\nSECTION VII.02. Approvals…………………………………………………………………………..43<\/p>\nSECTION VII.03. No Material Adverse Change……………………………………………………………43<\/p>\n
SECTION VII.04. No Litigation Threatened……………………………………………………………..43<\/p>\n
SECTION VII.05. Performance of Agreements…………………………………………………………….43<\/p>\n
SECTION VII.06. Proceedings…………………………………………………………………………43<\/p>\n
SECTION VII.07. Good Standing Certificates; Secretary’s Certificate……………………………………..43<\/p>\n
SECTION VII.08. Fairness Opinion…………………………………………………………………….44<\/p>\n
ARTICLE VIII SURVIVAL OF REPRESENTATIONS; RECOVERY…………………………………………………….44<\/p>\n
SECTION VIII.01. Non-Survival of Representations………………………………………………………44<\/p>\n
ARTICLE IX CLOSING……………………………………………………………………………….44<\/p>\n
SECTION IX.01. Deliveries at the Closing……………………………………………………………..44<\/p>\n
SECTION IX.02. Time and Place……………………………………………………………………….44<\/p>\n
ARTICLE X MISCELLANEOUS………………………………………………………………………….45<\/p>\n
SECTION X.01. Knowledge…………………………………………………………………………….45<\/p>\n
SECTION X.02. Expenses……………………………………………………………………………..45<\/p>\n
SECTION X.03. Governing Law…………………………………………………………………………45<\/p>\n
SECTION X.04. Definitions…………………………………………………………………………..45<\/p>\n
SECTION X.05. Captions……………………………………………………………………………..50<\/p>\n
SECTION X.06. Publicity…………………………………………………………………………….50<\/p>\n
SECTION X.07. Notices………………………………………………………………………………50<\/p>\n
SECTION X.08. Parties in Interest……………………………………………………………………51<\/p>\n
SECTION X.09. Counterparts………………………………………………………………………….51<\/p>\n
SECTION X.10. Entire Agreement………………………………………………………………………51<\/p>\n
SECTION X.11. Amendments……………………………………………………………………………52<\/p>\n
SECTION X.12. Severability………………………………………………………………………….52<\/p>\n
SECTION X.13. Third Party Beneficiaries………………………………………………………………52<\/p>\n
SECTION X.14. Termination of Agreement……………………………………………………………….52<\/p>\n
SECTION X.15. Procedure for Termination………………………………………………………………53<\/p>\n
SECTION X.16. Schedules…………………………………………………………………………….53<\/p>\n
SECTION X.17. Conspicuous Disclaimers………………………………………………………………..53
\n<\/c><\/c><\/s><\/table>\n
5
\n 6<\/p>\n
EXHIBITS<\/p>\n
EXHIBIT A Certificate of Merger
\nEXHIBIT B Certificate of Incorporation
\nEXHIBIT C Bylaws
\nEXHIBIT D Allocation of Merger Consideration
\nEXHIBIT E Form of Warrant
\nEXHIBIT F Investor Agreement
\nEXHIBIT G Notice of Action by Written Consent and Appraisal Rights<\/p>\n
6
\n 7<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
This AGREEMENT AND PLAN OF MERGER (“Agreement”) dated as of August 19,
\n1999 by and among Harken Energy Corporation, a Delaware corporation (“Harken”),
\nXEI Acquisition Corp., a Delaware corporation (“Sub”), and XPLOR Energy, Inc., a
\nDelaware corporation (“XPLOR” or the “Company”). Harken, the Sub and XPLOR are
\ncollectively referred to as the “Parties”.<\/p>\n
W I T N E S S E T H:<\/p>\n
WHEREAS, (i) Sub is a corporation organized and existing under the laws
\nof the State of Delaware and is a wholly-owned subsidiary of Harken, (ii) Harken
\nis a corporation organized and existing under the laws of the State of Delaware,
\nand (iii) the Company is a corporation organized and existing under the laws of
\nthe State of Delaware;<\/p>\n
WHEREAS, the Board of Directors of Harken, Sub and the Company deem it
\nadvisable and in the best interests of their stockholders that the Company
\nbecome a subsidiary of Harken pursuant to the Merger (as defined in Section
\nI.01) hereinafter provided for, and desire to make certain representations,
\nwarranties and agreements in connection with such Merger; and<\/p>\n
WHEREAS, each of the Company and Sub has obtained the necessary
\nstockholder approval of the transactions contemplated hereby.<\/p>\n
NOW, THEREFORE, in consideration of the premises and the mutual
\nagreements, provisions and covenants contained in this Agreement, the Parties
\nhereby agree as follows:<\/p>\n
ARTICLE I<\/p>\n
THE MERGER<\/p>\n
SECTION I.01. THE MERGER. (a) Harken has caused Sub to execute and
\ndeliver, and the Company has executed and delivered, this Agreement providing
\nfor the merger of Sub with and into the Company (the “Merger”) and the
\nconversion of the outstanding shares of the 1998 Series A Redeemable Preferred
\nStock, par value $0.001 per share, and the shares of the 1998 Series B
\nRedeemable Preferred Stock, par value $0.001 per share of the Company
\n(collectively, the “Preferred Stock”) as set forth herein. Each outstanding
\nshare of Common Stock of the Company, par value $0.001 per share (the “Common
\nStock”), shall be converted into the right to receive no consideration in the
\nMerger and shall therefore be cancelled and the holders thereof (the “XPLOR
\nCommon Stockholders”) shall have no further rights therein and no consideration
\nwill be paid with respect thereto other than amounts due, if any, pursuant to
\napplicable appraisal rights pursuant to Section 262 of the Delaware General
\nCorporation Law (the “Delaware Statute”). The Company shall be the surviving
\ncorporation (the “Surviving Corporation”) in the Merger and shall become a
\nwholly-owned subsidiary of Harken. From and after the Effective Time (as defined
\nin Section I.02), the identity and separate existence of Sub shall cease, and
\nthe Company shall succeed, without other transfer, to all the rights,
\nproperties, assets, debts and liabilities of Sub.<\/p>\n
7
\n 8<\/p>\n
(b) Harken shall reserve an aggregate of 9,836,066 shares of the common
\nstock, par value $.01 per share, of Harken, (including preferred share purchase
\nrights issuable pursuant to the Rights Agreement, dated April 9, 1998 between
\nHarken and ChaseMellon Shareholder Services, L.L.C., as rights agent, or any
\nother purchase right issued in substitution thereof) (collectively, “Harken
\nCommon Stock”), prior to the Merger to permit the delivery of shares of Harken
\nCommon Stock to the existing preferred stockholders of the Company (the “XPLOR
\nPreferred Stockholders”, and collectively with the XPLOR Common Stockholders,
\nthe “XPLOR Stockholders”) pursuant to the terms of this Agreement following the
\nMerger. Each of Harken and the Company shall use its commercially reasonable
\nefforts to cause the Merger to be consummated in accordance with the terms of
\nthis Agreement.<\/p>\n
SECTION I.02. FILING OF CERTIFICATE OF MERGER AND RELATED CERTIFICATES.
\nImmediately after all conditions to this Agreement have been satisfied or
\nwaived, the Parties hereto shall cause to be filed a certificate of merger
\npertaining to the Merger in substantially the form of Exhibit A hereto (the
\n“Certificate of Merger”), or such other documents necessary to effect the Merger
\nin accordance with the Delaware Statute, and the Merger shall become effective
\nsubstantially simultaneously in accordance with the terms of this Agreement
\n(such time and date are referred to herein as the “Effective Time”).<\/p>\n
SECTION I.03. EFFECT OF MERGER. The Parties agree to the following
\nprovisions with respect to the Merger:<\/p>\n
(a) Name of Surviving Corporation. The name of the Company, as
\n the surviving corporation in the Merger, from and after the Effective
\n Time shall be “XPLOR Energy, Inc.,” until changed or amended in
\n accordance with applicable law.<\/p>\n
(b) Charter Documents. The Restated Certificate of
\n Incorporation and Bylaws of the Surviving Corporation shall be amended
\n and restated at and as of the Effective Time to read as the Certificate
\n of Incorporation and Bylaws of the Sub immediately prior to the
\n Effective Time. Copies of the Amended and Restated Certificate of
\n Incorporation and Bylaws are attached as Exhibit B and C, respectively.<\/p>\n
(c) Officers and Directors of Surviving Corporation. The
\n officers and directors of Sub immediately prior to the Effective Time
\n will be the officers and directors of the Surviving Corporation.<\/p>\n
SECTION I.04. MERGER CONSIDERATION.<\/p>\n
(a) At the Effective Time, subject to Section I.06, each share of
\nPreferred Stock issued and outstanding immediately prior to the Effective Time
\nshall, by virtue of the Merger and without any action on the part of the holders
\nthereof, be converted into 0.871442 shares of Harken Common Stock (the “Merger
\nShares”) in the form of certificates representing shares of Harken Common Stock
\nissued by Harken. No fractional shares shall be issued and in no event shall
\nHarken be required to issue in excess of an aggregate of 7,500,000 shares of
\nHarken Common Stock in connection with the Merger other than pursuant to the
\nexercise of Warrants as<\/p>\n
8
\n 9<\/p>\n
described below. Each holder of Preferred Stock and the number of shares of
\nHarken Common Stock to be issued to each such holder is set forth on Exhibit D
\nattached hereto.<\/p>\n
(b) At the Effective Time, Harken will issue an aggregate of 2,336,066
\nwarrants exercisable for Harken Common Stock at a per share purchase price of
\n$2.50 per share (the “Warrants,” and collectively with the Merger Shares, the
\n“Merger Consideration”) to the holders of Preferred Stock as set forth on
\nExhibit D. The Warrants, a form of which is attached as Exhibit E, will expire
\neighteen (18) months after the date of issue; provided, however, if during the
\neighteen (18) months, no twenty (20) consecutive trading day period existed
\nwhere the average closing price for the Harken Common Stock is greater than the
\nexercise price of the Warrant at such time, then the term of the Warrants will
\nbe automatically extended for an additional twelve (12) months. The Warrants
\nshall, in the aggregate, be exercisable for 2,336,066 shares of Harken Common
\nStock, subject to adjustment as provided therein.<\/p>\n
(c) At the Effective Time, each share of Common Stock and each share of
\nPreferred Stock (collectively, the “Shares”) shall, by virtue of the Merger and
\nwithout any action on the part of the holders thereof be converted into the
\nright to receive no Merger Consideration and shall therefore, cease to be
\noutstanding, be canceled and retired and cease to exist, and each holder of a
\ncertificate representing any such Shares (“XPLOR Stock Certificates”) shall
\nthereafter cease to have any rights with respect to such Shares, except the
\nright to receive for each of the shares of Preferred Stock, upon the surrender
\nof such certificates representing such shares of Preferred Stock (the “XPLOR
\nPreferred Stock Certificates”) in accordance with Section I.05, the Merger
\nConsideration allocable to such shares as provided in Sections I.04(a) and (b)
\nand the amount of dividends or other distributions related to the Harken Common
\nStock, if any, with a record date after the Effective Time.<\/p>\n
(d) At the Effective Time, each share of common stock, par value $.01
\nper share, of Sub issued and outstanding immediately prior to the Effective Time
\nshall automatically become an equal number of shares of Common Stock.<\/p>\n
SECTION I.05. PAYMENT FOR SHARES IN THE MERGER. The manner of making
\npayment for Shares in the Merger shall be as follows:<\/p>\n
(a) At or promptly after the Effective Time, subject to Section I.08,
\nHarken shall distribute to each holder of Preferred Stock, upon surrender of one
\nor more XPLOR Preferred Stock Certificates for cancellation (or, in lieu
\nthereof, upon presentation of an affidavit stating that the XPLOR Preferred
\nStock Certificate has been lost or destroyed and an appropriate indemnity bond
\nhas been posted), the Merger Consideration due for each share of Preferred Stock
\nrepresented thereby, if any, in accordance with the provisions of Section I.04.
\nIf payment is to be made to a person other than the person in whose name the
\nXPLOR Preferred Stock Certificate surrendered is registered, it shall be a
\ncondition of payment that the XPLOR Preferred Stock Certificate so surrendered
\nshall be properly endorsed, with signatures guaranteed or notarized, or
\notherwise in proper form for transfer and that the person requesting such
\npayment shall pay any transfer or other taxes required by reason of the payment
\nto a person other than the registered holder of the XPLOR Preferred Stock
\nCertificate surrendered, or such person shall establish to the satisfaction of
\nHarken that such tax has been paid or is not applicable. Notwithstanding the
\nforegoing, no Party hereto shall be liable to a holder of shares of Preferred<\/p>\n
9
\n 10<\/p>\n
Stock for any cash, shares of Harken Common Stock or dividends thereon delivered
\nto a public official pursuant to applicable escheat law. Until surrendered in
\naccordance with the provisions of Section I.05, each XPLOR Preferred Stock
\nCertificate representing shares of Preferred Stock shall represent, for all
\npurposes, only the right to receive the Merger Consideration.<\/p>\n
(b) No dividends or other distributions that are declared after the
\nEffective Time on shares of Harken Common Stock and payable to the holders of
\nrecord after the Effective Time will be paid to persons entitled by reason of
\nthe Merger to receive shares of Harken Common Stock until such persons surrender
\ntheir XPLOR Preferred Stock Certificates. Upon such surrender, there shall be
\npaid to the person in whose name the shares of Harken Common Stock are issued
\nany dividends or other distributions having a record date after the Effective
\nTime and payable with respect to such shares of Harken Common Stock between the
\nEffective Time and the time of such surrender. After such surrender there shall
\nbe paid to the person in whose name the shares of Harken Common Stock are issued
\nany dividends or other distributions on such shares of Harken Common Stock which
\nshall have a record date after the Effective Time and prior to such surrender
\nand a payment date after such surrender and such payment shall be made on such
\npayment date. In no event shall the persons entitled to receive such dividends
\nor other distributions be entitled to receive interest on such dividends or
\nother distributions. Prior to such person surrendering such person’s XPLOR
\nPreferred Stock Certificate or XPLOR Preferred Stock Certificates, such person
\nshall not be entitled to vote or exercise any rights or ownership with respect
\nto the shares of Harken Common Stock held by it from time to time hereunder.<\/p>\n
SECTION I.06. DISSENTING SHARES. Notwithstanding anything in this
\nAgreement to the contrary, in the event that appraisal rights are available in
\nconnection with the Merger pursuant to Section 262 of the Delaware Statute,
\nshares of Common Stock that are issued and outstanding immediately prior to the
\nEffective Time and that are held by the stockholders of XPLOR who did not vote
\nin favor of the Merger and who comply with all of the relevant provisions of
\nSection 262 of the Delaware Statute (the “Appraisal Shares”) shall not be
\ncancelled as provided in Section I.04(c), unless and until such holders shall
\nhave failed to perfect or shall have effectively withdrawn or lost such right,
\nand such holder’s shares of Common Stock shall thereupon be deemed to have been
\ncancelled as provided in Section I.04(c), as of the Effective Time. The
\nSurviving Corporation shall give the XPLOR Stockholders set forth in Section
\n3.02(a) of the Disclosure Schedule prompt notice of any rights for appraisal by
\nmailing the material as set forth in Exhibit G on or about the Effective Date
\nand taking all appropriate action required of the Surviving Corporation to
\ncomply with any demand for appraisal under Delaware law and pursuant to the
\nterms of the Investor Agreement.<\/p>\n
SECTION I.07. TRANSFER OF SHARES IMMEDIATELY PRIOR TO THE EFFECTIVE
\nTIME. No transfers of Shares shall be made on the stock transfer books of the
\nCompany after the close of business on the day prior to the date of the
\nEffective Time.<\/p>\n
SECTION I.08. RESTRICTED LEGEND. The Company acknowledges and agrees
\nthat any certificates representing the Merger Shares will bear the following
\nrestrictive legend in substantially the following form and a stop-transfer order
\nmay be placed against their transfer:<\/p>\n
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
\n UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE<\/p>\n
10
\n 11<\/p>\n
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
\n AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
\n SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL REASONABLY
\n ACCEPTABLE TO THE ISSUER OF SUCH SECURITIES TO THE EFFECT THAT
\n REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO
\n RULE 144.<\/p>\n
The legend set forth above shall be removed and Harken shall issue a
\ncertificate without such legend to the holder of Merger Shares upon which it is
\nstamped, if, unless otherwise required by applicable state securities laws, (a)
\nsuch holder provides Harken with an opinion of legal counsel, in form, substance
\nand scope reasonably acceptable to Harken to the effect that a public sale or
\ntransfer of such Merger Shares may be made without registration under the
\nSecurities Act and such Merger Shares are being sold or transferred in
\naccordance with the method described therein as well as all applicable state
\nsecurities laws, (b) such holder provides Harken with reasonable assurances that
\nsuch Merger Shares are being sold pursuant to Rule 144 under the Securities Act
\n(or a successor rule thereto), (c) such holder sells its Merger Shares in a
\ntransaction registered under the Securities Act, or (d) two years have elapsed
\nfrom the date hereof and Harken receives an opinion of counsel, in form,
\nsubstance and scope reasonably acceptable to Harken that the volume limitations
\nin Rule 144(e) do not apply.<\/p>\n
SECTION I.09. REGISTRATION RIGHTS.<\/p>\n
(a) After one year from the date hereof, (i) the holders of a majority
\nof the Merger Shares issued to or held by XP Holdings, L.L.C., its subsidiaries
\nand affiliates and their respective successors and assigns on one hand (the “XP
\nHoldings Group”) and (ii) the holders of a majority of the Merger Shares issued
\nto or held by the other XPLOR Preferred Stockholders, their subsidiaries and
\naffiliates and their respective successors and assigns on the other
\n(collectively, the “TCW Investors”), shall each have a collective right by
\nwritten notice to Harken (a “Demand Notice”) to require Harken to file a
\nregistration statement (a “Registration Statement”) on an appropriate form under
\nthe Securities Act registering for resale all of the Merger Shares and any
\nshares issued to date upon the exercise of the Warrants which are held by the
\ngroup (the “Registrable Securities”) which are covered by such Demand Notice.
\nUpon receipt of a Demand Notice, Harken shall use its commercially reasonable
\nefforts to file such Registration Statement and cause it to be declared
\neffective as soon as practicable.<\/p>\n
(b) If at any time during the one (1) year period from the date hereof
\nHarken proposes to file a Registration Statement with respect to an offering of
\nHarken Common Stock (except on Form S-4, Form S-8 or any successor form
\nthereto), for its own account for cash, then Harken shall give written notice of
\nsuch proposed filing to holders of the Registrable Securities at least fifteen
\n(15) days before the anticipated filing date (the “Piggyback Notice”). The
\nPiggyback Notice shall offer such holders the opportunity to register all of the
\nRegistrable Securities on the Registration Statement (a “Piggyback
\nRegistration”). If any holder of Registrable Securities requests such Piggyback
\nRegistration, Harken shall, subject to the limitation set forth in Section
\nI.09(c) below, include in the Piggyback Registration the requested number of
\nRegistrable Securities.<\/p>\n
(c) If Harken is undertaking a Piggyback Registration, Harken shall use
\nits commercially reasonable efforts to cause the managing underwriters of a
\nproposed underwritten<\/p>\n
11
\n 12<\/p>\n
offering of equity securities to include all requested Registrable Securities on
\nthe same terms and conditions as any similar equity securities of Harken
\nincluded therein. Notwithstanding the foregoing, if the managing underwriters of
\nsuch underwritten offering determine in good faith that the total number of
\nsecurities that such holders and Harken propose to include in such offering is
\nsuch as to materially and adversely affect the success of such offering, then
\nthe securities to be offered for the account of holders of Registrable
\nSecurities or any other holders shall be reduced or limited pro rata in
\nproportion to the respective dollar amounts of securities held by such holder to
\nthe extent necessary to reduce the total number of securities to be included in
\nsuch offering to the amount recommended by such managing underwriters.<\/p>\n
(d) If any shares issued or issuable pursuant to the Warrants held by
\neither the XP Holdings Group or the TCW Investors remain unregistered after such
\ngroup has exercised its rights pursuant to Section I.09(a) (the “Remaining
\nWarrant Shares”), the holders of a majority of the Remaining Warrant Shares for
\nthe XP Holdings Group and the holders of a majority of the Remaining Warrant
\nShares for the TCW Investors shall each have the right by written notice (a
\n“Warrant Demand Notice”) to require Harken to file a Registration Statement on
\nan appropriate form under the Securities Act registering for resale all of the
\nRemaining Warrant Shares (a “Warrant Share Registration”) held by such group
\nthat have been issued to date and that have not been previously registered
\npursuant to either Section I.09(a) or (b).<\/p>\n
(e) Harken shall use its reasonable efforts to cause the Registration
\nStatement to be declared effective by the Securities and Exchange Commission
\n(the “SEC”) and any state securities commission as soon as practicable after its
\nfiling with the SEC, and to remain effective and current until such time as all
\nof the Registrable Securities included in such Registration Statement are sold
\npursuant to the Registration Statement (the “Effective Period”) and to execute
\nan underwriting agreement in customary form and reasonably satisfactory to
\nHarken and to reasonably assist such sale; provided, however, that (i) any
\nselling stockholder thereunder (a “Selling Stockholder”) shall use its
\nreasonable efforts to provide written notice to Harken prior to any sale of
\nRegistrable Securities, (ii) Harken shall have no obligation to cause the
\nRegistration Statement to remain effective for the benefit of a particular
\nSelling Stockholder if such Selling Stockholder is able to sell all remaining
\nRegistrable Securities owned by such Selling Stockholder in compliance with Rule
\n144 in a single transaction to which the volume limitations of Rule 144(e) do
\nnot apply or if such volume limitations are applicable without exceeding such
\nlimitations. Harken shall promptly notify the Selling Stockholders, their
\ncounsel and the managing underwriters, if any, and confirm such notice in
\nwriting (an “Occurrence Notice”), (i) of the issuance by the SEC of any stop
\norder suspending the effectiveness of a Registration Statement or of any order
\npreventing or suspending the effectiveness of a Registration Statement or of any
\norder preventing or suspending the use of any prospectus or the initiation of
\nany proceeding by any person or entity for that purpose, (ii) of the happening
\nof any event that makes any statement made in such Registration Statement or
\nrelated prospectus or any document incorporated or deemed to be incorporated
\ntherein by reference untrue in any material respect or that requires the making
\nof any changes in such Registration Statement, prospectus or documents so that
\nit will not contain any untrue statement of a material fact or omit to state any
\nmaterial fact required to be stated therein or necessary to make the statements
\ntherein, in light of the circumstances under which they were made (in the case
\nof the related prospectus only), not misleading, and (iii) of Harken’s
\nreasonable determination that a post-effective amendment to a Registration
\nStatement would be appropriate. Upon receipt of an Occurrence Notice, each<\/p>\n
12
\n 13<\/p>\n
Selling Stockholder shall forthwith discontinue disposition of the Registrable
\nSecurities covered by the applicable Registration Statement or prospectus until
\nthe earlier to occur of (x) the receipt of such Selling Stockholder of a
\nsupplemented or amended Registration Statement or Prospectus as contemplated by
\nthe following sentence or (y) the receipt by such Selling Stockholder of written
\nnotice from Harken (a “Clearance Notice”) that the use of the applicable
\nprospectus or Registration Statement may be resumed. If Harken shall deliver an
\nOccurrence Notice to any Selling Stockholder, (i) the Registrable Securities
\nsubject to such Registration Statement or prospectus shall remain Registrable
\nSecurities for purposes of this Agreement, and (ii) Harken shall use its
\ncommercially reasonable efforts to promptly prepare and file a supplement or
\npost-effective amendment to the Registration Statement, prospectus or document
\nincorporated or deemed incorporated by reference or prepare and file such other
\ndocuments and take such other actions as may be required to permit each Selling
\nStockholder to consummate the sale of the Registrable Securities subject to such
\nRegistration Statement or prospectus.<\/p>\n
(f) Notwithstanding anything to the contrary herein, Harken shall not
\nbe required to register any Registrable Securities or Remaining Warrant Shares
\nmore than once in a Demand Registration or Warrant Share Registration, as
\nappropriate, and shall not be required to effect (i) more than one Demand
\nRegistration and one Warrant Share Registration for the XP Holdings Group or
\n(ii) more than one Demand Registration and Warrant Share Registration for the
\nTCW Investors; provided, however, that if (A) any offering or sale of any
\nRegistrable Securities or Remaining Warrant Shares pursuant to a Demand
\nRegistration or Warrant Share Registration, as appropriate, is not consummated
\ndue to (i) any failure by Harken to perform its obligations under this Agreement
\nor (ii) the withdrawal by the group (either the XP Holdings Group or the TCW
\nInvestors) having given the Demand Notice or Warrant Demand Notice at any time
\nbefore the Registration Statement has become effective or in the case of an
\nunderwritten offering, if a material adverse change in Harken’s financial
\nposition or business occurs that causes such offering not to close, then the
\nDemand Notice or Warrant Demand Notice with respect to which such Registration
\nStatement was filed shall not be counted as a Demand Notice or Warrant Demand
\nNotice for such group.<\/p>\n
(g) EXPENSES. Harken shall pay all expenses on any registration
\nhereunder, other than underwriting discounts and commissions; transfer, stamp,
\nand similar taxes; and other than expenses incurred by the Selling Stockholder
\nwhose Registrable Securities are being sold for legal, investment banking, or
\nother similar services obtained by such Selling Stockholder in connection with
\nsuch registration and sale.<\/p>\n
(h) ASSIGNMENT OF REGISTRATION RIGHTS. The registration rights set
\nforth in this Section I.09 with respect to the Registrable Securities or
\nRemaining Warrant Shares are not assignable without the express written consent
\nof Harken, which consent shall not be unreasonably withheld; provided, however,
\nthat if any Registrable Securities, Remaining Warrant Shares or Warrants are
\ntransferred to an Affiliate of an XPLOR Preferred Stockholder, the registration
\nrights set forth in this Section I.09 may be assigned to such Person without
\nHarken’s consent.<\/p>\n
13
\n 14<\/p>\n
ARTICLE II<\/p>\n
STOCKHOLDER APPROVAL<\/p>\n
SECTION II.01. APPROVAL OF THE STOCKHOLDERS. This Agreement has been
\nadopted and approved by the XPLOR Stockholders as required under its charter
\ndocuments and the Delaware Statute, and such approval includes the approval of
\nall holders of XPLOR Preferred Stock.<\/p>\n
ARTICLE III<\/p>\n
REPRESENTATIONS AND WARRANTIES
\n OF THE COMPANY<\/p>\n
The Company represents and warrants to Harken that the statements
\ncontained in this Article III are correct and complete as of the date of this
\nAgreement and will be correct and complete as of the Effective Time (as though
\nmade then and as though the Effective Time were substituted for the date of this
\nAgreement throughout this Article III), except as set forth in the disclosure
\nschedule delivered by the Company to Harken on the date hereof and initialed by
\nthe Parties (the “Disclosure Schedule”). Nothing in the Disclosure Schedule
\nshall be deemed adequate to disclose an exception to a representation or
\nwarranty made herein, however, unless the Disclosure Schedule identifies the
\nexception with reasonable particularity and describes the relevant facts in
\nreasonable detail or specifically refers to the information contained in the
\nDisclosure Book as defined in Section X.04. The Disclosure Schedule will be
\narranged in paragraphs corresponding to the lettered and numbered paragraphs
\ncontained in this Article III.<\/p>\n
SECTION III.01. EXISTENCE AND GOOD STANDING. The Company is a
\ncorporation duly organized, validly existing and in good standing under the laws
\nof the State of Delaware. The Company has the corporate power and authority to
\nown its properties and to carry on its business as now being conducted. The
\nCompany is duly qualified to do business and is in good standing in each
\njurisdiction in which its ownership or leasing of properties or the conduct of
\nits business requires such qualification, except when the failure to have such
\nauthorization, to be so qualified or to be in good standing would not,
\nindividually or in the aggregate, have a Material Adverse Effect.<\/p>\n
SECTION III.02. CAPITALIZATION. As of the date of this Agreement, (a)
\n4,413,771 shares of Common Stock are issued and outstanding and 295,642 are held
\nin treasury; (b) the entire authorized capital stock of the Company consists of
\n30,000,000 shares of Common Stock and 20,000,000 shares of Preferred Stock.
\n12,249,563 shares of Preferred Stock have been designated as 1998 Series A
\nPreferred Stock, 7,376,143 of which are issued and outstanding and none are held
\nin treasury; (c) 1,230,280 shares of Preferred Stock have been designated as
\n1998 Series B Preferred Stock all of which are issued and outstanding and none
\nare held in treasury; (d) 8,606,423 warrants, each exercisable for one share of
\nCommon Stock, are outstanding and trade with the Preferred Stock; (e) 1,547,507
\nstock options, each exercisable for one share of Common Stock, are outstanding;
\nand (f) 1,600,000 shares of Common Stock are reserved for issuance upon exercise
\nof outstanding stock options. No other capital stock or equity securities of or
\ninterest in the Company are authorized or outstanding. All of the issued and
\noutstanding Shares have been duly authorized, are validly issued, fully paid,
\nand nonassessable, and are not<\/p>\n
14
\n 15<\/p>\n
subject to any preemptive rights and are held of record by the respective XPLOR
\nStockholders as set forth in Section 3.02(a) of the Disclosure Schedule. Each
\nholder of record of stock options and warrants is set forth in Section 3.02(b)
\nof the Disclosure Schedule. Except as set forth in Section 3.02(b) of the
\nDisclosure Schedule, there are no other outstanding or authorized options,
\nwarrants, purchase rights, subscription rights conversion rights, exchange
\nrights, or other contracts or commitments that could require the Company to
\nissue, sell, or otherwise cause to become outstanding any of its capital stock
\nor that could require the Company to redeem, repurchase, or otherwise acquire
\nany of its capital stock. There are no outstanding or authorized stock
\nappreciation, phantom stock, profit participation, or similar rights with
\nrespect to the Company. Other than the XPLOR Shareholder Agreement (as defined
\nbelow), which shall terminate as of the Effective Time, there are no voting
\ntrusts, proxies, or other agreements or understandings with respect to the
\nvoting of the capital stock of the Company. In addition, as of the Closing Date,
\nall options and warrants issued and outstanding and held by the holders of the
\nXPLOR Preferred Stock or the persons set forth in Section 3.02(c) of the
\nDisclosure Schedule, shall have been cancelled so that no such options or
\nwarrants shall remain outstanding and no such holder of such options or warrants
\nshall have any remaining rights therein and neither the Company nor any of its
\nSubsidiaries shall have any remaining obligations thereto. Except as set forth
\nin Section 3.02(b) of the Disclosure Schedule, the Company has no obligations to
\nredeem or buy any Shares from any holder thereof.<\/p>\n
SECTION III.03. CORPORATE AUTHORITY. The Company has the requisite
\ncorporate power and authority to enter into this Agreement and the other
\nagreements contemplated by this Agreement (the “Related Agreements”) to which
\nthe Company is a party. The execution and delivery of this Agreement and the
\nRelated Agreements to which the Company is a party and the consummation of the
\ntransactions contemplated hereby and thereby have been duly and validly
\nauthorized by the Board of Directors and approved by the requisite Company
\nstockholders, no other corporate proceedings on the part of the Company are
\nnecessary to authorize this Agreement, the Related Agreements and the
\ntransactions contemplated hereby and thereby which have not been obtained. All
\nsuch consents and approvals, if any, so obtained are listed on Section 3.03 of
\nthe Disclosure Schedule. This Agreement is and the Related Agreements to which
\nthe Company is a party will be, duly and validly executed and delivered by the
\nCompany and, assuming the due authorization, execution and delivery hereof and
\nthereof by the other Parties hereto and thereto, this Agreement constitutes, and
\nthe Related Agreements to which the Company is a party will constitute, valid
\nand binding agreements of the Company enforceable against the Company in
\naccordance with their respective terms, subject to applicable bankruptcy,
\ninsolvency, reorganization, fraudulent transfer, moratorium or other similar
\nlaws affecting the rights of creditors generally.<\/p>\n
SECTION III.04. NONCONTRAVENTION. Neither the execution and the
\ndelivery of this Agreement, nor the consummation of the transactions
\ncontemplated hereby, will (a) violate any constitution, statute, regulation,
\nrule, injunction, judgment, order, decree, ruling, charge, or other restriction
\nof any government, governmental agency, or court to which any of the Company and
\nits Subsidiaries is subject or any provision of the charter or bylaws of any of
\nthe Subsidiary and its Subsidiaries or (b) conflict with, result in a breach of,
\nconstitute a default under, result in the acceleration of, create in any party
\nthe right to accelerate, terminate, modify, or cancel, or require any notice
\nunder any agreement, contract, lease, license, permit, instrument, or other
\narrangement to which any of the Company and its Subsidiaries is a party or by
\nwhich it is bound<\/p>\n
15
\n 16<\/p>\n
or to which any of its assets is subject (or result in the imposition of any
\nsecurity interest upon any of its assets), except where a waiver or consent to
\nsuch event has been obtained or the occurrence of any such event would not have
\na Material Adverse Effect. None of the Company and its Subsidiaries needs to
\ngive any notice to, make any filing with, or obtain any authorization, consent,
\nor approval of any government or governmental agency in order for the Parties
\nhereto to consummate the transactions contemplated by this Agreement other than
\nas disclosed in Section 3.04 of the Disclosure Schedule.<\/p>\n
SECTION III.05. SUBSIDIARIES AND INVESTMENTS. Section 3.05 of the
\nDisclosure Schedule sets forth for each subsidiary of the Company (each a
\n“Subsidiary”): (a) its name and jurisdiction of incorporation, (b) the number of
\nshares of authorized capital stock of each class of its capital stock, (c) the
\nnumber of issued and outstanding shares of each class of its capital stock, the
\nnames of the holders thereof, and the number of shares held by each such holder,
\nand (d) the number of shares of its capital stock held in treasury. Each of the
\nSubsidiaries of the Company is duly qualified to do business and is in good
\nstanding in each jurisdiction in which its ownership or leasing of properties or
\nthe conduct of its business requires such qualification, except where the
\nfailure to be so qualified or in good standing would not, individually or in the
\naggregate, have a Material Adverse Effect. All of the issued and outstanding
\nshares of capital stock of each Subsidiary of the Company have been duly
\nauthorized and are validly issued, fully paid, and nonassessable and not subject
\nto any preemptive rights. No other equity securities of, or interest in, the
\nSubsidiaries of the Company are authorized or outstanding. Except as disclosed
\nin Section 3.05 of the Disclosure Schedule, the Company or its Subsidiaries
\nholds of record and owns beneficially all of the outstanding shares of each
\nSubsidiary of the Company, free and clear of any restrictions on transfer (other
\nthan restrictions under the Securities Act and state securities laws), Taxes,
\nsecurity interests, options, warrants, purchase rights, contracts, commitments,
\nequities, claims, demands or other encumbrances. There are no outstanding or
\nauthorized options, warrants, purchase rights, conversion rights, exchange
\nrights, or other contracts or commitments that could require any of the Company
\nand its Subsidiaries to sell, transfer, or otherwise dispose of any capital
\nstock of any of such Subsidiaries or that could require any such Subsidiary to
\nissue, sell, or otherwise cause to become outstanding any of its own capital
\nstock. There are no outstanding stock appreciation, phantom stock, profit
\nparticipation, or similar rights with respect to any Subsidiary of the Company.
\nThere are no voting trusts, proxies, or other agreements or understandings with
\nrespect to the voting of any capital stock of any Subsidiary of the Company.
\nExcept as disclosed in Section 3.05 of the Disclosure Schedule, none of the
\nCompany and its Subsidiaries controls directly or indirectly or, other than
\nparticipation in oil and gas operations in the ordinary course of business, has
\nany direct or indirect equity participation in any corporation, partnership,
\ntrust, or other business association which is not a Subsidiary of the Company.<\/p>\n
SECTION III.06. FINANCIAL STATEMENTS. Included in the Disclosure Book
\nare the following financial statements of the Company: (a) the audited
\nconsolidated financial statements of the Company for the fiscal years ended
\nDecember 31, 1997 and December 31, 1998 and related notes, (b) the Company’s
\nunaudited consolidated and consolidating financial statements for the fiscal
\nquarter ended June 30, 1999, including the balance sheet (the “June Balance
\nSheet”), and (c) all schedules and opinions of certified public accountants
\n(collectively, the “Financial Statements”). The Financial Statements (a) fairly
\npresent in accordance with generally accepted accounting principles the assets,
\nliabilities and financial condition of the<\/p>\n
16
\n 17<\/p>\n
Company and its consolidated Subsidiaries as of the dates thereof and the
\nconsolidated results of their operations for the respective periods ended on
\nsuch dates, (b) have been prepared from, and are consistent with, the books and
\nrecords of the Company and its consolidated Subsidiaries (which books and
\nrecords are correct and complete in all material respects), and (c) except as
\notherwise set forth in the notes thereto, (i) have been prepared in accordance
\nwith generally accepted accounting principles consistently applied and (ii)
\ninclude all adjustments that are necessary for a fair presentation of the
\ninformation shown (subject, in the case of reports other than annual year-end
\nreports, to normal year-end audit adjustments which will not be material,
\nindividually or in the aggregate). Since December 31, 1998, there has been no
\nchange, other than changes in the oil and gas industry generally and in the
\nordinary course of business consistent with past practice or as described in
\nSection 3.06 of the Disclosure Schedule, in the assets or liabilities, or in the
\nbusiness or condition, financial or otherwise, or in the results of operations,
\nof the Company and the Subsidiaries which has had a Material Adverse Effect.<\/p>\n
SECTION III.07. UNDISCLOSED LIABILITIES. To the Company’s best
\nknowledge, none of the Company and its Subsidiaries has any material liability
\n(and there is no basis for any present or future action, suit, proceeding,
\nhearing, investigation, charge, complaint, claim, or demand against any of them
\ngiving rise to any material liability), except for (a) liabilities set forth on
\nthe face of the June Balance Sheet (rather than in any notes thereto), (b)
\nliabilities set forth in Section 3.06 of the Disclosure Schedule, (c)
\nliabilities which have arisen after June 30, 1999 in the ordinary course of
\nbusiness (none of which results from, arises out of, relates to, is in the
\nnature of, or was caused by any breach of contract, breach of warranty, tort,
\ninfringement, or violation of law), and (d) liabilities which in the aggregate
\nwould not have a Material Adverse Effect.<\/p>\n
SECTION III.08. BOOKS AND RECORDS. The minute books of the Company and
\nthe Subsidiaries, as previously made available to Harken and its
\nrepresentatives, are in good order, correct, and complete (in all material
\nrespects), and accurately reflect all meetings of and corporate actions or
\nwritten consents by the XPLOR Stockholders and Board of Directors of the Company
\nand the Subsidiaries.<\/p>\n
SECTION III.09. TITLE. The Company and the Subsidiaries have good and
\ndefensible title to all the properties and assets of every kind, character and
\ndescription (real, personal or mixed, tangible and intangible), including,
\nwithout limitation, all parcels of real property, pipelines, rights-of-way and
\neasements and other incidental rights and permits, reflected on the June Balance
\nSheet or which would have been reflected on the June Balance Sheet if such
\nproperty or asset had been acquired prior to June 30, 1999, (the “Assets”)
\nexcept for Assets that are obsolete or that have been disposed of in the
\nordinary course of business between the date of the June Balance Sheet and the
\ndate of this Agreement, free and clear of all encumbrances of any nature except
\nfor (a) the encumbrances and title defects specifically described in Section
\n3.09 of the Disclosure Schedule; (b) mortgages and encumbrances which secure
\nindebtedness or obligations which are properly reflected on the Financial
\nStatements and, if such indebtedness exceeds $50,000, listed in Section 3.09 of
\nthe Disclosure Schedule; (c) Permitted Encumbrances; and (d) such imperfections
\nof title and encumbrances, if any, as do not materially interfere with the
\npresent use of any of the Assets subject thereto.<\/p>\n
17
\n 18<\/p>\n
SECTION III.10. INDEPENDENT AND INTERNAL ENGINEERING REPORTS. (a) The
\nCompany has made available to Harken the results of the Independent Engineering
\nReport, prepared by Netherland, Sewell & Associates, Inc. with respect to
\nreserves as of December 31, 1998 (the “Independent Engineering Report”) on the
\noil and gas fields listed on the attachment thereto (the “Evaluated Properties”)
\nin which the Company will have interests subsequent to the Effective Time. The
\nIndependent Engineering Report is the latest independent engineering report
\navailable to the Company relating to the Evaluated Properties. The Company has
\nprovided no materially false or misleading information to and has not withheld
\nfrom the Independent Engineer any material information with respect to the
\npreparation of the Independent Engineering Report. Except as disclosed on
\nSchedule 3.10 of the Disclosure Schedule, the Company is not aware of any facts
\nor circumstances that should reasonably cause the Company to conclude that (i)
\nany of the information that was supplied by the Company to the Independent
\nEngineer in connection with its preparation of the Independent Engineering
\nReport is not currently correct in all material respects (other than normal
\ndepletion by production in the ordinary course) or (ii) the Independent
\nEngineering Report is incorrect in any material respect.<\/p>\n
(b) The Company has made available to Harken the results of the
\ninternal engineering report, with respect to reserves as of June 30, 1999, a
\ncopy of which is attached hereto as Schedule 3.10 of the Disclosure Schedule
\n(the “Internal Engineering Report”), on the Evaluated Properties. The Internal
\nEngineering Report is the latest engineering report available to the Company
\nrelating to the Evaluated Properties. The Internal Engineering Report does not
\ncontain any materially false or misleading information and is currently correct
\nin all material respects (other than normal depletion by production in the
\nordinary course).<\/p>\n
SECTION III.11. TITLE TO INTERESTS. (a) Except as disclosed in Section
\n3.11 of the Disclosure Schedule, (i) the Company and its Subsidiaries own the
\ninterest in producing oil wells and producing gas wells described in the
\nIndependent Engineering Report, (individually a “Well” and collectively the
\n“Wells”), (ii) the Company’s and its Subsidiaries’ net revenue interest and
\nleasehold cost bearing interest (i.e., working interest) in each Well are as
\ndescribed in the Independent Engineering Report, and (iii) each oil, gas, and
\nmineral lease in which the Company and its Subsidiaries own any interest and the
\ntype of interest owned by the Company and its Subsidiaries (individually and
\ncollectively, the “Leases”) are described in the Disclosure Book. The lands
\nidentified in the Leases and owned by the Company and\/or its Subsidiaries are
\nindividually and collectively called the “Land.” The Wells, the Leases, and the
\nLand, together with all of the Company’s right, title and interest in (i) all
\ncontracts, agreements, leases, licenses, permits, authorization, easements, and
\norders (individually and collectively called “XPLOR Agreements”) in any way
\nrelating to the Wells, the Leases and\/or the Land, the operations conducted or
\nto be conducted pursuant thereto or thereon, or the production, treatment, sale
\nor disposal of hydrocarbons or water produced therefrom or attributable thereto,
\n(ii) all personal property, fixtures (including, without limitation, pipe,
\nplants and pipelines), equipment (including, without limitation, compressors,
\nparts, rods, tubular goods and supplies) and improvements located at, under or
\non the Wells, the Leases and\/or the Land, or used or obtained in connection
\ntherewith or with the operation or maintenance of the Wells or other facilities
\nthereon or with the production, treatment, sale or disposal of hydrocarbons or
\nwater produced therefrom or attributable thereto, and (iii) all other rights and
\ninterests in, to or under or derived from the Wells, the Leases, the XPLOR
\nAgreements, and\/or the Land (including, without limitation, all mineral and
\nroyalty interests, and all overriding royalty interests and all other<\/p>\n
18
\n 19<\/p>\n
interests in or payable out of or measured by production, and all surface
\ninterests, for a term or in fee), or in any way relating thereto, are referred
\nto herein as the “Interests.”<\/p>\n
(b) With respect to each Well, the Company’s and its Subsidiaries’
\ninterests in the Leases and the Land are such that, after giving effect to the
\nXPLOR Agreements, existing spacing orders, operating agreements, unit
\nagreements, communitization agreements and orders, unitization orders and
\npooling designations and orders, subject to any limitations described in Section
\n3.11 of the Disclosure Schedule and Permitted Encumbrances, and after taking
\ninto account all royalty interests, overriding royalty interests, net profits
\ninterests, production payments and other burdens on production attributable to
\nthird parties, (i) the Company and its Subsidiaries are entitled, during the
\nrespective terms of the Leases covering such Well, to a share (expressed as a
\ndecimal) of all oil, gas and other minerals produced from such Well which is not
\nless than the “net revenue interest” set forth in connection with the
\ndescription of such Well, free and clear of all liens, claims, mortgages, deeds
\nof trust, assignments of production, and security interests, other than those
\ndescribed in Section 3.11 of the Disclosure Schedule, (ii) the Company and its
\nSubsidiaries own an undivided interest (expressed as a decimal) equal to the
\n“working interest” set forth in connection with the description of such Well in
\nand to all property and rights incident thereto, including all rights in, to and
\nunder all agreements, leases, permits, easements, licenses and orders in any way
\nrelating thereto, and in and to all wells, personal property, fixtures and
\nimprovements thereon, appurtenant thereto or used or obtained in connection
\ntherewith or with the production or treatment or sale or disposal of
\nhydrocarbons or water produced therefrom or attributable, for a share of the
\ncosts relating to the exploration, development, and operation of such Well which
\nis no greater than the “working interest” set forth in connection with the
\ndescription of such Well. Notwithstanding the foregoing, title to the Company’s
\nInterests classified as proved developed producing, proved developed
\nnonproducing and proved undeveloped in the Independent Engineering Report is of
\na type and nature customarily acceptable to the reasonably prudent oil and gas
\noperator of oil and gas interests.<\/p>\n
SECTION III.12. COMPLIANCE WITH LEASES AND LAWS; OPERATION OF ASSETS.
\nExcept as set forth in Section 3.12 of the Disclosure Schedule:<\/p>\n
(a) Each Lease is in full force and effect and all rentals, royalties,
\nshut-in well payments, bonuses and other payments due or payable from or by the
\nCompany and its Subsidiaries under the Leases and applicable laws, rules and
\nregulations, have been properly and timely paid, except where the failure to pay
\nproperly and timely is in the normal course of business and would not have a
\nMaterial Adverse Effect, and all conditions necessary to keep the Leases in full
\nforce and effect as of the date hereof and as of the Closing Date have been or
\nshall be fully performed, including, to the best of the Company’s knowledge, all
\npayments or obligations due from or by third parties except where the failure to
\nsatisfy such conditions is in the normal course of business and would not have a
\nMaterial Adverse Effect;<\/p>\n
(b) The Company and its Subsidiaries are entitled to receive (and are
\ncurrently receiving with respect to producing oil, gas and\/or mineral leases)
\nwithout present suspense or presently required indemnity against asserted or
\nknown defects or disputes regarding the Company’s and its Subsidiaries’
\nownership, from each pipeline purchaser or other purchaser of production, or
\nfrom the person receiving payments from any such purchasers, the proceeds
\nattributable to the net revenue interest in production from each of the Leases,
\nexcept as set forth<\/p>\n
19
\n 20<\/p>\n
in Section 3.12 of the Disclosure Schedule, where the failure to receive such
\nproceeds would not have a Material Adverse Effect;<\/p>\n
(c) All Wells operated by the Company and its Subsidiaries have been
\ndrilled, completed and bottomed within the boundaries of each of the respective
\nLeases or within the limits otherwise permitted by contract and by law, and no
\nsuch Well is subject to material penalties or restrictions on allowables because
\nof any overproduction (legal or illegal) which would prevent the assignment of a
\nfull allowable (including maximum permissible tolerance) to each such Well by
\nthe state or local governmental agency having jurisdiction. No Well is subject
\nto any “take or pay” or similar obligation by which a purchaser of production
\nhas made payment to the Company and its Subsidiaries for oil, gas or mineral
\nproduction yet to be delivered, or by which any party is entitled to take or
\nreceive production from the Leases without thereafter paying the full value
\ntherefor;<\/p>\n
(d) The Company and its Subsidiaries have complied with all applicable
\nlaws relating to the production of or from the Interests, the conduct of
\ndrilling, completion, and production operations with respect to the Interests
\nand the regulation thereof and have administered and maintained the Interests in
\na reasonable manner and in accordance with generally prevailing standards of the
\noil and gas industry, except where the failure to comply or so administer or
\nmaintain would not have a Material Adverse Effect;<\/p>\n
(e) The Company and its Subsidiaries have not received notice of
\nviolation or probable violation of any applicable law relating to or directly or
\nindirectly affecting the Interests, nor are there any such violations, other
\nthan such violations which would not have a Material Adverse Effect;<\/p>\n
(f) There have been no demands for cancellation or termination of any
\nof the Interests or for any claimed breach of any Interest due to the failure of
\nthe Company, its Subsidiaries or any third party to produce or conduct drilling
\nor other operations thereon, nor have there been any suits, enforcement
\nproceedings or other actions filed, threatened or anticipated by the Company and
\nits Subsidiaries which might have a Material Adverse Effect;<\/p>\n
(g) The Company and its Subsidiaries hold all licenses, franchises,
\npermits, easements, certificates, consents, rights and privileges (“Permits”)
\nnecessary to the operation of the Interests, and to the best of the Company’s
\nknowledge, each third party operator of any of the Interests holds all Permits
\nnecessary to the operation of the Interests except for such Permits the lack of
\nwhich would not have a Material Adverse Effect;<\/p>\n
(h) To the best knowledge of the Company’s management, except as set
\nforth in Section 3.12(h) of the Disclosure Schedule and except for current
\ninvoices received within ten (10) days of the date hereof, which invoices were
\nincurred in the ordinary course of business, all invoices, statements, bills and
\naccounts of and to the Company and its Subsidiaries for labor, services,
\nmaterials or supplies furnished to or for the Interests have been paid in full
\nin the ordinary course of business consistent with past practices and the
\nCompany and its Subsidiaries are current in payment of all joint interest
\nbillings for operations or other contracts pertaining to the operation of the
\nInterests;<\/p>\n
20
\n 21<\/p>\n
(i) All production from the Wells operated by the Company or its
\nSubsidiaries have been properly accounted for and all proceeds attributable
\nthereto have been properly paid in the ordinary course of business consistent
\nwith past practices;<\/p>\n
(j) No production or sale of oil, gas or other hydrocarbons heretofore
\nproduced or sold from or attributable to the Interests has been in excess of any
\nallowable quantity or price or in violation of any other rule or regulation
\naffecting the sale of hydrocarbons as established by the applicable regulatory
\nauthorities except where such excess or violation would not have a Material
\nAdverse Effect;<\/p>\n
(k) No gas produced is subject to the price control jurisdiction of the
\nFederal Energy Regulatory Commission (“FERC”) under the Natural Gas Policy Act;
\nand<\/p>\n
(l) The Company and its Subsidiaries have properly prepared in full
\ncompliance with all applicable laws and regulations and have timely filed all
\nreports required to be filed by any law, government entity, or agency as a
\nresult of the operation of the Interests and no extensions of time to file any
\nsuch reports has been requested except where the failure to fully comply and
\ntimely file or any extension request would not have a Material Adverse Effect.<\/p>\n
SECTION III.13. EQUIPMENT. That portion of the Interests consisting of
\npersonal property, facilities, and fixtures including, without limitation, all
\nequipment and assets used in connection with the operation of the Interests, is
\nin good condition and repair, ordinary wear and tear excepted, and is adequate
\nfor the proper operation of the Interests, except for such repairs and additions
\nnecessary for the proper operation of the Interests and which individually or in
\nthe aggregate would not result in a Material Adverse Effect.<\/p>\n
SECTION III.14. CONTRACTS, AGREEMENTS, COMMITMENTS AND OTHER MATTERS.
\n(a) Included in the Disclosure Book, the Independent Engineering Report, and
\nSections 3.14 and 3.22 of the Disclosure Schedule is a true, and correct
\ndescription of all of the following (whether written or oral), including all
\namendments thereto, to which the Company or its Subsidiaries is a party or by
\nwhich any of the Assets is materially affected and that is currently in effect
\nor has any outstanding obligations thereunder (“Material Contracts”):<\/p>\n
(i) any note, agreement, mortgage, indenture, security
\n agreement and other instruments relating to the borrowing of money or
\n evidence of credit for the deferred purchase price of property, or the
\n direct or indirect guarantee by the Company or any of its Subsidiaries
\n of any such indebtedness or deferred purchase price in excess of
\n $50,000;<\/p>\n
(ii) any lease of real property and material personal property
\n providing for annual payments under any such lease in excess of
\n $25,000;<\/p>\n
(iii) any partnership or joint venture agreement other than in
\n the ordinary course of business;<\/p>\n
(iv) any management, employment and consulting agreement or
\n other contract for personal services that is not terminable by the
\n Company or any Subsidiary party<\/p>\n
21
\n 22<\/p>\n
thereto on not more than three month’s notice without penalty copies of
\n which have been provided to Harken;<\/p>\n
(v) any agreement providing for liability for severance pay or
\n benefits triggered by a change in control (any such amounts that will
\n be due shall be specifically set forth in Section 3.14(a)(v) of the
\n Disclosure Schedule), collective bargaining agreements, labor
\n contracts, or labor or personnel policies copies of all of which have
\n been provided to Harken;<\/p>\n
(vi) any agreement or commitment for capital expenditures in
\n excess of $25,000, for any single project (it being represented and
\n warranted that the liability under all undisclosed agreements and
\n commitments for capital expenditures does not exceed $100,000 in the
\n aggregate for all projects);<\/p>\n
(vii) any plan, contract or arrangement providing for bonuses,
\n pensions, deferred compensation, retirement plan payments, profit
\n sharing, stock options, stock purchase rights, stock appreciation
\n rights, incentive pay, or for any other plan for the benefit of the
\n Company’s and its Subsidiaries’ current or former directors, officers,
\n and employees (and any persons participating in, or having any rights
\n with respect to, any of the foregoing are set forth on Schedule
\n 3.14(a)(vii) of the Disclosure Schedule, which includes the details of
\n such participation);<\/p>\n
(viii) any contract, commitment or agreement that involves the
\n disposition of any assets of the Company or any of its Subsidiaries not
\n in the ordinary course of business consistent with past practice;<\/p>\n
(ix) any contract, commitment or agreement between the Company
\n or any of its Subsidiaries, on the one hand, and any affiliate of the
\n Company, on the other hand, involving consideration in excess of
\n $5,000;<\/p>\n
(x) any contract (A) for the sale of oil or other liquid
\n hydrocarbons or minerals produced or to be produced from the Assets
\n that is not terminable by the Company or the Subsidiary party thereto
\n or their respective successors without penalty on no more than ninety
\n (90) days’ notice or (B) for the sale of gas produced or to be produced
\n from the Assets that has a term exceeding one year, warrants the amount
\n of gas to be delivered or has a pricing provision not based on current
\n market value;<\/p>\n
(xi) any advance payment agreement or any oil and gas
\n balancing agreement, or any group of related agreements of such type,
\n under which the Company or any of its Subsidiaries has a net
\n obligation, as of the most recent date available, which shall be no
\n more than ninety (90) days prior to the date hereof, in excess of
\n $25,000 in cash or market value in oil or gas;<\/p>\n
(xii) any contract or agreement relating to the Assets under
\n which the Company or any of its Subsidiaries has outstanding
\n indebtedness, obligations or liability for borrowed money, or liability
\n for the deferred purchase price of property, excluding<\/p>\n
22
\n 23<\/p>\n
normal trade payables due in less than ninety (90) days, or has the
\n obligation to incur any such indebtedness, obligation or liability, in
\n each case in excess of $25,000;<\/p>\n
(xiii) any agreement concerning confidentiality or
\n noncompetition other than joint operating agreements or area of mutual
\n interest agreements, entered into in the ordinary course of business;<\/p>\n
(xiv) any agreement (or series of related agreements) under
\n which it has advanced or loaned any amount to any officer, director, or
\n employee of any of the Company and its Subsidiaries; and<\/p>\n
(xv) any other agreement, contract or commitment (or related
\n group thereof) that involves payments or receipts, individually or in
\n the aggregate over a twelve (12) month period, will result in a
\n material loss in the assets of the Company or any Subsidiaries, or
\n involves consideration in excess of more than $50,000.<\/p>\n
(b) The Company has made available to Harken true, correct and complete
\ncopies of all written Material Contracts and has provided accurate descriptions
\nof all oral Material Contracts. Except as set forth in Section 3.14 of the
\nDisclosure Schedule and as provided in Section III.33, each of the Material
\nContracts has been executed by the Parties thereto, is in full force and effect
\nand is enforceable against the Company or one of its Subsidiaries, as
\napplicable, in accordance with its terms (except that (i) the enforcement
\nthereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
\nother similar laws now or hereafter in effect relating to creditors’ rights
\ngenerally and (ii) the remedy of specific performance and injunctive and other
\nforms of equitable relief may be subject to equitable defenses and to the
\ndiscretion of the court before which any proceeding therefor may be brought) and
\nhas not been amended or modified in any way (whether in writing or orally).
\nExcept as set forth in Section 3.14 of the Disclosure Schedule, each Material
\nContract will continue to be legal, valid, binding, enforceable, and in full
\nforce and effect on substantially the same terms following the consummation of
\nthe transactions contemplated hereby, except where the lack of such continuation
\nwould not have a Material Adverse Effect. Except as set forth in Section 3.14 of
\nthe Disclosure Schedule and as provided in Section III.33, neither the Company,
\nany of its Subsidiaries nor any other party to any Material Contract is in or
\nalleged to be in material breach of any Material Contract, or has failed to
\nperform any material obligation required to be performed by them, and there does
\nnot exist under any provision thereof any event that, with the giving of notice
\nor the lapse of time or both, would constitute such a breach or default, except
\nfor such breaches, defaults and events as to which requisite waivers or consents
\nhave been obtained or which, in the aggregate, would not have a Material Adverse
\nEffect. Except as listed in Section 3.14 of the Disclosure Schedule or
\ndiscussions or negotiations that Harken or its agents or representatives have
\nparticipated in, neither the Company nor any of its Subsidiaries is
\nparticipating in any discussions or negotiations regarding modification of or
\namendment to any Material Contract or entry into any new Material Contract.<\/p>\n
(c) Except with respect to past due accounts payable or outstanding
\nindebtedness to suppliers (which are set forth on Schedule 3.14(c) of the
\nDisclosure Schedule listing an aging of the Company’s indebtedness), the
\nCompany’s and its Subsidiaries’ relationships with their respective suppliers
\nare generally satisfactory.<\/p>\n
23
\n 24<\/p>\n
(d) Other than as set forth in Section 3.14(d) of the Disclosure
\nSchedule, the Company and its Subsidiaries do not have outstanding any powers of
\nattorney, including, but not limited to, powers of attorney with respect to
\nrepresentation before governmental agencies, customs agents and brokers or given
\nin connection with qualification to conduct business in any other jurisdiction.<\/p>\n
SECTION III.15. RESTRICTIVE DOCUMENTS AND GOVERNMENTAL CONSENTS. The
\nCompany and its Subsidiaries are not subject to, or a party to, any charter,
\nby-law, mortgage, lien, lease, license, permit, agreement, contract, instrument,
\nlaw, rule, ordinance, regulation, order, judgment or decree, or any other
\nrestriction of any kind or character, which would prevent consummation of the
\ntransactions contemplated by this Agreement or the Related Agreements,
\ncompliance by the Company with the terms, conditions and provisions hereof or
\nthereof or, to the best knowledge of the Company, the continued operation of the
\nCompany’s and its Subsidiaries’ businesses after the date hereof on
\nsubstantially the same basis as heretofore operated or which would restrict the
\nability of the Company or its Subsidiaries to acquire any property or conduct
\nbusiness in any area except as would not have a Material Adverse Effect. Other
\nthan in connection or compliance with the provisions of the Delaware Statute,
\nthe Securities Act of 1933 (the “Securities Act”), the securities, takeover or
\nblue sky laws of the various states, neither the nature of the Company or of any
\nits Subsidiaries, nor of any of their respective businesses or properties, nor
\nany relationship between the Company or any of its Subsidiaries and any other
\nPerson is such as to require consent, approval or authorization of, or filing,
\nregistration or qualification with, any governmental authority on the part of
\nthe Company as a condition to the execution and delivery of this Agreement and
\nthe Related Agreements and the consummation by the Company of the transactions
\ncontemplated by this Agreement and the Related Agreements.<\/p>\n
SECTION III.16. LITIGATION. Except as disclosed in Section 3.16 of the
\nDisclosure Schedule, there is no action, suit, proceeding or investigation
\npending or currently threatened against the Company or any of its Subsidiaries,
\nincluding any action, suit, proceeding or investigation that questions the
\nvalidity of this Agreement or the Related Agreements or the Company’s right to
\nenter into this Agreement or the Related Agreements, or to consummate the
\ntransactions contemplated hereby or thereby or which, if decided in a manner
\nadverse to the Company, would reasonably be expected to have a Material Adverse
\nEffect.<\/p>\n
SECTION III.17. TAXES. (a) Except as disclosed in Section 3.17 of the
\nDisclosure Schedule or where the failure to file Tax Returns (as defined below)
\nand pay Taxes (as defined below) would not reasonably be expected to have a
\nMaterial Adverse Effect, the Company and each of its Subsidiaries has (i) duly
\nfiled with the appropriate Federal, state, local and foreign taxing authorities
\nall Tax Returns required to be filed by or with respect to the Company and its
\nSubsidiaries as of the date of this Agreement, and such Tax Returns are true,
\ncorrect and complete in all material respects and (ii) paid or made provision
\nfor in the Financial Statements all Taxes of the Company and its Subsidiaries
\nshown to be due on such Tax Returns. To the best knowledge of the Company, there
\nare no tax liens on any of the Assets other than liens for current real estate
\ntaxes not yet due or Taxes being contested in good faith by appropriate
\nproceedings and disclosed in Section 3.17 of the Disclosure Schedule. Except as
\nset forth in Section 3.17 of the Disclosure Schedule, the Company has not
\nreceived any written notice of deficiency, assessment or proposed assessment
\nfrom any Federal, state, local, tribal or foreign<\/p>\n
24
\n 25<\/p>\n
taxing authority with respect to liabilities for Taxes of the Company or its
\nSubsidiaries which have not been paid or finally settled, and, there is no
\npending tax examination of or tax claim assessed against the Company, any of its
\nSubsidiaries or any of the Assets, and any such deficiency, assessment, proposed
\nassessment or tax claim disclosed in Section 3.17 of the Disclosure Schedule is
\nbeing contested in good faith through appropriate proceedings.<\/p>\n
(b) For purposes of this Agreement, “Taxes” shall mean all taxes,
\ncharges, fees, levies, penalties or other assessments imposed by any United
\nStates Federal, state, local, tribal or foreign taxing authority, including, but
\nnot limited to, income, severance, ad valorem, service, leasing, occupation,
\nexcise, property, sales and use, transfer, franchise, payroll, withholding,
\nsocial security or other taxes and assessments, including any interest,
\npenalties or additions attributable thereto.<\/p>\n
(c) For purposes of this Agreement, “Tax Return” shall mean any return,
\nreport, information return or other document (including any related or
\nsupporting information) filed or required to be filed with any taxing authority
\nwith respect to Taxes.<\/p>\n
SECTION III.18. INSURANCE. Section 3.18 of the Disclosure Schedule or
\nthe Disclosure Book sets forth the material information with respect to each
\ncurrent insurance policy (including policies providing property, casualty,
\nliability, and workers’ compensation, and employee benefits coverage and bond
\nand surety arrangements) to which any of the Company and its Subsidiaries is a
\nparty, a named insured, or otherwise the beneficiary of coverage. With respect
\nto each such insurance policy in effect as of the date of this Agreement: (i)
\nthe policy is legal, valid, binding, enforceable, and in full force and effect;
\n(ii) the policy will continue to be legal, valid, binding, enforceable, and in
\nfull force and effect on identical terms following the consummation of the
\ntransactions contemplated hereby other than the Directors’ and Officers’
\ninsurance; (iii) neither any of the Company and its Subsidiaries nor, to the
\nknowledge of any of the directors and officers (and employees responsible for
\ninsurance matters) of the Company or its Subsidiaries, any other party to the
\npolicy is in breach or default (including with respect to the payment of
\npremiums or the giving of notices), and no event has occurred which, with notice
\nor the lapse of time, would constitute such a breach or default, or permit
\ntermination, modification, or acceleration, under the policy; and (iv) no party
\nto the policy has repudiated any provision thereof. Section 3.18 of the
\nDisclosure Schedule briefly describes any self-insurance arrangements affecting
\nany of the Company and its Subsidiaries.<\/p>\n
SECTION III.19. PATENTS, TRADEMARKS, TRADE NAMES, ETC. Except as
\ndisclosed in Section 3.19 of the Disclosure Schedule, neither the Company nor
\nits Subsidiaries own, license or use any patents, trademarks, trade names and
\ncopyrights which are material to the business of the Company or its
\nSubsidiaries.<\/p>\n
SECTION III.20. COMPLIANCE WITH LAW. Except as disclosed in Section
\n3.20 of the Disclosure Schedule, the Company and its Subsidiaries are not in
\nviolation of any order, injunction, judgment, ruling, law or regulation of any
\ncourt or governmental authority applicable to the property or business of the
\nCompany or its Subsidiaries. The licenses, permits and other governmental
\nauthorizations held by the Company and its Subsidiaries are valid and sufficient
\nfor the conduct of the Company’s and its Subsidiaries’ business as currently
\nconducted and <\/p>\n
25
\n 26<\/p>\n
presently proposed to be conducted, except where the failure to hold such
\nlicenses, permits and other governmental authorizations would not have a
\nMaterial Adverse Effect.<\/p>\n
SECTION III.21. LABOR RELATIONS. Neither the Company nor any of its
\nSubsidiaries is a party to any collective bargaining agreement applicable to
\nemployees of the Company or its Subsidiaries. Except as would not reasonably be
\nexpected to have a Material Adverse Effect, the Company and its Subsidiaries are
\nin compliance in all material respects with all applicable laws, ordinances,
\nregulations, statutes, rules and restrictions relating to (a) employment, (b)
\nhiring, promotion, employment and pay practices, (c) terms and conditions of
\nemployment and (d) federal and state wages and hours laws; and neither the
\nCompany nor any of its Subsidiaries is engaged in any unfair labor practice
\nwhich has had or is reasonably likely to have a Material Adverse Effect. No
\nstrike, slowdown, picketing or work stoppage by any union or other group of
\nemployees against the Company, any of its Subsidiaries or any of their
\nproperties wherever located, and no secondary boycott with respect to their
\nproducts, lockout by them of any of their employees or any other labor trouble
\nor other occurrence, event or condition of a similar character, has occurred or,
\nbeen threatened.<\/p>\n
SECTION III.22. EMPLOYEE BENEFIT MATTERS. (a) Section 3.22 of the
\nDisclosure Schedule or as specifically set forth in the Disclosure Book contains
\na true and complete list of all employee benefit plans (within the meaning of
\nSection 3(3) of the Employee Retirement Income Security Act of 1974, as amended
\n(“ERISA”)) as well as any and all amounts that to the Company’s knowledge may be
\nowed by the Company under each such plan, including but not limited to, any
\nunder funded amounts, and all bonus, stock option, stock purchase, incentive,
\ndeferred compensation, profit sharing, phantom stock, vacation, retiree medical
\nor life insurance, supplemental retirement, severance, disability, death or
\nother employee benefit plans, programs or arrangements, and all material
\nemployment or compensation agreements, in each case for the benefit of, or
\nrelating to, any current employee or former employee, officer or director of the
\nCompany or any of its Subsidiaries (collectively, the “Plans”).<\/p>\n
(b) None of the Plans (i) is a multiemployer plan, within the meaning
\nof Section 3(37) or 4001(a)(3) of ERISA or a single employer pension plan,
\nwithin the meaning of Section 4001(a)(15) of ERISA, for which the Company could
\nincur liability under Section 4063 or 4064 of ERISA or (ii) provides or promises
\nto provide retiree medical or life insurance benefits.<\/p>\n
(c) All Plans are in compliance in all material respects with the
\nrequirements prescribed by applicable statutes, orders or governmental rules or
\nregulations currently in effect with respect thereto, and the Company has
\nperformed all material obligations required to be performed by it under, and is
\nnot in any material respect in default under or in violation of, any of the
\nPlans.<\/p>\n
(d) The Company has no Plans that are qualified under Section 501(a) of
\nthe Internal Revenue Code.<\/p>\n
(e) The Company has not incurred any material liability to the Pension
\nBenefit Guaranty Corporation or any “withdrawal liability” within the meaning of
\nSection 4201 of ERISA, in either case relating to any Plan or any pension plan
\nmaintained by any company which would be treated as a single employer with the
\nCompany, under Section 4001 of ERISA.<\/p>\n
26
\n 27<\/p>\n
(f) The Company has made available to Harken full and complete copies
\nof all Plans and, where applicable, summary plan descriptions with respect to
\nthe Plans.<\/p>\n
SECTION III.23. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for events
\ncontemplated by this Agreement or disclosed in Sections 3.14, 3.22, or 3.23 of
\nthe Disclosure Schedule or the Disclosure Book, since December 31, 1998:<\/p>\n
(a) The Company and its Subsidiaries have used all reasonable efforts
\nto preserve and retain the business, employees, properties, suppliers and
\ngoodwill of the Company and its Subsidiaries and have operated their respective
\noperations and conducted business generally only in the ordinary and usual
\ncourse consistent with past practice;<\/p>\n
(b) There has been no direct or indirect redemption, purchase or other
\nacquisition by the Company of any shares of its capital stock, or any
\ndeclaration setting aside payment of any dividend or other distribution by the
\nCompany;<\/p>\n
(c) Other than bonuses paid in cash or stock options granted for the
\ncalendar year 1998, Directors’ and Officers’ insurance and changes contemplated
\nby this Agreement, the Company and its Subsidiaries have not, other than in the
\nordinary course of their business, (i) entered into or amended any employment,
\ncompensation or severance agreements, (ii) changed any current bonuses or
\nestablished any new bonuses, (iii) increased the level of compensation benefits
\nor perquisites of any executive officer or director, or (iv) established,
\nentered into or amended in any material respect any pension, employee benefit or
\nhealth plans or any other plans, policies, programs, practices or arrangements
\nrelating to employee benefits or compensation other than to maintain compliance
\nwith any applicable law or regulation; and<\/p>\n
(d) No event has occurred with respect to the Company or its
\nSubsidiaries, or the condition of the Evaluated Properties or the Assets, that
\nresults in or is reasonably likely to result in a Material Adverse Effect,
\nincluding, but not limited to, any Material Adverse Effect resulting from any
\nof, or an aggregation of, the following Company actions:<\/p>\n
(i) any damage, destruction or loss to any of the Evaluated
\n Properties or the Assets, whether or not covered by insurance other
\n than as a result of market conditions generally in the oil and gas
\n industry;<\/p>\n
(ii) any sale, lease, assignment, transfer, movement,
\n relocation, termination, release or assignment of any of the Evaluated
\n Properties or the Assets, other than sales of inventory in the ordinary
\n course of business;<\/p>\n
(iii) any waiver or release of any rights of either the
\n Company or any of its Subsidiaries under any Material Contracts (as
\n defined in Section III.14);<\/p>\n
(iv) any change in any accounting practice or procedure;<\/p>\n
(v) any capital expenditure or commitment for additions to
\n property, plant or equipment;<\/p>\n
27
\n 28<\/p>\n
(vi) any change in maintenance practices with respect to any
\n of the Evaluated Properties or the Assets;<\/p>\n
(vii) any change in credit policy;<\/p>\n
(viii) any change in purchasing or sale practices;<\/p>\n
(ix) any change in inventory, equipment spare parts, materials
\n or liquid levels inconsistent with historical levels maintained in the
\n ordinary course;<\/p>\n
(x) any other occurrence, circumstance or combination thereof,
\n except for any occurrence or circumstance generally applicable to the
\n oil and gas industry;<\/p>\n
(xi) any assumption, guarantee, endorsement or other
\n assumption of responsibility by the Company or any of its Subsidiaries
\n for the material liability or obligation of any other person (whether
\n absolute, accrued, contingent or otherwise);<\/p>\n
(xii) any discharge or satisfaction of any lien or other
\n encumbrance on any of the Assets or the Evaluated Properties or the
\n payment of any liability or obligation (whether absolute, accrued,
\n contingent or otherwise) of the Company or any of its Subsidiaries,
\n other than in the ordinary course of business and consistent with past
\n practice;<\/p>\n
(xiii) any cancellation, modification or settlement for less
\n than the full amount thereof of any material debt or claim by or owing
\n to the Company or any of its Subsidiaries;<\/p>\n
(xiv) any transfer or grant by the Company or any of its
\n Subsidiaries of any right under any contracts and other agreements,
\n patents, patent licenses, inventions, trade names, trademarks, service
\n marks or copyrights, or registrations or licenses thereof or
\n applications therefor, or with respect to any know-how or other
\n proprietary or trade rights;<\/p>\n
(xv) any termination, discontinuance, closing or disposal of
\n any of the Evaluated Properties or Assets; or<\/p>\n
(xvi) any transaction, contract or commitment entered into by
\n the Company or any Subsidiary which is not in the ordinary course of
\n business and consistent with past practice.<\/p>\n
SECTION III.24. NO BROKERS’ OR OTHER FEES. Except as disclosed in
\nSection 3.24 of the Disclosure Schedule, no broker, finder or investment banker
\nis entitled to any fee or commission in connection with the transactions
\ncontemplated hereby based upon arrangements made by or on behalf of the Company.<\/p>\n
28
\n 29<\/p>\n
SECTION III.25. COPIES OF DOCUMENTS. The Company has caused to be made
\navailable for inspection and copying by Harken and its advisers, true, complete
\nand correct copies of all documents referred to in this Article III, or in any
\nschedule furnished by the Company to Harken.<\/p>\n
SECTION III.26. ENVIRONMENTAL MATTERS. Except as set forth in Section
\n3.26 of the Disclosure Schedule or the Disclosure Book:<\/p>\n
(a) Neither the Company nor any of its Subsidiaries has violated or
\nreceived any notice alleging any past or present violation of, any applicable
\nFederal, state, local or foreign laws, statutes, ordinances, rules, regulations,
\norders or determinations of any governmental authority applicable to the Company
\nor applicable to any of its Subsidiaries, as the case may be, in its respective
\njurisdiction of operation which are in effect and duly enforced relating to
\nEnvironmental Laws, to the extent that any such violation, or such violations in
\nthe aggregate, would reasonably be expected to have a Material Adverse Effect.<\/p>\n
(b) No hazardous waste, substance or material has been stored, treated
\nor disposed of by the Company or any of its Subsidiaries or to the knowledge of
\nthe Company by any person on any real estate owned or leased by the Company or
\nits Subsidiaries, respectively, except in compliance with applicable
\nEnvironmental Laws; and the Company and its Subsidiaries have lawfully disposed
\nof their hazardous waste products with respect to the operations of their
\nbusinesses except, in each case, where such failure to be in compliance or to
\nobtain, store, treat or dispose of such waste products could not have a Material
\nAdverse Effect.<\/p>\n
(c) The Company is not aware of any facts or circumstances that could
\nreasonably lead the Company or any of its Subsidiaries to conclude that the
\ncosts and liabilities, other than the currently budgeted capital expenditures,
\nassociated with the effect of Environmental Laws on the business, operations and
\nproperties of the Company and its Subsidiaries (including, without limitation,
\nany capital or operating expenditures required for clean-up, closure of
\nproperties or compliance with Environmental Laws or any permit, license or
\napproval, any related constraints on operating activities and any potential
\nliabilities to third parties) could, singly or in the aggregate, have a Material
\nAdverse Effect.<\/p>\n
(d) The Company has caused to be made available to Harken for its
\nreview true and complete copies and results of any reports, studies, analyses,
\ntests, or monitoring possessed by the Company or its Subsidiaries pertaining to
\nHazardous Materials or Hazardous Activities in, on, or under the Facilities, or
\nconcerning compliance by any of the Company or its Subsidiaries with
\nEnvironmental Laws.<\/p>\n
SECTION III.27. NO AFFILIATE OWNERSHIP. Except as set forth in Section
\n3.27 of the Disclosure Schedule, no Person controlled by, controlling or under
\ncommon control with the Company (other than its Subsidiaries) owns any interest
\nin any of the Assets or the Evaluated Properties.<\/p>\n
SECTION III.28. SALE OF PRODUCTION. Except as set forth in the
\nDisclosure Book or Section 3.28 of the Disclosure Schedule and except as would
\nnot have a Material Adverse Effect, the Company and its Subsidiaries have no
\nproduction from any Well which is subject to balancing rights of third parties
\nor is subject to balancing duties under governmental<\/p>\n
29
\n 30<\/p>\n
requirements, and no third party has production from any Well which is subject
\nto the balancing rights of the Company or its Subsidiaries. Except as disclosed
\nin the Disclosure Book or Section 3.28 of the Disclosure Schedule, the Company
\nand its Subsidiaries have not collected any proceeds from the sale of
\nhydrocarbons produced from the Interests which are subject to refund. Except as
\nset forth in the Disclosure Book or Section 3.28 of the Disclosure Schedule,
\nproceeds from the sale of oil, gas and natural gas liquids from the Wells are
\nbeing received by the Company and its Subsidiaries in a materially timely manner
\nand based upon the net revenue interest described in the Disclosure Book for
\neach such Well and in accordance with the terms of the applicable purchase
\nagreement governing such sale, and are not being held in suspense for any reason
\nexcept in the ordinary course of business consistent with past practices. The
\nCompany has described pursuant to Section III.14 all contracts and agreements
\nand made available to Harken for examination all contracts and agreements
\nterminable by the Company and its Subsidiaries upon less than ninety (90) days’
\nnotice pursuant to which hydrocarbons produced from the Interests are sold,
\ntransported, processed or otherwise disposed of or marketed. Except as disclosed
\nin the Disclosure Book or Section 3.26 of the Disclosure Schedule, no person has
\nany call upon, preferential right or option to purchase or similar rights with
\nrespect to the Interests or to the production therefrom except at prevailing
\nmarket prices. Except as disclosed pursuant to the Disclosure Book or Section
\n3.14 of the Disclosure Schedule, no person has a right of first refusal with
\nrespect to the Interests triggered by the transactions contemplated hereby.
\nExcept as disclosed in the Disclosure Book or Section 3.28 of the Disclosure
\nSchedule, price renegotiation procedures have not been commenced under FERC
\nOrder No. 451 which involve or which hereafter may affect any gas produced from
\nthe Interests. Except as disclosed in the Disclosure Book or Section 3.28 of the
\nDisclosure Schedule, no offer of credits under FERC Order No. 500 has been made
\nwhich would entitle any purchaser of gas produced from the Interests to credit
\ntransported volumes against such purchaser’s take-or-pay obligations under any
\ncontract for the sale of gas produced form the Interests.<\/p>\n
SECTION III.29. STATUS OF WELLS. Except as disclosed in the Disclosure
\nBook or Section 3.29 of the Disclosure Schedule, all Wells set forth in the
\nIndependent Engineering Report, excluding proved undeveloped and proved
\ndeveloped nonproducing properties as identified in such report, are producing or
\noperationally capable of producing hydrocarbons (based upon prevailing economic
\nconditions) without the necessity of recompletion or material reworking
\noperations. Except as disclosed in the Disclosure Book or Section 3.29 of the
\nDisclosure Schedule or reserved for in the June Balance Sheet, the Company and
\nits Subsidiaries have no obligations existing for the plugging or abandonment
\n(including obligations for restoration of the surface) of any oil and\/or gas
\nwell, salt water disposal well or other well located at the Interests other than
\nthe general obligation to plug and abandon wells.<\/p>\n
SECTION III.30. HEDGING. Section 3.30 of the Disclosure Schedule or the
\nDisclosure Book sets forth for the periods shown obligations of the Company and
\neach of its Subsidiaries for the delivery of hydrocarbons attributable to any of
\nthe properties of the Company or any of its Subsidiaries in the future on
\naccount of prepayment, advance payment, take-or-pay or similar obligations
\nwithout then or thereafter being entitled to receive full value therefor. Except
\nas set forth in Section 3.30 of the Disclosure Schedule or the Disclosure Book,
\nas of the date of this Agreement, neither the Company nor any of its
\nSubsidiaries is bound by futures, hedge, swap, collar, put, call, floor, cap,
\noption or other contracts that are intended to benefit from or reduce or<\/p>\n
30
\n 31<\/p>\n
eliminate the risk of fluctuations in the price of commodities, including
\nhydrocarbons, or securities.<\/p>\n
SECTION III.31. DRILLING OBLIGATIONS. Other than as set forth in
\nSection 3.31 of the Disclosure Schedule or the Disclosure Book, the Company and
\nits Subsidiaries do not have any material drilling obligations or other
\ndevelopment commitments that are not terminable at will by the Company or the
\nSubsidiary party thereto without penalty, other than commitments and obligations
\nthat arose in the ordinary course of business where the sole consequence to the
\nCompany or the Subsidiary party thereto for a failure to participate is to
\nsuffer a “non-consent” penalty or forfeit an interest in the undeveloped lands
\nsubject to the commitment or obligation.<\/p>\n
SECTION III.32. ROYALTY INTERESTS. Section 3.32 of the Disclosure
\nSchedule hereof contains a true, correct and complete description of any
\nroyalty, overriding royalty, net profit or similar interests in oil and gas
\nproperties of the Company or its Subsidiaries, held by any current or former
\ndirectors, officers, employees, or consultants of the Company, or their assigns,
\nany independent contractors engaged by the Company, or any other Persons.<\/p>\n
SECTION III.33. SEISMIC INFORMATION. Section 3.33 of the Disclosure
\nSchedule describes all material agreements by which the Company has a license to
\nuse, a right or commitment to acquire, or that otherwise provide access to, 3-D
\nseismic data (such agreements collectively referred to as the “Seismic
\nAgreements”). True and complete copies of the Seismic Agreements will be
\ndelivered to Harken upon request. Except as set forth in the Seismic Agreements,
\nthe Company has no obligations in order to have full use of the seismic
\ninformation covered by the Seismic Agreements. Except to the extent set forth in
\nthe Seismic Agreements, the transactions contemplated by this Agreement will not
\nterminate or otherwise should not adversely affect the Company’s rights under
\nthe Seismic Agreements.<\/p>\n
SECTION III.34. TAX PARTNERSHIPS. No item of the Interests is treated
\nfor income tax purposes by the Company and its Subsidiaries as being owned by a
\npartnership.<\/p>\n
SECTION III.35. NOTES AND ACCOUNTS RECEIVABLE. Except as disclosed in
\nSection 3.35 of the Disclosure Schedule, the Financial Statements, or the
\nDisclosure Book, all notes and accounts receivable of the Company and its
\nSubsidiaries are reflected properly on their books and records, and to the
\nCompany’s best knowledge, are valid receivables subject to no setoffs or
\ncounterclaims, are current and collectible within sixty (60) days after the
\nEffective Time or in accordance with their terms, subject only to the reserve
\nfor bad debts set forth on the face of the June Balance Sheet (rather than in
\nany notes thereto) as adjusted for the passage of time through the Effective
\nTime in accordance with the past custom and practice of the Company and its
\nSubsidiaries.<\/p>\n
SECTION III.36. FULL DISCLOSURE. The Company has disclosed to Harken
\nall material facts pertaining particularly to the Company, its Subsidiaries, the
\nEvaluated Properties or the Assets (as opposed to public information concerning
\nmarketing conditions generally in the oil and gas industry) which, in the
\nreasonable business judgment of the Company, have a Material Adverse Effect on,
\nor in the future would be reasonably expected to have a Material Adverse Effect
\non, the Company, one of its Subsidiaries, the Evaluated Properties or the Assets
\nor the ownership, operation or maintenance of any of the Evaluated Properties or
\nthe Assets.<\/p>\n
31
\n 32<\/p>\n
SECTION III.37. OPINION OF FINANCIAL ADVISOR. The Board of Directors of
\nXPLOR has received the written opinion of Prudential Securities, Inc. dated
\nprior to the Effective Time, to the effect that, the Merger Consideration is
\nfair from a financial point of view, to the XPLOR Stockholders, and a copy has
\nbeen provided to Harken.<\/p>\n
SECTION III.38. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES OF THE
\nCOMPANY. THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY CONTAINED IN THIS
\nAGREEMENT ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES,
\nEXPRESS OR IMPLIED, AND THE COMPANY HEREBY DISCLAIMS ALL OTHER REPRESENTATIONS
\nAND WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, INCLUDING WITHOUT LIMITATION (i)
\nANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY, (ii) ANY EXPRESS OR IMPLIED
\nWARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (iii) ANY EXPRESS OR IMPLIED
\nWARRANTY AS TO CONDITION, OR (iv) ANY EXPRESS OR IMPLIED WARRANTY OF CONFORMITY
\nTO MODELS OR SAMPLES OF MATERIALS AND MAKES NO REPRESENTATIONS AS TO QUALITY OR
\nQUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE INTERESTS OR THE
\nABILITY OF THE INTERESTS TO PRODUCE HYDROCARBONS.<\/p>\n
ARTICLE IV<\/p>\n
REPRESENTATIONS OF HARKEN AND SUB<\/p>\n
Except to the extent a matter may be disclosed in the SEC Reports (as
\ndefined in Section IV.09) filed five (5) business days prior to the date of this
\nAgreement or provided to the Company, Harken and Sub represent, warrant and
\nagree as follows:<\/p>\n
SECTION IV.01. EXISTENCE AND GOOD STANDING OF HARKEN. Harken is a
\ncorporation duly organized, validly existing and in good standing under the laws
\nof the State of Delaware. Harken has the corporate power and authority to own
\nits properties and to carry on its business as now being conducted. Harken is
\nduly qualified to do business and is in good standing in each jurisdiction in
\nwhich its ownership or leasing of its properties or the conduct of its business
\nrequires such qualification, except for jurisdictions in which the failure to be
\nso qualified or to be in good standing would not, individually or in the
\naggregate, have a Material Adverse Effect.<\/p>\n
SECTION IV.02. EXISTENCE AND GOOD STANDING OF SUB. Sub is a corporation
\nduly organized, validly existing and in good standing under the laws of the
\nState of Delaware. Sub has the corporate power and authority to own its
\nproperties and to carry on its business as now being conducted. Sub is duly
\nqualified to do business and is in good standing in each jurisdictions in which
\nits ownership or leasing of its properties or the conduct of its business
\nrequires such qualification, except for jurisdictions in which the failure to be
\nso qualified or to be in good standing would not, individually or in the
\naggregate, have a Material Adverse Effect.<\/p>\n
SECTION IV.03. CORPORATE AUTHORITY. Harken has full corporate power and
\nauthority to execute and deliver this Agreement and to perform its obligations
\nhereunder. This Agreement<\/p>\n
32
\n 33<\/p>\n
constitutes the valid and legally binding obligation of Harken, enforceable in
\naccordance with its terms and conditions. Harken need not give any notice to,
\nmake any filing with, or obtain any authorization, consent, or approval of any
\ngovernment or governmental agency in order to consummate the transactions
\ncontemplated by this Agreement.<\/p>\n
SECTION IV.04. NONCONTRAVENTION. Neither the execution and the delivery
\nof this Agreement, nor the consummation of the transactions contemplated hereby,
\nwill (a) violate any constitution, statute, regulation, rule, injunction,
\njudgment, order, decree, ruling, charge, or other restriction of any government,
\ngovernmental agency, or court to which Harken or Sub is subject or any provision
\nof their respective charter or bylaws or (b) conflict with, result in a breach
\nof, constitute a default under, result in the acceleration of, create in any
\nparty the right to accelerate, terminate, modify, or cancel, or require any
\nnotice under any agreement, contract, lease, license, instrument, or other
\narrangement to which either Harken or Sub is a party or by which either is bound
\nor to which any of their respective assets are subject (or result in the
\nimposition of any security interest upon any of their assets), except where the
\noccurrence of such event would not have a Material Adverse Effect. Other than
\nthose contemplated hereby, none of Harken and Sub needs to give any notice to,
\nmake any filing with, or obtain any authorization, consent, or approval of any
\ngovernment or governmental agency in order for the Parties hereto to consummate
\nthe transactions contemplated by this Agreement.<\/p>\n
SECTION IV.05. NO BROKERS’ OR OTHER FEES. No broker, finder or
\ninvestment banker is entitled to any fee or commission in connection with the
\ntransactions contemplated hereby based upon arrangements made by or on behalf of
\nHarken or Sub.<\/p>\n
SECTION IV.06. CAPITALIZATION. As of the date of this Agreement,
\nwithout giving effect to the transaction contemplated hereby, the entire
\nauthorized capital stock of Harken consists of 225,000,000 shares of Harken
\nCommon Stock, of which 136,160,830 Common Stock are issued and outstanding and
\nof which 1,218,000 shares of Harken Common Stock are held in treasury; and
\n10,000,000 shares of preferred stock, none of which are outstanding. All
\noutstanding shares have been duly authorized and validly issued and are fully
\npaid and non-assessable and are not subject to any preemptive rights. A total of
\n1,520,000 warrants and 14,509,624 stock options, each exercisable for one share
\nof Harken Common Stock, are outstanding. In addition, approximately $85.0
\nmillion of 5% convertible notes are outstanding. Harken has reserved for
\nissuance 87,621,170 shares of Harken Common Stock to be issued upon exercise or
\nconversion of any outstanding stock options, warrants or convertible notes. No
\nother capital stock or equity securities of or interests in Harken are
\nauthorized or outstanding.<\/p>\n
SECTION IV.07. LITIGATION. There is no action, suit, proceeding or
\ninvestigation pending or currently threatened against Harken or Sub that
\nquestions the validity of this Agreement or the Related Agreements or Harken’s
\nor Sub’s right to enter into this Agreement or the Related Agreements, or to
\nconsummate the transactions contemplated hereby or thereby or which, if decided
\nin a manner adverse to Harken or Sub, would reasonably be expected to have a
\nMaterial Adverse Effect.<\/p>\n
SECTION IV.08. COPIES OF DOCUMENTS. Harken and Sub have caused to be
\nmade available for inspection and copying by the Company and its advisers, true,
\ncomplete and correct<\/p>\n
33
\n 34<\/p>\n
copies of all documents referred to in this Article IV or in any schedule
\nfurnished by Harken and Sub to the Company or reasonably requested in writing by
\nthe Company.<\/p>\n
SECTION IV.09. REPORTS WITH THE SECURITIES AND EXCHANGE COMMISSION. All
\nregistration statements, reports, proxy statements and other materials
\n(collectively, “SEC Reports”) required to be filed by Harken with the Commission
\nsince January 1, 1999 were filed within the applicable required time periods (or
\nany extensions related thereto), complied in all respects with the applicable
\nrequirements of the Securities Act and the Securities Exchange Act of 1934 (the
\n“1934 Act”) and the applicable rules and regulations of the Commission
\npromulgated thereunder, and at the time filed (or, if amended or superseded by a
\nfiling prior to the date of this Agreement, then on the date of such filing if
\nsuch filing has been provided to the Company) did not contain any untrue
\nstatement of a material fact or omit to state a material fact required to be
\nstated therein or necessary to make the statements made therein, in light of the
\ncircumstances under which they were made, not misleading. Harken has furnished
\nthe Company with complete and accurate copies of its quarterly report on Form
\n10-Q for the fiscal quarter ended June 30, 1999, and all other reports or
\ndocuments required to be filed by Harken pursuant to Section 13(a) or 15(d) of
\nthe 1934 Act since the filing of the most recent quarterly report on Form 10-Q.
\nThe consolidated balance sheets and the related statements of income,
\nstockholders’ equity and cash flow (including the related notes thereto) of
\nHarken included in the SEC Reports complied as to form in all material respects
\nwith applicable accounting requirements and the published rules and regulations
\nof the Commission with respect thereto and have been prepared in accordance with
\ngenerally accepted accounting principles applied on a basis consistent with
\nprior periods (except as otherwise noted therein). The balance sheets included
\nin the SEC Reports present fairly the consolidated financial position of Harken
\nand its consolidated subsidiaries as of their respective dates, and, except as
\nindicated therein, reflect all claims against and all debts and liabilities of
\nHarken and its consolidated subsidiaries, fixed or contingent, as at the
\nrespective dates thereof, and the related statements of income, stockholders’
\nequity and cash flow fairly present the results of its operations and its cash
\nflow for the periods presented therein (subject, in the case of the unaudited
\ninterim financial statements, to normal year-end adjustments). Since December
\n31, 1998, there has been no material adverse change in the assets or
\nliabilities, or in the business or condition, financial or otherwise, or in the
\nresults of operations of Harken and its consolidated subsidiaries taken as a
\nwhole other than changes in the oil and gas industry generally and changes in
\nthe ordinary course of business consistent with past practice and, other than
\nthe transactions contemplated by this Agreement or set forth in Section 4.9 of
\nthe Disclosure Schedule, to the knowledge of Harken, no fact or condition exists
\nor is contemplated or threatened which might cause such a change in the future.<\/p>\n
SECTION IV.10. HARKEN COMMON STOCK AND WARRANTS. The Harken Common
\nStock to be issued as part of the Merger Consideration will be duly authorized
\nand, upon issuance pursuant to the terms of this Agreement or the Warrants, such
\nshares will be validly issued, fully paid, and non-assessable, and will not be
\nsubject to any preemptive or similar right. The Warrants to be issued as part of
\nthe Merger Consideration will be duly authorized, executed and delivered, and
\nupon issuance pursuant to the terms of this Agreement, will constitute the valid
\nand legally binding obligation of Harken, enforceable in accordance with their
\nterms and conditions.<\/p>\n
34
\n 35<\/p>\n
SECTION IV.11. FULL DISCLOSURE. Harken has disclosed to the Company all
\nmaterial facts pertaining particularly to Harken, its subsidiaries, the Harken
\nEvaluated Properties, or the Harken Assets (as opposed to public information
\nconcerning marketing conditions generally in the oil and gas industry) which, in
\nthe reasonable business judgment of Harken, have a Material Adverse Effect on,
\nor in the future would be reasonably expected to have a Material Adverse Effect
\non, Harken, its Subsidiaries, the Harken Evaluated Properties, or the Harken
\nAssets or the ownership operation, or maintenance of any of the Harken Evaluated
\nProperties or the Harken Assets.<\/p>\n
SECTION IV.12. BOOKS AND RECORDS. The minute books of Harken, as
\npreviously made available to the Company and its representatives, accurately
\nreflect all meetings of and corporate actions or written consents by the Board
\nof Directors of Harken.<\/p>\n
SECTION IV.13. TAXES. (a) Except where the failure to file Tax Returns
\nand pay Taxes would not reasonably be expected to have a Material Adverse
\nEffect, Harken and Sub have (i) duly filed with the appropriate Federal, state,
\nlocal and foreign taxing authorities all Tax Returns required to be filed by or
\nwith respect to Harken and Sub as of the date of this Agreement, and such Tax
\nReturns are true, correct and complete in all material respects and (ii) paid or
\nmade provision for in the Financial Statements all Taxes of Harken and Sub to be
\ndue on such Tax Returns. To the best knowledge of Harken and Sub, there are no
\ntax liens on any of the Assets other than liens for current real estate taxes
\nnot yet due or Taxes being contested in good faith by appropriate proceedings.
\nHarken or the Sub have not received any written notice of deficiency, assessment
\nor proposed assessment from any Federal, state, local, tribal or foreign taxing
\nauthority with respect to liabilities for Taxes of Harken or Sub which have not
\nbeen paid or finally settled, and, there is no pending tax examination of or tax
\nclaim assessed against Harken, the Sub or any of the Assets, and any such
\ndeficiency, assessment, proposed assessment or tax claim is being contested in
\ngood faith through appropriate proceedings.<\/p>\n
SECTION IV.14. RESTRICTIVE DOCUMENTS AND GOVERNMENTAL CONSENTS. Harken
\nand Sub are not subject to, or a party to, any charter, by-law, mortgage, lien,
\nlease, license, permit, agreement, contract, instrument, law, rule, ordinance,
\nregulation, order, judgment or decree, or any other restriction of any kind or
\ncharacter, which would prevent the execution and delivery of this Agreement or
\nthe Related Agreements, the consummation of the transactions contemplated by
\nthis Agreement or the Related Agreements, compliance by Harken and Sub with the
\nterms, conditions and provisions hereof or thereof or, to the best knowledge of
\nHarken and Sub, the continued operation of Harken’s and Sub’s businesses after
\nthe date hereof on substantially the same basis as heretofore operated or which
\nwould restrict the ability of Harken or Sub to acquire any property or conduct
\nbusiness in any area except as would not have a Material Adverse Effect. Other
\nthan in connection or compliance with the provisions of the Delaware Statute,
\nthe Securities Act, the securities, takeover or blue sky laws of the various
\nstates, neither the nature of Harken and the Sub, nor of any of their respective
\nbusinesses or properties, nor any relationship between Harken and the Sub and
\nany other Person is such as to require consent, approval or authorization of, or
\nfiling, registration or qualification with, any governmental authority on the
\npart of Harken as a condition to the execution and delivery of this Agreement
\nand the Related Agreements and the consummation by Harken and the Sub of the
\ntransactions contemplated by this Agreement and the Related Agreements.<\/p>\n
35
\n 36<\/p>\n
SECTION IV.15. TITLE. Harken and Sub have good and defensible title to
\nall the properties and assets of every kind, character and description (real,
\npersonal or mixed, tangible and intangible), including, without limitation, all
\nparcels of real property, pipelines, rights-of-way and easements and other
\nincidental rights and permits, reflected on the latest balance sheet included in
\nthe SEC Reports (the “Harken Assets”) except for Harken Assets that are obsolete
\nor that have been disposed of in the ordinary course of business free and clear
\nof all encumbrances of any nature except for (i) the encumbrances and title
\ndefects specifically described in Schedule 4.15; (ii) mortgages and encumbrances
\nwhich secure indebtedness or obligations which are properly reflected on
\nSchedule 4.15, if such indebtedness exceeds $50,000; (iii) Permitted
\nEncumbrances; and (iv) such imperfections of title and encumbrances, if any, as
\ndo not materially interfere with the present use of any of the Harken Assets
\nsubject thereto.<\/p>\n
SECTION IV.16. HARKEN INDEPENDENT ENGINEERING REPORT. Harken has made
\navailable to the Company the results of the Harken Independent Engineering
\nReport, prepared by Gaffney, Cline & Associates, DeGolyer and MacNaughton and JR
\nButler and Company with respect to reserves as of December 31, 1998 (the “Harken
\nIndependent Engineering Report”) on the oil and gas fields listed on the
\nattachment thereto (the “Harken Evaluated Properties”) in which Harken will have
\ninterests subsequent to the Effective Time. The Harken Independent Engineering
\nReport is the latest independent engineering report available to Harken relating
\nto the Harken Evaluated Properties. Harken has provided no materially false or
\nmisleading information to and has not withheld from the Independent Engineer any
\nmaterial information with respect to the preparation of the Harken Independent
\nEngineering Report. Except as set forth on Section 4.16 of the Disclosure
\nSchedule, Harken is not aware of any facts or circumstances that should
\nreasonably cause Harken to conclude that (i) any of the information that was
\nsupplied by Harken to the Independent Engineer in connection with its
\npreparation of the Harken Independent Engineering Report is not currently
\ncorrect in all material respects (other than normal depletion by production in
\nthe ordinary course) or (ii) the Harken Independent Engineering Report is
\nincorrect in any material respect.<\/p>\n
SECTION IV.17. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES OF HARKEN
\nAND SUB. THE REPRESENTATIONS AND WARRANTIES OF HARKEN AND SUB CONTAINED IN THIS
\nAGREEMENT ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES,
\nEXPRESS OR IMPLIED, AND HARKEN AND SUB HEREBY DISCLAIM ALL OTHER REPRESENTATIONS
\nAND WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, INCLUDING WITHOUT LIMITATION (i)
\nANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY, (ii) ANY EXPRESS OR IMPLIED
\nWARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (iii) ANY EXPRESS OR IMPLIED
\nWARRANTY AS TO CONDITION, OR (iv) ANY EXPRESS OR IMPLIED WARRANTY OF CONFORMITY
\nTO MODELS OR SAMPLES OF MATERIALS AND MAKES NO REPRESENTATIONS AS TO QUALITY OR
\nQUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE HARKEN INTERESTS
\nOR THE ABILITY OF THE INTERESTS TO PRODUCE HYDROCARBONS.<\/p>\n
36
\n 37<\/p>\n
ARTICLE V<\/p>\n
COVENANTS<\/p>\n
SECTION V.01. CONDUCT OF BUSINESS OF THE COMPANY AND HARKEN. During the
\nperiod from the date of this Agreement to the Effective Time, or the dates, if
\nany, on which this Agreement is earlier terminated pursuant to Section X.14
\nhereof, each of Harken and the Company shall conduct its respective operations
\nonly according to its ordinary and usual course of business and the Company
\nshall use reasonable best efforts to preserve intact its respective business
\norganization, keep available the services of its officers and employees and
\nmaintain satisfactory relationships with licensors, suppliers, distributors,
\nlessees, clients and others having business relationships with it.
\nNotwithstanding the immediately preceding sentence, pending the Effective Time
\nand except as may be first approved by Harken, or the Company, as the case may
\nbe, or as is otherwise permitted or required by this Agreement, the Company will
\n(a) refrain from making any bonus, pension, retirement or insurance payment or
\narrangement to or with any persons except those that may have already been
\naccrued and from increasing any benefits payable under any Plan; (b) refrain
\nfrom entering into any contract or commitment except contracts in the ordinary
\ncourse of business; and (c) refrain from making any change affecting any bank,
\nsafe deposit or power of attorney arrangements; and each of Harken, Sub, and the
\nCompany will (x) cause its Certificate of Incorporation and By-Laws to be
\nmaintained in their form on the date of this Agreement and (y) refrain from
\ndeclaring, setting aside, paying or distributing any dividends or distribution
\nwith respect to its capital stock or engage in any similar recapitalization.
\nDuring the period from the date of this Agreement to the Effective Date, each of
\nHarken, Sub, and the Company shall confer on a regular and frequent basis to
\nreport material operational matters and to report the general status of ongoing
\noperations. Each of Harken, Sub, and the Company shall notify Harken of any
\nunexpected emergency or other change in the normal course of its business or in
\nthe operation of its properties and of any governmental complaints,
\ninvestigations or hearings (or communications indicating that the same may be
\ncontemplated), adjudicatory proceedings, budget meetings or submissions
\ninvolving any material property of Harken, Sub, or the Company, and to keep each
\nother fully informed of such events and permit each other’s respective
\nrepresentatives prompt access to all materials prepared in connection therewith.<\/p>\n
SECTION V.02. EXCLUSIVE DEALING. During the period from the date of
\nthis Agreement to the earlier of (i) the Effective Time or (ii) the termination
\nof this Agreement pursuant to Section X.14 hereof, the Company shall not take
\nany action to, directly or indirectly, encourage, solicit, initiate or engage in
\ndiscussions or negotiations with, or provide any information to, any Person,
\nother than Harken, concerning any purchase of the Shares or any merger or sale
\nof all or substantially all of the assets of the Company and the Subsidiaries or
\nsimilar transaction involving the Company and any of the Subsidiaries. The
\nCompany will immediately notify Harken if any Person makes any proposal, after
\ninquiry, or contact with respect to any of the foregoing.<\/p>\n
SECTION V.03. REVIEW OF THE COMPANY AND HARKEN; CONFIDENTIALITY. (a)
\nHarken and the Company may, prior to the Effective Time, through their
\nrespective representatives, review the properties, books and records of the
\nCompany and their respective financial and legal condition as they deem
\nnecessary or advisable to familiarize itself themselves with such<\/p>\n
37
\n 38<\/p>\n
properties and other matters; such review shall not, however, affect the
\nrepresentations and warranties made by Harken, Sub, and the Company hereunder.<\/p>\n
(b) Each of Harken and the Company shall permit each other and their
\nrespective representatives to have, after the date of execution hereof, full
\naccess to the premises and to all the books and records of the Company and
\nHarken and will cause the officers of Harken, Sub, and the Company to furnish
\neach other with such financial and operating data and other information with
\nrespect to the business and properties of Harken, Sub, and the Company as they
\nshall from time to time reasonably request. In the event of termination of this
\nAgreement, each of Harken and the Company shall keep confidential any material
\ninformation obtained from the other concerning the properties, operations and
\nbusiness (unless readily ascertainable from public or published information or
\ntrade sources) until the same ceases to be material (or becomes so
\nascertainable) and shall return to each other all copies of any schedules,
\nstatements, documents or other written information obtained in connection
\ntherewith. Harken, Sub and the Company shall deliver or cause to be delivered on
\nthe Closing Date, and at such other times and places as shall be reasonably
\nagreed upon, such additional instruments as the Company, Harken and Sub may
\nreasonably request for the purpose of carrying out this Agreement.<\/p>\n
SECTION V.04. REGULATORY AND OTHER FILINGS AND APPROVALS. Each of
\nHarken, Sub and the Company shall duly make all regulatory filings required to
\nbe made by each in respect of this Agreement or the transactions contemplated
\nhereby. Harken, Sub and the Company shall use all reasonable efforts to obtain
\nall regulatory approvals necessary to carry out the transactions contemplated by
\nthis Agreement.<\/p>\n
SECTION V.05. REASONABLE BEST EFFORTS. Subject to the fiduciary duties
\nof the directors of Harken, Sub and the Company under applicable law as advised
\nby counsel, each of Harken, Sub and the Company agrees to use its reasonable
\nbest efforts promptly to take, or cause to be taken, all actions and to do, or
\ncause to be done, all things necessary, proper or advisable to consummate and to
\nmake effective the transactions contemplated by this Agreement and the Related
\nAgreements, including the satisfaction of all conditions thereto, and shall use
\ntheir reasonable best efforts to obtain all waivers, permits, consents and
\napprovals and to effect all registrations, filings and notices with or to third
\nparties or governmental or public bodies or authorities that are, in the opinion
\nof either Harken, Sub and the Company, necessary or desirable in connection with
\nthe transactions contemplated by this Agreement and the Related Agreements,
\nincluding, without limitation, filings and approvals to the extent required
\nunder the Delaware Statute, the securities, takeover or blue sky laws of the
\nvarious states, the Securities Act, the regulatory laws of various states in
\nwhich Harken, Sub and the Company conduct business, and consents and waivers
\nrequired under any material contracts, agreements, leases, licenses or other
\ndocuments to which Harken, Sub or the Company is a party. If at any time after
\nthe Effective Time any further action is necessary or desirable to carry out the
\npurposes of this Agreement and the Related Agreements, the proper officers or
\ndirectors of Harken, Sub and the Company shall take such action.<\/p>\n
SECTION V.06. PUBLIC ANNOUNCEMENTS. Harken and the Company shall
\nconsult each other before issuing any press release or other public announcement
\nregarding the Merger, and shall not issue any such press release or other public
\nannouncement without the consent of the<\/p>\n
38
\n 39<\/p>\n
other unless required by law, as advised by counsel, or by obligations pursuant
\nto any listing agreement with any national securities exchange.<\/p>\n
SECTION V.07. AMEX QUOTATION. Harken shall prepare and submit a listing
\napplication covering the shares to be issued in the Merger Consideration for
\nquotation on The American Stock Exchange as promptly as practicable after the
\ndate hereof.<\/p>\n
SECTION V.08. CHANGE OF CONTROL PAYMENTS. The “change of control”
\nprovisions of the employment agreements set forth in Section 3.14 of the
\nDisclosure Schedule shall be paid by Harken at the Effective Time or, in lieu
\nthereof, other payments as arranged with such persons employed pursuant to such
\nemployment agreements.<\/p>\n
SECTION V.09. DIRECTORS’ AND OFFICERS’ INSURANCE. Reference is hereby
\nmade to all provisions of the Restated Certificate of Incorporation and Bylaws
\nof the Company and its Subsidiaries and all indemnification agreements between
\nthe Company or any Company Subsidiary and any director, officer, or employee of
\nthe Company which agreements are disclosed in Section 5.09 of the Disclosure
\nSchedule that contemplate indemnification of directors, officers, and employees
\nof the Company and its Subsidiaries (the “Company Indemnification Provisions”).
\nFrom and after the Effective Time, the Surviving Corporation shall, and Harken
\nshall cause the successor to the Surviving Corporation to, honor the Company’s
\nexisting obligations to indemnify all present and former directors, officers,
\nand employees of the Company and its Subsidiaries to the fullest extent called
\nfor by the Company Indemnification Provisions. The Surviving Corporation shall
\nalso advance expenses (including reasonable attorneys’ fees), as reasonably
\nincurred by such individuals to the fullest extent permitted by applicable law
\nprovided that if required by law such individual provides an undertaking to
\nrepay such advances if it is ultimately determined that such individual is not
\nentitled to indemnification. The Company has purchased a “tail policy,” the
\ndetails of which are set forth in Section 5.09 of the Disclosure Schedule to
\nprovide the directors and officers of the Company with the coverage set forth
\ntherein.<\/p>\n
SECTION V.10. INVESTOR AGREEMENT. Harken shall have received an
\nexecuted Agreement, a form of which is attached as Exhibit F, from each XPLOR
\nPreferred Stockholder. In addition, the document shall include a waiver on the
\npart of each holder of Preferred Stock, of such holders’ rights pursuant to
\nArticle Ninth of the Certificate of Incorporation, including in particular,
\nSection 4.2 therein and each Preferred Stockholder shall hold harmless and
\nindemnify Harken, Sub, the Company and its Subsidiaries from certain claims,
\nobligations and liabilities as set forth therein.<\/p>\n
SECTION V.11. ISSUANCE OF SECURITIES. Without the prior written consent
\nof the Company, Harken shall not issue or agree to issue any shares of capital
\nstock (except upon the exercise of outstanding rights, options or warrants to
\npurchase common stock in exchange for full payment), bonds or other corporate
\nsecurities during the period between the date hereof and the Effective Time.<\/p>\n
SECTION V.12. BENEFIT PLANS AND RELATED MATTERS. (a) Harken shall take
\nsuch actions as are necessary to fulfill the Company’s severance obligations to
\nits employees and to<\/p>\n
39
\n 40<\/p>\n
make available to former employees of the Company continued employee and welfare
\nbenefits after the Effective Time as required by COBRA or other applicable law.<\/p>\n
(b) Other than as set forth in Sections V.12(a) and (c) and subject to
\nthe provisions of Harken’s policies and programs, any employee of the Company
\nretained by Harken or its affiliates (at their sole and absolute discretion)
\nafter the Effective Time (each, a “Transferred Employee”) shall be eligible to
\nparticipate or eligible for accrual of benefits, vesting and contributions or
\naccruals to be made or credited following the Effective Time under each of
\nHarken’s employee benefit plans, programs or arrangements available to all or
\nsubstantially all of Harken’s employees, subject to the terms upon which such
\nplans allow new participation by Harken’s employees. Each Transferred Employee
\nshall be credited with the time-in-service that the employee accrued with the
\nCompany or its Subsidiaries.<\/p>\n
(c) Except as expressly provided in this Section V.12, Harken has no
\nobligation to (i) make any contributions or accruals with respect to any period
\npreceding the Effective Time, (ii) offer Transferred Employees the same or
\ncomparable employee plans or benefits as those offered by the Company, or (iii)
\nassume any liability of the Company with respect to the Company’s employee
\nbenefit plans or severance policy, accrued vacation or sick leave for the
\nCompany’s employees, or the Company’s employment of the Transferred Employees
\nprior to the Effective Time. This Agreement is not intended to create and does
\nnot create any contractual or legal rights in or enforceable by any employee of
\nthe Company or upon any party other than the Company and Harken. Any oral or
\nwritten communications to the employees of the Company prior to the Effective
\nTime concerning the subject matter of this Section V.12 shall be approved in
\nadvance by the Company and Harken.<\/p>\n
SECTION V.13. RESIGNATIONS. The Company will procure from each director
\nand officer of the Company and its Subsidiaries written resignation as of the
\nEffective Time from each and every such position that such person holds with the
\nCompany or any of its Subsidiaries and the Company shall deliver such written
\nresignation to Harken at Closing.<\/p>\n
ARTICLE VI<\/p>\n
CONDITIONS TO HARKEN’S OBLIGATIONS<\/p>\n
All obligations of Harken to be discharged under this Agreement at the
\nClosing are subject to the fulfillment, prior to or at the Closing, of each of
\nthe following conditions, unless waived in writing by Harken prior to or at the
\nClosing:<\/p>\n
SECTION VI.01. GOOD STANDING CERTIFICATES; SECRETARY’S CERTIFICATE. The
\nCompany shall have delivered to Harken (a) copies of the charter, including all
\namendments thereto, certified by the Secretary of State or other appropriate
\nofficial of the jurisdiction of incorporation of the Company and each of the
\nSubsidiaries; (b) certificates from the Secretary of State or other appropriate
\nofficial of the jurisdiction of incorporation to the effect that the Company and
\nthe Subsidiaries are in good standing or subsisting in such jurisdiction and
\nlisting all charter documents of the Company and the Subsidiaries on file; (c) a
\ncertificate from the Secretary of State or other appropriate official in each
\nState in which the Company and the Subsidiaries are qualified to do business to
\nthe effect that the Company and the Subsidiaries are in good standing<\/p>\n
40
\n 41<\/p>\n
in such state; and (d) a certificate, dated as of the Closing Date and signed by
\nthe chief executive officer of XPLOR, which contains resolutions or written
\nconsents of the board of directors of XPLOR and the XPLOR Stockholders related
\nto the approval of this Agreement and the Related Agreements.<\/p>\n
SECTION VI.02. NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date,
\nthere shall have been no material adverse change in the assets or liabilities,
\nthe business or condition, financial or otherwise, the results of operations, or
\nprospects of the Company and its Subsidiaries taken as a whole that would or
\nwould be reasonably likely to have a Material Adverse Effect other than such
\nchange that affects Harken and the Company in a substantially similar manner and
\nthe Company shall have delivered to Harken a certificate, dated the Closing
\nDate, to such effect. A change resulting from a change in the prices of oil and
\ngas, stock market conditions, general economic conditions, or oil and gas
\nindustry conditions will not be deemed to be a material adverse change pursuant
\nto this Section VI.02.<\/p>\n
SECTION VI.03. TRUTH OF REPRESENTATIONS AND WARRANTIES. The
\nrepresentations and warranties of the Company contained in this Agreement or in
\nany schedule delivered pursuant hereto shall be true and correct in all material
\nrespects (except for such representations and warranties which are qualified by
\n“material” or “Material Adverse Effect” which shall be true and correct) on and
\nas of the Closing Date with the same effect as though such representations and
\nwarranties had been made on and as of such date except as expressly contemplated
\nherein or in the schedules delivered pursuant to this Agreement, and the Company
\nshall have delivered to Harken on the Closing Date a certificate, dated the
\nClosing Date, to such effect.<\/p>\n
SECTION VI.04. PERFORMANCE OF AGREEMENTS. Each and all of the
\nagreements of the Company to be performed on or before the Closing Date pursuant
\nto the terms hereof shall have been duly performed in all material respects, and
\nthe Company shall have delivered to Harken a certificate, dated the Closing
\nDate, to such effect.<\/p>\n
SECTION VI.05. NO LITIGATION THREATENED. No action or proceedings shall
\nhave been instituted or, to the best knowledge of the Company, threatened before
\na court or other government body or by any public authority to restrain or
\nprohibit any of the transactions contemplated hereby, and the Company shall have
\ndelivered to Harken a certificate, dated the Closing Date, to such effect.<\/p>\n
SECTION VI.06. APPROVALS. All governmental and other consents and
\napprovals, if any, necessary to permit the consummation of the transactions
\ncontemplated by this Agreement shall have been received. No action or proceeding
\nshall have been commenced or threatened seeking any injunction, restraining
\norder or other order which seeks to prohibit, restrain, invalidate or set aside
\nthe effectuation of the transaction contemplated herein.<\/p>\n
SECTION VI.07. INTRA-COMPANY DEBT. All indebtedness of the directors,
\nofficers and employees of the Company and the Subsidiaries to the Company and
\nthe Subsidiaries shall have been repaid in full except for intercompany
\nreceivables and payables in the ordinary course of business.<\/p>\n
41
\n 42<\/p>\n
SECTION VI.08. PROCEEDINGS. All proceedings to be taken by the Company
\nin connection with the transactions contemplated by this Agreement and all
\ndocuments incident thereto shall be reasonably satisfactory in form and
\nsubstance to Harken and its counsel and Harken shall have received copies of all
\nsuch documents and other evidences as it or its counsel may reasonably request
\nin order to establish the consummation of such transactions and the taking of
\nall proceedings in connection therewith.<\/p>\n
SECTION VI.09. STOCKHOLDER APPROVAL. This Agreement shall have been
\nduly approved by the XPLOR Stockholders in accordance with applicable law.<\/p>\n
SECTION VI.10. WARRANTS. All warrants to purchase capital stock of the
\nCompany shall have been terminated.<\/p>\n
SECTION VI.11. XPLOR SHAREHOLDER AGREEMENT. The Shareholder Agreement,
\ndated as of July 29, 1998, by and among XPLOR Energy, Inc., XP Holdings, LLC,
\nTrust Company of the West, TCW Debt and Royalty Fund VI, L.P., TCW Debt and
\nRoyalty Fund VIB, L.P., TCW DR VI Royalty Partnership, L.P., and the other
\nshareholders named therein ( the “XPLOR Shareholders Agreement”) shall be
\nterminated and such agreement shall be of no further force or effect and no
\nparty thereto shall have any remaining rights or obligations thereunder as of
\nthe Effective Date.<\/p>\n
SECTION VI.12. EXPENSE REIMBURSEMENT AGREEMENT. The Expense
\nReimbursement Agreement, dated July 29, 1998, by and between the Company and
\nBeacon Energy Management shall be terminated and such agreement shall be of no
\nfurther force or effect and no party thereto shall have any remaining rights or
\nobligations thereunder for services rendered after the Closing Date but the
\nSurviving Corporation shall honor rights and obligations for reasonable expenses
\nthat may have arisen prior to such termination.<\/p>\n
SECTION VI.13. CREDIT AGREEMENT. The Amended and Restated Credit
\nAgreement by and among XPLOR Energy SPV-I, Inc. and Christiania Bank OG
\nKreditkasse ASA and the other lenders party thereto shall have been amended or
\nsuperseded by a new facility satisfactory to Harken and a written letter of the
\nLenders shall have been received stating that no default shall exist or come to
\nexist as of the Closing Date.<\/p>\n
ARTICLE VII<\/p>\n
CONDITIONS TO THE COMPANY’S OBLIGATIONS<\/p>\n
All obligations of the Company to be discharged under this Agreement at
\nthe Closing are subject to the fulfillment, prior to or at the Closing, of each
\nof the following conditions, unless waived pursuant to Section II.03 or in
\nwriting by the Company prior to or at the Closing:<\/p>\n
SECTION VII.01. TRUTH OF REPRESENTATIONS AND WARRANTIES. The
\nrepresentations and warranties of Harken and Sub contained in this Agreement or
\nin any schedule delivered pursuant hereto shall be true and correct in all
\nmaterial respects (except for such representations and warranties which are
\nqualified by “material” or “Material Adverse Effect” which shall be true and
\ncorrect) on and as of the Closing Date with the same effect as though such
\nrepresentations<\/p>\n
42
\n 43<\/p>\n
and warranties had been made on and as of such date; and Harken and Sub shall
\nhave delivered to the Company on the Closing Date a certificate, dated the
\nClosing Date, to such effect.<\/p>\n
SECTION VII.02. APPROVALS. All governmental and all other consents and
\napprovals, if any, necessary to permit the consummation of the transactions
\ncontemplated by this Agreement shall have been received. No action or proceeding
\nshall have been commenced or threatened seeking any injunction, restraining
\norder or other order which seeks to prohibit, restrain, invalidate or set aside
\nthe effectuation of the Merger.<\/p>\n
SECTION VII.03. NO MATERIAL ADVERSE CHANGE. Prior to the Effective
\nTime, there shall have been no material adverse change in the assets or
\nliabilities, the business or condition, financial or otherwise, the results of
\noperations, or prospects of Harken on a consolidated basis that would or would
\nbe reasonably likely to have a Material Adverse Effect other than such change
\nthat affects Harken and the Company in a substantially similar manner and Harken
\nshall have delivered to the Company a certificate, dated the Closing Date, to
\nsuch effect. A change resulting from a change in the prices of oil and gas,
\nstock market conditions, general economic conditions, or oil and gas industry
\nconditions will not be deemed to be a material adverse change pursuant to this
\nSection VII.03.<\/p>\n
SECTION VII.04. NO LITIGATION THREATENED. No action or proceedings
\nshall have been instituted or, to the best knowledge of Harken, threatened
\nbefore a court or other government body or by any public authority to restrain
\nor prohibit any of the transactions contemplated hereby, and Harken and Sub
\nshall have delivered to the Company a certificate, dated the Closing Date, to
\nsuch effect.<\/p>\n
SECTION VII.05. PERFORMANCE OF AGREEMENTS. Each and all of the
\nagreements of Harken and its officers and directors and Sub to be performed on
\nor before the Closing Date pursuant to the terms hereof or the Agreements shall
\nhave been duly performed in all material respects, and Harken and Sub shall have
\ndelivered to the Company a certificate, dated the Closing Date, to such effect.<\/p>\n
SECTION VII.06. PROCEEDINGS. All proceedings to be taken by Harken or
\nSub in connection with the transactions contemplated by this Agreement and all
\ndocuments incident thereto shall be reasonably satisfactory in form and
\nsubstance to the Company and its counsel and the Company shall have received
\ncopies of all such documents and other evidences as it or its counsel may
\nreasonably request in order to establish the consummation of such transactions
\nand the taking of all proceedings in connection therewith.<\/p>\n
SECTION VII.07. GOOD STANDING CERTIFICATES; SECRETARY’S CERTIFICATE.
\nHarken and Sub shall have delivered to the Company (a) copies of the charter,
\nincluding all amendments thereto, certified by the Secretary of State or other
\nappropriate official of the jurisdiction of incorporation of Harken and Sub; (b)
\ncertificates from the Secretary of State or other appropriate official of the
\njurisdiction of incorporation to the effect that Harken and Sub are in good
\nstanding or subsisting in such jurisdiction and listing all charter documents of
\nHarken and Sub on file; and (c) a certificate of Harken dated as of the
\nEffective Time and signed by an executive officer of Harken or Sub, as
\nappropriate, which contains resolutions or written consents of the board of<\/p>\n
43
\n 44<\/p>\n
directors of Harken and Sub, as appropriate, related to the approval of this
\nAgreement and the Related Agreements.<\/p>\n
SECTION VII.08. FAIRNESS OPINION. The Company shall have received a
\nfairness opinion from Prudential Securities in form and substance satisfactory
\nto the Company and its Board of Directors.<\/p>\n
ARTICLE VIII<\/p>\n
SURVIVAL OF REPRESENTATIONS; RECOVERY<\/p>\n
SECTION VIII.01. NON-SURVIVAL OF REPRESENTATIONS. Except as set forth
\nin the Investor Agreement and the terms of the securities issued as Merger
\nConsideration, the representations, warranties, covenants and agreements of the
\nCompany, Harken and Sub set forth in this Agreement shall not survive the Merger
\ncontemplated hereby and shall expire at the Effective Time; provided, however,
\nthat the covenants of Harken set forth in Sections I.01(b), I.02, I.04, I.05,
\nI.06, I.08, I.09, IV.10, V.05, V.07, V.08, V.09, V.12 and X.02, and Article VIII
\nshall survive the Merger contemplated hereby. Except as set forth in the
\nInvestor Agreement, in the absence of fraud, Harken, the Company, Sub, and the
\nSurviving Corporation shall covenant and agree never to institute, directly or
\nindirectly, any action or proceeding against the XPLOR Stockholders based upon
\nor arising out of or in any manner related to, the breach of a representation,
\nwarranty, covenant or agreement contained in this Agreement.<\/p>\n
ARTICLE IX<\/p>\n
CLOSING<\/p>\n
SECTION IX.01. DELIVERIES AT THE CLOSING. Immediately following the
\nsatisfaction of the conditions set forth in Articles VI and VII hereof, the
\nCompany and Sub shall cause a Certificate of Merger to be filed in accordance
\nwith the provisions of the Delaware Statute, and shall take any and all other
\nlawful actions and do any and all other lawful things necessary to cause the
\nMerger to become effective.<\/p>\n
SECTION IX.02. TIME AND PLACE. The consummation of the transactions
\ncontemplated by this Agreement (the “Closing”) shall take place at the offices
\nof Harken Energy Corporation, 16285 Park Ten Place, Suite 600, Houston, Texas
\n77084, as soon as reasonably practicable after such time as the conditions set
\nforth in Articles VI and VII shall have been satisfied or waived, or at such
\nother place or at such other time as may be mutually agreed upon by Harken and
\nthe Company (the “Closing Date”).<\/p>\n
44
\n 45<\/p>\n
ARTICLE X<\/p>\n
MISCELLANEOUS<\/p>\n
SECTION X.01. KNOWLEDGE. Where any representation or warranty contained
\nin this Agreement is expressly qualified by reference to the knowledge,
\ninformation and\/or belief of the Company, Sub or Harken, each of the Company,
\nSub or Harken confirms that he or it, as the case may be, has made due and
\ndiligent inquiry as to the matters that are the subject of such representations
\nand warranties.<\/p>\n
SECTION X.02. EXPENSES. The Parties hereto shall pay all of their own
\nexpenses relating to the transactions contemplated by this Agreement, including,
\nwithout limitation, the fees and expenses of their respective counsel and
\nfinancial advisers and engineers. Notwithstanding the foregoing, the XPLOR
\nPreferred Stockholders shall pay all of their own and the Company’s and its
\nSubsidiaries’ expenses (other than the fees of Prudential as set forth on
\nSchedule 3.24, the cost to purchase the tail policy as set forth in Section 5.09
\nof the Disclosure Schedule and the cash payments referred to in Section V.08 (or
\nother arrangements to be paid in cash in lieu thereof), which shall be paid by
\nHarken) in connection with the transactions contemplated hereby.<\/p>\n
SECTION X.03. GOVERNING LAW. The interpretation and construction of
\nthis Agreement, and all matters relating hereto, shall be governed by the laws
\nof the State of Delaware without regard to the principles or conflicts of law
\napplicable thereto.<\/p>\n
SECTION X.04. DEFINITIONS. For purposes of this Agreement, the
\nfollowing capitalized terms shall have the meanings set forth below:<\/p>\n
“Agreement” shall have the meaning set forth in the Introduction.<\/p>\n
“Appraisal Shares” shall have the meaning set forth in Section I.07.<\/p>\n
“Assets” shall have the meaning set forth in Section III.09.<\/p>\n
“Certificate of Merger” shall have the meaning set forth in Section
\n I.02.<\/p>\n
“Clearance Notice” shall have the meaning set forth in Section I.09(d).<\/p>\n
“Closing” shall have the meaning set forth in Section IX.02.<\/p>\n
“Closing Date” shall have the meaning set forth in Section IX.02.<\/p>\n
“Common Stock” shall have the meaning set forth in Section I.01.<\/p>\n
“Company Indemnification Provisions” shall have the meaning set forth
\n in Section V.09.<\/p>\n
“Delaware Statute” shall have the meaning set forth in Section I.01.<\/p>\n
“Demand Notice” shall have the meaning set forth in Section I.09.<\/p>\n
“Disclosure Book” means the binder labeled “XPLOR ENERGY, INC.
\n Disclosure Book” dated August 10, 1999.<\/p>\n
45
\n 46<\/p>\n
“Effective Period” shall have the meaning set forth in Section I.09.<\/p>\n
“Effective Time” shall have the meaning set forth in Section I.02.<\/p>\n
“Environmental Law” means any applicable legal requirement which is in
\n effect that requires or relates to: (a) advising appropriate
\n authorities, employees, and the public of intended or actual releases
\n of pollutants or hazardous substances or materials, violations of
\n discharge limits, or other prohibitions and of the commencements of
\n activities, such as resource extraction or construction, that could
\n have significant impact on the environment; (b) preventing or reducing
\n to acceptable levels the release of pollutants or hazardous substances
\n or materials into the environment; (c) reducing the quantities,
\n preventing the release, or minimizing the hazardous characteristics of
\n wastes that are generated; (d) assuring that products are designed,
\n formulated, packaged, and used so that they do not present unreasonable
\n risks to human health or the environment when used or disposed of; (e)
\n protecting resources, species, or ecological amenities, including any
\n “Wetlands” as defined in the Clean Water Act and the regulations
\n promulgated thereunder; (f) reducing to acceptable levels the risks
\n inherent in the transportation of hazardous substances, pollutants,
\n oil, or other potentially harmful substances; (g) cleaning up
\n pollutants that have been released, preventing the threat of release,
\n or paying the costs of such clean up or prevention; or (h) making
\n responsible parties pay private parties, or groups of them, for damages
\n done to their health or the environment, or permitting self-appointed
\n representatives of the public interest to recover for injuries done to
\n public assets.<\/p>\n
“ERISA” shall have the meaning set forth in Section III.22.<\/p>\n
“Evaluated Properties” shall have the meaning set forth in Section
\n III.10.<\/p>\n
“Facilities” means any real property, leaseholds, or other interests
\n currently or formerly owned or operated by any of the Company or its
\n Subsidiaries and any buildings, plants, structures, or equipment
\n (including motor vehicles, tank cars, and rolling stock) currently or
\n formerly owned or operated by any of the Company or its Subsidiaries.<\/p>\n
“FERC” shall have the meaning set forth in Section III.12.<\/p>\n
“Financial Statements” shall have the meaning set forth in Section
\n III.06.<\/p>\n
“Harken” shall have the meaning set forth in the Introduction.<\/p>\n
“Harken Assets” shall have the meaning set forth in Section IV.15.<\/p>\n
“Harken Common Stock” shall have the meaning set forth in Section I.01.<\/p>\n
“Harken Independent Engineering Report” shall have the meaning set
\n forth in Section IV.16.<\/p>\n
46
\n 47<\/p>\n
“Hazardous Activity” means the distribution, generation, handling,
\n importing, management, manufacturing, processing, production,
\n refinement, Release, storage, transfer, transportation, treatment, or
\n use (including any withdrawal or other use of groundwater) of Hazardous
\n Materials in, on, under, about, or from the Facilities or any part
\n thereof into the environment, and any other act, business, operation,
\n or thing that increases the danger, or risk of danger, or poses an
\n unreasonable risk of harm to Persons or property on or off the
\n Facilities, or that may affect the value of the Facilities or any of
\n the Company and its Subsidiaries.<\/p>\n
“Hazardous Materials” means any waste or other substance that is
\n listed, defined, designated, or classified as, or otherwise determined
\n to be, hazardous, radioactive, or toxic or a pollutant or a contaminant
\n under or pursuant to any Environmental Law, including any admixture or
\n solution thereof, and specifically including petroleum and all
\n derivatives thereof or synthetic substitutes therefor and asbestos or
\n asbestos containing materials.<\/p>\n
“Independent Engineering Report” shall have the meaning set forth in
\n Section III.10.<\/p>\n
“Insured Parties” shall have the meaning set forth in Section V.09.<\/p>\n
“Internal Engineering Report” shall have the meaning set forth in
\n Section III.10.<\/p>\n
“Interests” shall have the meaning set forth in Section III.11.<\/p>\n
“Land” shall have the meaning set forth in Section III.11.<\/p>\n
“Leases” shall have the meaning set forth in Section III.11.<\/p>\n
“June Balance Sheet” shall have the meaning set forth in Section
\n III.06.<\/p>\n
“Material Adverse Effect” shall mean a material adverse effect on the
\n business, results of operation or financial condition of XPLOR and the
\n Subsidiaries (as hereinafter defined) or Harken and its subsidiaries,
\n as the case may be, taken as a whole, but not including effects that
\n are applicable to XPLOR and the Subsidiaries or Harken and its
\n subsidiaries, as the case may be, resulting from market conditions
\n generally in the oil and gas industry.<\/p>\n
“Material Contracts” shall have the meaning set forth in Section
\n III.14.<\/p>\n
“Merger” shall have the meaning set forth in Section I.01(a).<\/p>\n
“Merger Consideration” shall have the meaning set forth in Section
\n I.04.<\/p>\n
“Merger Shares” shall have the meaning set forth in Section I.04.<\/p>\n
“Occurrence Notice” shall have the meaning set forth in Section
\n I.09(d).<\/p>\n
“Permits” shall have the meaning set forth in Section III.12(g).<\/p>\n
47
\n 48<\/p>\n
“Permitted Encumbrances” Permitted Encumbrances shall mean (i)
\n royalties, overriding royalties, reversionary interests and similar
\n burdens if the cumulative effect of such burdens does not and will not
\n reduce the net revenue interest with respect to a well or property
\n below the net revenue interest shown in the Independent Engineering
\n Report or increase the working interest with respect to such well or
\n property above the working interest shown in the Independent
\n Engineering Report; (ii) the terms and conditions of all leases,
\n servitudes, production sales contracts, division orders, contracts for
\n sale, purchase, exchange, refining or processing of hydrocarbons,
\n unitization and pooling designations, declarations, orders and
\n agreements, operating agreements, agreements of development, area of
\n mutual interest agreements, farmout agreements, gas balancing or
\n deferred production agreements, processing agreements, plant
\n agreements, pipeline, gathering and transportation agreements,
\n injection, repressuring and recycling agreements, salt water or other
\n disposal agreements, seismic or geophysical permits or agreements, and
\n other agreements including, without limitation, the terms and
\n conditions of any and all contracts and agreements set forth in the
\n Independent Engineering Report covering production sales contracts and
\n all other contracts and agreements disclosed in schedules to this
\n Agreement, to the extent that such contracts and agreements do not and
\n will not reduce the net revenue interest of any well or property
\n included in the Interests (as defined in Section III.09) below the net
\n revenue interest shown in the Independent Engineering Report or
\n increase the working interest with respect to such well or property
\n above the working interest shown in the Independent Engineering Report
\n without a proportionate increase in the net revenue interest with
\n respect to such well or property; (iii) easements, rights of way,
\n servitudes, permits, surface leases and other rights with respect to
\n surface obligations, pipelines, grazing, canals, ditches, reservoirs,
\n or the like, conditions, covenants or other restrictions, and easements
\n of streets, alleys, highways, pipelines, telephone lines, power lines,
\n railways and other easements and rights of way on, over or in respect
\n of any of the Interests, so long as they are not such that would have a
\n material adverse effect on such Interest; (iv) any preferential
\n purchase rights, required third party consents to assignment and
\n similar agreements and obligations applicable to the transactions
\n contemplated hereby with respect to which prior to the Effective Time
\n (A) waivers or consents have been obtained from the appropriate person,
\n or (B) the applicable period of time for asserting such rights has
\n expired without any exercise of such rights; (v) liens for Taxes (as
\n defined in Section III.15) or assessments not yet delinquent or being
\n protested in good faith by appropriate action brought in the normal
\n course; (vi) materialmen’s, mechanic’s, repairman’s, employee’s,
\n contractor’s, operator’s, and other similar liens or charges arising in
\n the ordinary course of business (A) if they have not been filed
\n pursuant to law, (B) if filed, they have not yet become due and payable
\n or payment is being withheld as provided by law or (C) if their
\n validity is being contested in good faith in the ordinary course of
\n business by appropriate action; (vii) approvals that are ministerial in
\n nature and are customarily obtained from governmental authorities after
\n the Effective Time in connection with transactions of the same nature
\n as are contemplated hereby; (viii) conventional rights of reassignment
\n arising in respect of abandonment, cessation of production or
\n expiration of leases; (ix) all rights reserved to or vested in any
\n governmental authority to control or regulate any of the Interests in
\n any manner, and all applicable laws, rules and orders of governmental
\n authorities; (x) any other liens, charges, encumbrances, contracts,
\n agreements, instruments, obligations, effects or irregularities of any
\n kind whatsoever that would not have a Material Adverse<\/p>\n
48
\n 49<\/p>\n
Effect; and (xi) overriding royalties pursuant to the Company’s
\n overriding royalty incentive plan, whether oral or written, as
\n specifically described in the Disclosure Book. In addition, any
\n overriding royalties that have not been assigned of record as of
\n December 31, 1999, are set forth in Section 3.32 of the Disclosure
\n Schedule.<\/p>\n
“Person” shall mean and include an individual, a partnership, a joint
\n venture, a corporation, a trust, an unincorporated organization and a
\n government or other department or agency thereof.<\/p>\n
“Piggyback Notice” shall have the meaning set forth in Section I.10.<\/p>\n
“Plans” shall have the meaning set forth in Section III.22.<\/p>\n
“Preferred Stock” shall have the meaning set forth in Section I.01.<\/p>\n
“Related Agreements” shall have the meaning set forth in Section
\n III.03.<\/p>\n
“Registrable Securities” shall have the meaning set forth in Section
\n I.10.<\/p>\n
“Registration Statement” shall have the meaning set forth in Section
\n I.10.<\/p>\n
“SEC” shall have the meaning set forth in Section I.10.<\/p>\n
“SEC Reports” shall have the meaning set forth in Section IV.09.<\/p>\n
“Securities Act” shall have the meaning set forth in Section III.15.<\/p>\n
“Selling Stockholder” shall have the meaning set forth in Section I.10.<\/p>\n
“Shares” shall have the meaning set forth in Section I.04(c).<\/p>\n
“Sub” shall have the meaning set forth in the Introduction.<\/p>\n
“Subsidiaries” shall have the meaning set forth in Section III.05.<\/p>\n
“Surviving Corporation” shall have the meaning set forth in Section
\n I.01.<\/p>\n
“Taxes” shall have the meaning set forth in Section III.17.<\/p>\n
“Tax Return” shall have the meaning set forth in Section III.17.<\/p>\n
“TCW Investors” shall have the meaning set forth in Section I.09(a).<\/p>\n
“TCW Registrable Securities” shall have the meaning set forth in
\n Section I.09(a).<\/p>\n
“Transferred Employee” shall have the meaning set forth in Section
\n V.12.<\/p>\n
49
\n 50<\/p>\n
“XP Holdings Group” shall have the meaning as set forth in Section
\n I.09(a).<\/p>\n
“XP Registrable Securities” shall have the meaning as set forth in
\n Section I.09(a).<\/p>\n
“XPLOR” or “Company” shall have the meaning set forth in the
\n Introduction.<\/p>\n
“XPLOR Agreements” shall have the meaning set forth in Section
\n III.11(a).<\/p>\n
“XPLOR Common Stockholder” shall have the meaning set forth in Section
\n I.01<\/p>\n
“XPLOR Stock Certificates” shall have the meaning set forth in Section
\n I.04(c).<\/p>\n
“XPLOR Preferred Stockholder” shall have the meaning set forth in
\n Section I.01.<\/p>\n
“XPLOR Stockholder” or “XPLOR Stockholders” means the XPLOR Preferred
\n Stockholders and the XPLOR Common Stockholders.<\/p>\n
“XPLOR 401(k) Plan” shall have the meaning set forth in Section V.12.<\/p>\n
“Warrants” shall have the meaning set forth in Section I.04.<\/p>\n
“Well” or “Wells” shall have the meaning set forth in Section III.11.<\/p>\n
“1934 Act” shall have the meaning set forth in Section IV.09.<\/p>\n
SECTION X.05. CAPTIONS. The Article and Section captions used herein
\nare for reference purposes only, and shall not in any way affect the meaning or
\ninterpretation of this Agreement. All references in this Agreement to an Article
\nor Section, when used without further attribution, shall refer to Articles or
\nSections of this Agreement.<\/p>\n
SECTION X.06. PUBLICITY. Except as otherwise required by law and the
\nrules and regulations of The American Stock Exchange, none of the Parties hereto
\nshall issue any press release or make any other public statement, in each case
\nrelating to or connected with or arising out of this Agreement or the matters
\ncontained herein, without obtaining the prior approval of Harken and the Company
\nto the contents and the manner of presentation and publication thereof.<\/p>\n
SECTION X.07. NOTICES. Any notice or other communications required or
\npermitted hereunder shall be sufficiently given if delivered in person or sent
\nby overnight courier or by registered or certified mail, postage prepaid,
\naddressed as follows or by facsimile transmission to the number set forth below:<\/p>\n
50
\n 51<\/p>\n
If to the Company:<\/p>\n
XPLOR Energy, Inc.
\n 10200 Grogans Mill Road, Suite 500
\n The Woodlands, Texas 77380
\n Attention: Steven W. Nance
\n Facsimile: (281) 364-3759<\/p>\n
With a copy to:<\/p>\n
King & Spalding
\n 1100 Louisiana, Suite 3300
\n Houston, Texas 77002
\n Attention: Nancy A. Chafin
\n Facsimile: (713) 751-3290<\/p>\n
If to Harken or Sub:<\/p>\n
Harken Energy Corporation
\n 16285 Park Ten Place, Suite 600
\n Houston, Texas 77084
\n Attention: Larry E. Cummings
\n Facsimile: (281) 717-1400<\/p>\n
With a copy to:<\/p>\n
Baker & McKenzie
\n 1200 Smith Street, Suite 1200
\n Houston, Texas 77002
\n Attention: Amar Budarapu
\n Facsimile: (713) 427-5099<\/p>\n
or such other address as shall be furnished in writing by any such party, and
\nsuch notice or communication shall be deemed to have been given as of the date
\nso delivered or mailed.<\/p>\n
SECTION X.08. PARTIES IN INTEREST. This Agreement may not be
\ntransferred, assigned, pledged or hypothecated by any Party hereto, other than
\nby operation of law. This Agreement shall be binding upon and shall inure to the
\nbenefit of the Parties hereto and their respective heirs, executors,
\nadministrators, successors and assigns.<\/p>\n
SECTION X.09. COUNTERPARTS. This Agreement may be executed in two or
\nmore counterparts, all of which taken together shall constitute one instrument.<\/p>\n
SECTION X.10. ENTIRE AGREEMENT. This Agreement, including the other
\ndocuments referred to herein which form a part hereof, contains the entire
\nunderstanding of the Parties hereto with respect to the subject matter contained
\nherein and therein and supersedes all prior agreements and understandings
\nbetween the Parties with respect to such subject matter. All<\/p>\n
51
\n 52<\/p>\n
exhibits and schedules referred to herein and attached hereto are incorporated
\nherein by reference.<\/p>\n
SECTION X.11. AMENDMENTS. This Agreement may not be changed orally, but
\nonly by an agreement in writing signed by Harken, Sub and the Company.<\/p>\n
SECTION X.12. SEVERABILITY. In case any provision in this Agreement
\nshall be held invalid, illegal or unenforceable, the validity, legality and
\nenforceability of the remaining provisions hereof will not in any way be
\naffected or impaired thereby.<\/p>\n
SECTION X.13. THIRD PARTY BENEFICIARIES. Each Party hereto intends that
\nexcept for the provisions of Articles I and VIII (the last sentence thereof) and
\nSections V.08, V.09, and V.10, this Agreement shall not benefit or create any
\nright or cause of action in or on behalf of any person other than the Parties
\nhereto.<\/p>\n
SECTION X.14. TERMINATION OF AGREEMENT. Notwithstanding anything
\ncontained in this Agreement to the contrary, this Agreement may be terminated
\nand abandoned only in the following manner:<\/p>\n
(a) by the mutual written consent of the Board of Directors of Harken
\nand the Company at any time prior to the Closing; or<\/p>\n
(b) by Harken, Sub or the Company if the Closing shall not have
\noccurred on or before September 30, 1999; provided, however, that the right to
\nterminate this Agreement under this Section X.14(b) shall not be available to
\nany Party whose failure to fulfill any obligation, covenant or condition under
\nthis Agreement has been the cause of, or resulted in, the failure of the Closing
\nto occur on or before such date; or<\/p>\n
(c) by Harken, Sub or the Company, at any time prior to the Closing, if
\nany court of competent jurisdiction in the United States or other United States
\ngovernmental body shall have issued an order, decree or ruling or taken any
\nother action restraining, enjoining or otherwise prohibiting the consummation of
\nthe transactions contemplated by this Agreement and such order, decree, ruling
\nor other action shall have become final and nonappealable; or<\/p>\n
(d) By Harken or Sub if any condition set forth in Article VI could not
\nbe satisfied on or prior to September 30, 1999, unless such failure shall have
\nbeen caused by or resulted from the failure of Harken or Sub to perform in any
\nmaterial respect any material covenant or agreement of either of them set forth
\nin this Agreement or the material breach by Harken or Sub of any material
\nrepresentation or warranty of either of them set forth in this Agreement; or<\/p>\n
(e) By the Company if any condition set forth in Article VII could not
\nbe satisfied on or prior to September 30, 1999, unless such failure shall have
\nbeen caused by or resulted from the failure of the Company to perform in any
\nmaterial respect any material covenant or agreement of it contained in this
\nAgreement or the material breach by the Company of any material representation
\nor warranty of it contained in this Agreement.<\/p>\n
52
\n 53<\/p>\n
SECTION X.15. PROCEDURE FOR TERMINATION. In the event of the
\ntermination of this Agreement and abandonment of the transactions contemplated
\nhereby by any or all of the Parties pursuant to Section X.14 hereof, written
\nnotice thereof shall forthwith be given to the other Party specifying the
\nprovision hereof pursuant to which such termination is made and this Agreement
\nand the transactions contemplated by this Agreement shall be abandoned and, all
\nobligations except for the provisions of the third sentence of Section V.03,
\nSection V.07 and this Section X.15 of this Agreement shall forthwith become void
\nand have no effect, without any liability on the part of any Party or its
\nrespective directors, officers, employees, agents, consultants or stockholders.
\nIf this Agreement is terminated as provided herein:<\/p>\n
(a) Each Party shall redeliver or destroy all documents, work papers
\nand other materials of the other Party relating to the transactions contemplated
\nhereby, whether so obtained before or after the execution of this Agreement, to
\nthe Party furnishing the same; and<\/p>\n
(b) All information received by any Party hereto with respect to the
\nbusiness of the other Party (other than information which is a matter of public
\nknowledge or which has heretofore been or is hereafter published in any
\npublication for public distribution or filed as public information with any
\ngovernmental authority) shall not at any time be used for the advantage of, or
\ndisclosed to third parties by, such Party to the detriment of the Party
\nfurnishing such information.<\/p>\n
SECTION X.16. SCHEDULES. The disclosure made in any Section of the
\nDisclosure Schedule with respect to any representation and warranty shall be
\ndeemed to be made with respect to any other representation and warranty which
\nrequires the same or similar disclosure to the extent that the subject matter of
\nsuch disclosure to one applies to another representation and warranty.<\/p>\n
SECTION X.17. CONSPICUOUS DISCLAIMERS. THE PARTIES AGREE THAT TO THE
\nEXTENT REQUIRED TO BE OPERATIVE, THE DISCLAIMERS OF CERTAIN WARRANTIES AND OTHER
\nMATTERS CONTAINED IN THIS AGREEMENT ARE “CONSPICUOUS” DISCLAIMERS FOR THE
\nPURPOSES OF ANY APPLICABLE LAW, RULE, OR ORDER.<\/p>\n
53
\n 54<\/p>\n
IN WITNESS WHEREOF, Harken, Sub, and the Company have executed this
\nAgreement to be effective as of the day and year first above written.<\/p>\n
HARKEN ENERGY CORPORATION<\/p>\n
———————————-
\n Name:
\n Title:<\/p>\n
XEI ACQUISITION CORP.<\/p>\n
———————————-
\n Name:
\n Title:<\/p>\n
XPLOR ENERGY, INC.<\/p>\n
———————————-
\n Name:
\n Title:<\/p>\n
54<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7721],"corporate_contracts_industries":[9409],"corporate_contracts_types":[9622,9626],"class_list":["post-43065","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-harken-oil---gas-inc","corporate_contracts_industries-energy__exploration","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43065","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43065"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43065"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43065"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43065"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}