided. All the information, statistics, summaries, and
facsimiles furnished by or on behalf of SELLER herewith, hereunder, or prior to
the execution of this Agreement are furnished or will be furnished for BUYER's
use at BUYER's sole risk. All such information has been compiled or prepared by
SELLER based upon its files and records and such information represents true and
correct copies of materials out of its files or materials delivered to it by
third parties and it has no actual knowledge of facts different from the facts
set forth in the materials delivered, but SELLER MAKES NO REPRESENTATION,
EXPRESS OR IMPLIED, AS TO THE ACCURACY, CORRECTNESS, COMPLETENESS, OR THE
ADEQUACY OF SAME AND DOES NOT WARRANT OR GUARANTEE SUCH INFORMATION IN ANY WAY.
SELLER HAS MADE NO STATEMENTS OR REPRESENTATIONS CONCERNING THE PRESENT OR
FUTURE VALUE OF THE ANTICIPATED INCOME, COSTS, OR PROFITS, IF ANY, TO BE DERIVED
FROM THE PROPERTIES. BUYER IS RESPONSIBLE FOR MAKING SUCH INDEPENDENT
INVESTIGATION AND EVALUATION OF THE PROPERTIES AS BUYER SHALL DEEM APPROPRIATE,
REALIZING THAT SELLER DOES NOT ASSUME AND SHALL HAVE NO LIABILITY TO BUYER OR
ANY OTHER PARTY FOR ANY RELIANCE WHICH MAY BE PLACED ON THE INFORMATION,
STATISTICS, SUMMARIES, OR FACSIMILES FURNISHED HEREWITH OR HEREUNDER.
SPECIFICALLY, BUT WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ANY
DESCRIPTION OF WELLS AND EQUIPMENT INCLUDED IN THE PROPERTIES HAS BEEN COMPILED
STRICTLY FROM SELLER'S RECORDS RATHER THAN FROM AN ON-THE-GROUND INVENTORY.
6.2 Warranties. EXCEPT AS OTHERWISE PROVIDED HEREIN, CONVEYANCE OF THE SALE
INTEREST IN ALL REAL AND PERSONAL PROPERTY WILL BE MADE ON AN "AS IS, WHERE IS"
BASIS, WITHOUT WARRANTIES, EXPRESS OR IMPLIED IN FACT OR IN LAW, AS TO
MERCHANTABILITY, DURABILITY, USE, OPERATION, OR FITNESS FOR ANY PARTICULAR
PURPOSE.
ARTICLE 7. COVENANTS OF SELLER
SELLER covenants and agrees with BUYER as follows:
7.1 Access to Records. Prior to the Closing Date, SELLER shall grant BUYER
and its Representatives reasonable access to the Records for the review and
copying thereof, at BUYER's expense, during SELLER's normal business hours upon
reasonable prior notification, subject to any confidentiality agreements
previously signed by BUYER. The Records shall be made available at their
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present location together with suitable office facilities for review and copying
purposes. BUYER will use its best efforts to conduct such operations in a manner
that will not disrupt SELLER's normal business activities.
7.2 Maintenance of Properties. SELLER will not sell, transfer, assign,
convey or otherwise dispose of any of the Properties subject to SELLER's direct
control, other than (a) oil, gas and other hydrocarbons produced, saved and sold
in the ordinary course of business, (b) personal property and equipment which is
replaced with property and equipment of comparable or better value and utility
in the ordinary and routine maintenance and operation of the Properties, and (c)
as required in connection with any exercise of Preferential Rights or as
otherwise required to satisfy obligations to third parties under farmout,
farmin, operating or other similar agreements presently existing.
7.3 Operations. With respect to any of the Properties, SELLER will, subject
to any limitations imposed by the Bankruptcy Court, endeavor in good faith until
Closing (subject to this Agreement and the rights of affected parties under
applicable agreements) to:
(a) use reasonable efforts to provide BUYER access to the Properties;
(b) cause the Properties to be developed, maintained and operated in
compliance with applicable laws, ordinances, rules, regulations and order and in
a prudent, good and workmanlike manner, maintain all insurance now in force with
respect to the Properties, and pay or cause to be paid all costs and expenses in
connection therewith;
(c) not approve the drilling of any new well on the Properties without
the advance written consent of BUYER, which consent (which may not be
unreasonably withheld) or non-consent must be given by BUYER within three
business (3) days of the notice from SELLER;
(d) not take any action or fail to take any action which is reasonably
expected to result in any termination of the Leases forming a part of the
Properties;
(e) perform and comply with all of its obligations under agreements
relating to or affecting the Properties;
(f) carry on its business with respect to the Properties in
substantially the same manner as it has heretofore;
(g) not enter into or assume any contract, agreement, consent order
with any governmental agency, administrative body or court or commitment which
is not in the ordinary course of business as heretofore conducted or which
involves payments, receipts or potential liabilities with respect to any one of
the Properties of more than $50,000.00, (net to SELLER) excluding emergency
expenditures;
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(h) not resign or otherwise voluntarily relinquish its rights as
operator of any of the Properties for which it serves as operator on the date
hereof;
(i) not grant any preferential right to purchase or similar right or
agree to require the consent of any party to the transfer and assignment of the
Properties to BUYER, subject to existing contractual obligations;
(j) not enter into any gas sales contract or crude oil sales or supply
contract with respect to the Properties which is not terminable without penalty
upon notice of thirty (30) days or less;
(k) not enter into any transaction the effect of which, considered as
a whole, would be to cause SELLER's ownership interest in any of the Properties
to be decreased from its ownership interest as of the date hereof;
(l) if any approval or consent by any federal, state or local
governmental authority is required to vest Acceptable Title to any of the Sale
Interest in BUYER at Closing, exercise its best efforts, as reasonably requested
in writing by BUYER, to obtain all such required approvals or consents at
BUYER's expense;
(m) through Closing, endeavor to give prompt written notice to BUYER
of any notice of default (or written threat, whether disputed or denied)
received or given by SELLER after the date hereof under any instrument or
agreement affecting the Properties to which SELLER is a party or by which it or
any of the Properties is bound; and
(n) to the extent it can do so without violating any third party
agreement and subject to the rights of third parties, exercise its best efforts
to provide (as soon as practicable) BUYER with a copy of any material authority
for expenditure and material contract affecting the Properties entered into
after the Effective Time, provided, however, that the provision of such matters
to BUYER is for informational purposes only and that BUYER shall have no right
to comment upon or object to any such matter that is otherwise not in violation
of this Agreement.
7.4 Permissions. SELLER will use reasonable efforts to obtain all
permissions, approvals, and consents of federal, state, and local governmental
authorities and other third parties as may be required to consummate the sale
contemplated hereunder (excluding governmental permissions, approvals, and
consents which are customarily obtained after the consummation of transactions
of the type contemplated hereunder).
7.5 Exclusive Dealing. Upon execution of this Agreement, SELLER shall not,
directly or indirectly, through any Representatives (defined below) or
otherwise, initiate the solicitation of any proposal from any person, other than
BUYER, relating to the acquisition of SELLER or any stock, business or
substantial asset of SELLER, whether through purchase, merger, consolidation,
transfer, business combination, or otherwise. In addition, upon execution of
this Agreement, SELLER shall
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not, directly or indirectly, through any Representatives, or otherwise,
affirmatively sell or transfer a material portion of the Properties or a
significant equity interest in SELLER to any person or entity other than BUYER.
"Representatives" means, collectively, a party's directors, officers, financial
advisors, attorneys, accountants, consultants, agents, affiliates, employees or
other representatives. SELLER may, however, provide information to and discuss a
potential sale with any entity which submits an unsolicited inquiry or proposal
to SELLER to acquire the Properties in any way (including, without limitation,
by sale or merger). SELLER may advise the Bankruptcy Court of any such competing
proposal and its views of such proposal, if SELLER determines in good faith,
after consultation with its legal counsel, that such action is required to
comply with its fiduciary duties as imposed by applicable law.
7.6 Motion to Approve Agreement and Transaction . SELLER shall file in the
Bankruptcy Court (i) on or before April 28, 2000, a motion acceptable to BUYER
(the "Sale Motion") seeking approval of the Agreement and the transaction
contemplated herein pursuant to Sections 363(f) and 365 of Title 11 of the
United States Code (the "Code"); (ii) on or before April 21, 2000, a motion
acceptable to BUYER to approve the payment to BUYER of the Break-Up Fee pursuant
to Section 12.8 of this Agreement and to approve the payment to BUYER of the
Expense Fee pursuant to Section 12.9 of this Agreement in a form acceptable to
BUYER (the "Expense Motion"); and (iii) on or before April 28, 2000, a motion
acceptable to BUYER to establish bidding proceedings for subsequently submitted
proposals to purchase the Properties containing a provision that all competing
bids for the Properties must be in excess of $5,000,000 in additional value than
is afforded SELLER pursuant to this Agreement, and on substantially the same
terms as provided in this Agreement, and a provision for the approval by the
Bankruptcy Court of the exclusive dealing requirements of Section 7.5 of this
Agreement. BUYER shall not be required to perform any of its obligations
pursuant to this Agreement until an order approving the relief requested in the
Expense Motion (the "Expense Order") is entered and is not vacated or stayed. If
an appeal is taken from the Expense Order, or the time to file such an appeal
has not expired, BUYER may, but shall not be required to, perform any or all of
its obligations pursuant to this Agreement pending resolution of such appeal or
the expiration of such period.
ARTICLE 8. COVENANTS OF BUYER
BUYER covenants and agrees with SELLER as follows:
8.1 Return of Data. BUYER agrees that if this Agreement is terminated for
any reason whatsoever, BUYER shall promptly return to SELLER all information and
data furnished by or on behalf of SELLER to BUYER, its officers, employees, and
representatives in connection with this Agreement, and BUYER shall destroy all
copies, extracts, or excerpts of such information and data.
8.2 INDEMNITY REGARDING ACCESS. BUYER AGREES TO PROTECT, INDEMNIFY, DEFEND,
AND HOLD HARMLESS SELLER FROM AND AGAINST ANY AND ALL LOSSES IN CONNECTION WITH
PERSONAL INJURIES, DEATH, OR PROPERTY
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DAMAGE ARISING OUT OF OR RELATING TO THE ACCESS OF BUYER, ITS OFFICERS,
EMPLOYEES, AND REPRESENTATIVES TO THE PROPERTIES FROM THE DATE HEREOF TO THE
CLOSING DATE, REGARDLESS OF WHETHER SUCH INJURIES, DEATH, OR DAMAGES ARE CAUSED
IN PART BY THE SOLE, PARTIAL OR CONCURRENT NEGLIGENCE OF SELLER.
ARTICLE 9. SELLER'S CONDITIONS OF CLOSING
The obligation of SELLER to close this transaction shall be subject to and
conditioned upon the following, any one or more of which may be waived by
SELLER, in whole or in part:
9.1 Representations. The representations of BUYER under Article 5 of this
Agreement shall be true and accurate in all material respects as of the date
when made and shall be deemed to be made again at and as of the time of the
Closing and shall then be true and accurate in all material respects.
9.2 Performance. BUYER shall have performed and complied with each
covenant, agreement, and condition required by this Agreement to be performed or
complied with by it prior to or at Closing.
9.3 Pending Matters. At Closing, no litigation, proceeding, investigation,
or inquiry (other than between the parties to this Agreement and other than
objections by any third party to the Sale Motion not ruled upon or otherwise
considered by the Bankruptcy Court) shall be pending or threatened to enjoin or
prevent the consummation of the transactions contemplated by this Agreement.
9.4 Officer's Certificate. BUYER shall have delivered to SELLER a
certificate of an executive officer of BUYER, dated the Closing Date, certifying
on behalf of BUYER that the conditions in Sections 9.1, 9.2 and, to the
knowledge of BUYER, 9.3 above have been fulfilled.
9.5 Court Approval. SELLER shall have obtained an order of the Bankruptcy
Court, in a form acceptable to BUYER, pursuant to Section 363(f) and Section 365
of the Code authorizing and approving the sale of the Properties and assignment
of the Contracts pursuant to this Agreement, free and clear of liens, claims,
interests, mortgages and encumbrances other than the Permitted Encumbrances
which order has not been reversed, vacated or stayed (the "Sale Order").
ARTICLE 10. BUYER'S CONDITIONS OF CLOSING
The obligation of BUYER to close this transaction shall be subject to and
conditioned upon the following, any one or more of which may be waived by BUYER,
in whole or in part:
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10.1 Representations. The representations of SELLER under Article 4 of
this Agreement shall be true and accurate in all material respects as of the
date when made and, except as to any matter discovered by BUYER and disclosed to
SELLER relating to a representation qualified by "knowledge", shall be deemed to
be made again at and as of the time of the Closing and shall then be true and
accurate in all material respects.
10.2 Performance. SELLER shall have performed and complied with each
covenant, agreement, and condition required by this Agreement to be performed or
complied with by it prior to or at Closing.
10.3 Pending Matters. At Closing, no litigation, proceeding,
investigation, or inquiry (other than between the parties to this Agreement and
other than objections by any third parties to the Sale Motion not ruled upon or
otherwise considered by the Bankruptcy Court) shall be pending or threatened to
enjoin or prevent the consummation of the transactions contemplated by this
Agreement.
10.4 Officer's Certificate. SELLER shall have delivered to BUYER a
certificate of an executive officer of SELLER, dated the Closing Date,
certifying on behalf of SELLER that the conditions contained in Sections 10.1,
10.2 and, to the knowledge of SELLER, 10.3 have been fulfilled.
10.5 Release of SELLER Liens. SELLER shall have delivered to BUYER evidence
satisfactory to BUYER that the Properties can be conveyed to BUYER free and
clear of any lien, mortgage or encumbrance held by SELLER's lenders.
10.6 Court Approval. SELLER shall have obtained the Sale Order.
ARTICLE 11. CLOSING
11.1 Time and Place of Closing. Subject to the conditions stated in this
Agreement, the consummation of the transactions contemplated hereby (the
"Closing") shall occur on such date that the parties may mutually agree upon and
designate in writing but in absence of such Agreement, on the later of the fifth
(5th) business day after the entry of the Sale Order or the thirteenth (13th)
business day after receipt by SELLER of the Notice of Defects at 11:00 A.M.
C.D.S.T.,(the "Closing Date"). The Closing shall be held at SELLER's office in
Midland, Texas, or at such other location as may be mutually agreed upon by
SELLER and BUYER.
11.2 Closing Obligations.
(a) At Closing, SELLER shall deliver to BUYER the following:
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(i) Executed title certificates for the Vehicles and executed
Assignments, Bills of Sale and Conveyances of the Sale Interest in the
Properties, in the form attached hereto as Exhibit "C" and in sufficient
counterparts for recording in each appropriate filing jurisdiction;
(ii) An initial settlement statement reflecting adjustments to
the Purchase Price as provided in Article 2 above (SELLER shall provide BUYER a
copy of the statement at least three (3) business days prior to the Closing
Date);
(iii) Letters-in-lieu of transfer orders, directing that all
proceeds of production from the Sale Interest in the Properties which have
heretofore been paid to SELLER shall be paid to the account of BUYER as of and
after the Effective Time;
(iv) SELLER's Officer's Certificate in compliance with Section
10.4 hereof;
(v) Possession of the Sale Interest in the Properties;
(vi) One copy of the Sale Order certified by the Clerk of the
Bankruptcy Court;
(vii) An Assignment of SELLER's ownership rights in the Prize
Agreement in a form as agreed to by BUYER and SELLER; and
(viii) Executed transfer of operatorship forms (RRC Form P-4) for
all Properties for which BUYER will assume operatorship.
(b) At Closing, BUYER shall:
(i) Deliver to SELLER the Adjusted Purchase Price by wire
transfer to SELLER's account as follows:
Name of Bank: Bank of America, N.A.
Bank ABA Number: 111000012
Account Name: Costilla Energy, Inc. - Operating Account
Account Number: 375 0767438
Contact: Celia Zinn
(ii) Execute the Assignments, Bills of Sale and Conveyances
delivered by SELLER to BUYER at Closing, evidencing BUYER's acceptance of same;
and
(iii) Deliver to SELLER BUYER's Officer's Certificate in
compliance with Section 9.4 hereof.
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11.3 Further Assurances. Prior to and for six (6) months subsequent to
Closing, the parties shall execute, acknowledge, and deliver any other documents
and shall take such other actions as may be necessary to carry out their
obligations under this Agreement.
ARTICLE 12. ADDITIONAL AGREEMENTS
12.1 Post Closing Adjustments to Purchase Price. Within 120 days after the
Closing, SELLER shall prepare, in accordance with this Agreement and with GAAP,
and deliver to BUYER a statement setting forth each adjustment to the Purchase
Price required pursuant to Section 12.2 and showing the calculation of each such
adjustment. Within 14 after receipt of such statement from SELLER, BUYER shall
deliver to SELLER a written report containing all changes with explanations and
documentation therefor that BUYER proposes be made to such statement, it being
agreed that BUYER's failure to deliver such report to SELLER within such time
period shall constitute acceptance by BUYER of SELLER's statement. From and
after the expiration of such 14 day period, no additional changes to the
statement provided by SELLER shall be considered by the parties. If BUYER has
timely delivered such written report, the parties shall then undertake to agree
on the items in dispute and the final adjustment no later than 30 days after the
receipt by SELLER of BUYER's statement of proposed changes. Following the final
determination of the adjustment pursuant to this Section 12.1, SELLER or BUYER,
as the case may be, shall make the payment required within 3 business days after
such final determination. SELLER and BUYER will provide any information
reasonably requested by the other in order to prepare such statement or verify
BUYER's written report.
12.2 Receipts and Credits. Notwithstanding anything contained in Section
1.2 of this Agreement to the contrary:
(a) Subject to the terms hereof and except to the extent the same have
already been taken into account as an adjustment to the Purchase Price, all
monies, proceeds, receipts, credits, and income attributable to the Sale
Interest in the Properties:
(i) for the period subsequent to the Effective Time, shall be the
sole property and entitlement of BUYER, and, to the extent received by SELLER,
SELLER shall fully disclose, account for, and transmit same to BUYER promptly;
(ii) for the period prior to the Effective Time, shall be the
sole property and entitlement of SELLER, and, to the extent received by BUYER,
BUYER shall fully disclose, account for, and transmit same to SELLER promptly.
(b) Subject to the terms of this Agreement and except to the extent
same have already been taken into account as an adjustment to the Purchase
Price, all costs, expenses, disbursements, obligations, and liabilities
attributable to the Sale Interest in the Properties:
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(i) for the period prior to the Effective Time, regardless of
when due or payable, shall be the sole obligation of SELLER and SELLER shall, to
the extent ordered by the Bankruptcy Court, promptly pay same; and
(ii) for the period subsequent to the Effective Time, regardless
of when due or payable, shall be the sole obligation of BUYER and BUYER shall
promptly pay, or if paid by SELLER, promptly reimburse SELLER for and hold
SELLER harmless from and against same.
12.3 Records. The originals of all files, records, documentation, and data
of SELLER that BUYER may reasonably request relating to (or evidencing) SELLER's
ownership or rights in the Properties or other rights and interests described
herein, including, but not limited to lease files, land files, well files,
production sales agreements files, division order files, title opinions and
abstracts, governmental filings, production reports, production logs, core
sample reports, and land maps, as such data is assembled and maintained in the
normal course of business (collectively, the "Records"), will be delivered at
Closing at their current location to BUYER; provided, however, that SELLER may
retain during the Cure Period such of the Records needed to cure Defects
pursuant to Section 3.6(b). To the extent not obtained or satisfied as of
Closing, SELLER agrees to continue to use all reasonable efforts and to
cooperate with BUYER's efforts to obtain for BUYER access to files, records and
data relating to the Property in the possession of third parties.
12.4 Notices. All notices hereunder shall be in writing and any
communication or delivery hereunder shall be deemed to have been duly made when
personally delivered to the individual indicated below, or if mailed, when
received by the party charged with such notice and addressed as follows:
SELLER: Costilla Energy, Inc.
400 West Illinois, Suite 1000
Midland, Texas 79701
Attention: Mr. Clifford Hair
and Marc Dingler
Facsimile: (915) 686-6083
BUYER: Louis Dreyfus Natural Gas Corp.
14000 Quail Springs Parkway, Suite 600
Oklahoma City, Oklahoma 73134
Attention: Mr. Mark E. Monroe
and Richard E. Bross
Facsimile: (405) 749-9385
Any party may, by written notice so delivered to the other, change the address
of, or the individual to which or to whom, delivery shall thereafter be made.
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12.5 Recording Documents. BUYER shall pay all documentary, filing, and
recording fees incurred in connection with the filing and recording of the
instruments of conveyance. As soon as practicable after Closing, BUYER shall
provide SELLER with a schedule reflecting the recording information for all
recorded documents conveying the Sale Interest in the Properties to BUYER and
copies of the recorded documents.
12.6 Right of Termination. This Agreement and the transactions contemplated
herein may be terminated:
(a) At any time prior to Closing by SELLER and BUYER by mutual written
agreement;
(b) At any time prior to Closing by SELLER or BUYER in the event:
(i) that there shall be any actual or threatened litigation
(other than between the parties to this Agreement and other than objections by
any third party to the Sale Motion not ruled upon or otherwise considered by the
Bankruptcy Court) challenging the validity or legality of this Agreement or the
consummation hereof or seeking to restrain or invalidate any of the transactions
contemplated hereunder which would, in the judgment of such party acting
reasonably, based upon the advice of counsel, involve material expense or lapse
of time which would be materially adverse to the interests of such party; or
(ii) such party is exercising a right of termination specifically
provided for in Article 3 in this Agreement; or
(c) By SELLER if at any time after:
(i) Forty-five (45) days after the date the Bankruptcy Court
enters the Expense Order, the conditions to Closing detailed in Sections 9.1,
9.2 or 9.4 are not satisfied and SELLER is not otherwise in material default
hereunder; or
(ii) Forty-five (45) days after the date the Bankruptcy Court
enters the Expense Order, the condition to Closing detailed in Section 9.5 is
not satisfied and SELLER is not otherwise in material default hereunder.
(d) By BUYER if at any time after;
(i) Forty-five (45) days after the date the Bankruptcy Court
enters the Expense Order, the conditions to Closing detailed in Sections 10.1,
10.2, 10.4 or 10.5 are not satisfied and BUYER is not otherwise in material
default hereunder; or
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(ii) Forty-five (45) days after the date the Bankruptcy Court
enters the Expense Order, the condition to Closing detailed in Section 10.6 is
not satisfied and BUYER is not otherwise in material default hereunder.
(e) By BUYER if SELLER should take any action (other than those
actions in furtherance of its fiduciary duties as permitted in Section 7.5
hereof) to pursue any sale or transfer of the Properties or sale or transfer of
control of SELLER to any entity other than BUYER, or if SELLER withdraws the
Sale Motion or the Expense Motion, or if SELLER , prior to any denial by the
Bankruptcy Court to enter the Sale Order, otherwise pursues a plan of
reorganization that does not incorporate the transactions contemplated by this
Agreement; and
(f) By BUYER if the Bankruptcy Court does not enter the Expense Order
on or before ten (10) days from the Execution Date, or if such order is vacated
or reversed after its entry. If the Expense Order is denied, or is vacated or
reversed, BUYER must elect and notify SELLER within ten (10) days after BUYER
has received notice that the Expense Order has been denied, vacated or reversed,
as to whether BUYER will terminate this Agreement or perform its obligations
under this Agreement without the Expense Order (including the obligation to fund
the Deposit for $2,000,000).
12.7 Effect of Termination and Remedies upon Breach.
(a) If this Agreement is terminated by BUYER and SELLER pursuant to
Section 12.6(a), by SELLER pursuant to Section 12.6(b) or 12.6(c)(ii), or by
BUYER pursuant to Section 12.6(b), 12.6(d)(ii) or Section 12.6(f), SELLER shall
promptly refund the Deposit to BUYER, and this Agreement shall become void and
of no further force or effect (except for the indemnity obligations in Section
3.3 and Sections 8.1, 8.2 and 14.10 and the rights and obligations in Sections
12.8 and 12.9, which shall survive such termination) and neither party shall
have any other obligation or liability to the other party.
(b) If this Agreement is terminated by SELLER pursuant to Section
12.6(c)(i), or if the transaction contemplated by this Agreement does not close
because of a material breach of this Agreement by BUYER, SELLER shall as its
sole and exclusive remedy retain the Deposit as liquidated damages, and this
Agreement shall be of no further force or effect (except for the indemnity
obligations in Section 3.3 and Sections 8.1, 8.2 and 14.10, which shall survive
such termination) and neither party shall have any other obligation or liability
to the other party.
(c) If this Agreement is terminated by BUYER pursuant to Section
12.6(d)(i) or Section 12.6(e), or if the transaction contemplated by this
Agreement does not close because of a material breach of this Agreement by
SELLER, SELLER shall promptly refund the Deposit to BUYER and pay to BUYER, the
sum of $2,000,000, as liquidated damages which shall be the sole and exclusive
remedy for BUYER, and this Agreement shall be of no further force or effect,
(except for the indemnity obligations in Section 3.3 and Sections 8.1, 8.2 and
14.10, which shall survive such termination) and neither party shall have any
other obligation or liability to the other.
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12.8 Break-Up Fee. In the event this Agreement is terminated by SELLER
pursuant to Section 12.6(c)(ii), or by BUYER pursuant to Section 12.6(d)(ii) and
BUYER is otherwise not entitled to recover liquidated damages pursuant to
Section 12.7(c), and;
(a) BUYER was not in breach of the Agreement at the time of
termination; and
(b) SELLER sells substantially all of its assets or all of its stock
to a third party within one-hundred forty (140) days after the 12.6(c)(ii) or
12.6(d)(ii) termination event, then SELLER shall promptly pay to BUYER the sum
of $2,000,000 (herein the "Break-Up Fee").
12.9 Expense Fee. In the event this Agreement is terminated by SELLER
pursuant to Section 12.6(c)(ii), or by BUYER pursuant to Section 12.6(d)(ii),
and BUYER is otherwise not entitled to recover liquidated damages pursuant to
Section 12.7(c), and;
(a) BUYER was not in breach of the Agreement at the time of
termination; and
(b) SELLER does not sell substantially all of its assets or all of its
stock to a third party within one-hundred forty (140) days after the 12.6(c)(ii)
or 12.6(d)(ii) termination event, then SELLER shall promptly reimburse BUYER for
reasonable out of pocket expenses as approved by the Bankruptcy Court as
incurred by BUYER in connection with its good faith actions in furtherance of
performance pursuant to this Agreement, including without limitation the due
diligence of BUYER with respect to the Properties; up to, but not to exceed
$500,000 (herein the "Expense Fee").
12.10 Prize Motion. After execution of this Agreement, SELLER shall
promptly seek the Bankruptcy Court's approval, either in the Sale Motion or a
separate motion or adversary proceeding, to sell and transfer all of SELLER's
rights in and to the Prize Agreement to BUYER without restriction, penalty or
diminution in SELLER's rights such that BUYER stands in the place of SELLER
under the Prize Agreement as if no assignment thereof had been made. If within
ninety (90) days from the date of entry of the Sale Order, Bankruptcy Court has
entered an order approving the transfer of SELLER's rights in and to the Prize
Agreement without restriction, penalty or diminution in SELLER's rights (whether
through the Sale order itself or a separate order or judgment), the Purchase
Price shall be adjusted upward in an amount equal to $250,000 and accounted for
during the post closing under Section 12.1 of this Agreement. BUYER shall have
the right without objection from SELLER to intervene in and pursue on behalf of
SELLER any motion or adversary proceeding before the Bankruptcy Court regarding
the transfer of the Prize Agreement. BUYER shall also have the right, at its
sole election and upon notice to SELLER at any time prior to an entry of an
order by the Bankruptcy Court concerning the Prize Agreement, to terminate the
obligation of SELLER to take any further action regarding the Prize Agreement as
contemplated in this Section, and no Purchase Price adjustment shall be made.
12.11 Sales Taxes. The Purchase Price provided for hereunder excludes any
sales taxes or other taxes in connection with the sale of the Sale Interest in
the Properties pursuant to this Agreement. If a determination is ever made that
a sales tax or other transfer tax applies, BUYER shall
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pay such tax as well as any applicable conveyance, transfer, and recording fees,
and real estate transfer stamps or taxes imposed on any transfer of property
pursuant to this Agreement. SELLER shall use its best efforts to minimize taxes
in accordance with Section 1146 of the Code and other applicable law. BUYER
SHALL DEFEND, INDEMNIFY, AND HOLD SELLER HARMLESS WITH RESPECT TO THE REPORTING
AND PAYMENT OF ALL SUCH TAXES, IF ANY, INCLUDING ANY INTEREST OR PENALTIES
ASSESSED THEREON.
12.12 Taxes. All ad valorem, severance, or other such production or
property taxes relating to the Sale Interest in the Properties shall be shared
in proportion to the period of ownership of the Sale Interest in the Properties.
Any such ad valorem, severance, or other such production or property tax
relating to the period prior to the Effective Time shall be the responsibility
of the SELLER. Any such ad valorem, severance, or other such production or
property tax relating to the period after the Effective Time and beyond shall be
the responsibility of the BUYER. Accounting for taxes shall be made as provided
in Section 2.3.
ARTICLE 13. ASSUMPTION OF OBLIGATIONS; INDEMNIFICATION
13.1 Definitions. As used in this Agreement, "Losses" means any
liabilities, losses, claims, demands, causes of action, costs and expenses
(including, but not limited to, court costs and reasonable attorneys' fees and
other costs and expenses incident to proceedings or investigations respecting,
or the prosecution or defense of, a claim) of every kind and character.
13.2 Assumption of Contracts. The sale of the Sale Interest in the
Properties is and will be made subject to the Contracts to which the Properties
are presently subject. BUYER shall assume and be responsible only for all
obligations accruing under the Contracts after the Effective Time.
13.3 Imbalances. SELLER and BUYER hereby agree that (i) over or under
imbalances with respect to gas production attributable to the Properties
("Imbalances") shall not be included in any Identified Claims asserted
hereunder, and (ii) the Properties will be conveyed specifically subject to
Imbalances which exist as of the Effective Time, with BUYER, as of Closing,
bearing and assuming all obligations with respect to any overproduction account
or liability and receiving the benefit of and being credited with any
underproduction account or credit.
13.4 BUYER'S INDEMNITY. BUYER SHALL BE RESPONSIBLE FOR AND INDEMNIFY,
DEFEND AND HOLD HARMLESS SELLER, ITS DIRECTORS, OFFICERS AND SHAREHOLDERS FROM
AND AGAINST ALL LOSSES THAT IN ANY WAY RESULT FROM OR ARISE OUT OF THE USE,
OWNERSHIP OR OPERATION OF THE PROPERTIES AND WHICH ACCRUE AND ARE BASED ON
OCCURRENCES OR EVENTS AFTER THE EFFECTIVE TIME INCLUDING, WITHOUT LIMITATION (I)
ANY LOSSES ARISING FROM ANY INJURY OR OCCURRENCE ON OR RELATING TO THE
PROPERTIES, AND (II) ALL LOSSES, INCLUDING BUT NOT LIMITED TO ANY CIVIL FINES,
PENALTIES, EXPENSES, COSTS OF CLEAN-UP OR REMEDIATION, AND PLUGGING LIABILITIES
FOR ANY AND
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ALL WELLS, BROUGHT BY ANY AND ALL PERSONS, INCLUDING, BUT NOT LIMITED TO,
BUYER'S AND SELLER'S EMPLOYEES, AGENTS, OR REPRESENTATIVES AND ALSO ANY PRIVATE
CITIZENS, PERSONS, OR ORGANIZATIONS AND ANY AGENCY, BRANCH, OR REPRESENTATIVE OF
FEDERAL, STATE, OR LOCAL GOVERNMENT, ON ACCOUNT OF ANY PERSONAL INJURY, DISEASE,
OR DEATH OR ANY DAMAGE, DESTRUCTION, LOSS OF PROPERTY OR CONTAMINATION OF
NATURAL RESOURCES (INCLUDING AIR, SOIL, SURFACE WATER, OR GROUND WATER)
RESULTING FROM OR ARISING OUT OF ANY LIABILITY CAUSED BY OR CONNECTED WITH ANY
ENVIRONMENTAL CONDITION OF, ON, OR RESULTING FROM THE PROPERTIES INCLUDING, BUT
NOT LIMITED TO, THE PRESENCE, DISPOSAL, OR RELEASE OF ANY MATERIAL OF ANY KIND
IN, ON OR UNDER THE PROPERTIES OR OTHER AFFECTED PROPERTY, OR CAUSED BY OR
CONNECTED WITH ACTS OR OMISSIONS OF ANY PARTY'S EMPLOYEES, REPRESENTATIVES, OR
AGENTS WITH REGARD TO THE USE, OWNERSHIP, OR OPERATORSHIP OF THE PROPERTIES
AFTER THE EFFECTIVE TIME.
13.5 Litigation. Upon Closing, SELLER shall be responsible for and to the
extent not discharged in the Bankruptcy Proceeding retain all litigation which
has been filed and served on SELLER before the execution of this Agreement to
which BUYER is not a party and SELLER is a party.
ARTICLE 14. MISCELLANEOUS
14.1 Amendment. This Agreement may not be amended nor any rights hereunder
waived except by an instrument in writing signed by the party to be charged with
such amendment or waiver and delivered by such party to the party claiming the
benefit of such amendment or waiver.
14.2 Gender. References made in this Agreement, including use of a
pronoun, shall be deemed to include where applicable, masculine, feminine,
singular or plural, individuals, partnerships, or corporations. As used in this
Agreement, "person or entity" shall mean any natural person, corporation,
partnership, trust, estate, or other entity.
14.3 Entire Agreement. This Agreement and that certain Confidentiality
Agreement dated August 11, 1999 constitute the entire understanding among the
parties with respect to the subject matter hereof, superseding all negotiations,
prior discussions, and prior agreements and understandings relating to such
subject matter.
14.4 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of, the parties hereto and, except as otherwise
prohibited, their respective successors and assigns; and except as otherwise
stated herein, nothing contained in this Agreement, or implied herefrom, is
intended to confer upon any other person or entity any benefits, rights, or
remedies.
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14.5 Survivability. Except for Sections 3.3, 3.6(b), 4.16, 8.1, 8.2, 12.1,
12.8, 12.9, 12.10 and 14.10, no indemnifications, covenants, agreements,
representations, guaranties, and warranties shall survive the Closing.
14.6 Severability. If a court of competent jurisdiction determines that
any clause or provisions of this Agreement is void, illegal, or unenforceable,
the other clauses and provisions of the Agreement shall remain in full force and
effect and the clauses and provisions which are determined to be void, illegal,
or unenforceable shall be limited so that they shall remain in effect to the
extent permissible by law.
14.7 Governing Law, Jurisdiction and Venue. This Agreement shall be
governed and construed under the laws of the State of Texas (excluding any
conflict of laws provision that would require the application of any other
jurisdiction), and exclusive jurisdiction and venue for any dispute concerning
the validity, construction, interpretation or enforcement of this Agreement
shall be in the Bankruptcy Court, as a proceeding ancillary to the Bankruptcy
Proceeding.
14.8 Confidentiality. Until Closing SELLER and BUYER agree to keep all
information regarding the terms and provisions of this Agreement and the
transactions contemplated hereby confidential at all times and agree not to
disclose any information which cannot be obtained from public sources, except
where required to do so by law, without the prior written consent of the other
party, which consent shall not be unreasonably withheld.
14.9 Assignability. Neither party hereto shall assign this Agreement or
any of its rights or obligations hereunder without the prior written consent of
the other party.
14.10 EXPRESS NEGLIGENCE RULE; CONSPICUOUSNESS. BUYER ACKNOWLEDGES THAT THE
PROVISIONS IN THIS AGREEMENT THAT ARE SET OUT IN ITALICS, IN BOLD, UNDERLINE OR
CAPITALS (OR ANY COMBINATION THEREOF) SATISFY THE REQUIREMENTS FOR THE EXPRESS
NEGLIGENCE RULE AND/OR ARE CONSPICUOUS.
14.11 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
party and delivered to the other party.
14.12 Press Release. SELLER and BUYER shall consult with each other with
regard to all press releases and other public announcements issued concerning
this Agreement or the transactions contemplated hereby and, except as may be
required by applicable laws or the applicable rules and regulations of any
governmental agency, stock exchange or over-the-counter market, neither BUYER
nor SELLER shall issue any such press release or make any other public
announcement without the prior written consent of the other party, which consent
shall not be unreasonably withheld.
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The parties have executed this Agreement as of the date first above
mentioned.
BUYER:
By: /s/ Mark E. Monroe
-----------------------------------------
Name: Mark E. Monroe
Title: President and Chief Executive Officer
SELLER:
COSTILLA ENERGY, INC.
By: /s/ Cadell S. Liedtke
-----------------------------------------
Name: Cadell S. Liedtke
Title: Chairman of the Board
STATE OF OKLAHOMA )
)
COUNTY OF _________ )
This instrument was acknowledged before me on _____________________, 2000,
by Mark E. Monroe, the President and Chief Executive Officer of Louis Dreyfus
Natural Gas Corp., a ________ corporation on behalf of said corporation.
--------------------------------------------
Notary Public
My Commission Expires:
----------------------
STATE OF TEXAS )
)
COUNTY OF MIDLAND )
This instrument was acknowledged before me on _____________________, 2000,
by Cadell Liedtke, the Chairman of the Board of Costilla Energy, Inc., a Texas
corporation on behalf of said corporation.
--------------------------------------------
Notary Public
My Commission Expires:
----------------------
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