FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
FIRST AMENDMENT TO PURCHASE
AND SALE AGREEMENT
THIS
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of
July 16, 2009 (the “Execution Date”), is by and between INDIGO-ENERGY, INC., a Nevada
corporation, hereinafter referred to as “Seller”, BLUESTONE ENERGY PARTNERS, a West
Virginia general partnership (“Purchaser”), and XXXXXXX XXXXXX LLP, as “Escrow
Agent”. Seller, Purchaser and Escrow Agent are sometimes referred to
herein together as the “Parties” and individually as a “Party”.
RECITALS:
WHEREAS, Seller owns the Hydrocarbons
(as hereinafter defined), with respect to certain tracts or parcels of land
situate in Xxxxxxx Township and Freeport Township, Xxxxxx County, Pennsylvania,
and in Battelle District, Monongalia County, West Virginia (the “Property”), being
more particularly described on Exhibit A-1 attached
hereto;
WHEREAS,
Seller, TAPO ENERGY, LLC, a West Virginia limited liability company (“TAPO”), and Xxxxxxx
Xxxxxx LLP as escrow agent, entered into that certain Letter Agreement dated as
of May 28, 2009, pursuant to which Seller agreed to sell to TAPO all its right,
title and interest in the Hydrocarbons in and underlying the Property (the
“Purchase and Sale
Agreement” or “PSA”);
WHEREAS,
pursuant to the PSA, TAPO has assigned all its rights and obligations thereunder
to Purchaser by Assignment and Assumption Agreement dated June 1, 2009 (the
“Assignment”),
a copy of which has been furnished to Seller; and
WHEREAS,
as a condition to the closing of the transaction contemplated in the PSA, the
Parties have agreed to enter into this Agreement to amend the PSA as set forth
herein.
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 is hereby acknowledged, the Parties agree to modify and amend the PSA as
follows:
By adding
Section 1.1 as
follows:
1.1 The
following terms shall have the meanings set forth below:
1.1.a. “Closing Date” means
July 16, 2009, which shall be the date that the Transferred Property is conveyed
by Seller to Purchaser.
1.1.b “Shallow Formations”
mean the depths and formations above the stratagraphic equivalent of 350 feet
above the top of the Xxxxx Formation.
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1.1.c. “Indigo Xxxxx” means
Indigo Well No. 1 (API#061-01507), Indigo Well No. 2 (API#061-01509) and Indigo
Well No. 3 (API#061-01510), all located on a tract of land situate in Battelle
District, Monongalia, County, West Virginia, being identified on Tax Map 1 as
Parcel No. 5, and being more fully set forth and identified on the surveys
attached hereto as Exhibit
A-3.
1.1.d. “Reserved Radius”
means a circular radius of 1000 feet surrounding the well bore of each of the
Indigo Xxxxx, the well bore to be in the center of the circle, which radius
shall be excepted and reserved by Seller.
1.1.e. “Excluded Property”
means the Hydrocarbons existing in the Shallow Formations underlying the Indigo
Xxxxx and within the Reserved Radius.
1.1.f. “Hydrocarbons” means
oil, gas, casinghead gas, condensate, distillate, liquid hydrocarbons, gaseous
hydrocarbons and all other products refined or extracted therefrom, together
with all minerals produced in association with these substances.
1.1.g. “Leasehold Rights”
means all of Sellers’ right, title, and interest in and to those Hydrocarbons
leases, and other property interests described on Exhibit A-2 attached hereto
(the “Leases”),
and all rights granted under the Leases including any access rights and rights
to install pipelines, utilities, surface facilities and other infrastructure
necessary or convenient in the exploration for, and development, production,
processing and transportation of, Hydrocarbons; and any other rights, properties
or interests now vested in Sellers relating to, or necessary or convenient in
connection with, the ownership, development and operation of the
Leases.
By adding Section 2.1 as
follows:
2.1 The
Parties hereby agree and acknowledge that, for the Purchase Price herein stated,
Seller intends to sell, and Purchaser intends to purchase, all of Seller’s
right, title and interest in the Hydrocarbons in and underlying the Property and
the Leasehold Rights, except the Excluded Property as defined in Section 1.1.e.,
all as set forth on Exhibits X-0, X-0 xxx X-0.
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Xx amending Section 8 as
follows:
8. In
addition to the Purchase Price set forth in Section 2 hereof, Seller shall be
entitled to an overriding royalty interest (“ORRI”) not to exceed
3.125% of the net revenue from production of Hydrocarbons from the Property;
provided, however, notwithstanding the foregoing, if Seller owns less than 100%
of the Hydrocarbons, the ORRI as to that Property shall be
automatically reduced in the proportion that the net ownership of the
Hydrocarbons bears to 100% of the ownership of the Hydrocarbons. By
way of example, if Seller owns 50% of the Hydrocarbons in a specific Property,
then Seller would be entitled to an ORRI not to exceed 1.563% (50% of 3.125%) of
the net revenue from production as to that Property. Purchaser shall
provide Seller with written income statements regarding net revenue generated
from the production of Hydrocarbons upon written request from
Seller. Seller shall have the right to inspect Purchaser’s records
relating to the production and sale of Hydrocarbons from the Property upon 30
days written notice to Purchaser; provided, however, that Seller’s written
request to inspect Purchaser’s records shall be no more frequently than once in
any calendar year, and shall be strictly limited to only those records that are
necessary for Seller to determine its ORRI. The terms and provisions
contained in this Section 9 do not create, nor give rise to, any obligation,
duty or covenant whatsoever by Purchaser, either express or implied, to engage
in operations for Hydrocarbons. Seller’s right to inspect Purchaser’s
records shall not be transferrable or assignable without the express written
consent of Purchaser, which consent may be withheld for any reason or no
reason.
By amending Section 9 as
follows:
9. The
Purchase Price shall not be released to Seller until all documents necessary to
effectuate this transaction, as determined by Purchaser in its discretion, have
been executed and delivered to Purchaser, including, but not limited to the
following:
(a) documents
listed on the “Closing
Documents List” attached hereto as Schedule 2, the terms
and conditions of such documents all being expressly incorporated
herein;
(b) copies
of all necessary and duly executed consents to assignment or waivers of
preferential rights to purchase with respect to the Leasehold Rights as listed
in Schedule
3;
(c) a
certificate duly executed by the secretary or any assistant secretary of each
Seller, dated as of the Execution Date, (i) attaching and certifying on
behalf of such Seller complete and correct copies of: (A) the
certificate of incorporation, bylaws or other governing documents of such
Seller, each as in effect as of the Execution Date; and (B) the resolutions
of the board of directors of each such Seller authorizing the execution,
delivery, and performance by such Seller of this Agreement and the transactions
contemplated hereby; and (ii) certifying on behalf of such Seller the
incumbency of each officer of such Seller executing this Agreement or any
document delivered in connection with the execution of this Agreement;
and
(d) an
executed statement described in Treasury Regulation 1.1445-2(b)(2) certifying
that each Seller is not a foreign person within the meaning of the
Code.
9.1 Simultaneous
with the execution of this Agreement, upon the terms and subject to the
conditions of this Agreement, Purchaser shall deliver or cause to be delivered
to Seller, among other things, the following:
(a) a
wire transfer to Seller of the Purchase Price in same-day funds, less the
Deposit; and
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(b) a
certificate duly executed by a partner of Purchaser, dated as of the Execution
Date: (i) attaching and certifying on behalf of Purchaser
complete and correct copies of the certificate of formation or other
governing documents of Purchaser in effect as of the Execution Date; and
(ii) certifying on behalf of Purchaser the incumbency of each partner
executing this Agreement or any document delivered in connection with the
execution of this Agreement.
By amending Section 11 as
follows:
11. Governing Law. THIS
AGREEMENT AND THE LEGAL RELATIONS BETWEEN THE PARTIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WEST VIRGINIA WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS OTHERWISE APPLICABLE TO SUCH
DETERMINATIONS. Jurisdiction and venue with respect to any disputes arising
hereunder shall be proper only in the Circuit Court of Monongalia County, West
Virginia, or in the United States District Court for the Northern District of
West Virginia. The Parties hereby waive trial by jury in any action,
proceeding, or counterclaim brought by any Party against the other in any matter
whatsoever arising out of or in relation to or in connection with this
Agreement.
By
adding Section 15 as
follows:
15. Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original instrument, but all such counterparts together shall constitute but one
agreement.
By adding Section 16 as
follows:
16. Waivers. Any
failure by any of the Parties to comply with any of their obligations,
agreements or conditions herein contained may be waived in writing, but not in
any other manner, by the Party to whom such compliance is owed. No
waiver of, or consent to a change in, any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of, or consent to a change in,
other provisions hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
By adding
Section 17 as
follows:
17. Limitation on
Damages. Notwithstanding
anything to the contrary contained herein, neither Seller or Purchaser, nor any
of their respective affiliates, shall be entitled to special, punitive, indirect
or consequential damages in connection with this Agreement and the transactions
contemplated hereby (other than special, punitive, indirect or consequential
damages suffered by third persons for which responsibility is allocated between
the Parties) and each Party, for itself and on behalf of their affiliates,
hereby expressly waive any right to special, punitive, indirect or consequential
damages in connection with this Agreement and the transactions contemplated
hereby.
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By adding Section 18 as
follows:
18. Severability. If
any part of this Agreement should be held to be void or unenforceable, such part
will be treated as severable, leaving valid the remainder of this Agreement
notwithstanding the part or parts found void or unenforceable.
By adding
Section 20 as
follows:
20. Construction. It
is the intention of the Parties that this Agreement shall not be construed for
or against any Party.
By adding
Section 21 as
follows:
21. Enforcement
Actions. Subject to the provisions of Section 11, as amended
herein, in any suit brought to enforce the provisions of this Agreement or to
establish a breach hereof, the Party bringing such suit, if successful therein,
shall also be entitled to recover reasonable attorneys’ fees and all costs
incurred in connection therewith.
By adding
Section 22 as
follows:
22. Notices. All
notices that are required or may be given pursuant to this Agreement shall be
sufficient in all respects if given in writing and delivered personally, by
telecopy or by registered or certified mail, postage prepaid, as
follows:
If
to Seller:
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000
X. Xxxxx Xxxxxx Xxxxxxx
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Xxxxx
000
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Xxxxxxxxx,
XX 00000
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Attn:
Xxxxxx X. Xxxxxx, CEO
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If
to Purchaser:
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Bluestone
Energy Partners
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P.
O. Xxx 000
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Xxxxxxxxx,
XX 00000
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Attn:
Xxxxxxx Xxxxxxx Xxxxxx
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Any Party
may change its address for notice by notice to the others in the manner set
forth above. All notices shall be deemed to have been duly given at
the time of receipt by the Party to which such notice is
addressed.
By adding
Section 23 as
follows:
23. Right of First Refusal
Option on Sale. If the Seller receives
a bona fide offer from a third party to buy its interest in the Excluded
Property, which offer the Seller shall desire to accept, the Seller shall
immediately notify the Purchaser, in writing giving all of the terms and
conditions of such offer, and the Purchaser shall have the right and option for
thirty (30) days after receipt of such notice to elect to purchase said interest
in the Excluded Property for the same consideration and on the same terms and
conditions in such offer. Said option shall be exercisable by the
Purchaser giving notice to the Seller within such thirty (30) day
period. If said option is not exercised by the Purchaser within such
period, the Seller shall have the right to sell said interest in the Excluded
Property to such third party on the terms and conditions contained on said
notice to the Purchaser. Should the Purchaser fail to exercise any
first refusal option available to it, none of its rights or remedies as provided
for or contained in the Purchase and Sale Agreement, as amended by this
Agreement, will be in any way affected or diminished.
[SIGNATURE
PAGE TO FOLLOW]
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[SIGNATURE
PAGE]
IN WITNESS WHEREOF, the
Parties hereto have caused their names to be signed hereto by their proper
officers or general partner thereunto duly authorized all as of the Execution
Date.
SELLER:
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PURCHASER:
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BLUESTONE
ENERGY PARTNERS
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By:
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/s/ Xxxxxx X. Xxxxxx |
By:
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/s/ Xxxxxxx X. Xxxx | |
Name: Xxxxxx
X. Xxxxxx
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Name: Xxxxxxx
X. Xxxx
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Its: President
|
Its: General
Partner
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ATTACHED
TO AND MADE PART OF THAT CERTAIN FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
BY AND AMONG INDIGO-ENERGY, INC. AND BLUESTONE ENERGY PARTNERS
EXHIBIT
A-1
TRACT
EXHIBIT
-8-
ATTACHED
TO AND MADE PART OF THAT CERTAIN FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
BY AND AMONG INDIGO-ENERGY, INC. AND BLUESTONE ENERGY PARTNERS
EXHIBIT
A-2
LEASE
EXHIBIT
-9-
ATTACHED
TO AND MADE PART OF THAT CERTAIN FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
BY AND AMONG INDIGO-ENERGY, INC. AND BLUESTONE ENERGY PARTNERS
EXHIBIT
A-3
EXCLUDED
PROPERTY
Indigo Well No.
1 API# 47-61-1507
Indigo Well No.
2 API# 00-000-0000
Indigo Well No.
3 API# 00-000-0000
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ATTACHED
TO AND MADE PART OF THAT CERTAIN FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
BY AND AMONG INDIGO-ENERGY, INC. AND BLUESTONE ENERGY PARTNERS
SCHEDULE
2
CLOSING
DOCUMENTS LIST
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ATTACHED
TO AND MADE PART OF THAT CERTAIN FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
BY AND AMONG INDIGO-ENERGY, INC. AND BLUESTONE ENERGY PARTNERS
SCHEDULE
3
CONSENTS
AND PREFERENTIAL PURCHASE RIGHTS
NONE
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