Exhibit 10.1
PURCHASE AND SALE AGREEMENT
     THIS PURCHASE AND SALE AGREEMENT (the “Agreement”) is made and as of this
8th day of September, 2011 by and between Whitney Exploration, LLC, a Louisiana
limited liability company (“Seller”), Mr. Stephen J. Williams, a resident of the
State of Louisiana and sole member of Seller (“Williams”), on the one hand, and
McMoRan Oil & Gas LLC, a Delaware limited liability company (“Buyer”), on the
other hand. McMoRan Exploration Co., a Delaware corporation and the corporate
parent of Buyer (“MMR”), has joined as a party to this Agreement in connection
with its undertaking to issue shares of MMR common stock to Seller as part of
the consideration for the transaction described herein, including to make
certain representations in connection with such issuance.
RECITALS
     WHEREAS, Buyer and Seller are parties to that certain letter agreement
dated May 1, 2009, which letter agreement has been amended on two subsequent
occasions (as so amended, the “Letter Agreement”), pursuant to which Seller
agreed to provide funds to Buyer in exchange for Buyer’s grant of certain rights
and interests with respect to four prospects specified in the Letter Agreement
and with respect to two subsequently identified and agreed prospects
(collectively, the "Subject Properties”); and
     WHEREAS, Seller has acquired under the Letter Agreement certain Interests
(as defined herein) with respect to the Subject Properties; and
     WHEREAS, Seller desires to sell, and Buyer desires to purchase, all of
Seller’s Interests (as defined herein) on the terms and conditions hereinafter
set forth.
     NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations, warranties, covenants, conditions and agreements
contained herein, and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1
PURCHASE AND SALE
     1.1 Purchase and Sale. Subject to the terms and conditions set forth in
this Agreement, Seller agrees to sell to Buyer, and Buyer agrees to purchase
from Seller, the Interests (as defined below) free and clear of all liens,
security interests and encumbrances.
     1.2 Certain Definitions. As used herein:
          (a) “Governmental Authority” means any federal, state, local or
foreign government and/or any political subdivision thereof, including
departments, courts, commissions, boards, bureaus, ministries, agencies or other
instrumentalities, including the MMS and the Louisiana Department of Natural
Resources.

 

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          (b) “Interests” means any and all rights, title or interests in or to
the Subject Properties that Seller or Williams has or may have acquired under or
by reason of the Letter Agreement (whether by assignment by the Buyer or
otherwise), including, without limitation, any rights, title or interests in the
Subject Properties (i) that Seller owns; (ii) that are held on behalf of Seller,
including beneficial interests; (iii) pursuant to which Seller has made or
committed to make a financial contribution; or (iv) that vest Seller with the
right to participate in exploration and development. The term Interests also
includes, without limitation, any and all property rights, contract rights,
participation rights, rights to proceeds, rights with respect to advance
billings, rights to work-in-process or tangible assets procured in connection
with the drilling, exploration, completion, and development activities on the
Subject Properties, rights in operating agreements and any other agreements
respecting the Subject Properties and/or the sale of production realized
therefrom, any and all claims related to the Subject Properties, any facilities
on, related to, or servicing the Subject Properties (including wells, platforms,
platform equipment, and pipelines), and any and all other rights that Buyer
assigned to Seller, or Seller acquired, under the Letter Agreement.
          (c) “Laws” means all laws, statutes, rules, regulations, ordinances,
orders, decrees, requirements, judgments and codes of Governmental Authorities.
          (d) “MMS” means the Bureau of Ocean Energy Management, Regulation and
Enforcement, formerly known as the Minerals Management Service, Department of
Labor, United States of America, and any successor thereto.
          (e) “Person” means any individual, corporation, partnership, limited
liability company, trust, estate, Governmental Authority or any other entity.
          (f) “Securities Act” means the Securities Act of 1933, as amended.
          (g) “Subject Properties” has the meaning ascribed to it in the
recitals and shall include, but not be limited to those properties described in
Exhibit A hereto.
ARTICLE 2
PURCHASE PRICE
     2.1 Purchase Price. As consideration for its acquisition of the Interests,
at the Closing Buyer shall (i) pay to Seller cash in the amount of Ten Million
Dollars ($10,000,000), (ii) deliver to Seller 2,835,158 shares of MMR common
stock (the “Shares”) in the name of Seller (the Shares and cash together being
the “Purchase Price”) and (iii) assume any past or future payment or
reimbursement obligations of Seller under the Letter Agreement (or, to the
extent such obligations are owed by Seller to Buyer, to release Seller from such
payment or reimbursement obligations).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
     3.1 Seller Representations. Seller as to itself, and Williams on his own
behalf and on behalf of Seller, represent and warrant to Buyer that:

 

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          (a) Existence and Qualification. Seller is a limited liability company
organized, existing and in good standing under the laws of the State of
Louisiana and is duly qualified to do business in, and is in good standing
under, the laws of each jurisdiction where it conducts business. Seller has all
necessary qualifications under applicable laws and regulations to own the
Interests.
          (b) Authority and Power. Seller has the full legal authority and power
to carry on its business as presently conducted, and each of Seller and Williams
have the full legal power and authority to enter into this Agreement and to
perform their respective obligations under this Agreement and the transactions
contemplated hereby.
          (c) Sole Member. Williams is the sole member of Seller and Seller has
never had any other members.
          (d) Authorization, Enforceability and No Conflicts. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby (i) have been duly and validly authorized by
all necessary action on the part of Seller and (ii) do not, and the consummation
of the transactions contemplated by this Agreement will not, violate or be in
conflict with Seller’s articles of organization or operating agreement. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby will not violate or be in conflict with any
agreement, instrument, judgment, order, decree, law or regulation by which
Seller or Williams is bound or to which the Interests are subject. This
Agreement constitutes a valid and binding obligation of each of Seller and
Williams and is enforceable according to its terms.
          (e) Brokers’ Fees. Neither Seller nor Williams has incurred any
obligation or liability, contingent or otherwise, for brokers’ or finders’ fees
related to the transactions contemplated by this Agreement for which Buyer may
be liable.
          (f) Litigation. There are no actions, lawsuits or proceedings before
any court, tribunal or governmental authority that are pending or, to the
knowledge of Seller or Whitney, threatened against Seller that could be
reasonably expected to (i) affect or burden the Interests in any material
respect or (ii) adversely affect the ability of Seller or Williams to execute
and deliver this Agreement or consummate the transactions contemplated hereby.
There are no bankruptcy or reorganization proceedings pending or threatened
against Seller or Williams.
          (g) No Encumbrances. Neither Seller nor Williams has taken any action,
or permitted knowingly any action to be taken, that has subjected the Interests
to any liens, security interests or encumbrances, and such Interests are held by
Seller and are being conveyed to Buyer free and clear of any liens, security
interests and encumbrances.
          (h) No Transfers. Neither Seller nor Williams has conveyed, sold,
transferred or assigned to any third party any of the Interests acquired by
either of them under the Letter Agreement.
          (i) Consents, Approvals and Waivers. None of the Interests are subject
to any restrictions on assignment or any preferential rights to purchase, nor
does the assignment or transfer thereof require the consent of any third party.
The execution, delivery and performance

 

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of this Agreement by Seller is not subject to any consent, approval or waiver
from any Governmental Authority or other Person.
          (j) Investment Intent. (i) Seller is acquiring the Shares for its own
account and not with a view to their distribution, within the meaning of
Section 2(11) of the Securities Act, in violation of the Securities Act (except
for any distribution of the Shares by Seller to Williams in connection with a
liquidating distribution, in which case Seller shall procure an undertaking from
Williams agreeing to be bound by the restrictions on transfer stated herein).
               (ii) Seller understands that (A) the Shares (x) have not been
registered under the Securities Act or any state securities Laws, (y) will be
issued in reliance upon an exemption from the registration and prospectus
delivery requirements of the Securities Act pursuant to Regulation D thereof or
another available exemption and (z) will be issued in reliance upon exemptions
from the registration and prospectus delivery requirements of state securities
Laws which relate to private offerings, and (B) Seller must bear the economic
risk of such investment indefinitely unless a subsequent disposition by Seller
thereof is made in conformity with federal and state securities laws.
               (iii) Each of Williams and Seller (through Williams as its sole
member) is an “accredited investor” as defined in Regulation D under the
Securities Act and by reason of its business and financial experience it has
such knowledge, sophistication and experience in making similar investments and
in business and financial matters generally so as to be capable of evaluating
the merits and risks of the prospective investment in the MMR Shares and Seller
is able to bear the economic risk of such investment.
     3.2 Buyer Representations. Buyer represents and warrants to Seller as
follows:
          (a) Existence and Qualification. Buyer is a limited liability company
organized, existing and in good standing under the laws of the State of
Delaware. Buyer is qualified under applicable law and regulation to own the
Interests and, in particular, Buyer is qualified to do business and is in good
standing in each of the jurisdictions where it conducts its business.
          (c) Authority and Power. Buyer has the authority and power to carry on
its business as presently conducted, to enter into this Agreement and to perform
its obligations under this Agreement and the transactions contemplated hereby.
          (d) Authorization, Enforceability and No Conflicts. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby (i) have been duly and validly authorized by
all necessary action on the part of Buyer and (ii) do not, and the consummation
of the transactions contemplated by this Agreement will not, violate or be in
conflict with Buyer’s certificate of formation or limited liability company
agreement or any agreement, instrument, judgment, order, decree, law or
regulation by which Buyer is bound. This Agreement constitutes a valid and
binding obligation of Buyer enforceable according to its terms.

 

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          (e) Brokers’ Fees. Buyer has incurred no obligation or liability,
contingent or otherwise, for brokers’ or finders’ fees related to the
transactions contemplated by this Agreement for which Seller may be liable.
          (f) Litigation. There are no pending suits, actions or other
proceedings in which Buyer is a party (or which have been threatened to be
instituted against Buyer) which affect the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
          (g) Consents, Approvals and Waivers. The execution, delivery and
performance of this Agreement by Buyer will not be subject to any consent,
approval or waiver from any Governmental Authority or other Person.
     3.3 MMR Representations.
          (a) Existence and Qualification. MMR is a corporation organized,
existing and in good standing under the laws of the State of Delaware. MMR is
qualified to do business and is in good standing in each of the jurisdictions
where it conducts its business.
          (c) Authorization, Enforceability and No Conflicts. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby (i) have been duly and validly authorized by
all necessary action on the part of MMR and (ii) do not, and the consummation of
the transactions contemplated by this Agreement will not, violate or be in
conflict with MMR’s certificate of incorporation or bylaws or any agreement,
instrument, judgment, order, decree, law or regulation by which MMR is bound.
This Agreement constitutes a valid and binding obligation of MMR enforceable
according to its terms.
          (d) Shares. The Shares will be duly and validly authorized and issued
and will be fully paid and non-assessable upon the issuance thereof and will not
be subject to any preemptive or similar rights.
ARTICLE 4
CLOSING
     4.1 Closing. The closing of the transaction contemplated by this Agreement
(the “Closing”) shall take place at the offices of Buyer, 1615 Poydras Street,
New Orleans, Louisiana 70112 on the date this Agreement is executed and
delivered.
     4.2 Obligations of Seller at Closing. At the Closing, upon the terms and
subject to the conditions of this Agreement, and subject to the simultaneous
performance by Purchaser of its obligations pursuant to Section 4.3, Seller
shall deliver or cause to be delivered to Purchaser the following:
          (a) an executed copy of the Assignment, in substantially the form
attached hereto as Exhibit B, pursuant to which the Seller and Williams sell,
convey and assign all the Interests to Buyer (the “Assignment”);

 

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          (b) evidence of releases of all, if any, liens, security interests and
encumbrances affecting the Interests;
          (c) a receipt evidencing the delivery of the Shares; and
          (d) an executed copy of the Registration Rights Agreement, in
substantially the form attached hereto as Exhibit C.
     4.3 Obligations of Purchaser at Closing. At the Closing, upon the terms and
subject to the conditions of this Agreement, and subject to the simultaneous
performance by Seller of its obligations pursuant to Section 4.2, Buyer shall
deliver or cause to be delivered to Seller, the following:
          (a) the cash portion of the Purchase Price in same-day funds to Seller
by direct bank or wire transfer to an account directed by Seller;
          (b) an executed copy of the Assignment;
          (c) certificates representing the Shares to Seller; provided, that, at
Seller’s request, in lieu of delivery of physical certificates, Buyer and MMR
agree that MMR’s transfer agent shall be instructed to electronically transmit
the Shares to Seller by crediting the account of the Seller’s prime broker with
the Depository Trust Company (“DTC”) through the Deposit Withdrawal Agent
Commission system of DTC;
          (d) an executed copy of the Registration Rights Agreement in
substantially the form attached hereto as Exhibit B.
     4.4 Obligations of Seller. Upon the Closing, Seller shall not have any
liabilities or obligations under the Letter Agreement or with respect to the
Subject Properties, including but not limited to any amounts billed to Seller
but not paid, amounts incurred but not billed and all future costs associates
with the Interests.
ARTICLE 5
INDEMNIFICATION
     5.1 Survival. The representations, warranties, covenants and agreements of
or by Seller and Buyer shall survive the Closing.
     5.2 Indemnification.
          (a) From and after Closing, Seller and Williams, jointly and
severally, shall protect, defend, indemnify and hold Buyer harmless from and
against any and all damages, claims, losses, demands, fines, penalties,
judgments (including interest), costs, expenses and liabilities (direct,
contingent or otherwise) including consulting and attorneys’ fees and costs of
court (“Damages”) incurred or suffered by Buyer caused by or arising out of or
resulting from (i) a breach by Seller or Williams of any of the representations
or warranties made by Seller and Williams contained in Section 3.1, or (ii) any
actions or omissions by Seller or Williams at any

 

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time prior to the Closing that relate in any material way to the Subject
Properties or the Interests owned by Seller and being conveyed to Buyer.
          (b) From and after Closing, Buyer shall protect, defend, indemnify and
hold Seller and Williams harmless from and against any and all Damages incurred
or suffered by Seller or Williams caused by or arising out of or resulting from
Buyer’s breach of any of the representations or warranties made by Buyer
contained in Section 3.2 or for any actions or omissions by Buyer or MMR at any
time prior to the Closing that relate in any material way to the Subject
Properties or the Interests owned by Seller and being conveyed to Buyer.
     5.3 Claims. All claims for indemnification under Section 5.2 shall be
asserted and resolved pursuant to this Section 5.3. Any person claiming under
Section 5.2 is hereinafter referred to as the “Indemnified Party” and any person
against whom such claims are asserted hereunder is hereinafter referred to as
the “Indemnifying Party.” If any Damages are asserted against or sought to be
collected from an Indemnified Party by a third person, said Indemnified Party
shall with reasonable promptness provide to the Indemnifying Party a written
notice of claim specifying in reasonable detail the specific nature of and
specific basis of the Damages and the estimated amount of such Damages (“Claim
Notice”). Notwithstanding the preceding sentence, failure of the Indemnified
Party to give notice hereunder shall not release the Indemnifying Party from its
obligations under Section 5.2, except to the extent the Indemnifying Party is
actually prejudiced by such failure to give notice. The Indemnifying Party shall
have 30 days from the personal delivery or receipt of the Claim Notice (the
“Notice Period”) to notify the Indemnified Party (a) whether or not it disputes
the liability of the Indemnifying Party to the Indemnified Party hereunder with
respect to such Damages and (b) whether or not it desires, at the sole cost and
expense of the Indemnifying Party, to defend the Indemnified Party against such
Damages; provided, however, that any Indemnified Party is hereby authorized
prior to and during the Notice Period to file any motion, answer or other
pleading that it deems necessary or appropriate to protect its interests or
those of the Indemnifying Party (and of which it shall have given notice and
opportunity to comment to the Indemnifying Party) and not prejudicial to the
Indemnifying Party. If the Indemnifying Party notifies the Indemnified Party
within the Notice Period that it desires to defend the Indemnified Party against
such Damages, the Indemnifying Party shall have the right to defend all
appropriate proceedings, and with counsel of its own choosing, which proceedings
shall be promptly settled or prosecuted by them to a final conclusion. If the
Indemnified Party desires to participate in, but not control, any such defense
or settlement it may do so at its sole cost and expense. If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any Damages that the
Indemnifying Party elects to contest. No claim may be settled or otherwise
compromised without the prior written consent of the Indemnifying Party.
ARTICLE 6
MISCELLANEOUS
     6.1 Notices. All notices required or permitted under this Agreement shall
be effective upon receipt if personally delivered, if mailed by registered or
certified mail, postage prepaid, or if delivered by telegram, telecopy,
facsimile or other electronic transmission if directed to the Parties as
follows:

 

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To Buyer and/or MMR:
1615 Poydras Street
New Orleans, Louisiana 70112
Attention: John Amato, General Counsel
Fax: 504-582-1603
To Seller:
P.O. Box 440
LaRose, Louisiana 70373
Attention: Stephen J. Williams
Fax: 985-325-7063
or
if to Seller via Fed Ex, to the following street address:
16210 West Main Street
Cut Off, Louisiana 70345
Any party may give written notice of a change in the address or individual to
whom delivery shall be made.
     6.2 Expenses. Except as otherwise provided in this Agreement, all fees,
costs and expenses incurred by the Parties in negotiating this Agreement or in
consummating the transactions contemplated by this Agreement shall be paid by
the Party incurring them.
     6.3 Amendment. This Agreement may not be altered or amended, nor any rights
waived, except by a written instrument executed by the Party to be charged with
the amendment or waiver. No waiver of any provision of this Agreement shall be
construed as a continuing waiver of the provision.
     6.4 Headings. The headings are for convenience only and do not limit or
otherwise affect the provisions of this Agreement.
     6.5 Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original and which, taken together, shall constitute the same
instrument.
     6.6 Rules of Construction. Unless the context otherwise requires, as used
in this Agreement (a) a term has the meaning ascribed to it; (b) “or” is not
exclusive; (c) “including” means “including, without limitation;” (d) words in
the singular include the plural; (e) words in the plural include the singular;
(f) words applicable to one gender shall be construed to apply to each gender;
(g) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar
words refer to this entire Agreement; (h) the terms “Article” or “Section” shall
refer to the specified Article or Section of this Agreement; and (i) the
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Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
     6.7 Governing Law. This Agreement and the transactions contemplated by this
Agreement shall be governed and construed in accordance with the internal laws
of the State of Louisiana without giving effect to any principles of conflicts
of laws.
     6.8 Waiver of Jury Trial. THE PARTIES HEREBY ACKNOWLEDGE THAT THEY HAVE
BEEN REPRESENTED BY AND HAVE CONSULTED WITH COUNSEL OF THEIR CHOICE, AND HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVE ANY AND ALL RIGHT
TO TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, THE TRANSACTION DOCUMENTS, ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
     6.9 Entire Agreement. This Agreement is the entire understanding between
Seller and Buyer concerning the subject matter of this Agreement. This Agreement
supersedes all negotiations, discussions, representations, prior agreements and
understandings, whether oral or written.
     6.10 Severance. If any provision of this Agreement is found to be illegal
or unenforceable, the other terms of this Agreement shall remain in effect and
this Agreement shall be construed as if the illegal or unenforceable provision
had not been included.
     6.11 Third Party Beneficiaries. Nothing in this Agreement shall entitle any
Person other than the parties hereto to any claim, cause of action, remedy or
right of any kind.
[Next page is the signature page]

 

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     IN WITNESS WHEREOF, this Agreement has been signed by each of the Parties
as of the date first above written.

            Seller:

WHITNEY EXPLORATION, LLC
      By:   /s/ Stephen J. Williams        Name:   Stephen J. Williams       
Title:   Sole Member                  Williams:
      /s/ Stephen J. Williams      Stephen J. Williams                       
Buyer:

MCMORAN OIL & GAS LLC
      By:   /s/ Nancy D. Parmelee        Name:   Nancy D. Parmelee       
Title:   Chief Financial Officer and Secretary                  MMR:

MCMORAN EXPLORATION CO.
      By:   /s/ Nancy D. Parmelee        Name:   Nancy D. Parmelee       
Title:   Senior Vice President, Chief Financial Officer and Secretary