ASSET PURCHASE
AGREEMENT
dated as of May __,
2009
by and between
NCEY Holdings, LLC,
and
Brazos Lateral Holdings
Corp.
as Purchasers
and
New Century Energy
Corp.
Gulf Coast Oil Corporation,
and
Century Resources,
Inc.
as Seller
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of
_______________ (this “ Agreement ”), by and
among New Century Energy Corp., Gulf Coast Oil Corporation, and
Century Resources, Inc. (together, the “ Sellers
”) and NCEY Holdings, LLC (“ NCEY Holdings
”) and Brazos Lateral Holdings Corp. (“ Brazos
Lateral ”), and if applicable, their designee (NCEY
Holdings, Brazos Lateral, and such designee, as applicable “
Purchaser ”).
BACKGROUND
On July 28, 2008, (the “ Petition
Date ”), Sellers commenced voluntary petitions for relief
under chapter 11 of the United States Code in the United States
Bankruptcy Court for the Southern District of Texas (the “
Chapter 11 Cases ”).
Sellers desire to sell, transfer and assign to
Purchaser, and Purchaser desires to purchase, acquire and assume
from Sellers, pursuant to sections 363 and 365 of the
Bankruptcy Code, all of the Purchased Assets and Assumed
Liabilities, on the terms and subject to the conditions set forth
in this Agreement all as more specifically provided
herein.
NOW, THEREFORE, in consideration of the premises
and the mutual covenants and agreements hereinafter contained, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1
Certain Definitions .
For purposes of this Agreement, the following
terms shall have the meanings specified in this
Section 1.1:
“ Affiliate ” means, with
respect to any Person, any other Person that, directly or
indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person, and
the term “control” (including the terms
“controlled by” and “under common control
with”) means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of such Person, whether through ownership of voting
securities, by contract or otherwise. A Person is also
an Affiliate of a Seller if a family member (i.e., a spouse, child,
parent or sibling) of an employee, shareholder, owner, manager,
director or officer of such Seller controls such Person.
“ Alternative Transaction ”
means any transaction involving either (i) except as contemplated
by this Agreement, the consummation of the sale of all or any
portion of the Purchased Assets by Sellers to a purchaser other
than Purchaser and/or one or more of its Affiliates at any time
during the pendency of the Chapter 11 Cases or as a part of, or
pursuant to, any plan of reorganization confirmed in the Chapter 11
Cases or (ii) except to the extent the Closing has occurred, the
filing of a plan of reorganization by Sellers or the confirmation
of a plan of reorganization with respect to Sellers that does not
include a sale of all, or any portions of which in the aggregate
involve substantially all, of the Purchased Assets by Sellers to
Purchaser and/or one or more Affiliates of Purchaser;
provided that “Alternative Transaction” shall
not include an orderly liquidation of Sellers’ assets in
which (x) Sellers’ assets are sold on an asset-by-asset
basis or in lots of assets, any one of which does not encompass all
or substantially all of Sellers’ assets, or (y) Sellers sell
their assets in bulk to an auctioneer or liquidator.
“ Assumed Contracts ” has the
meaning given to such term in Section 2.1 of this
Agreement.
“ Assumed Executory Contracts
” has the meaning given to such term in Section 2.1 of this
Agreement.
“ Assumed Liabilities ” has
the meaning given to such term in Section 2.3 of this
Agreement.
“ Bankruptcy Code ” means
Title 11 of the United States Code.
“ Bankruptcy Court ” means
the United States Bankruptcy Court for the Southern District of
Texas, Houston Division, or such other court having jurisdiction
over the Chapter 11 Cases originally administered in the United
States Bankruptcy Court for the Southern District of Texas, Houston
Division.
“ Business ” means the
business of Sellers as of the date hereof relating to the
exploration, production and sale of oil, gas, or other
hydrocarbons, minerals, or substances therefrom.
“ Business Day ” means any
day of the year on which national banking institutions in New York
City are open to the public for conducting business and are not
required or authorized to close.
“ Chapter 11 Cases ” has the
meaning given to such term in the Background Section to this
Agreement.
“ Closing ” has the meaning
given to such term in Section 4.1 of this Agreement.
“ Closing Date ” has the
meaning given to such term in Section 4.1 of this
Agreement.
“ COBRA ” means Part 6 of
Subtitle B of Title I of ERISA, Section 4980B of the Code and any
similar state law.
“ Claims ” means any and all
claims as defined in section 101(5) of the Bankruptcy
Code.
“ Code ” means the Internal
Revenue Code of 1986, as amended.
“ Competing Bid ” has the
meaning given to such term in Section 7.6 of this
Agreement.
“ Confidential Information ”
means any confidential information with respect to, including,
without limitation, methods of operation, customers, customer
lists, Products, prices, fees, costs, Technology, inventions, trade
secrets, know-how, software, marketing methods, plans, personnel,
suppliers, competitors, markets or other specialized information or
proprietary matters.
“ Confidentiality Agreement ”
means the agreement attached hereto as Exhibit __.
“ Confirmation Hearing ”
means the hearing scheduled in the Bankruptcy Court on _________,
2009.
“ Confirmation Order ” means
the order to be entered by the Bankruptcy Court at the Confirmation
Hearing in substantially the same form as Exhibit D.
“ Contract ” means any
written or oral contract, indenture, note, bond, lease (excluding
any Assumed Lease), license or other legally binding agreement or
arrangement.
“ Copyrights ” means all
copyrightable works, and all United States and foreign registered
copyrights and applications, registrations and renewals therefore
owned by Sellers, and any past, present or future claims or causes
of actions arising out of or related to any infringement or
misappropriation of any of the foregoing, that are used or useful
in connection with or related to the Purchased Assets as of the
date hereof. The Copyrights include, but are not limited
to, those listed on Schedule 1.1(c) .
“ Credit Bid ” means
the bid of Purchaser for the purchase of the
Purchased Assets pursuant to this Agreement or at an auction that
may be offset from the Purchase Price in accordance with Section
363(k) of the Bankruptcy Code.
“ Credit Bid Amount ” means a
Credit Bid in an amount equal to or less than the Lenders
Debt.
“ Cure Amount ” has the
meaning given to such term in Section 2.3 of this
Agreement.
“ Debt ” for any Person,
means all obligations of such Person (a) for borrowed money
(including principal, accrued by unpaid interest, prepayment
premiums or penalties and expenses); (b) evidenced by notes, bonds,
debentures or similar instruments; (c) under or relating to letters
of credit (including any obligation to reimburse the issuer thereof
with respect to amounts drawn on such instruments); (d) to pay any
accrued dividends or distributions (or dividends or distributions
that have otherwise been declared and not yet paid) or to redeem
any securities or rights; (e) under any lease of any property,
which, in accordance with GAAP, is required to be accounted for as
a capital lease on the consolidated balance sheet of such Person
and (f) in respect of the obligations described in clauses (a)
through (e) above, (i) any guarantee of the payment or performance
of, or any Liability in respect of, any Debt or other obligation of
any other Person, (ii) any other arrangement whereby credit is
extended to one obligor on the basis of any promise or undertaking
of another Person (A) to pay the Debt of such obligor, (B) to
purchase any obligation owed by such obligor to discharge one or
more of its obligations, or (D) to maintain the capital, working
capital, solvency or general financial condition of such obligor,
and (iii) any Liability as a general partner of a partnership or as
a venturer in a joint venture in respect of Debt or other
obligations of such partnership or joint venture of any other
Person.
“ D&O Claims ” has the
meaning given to such term in Section 2.2 of this
Agreement.
“ Domain Names ” means the
internet domain names owned by Sellers, including without
limitation those that are listed or described on Schedule
1.1(b) , and all registrations, applications and renewals
related to the foregoing.
“ Employee Plans ” has the
meaning given to such term in Section 5.7(a) of this
Agreement.
“ Employees ” means all
individuals, whether or not actively at work as of the date hereof,
who are employed by Sellers or their Subsidiaries in connection
with the Business, together with individuals who are hired in
respect of the Business after the date hereof and prior to the
Closing.
“ Environmental Law ” means
any Law that relates to, or otherwise imposes liability or
standards of conduct concerning, pollution, or protection of the
environment, or protection of human or occupational health from
environmental hazards, including those concerning discharges,
releases or threatened releases of, petroleum or hazardous
substances.
“ Equipment ” means all
machinery, equipment, furniture, trade fixtures, furnishings,
vehicles, leasehold improvements and other tangible personal
property used in connection with the Business as presently
conducted, including, without limitation, all artwork, desks,
chairs, tables, Hardware, copiers, telephone lines and numbers,
facsimile machines and other telecommunication equipment, cubicles
and miscellaneous office furnishings and supplies, as well as
pumps, surface and subsurface well equipment, gas plants,
lines and facilities, sulfur recovery facilities, compressors,
compressor stations, dehydration facilities, treating
facilities, gathering lines, flow lines, valves, meters,
separators, tanks, tank batteries, and other fixtures and
facilities used in connection with the Leased Real Property or the
Business.
“ ERISA ” means the Employee
Retirement Income Security Act of 1974, as amended.
“ ERISA Affiliate ” has the
meaning given to such term in Section 5.7(a) of this
Agreement.
“ Excluded Assets ” has the
meaning given to such term in Section 2.2 of this
Agreement.
“ Excluded Liabilities ” has
the meaning given to such term in Section 2.4 of this
Agreement.
“ Financial Statements ” has
the meaning given to such term in Section 5.12 of this
Agreement.
“ GAAP ” means generally
accepted accounting principles in the United States as of the date
hereof as applied in a manner consistent with the Seller’s
historical accounting policies.
“ Governmental Body ” means
any government or governmental or regulatory body thereof, or
political subdivision thereof, whether foreign, federal, state or
local, or any agency, instrumentality or authority thereof, or any
court or arbitrator (public or private).
“ Hardware ” means any and
all computer and computer-related hardware, including, without
limitation, computers, file servers, facsimile servers, scanners,
color printers, laser printers and networks.
“ Hazardous Substances ”
means any wastes, substances, products, pollutants or materials,
whether solid, liquid or gaseous, that (i) is or contains asbestos,
polychlorinated biphenyls, radioactive materials, oil, petroleum or
any fraction thereof, (ii) requires removal, remediation or
reporting under any Environmental Law, or is defined, listed or
identified as a “contaminant”, “pollutant”,
“toxic substance”, “toxic material”,
“hazardous waste” or “hazardous substance”
or words of similar meaning and regulatory effect thereunder or
(iii) is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is
regulated as such by any Governmental Body under any Environmental
Law.
“ Intellectual Property ”
means intellectual property or other proprietary rights of every
kind throughout the world, both domestic and foreign, which, in
each case, are used or useful in connection with or related to the
Business as of the date hereof, including all inventions and
improvements thereon, Patents, Trademarks, Domain Names, Trademark
Rights, Copyrights, Technology and trade secrets.
“ Interest ” means any defect
or imperfection in title, encumbrance, interest, Claim, charge,
pledge, mortgage, deed of trust, security interest, lien, lease,
sublease, license, option, right of first refusal, easement,
right-of-way, servitude, covenant, condition, proxy, voting trust
or agreement or transfer restriction under any shareholder or
similar agreement.
“ Inventory ” means all
finished goods, work in process, raw materials, goods in transit,
goods at customer sites and other inventory or goods held for sale
of a person in all forms, wherever located, now or hereafter
existing, including without limitation all produced oil, gas,
condensate and natural gas liquids attributable to the Leased Real
Property.
“ Knowledge of Sellers ”
means the actual knowledge of those officers and directors of
Sellers identified on Schedule 1.1(d) , assuming reasonable
inquiry of such individuals in the Ordinary Course of Business, but
without any separate duty to investigate.
“ Laurus ” or “
LMF ” means Laurus Mater Fund, Ltd., a Cayman Islands
company and each of its Affiliates, successors and
assigns.
“ Laurus’s Allowed Claim
” means the amount of Laurus’s allowed claim in the
Chapter 11 Cases as may be determined by the Bankruptcy Court, and
which amount shall not be less than $66,000,000 as set forth in the
Stipulated Final Cash Collateral Order (Dkt 95) entered by the
Bankruptcy Court on September 29, 2008.
“ Law ” means any federal,
state or local law, common law, statute, code, ordinance, rule or
regulation.
“ Leased Real Property ” has
the meaning given to such term in Section 2.1 of this
Agreement.
“ Legal Proceeding ” means
any judicial, administrative or arbitral actions, demands, suits,
proceedings (public or private), audit or investigation by or
before a Governmental Body or arbitral tribunal.
“ Lenders Debt ” is the
amount stated in Section 3.1 of this Agreement, or the amount of
Laurus’s Allowed Claim, which ever is the greatest
uncontested amount.
“ Liability ” means any debt,
liability or obligation (whether direct or indirect, known or
unknown, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated, or due or to become due) and including all costs
and expenses relating thereto.
“ Licensed Intellectual Property
” means all Patents, Trademarks, Domain Names, Trademark
Rights, Copyrights and Technology that are licensed to Sellers from
another Person as set forth on Schedule 1.1(g) .
“ Losses ” means
collectively, all damages, claims, liabilities, fines, penalties,
levies, fees, costs or expenses (including reasonable expenses and
disbursements of accountants and legal counsel).
“ Material Adverse Effect ”
means any events, circumstances, development, change or effect
that, individually or in the aggregate with all other events,
circumstances, developments, changes and effects, has: (i) a
material adverse effect on the Purchased Assets, properties,
results of operations or consolidated financial condition of
Sellers (taken as a whole); provided , however , that
none of the following shall be deemed to constitute, and none of
the following shall be taken into account in determining whether
there has been, a Material Adverse Effect: any adverse change,
event, development, or effect arising from or relating to (1) acts
of war or terrorism occurring after the date hereof so long as the
Purchased Assets are not disproportionately affected thereby; (2)
any change in the market price or trading volume of the common
stock of the Sellers after the date hereof; (3) any change arising
from and related to the market in general in which Sellers operate
the Business (whether in the United States or abroad), the United
States economy as a whole, or international economy; (4) changes in
GAAP or (5) the commencement of the Chapter 11 Cases; or (ii) a
material adverse effect on the ability of Sellers to consummate the
transactions contemplated by this Agreement, in each case (clause
(i) or (ii) above).
“ Notes ” means (i) Secured
Convertible Term Note, dated June 30, 2005 issued by New Century
Energy Corp. (“ NCEY ”) to Laurus Master Fund,
Ltd. and subsequently assigned to affiliates of LMF (as amended,
restated, modified and/or supplemented from time to time, the
“ June 2005 NCEY Note ”), (ii) Secured Term
Note, dated September 19, 2005, issued by NCEY to Laurus Master
Fund, Ltd. and subsequently assigned to affiliates of LMF (as
amended, restated, modified and/or supplemented from time to time,
the “ September 2005 NCEY Note ”), (iii) Secured
Term Note, dated December 28, 2006, issued by NCEY to Laurus and
subsequently assigned to affiliates of Laurus Master Fund, Ltd. (as
amended, restated, modified and/or supplemented from time to time,
the “ December 2006 NCEY Note ”), (iv) Secured
Term Note, dated November 30, 2007, issued by NCEY to Valens U.S.
SPV I, LLC (“ Valens US ”) and subsequently
assigned to affiliates of Valens US (as amended, restated, modified
and/or supplemented from time to time, the “ First
November 2007 NCEY Note ”), (v) Secured Term Note, dated
November 30, 2007, issued by NCEY to Valens Offshore SPV II, Corp.
(“ Valens Offshore II ”) as may be subsequently
assigned to affiliates of Valens Offshore II (as amended, restated,
modified and/or supplemented from time to time, the “Second
November 2007 NCEY Note”), (vi) Secured Term Note, dated
April 27, 2006, issued by Gulf Coast Oil Corporation (“
Gulf ”) to Laurus Master Fund, Ltd. and subsequently
assigned to affiliates of LMF (as amended, restated, modified
and/or supplemented from time to time, the “ April 2006
Gulf Note ”), (vii) Secured Term Note, dated November 20,
2007 issued by Gulf to Valens Offshore II as may be subsequently
assigned to affiliates of Valens Offshore II (as amended, restated,
modified and/or supplemented from time to time, the “
First November 2007 Gulf Note ”) and (viii) the
Secured Term Note, dated November 20, 2007 issued by Gulf to Valens
US as may be subsequently assigned to affiliates of Valens US (as
amended, restated, modified and/or supplemented from time to time,
the “ Second November 2007 Gulf Note
”).
“ Order ” means any order,
injunction, judgment, decree, ruling, writ, assessment or
arbitration award of a Governmental Body.
“ Ordinary Course of Business
” means the ordinary and usual course of normal day-to-day
operations of the Business since the Petition Date.
“ Party ” means each of
Sellers and Purchaser and “ Parties ” means
collectively Sellers and Purchasers.
“ Patents ” means the United
States patents and patent applications owned by Sellers, including,
any continuations, divisionals, continuations in part, or reissues
of patent applications and patents issuing thereon and any past,
present or future claims or causes of action arising out of or
related to any infringement or misappropriation of any of the
foregoing, that are used or useful in connection with or related to
the Business as of the date hereof. The Patents include,
but are not limited, to those listed on Schedule 1.1(e)
.
“ Permits ” means any
approvals, authorizations, consents, licenses, permits or
certificates of a Governmental Body.
“ Permitted Exceptions ”
means: (i) Interests relating to Taxes which are not due and
payable as of the Closing Date or the amount or validity of which
is being contested in good faith by appropriate proceedings,
provided an appropriate reserve for such Taxes is established in
accordance with GAAP; (ii) mechanics’, carriers’,
workers’, repairers’, materialmen’s and similar
Interests arising or incurred in the Ordinary Course of Business,
for amounts which are not due and payable as of the Closing Date or
the amount or validity of which is being contested in good faith by
appropriate proceedings, provided an appropriate reserve for
such Interests is established in accordance with GAAP; (iii) any
Interests disclosed on Schedule 1.1(h) ; and (iv) any
other Interests which will be discharged on or before the Closing
Date in connection with the Confirmation Order or any other actions
of the Bankruptcy Court.
“ Person ” means any
individual, corporation, limited liability company, partnership,
firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other
entity.
“ Petition Date ” has the
meaning given to such term in the Background Section to this
Agreement.
“ Plan ” has the meaning
given to such term in Section 7.1 of this Agreement.
“ Products ” means any and
all products developed, manufactured, marketed or sold in
connection with the Business.
“ Purchased Assets ” has the
meaning given to such term in Section 2.1 of this
Agreement.
“ Purchased Intellectual Property
” means all of Sellers’ and the Seller
Affiliates’ right, title and interest in and to Intellectual
Property (other than Licensed Intellectual Property).
“ Purchaser ” has the meaning
given to such term in the Introductory Section to this
Agreement.
“ Purchaser Documents ” has
the meaning given to such term in Section 6.2 of this
Agreement.
“ Purchaser Material Adverse Effect
” means a material adverse effect on the ability of Purchaser
to (i) consummate the transactions contemplated hereby or the
Purchaser Documents without any material delay or (ii) perform
their respective obligations under this Agreement or the Purchaser
Documents.
“ Purchaser Parties ” has the
meaning given to such term in Section 12.2 of this
Agreement.
“ Purchaser Plans ” has the
meaning given to such term in Section 9.2 of this
Agreement.
“ Release ” means any
release, spill, emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching, or migration at, into or
onto the environment, including movement or migration through or in
the environment, whether sudden or non-sudden and whether
accidental or non-accidental, or any release, emission or discharge
as those terms are defined in any applicable Environmental
Law.
“ Rental Agreement ” means a
lease, rental agreement or similar contract, license or
arrangement
“ Required Consents ” has the
meaning given to such term in Section 10.2 of this
Agreement.
“ Seller Documents ” has the
meaning given to such term in Section 5.2 of this
Agreement.
“ Seller Party ” has the
meaning given to such term in Section 12.3 of this
Agreement.
“ Sellers ” has the meaning
given to such term in the Introductory Section to this
Agreement.
“Subsidiary ” means any Person of which a majority of
the outstanding voting securities or other voting equity interests
are owned, directly or indirectly, by Seller.
“ Tax Authority ” means any
federal, state, local or foreign government, or any agency,
instrumentality or employee thereof, charged with the
administration of any Law relating to Taxes.
“ Tax Return ” means all
returns, declarations, reports, estimates, information returns and
statements required to be filed in respect of any Taxes.
“ Taxes ” means (i) all
federal, state, local or foreign taxes, charges or other
assessments, including, without limitation, all net income, gross
receipts, capital, sales, use, ad valorem , value
added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security,
unemployment, excise, severance, stamp, occupation, property and
estimated taxes; and (ii) all interest, penalties, fines,
additions to tax or additional amounts imposed by any Tax Authority
in connection with any item described in clause (i)
.
“ Technology ” means,
collectively, all designs, formulae, algorithms, procedures,
methods, techniques, know-how, research and development, technical
data, programs, subroutines, tools, materials, specifications,
processes, inventions (whether patentable or unpatentable and
whether or not reduced to practice), apparatus, creations,
improvements, works of authorship and other similar materials, and
all recordings, graphs, drawings, reports, analyses, and other
writings, and other tangible embodiments of the foregoing, in any
form whether or not specifically listed herein, and all related
technology, that are used in, incorporated in, embodied in,
displayed by, or are used in the design, used in the development,
used in the reproduction, used in the maintenance or used in the
modification of, any of the Products.
“ Termination Date ” means
___________, 2009.
“ Trademarks ” means the
trademark registrations and applications for trademark registration
owned by Sellers, together with the goodwill associated with any of
the foregoing, and all applications, registrations and renewals
thereof, and any past, present or future claims or causes of action
arising out of or related to any infringement or misappropriation
of any of the foregoing, that are used or useful in connection with
or related to the Business as of the date hereof. The
Trademarks include, but are not limited to, those listed on
Schedule 1.1(f) .
“ Trademark Rights ” means
all common law rights in the United States in trade names,
corporate names, logos, slogans, designs, trade dress, and
unregistered trademarks and service marks, together with all
translations, adaptations, derivations and combinations thereof,
and the goodwill associated with any of the foregoing, which, in
each case, are used by Sellers with regard to the Business as of
the date hereof.
“ Transfer Taxes ” means any
and all sales, use stamp, documentary stamp, filing, recording,
transfer or similar fees or taxes or governmental charges
(including any interest and penalty thereon) payable in connection
with the transactions contemplated by this Agreement.
“ Transferred Employees ” has
the meaning given to such term in Section 9.1(a) of this
Agreement.
“ Undisclosed Contract ” has
the meaning given to such term in Section 2.1 of this
Agreement.
“ WARN ” or “ WARN
Act ” means the Worker Adjustment and Retraining
Notification Act of 1988, as amended, and any similar state Law,
and the rules and regulations thereunder.
1.2
Other Definitional and Interpretive Matters .
(a) Unless
otherwise expressly provided, for purposes of this Agreement, the
following rules of interpretation shall apply:
Calculation of Time Period
. When calculating the
period of time before which, within which or following which any
act is to be done or step taken pursuant to this Agreement, the
date that is the reference date in calculating such period shall be
excluded. If the last day of such period is a
non-Business Day, the period in question shall end on the next
succeeding Business Day.
Dollars . Any reference in this Agreement to
$ shall mean dollars of the United States of America.
Exhibits/Schedules . All Exhibits and Schedules annexed
hereto or referred to herein are hereby incorporated in and made a
part of this Agreement as if set forth in full
herein. Any matter or item disclosed on one schedule
shall be deemed to have been disclosed on each other schedule where
such matter or item’s relevance is readily apparent on the
face of such item. Any capitalized terms used in any
Schedule or Exhibit but not otherwise defined therein shall be
defined as set forth in this Agreement. The Schedules
shall be subject to changes and modifications from time to time
that are reasonably acceptable to the Sellers and the
Purchaser.
Gender and Number . Any reference in this Agreement to
gender shall include all genders, and words imparting the singular
number only shall include the plural and vice versa.
Headings . The provision of a Table of
Contents, the division of this Agreement into Articles, Sections
and other subdivisions and the insertion of headings are for
convenience of reference only and shall not affect or be utilized
in construing or interpreting this Agreement. All
references in this Agreement to any “Section” are to
the corresponding Section of this Agreement unless otherwise
specified.
Herein . The words such as “
herein ,” “ hereinafter ,” “
hereof ” and “ hereunder ” refer to
this Agreement as a whole and not merely to a subdivision in which
such words appear unless the context otherwise requires.
Including . The words such as
“includes” and “including” shall mean
“including without limitation”.
(b) The
parties hereto have participated jointly in the negotiation and
drafting of this Agreement and, in the event an ambiguity or
question of intent or interpretation arises, this Agreement shall
be construed as jointly drafted by the Parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring
any Party by virtue of the authorship of any provision of this
Agreement.
ARTICLE II
PURCHASE AND SALE OF ASSETS;
ASSUMPTION OF LIABILITIES
2.1
Purchase and Sale of Assets . On the terms and subject to
the conditions set forth in this Agreement, at the Closing,
Purchaser shall purchase, acquire and accept from Sellers, and
Sellers shall sell, transfer, assign, convey and deliver to
Purchaser all of Sellers’ right, title and interest in, to
and under the Purchased Assets. “ Purchased
Assets ” shall mean all assets, properties, interests and
rights of Sellers, other than the Excluded Assets, as of the
Closing, used or useful in connection with or related to the
Business, including:
(a) (i)
all leasehold estates created by the oil and gas leases described
on Schedule 2.1(b) (the “ Leased Real Property
”), including any amendments or extension of said leases, or
new leases covering the same property (in whole or in part) covered
by said leases, together with all contract rights and privileges;
surface, reversionary, future or remainder interests; and all other
rights titles and interests associated with the Leased Real
Property or lands or leases pooled therewith; and (ii) all
oil, gas, water disposal and other wells located on the Leases
or on lands pooled therewith (the "Wells"), including, but not
limited to, the wells described on Schedule 2.1(b) ,
together with all of Seller's interest in the rights
and appurtenances incident thereto;
(b) (i)
all contracts and agreements concerning the Leased Real Property,
including, but not limited to, unit agreements,
pooling agreements, areas of mutual interest agreements,
farmout agreements, farmin agreements, saltwater disposal
agreements, water injection agreements, line well injection
agreements, road use agreements, drilling contracts, operating
agreements, well service contracts, production sales
contracts, gas contracts, gas balancing agreements, storage or
warehouse agreements, supplier contracts, service contracts,
construction agreements, division orders and transfer orders,
insofar as and only insofar as they relate to the Leased Real
Property, and (iii) all Contracts and purchase orders related to
the Business which are made between the date hereof and Closing in
accordance with the terms of this Agreement, and as agreed to in
writing by Laurus with such agreement not to be unreasonably
withheld (the “Assumed Contracts”);
(c) the
Purchased Intellectual Property, together with the right to sue and
recover for past, present or future infringements or
misappropriations thereof, and all telephone numbers assigned to
Sellers;
(d) all
leases and contracts as listed on Schedule 2.1(e) (the
“ Assumed Executory Contracts ”);
(e) all
Equipment except for any equipment or tangible property held by
Sellers pursuant to a Rental Agreement unless the Rental Agreement
is an Assumed Contract or an Assumed Lease;
(g) all
accounts receivable of the Sellers, except to the extent an
Excluded Asset;
(h) all
deposits and prepaid expenses set forth on Schedule 2.1(i)
;
(i)
all lockboxes and bank accounts and all cash and cash
equivalents;
(j)
all books, records, papers and instruments of whatever nature and
wherever located that are in the possession or control of the
Sellers that are used or useful in connection with or relate to the
Business or the Purchased Assets;
(k) all
insurance proceeds, claims and causes of action relating to the
Purchased Assets;
(l)
all rights, privileges, Permits, Claims, set-offs causes of action,
and options of the Sellers to the extent transferable, except with
respect to the Excluded Assets or the Excluded Liabilities, and
excluding all rights and avoidance Claims of Sellers arising under
Chapter 5 of the Bankruptcy Code; and
(m) subject
to the exclusions set forth in this Agreement, all other or
additional privileges, rights, interests, properties and assets of
every kind and description and wherever located that are used or
useful in connection with the Business as presently
conducted.
Notwithstanding
anything to the contrary contained herein, Purchaser may (x) at any
time up to fifteen (15) days prior to the Confirmation Hearing
(except where the counterparty to a Contract or lease consents (in
which case Purchaser may supplement, as applicable, Schedule
2.1(e) at any time prior to the Confirmation Hearing))
supplement, as applicable, Schedule 2.1(e) to add any
Contract or lease that was not previously listed thereon, in which
case such Contract or lease shall be, as applicable, an Assumed
Contract or an Assumed Lease, or (y) at any time prior to the
Closing remove any Contract or lease from, as applicable,
Schedule 2.1(e) listed thereon, in which case such Contract
or lease shall not be, as applicable, an Assumed Contract or
Assumed Lease, but rather shall be an Excluded Asset. In
the case of any Contract or lease the existence of which were not
disclosed to the Purchaser in reasonable detail prior to the date
hereof (an “ Undisclosed Contract ”), Purchaser
may remove or add such Undisclosed Contract to Schedule
2.1(e) , as applicable, at any time prior to Closing, and
Sellers shall take all actions desirable or necessary, including
filing any necessary or desirable motions or applications and
obtaining any appropriate Orders from the Bankruptcy Court, in
order to effectuate the assignment of such Undisclosed Contract to
the Purchaser.
2.2
Excluded Assets . Nothing contained herein shall
be deemed to sell, transfer, assign or convey the Excluded Assets
to Purchaser, and Sellers shall retain all right, title and
interest to, in and under the Excluded Assets. “
Excluded Assets ” shall mean the following assets of
Sellers:
(a) any
and all rights under this Agreement, and any rights, Claims,
counterclaims, demands and causes of action of Sellers that relate
to the Excluded Liabilities, including, without limitation,
avoidance Claims or causes of action arising under the Bankruptcy
Code or applicable state law, including, without limitation, all
rights and avoidance Claims of Sellers arising under Chapter 5 of
the Bankruptcy Code, and, except for Claims, counterclaims, causes
of action and demands that are expressly described herein as
Purchased Assets (including those included in the definitions of
Copyrights, Patents and Trademarks), any and all Claims,
counterclaims, demands, and causes of action of Sellers against any
current or former directors, officers, attorneys,
accountants, investment bankers, and
other professionals, employees, shareholders or agents of
Seller sounding in tort or otherwise arising under the
Bankruptcy Code or applicable state law (the “
D&O Claims ”) and any directors and
officers insurance policies;
(b) all
leases other than the Assumed Contracts or Assumed Executory
Contracts or associated with the Leased Real Property, and all
Contracts other than the Assumed Contracts and Assumed Executory
Contracts, including any accounts receivable arising out of or in
connection with any Contracts other than the Assumed Contracts and
Assumed Executory Contracts;
(c) any
and all deposits and prepaid expenses that are not set forth on
Schedule 2.1(i) and any and all instruments, letters of
credit proceeds, unbilled costs and fees, and accounts primarily
relating to any Excluded Assets;
(e) any:
(i) confidential personnel and medical records pertaining to any
Employee to the extent such records may not be transferred to
Purchaser pursuant to applicable Law; (ii) other books and records
that Sellers are required by Law to retain including, without
limitation, Tax Returns, taxpayer and other identification numbers,
financial statements and corporate or other entity filings;
provided , that Purchaser shall have the right to make
copies of any portions of such retained books and records to the
extent that such portions relate to the Business or any of the
Purchased Assets; (iii) any information management systems of
Sellers, other than those used in or useful in connection with or
related to the Business; and (iv) minute books, stock ledgers and
stock certificates of any Seller or any of its Subsidiaries except
for entities the stock of which, if any, is a Purchased
Asset;
(f) any
claim, right or interest of Sellers in or to any refund, rebate,
abatement or other recovery for Taxes, together with any interest
due thereon or penalty rebate arising therefrom, for any Tax period
(or portion thereof) ending on or before the Closing
Date;
(g) assets
of any Employee Plan, except as provided in Article IX;
and
(h) other
assets listed on Schedule 2.2(h) .
2.3
Assumption of Liabilities . On the terms and
subject to the conditions set forth in this Agreement, at the
Closing, Purchaser shall assume the following, and only the
following, Liabilities of Sellers (the “ Assumed
Liabilities ”):
(a) all
Liabilities relating to the Purchased Assets that arise from
events, facts or circumstances that occur after the
Closing;
(b) all
Liabilities of Sellers under the Assumed Contracts and Assumed
Executory Contracts arising after the Closing;
(c) Liabilities
(whether known or unknown) arising from the sale of Products or
Inventory after the Petition Date pursuant to product warranties
(provided that the only liability assumed under such warranties is
the obligation to replace defective product), product returns and
rebates;
(d) amounts
payable under Section 365 of the Bankruptcy Code to cure monetary
defaults under the Assumed Contracts and the Assumed Executory
Contracts (the “ Cure Amount ”);
(e) all
other Liabilities with respect to the Purchased Assets arising
after the Closing; and
(f) all
Liabilities relating to amounts required to be paid by Purchaser
hereunder.
2.4
Excluded Liabilities . Notwithstanding anything
in this Agreement to the contrary, except for the Assumed
Liabilities specifically described in Section 2.3 (it being
understood that if a Liability could be construed to be described
in both Section 2.3 and Section 2.4, then it shall be deemed an
Excluded Liability), Purchaser shall not assume or be liable for,
and shall be deemed not to have assumed or be liable for, any of
the Liabilities of the Sellers (collectively, the “
Excluded Liabilities ”), which Excluded Liabilities
include:
(a) all
Liabilities arising out of Excluded Assets, including Contracts
that are not Assumed Contracts or Assumed Executory
Contracts;
(b) except
for the Assumed Liabilities described in Schedule 2.3(d),
Liabilities (whether known or unknown) arising from the sale of
Products of Inventory prior to the Closing, whether pursuant to
product warranties, product recalls, returns and rebates or
otherwise;
(c) except
as provided in Article IX, all Liabilities with respect to all
employee benefit plans, policies, agreements and arrangements of
the Sellers and their Affiliates, including all Employee Plans, and
any Liability to or in respect of, or arising out of or in
connection with, the employment by any of the Sellers or cessation
of employment with any of the Sellers of any employees or
independent contractors or former employees or independent
contractors of any of the Sellers, including any severance
obligations that arise on or prior to the Closing Date;
(d) except
for the Assumed Liabilities described in Schedule 2.3(d), all
Liabilities for (i) Taxes of Sellers (including all Liabilities for
Taxes relating to the Purchased Assets) for any Tax periods (or
portions thereof) ending on or before the Closing Date and (ii)
Transfer Taxes;
(e) Liabilities
incurred in the Ordinary Course of Business and existing prior to
the filing of the Chapter 11 Cases that are subject to compromise
under the Bankruptcy Code (the “ Compromised
Liabilities ”);
(g) all
Liabilities relating to amounts required to be paid by Sellers
hereunder;
(h) all
Liabilities associated with brokers, finders or other consultants
or advisors to Sellers entitled to a fee or reimbursement of
expenses with respect to this transaction; and
(i)
all other Liabilities, accrued expenses, accounts payable of Seller
arising from or associated with the Business or the Permits arising
from events, facts or circumstances occurring before the Closing,
except to the extent expressly identified as an Assumed
Liability.
2.5
Further Conveyances and Assumptions .
(a) From
time to time following the Closing, Sellers shall, or shall cause
their Affiliates to, make available to Purchaser on a timely basis
such data in personnel records of Employees as is reasonably
necessary for Purchaser to transition such employees into
Purchaser’s records to the extent not prohibited by
applicable Law.
(b) From
time to time following the Closing, Sellers and Purchaser shall,
and shall cause their respective Affiliates to, on a timely basis,
execute, acknowledge and deliver all such further conveyances,
notices, assumptions, releases and such other instruments, and
shall, on a timely basis, take such further actions, as may be
reasonably necessary or appropriate to assure fully to Purchaser
and its respective successors or assigns, all of the properties,
rights, titles, interests, estates, remedies, powers and privileges
intended to be conveyed to Purchaser under this Agreement and the
Seller Documents and to assure fully to Sellers and their
Affiliates and their successors and assigns, the assumption of the
liabilities and obligations intended to be assumed by Purchaser
under this Agreement and such other agreements contemplated hereby,
and to otherwise make effective the transactions contemplated
hereby and thereby.
ARTICLE III
CONSIDERATION
3.1
Purchase Price . Each Seller hereby acknowledges,
confirms and agrees that as of the close of business on the date
hereof, (a) each Seller is indebted to LMF with respect to loans
and advances in the aggregate amount (including principal,
interest, fees, costs, and other charges payable by each Seller) of
$75,000,000.00 (the “ Lender Debt ”) and (b) the
Lender Debt is a valid and unconditional obligation of each Seller
to LMF (as hereinafter defined) and is due and owing without
offset, defense or counterclaim of any kind, nature or description
whatsoever. Subject to overbidding, the Purchase Price
for the Acquired Assets shall be the Credit Bid Amount.
3.2
Reservations of Rights. Notwithstanding anything
contained herein to the contrary, LMF does not terminate nor in any
manner whatsoever release any rights granted to it under or in
connection with and/or any obligations, representation or
warranties of the Sellers under (i)that certain Option, dated June
30, 2005, issued by New Century Energy Corp. (" NCEY ") to
LMF and subsequently assigned in full to affiliates of LMF,
including without limitation, LMF Select Assets, Ltd. ("
Select ") (as amended, restated, modified and/or
supplemented from time to time, the " June Option "), (ii)
that certain Common Stock Purchase Warrant, dated, June 30, 2005,
issued by NCEY to LMF and subsequently assigned in full to Select
(as amended, restated, modified and/or supplemented from time to
time, the " June Warrant "),(iii) that certain Option, dated
December 30, 2005, issued by NCEY to LMF and subsequently assigned
in full to Select (as amended, restated, modified and/or
supplemented from time to time, the " December Option ")and
(iv) that certain Common Stock Purchase Warrant, dated April 28,
2006, issued by Gulf Coast Oil Corporation to LMF and subsequently
assigned in full to Select and Valens U.S. SPV I, LLC (as amended,
restated, modified and/or supplemented from time to time, the
“ Gulf Warran t” and, together with the June
Option, the June Warrant and the December Option, the
“Warrants”), which such Warrants shall remain in full
force and effect in accordance with their terms.
3.3
Payment of Purchase Price .
(a) Not
later than one (1) Business Day prior to the Closing Date, the
Seller and Purchaser shall cooperatively prepare a closing
statement consisting of the Cure Amount.
(b) At
the Closing, Purchaser shall cancel the sum of the Credit Bid
Amount under the Notes.
(c) At
the Closing, Purchaser and each of its Affiliates shall be deemed
to have relinquished and released all claims, demands, and causes
of action against and interests in the Sellers and their Affiliates
as set forth in Exhibit E.
ARTICLE IV
CLOSING AND TERMINATION
4.1
Closing Date . Subject to the satisfaction of the
conditions set forth in Sections 10.1, 10.2 and 10.3 hereof (or the
waiver thereof by the Party entitled to waive that
condition): (a) so long as no objection or other
challenge to Purchaser’s good faith has been made or asserted
at or before the Confirmation Hearing and no appeal has been filed
challenging or disputing any finding or decree, whether under
Section 363(m) or 363(n) of the Bankruptcy Code or otherwise, by
the Bankruptcy Court relating to Purchaser’s good faith, the
closing of the purchase and sale of the Purchased Assets and the
assumption of the Assumed Liabilities provided for in Article II
hereof (collectively, the “ Closing ”) shall
take place at 10:00 a.m. (Houston time) on the business day
selected by Purchaser that is after entry of the Confirmation Order
on the docket; or (b) if any objection or other challenge to
Purchaser’s good faith has been made or asserted at or before
the Confirmation Hearing and no appeal has been filed challenging
or disputing any finding or decree, whether under Section 363(m) or
363(n) of the Bankruptcy Code or otherwise, by the Bankruptcy Court
relating to Purchaser’s good faith, the Closing shall take
place at 10:00 a.m. (Houston time) on the Business Day selected by
Purchaser that is after the Confirmation Order becomes a final
order no longer subject to appeal or reconsideration; or (c) if (i)
any appeal is filed challenging or disputing any finding or decree,
whether under Section 363(m) or 363(n) of the Bankruptcy Code or
otherwise, by the Bankruptcy Court relating to Purchaser’s
good faith but the Confirmation Order is not otherwise stayed, and
(ii) Purchaser decides, in its sole and absolute discretion, to
proceed with the Closing, the Closing shall take place at
10:00
