ASSET ACQUISITION AGREEMENT
BETWEEN
CASTLE EXPLORATION COMPANY, INC.
DEERLICK CREEK PARTNERS, I, L.P.
AND
XXXXX RESOURCES, Inc.
EFFECTIVE AS OF SEPTEMBER 1, 1999
THIS AGREEMENT, dated October ___ 1999, but effective as of September
1, 1999 ("Effective Date"), by and among Deerlick Creek Partners, I, L.P. a
Delaware limited partnership ("DCP"), Xxxxx Resources, Inc., a Pennsylvania
corporation ("DRI"), whose collective address is Suite 615, 000 Xxx Xxxxx Xxxxxx
Xxxx, Xxxxx, Xxxxxxxxxxxx, 00000 (DCP and DRI are sometimes collectively
referred to as the "Seller"), and CASTLE EXPLORATION COMPANY, INC., a Delaware
corporation, whose address is 000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx Meeting,
Pennsylvania 19462 (the "Buyer").
WITNESSETH
WHEREAS, the DRI owns an undivided interest in certain occluded coalbed
methane leases, Xxxxx Pipelines, Oil and Gas Contracts, desalination ponds and
the equipment used thereon and appurtenant thereto all of which are located in
Tuscaloosa County, Alabama ("Assets"); and
WHEREAS, DRI is the managing general partner of DCP; and
WHEREAS, DCP owns a net profits interest in the Assets; and
WHEREAS, the Seller desires to sell and convey and Buyer desires to
purchase and acquire the Assets, effective as of the Effective Date; and
WHEREAS, the assets are subject to a "Right of First Refusal" in favor
of DeGas, an Alabama partnership, successor in interest to DeGas, Inc, an
Alabama corporation ("DeGas"), under that certain agreement dated as of August
20, 1982 by and among DeGas and TRW, Inc. predecessor in interest to Seller
("TRW Agreement").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound hereby, agree as follows:
ARTICLE I - DEFINITIONS
1. The following terms shall have the meanings ascribed to them below when
used in this Agreement:
1.1. "Agreement", shall mean this Asset Acquisition Agreement.
1.2. "Assignment" or "Assignments" shall mean those Assignments and
Bills of Sale in substantially in the form of Exhibit "A". The Assignments
shall contain special warranty deed language, conveying the Assets without
warranty, either expressed or implied, except those claiming by, through or
under the Seller, but not otherwise, with full substitution and subrogation all
as more particularly set forth in the Agreement, with all Equipment conveyed "AS
IS" and "WHERE IS" WITHOUT WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR
MERCHANTABILITY.
1.3. "Closing", shall mean the consummation of the transactions
contemplated by this Agreement.
1.4. "Closing Date", shall mean the earlier of (i) sixty (60) days
after the submittal of the Agreement to DeGas under Paragraph 16 of the TRW
Agreement or (ii) receipt of DeGas's waiver of its Right of First Refusal, but
in no event shall the Closing Date be later than December 31, 1999.
1.5. "Effective Date", shall mean 7:01 a.m. local time, September 1,
1999 where the Oil and Gas Properties are located.
1.6. "Encumbrance", shall mean any mortgage, lien, security interest,
pledge, charge, encumbrance, claim, limitation, irregularity, burden,
hypothecation or defect.
1.7. "Environmental Condition", shall mean any existing condition of
the soil, subsurface, surface waters, ground waters, atmosphere or other
-2-
environmental medium, whether or not yet discovered, which could reasonably be
expected to result in any damage, loss, cost, expense, claim, demand,
investigation, lien or liability relating to the Assets under any Environmental
Statute.
1.8. "Environmental Statute", shall mean the Resource Conservation and
Recovery Act of 1976, as amended prior to the Closing Date, the Clean Air Act,
as amended prior to the Closing Date, the Clean Water Act, as amended prior to
the Closing Date, and the Comprehensive Environmental Response, Compensation and
Liability Act, as amended prior to the Closing Date, and all federal, state, and
other governmental regulations, orders, interpretations or rulings issued
thereunder prior to the Closing Date, and other Legal Requirements relating to
air or water quality, hazardous or solid wastes, hazardous substances or any
other environmental matters.
1.9. "Execution Date", shall mean October 22, 1999.
1.10. "Existing Burdens", shall mean Lease Burdens and Permitted
Encumbrances of record as of the Effective Date or of which Buyer has received
written notice as of the Execution Date.
1.11. "Final Settlement Statement", shall mean that Final Settlement
Statement as provided for in Paragraph 9.8.
1.12. "Lease Operating Expenses", shall mean any and all costs and
expenses properly charged by the operator of the Assets pursuant to the
applicable operating agreement governing operations on such Assets, to include,
by way of example and not limitation, those charges and costs permitted under
Articles II and III of the XXXXX accounting procedure attached to such operating
agreements as an exhibit.
-3-
1.13. "Legal Requirements", shall mean any law, statute., ordinance,
decree, requirement, order, judgment, rule or regulation including by way of
example and not limitation the terms of any license, permit, certificate, or
abandonment approval promulgated prior to, or at the time of the Closing Date,
by any governmental authority to include, without limitation, any bonding
requirements of Buyer or other regulatory approval governing the transfer of
operations to Buyer.
1.14. "Oil and Gas Contracts", shall mean any contracts that affect or
relate to the Oil and Gas Properties or the Production covered thereby including
amendments thereto. "Oil and Gas Contracts" includes, by way of example and not
limitation, area of mutual interest agreements, acreage contribution agreements,
advance payment agreements, bottom hole agreements, division orders, drilling
contracts, dry hole agreements, exploration agreements, farm-in and farm-out
agreements, Gas Balancing Agreements (including claims to recover natural gas
or money under Gas Balancing Agreements for Seller's under production before the
Effective Date), natural gas and oil sales, exchange, treating and processing
contracts, operating agreements, net profits agreements, participation
agreements, storage agreements, support agreements, transfer orders,
transportation agreements, water rights agreements, and salt water disposal
agreements.
1.15. "Ordinary Course of Business", shall mean the ordinary course of
business and conduct of operations consistent with past custom and practice,
and shall include, without limitation, operations of a kind and nature conducted
in a manner consistent with those of a reasonably prudent operator in the same
or similar circumstances.
-4-
1.16. "Permitted Encumbrances", shall mean those Encumbrances as may
exist on the Oil and Gas Properties from time to time in the Ordinary Course of
Business, to include, by way of example and not limitation: liens for Taxes not
yet due and payable, or if due and payable, are being contested in good faith in
the Ordinary Course of Business, inchoate, statutory or operators liens securing
obligations for labor, services, materials and supplies furnished to the Oil and
Gas Properties, but only if such liens are not delinquent and will be discharged
in the Ordinary Course of Business; Encumbrances that arise under Oil and Gas
Contracts of a type and nature customary in the oil and gas industry to secure
the payment of amounts that are not yet delinquent or, if delinquent, are being
contested in good faith in the Ordinary Course of Business; Encumbrances that
arise as a result of unit or communization agreements, Oil and Gas Contracts,
orders and laws. Provided, however, that any Encumbrances placed on the Assets
as a direct result of: (i) an action or inaction taken by Seller based upon the
recommendation of Buyer; or (ii) Buyer's having taken an action which was not
authorized by Seller and which was beyond Buyer's authorized scope of its
management services, shall be deemed a Permitted Encumbrance.
1.17. "Person", shall mean an individual, group, partnership,
corporation, trust, Limited Liability Company or other entity.
1.18. "Pipeline", shall mean the gas gathering system located on the
Oil and Gas Properties as well as Seller's interest in the desalination ponds
located on the Oil and Gas Properties.
1.19. "Production", shall mean all hydrocarbons produced, saved and
sold from the Assets.
-5-
1.20. "Taxes", shall mean all ad valorem, severance, and other taxes or
fees levied upon or measured by Production, personal property taxes, real
property taxes, and any and all other taxes or fees of whatever type or kind
assessed or which are attributable to the ownership of the Assets.
1.21. "Xxxxx", shall mean Seller's interest in those xxxxx set forth on
Schedule 1.21 hereto.
ARTICLE II - PURCHASE AND SALE OF THE ASSETS
2.1. Transfer. Subject to the term of this Agreement, Seller hereby
agrees to sell, transfer, convey and deliver unto the Buyer, and Buyer hereby
agrees to purchase, acquire and accept, all of the Seller's right, title and
interest in and to the Assets, effective as of the Effective Date.
2.2. Closing. At the closing, subject to the provisions of Article
VII., the Buyer will deliver to Seller the Purchase Price in accordance with
Article III below, on the Closing Date.
2.3. Assignments. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties contained herein, at
Closing, Seller shall convey, transfer, assign and deliver all of the Seller's
right, title and interest in and to the Assets (by executing and delivering one
or more counterparts of the Assignment, together with a description of the
respective Assets attached thereto) to Buyer. The Assignment shall provide for a
Special Warranty of title to the Assets by, through and under the Seller, but
not otherwise.
-6-
ARTICLE III - PURCHASE PRICE
3. Price. The purchase price for the Assets (the "Purchase Price")
shall be One Million Four Hundred Twenty Four Thousand Two Hundred Ninety Eight
Dollars and forty nine cents ($1,424,298.49).
3.1. Manner of Payment. At the Closing, subject to the provisions of
Article VII below, the Buyer will wire transfer to Seller's account the Purchase
Price, less:
3.1.1. any and all amounts due and owing Pennsylvania Castle
Energy Corporation ("PACEC") by Seller for Lease Operating Expenses prior to the
Effective Date as well as royalty burdens attributable to Production prior to
the Effective Date and which were actually paid by PACEC on behalf of Sellers
for which PACEC has not been repaid as of the Closing Date; and
3.1.2. an amount equal to the Seller's portion, of the settlement
with Sonat under that contract dated September 4, 1982 estimated to be Eighty
Eight Thousand Dollars ($88,000). The amount withheld for the Seller's Sonat
settlement will be placed in escrow with Seller's counsel and shall be governed
by the terms of an escrow agreement to be entered into between Seller and PACEC.
3.2. Allocation of Revenues and Assumption of Liabilities. Subject to
the terms and provisions hereof, as of the Effective Date:
3.2.1. Buyer purchases., acquires and assumes the liabilities and
obligations pertaining to the Assets which accrue on and after the Effective
Date (to include by way of example and not limitation, all obligations: (i)
associated with any Environmental Condition; (ii) under the leases which
constitute a portion of the Oil and Gas Properties; (iii) under the Oil and Gas
Contracts; and (iv) other Legal Requirements), as evidenced by the execution of
this Agreement and the execution and
-7-
acceptance of each Assignment, but excluding however: (x) liabilities and
obligations of Seller pertaining to the Assets, either incurred or accruing
prior to the Effective Date; or, (y) liabilities or obligations arising from a
breach of any the obligations of Seller under this Agreement.
3.2.2. Seller shall retain and bear the liabilities and
obligations pertaining to Seller's actions pertaining to the Assets, (to
include, by way of example and not limitation: (i) costs of any other contract
or document to which Seller is a party, as of the Effective Date; or (ii)
payments to any third party, to include the Sonat contract through September 4,
1999, other than a lease burden, delay rental or shut in royalty payment) and
arising and/or incurred prior to the Effective Date (whether or not actually
invoiced or billed prior to or subsequent to the Effective Date), excluding
however: (x) liabilities specifically assumed by the Buyer under this Agreement;
and (y) liabilities arising from a breach of any of Buyer's obligations under
this Agreement. It is expressly agreed and understood that the settlement
obligation under the Sonat contract shall be deemed to be a pre-Effective Date
obligation of the Seller.
3.2.3. Seller shall receive all proceeds of Production
actually sold and delivered before the Effective Date., and Buyer shall receive
all proceeds of Production as of and after the Effective Date.
3.2.4. Seller shall receive all revenues and benefits
attributable to the Assets relating to the period prior to the Effective Date
and Buyer shall receive all revenues and benefits attributable to the Assets
relating to the period commencing as of the Effective Date.
3.2.5. Taxes assessed against the Assets shall be pro rated at
the Closing Date as of the Effective Date.
-8-
ARTICLE IV - DRI'S REPRESENTATIONS AND WARRANTIES
4. DRI represents and warrants to Buyer as of the Execution Date and as of
the Closing Date, as follows:
4.1. Organization. DRI is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation
and in each jurisdiction where it is required for the conduct of its business.
4.2. Authority. DRI has all requisite power and authority to carry on
its business as presently conducted, to enter into this Agreement to sell the
assets on the terms described in this Agreement, and to perform its obligations
under this Agreement. Upon the receipt of DeGas's waiver of its Right of First
Refusal or expiration of the period in which DeGas has the right to exercise its
Right of First Refusal, the consummation of the transaction contemplated by this
Agreement will not violate, nor be in conflict with, any provisions of its
Certificate of Incorporation or other governing document of DRI., or any
material agreement or instrument to which DRI is a party or by which DRI or any
of the Assets is bound, or any judgment, decree, order, statute, rule or
regulation applicable to Seller or any of the Assets.
4.3. Binding Obligation. This Agreement has been duly executed and
delivered on behalf of DRI. All documents and instruments required hereunder to
be executed and delivered to Buyer shall have been duly executed and delivered.
This Agreement does, and such document and instrument will, constitute legal,
binding obligations of the Seller in accordance with their terms.
4.4. No Breach of Statute, Decree or Contract. The execution, delivery
and performance of this Agreement by DRI does not and will not, after receipt
of DeGas's waiver of its Right of First Refusal or expiration of the period in
which DeGas
-9-
has the right to exercise its Right of First Refusal, breach any Legal
Requirement, at the Closing conflict with or result in a breach of or default
under any agreement or any order, writ, injunction, decree, contract, agreement
or instrument to which DRI is a party or by which the Assets are or may be
bound, will not result in the creation or imposition of any lien, charge or
encumbrance of any nature upon any of the Assets, and will not give to others
any interest or rights in, or with respect to any of the Assets, except for
Permitted Exceptions.
4.5. No Litigation or Adverse Events. To the best of DRI's knowledge
there is no suit, claim or action, or legal, administrative, arbitration or
other proceeding, or governmental investigation, pending or, to DRI's knowledge,
threatened, by or against DRI or the Assets, and no event or condition of any
character, to DRI's knowledge, pertaining to DRI or Assets, that could prevent
the consummation of the transactions contemplated by this Agreement.
4.6. Permitted Encumbrances. To the best of DRI's knowledge, DRI has
not created any Permitted Encumbrances.
4.7. Taxes. DRI is not aware of any unpaid taxes relating to the
Assets.
4.8. Title. To the best of Seller's knowledge, the Assignments will
convey to Buyer, subject to Existing Burdens, Seller's right, title and
interests to the Assets. Other than the Existing Burdens, Seller has not created
any liens, claims or Encumbrances affecting the Assets. Seller shall provide a
Special Warranty of title to the assets to Buyer by, through and under Seller,
but not otherwise, with full power of substitution and subrogation.
EXCEPT FOR THE SPECIAL WARRANTIES OF TITLE GIVEN BY SELLER IN THE ASSIGNMENTS,
SELLER DISCLAIMS ANY WARRANTIES EXPRESS AND IMPLIED, INCLUDING WITHOUT
LIMITATION ANY WARRANTIES OF MERCHANTABILITY OR
-10-
FITNESS FOR A PARTICULAR PURPOSE (INCLUDING WARRANTIES WITH RESPECT TO THE
PRESENCE OF ENVIRONMENTAL CONDITIONS OR NATURALLY OCCURRING RADIOACTIVE MATERIAL
AFFECTING SUCH PERSONAL PROPERTY) OF ANY PROPERTY REAL, PERSONAL OR MIXED OR
EQUIPMENT (INCLUDING PIPELINE EQUIPMENT) CONVEYED TO AND ACQUIRED BY BUYER,
WITH ALL SUCH REAL AND PERSONAL PROPERTY AND EQUIPMENT BEING TRANSFERRED,
ASSIGNED, SOLD, PURCHASED, ACCEPTED AND ACQUIRED "AS IS" AND "WHERE IS,'
WITHOUT REPRESENTATION AS TO FITNESS FOR A PARTICULAR PURPOSE.
4.9. Status of Leases.
4.9.1. Working Interests. DRI's Working Interests in the Oil and
Gas Properties is represented on Schedule 1.21.
4.9.2. Net Revenue Interests. DRI's Net Revenue Interests in the
Oil and Gas Properties is represented on Schedule 1.21.
4.10. Necessary Action. DRI shall take or cause to be taken all
such actions, as would a prudent businessman under the same or similar
circumstances, as may be necessary and advisable to consummate and make
effective the sale of the Assets contemplated by this Agreement and to assure
that DRI will not be under any material corporate, legal or contractual
restriction that would prohibit or delay the timely consummation of such
transactions; provided, however, that DRI shall not be required to (i) file suit
or assume any additional liabilities in performing its obligations hereunder,
(ii) to perform any title curative, or (iii) take any action prior to the
receipt of DeGas's waiver of its preferential right to purchase.
4.11. Environmental Claims. To the best of Seller's knowledge there is
Environmental Condition in, on or under any of the Assets. Buyer is the
operator
-11-
of the Assets and is aware of their condition by virtue of its operation and
inspection of the Assets.
ARTICLE V - DCP'S REPRESENTATION AND WARRANTIES
5. DCP represents and warrants to Buyer as of the Execution Date and the
Closing Date as follows:
5.1. Organization. DCP is a partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware and in
each jurisdiction where it is required for the conduct of its business.
5.2. Authority. DCP has all requisite power and authority to carry on
its business as presently conducted, to enter into this Agreement to sell the
assets on the terms described in this Agreement, and to perform its obligations
under this Agreement. Upon the receipt of DeGas's waiver of its Right of First
Refusal or expiration of the period in which DeGas has the right to exercise its
Right of First Refusal, the consummation of the transaction contemplated by this
Agreement will not violate, nor be in conflict with., any provisions of its
Partnership Agreement or other governing document of DCP, or any material
agreement or instrument to which DCP is a party or by which DCP or any of the
Assets is bound, or any judgment, decree, order, statute, rule or regulation
applicable to Seller or any of the Assets. DRI as the sole general partner of
DCP is authorized to represent DCP in this Asset Acquisition Agreement.
5.3. Binding Obligation. This Agreement has been duly executed and
delivered on behalf of DCP. All documents and instruments required hereunder to
be executed and delivered to Buyer shall have been duly executed and delivered.
-12-
This Agreement does, and such document and instrument will, constitute legal,
binding obligations of the Seller in accordance with their terms.
5.4. No Breach of Statute. Decree or Contract. The execution, delivery
and performance of this Agreement by DCP does not and will not, after receipt of
DeGas's waiver of its Right of First Refusal or expiration of the period in
which DeGas has the right to exercise its Right of First Refusal, breach any
Legal Requirement, at the Closing conflict with or result in a breach of or
default under any agreement or any order, writ, injunction, decree, contract,
agreement or instrument to which DCP is a party or by which the Assets are or
may be bound, will not result in the creation or imposition of any lien, charge
or encumbrance of any nature upon any of the Assets, and will not give to others
any interest or rights in, or with respect to any of the Assets, except for
Permitted Exceptions.
5.5. No Litigation or Adverse Events. To the best of DCP'S knowledge
there is no suit, claim or action, or legal, administrative, arbitration or
other proceeding, or governmental investigation, pending or, to DCP's
knowledge, threatened, by or against DCP or the Assets, and no event or
condition of any character, to DCP's knowledge, pertaining to DCP or Assets,
that could prevent the consummation of the transactions contemplated by this
Agreement.
5.6. Taxes. DCP is not aware of any unpaid taxes relating to the
Assets.
5.7. Title. To the best of Seller's knowledge, the Assignments will
convey to Buyer, subject to Existing Burdens, all of DCP's right, title and
interest to the Assets without reservations. Other than the Existing Burdens,
Seller has not created any liens, claims or Encumbrances affecting the Assets
Seller shall provide a
-13-
Special Warranty of title to the Assets to Buyer by, through and under Seller,
but not otherwise, with full power of substitution and subrogation.
EXCEPT FOR THE SPECIAL WARRANTIES OF TITLE GIVEN BY SELLER IN THE ASSIGNMENTS,
SELLER DISCLAIMS ANY WARRANTIES EXPRESS AND IMPLIED, INCLUDING WITHOUT
LIMITATION ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
(INCLUDING WARRANTIES WITH RESPECT TO THE PRESENCE OF ENVIRONMENTAL CONDITIONS
OR NATURALLY OCCURRING RADIOACTIVE MATERIAL AFFECTING SUCH PERSONAL PROPERTY) OF
ANY PROPERTY REAL, PERSONAL OR MIXED OR EQUIPMENT (INCLUDING PIPELINE
EQUIPMENT) CONVEYED TO AND ACQUIRED BY BUYER, WITH ALL SUCH REAL AND PERSONAL
PROPERTY AND EQUIPMENT BEING TRANSFERRED, ASSIGNED, SOLD, PURCHASED, ACCEPTED
AND ACQUIRED "AS IS" AND "WHERE IS" WITHOUT REPRESENTATION AS TO FITNESS FOR A
PARTICULAR PURPOSE.
5.8. Necessary Action. DCP shall take or cause to be taken all such
actions, as would a prudent businessman under the same or similar circumstances,
as may be necessary and advisable to consummate and make effective the sale of
the Assets contemplated by this Agreement and to assure that DCP will not be
under any material corporate, legal or contractual restriction that would
prohibit or delay the timely consummation of such transactions; provided,
however, that DCP shall not be required to (i) file suit or assume any
additional liabilities in performing its obligations hereunder, (ii) to perform
any title curative, or (iii) take any action prior to the receipt of DeGas's
waiver of its preferential right to purchase.
5.9. Permitted Encumbrances. To the best of DCP's knowledge, DCP has
not created any Permitted Encumbrances.
-14-
5.10. Net Profits Interest. DCP's net profits interest in the Oil and
Gas Properties is represented on Schedule 1.21.
ARTICLE VI - THE BUYER'S REPRESENTATIONS AND WARRANTIES
6. The Buyer represents and warrants to Seller as of the Execution Date
and the Closing Date, as follows:
6.1. Corporate. The Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the Commonwealth of
Pennsylvania. The Buyer has duly authorized the execution, delivery and
performance of this Agreement by all necessary corporate action, and the same is
a binding obligation of the Buyer, enforceable in accordance with its terms.
6.2. No Breach of Statute or Contract. The execution, delivery and
performance of this Agreement will not breach any statute or regulation of any
governmental authority, and will not at the Closing conflict with or result in
a breach of or default under any of the terms, conditions, or provisions of the
Buyer's Certificate of Incorporation or by-laws or any order, writ, injunction,
decree, agreement or instrument to which the Buyer is a party or by which it is
or may be bound.
6.3. Environmental Inspection. Buyer acknowledges that it has had ample
opportunity to inspect the Assets, has actually inspected the Assets and is
aware of their condition and status. In entering into this Agreement, Buyer is
relying exclusively on: (i) its own inspection, due diligence and knowledge of
the Assets; and (ii) that Phase I Environmental Site Assessment dated August 5,
1999 prepared by Highland Technical Services, Inc. and not on any statement or
representation of Seller with respect thereto. As of and subsequent to the
Effective Date, Buyer shall be fully and solely liable for any Environmental
Condition occurring after the Effective Date or
-15-
environmental claim arising therefrom in respect of the Assets. Buyer
acknowledges that its affiliate PACEC has been the operator of the Assets since
October 1990.
6.4. Knowledgeable Buyer. Buyer is a knowledgeable purchaser, owner and
operator of oil and gas properties, is familiar with the Assets, has the
ability to evaluate (and in fact has evaluated) the Assets for purchase.
6.5. Conduct of Due Diligence. Buyer acknowledges that it has been
afforded the opportunity to and has conducted sufficient independent due
diligence concerning the Assets to be purchased. Buyer is acquiring the Assets
based solely on its knowledge of the Assets as operator and the owner of an
undivided working interest in the Assets and its own independent due diligence,
and not based upon any representation, statement or inducement of Seller, or
either of them.
ARTICLE VII - CONDITIONS TO THE BUYER'S OBLIGATIONS TO CLOSE
7. The Buyer's obligation to close shall be subject to the satisfaction of
the following conditions prior to or at the Closing, unless waived by the Buyer.
7.1. Compliance With Agreement. The Seller, and each of them, shall
have performed and complied in all respects with all his obligations under this
Agreement which are to be performed or complied with by it prior to or at the
Closing.
7.2. Litigation. No litigation or other proceeding shall have been
commenced or threatened against the Buyer or the Seller, which in the sole
opinion of the Buyer would materially and adversely affect its ownership, or the
value, of the Assets.
7.3. DeGas Waiver. Either Seller shall have received from DeGas a
waiver of DeGas's preferential right to purchase the Assets, or DeGas's sixty
(60) day period in which to evoke its Right to First Refusal shall have expired.
-16-
ARTICLE VIII - CONDITIONS TO THE SELLER'S OBLIGATION TO CLOSE
8. The Seller's obligation to close shall be subject to the satisfaction
of the following conditions prior to or at the Closing, unless waived by the
Seller:
8.1. Compliance With Agreement. The Buyer shall have performed and
complied in all material respects with all its obligations under this Agreement
which are to be performed or complied with by it prior to or at the Closing.
8.2. DeGas Waiver. Either Seller shall have received from DeGas a
waiver of DeGas's preferential right to purchase the Assets, or DeGas's sixty
(60) day period in which to evoke its Right to First Refusal shall have expired.
ARTICLE IX - CLOSING; TERMINATION; POST CLOSING
9. Closing.
9.1. Place. The Closing shall take place at such location as mutually
agreed upon by the Buyer and the Seller. Closing may be by facsimile transaction
or in Escrow.
9.2. Termination. At any time before the Closing, this Agreement may be
terminated: (i) by mutual consent of the parties; (ii) by either the Buyer or
the Seller if there has been a material misrepresentation, material breach of
warranty or material breach of covenant by the other; (iii) by the Buyer if any
condition set forth in Article VII shall not be satisfied at the Closing; or
(iv) by the Seller if any condition set forth in Article VIII shall not be
satisfied at the Closing.
9.3. Transfer of Assets. Seller will, subject to the provisions of this
Agreement: (i) execute and deliver to Buyer an Assignment satisfying the
requirements
-17-
of Paragraph 2.3; and (ii) transfer to Buyer all of Seller's right, title and
interest in and to any funds received by Seller after the Effective Date.
9.4. Taxes. All Taxes shall be pro-rated between Seller and Buyer as of
the Effective Date. Seller shall be charged for all such Taxes based on
ownership of the Assets prior to the Effective Date. Buyer shall be charged for
all such Taxes based on ownership of the Assets from and after the Effective
Date. Buyer shall pay all documentary, filing and recording fees for the
Assignments required in connection with the transaction contemplated by this
Agreement.
9.5. Purchase Price Allocation. Seller and Buyer recognize that
reporting requirements of Sec. 1060(b) of the Internal Revenue Code, and the
regulations promulgated thereunder, may apply to the transaction contemplated by
this Agreement. If so, Seller and Buyer agree that the Purchase Price shall be
allocated among the assets as mutually agreed by Seller and Buyer to comply with
and satisfy the requirements of Sec. 1060(b) and applicable regulation. Seller
and Buyer agree that no Asset shall be allocated a negative value. The allocated
value of the Assets is set forth on Schedule 9.5.
9.6. Payment. Buyer shall pay to Seller the Purchase Price pursuant to
Article III.
9.7. Accounts Receivable and Accounts Payable. All unpaid accounts
receivable and unpaid accounts payable as of the Closing Date shall be handled
in accordance with Paragraphs 3.1 and 3.2 above.
9.8. Final Settlement Statement. Within sixty (60) days after the
Closing, or as soon as practical thereafter, Buyer shall prepare, in accordance
with this Agreement, the Final Settlement Statement, setting forth any
-18-
appropriate adjustments or payments not finally determined as of the Closing
Date. Buyer shall submit the Final Settlement Statement to Seller and shall
afford Seller access to Buyer's records pertaining to the computation of the
Final Settlement Statement. Seller shall deliver to Buyer a written report
containing any changes, which Seller proposed, be made to the Final Settlement
Statement. The parties shall employ that degree of effort as would prudent
business persons engaged in on going business relationships to reach agreement
as to the amounts due pursuant to such Final Settlement statement no later than
thirty (30) days after the submission of the Final Settlement Statement to
Seller. The date upon which such agreement is reached shall be called the
"Settlement Date".
9.8.1. On the Settlement Date, should one party be obligated to
the other by reason of the Final Settlement Statement, the indebted party shall
pay to the other party, in immediately available funds, those monies determined
to be due under the Final Settlement Statement. Until paid, all past due amounts
under this Paragraph 9.8 shall bear interest at the rate of prime plus two
percent, to more, as established by PNC Bank, Pittsburgh, Pennsylvania
(computed based on a 360 day year).
ARTICLE X - INDEMNIFICATION
10.1. Indemnification of the Buyer. DRI and DCP shall indemnify and
hold the Buyer harmless against., and reimburse the Buyer on demand for., all
actual damage, loss, cost or expense (including reasonable attorneys' fees
incurred in defending or settling any claim for such damage, loss, cost or
expense) incurred by the Buyer resulting from any breach of DRI's and DCP's
representations, warranties or covenants in this Agreement, including, but not
by way of limitation, claims arising
-19-
out of DRI's management of DCP and the distribution of proceeds here from
between DRI and the limited partners of DCP.
10.2. Indemnification of the Seller. The Buyer shall indemnify and hold
DRI and DCP harmless against, and reimburse DRI and DCP on demand for, all
actual damage, loss, cost or expense (including reasonable attorneys' fees
incurred in defending or settling any claim for such damage, loss, cost or
expense) incurred by the Seller resulting from any breach of the Buyer's
representations, warranties or covenants in this Agreement.
ARTICLE XI - MISCELLANEOUS
11.1. Notices. Any notice, request demand, statement or other
communication required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered in person, or if telegraphed, or
by courier, or mailed by certified mail, return receipt requested, when actually
received, and may be given as follows:
If to Seller:
Xxxxx Resources, Inc.
000 Xxx Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx
with copies to:
Xxxxxx, Van Denbergh & Xxxxxxx, PC
Xxx Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: C. Xxxxxx Xxxxxxx, Esquire
-20-
If to Buyer:
Castle Exploration Company, Inc.
000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
with copies to:
Castle Exploration Company, Inc.
0000 Xxxxx Xxxxxxx
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, III, Esq.
Or to such other address as such party may designate by ten (10) days advance
written notice to the other party.
11.2. Exclusiveness. This Agreement embodies all of the
representations, warranties and agreements of the parties hereto with respect to
the subject matter hereof, and all prior understandings, representations and
warranties (whether oral or written) with respect to such matters are
superseded. This Agreement may not be amended, modified, waived, discharged or
terminated except by an instrument in writing signed by the party or an
executive officer of a corporate party against whom enforcement of the change,
waiver, discharge or termination is sought.
11.3. Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provisions were omitted.
11.4. Successors. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns.
-21-
11.5. Assignment. This Agreement may not be assigned without the prior
written consent of the other party.
11.6. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same agreement.
11.7. Neither Party Drafter. The parties hereto agree that this
Agreement is the product of negotiation between the parties that counsel during
its negotiations has represented each and that neither party shall be deemed the
drafter hereof.
11.8. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the Commonwealth of Pennsylvania
without giving effect to conflicts of laws provisions without giving effect to
conflict of laws provisions.
11.9. Paragraph Headings. The paragraph headings in this Agreement are
for convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
11.10. Costs. Each party agrees to bear its legal, accounting and other
fees incurred in the negotiation of the transaction contemplated hereby, the
conduct of its due diligence and the preparation of the documents addressed
herein.
11.11. Survival of Provisions. The representations and warranties and
covenants of Seller and Buyer set forth in this Agreement and in any instrument
delivered in connection herewith shall survive the Closing, provided that
neither Seller or Buyer nor any successor to Seller or Buyer may bring any
action or present a claim for a breach of such representations and warranties
unless written notice of such
-22-
claim with reasonable particulars of the claim has been delivered to Seller or
Buyer within one (1) year after the Closing Date.
11.12. Exhibits. The Exhibits and Schedules attached hereto, together
with all documents incorporated by reference therein, form an integral part of
this Agreement and are hereby incorporated into this Agreement wherever
reference is made to them to the same extent as if they were set out in full at
the point at which such reference is made.
-23-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Execution Date but effective as of the Effective Date.
Attest: CASTLE EXPLORATION COMPANY, INC.
/s/ Xxxxx Xxxx /s/ Xxxxxx X. Xxxxxx XX
-------------------------------- -----------------------------------------
Secretary By: Xxxxxx X. Xxxxxx XX
-------------------------------------
Its:CEO
-------------------------------------
Attest: XXXXX RESOURCES, INC.
/s/ Xxxx X. Xxxxxxxxx By: /s/ Xxxxx X. Xxxxxxx
-------------------------------- -------------------------------------
Secretary Xxxxx X. Xxxxxxx, President
Attest: DEERLICK CREEK PARTNERS, I, L.P.
By Xxxxx Resources, Inc.,
Managing General Partner
/s/ Xxxx X. Xxxxxxxxx By: /s/ Xxxxx X. Xxxxxxx
-------------------------------- -------------------------------------
Secretary Xxxxx X. Xxxxxxx, President
