Concession and Lease Purchase Agreement - CAB Resources Inc., Crusader Inc., Australian Hydrocarbons Inc. and Harken Energy Corp.
CONCESSION AND LEASE PURCHASE AGREEMENT
This CONCESSION AND LEASE PURCHASE AGREEMENT (the "Agreement") is
entered into effective as of 7:00 a.m. C.S.T. on August 1, 1994 (the "Effective
Time") by and among C. A. B. RESOURCES, INC., a Texas corporation ("CAB"),
CRUSADER, INC., a Delaware corporation ("Crusader"), and AUSTRALIAN
HYDROCARBONS, INC., a Delaware corporation ("AHI") (CAB, Crusader and AHI are
herein collectively called "Sellers" and individually a "Seller"), and HARKEN
ENERGY CORPORATION, a Delaware corporation (herein called "Purchaser").
RECITALS
WHEREAS, pursuant to that certain Concession Purchase Agreement (the
"Acquisition Agreement") and that certain Joint Operations Agreement (the
"JOA") each dated effective as of August 1, 1988, by and among Sellers (and
others) and Chuska Energy Company, each Seller acquired a Participating
Interest in the Concession Properties (hereafter defined), including, without
limitation, those Concession Properties described on Exhibit "A" attached
hereto.
WHEREAS, each Seller owns an undivided interest, beneficially, in and
to those certain oil and leases described on Exhibit "B" attached hereto (the
"BIA Leases").
WHEREAS, Sellers desire to sell to Purchaser, and Purchaser desires to
purchase from Sellers, all of Sellers' right, title and interests in and to the
Concession Properties and the BIA Leases.
NOW, THEREFORE, for and in consideration of the premises, of the
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed, the
parties agree as follows:
1. Definitions. For purposes of this Agreement, unless otherwise
defined herein, capitalized terms set forth in this Agreement shall have the
meaning ascribed to them in the Acquisition Agreement.
2. Purchase and Sale. Subject to the terms and conditions
hereinafter set forth, Purchaser shall purchase from Sellers, and Sellers shall
sell, assign, transfer, grant, convey and deliver to Purchaser, effective as of
the Effective Time, free and clear of all mortgages, liens, pledges, security
interests, charges, claims, restrictions, and encumbrances created by, through
or under Sellers, but not otherwise, the following:
(a) Concession Properties. All of Sellers' right, title
and interest in and to the properties described in Section 2 of the Acquisition
Agreement (all of Sellers' right, title and interest in all of such property is
herein called the "Concession Property"), such property to include, without
limitation, each Seller's right, title and interest, if any, in and to the
following:
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(i) Sellers' interest in the Concession Property
described or referred to on Exhibit "A" hereto;
(ii) Sellers' interest in the JOA and all rights
of Sellers created under or by virtue of the JOA; and
(iii) Sellers' interest in all other properties,
assets, rights or interests owned by Sellers under or pursuant to the
Acquisition Agreement and/or the JOA, regardless of whether such properties,
assets or interests are described or referred to on Exhibit "A" attached
hereto.
(b) BIA Leases. All of Sellers' right, title and
interest in and to the BIA Leases, together with any and all producing,
non-producing and shut-in oil and gas wells, salt water disposal wells, water
wells, injection wells, and all other wells attributable to Sellers' right,
title and interest in the BIA Leases, all equipment, rights-of-way, easements,
appurtenances, contract rights, personal property, and hydrocarbons located on
or used in connection with Sellers' right, title and interest in the BIA
Leases.
All of Sellers' right, title and interest in the Concession Properties
and the BIA Lease are herein collectively called the "Properties".
Notwithstanding anything to the contrary, Purchaser agrees to and
shall assume and pay, perform and discharge when due all liabilities and
obligations of Sellers relating to the Properties, other than the liabilities
and costs set forth on Schedule 2 attached hereto.
3. Purchase Price. Subject to Section 4 below, Sellers and
Purchaser agree that the purchase price to be paid by Purchaser for the
Properties (the "Purchase Price") shall be $1,800,000 payable to Sellers in
newly issued shares of Purchaser's common stock (par value $.01 per share) (the
"Purchaser Common Stock") valued at the Index Price (as defined below). The
Purchaser Common Stock shall be issued to each Seller in the following
percentages:
Percentage of
Seller Purchaser Common Stock
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CAB 12.68%
Crusader 60.22%
AHI 27.10%
For the purpose of this Agreement, the term "Index Price" means the average
closing sale price of the Purchaser Common Stock for the five (5) trading days
immediately preceding the Closing Date as reported in the Wall Street Journal,
Southwest Edition. All shares of Purchaser Common Stock issued to Sellers
hereunder shall be rounded to the nearest whole share.
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4. Adjustment to Purchase Price. The Purchase Price shall be
adjusted as follows:
(a) The Purchase Price shall be adjusted upward by the
following:
(1) the value of all merchantable, allowable oil
in storage at the Effective Time which is sold and which is
credited to Sellers' interest in the BIA Leases, such value to
be the actual price received less taxes deducted by the
purchaser;
(2) the amount of all expenditures paid by or on
behalf of Sellers relating to ownership or operation of the
Properties after the Effective Time (exclusive of Sellers'
general and administrative expenses), including, without
limitation, (i) expenses that are paid by Sellers prior to the
Closing Date under the JOA and that are, in accordance with
generally accepted accounting principles, attributable to the
period after the Effective Time, (ii) operational expenditures
paid by Sellers prior to the Closing Date in connection with
the operation of the BIA Leases after the Effective Time and
(iii) prepaid expenses attributable to the Properties that are
paid by Seller and that are, in accordance with generally
accepted accounting principles, 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; and
(3) any other amount agreed upon in writing by
Sellers and Purchaser.
(b) The Purchase Price shall be adjusted downward by the
following:
(1) the proceeds received by Sellers prior to the
Closing Date attributable to the Properties and that are, in
accordance with generally accepted accounting principles,
attributable to the period of time from the Effective Time to the
Closing Date and that are not turned over to Purchaser; provided,
however, that the Purchase Price shall not be adjusted downward
on the account of the revenues distributed to Sellers resulting
from the ownership adjustment in the Aneth Gas Plant, such
adjustment being made in August 1994 pursuant to the JOA;
(2) 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 Properties prior to
the Effective Time, which amount shall be computed based upon
such taxes assessed against the applicable portion of the
Properties for the current tax year or, if such taxes are
assessed on other than a calendar year basis, for the tax related
year last ended; and
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(3) any other amount agreed upon in writing by
Seller and Buyer.
The adjustment to the Purchase Price shall be paid in cash to the appropriate
party or parties after Closing pursuant to Section 15(c) hereof. There shall
be no adjustment to the Purchaser Common Stock issued to Sellers at Closing on
account of any adjustment to the Purchase Price made according to this Section
4.
5. Registration Rights.
(a) Certain Definitions. As used in this Section 5, the
following terms shall have the following respective meanings:
(i) "Commission" means the Securities and
Exchange Commission, or any other federal agency at the time administering the
Securities Act of 1933, as amended (the "Act").
(ii) "Registration Statement" means the
Registration Statement filed by Purchaser with the Commission for a public
offering and sale of securities of Purchaser pursuant to this Section, but
shall not include a Registration Statement on Form S-8 or Form S-4, or any
other registration statement filed by Purchaser with the Commission covering
only securities proposed to be issued in exchange for securities or assets of
another corporation.
(iii) "Registerable Shares" means the shares of
Purchaser Common Stock acquired by Sellers pursuant to the terms of this
Agreement, and shall include any other shares of common stock of Purchaser
issued in respect of such shares (whether because of stock splits, stock
dividends, reclassifications, recapitalizations, or similar events affecting
Purchaser); provided, however, that shares of common stock of Purchaser which
are Registerable Shares shall cease to be Registerable Shares upon any sale
pursuant to a Registration Statement under this Section 5, or with respect to a
particular Seller, any other disposition of less than all of the shares of
common stock of Purchaser received by such Seller pursuant to a private sale or
other disposition, including all dispositions of the common stock by Sellers
pursuant to Section 4(1) and Rule 144 of the Act, it being the expressed
intentions of the parties hereto that the registration rights contained herein
may only be assigned by a Seller in connection with any private sale or other
transaction agreed to by such Seller subsequent to the date hereof if all of
such Seller's Registerable Shares are sold or otherwise transferred pursuant to
such transaction.
(b) Sale or Transfer of Shares; Legend.
(i) The Registerable Shares and shares issued in
respect of the Registerable Shares shall not be sold or transferred unless
either (A) they first have been registered under the Act, or (B) Purchaser
first shall have been furnished with an opinion of Sewell & Riggs, P. C., or
other legal counsel, reasonably satisfactory to Purchaser, to the effect that
such sale or transfer is exempt from the registration requirements of the Act.
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(ii) All of the Registerable Shares of Purchaser
Common Stock shall bear the legend in the following form:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES ACT AND CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED
OF UNLESS REGISTERED UNDER SUCH ACTS OR EXEMPTIONS FROM REGISTRATION
ARE AVAILABLE. THE TRANSFER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED UNDER THE CONCESSION AND LEASE PURCHASE
AGREEMENT DATED AS OF OCTOBER 20, 1994 BY AND AMONG C.A.B. RESOURCES,
INC., CRUSADER, INC., AUSTRALIAN HYDROCARBONS INC. AND HARKEN ENERGY
CORPORATION. A COPY OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE RECORD HOLDER OF THE CERTIFICATE TO HARKEN
ENERGY CORPORATION.
(c) Demand Registrations.
(i) Requests for Registration. At any time after
the Closing, either of (x) CAB and Crusader and (y) AHI may request
registration under the Securities Act of all or part of their Registerable
Shares. Each request for a Demand Registration shall specify the approximate
number of Registerable Shares requested to be registered and the anticipated
per share price range for such offering. Within ten days after receipt of any
such request, Purchaser will give written notice of such requested registration
to all other holders of Registerable Shares and will include in such
registration, subject to subparagraph (c) (iii), all Registerable Shares with
respect to which Purchaser has received written requests for inclusion therein
within 15 days after the receipt of Purchaser's notice. In the event either of
(x) CAB and Crusader or (y) AHI shall request a Demand Registration pursuant to
this Section 5(c), Purchaser shall provide written notice to the Seller (or
Sellers) who did not request such Demand Registration, whereupon such Seller
(or Sellers) shall have ten (10) days from receipt of such notice to elect in
writing to have its Registrable Shares registered pursuant to such Demand
Registration. The failure to elect in writing within such 10-day period shall
be deemed an election to not have such Seller's (or Sellers') shares registered
pursuant to such Demand Registration. If such Seller (or Sellers) elect to not
have its shares registered pursuant to such Demand Registration, such Seller
(or Sellers) shall have no further rights of a Demand Registration under this
Section 5(c) and provided such registration otherwise counts as a Demand
Registration pursuant to paragraph (c) and (g) of this Section. Any
registration requested pursuant to this subparagraph (c)(i) is referred to
herein as a "Demand Registration."
(ii) Number of Demand Registrations. The holders
of Registerable Shares will be entitled to require one Demand Registration in
which Purchaser will pay all Registration Expenses (as hereinafter defined). A
registration will not count as a Demand Registration unless and until it has
remained effective for 180 days or such shorter period as shall be required to
sell all of the securities registered pursuant thereto (but not before the
expiration of the applicable prospectus delivery period); provided that in any
event Purchaser will pay all
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Registration Expenses in connection with any registration initiated as a Demand
Registration whether or not it has become effective.
(iii) Priority on Registrations. Purchaser will
not include in any Demand Registration any securities which are not
Registerable Shares without the prior written consent of the holders of the
Registerable Shares initially requesting such registration. If a Demand
Registration is an underwritten offering and the managing underwriters advise
Purchaser in writing that in their opinion the number of Registerable Shares
and, if permitted hereunder, other securities requested to be included in such
offering, exceeds the number of Registerable Shares and other securities, if
any, which can be sold in an orderly manner in such offering within a price
range acceptable to the holders of the Registerable Shares initially requesting
registration, Purchaser will include in such registration, prior to the
inclusion of any securities which are not Registerable Shares, the number of
Registerable Shares requested to be included which in the opinion of such
underwriters can be sold in an orderly manner within the price range of such
offering, pro rata among the respective holders thereof on the basis of the
amount of Registerable Securities requested by such holders to be included in
such registration.
(iv) Selection of Underwriters. If any Demand
Registration is in the form of an underwritten offering, Purchaser will select
and retain the investment banker or investment bankers and manager or managers
that will administer the offering; provided, however, that such selection will
be subject to the approval of the holders of the Registerable Shares
participating in such registration, which shall not be unreasonably withheld.
Purchaser shall, (together with all holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting.
If a holder of Registerable Shares disapproves of the terms of the
underwriting, such Person may elect to withdraw therefrom by written notice to
Purchaser and the managing underwriter. The Registerable Shares so withdrawn
shall also be withdrawn from registration.
(v) Minimum Shares Included. Purchaser shall not
be required to effect any Demand Registration unless the holders of
Registerable Shares agree to include therein Registerable Securities that at
the time of demand constitute at least 50% (or such lesser percentage as the
underwriter shall determine is desirable) of the Registerable Securities.
(d) Piggyback Registrations.
(i) Right to Piggyback. Whenever Purchaser
proposes to register any of its securities under the Securities Act for sale
for cash (other than pursuant to a Demand Registration) and the registration
form to be used may be used for the registration of Registerable Shares,
Purchaser will give prompt written notice to all holders of Registerable Shares
of its intention to effect such a registration and will include in such
registration all Registerable Shares with respect to which Purchaser has
received written requests for inclusion therein within 15 days after the
receipt of Purchaser's notice (a "Piggyback Registration"). If Purchaser gives
notice of such a proposed registration, the total number of Registerable Shares
which shall be included in such registration shall be limited to such number,
if any, as in the reasonable opinion of the
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manager of such offering would not adversely affect the marketability or
offering price of all of the securities proposed to be offered by Purchaser in
such offering; provided, however, if the holders of Registerable Shares having
registration rights upon a Piggyback Registration are not permitted to include
all of such Registerable Shares by reason of such determination by the manager
of the offering, the Registerable Securities to be included in the offering
shall be determined in accordance with subparagraphs (d) (iii) and (iv) below.
Notwithstanding the foregoing, Purchaser may, in its sole discretion and
without the consent of any holder of Registerable Shares, withdraw such
Registration Statement and abandon such proposed public offering.
(ii) Piggyback Expenses. The Registration
Expenses of the holders of Registerable Shares will be paid by Purchaser in all
Piggyback Registrations.
(iii) Priority on Primary Registrations. If a
Piggyback Registration is a primary registration on behalf of Purchaser, and
the managing underwriters advise the company in writing that in their opinion
the number of securities requested to be included in such registration exceeds
the number which can be sold in an orderly manner in such offering within a
price range acceptable to Purchaser, Purchaser will include in such
registration (i) first, the securities Purchaser proposes to sell, (ii) second,
the Registerable Shares requested to be included in such registration, pro rata
among the holders thereof on the basis of the number of shares of such
Registerable Shares requested to be included in such registration by each such
holder, and (iii) third, other securities requested to be included in such
registration.
(iv) Priority on Secondary Registrations. If a
Piggyback Registration is an underwritten secondary registration on behalf of
holders of Purchaser's securities, and the managing underwriters advise
Purchaser in writing that in their opinion the number of securities requested
to be included in such registration exceeds the number which can be sold in an
orderly manner in such offering within a price range acceptable to the holders
initially requesting such registration, Purchaser will use its reasonable
efforts to include in such registration (i) first, the securities the holders
initially requesting such registration propose to sell, and (ii) second, the
Registerable Shares requested to be included in such registration, pro rata
among the holders thereof on the basis of the number of shares of such
Registerable Shares requested to be included in such registration by each such
holder.
(e) Holdback Agreement. Each holder of Registerable
Shares agrees not to effect any public sale or distribution (including sales
pursuant to Rule 144) of any Registerable Shares, within seven days prior to
and during the 60-day period beginning on the date specified in writing by
Company to the holder as being the intended effective date of any underwritten
Demand Registration or any underwritten Piggyback Registration in which
Registerable Shares are included (except as part of such underwritten
registration), unless the underwriters managing the registered public offering
otherwise agree.
(f) Registration Procedures. Whenever the holders of
Registerable Shares have requested that any Registerable Shares be registered
pursuant to this Section, Purchaser will use reasonable efforts to effect the
registration and the sale of such Registerable Shares in
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accordance with the intended method of disposition thereof, and pursuant
thereto Purchaser will as expeditiously as possible:
(i) prepare and file with the Commission a
Registration Statement on the appropriate form with respect to such
Registerable Shares and use all reasonable efforts to cause such Registration
Statement to become effective (provided that before filing a Registration
Statement or prospectus or any amendments or supplements thereto, Purchaser
will furnish to the counsel selected by the holders of the Registerable Shares
covered by such Registration Statement copies of all such documents proposed to
be filed, which documents will be subject to the review of such counsel);
(ii) prepare and file with the Commission such
amendments and supplements to such Registration Statement and the prospectus
used in connection therewith as may be necessary to keep such Registration
Statement effective for a period of not less than 180 consecutive days or such
shorter period which will terminate when Registerable Shares covered by such
Registration Statement have been sold (but not before the expiration of the
applicable prospectus delivery period) and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such Registration Statement during such period in accordance with the intended
methods of disposition by the sellers thereof sat forth in such Registration
Statement;
(iii) furnish to each seller of Registerable Shares
such number of copies of such Registration Statement, each amendment and
supplement thereto, the prospectus included in such Registration Statement
(including each preliminary prospectus) and such other documents as such seller
may reasonably request in order to facilitate the disposition of the
Registerable Shares owned by such seller;
(iv) use its reasonable efforts to register or
qualify such Registerable Shares under such other securities or blue sky laws
of such jurisdictions within the United States as any seller reasonably
requests and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate the disposition in
such jurisdictions of the Registerable Shares owned by such seller (provided
that Purchaser will not be required to qualify generally to do business or file
any general consent to service of process in any jurisdiction where it would
not otherwise be required to qualify or file but for this subparagraph);
(v) notify each seller of such Registerable
Shares, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result
of which the prospectus included in such Registration Statement contains an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and, at the request of any such seller, Purchaser will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registerable Shares, such prospectus will not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading;
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(vi) use its reasonable efforts to cause all such
Registerable Shares to be listed on each securities exchange on which similar
securities issued by Purchaser are then listed and, if not so listed, to be
listed on the NASD automated quotation system and, if listed on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), use
its reasonable efforts to secure designation of all such Registerable Shares
covered by such Registration Statement as a NASDAQ "national market system
security" within the meaning of Rule 11Aa2-1 of the Securities and Exchange
Commission or, failing that, to secure NASDAQ authorization for such
Registerable Shares and, without limiting the generality of the foregoing, to
arrange for at least one market maker to register as such with respect to such
Registerable Shares with the NASD;
(vii) provide a transfer agent and registrar (which
may be Purchaser) for all such Registerable Shares not later than the effective
date of such Registration Statement;
(viii) enter into such customary agreements
(including underwriting agreements in customary form) and take all such other
actions as the holders of the Registerable Shares being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registerable Shares (including, without limitation,
effecting a stock split or a combination of shares);
(ix) make available for inspection by any seller
of Registerable Shares, any underwriter participating in any disposition
pursuant to such Registration Statement and any attorney, accountant or other
agent retained by any such seller or underwriter, all financial and other
records (reasonably requested), pertinent corporate documents and properties of
Purchaser as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause Purchaser's officers, directors, employees
and independent accountants to supply all information reasonably requested by
any such seller, underwriter, attorney, accountant or agent in connection with
such Registration Statement; provided, however, each seller of Registerable
Shares agrees that information obtained by it as a result of such inspections
which is deemed confidential shall not be used by it as the basis for any
market transaction in securities of the company unless and until such
information is made generally available to the public and each such seller
shall cause any attorney, accountant or agent retained by such seller to keep
confidential any information so deemed;
(x) otherwise use reasonable efforts to comply
with all applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least 12 months beginning with the first
day of Purchaser's first full calendar quarter after the effective date of the
Registration Statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder;
(xi) permit any holder of Registerable Shares,
which holder, in its reasonable judgment, might be deemed to be an underwriter
or a controlling person of Purchaser, to participate in the preparation of such
registration or comparable statement and to comment thereon;
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(xii) in the event of the issuance of any stop
order suspending the effectiveness of a Registration Statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any common stock included in such Registration Statement for
sale in any jurisdiction, Purchaser will use reasonable efforts promptly to
obtain the withdrawal of such order;
(xiii) use reasonable efforts to cause such
Registerable Shares covered by such Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable the sellers thereof to consummate the disposition of such
Registerable Shares;
(xiv) use its reasonable efforts to obtain a cold
comfort letter from the Purchaser's independent public accountants in customary
form and covering such matters of the type customarily covered by cold comfort
letters as the holders of the Registerable Shares being sold in such
registration reasonably request; and
(xv) use reasonable efforts thereafter to cause
the Registerable Shares to qualify as "margin stock" within the meaning of
Regulations G, T and U promulgated by the Federal Reserve Board.
(g) Allocation of Registration Expenses. Purchaser shall
be responsible for and pay all Registration Expenses (as defined below).
Sellers shall only be responsible for and pay the following fees and expenses
of registration on a pro rata basis in accordance with the number of their
Registerable Shares included in such registration:
(i) Underwriting discounts and selling
commissions attributable to the sale of Registerable Shares; and
(ii) Fees and expenses of Sellers' independent
legal counsel.
Notwithstanding the foregoing, if a registration is withdrawn at the written
request of the Sellers requesting such registration (other than as a result of
information concerning the business or financial condition of Purchaser which
is made known to Sellers after the date on which such registration was
requested) and if Sellers elect in writing not to have such registration
counted as a registration requested under subparagraph (c) of this Section,
Sellers shall pay all reasonable Registration Expenses of such registration pro
rata in accordance with the number of their Registrable Shares included in such
registration. For purposes of this Section, "Registration Expenses" shall mean
all fees and expenses incident to Purchaser's performance of or compliance with
this Section 5 (other than those specifically payable by Sellers pursuant to
this subparagraph (g)), including, without limitation, all registration and
filing fees, listing fees, fees and expenses of compliance with securities or
blue sky laws, printing and engraving expenses, messenger and delivery
expenses, and fees and disbursements for counsel, all independent certified
public accountants, underwriters and any others retained by Purchaser.
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(h) Certain Delays. Purchaser shall have the right from
time to time and at anytime to defer for a period not to exceed 30 days, the
filing of any Registration Statement requested under Sections 5(c) or 5(d)
above if, in the reasonable judgment of Purchaser's board of directors, such
registration would materially interfere with or materially and adversely affect
any then existing negotiations for financing arrangements of financing plans of
Purchaser, or any arrangement or plan of Purchaser, then pending or being
negotiated in good faith, relating to any acquisition, disposition, merger or
similar transaction.
6. Representations and Warranties of Sellers. Each Seller
represents and warrants (only with respect to itself) to Purchaser the
following:
(a) Seller is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted;
(b) Seller has full power and authority under its
articles of incorporation and by-laws to conduct its business as presently
conducted and to perform its obligations under this Agreement.
(c) This Agreement is a legal and binding obligation of
Seller, enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency reorganization, moratorium and similar laws and
equitable principles relating to or limiting creditors' rights generally.
(d) CAB owns a 3.500% Participating Interest in the
Concession Properties; Crusader owns an 11.625% Participating Interest in the
Concession Properties; and AHI owns a 5.23125% Participating Interest in the
Concession Properties, in each case free and clear of all mortgages, liens,
pledges, security interests, charges, claims, and encumbrances of any nature
whatsoever that have been created by, through or under Seller, but not
otherwise.
(e) Seller owns its beneficial interest in the BIA Leases
free and clear of all mortgages, liens, pledges, security interests, charges,
claims and encumbrances of any nature whatsoever that have been created by,
through, or under Seller, but not otherwise.
(f) To Seller's knowledge, all taxes, assessments and
governmental charges imposed upon the Properties or upon the income, profit and
revenues derived therefrom, to the extent payable by Seller, have been paid by
Seller.
(g) To Seller's knowledge, Seller has not received any
material prepayment respecting any of the Properties and Seller has not entered
into any agreement which contains a "take or pay" clause or similar arrangement
that has obligated Seller to deliver oil, gas or other hydrocarbons at some
future time without then or thereafter receiving full payment thereof. To
Seller's knowledge, Seller is not currently obligated to "make up" any
deliveries of oil or gas to any third parties out of future production from any
of the Properties.
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(h) To Seller's knowledge, no suit, action or other
proceeding is pending before any court or governmental agency as of the date of
this Agreement of which Seller is a party and which might result in substantial
impairment or loss of any Seller's title to any material part of the Properties
or the ability of any Seller to perform its obligations hereunder.
(i) With respect to the "Basic Documents" (defined
below), to Seller's knowledge and in all material respects:
(i) Seller is not in breach or default with
respect to any of its material obligations pursuant to such Basic Documents, or
any regulations incorporated therein or governing same;
(ii) All material payments (including, without
limitation, joint interest or other billings due under JOA or any operating
agreement covering the BIA Leases) due thereunder have been made by Seller;
(iii) Seller or any other party to any Basic
Documents has not given or threatened to give notice of any action to
terminate, cancel, rescind or procure a judicial reformation of any Basic
Documents or any provision thereof; and
(iv) Subject to any requisite consents to
assignment or transfer of the Properties, the execution of this Agreement and
the consummation of the transactions contemplated hereby will not result in a
breach of, constitute default under, or result in a violation of the material
provisions of any Basic Document.
As used herein the term "Basic Documents" shall mean the Acquisition Agreement,
the JOA, the BIA Leases, agreements in respect of or affecting the purchase,
sale, gathering, delivery, compression, transferring, processing, marketing or
any other disposition of oil, gas or condensate produced from or attributable
to the Properties, unitization or pooling agreement and all other material
executory contracts relating to the Properties.
(j) Seller has been furnished with or has had access to
the information it has requested from Purchaser and has had an opportunity to
ask questions and receive answers from management of Purchaser. Seller
acknowledges that it has received and had the opportunity to review copies of
Purchaser's Annual Report on Form 10-K for the fiscal year ended December 31,
1993, Purchaser's Quarterly Reports on Form 10-Q for the quarters ended March
31 and June 30, 1994 and its Proxy Statement dated April 22, 1994 (collectively
referred to herein as the "Purchaser SEC Filings"). Seller is either (i) an
"accredited investor" (as defined in Rule 501(a) of the Act) or (ii) alone, or
together with a "purchaser representative" (as defined in Rule 501(h)
promulgated pursuant to the Act), has knowledge, experience and skill in
business and financial matters and with respect to investments in securities so
as to enable it to understand and evaluate the merits and risks of the
acquisition of the Purchaser Common Stock and to form an investment decision
with respect to such investment. Seller agrees that each certificate
representing shares of Purchaser Common Stock issued pursuant to this Agreement
will contain the restrictive legend set
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<PAGE> 13
forth in Section 5(b)(ii) hereof and acknowledge that stop transfer
instructions will be given to Purchaser's transfer agent for the shares of
Purchaser Common Stock.
7. Representations and Warranties of Purchaser. Purchaser
represents and warrants to Sellers the following:
(a) Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) Purchaser has full power and authority to carry on
its business as presently conducted, to enter into this Agreement, to purchase
the Properties on the terms described in this Agreement, and to perform its
other obligations under this Agreement.
(c) The execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly and validly
authorized by all requisite action on the part of Purchaser.
(d) This Agreement is a legal and binding obligation of
Purchaser, enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws and
equitable principles relating to or limited creditors' rights generally.
(e) Purchaser has incurred no liability, contingent or
otherwise, for brokers' or finders' fees relating to the transactions
contemplated by this Agreement for which any Seller shall have any
responsibility whatsoever.
(f) Purchaser is knowledgeable, competent, and
experienced in the oil and gas industry and has independently evaluated and
interpreted all information and data relating to the Properties prior to
entering into this Agreement, understands and is financially able to bear the
risk associated with the Properties, and has independently conducted all the
due diligence investigations and reviews of all technical, geologic,
environmental and legal matters concerning the Properties as it deems necessary
prior to Closing. Purchaser acknowledges that Sellers have made no statements
or representations concerning the present or future value of anticipated
income, costs or profits, if any, to be derived from the Properties, and
Purchaser has relied solely upon its independent inspections, estimates,
computations, evaluations, reports, studies and knowledge of the Properties.
8. Survival of Representations and Warranties. The
representations and warranties of Sellers in Section 6 and the representations
and warranties of Purchaser in Section 7 shall survive the Closing for a period
of one (1) year from the Closing Date (as hereinafter defined).
9. Covenants of Purchaser.
(a) Purchaser agrees to indemnify and hold Sellers
Indemnified Group (as hereinafter defined) and any member thereof, harmless
from, and shall reimburse each Seller and
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<PAGE> 14
its agents, directors, officers, employees and predecessors in interest
(collectively "Sellers' Indemnified Group") with respect to all claims,
demands, causes of action, losses, damages, liabilities, costs and expenses,
including attorneys' fees and court costs including, without limitation, the
environmental liabilities discussed in Section 9(b) below (collectively the
"Claims"), arising out of, and/or incurred, in connection with the ownership,
development and operation of the Properties asserted against or incurred by any
member of Sellers' Indemnified Group for any Claims for acts, events,
omissions, occurrences or conditions arising or incurring before or after the
Effective Time, except for Sellers Indemnified Claims as described in Section
10 hereof, regardless of whether such Claims are founded in whole or in part
upon the negligent acts or omissions of any member of the Sellers' Indemnified
Group.
(b) Without limiting the generality of the foregoing,
Purchaser agrees to indemnify and hold Sellers' Indemnified Group and any
member thereof harmless from, and shall reimburse Sellers' Indemnified Group or
any member thereof with respect to, any and all fines, penalties, costs,
clean-up charges, remediation expenses and assessments (other than Sellers
Indemnified Claims) levied or assessed against Sellers' Indemnified Group or
any member thereof by any person, party or entity, including, but not limited
to, any local, state or federal government entity or authority, together with
any and all Claims of every kind or character, except for Sellers Indemnified
Claims, asserted against or incurred by Sellers' Indemnified Group or any
member thereof at any time for any Claims for acts, events, omissions,
conditions or occurrences, except for Sellers' Indemnified Claims, arising or
incurring before or after the Effective Time by reason of, or arising from, the
Properties or the presence, generation, transportation, treatment, disposal or
release of any hazardous substances or any other environmental contamination
regarding the Properties that arises or occurs before or after the Effective
Time in any manner, including but not limited to the above-referenced presence
of hazardous substance or any other environmental contamination upon the
Properties that arises or occurs after the Effective Time, regardless of
whether such Claims are founded in whole or in part upon the negligent acts or
omissions of Sellers Indemnified Group or any member thereof, but excluding
Sellers Indemnified Claims. For purposes of this Section 9, "hazardous
substances" and "environmental contamination" shall include, without
limitation, oil, gas and other hydrocarbons, radioactive materials, including
NORM, asbestos or asbestos containing materials, polychlorinated biphenyels and
any chemicals, materials, wastes or substances defined as or included in the
definition of "hazardous substances," "hazardous waste," "hazardous materials,"
"toxic substances," "toxic pollutants," "contaminants," or "pollutants" or
words of similar import under any environmental laws or regulations, including,
without limitation, applicable federal, state or local statutes, rules,
regulations, ordinances, codes and policies, now in effect or hereinafter
enacted, and as such may be amended from time to time, relating to the
environment or human health or safety, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601 et seq., the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Section 1801 et seq., the Resource
Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et
seq., Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1201
et seq., the Safe Drinking Water Act, 42 U.S.C. Section 3808 et seq., the Toxic
Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq., and the
Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.
- 14 -
<PAGE> 15
(c) Purchaser hereby agrees, as of the Effective Time, to
assume, perform and comply with all of the provisions and obligations (express
or implied) that are attributable to the Properties or that are attributable to
acts, operations, omissions or conditions arising before or after the Effective
Time (except for Sellers Indemnified Claims), including, but not limited to:
all of the terms and conditions of the JOA, the BIA Leases and all applicable
and valid agreements, contracts and instruments, unit agreements, joint
operating agreements, pooling agreements, communitization agreements and
easements and rights-of-way respecting the BIA Leases; all existing lease
burdens (including, but not limited to, royalties, overriding royalties,
production payments, net profits interest, carried working interest or similar
burdens); and all duties imposed by governmental law, rule or regulation.
(d) All covenants of Purchaser contained in this Section
9 shall survive Closing.
10. Covenants of Sellers. Each Seller severally, but not jointly,
agrees to indemnify and hold Purchaser harmless from, and shall reimburse
Purchaser and its agents, directors, officers, and employees (collectively
"Purchaser's Indemnified Group") with respect to all Claims, including
attorneys' fees and court costs including, relating to, arising out of or in
connection with any of the following (the Claims set forth in subparagraphs (a)
and (b) below for which Sellers shall indemnify Purchasers Indemnified Group
are herein collectively called "Sellers Indemnified Claims"):
(a) All fines, penalties, clean-up charges, remediation
expenses and assessments levied or asserted against Purchasers Indemnified
Group by any local, state or federal government entity or authority by reason
of or arising from the clean-up or remediation of any hazardous substances or
any other environmental contamination that exists on or at the Aneth Gas Plant
as of the Effective Time, but only to the extent that any of the foregoing (i)
is not subject to indemnification by El Paso Natural Gas Company and (ii) is
based on or attributable to the respective Seller's interest in the Aneth Gas
Plant; and
(b) All amounts, including interest, penalties and fines,
levied or asserted against Purchasers Indemnified Group by reason of or arising
from a presently pending investigation or audit by the Minerals Management
Service respecting the alleged underpayment of royalties or other amounts
payable to the Tribe under or pursuant to the Tribal Agreements or the BIA
Leases, but only to the extent that such amounts are based on or attributable
to the respective Seller's interest in the Properties.
All covenants of Sellers contained in this Section 10 shall survive
Closing.
11. Sellers' Conditions to Closing. The obligations of Sellers at
the Closing are subject, at the option of Sellers, to the satisfaction at or
prior to the Closing that all representations and warranties of Purchaser
contained in this Agreement shall be true in all material respects at and as of
the Closing as if such representations and warranties were made at and as of
the Closing, and Purchaser shall have performed and satisfied all material
agreements in
- 15 -
<PAGE> 16
all material respects required by this Agreement to be performed and satisfied
by Purchaser at or prior to the Closing.
12. Purchaser's Conditions. The obligations of Purchaser at the
Closing are subject, at the option of Purchaser, to the satisfaction at or
prior to the Closing that all representations of Sellers contained in this
Agreement shall be true in all material respects at and as of the Closing as if
such representations and warranties were made at and as of the Closing, and
Sellers shall have performed and satisfied all material agreements in all
material respects required by this Agreement to be performed and satisfied by
Sellers at or prior to the Closing.
13. Closing. Unless the parties hereto mutually agree otherwise
and subject to the conditions stated in this Agreement, the consummation of the
transactions contemplated hereby (herein called the "Closing" and the date of
which herein called the "Closing Date") shall be held on or before October 20,
1994. The Closing shall be held at the office of Purchaser or at such other
place as Purchaser and Sellers may agree in writing.
14. Closing Obligations. At the Closing, the following events
shall occur, each being a condition precedent to the others and each being
deemed to have occurred simultaneously with the others.
(a) Each Seller shall execute, acknowledge and deliver an
Assignment and Bill of Sale to Purchaser covering the Concession Properties in
the form (executed in sufficient counterparts to facilitate recording)
substantially set forth in Exhibit "C" hereto.
(b) Purchaser shall instruct and cause its transfer agent
to issue the Purchaser Common Stock to each Seller in the percentages specified
in Section 3 hereof.
15. Obligations after Closing.
(a) Sales Taxes and Recording Fees. Purchaser shall pay
all sales taxes and assessments occasioned by the sale of the Properties, and
Purchaser shall pay all filing and recording fees required in connection with
the filing and recording of any assignments.
(b) Further Assurances. After Closing, Sellers and
Purchaser shall execute, acknowledge and deliver or cause to be executed,
acknowledged and delivered such instruments and take such other action as may
be reasonably necessary or advisable to carry out their obligations under this
Agreement and under any document, certificate or other instrument delivered
pursuant hereto or required by law. If at any time subsequent to the Closing,
either party comes into possession of money or property belonging to the other,
such money or property shall be promptly turned over to the party entitled
thereto. If requested by Purchaser, after Closing each Seller shall execute,
acknowledge and deliver a Declaration of Ownership in the form reasonably
satisfactory to Sellers and Purchaser, to be executed in sufficient counterpart
for filing with (i) the Minerals Division of the Tribe, (ii) the Bureau of
Indians Affairs in Window Rock, Arizona, (iii) San Juan County, New Mexico,
(iv) Apache County, Arizona and (v) San Juan County, Utah.
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<PAGE> 17
(c) Final Accounting. On or before forty-five (45) days
of the Closing Sellers and Purchaser shall deliver to each other, in accordance
with Section 4 or other provisions of this Agreement and generally accepted
accounting principles, an itemized statement setting forth all income received
and expenditures incurred relating to the Properties, the operation thereof and
production and/or revenues therefrom. As soon as practicable, Purchaser and
Sellers shall account to each other in cash (not in Purchaser Common Stock) for
such income and expenditures which were not utilized in calculating the
Purchase Price paid to Sellers at the Closing, as contemplated by Section 4 or
other provisions of this Agreement, taking in account ordinary set-off of same
(the "Final Accounting"). If Buyer and Seller are unable to agree upon the
Final Accounting within sixty (60) days of Closing, then such Final Accounting
shall be resolved through arbitration proceedings in accordance with this
Agreement.
16. Termination. This Agreement and the transaction contemplated
hereby may be terminated in the following instances:
(a) By Sellers if the conditions set forth in Section 10
are not satisfied in a material way or waived as of the Closing Date.
(b) By Purchaser if the conditions set forth in Section
11 are not satisfied in a material way or waived as of the Closing Date.
(c) At any time by the mutual written agreement of
Purchaser and Sellers.
17. Title and Warranty.
(a) Title. Purchaser has had the opportunity to examine
all files, title information and production data that Sellers have in their
possession relating to the Properties. The furnishing of such files, title
information and production data shall create no liability or responsibility on
the part of Sellers and Sellers make no warranty or representation as to the
correctness or completeness of the files, title information and production data
so furnished. Purchaser has conducted, or will conduct prior to Closing, such
examination of title and the other information as it sees fit and has notified
Sellers that this examination revealed no title defects which would cause
Sellers' title to be not merchantable. The purchase and sale of the Properties
shall be made pursuant to a special warranty of title subject to all
reservations, exception, limitations, claims, encumbrances or burdens (i)
contained herein, (ii) which are of record, (iii) of which Purchaser has actual
notice, or (iv) which are not claimed by, through or under Sellers.
(b) Warranty. At the Closing, Sellers shall convey the
Properties subject to a special warranty of title that the Properties are free
and clear from all mortgages, liens, claims or other encumbrances by or on
behalf of any person or entity claiming by, through or under Sellers, but not
otherwise. Purchaser acknowledges that it has relied solely on the basis of
its own investigation of the Properties. NOTWITHSTANDING ANYTHING TO THE
CONTRARY, EXCEPT FOR THE FOREGOING SPECIAL WARRANTY OF TITLE, SELLERS MAKE NO
REPRESENTATIONS OR WARRANTIES WITH RESPECT TO TITLE TO THE PROPERTIES. AT THE
CLOSING, SELLERS SHALL CONVEY THE PROPERTIES "AS
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<PAGE> 18
IS, WHERE IS," WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES OF ANY KIND, INCLUDING
WARRANTIES AS TO DESCRIPTION, VALUE, QUALITY, CONDITION, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
18. Miscellaneous Provisions.
(a) Successors and Assigns. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Notwithstanding the foregoing, neither
Purchaser nor Sellers may assign their rights or obligations hereunder prior to
Closing without the written consent of the other parties.
(b) Counterparts. This Agreement may be executed in two
or more identical counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. All
proceedings to be taken and all documents to be executed and delivered by the
parties at Closing shall be deemed to have been taken and executed
simultaneously with all other proceedings to be taken and documents to be
executed and delivered at Closing and no proceeding shall be deemed taken or
any documents delivered or executed until all have been taken, executed and
delivered at Closing.
(c) Titles and Subtitles. The titles and subtitles used
in this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(d) Finder's Fee. Sellers and Purchasers represent that
they neither are nor will be obligated for any finders fee or commission in
connection with this transaction.
(e) Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
(f) Notices. Any notice, demand or other communication
required to be given or made under this Agreement shall be in writing and be
deemed duly given or made if delivered or sent by telex or facsimile as
follows:
SELLERS: C.A.B. RESOURCES, INC.
c/o Sewell & Riggs
333 Clay Avenue, Suite 800
Houston, Texas 77002
Attention: N. L. Stevens, III
Facsimile: (703) 652-8808
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<PAGE> 19
CRUSADER, INC.
c/o Sewell & Riggs
333 Clay Avenue, Suite 800
Houston, Texas 77002
Attention: N. L. Stevens, III
Facsimile: (703) 652-8808
AUSTRALIAN HYDROCARBONS INC.
c/o Sewell & Riggs
333 Clay Avenue, Suite 800
Houston, Texas 77002
Attention: N. L. Stevens, III
Facsimile: (703) 652-8808
PURCHASER: HARKEN ENERGY CORPORATION
2505 N. Highway 360, Suite 800
Grand Prairie, Texas 75050
Attention: Larry E. Cummings
Facsimile: (817) 652-4463
Any party may change its address for the purpose of this Agreement by
giving notice of such change to the other parties pursuant to the provisions of
this section. Any notice, demand or other communication sent by facsimile
shall be deemed given, in absence of proof to the contrary, upon receipt in a
legible form by the party being served.
(g) Legal Costs. The costs of legal counsel incidental
to the instructions for and the preparation and execution of this Agreement,
all counterparts thereof and all documents executed in connection therewith
shall be borne and paid by the parties who engaged such counsel or on whose
behalf such counsel was engaged.
(h) Governing Law; Jurisdiction and Venue. The terms and
interpretation of this Agreement shall be governed by the laws of the State of
Texas. In no event shall any Texas laws or principles of conflicts of law be
used to permit the laws of another jurisdiction to govern, nor to permit
jurisdiction or venue to be other than those specified herein. The courts of
the State of Texas shall have exclusive jurisdiction over any dispute related
to this Agreement.
(i) Amendments. No modification, variation or amendment
of this Agreement shall have any force or effect unless it is in writing and
signed by all the Parties. Unless the context otherwise so requires, a
reference to this Agreement shall include a reference to this Agreement as
modified, varied or amended from time to time.
(j) Powers of Attorney. If this Agreement is executed
for and on behalf of any of the parties by an attorney-in-fact, each attorney
so executing declares that at the time of execution of this Agreement, no
notice of the revocation of the power of attorney under the
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<PAGE> 20
authority of which he or she executes this Agreement has been received. A copy
of each such power of attorney shall be furnished to each other Party to this
Agreement upon request.
(k) Entire Agreement. This Agreement supersedes all
prior proposals, whether oral or written, and all previous negotiations and
understanding among Purchaser and Sellers with respect to the subject matter
hereof.
(l) Conflicts. In the event that the provisions of this
Agreement conflict with the provisions of the JOA or any other agreement or
instrument executed and delivered to effectuate the transactions contemplated
by this Agreement, the provisions of this Agreement shall prevail over all
others.
(m) Incorporation of Exhibits and Schedules. All
Exhibits and Schedules referred to herein are incorporated herein and made a
part of this Agreement for all purposes.
(n) Publicity. Sellers and Purchaser shall consult with
each other with regard to all press releases and other publicity issued at or
prior to the Closing 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 or stock exchange, neither
Purchaser nor Sellers shall issue any such press release or other publicity
without the prior written consent of the other party, which consent may be
withheld for any reason.
(o) Arbitration. If the parties are unable to resolve a
dispute arising under this Agreement, then such dispute shall be settled by
binding arbitration in Houston, Texas, before an independent and impartial
arbitrator. Any party may call for arbitration by written notice to the
others. If within twenty (20) days after receipt of such notice, the parties
are unable to agree upon an arbitrator, then any party may apply to the then
sitting Chief Judge of the United States District Court for the Southern
District of Texas requesting the appointment of an arbitrator. The arbitration
shall be governed by the United States Arbitration Act (9 U.S.C. Section
Section 1-16) and, except as contradicted by the United States Arbitration Act,
shall be conducted in accordance with the rules of the American Arbitration
Association then in effect, including, without limitation, the Code of Ethics
for Arbitrators in Commercial Disputes. The decision of the arbitrator on any
point or points will be final. Judgment may be entered upon any award rendered
by the arbitrator in any court having jurisdiction. Each party shall pay its
own costs of the arbitration, including attorneys' fees, preparation costs and
travel expenses. All other costs of arbitration, including the cost of the
arbitrator, shall be borne equally by the parties.
(p) Attorneys' Fees. If any litigation is commenced
between the parties concerning this Agreement, the party prevailing in such
litigation shall be entitled to the reasonable attorneys' fees and expenses of
counsel and court costs incurred by reason of such litigation.
EXECUTED this the 20th day of October, 1994, but effective for all
purposes as of the Effective Time.
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<PAGE> 21
SELLERS:
C.A.B. RESOURCES, INC., a Texas corporation
By: ____________________________________
N. L. Stevens, III, Attorney-in-Fact
CRUSADER, INC., a Delaware corporation
By: ____________________________________
N. L. Stevens, III, Attorney-in-Fact
AUSTRALIAN HYDROCARBONS INC.,
a Delaware corporation
By: ____________________________________
N. L. Stevens, III, Attorney-in-Fact
PURCHASER:
HARKEN ENERGY CORPORATION,
a Delaware corporation
By: ____________________________________
Larry E. Cummings, Vice President
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<PAGE> 22
SCHEDULE 2
RETAINED LIABILITIES
1. All finds, penalties, clean-up charges, remediation expenses
and assessments based on or attributable to the Sellers' interest in the
Properties levied or asserted by any local, state or federal government entity
or authority by reason of or arising from the clean-up or remediation of any
hazardous substances or any other environmental contamination that exists on or
at the Aneth Gas Plant as of the Effective Time, but only to the extent that
nay of the foregoing is not subject to indemnification by El Paso Natural Gas
Company.
2. All amounts, including interest, penalties and fines, levied
or asserted based on or attributable to the Sellers' Interest in the Properties
by reason of or arising from an investigation or audit by the Minerals
Management Service pending as of September 24, 1994 respecting the alleged
underpayment of royalties or other amounts payable to the Tribe under or
pursuant to the Tribal Agreements or the BIA Leases.
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<PAGE> 23
EXHIBIT "A"
Concession Properties
The Concession Properties shall include each Sellers Participating
Interest in the following (capitalized terms are defined in the Acquisition
Agreement):
(i) all gross proceeds from the sale to purchasers of Petroleum
produced from the Area pursuant to the 1987 Tribal Agreement
after the Effective Time, after deduction for the percentage
of gross proceeds payable to the Tribe pursuant to Section 15
of the 1987 Tribal Agreement;
(ii) all gross proceeds from the sale to purchasers of Petroleum
produced from the Area pursuant to the 1983 Tribal Agreement
and the 1984 Tribal Agreement after the Effective Date after
deduction for the percentage of gross proceeds payable to the
Tribe pursuant to Section 16 of the 1983 Tribal Agreement and
Section 15 of the 1984 Tribal Agreement; provided, however,
with respect to any wells on acreage covered by the
partnership agreements listed on Schedule 2 to the Acquisition
Agreement such gross proceeds shall be reduced to Sellers'
Partnership Share;
(iii) all other rights, titles, interests, benefits and privileges,
if any, whether real, personal or mixed, arising out of and
created by virtue of the Tribal Agreements, that Sellers are
permitted to assign pursuant to the terms and provisions of
the Tribal Agreements, including without limitation: (a) all
right, title and interest of Sellers in and to Petroleum
severed and extracted from or attributable to the Area; (b)
all right, title and interest of Sellers in and to (i)
accounts (including but not limited to accounts resulting from
the sale of Petroleum at the wellhead) and (ii) instruments,
contract rights and general intangibles arising in connection
with the -sale or other disposition of any Petroleum produced
from and after the Effective Date; and (c) all right, title
and interest of Sellers in and to the contracts, agreements,
easements and rights-of-way described on Exhibit "J" to the
Acquisition Agreement and (d) all right, title and interest of
Sellers in and to all other contracts, operating agreements,
farm-out or farm-in agreements, sharing agreements, mineral
purchase agreements, rights-of-way, easements, surface leases,
permits, franchises, licenses, pooling or unitization
agreements, unit designations and pooling orders affecting the
Area, the Operating Equipment or Petroleum produced from the
Area or which are useful or appropriate in drilling for,
producing, treating, handling, storing, transporting or
marketing Petroleum produced from the Area together with all
technical, scientific, geological and seismic data and all
other information of any kind whatsoever heretofore obtained
and accumulated by or on behalf of Sellers or that may be so
obtained and accumulated in the future in connection with
exploration for and production and development of Petroleum
from the Area;
<PAGE> 24
(iv) the Aneth Gas Plant (subject to Section 2(a) of the
Acquisition Agreement) and the Aneth Plant Revenues; and
(v) all of Sellers' right, title and interest in and to the
Operating Equipment.
<PAGE> 25
EXHIBIT "C"
ASSIGNMENT AND BILL OF SALE
(Concession Properties)
NAVAJO NATION )
)
STATE OF ARIZONA )
COUNTY OF APACHE )
)
STATE OF NEW MEXICO )
COUNTY OF SAN JUAN ) KNOW ALL MEN BY THESE PRESENTS:
)
STATE OF UTAH )
COUNTY OF SAN JUAN )
)
UNITED STATES OF AMERICA )
That, ____________________________________, a _____________
corporation whose address is __________________________ ("Assignor"), for and in
consideration of $10.00 and other good and valuable consideration in hand paid
to Assignor by HARKEN ENERGY CORPORATION, a Delaware corporation whose address
is 2505 N. Highway 360, Suite 800, Grand Prairie, Texas 75050 ("Assignee") has
transferred, sold, assigned and conveyed and by these presents does hereby, as
of August 1, 1994, transfer, sell, assign and convey unto Assignee, free and
clear of any and all mortgages, liens, pledges, security interests, charges,
claims, restrictions and encumbrances of any nature whatsoever created by,
through or under Assignor, but not otherwise, the following described
"Property":
All of Assignor's right, title and interest in and to:
1. (a) All gross proceeds from the sale to purchasers of (i)
casinghead gas and (ii) under the 1987 Tribal
Agreement (hereinafter defined), all oil, gas,
hydrocarbons, helium, nitrogen and other gas
resources and (iii) under the 1983 Tribal Agreement
and 1984 Tribal Agreement (hereinafter defined), all
oil, gas, helium, hydrocarbon and other gas resources
("Petroleum"), produced, obtained or secured from the
lands described in Exhibit "A" attached hereto and by
reference made a part hereof, as subsequently reduced
in accordance with the Tribal Agreements (as
hereafter defined), (the "Area") pursuant to the
following described "Tribal Agreements":
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<PAGE> 26
(1) Oil and Gas Operating Agreement dated July
28, 1983 by and between the Navajo Tribe of
Indians, as Owner, Chuska Energy Company
("Chuska"), as Operator (the "1983 Tribal
Agreement");
(2) Oil and Gas Operating Agreement dated
November 26, 1984 by and between the Navajo
Tribe of Indians, as Owner, and Chuska, as
Operator (the "1984 Tribal Agreement"); and
(3) Oil and Gas Operating Agreement dated
February 18, 1987 by and between the Navajo
Tribe of Indians, as Owner, and Assignor, as
Operator (the "1987 Tribal Agreement")
after deductions for the percentage of gross proceeds
payable to the Navajo Tribe of Indians pursuant to
Section 16 of the 1983 Tribal Agreement and Section
15 of the 1984 Tribal Agreement and the 1987 Tribal
Agreement; and
(b) all other rights, titles, interests, benefits and
privileges, if any, whether real, personal or mixed,
arising out of and created by virtue of the Tribal
Agreements, that Assignor is permitted to assign
pursuant to the terms and provisions of the Tribal
Agreements, including without limitation (i) all
right, title and interest of Assignor, if any, in and
to Petroleum severed and extracted from or
attributable to the Area; (ii) all right, title and
interest of Assignor in and to accounts (including
but not limited to accounts resulting from the sale
of Petroleum at the wellhead) instruments, contract
rights and general intangibles arising in connection
with the sale or other disposition of any Petroleum
produced from and after the effective date hereof;
and and (iii) all right, title and interest of
Assignor in and to all other, if any, contracts,
operating agreements, farm-out or farm-in agreements,
sharing agreements, mineral purchase agreements,
rights-of-way, easements, surface leases, permits,
franchises, licenses, pooling or unitization
agreements, unit designations and pooling orders
affecting the Area, the Operating Equipment
(hereinafter defined) or Petroleum produced from the
Area or which are useful or appropriate in drilling
for, producing, treating, handling, storing,
transporting or marketing Petroleum produced from the
Area together with all technical, scientific,
geological and seismic data and all other information
of any kind whatsoever heretofore obtained and
accumulated by or on behalf of Assignor and that may
be so obtained and accumulated in the future in
connection with exploration for and production and
development of Petroleum from the Area.
2. All of Assignor's right, title and interest in and to
operating equipment used in connection with the exploration
for and production of Petroleum under the Tribal Agreements.
The Assignee is acquiring its interest in such operating
equipment
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<PAGE> 27
regardless of whether such operating equipment has become
incorporated into or fixed to realty or structures or
improvements located therein or thereon.
3. The aggregate of all net revenues ("Aneth Plant Revenues")
that Assignor receives as a Plant Owner under the Plant
Ownership and Operating Agreement for the Aneth Gas Plant,
said Plant being more particularly described in Exhibit "B"
attached hereto and by reference made a part hereof, made and
entered into December 31, 1986 by and between Chieftain
International, Inc., Exxon Company U.S.A., Mobil Exploration
and Producing North America, Inc., and Texaco, Inc. (such four
entities hereafter the "Original Plant Owners"), as amended by
(a) a First Amendment to the Plant Ownership and Operating
Agreement for the Operating Agreement for the Aneth Gas Plant,
San Juan County, Utah, made and entered into May 31, 1987 by
and between the Original Plant Owners, and (b) Consent and
Ratification Agreement made and entered into December 21, 1987
by and between the Original Plant Owners and Assignor, and as
may have been subsequently amended. As used in this paragraph
3, the term "net revenues" means all revenues actually
received by Assignor less deductions for any and all
liabilities, losses, claims, causes of action, judgments,
damages, awards, fees, costs, expenses and attorneys fees
payable by the holder of Aneth Plant Revenues including
without limitation all applicable taxes, royalties, service
charges, rentals, capital contributions and costs of producing
the Aneth Plant Revenues.
This Assignment and Bill of Sale has been executed and delivered
pursuant to that certain Concession and Lease Purchase Agreement (the "Purchase
Agreement") dated effective August 1, 1994 by and among C.A.B. Resources, Inc.,
Crusader, Inc., Australian Hydrocarbons Inc. and Assignee and is made and
accepted subject to the Purchase Agreement and the following:
(1) the terms and provisions of the above referenced Concession
and Lease Purchase Agreement and all matters set forth therein
including without limitation that certain Joint Operations
Agreement, dated August 1, 1988, by and among Chuska Energy
Company, as Operator, and Assignor and others, as
Non-operators;
(2) liens for taxes, mechanics, laborers and materialmen arising
by operation of law to secure sums not yet delinquent or due
or being contested in good faith by appropriate action
promptly initiated and diligently conducted;
(3) Assignee shall not acquire by virtue of this Assignment and
Bill of Sale any operating rights under the Tribal Agreements;
provided, however, this paragraph shall not limit the
provisions of the Joint Operations Agreement; and
(4) the terms and provisions of the following "Partnership
Agreements" more particularly described on Schedule 2 of that
certain Concession Purchase Agreement dated August 1, 1988
among Chuska Energy Company, Assignor and others:
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<PAGE> 28
(a) the Agreements of Limited Partnership for Aneth No. 1
Ltd., Aneth No. 2 Ltd., Aneth No. 3 Ltd., Aneth
No. 3A Ltd., Aneth No. 6 Ltd., Aneth No. 7 Ltd.,
Aneth No. 8 Ltd. and Aneth No. 9 Ltd. insofar and
only insofar as such Agreements of Limited
Partnership pertain to the "Contract Areas" therein
described; and
(b) Agreement dated September 11, 1984 by and between
Chuska Energy Company and Trafalgar House Oil & Gas
Inc., insofar and only insofar as the Agreement
covers the properties and wells therein described.
TO HAVE AND TO HOLD the Property described above, together with all
and singular the rights and appurtenances thereto and anywise belonging unto
Assignee, its successors and assigns forever.
Notwithstanding anything herein to the contrary, Assignee hereby
assumes and shall pay, perform and discharge when due all liabilities and
obligations relating to the Property, other than the liabilities and costs set
forth on Schedule 2 attached hereto.
The only warranties made by Assignor in connection with this
Assignment and Bill of Sale are those contained in the Purchase Agreement and
any other warranties, express or implied, are hereby expressly excluded.
NOTWITHSTANDING ANYTHING TO THE CONTRARY, EXCEPT FOR THE SPECIAL WARRANTY OF
TITLE SET FORTH IN THE PURCHASE AGREEMENT, ASSIGNORS MAKE NO REPRESENTATIONS OR
WARRANTIES WITH RESPECT TO TITLE TO THE PROPERTY. ASSIGNORS HEREBY CONVEY THE
PROPERTY "AS IS, WHERE IS," WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES OF ANY
KIND, INCLUDING WARRANTIES AS TO DESCRIPTION, VALUE, QUALITY, CONDITION,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
For convenience of recording in the appropriate public records of the
Navajo Nation., Apache County, Arizona, San Juan County, New Mexico, San Juan
County, Utah and the United States of America, this Assignment and Bill of Sale
may be executed by the undersigned in multiple originals it being recognized
that all of such multiple originals, if any, shall comprise only one instrument
of conveyance.
EXECUTED this the 20th day of October, 1994, but effective as of the
1st day of August, 1994 at 7:00 C.S.T.
(NAME OF ASSIGNOR)
By: _________________________________
Name: _______________________________
Title: ______________________________
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<PAGE> 29
THE STATE OF TEXAS )
)
COUNTY OF __________________ )
On the ______ day of ______________, 1994, personally appeared before
me, the undersigned authority, ___________________________ , who, being by me
duly sworn, did state and affirm that he is the attorney-in-fact of
____________________________________, a ______________ corporation, and that
the foregoing instrument was signed on behalf of said corporation by authority
of its board of directors and the said _________________________ acknowledged
to me that said corporation executed the same for the purposes and
considerations therein expressed
________________________________
Notary Public in and for
The State of _____________
________________________________________
Printed Name of Notary
My Commission Expires: _____________
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