Exhibit 10.45
ASSET PURCHASE AND SALE AGREEMENT
BY AND AMONG
CENTURY WELL SERVICE, INC., ET. AL.
AND
DALECO RESOURCES CORPORATION
EXECUTED: MAY 23, 2006
THIS AGREEMENT, dated May 23, 2006 ("Execution Date") but effective
as of Closing Date, is entered into by and among Century Energy Management Co.,
Inc., Newport Transmission, Inc., Biscayne Petroleum Corp., River Resources,
LLC., Rockhound Exploration & Development, LLC. and Century Well Service, Inc.,
whose address is 0 Xxxxxxxxx Xxxxx, Xxxxxxx, XX 00000 (hereinafter collectively
referred to as "Seller") and Daleco Resources Corporation with one or more of
its subsidiary entities, whose collective address is 000 Xxxxx Xxxxxx Xxxxxx,
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000 (hereinafter collectively referred to as
"Buyer").
WITNESSETH
WHEREAS, Seller owns various undivided interests in the Assets; and
WHEREAS, Seller entered into a Letter of Intent with WE Energy, LLC,
dated March 31, 2006 ("Letter of Intent"); and
WHEREAS, the Letter of Intent provides that the purchaser of the
Assets may be WE Energy, LLC or its designee, and
WHEREAS, Buyer is the designee of WE Energy, LLC, and
WHEREAS, the Seller desires to sell and convey and Buyer desires to
purchase and acquire the Assets, effective as of the Effective Date.
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 1 -- DEFINITIONS
The following terms shall have the meanings ascribed to them below
when used in this Agreement:
1.1 "Accounts Receivable", shall mean all accounts, instruments and
general intangibles (as such terms are defined in the Uniform Commercial Code of
Ohio) attributable to Seller's interest in the Assets with respect to any period
of time from and after the Closing Date.
1.2 "Agreement", shall mean this Asset Purchase and Sale Agreement.
1.3 "Assets", shall mean Seller's assets listed on Schedule 1.3
hereto, except the Excluded Assets. The Assets include, but are not limited to:
1.3.1. the Equipment, the Oil and Gas Properties, Real and
Personal Property, Pipeline Interests and Oil and Gas Contracts; and
1.3.2 Copies of all of Seller's documents relating to the
Equipment, the Oil and Gas Properties, and the Xxxxx to include, by way of
example and not limitation, Production, financial, title, logs, core, geological
and engineering records, and all other files whether kept manually or in
electronic form, that covers, deals with or relates to the Assets or any part
thereof; ("Books and Records").
1.4 "Assignment" or "Assignments" shall mean one or more Assignments
and Bills of Sale in substantially the forms of Exhibit "A-1", through Exhibit
"A - 3" hereto and Deed or Indenture for the conveyance of real property in the
form attached hereto as Exhibit "A-4". The Assignments covering leases held by
production shall contain special warranty deed language, conveying the Assets
without warranty, either expressed or implied, except for claims by, through or
under the Seller, but not otherwise, with full substitution and subrogation
rights all as more particularly set forth in the Assignment, with all Equipment
conveyed "AS IS and WHERE IS, without warranty of merchantability OR fitness for
a particular PURPOSE." The Assignments covering leases not held by production
shall be conveyed by Quit Claim Assignments. Real Property will be conveyed by
general warranty Deed.
1.5 "Closing", shall mean the consummation of the transactions
contemplated by this Agreement.
1.6 "Closing Date", shall mean the date on which the Closing shall
have the meaning set forth in Paragraph 2.3.
1.7 "Effective Date", shall mean 7:01 a.m. Eastern Standard Time, on
the Closing Date.
1.8 "Encumbrance", shall mean all liens, claims or encumbrances of
whatever type to include by way of example and not limitation any mortgage,
lien, security interest, pledge, charge, encumbrance, claim, limitation,
reversionary interest, preferential right to purchase any of the Assets,
irregularity, burden, hypothecation or defect, a complete and correct list of
which is attached hereto as Schedule 1.8.
1.9 "Environmental Condition", shall mean any condition of the soil,
subsurface, surface waters, ground waters, atmosphere or other environmental
medium, whether or not yet discovered, which results, or could reasonably be
expected to result, in any damage, loss, cost, expense, claim, demand,
investigation, lien or liability relating to the Assets as a result of or under
any Environmental Law.
1.10 "Environmental Law", shall mean the Resource Conservation and
Recovery Act of 1976, as amended, the Clean Air Act, as amended, the Clean Water
Act, as amended, and the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, and all federal, state, local and other governmental
regulations, orders, interpretations or rulings issued thereunder, and other
Legal Requirements relating to air or water quality, hazardous or solid wastes,
hazardous substances, the prevention or remediation of pollution or
environmental damage, protection of the environment or any other environmental
matters.
1.11 "Equipment", shall mean those items of equipment, inventory and
spare parts belonging to the Seller, a partial list of which is set forth on
Schedule 1.11 hereto, to include by way of example and not limitation the: (i)
equipment located on the Oil and Gas Properties; (ii) appurtenant thereto,
and/or, (iii) used in connection with the Oil and Gas Properties, the Pipeline
and/or the Xxxxx to include, by way of example and not limitation, the
Infrastructure; (iii) drilling rigs and related equipment, to include all
tubulars, drill stems, dozers, tractors and bits .
1.12 "Escrow Agent" shall have the meaning as described in Paragraph
3.1, and "Escrow Agreement" shall mean that document set forth as Exhibit "B"
hereto.
1.13 "Excluded Assets" shall mean those assets of Seller not listed
on Exhibit 1.3 and not conveyed to Buyer, to include, by way of example and not
limitation, the "Robo Enterprises xxxxx", three designated automobiles, the West
Virginia assets, any stock owned by the Seller and the Seller's names, as more
fully set forth on Schedule 1.13.
1.14 "Execution Date", shall have the meaning set forth above.
1.15 "Existing Burdens", shall mean Lease Burdens and Permitted
Encumbrances of record as of the Effective Date or of which Buyer has received
written notice prior to the Closing Date.
1.16 "Final Settlement Statement", shall mean that Final Settlement
Statement as provided for.
1.17 "Gathering System" shall mean the Seller's pipeline system
connected to the Xxxxx and transporting the hydrocarbons and water produced from
a well to tanks or a first purchaser's pipeline or an end user's interchange, a
description of which is set forth on Schedule 1.17 hereto.
1.18 "Infrastructure", shall mean the Gathering System, water
disposal and transportation systems, separation equipment, measurement,
electrical and other systems in place as of the Closing Date and used or held
for use in connection with the ownership or operation of the Oil and Gas
Properties, a description and listing of which is set forth on Schedule 1.18
hereto.
1.19 "Lease", shall mean an instrument granting the lessee the right
to explore for and to remove hydrocarbons from the mineral estate, or other like
conveyance of the right to use the lands of another, a list of which Leases
comprising part of the Assets is attached as Schedule 1.19.
1.20 "Lease Burdens", shall mean all Royalties and Overriding
Royalties and such other rights to share in the Production from the Xxxxx of
record as of the Effective Date, a list of which is set forth on Schedule 1.20
hereto.
1.21 "Lease Operating Expenses", shall mean any and all costs and
expenses properly charged by the operator of the Xxxxx pursuant to the
applicable operating agreement governing operations on such Xxxxx.
1.22 "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, issued or enacted by any governmental
authority to include, without limitation, any bonding requirements of Buyer or
other regulatory approval governing the transfer of operations to Buyer.
1.23 "Letter of Intent," shall mean that certain letter dated March
31, 2006 by and among Seller and WE Energy, LLC, setting forth the terms
pursuant to which the Seller was willing to sell the Assets and WE Energy was
willing to buy the Assets.
1.24 "Net Revenue Interest", shall mean a Revenue Interest less all
Lease Burdens, a schedule of which is attached hereto as Schedule 1.44.
1.25 "NOV" shall mean a notice of violation issued by the Ohio
Department of Natural Resources or any other regulatory agency having
jurisdiction over the Assets, a list of which is set forth on Schedule 1. 25
hereto.
1.26 "Oil and Gas Contracts", shall mean all rights of Seller to any
contracts that affect or relate to the Oil and Gas Properties or the Production
attributable thereto 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 gas balancing
agreements with respect to Production before the Effective Date), Surface
Agreements, natural gas 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.
1.27 "Oil and Gas Properties", shall mean those Leases, Working
Interests, Overriding Royalty Interests, Net Revenue Interests and Xxxxx of
Seller set forth on Schedule 1.44 hereto.
1.28 "Operator", shall mean the person designated as the "operator"
of the Oil and Gas Properties in the Operating Agreement governing the Xxxxx.
1.29 "Operating Agreements", shall mean those agreements governing
the operation of the Xxxxx, as set forth on Schedule 1.29 hereto.
1.30 "Ordinary Course of Business", shall mean the ordinary course
of business and conduct of operations in the oil and gas industry and 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.
1.31 "Outstanding Obligations", shall mean those Taxes, Lease
Operating Expenses, Royalties, and Overriding Royalties and any other
liabilities or expenses relating to the ownership and operation of the Assets
accruing on or before the Effective Date and which Seller has not paid as of the
Closing Date, a list of which is set forth on Schedule 1.31 hereto.
1.32 "Overriding Royalty", shall mean a non-operating interest
carved out of a Working Interest's share of the oil and gas produced at the
surface, free of production expenses, a list of which is set forth on Schedule
1.44.
1.33 "Permits", shall mean all permits, licenses and approvals, from
any and all agencies, whether county, state or Federal, for the operation of the
Seller's activities, a list of which is set forth on Schedule 1.33 hereto.
1.34 "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, which are: (a) 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;
(b) inchoate, statutory or operator's 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; (c) 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; (d) Encumbrances that arise as a
result of Oil and Gas Contracts that can be terminated on thirty (30) days
notice, and orders and laws a list of which is set forth on Schedule 1.34
hereto.
1.35 "Person", shall mean an individual, group, partnership,
corporation, trust, Limited Liability Company or other entity.
1.36 "Pipeline", shall mean all of the Seller's interest in the
Gathering System.
1.37 "Pipeline Interest", shall mean Seller's interest in the
Pipeline.
1.38 "Production", shall mean all hydrocarbons produced, saved and
sold from the Xxxxx.
1.39 "Real and Personal Property" shall mean all real estate,
drilling rigs, workover rigs, service rigs and all tangible property (whether
real, personal or otherwise) equipment associated with and used by, on and with
the production operations, the pipeline operations, the saltwater disposal
operations, the drilling rigs, work over rigs and service rigs (hereinafter
drilling rigs, work over rigs and service rigs are collectively referred to as
"Drilling Rigs"), a list of which is set forth on Schedule 1. 39 hereto.
1.40 "Revenue Interest", shall mean the gross revenues from
Production attributable to a Working Interest, a list of which is set forth on
Schedule 1. 44 hereto.
1.41 "Royalty", shall mean that proportionate share of Production
payable to the owner of the mineral estate or its designee, free of all expenses
of Production.
1.42 "Surface Rights", shall mean all rights, by whatever name or
designation, to include, by way of example and not limitation, easements,
rights-of-way, meter site agreements compressor site agreements, and surface
leases for the drilling, completion and production of a well, the laying of a
pipeline, the installation of a meter site or compressor site or other items of
tangible property incident to the production or transportation of hydrocarbons,
a list of which is set forth on Schedule 1.42.
1.43 "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 based upon the ownership of the Assets, business privilege
taxes and all other taxes levied by any governmental body or agency upon and
required for businesses doing business within their jurisdiction.
1.44 "Xxxxx", shall mean Seller's interest in those xxxxx set forth
on Schedule 1.44 hereto.
1.45 "Working Interest", shall mean an interest in the leases
embodying operating rights, operating obligations (including, but not limited
to, obligations to bear the costs and expenses of exploring for and producing
hydrocarbons) and the right to share in Production, a list of which is set forth
on Schedule 1. 44 hereto.
ARTICLE II -- PURCHASE AND SALE OF THE ASSETS
2.1 Transfer. Subject to the terms of this Agreement, Seller hereby
agrees to sell, transfer, assign, convey and deliver unto the Buyer, and Buyer
hereby agrees to purchase, acquire and accept, the Assets, effective as of the
Effective Date.
2.2 Closing. At the closing, subject to the provisions of Article
VII and VIII, the Buyer will deliver the Purchase Price in accordance with
Article III below to the Escrow Agent.
2.3 Closing Date. The date of the Closing shall be a date not later
than sixty (60) days after the Execution Date, unless extended by mutual
agreement of the parties hereto but in any event not later than July ___, 2006.
Buyer may unilaterally extend the Closing Date for an additional 30 days upon
the payment to Seller of an additional $25,000.00 Good Faith Deposit (as that
term is defined in Paragraph 3.1 below).
2.4 Execution. Upon the execution of this Agreement, this Agreement
shall become a binding agreement by and between the Buyer and the Seller,
subject to the parties fulfilling their respective conditions to Closing as set
forth in Articles VII and VIII below.
2.5 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
Assets (by executing and delivering one or more counterparts of the Assignments,
together with a description of the respective Assets attached thereto) to Buyer.
The Assignments covering leases held by production shall provide for a Special
Warranty of title to the Assets by, through and under the Seller, but not
otherwise, with all Equipment conveyed "AS IS and WHERE IS, WITHOUT WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE." The real property shall be
conveyed to Buyer by General Warranty Deed. All leases not held by production
shall be conveyed to Buyer by a Quit Claim Assignment.
ARTICLE III-- PURCHASE PRICE
3.1 Price. The purchase price for the Assets shall be Four Million
Dollars ($4,000,000) ("Purchase Price") less all good faith deposits ("Good
Faith Deposits") paid to Seller by Buyer on or before the Closing Date, of which
Fifty Thousand Dollars ($50,000) has already been paid by Buyer to Seller as of
the Execution Date, plus 250,000 shares of Daleco Resources Corporation common
stock, par value $.01 ("Stock"), subject to the terms and conditions of the
Registration Rights Agreement. The Purchase Price as adjusted by: (a) Paragraph
3.3 below, and (b) less any Good Faith Deposits is referred to as the "Adjusted
Purchase Price."
3.2 Manner of Payment, Escrow Agent.
3.2.1 At the Closing, the Buyer will pay to Crabbe, Xxxxx &
Xxxxx, LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxx 00000 (the
"Escrow Agent") the Adjusted Purchase Price in immediately available Federal
funds. Upon receipt of the Adjusted Purchase Price in immediately available
Federal funds, Seller shall deliver to the Buyer the Assignments and such other
Closing documentation as required herein.
3.2.2 At the Closing, the Buyer will deliver to the Escrow
Agent a Certificate in the name of the Seller, or its designee, for 250,000
shares of Stock. The Certificate shall bear the following restrictive legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR QUALIFIED
PURSUANT TO THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (i)
AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE 1933 ACT AND
AN EFFECTIVE REGISTRATION OR QUALIFICATION OF SUCH SECURITIES FOR SALE UNDER ANY
APPLICABLE STATE SECURITIES LAW; OR (ii) AN OPINION OF COUNSEL SATISFACTORY TO
THE CORPORATION THAT SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED.
3.2.2.1 The Stock shall be subject to a registration rights
agreement ("Registration Rights Agreement") in form and substance identical to
Exhibit C hereto. The Registration Rights Agreement shall be effective for one
year from the Closing Date ("Term") and shall grant to the Seller "piggy back"
registration rights onto Buyer's registration of common stock during the Term.
The Seller shall have no rights to demand a registration of the Stock acquired
by it under Paragraphs 3 and 3.2.1 or this Agreement generally. The parties
incorporate by reference the Registration Rights Agreement (Exhibit C) herein
for all purposes as though the Registration Rights Agreement was set forth at
length herein.
3.3 Allocation of Revenues and Assumption of Liabilities. Subject to
the terms and provisions hereof, as of the Effective Date:
3.3.1 Buyer purchases and acquires the Assets and assumes the
liabilities and obligations pertaining to the Assets which accrue on and after
the Closing Date (to include, by way of example and not limitation, all
obligations arising after the Closing Date: (i) under the Leases which
constitute a portion of the Oil and Gas Properties; (ii) under the Oil and Gas
Contracts; (iii) referenced herein or on Exhibits and Schedules hereto; and (iv)
other Legal Requirements), as evidenced by the execution of this Agreement and
the execution and acceptance of each Assignment, but excluding however: (x)
Excluded Liabilities (as defined in Paragraph 3. 3.2 below) or, (y) liabilities
or obligations arising from a breach of any the obligations of Seller under this
Agreement.
3.3.2 Seller shall retain and bear the liabilities and
Obligations attributable to Seller's ownership or operation of the Assets and
arising and/or incurred prior to the Effective Date, to include, by way of
example and not limitation: (i) costs for Leases or leasehold interests under
any existing letter of intent, prospect acquisition agreement, or other contract
or document to which Seller is a party and (ii) all Outstanding Obligations,
whether or not actually invoiced or billed prior to or subsequent to the
Effective Date (collectively, the "Excluded Liabilities"), 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.
3.3.3 Seller shall receive all proceeds of Production actually
produced, sold and delivered before the Closing Date, and Buyer shall be
entitled to all proceeds of Production actually produced, saved, sold and
delivered on and after the Closing Date.
3.3.4 Seller shall receive all revenues and benefits
attributable to the Assets earned prior to the Closing Date and Buyer shall
receive all revenues and benefits attributable to the Assets earned on and after
the Closing Date, to include all prepayments for drilling contracts and/or
services received by Seller prior to the Closing Date but not performed or
drilled by the Closing Date.
3.3.5 Taxes assessed on and against the Assets shall be pro
rated as of the Closing Date in accordance with Paragraph 9.7, with the Purchase
Price to be adjusted in accordance with Paragraph 3.3.
3.3.6 Purchase Price Adjustment. The Purchase Price shall be
adjusted as follows:
3.3.6.1 Upwards by:
3.3.6.1.1 Taxes actually paid by Seller out of
Seller's funds in respect of the Assets and relating to periods on or after
the Closing Date and which were not deducted from revenues attributable to the
Assets as of and after the Closing Date.
3.3.6.2 Downwards by:
3.3.6.2.1 The totality of the Good Faith Deposits.
3.3.6.2.2 The amount shown on Schedule 1.8, paid
to any creditor, mortgagee, lien holder, or any other party by Buyer to whom the
Seller is indebted and to whom payment must be made to allow the Seller to
deliver the Assets to the Purchaser free and clear of all Encumbrances, other
than Permitted Liens, at Closing.
3.4 Closing Statement. Seller shall deliver to Buyer not less than
two business days before the Closing Date a statement (the "Closing Statement")
setting forth the adjustments to the Purchase Price provided in Paragraph 3.3,
using estimates where actual amounts are not known at the Closing. The Closing
Statement shall be prepared in form and substance mutually acceptable to the
parties.
3.5 Additional Consideration. For a period of three (3) years after
the Closing Date, Seller shall have the right depending on the reasonable
availability of the T-4 drilling rig acquired by Buyer from Seller, upon not
less than thirty (30) days prior written notice to Buyer, to use the T-4
drilling rig for the drilling of up to five (5) xxxxx per calendar year.
Seller's cost for utilization of the T-4 drilling rig shall be Buyer's actual
costs of operating the T-4 drilling rig plus fifteen percent (15%). Seller's
costs shall mean those costs which are customarily associated with the operation
and management of a drilling rig operating in Ohio, as shall be further set
forth in the drilling contract to be executed by Buyer and Seller at the time of
engagement of the drilling rig. The parties agree to work together to provide
Buyer with as much lead time as appropriate for the scheduling of the T-4
drilling rig.
ARTICLE IV -- THE SELLER'S REPRESENTATIONS AND WARRANTIES
4.1 Each Seller represents and warrants to Buyer and its successors
and assigns that as of the Execution Date and as of the Closing Date:
4.2 Organization. Each Seller is duly organized and validly existing
under the laws of the State of its formation, and each Seller is in good
standing and qualified to do business in each jurisdiction where it is required
for the conduct of Seller's business.
4.3 Authority. Each Seller 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. The execution of this Agreement and the
consummation of the transaction contemplated by this Agreement (i) has been
approved by the shareholders and board of directors of the each Seller and such
other corporate requirements to which each Seller is subject, and (ii) will not
violate, nor be in conflict with, any provisions of its governing documents or
any material agreement or instrument to which each Seller is a party or by which
each Seller or any of the Assets is bound, or any judgment, decree, order,
statute, rule or regulation applicable to each Seller or any of the Assets.
4.4 Binding Obligation. This Agreement has been duly executed and
delivered on behalf of each Seller in accordance with the provisions of the
governing documents. 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 documents and instruments will, to the extent they
are binding on Buyer, constitute legal, binding obligations of each Seller in
accordance with their terms.
4.5 No Breach of Statute, Decree or Contract. The execution,
delivery and performance of this Agreement by each Seller does not and will not
breach any Legal Requirement, will not 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 any Seller 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 to the extent of Permitted Encumbrances .
4.6 No Litigation or Adverse Events. Except as set forth in Schedule
4.6, to the best of each Seller's knowledge there is no suit, claim or action,
or legal, administrative, arbitration or other proceeding, or governmental
investigation, pending or, to each Seller's knowledge, threatened, by or against
any Seller or the Assets, and no event or condition of any character exists, to
the Seller's knowledge, pertaining to any Seller or Assets, that could prevent
the consummation of the transactions contemplated by this Agreement or which
might result in a material loss of any portion of the Assets, a material
diminution in the value of any of the Assets or a material interference with the
use and enjoyment of any of the Assets.
4.7 Taxes. Except as set forth on Schedule 4.7, all Taxes,
assessments, excises and other levies which, if not paid, could constitute liens
or charges attributable to the Assets except for Taxes being contested in good
faith and by appropriate proceedings have been paid in the ordinary course. Each
Seller remains responsible for Taxes due and owing for periods prior to the
Effective Time.
4.8 Accuracy of Documents. All copies of Oil and Gas Contracts,
Permits, and other documents, provided by each Seller in connection with the
transactions contemplated hereby, are complete and accurate and have not been
amended or modified. Each Seller has provided Buyer, its agents and
representatives with access to all documents which Buyer requested.
4.9 Title. Each Seller has good and marketable title to all of the
Assets to be conveyed to Buyer by it at Closing, free and clear of all
Encumbrances except for the Existing Burdens. The Assignments will convey to
Buyer, subject to Existing Burdens, each Seller's title to the Assets without
reservation. Other than the Existing Burdens, each Seller has not created any
additional liens, claims or Encumbrances affecting the Assets from and after the
Closing Date. Seller shall for each lease held by production 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. For each Lease not
held by production, each Seller shall convey such lease to Buyer by Quit Claim
Assignment. Seller shall provide warranty of title as to the real property
conveyed to Buyer by General Warranty Deed.
4.9.1 Equipment. EXCEPT FOR THE SPECIAL WARRANTIES OF TITLE
GIVEN BY SELLER IN THE ASSIGNMENTS, SELLER DISCLAIMS ANY WARRANTIES EXPRESS
AND/OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE (INCLUDING WARRANTIES WITH RESPECT TO THE
PRESENCE OF ENVIRONMENTAL CONDITIONS, EXCEPT AS SET FORTH IN PARAGRAPH 4.12, OR
NATURALLY OCCURRING RADIOACTIVE MATERIAL AFFECTING THE ASSETS) OR 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 WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR
MERCHANTABILITY.
4.10 Status of Leases.
4.10.1 Payments. To the best of each Seller's knowledge, after
reasonable inquiry, since Seller's acquisition of the Assets, all Oil and Gas
Properties are in full force and effect with all Royalties, Overriding
Royalties, rentals, shut-in royalties and other such payments due in respect to
the Oil and Gas Properties having been properly and timely paid (except where
Royalty payments have been legally suspended to Royalty owners whose whereabouts
are unknown or who have title defects). Seller remains responsible for its share
of any payments due to the owner of an Oil and Gas Property that may be
determined to be due for periods prior to the Closing Date.
4.10.2 Each Seller remains responsible and liable for any
payments that may be determined to be due for periods prior to the Closing Date,
to include royalties for periods due on hydrocarbons produced, saved and sold
prior to the Closing Date even though the proceeds of which are not received by
the Seller until after the Closing Date.
4.10.3 Working Interests. Seller's Working Interests in the
Oil and Gas Properties are represented on Schedule 1. 44.
4.10.4 Net Revenue Interests. Seller's Net Revenue Interests
in the Oil and Gas Properties are represented on Schedule 1. 44.
4.10.5 Overriding Royalty. Seller's Overriding Royalty
Interests binding the Assets are set forth on Schedule 1. 44.
4.10.6 Compliance with Laws. Seller, as owner, operator,
driller and a non-operator, has, to the extent required, complied in all
material respects with all-applicable laws, regulations and orders of all
governmental agencies having jurisdiction over the Assets and the conduct of its
business.
4.11 Necessary Action. Each Seller 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 the Seller 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 Seller shall not be required to file suit
or assume any additional liabilities in performing its obligations.
4.12 No Default. Each Seller is not in default under, and has not
received a notice of default or termination (to include a self-executing
termination clause under any instrument to which Seller is a party) with respect
to any Asset or the title of the Seller thereto. Except for Permitted
Encumbrances, and the Encumbrances set forth in Schedule 1.8 hereto all of which
shall be paid in full at or prior to the Closing, no condition exists that with
notice or lapse of time or both would constitute a default under any mortgage,
indenture, loan credit agreement or other agreement or instrument evidencing
indebtedness for borrowed money, or create a lien, charge or other Encumbrance
on any of the Assets. Seller has not received any notice of default with respect
to, any order, writ, injunction or decree of any court, commission or
administrative agency in connection with the ownership, development or operation
of the Assets, or any part thereof, which would materially adversely affect the
value of the Assets. All of the proceeds from the sale of Production are being
properly and timely paid to the Seller by the purchasers of production without
suspension or indemnity other than standard division order indemnity.
4.13 Environmental Claims. Except as set forth on Schedule 1.8
hereto, to the best of Seller's knowledge, after reasonable inquiry, there is no
Environmental Condition in, on or under any of the Assets which has not been
disclosed to Buyer prior to the Effective Date. Each Seller has not received and
has no knowledge of any notice of or any threat of any claim, suit, proceeding,
inquiry, investigation, or judicial or administrative action arising out of or
based upon any Environmental Condition or Environmental Law, pertaining directly
or indirectly, to any of the Assets.
4.14. Existing Burdens. Seller represents that the Lease Burdens and
other Existing Burdens on the Xxxxx do not reduce the Net Revenue Interest below
the percentages set forth on Schedule 1.44. Seller does warrant the represented
Net Revenue Interest against all claims arising by, through and under Seller,
but not otherwise.
4.15 Permits. All permits necessary for the operation of the Assets
are in full force and effect.
4.16 Absence of Changes.
4.16.1 Since January 31, 2006, there has not been (a) any
material reduction in the rate of production of Hydrocarbons from any of the Oil
and Gas Properties other than changes (i) in the ordinary course of operation to
include, by way of example and not limitation, weather related curtailments and
interruptions and pipeline or end user curtailments and interruptions (ii) that
result from depletion in the ordinary course of operation and (iii) that result
from variances in markets for Production, and except as disclosed to Buyer's
representatives and agents and examined in the Buyer's field examination of the
Assets, none of the Oil and Gas Properties has suffered any material
destruction, damage or loss, or (b) any material casualty loss, whether or not
covered by insurance. Seller represents and warrants from the Effective Date
through the Closing Date, Seller has Owned and caused the Oil and Gas Properties
to be operated in a manner consistent with its historical practices and in the
ordinary and regular course of business of being a non-operating owner of the
Oil and Gas Properties.
4.16.2 Since January 31, 2006, there has not been any material
reduction in the operations, revenues or contracts of drilling, well servicing
and commercial saltwater disposal facilities.
4.16.3 Since January 31, 2006, there has not been any material
reduction in the hydrocarbons transported by the Gathering System.
4.17 Each Seller is not a party to any union contract. All of
Seller's employees are "employees at will" and have no contracts or other
agreements with Seller that would obligate Buyer, in any capacity, to fund any
severance package, 401(k), pension or other fund on behalf of the Seller's
employees.
4.17.1 Each Seller has made and is current on all workmen's
compensation and unemployment compensation payments required and/or levied by
any governing body in the states, counties or local ordinances in which each
Seller conducts its business.
4.18 There are no imbalances under any gas balancing agreements
affecting the Assets and Buyer shall not be obligated to deliver any oil and gas
produced from the leases to any party by virtue of any prepayment made under any
production sales contract or other contract or similar agreement.
4.19 Each Seller has not received any amounts for the sale of oil,
gas, or other hydrocarbons in excess of the amounts permitted by laws, rules,
and regulations of the United States government or any state agency.
4.20 Each Seller shall indemnify and hold Buyer harmless from any
claims and demands from all brokers or finders employed or retained by Seller.
4.21 There are no bankruptcy, reorganization, or receivership
proceedings pending, being contemplated by, or, to the knowledge of Seller,
threatened against any Seller.
4.22 Each Seller has or will have prior to Closing, obtained all
requisite third party consents, if same are required, in order to transfer,
convey and assign the Assets to Buyer.
4.23 Each Seller has maintained in effect through the Closing Date
all policies of insurance covering its activities and the Assets, a list of
which is set forth on Schedule 4.23 hereto.
4.24 Each Seller acknowledges that Buyer will pay WE Energy, LLC a
finder's fee with respect to this transaction to which each Seller has no claim
or interest and for which Seller shall have no liability.
4.25 Each Seller represents and Warrants that the listing of NOV's
as set forth on Schedule 1. 25 consists of all of the open NOV's to which Seller
is subject or of which it has notice or which are pending. Seller is not aware
of any inspection by any governmental official resulting in finding of a
violation of any applicable law or regulation in the conduct of its activities
except as shown on Exhibit 1. 25.
ARTICLE V -- THE BUYER'S REPRESENTATIONS AND WARRANTIES
5.1 The Buyer represents and warrants to each Seller as of the
Execution Date and the Closing Date as follows:
5.1.1 Existence. The Buyer is a company duly organized,
validly existing, and in good standing under the laws of the state of its
formation, and is in good standing and qualified to do business in each
jurisdiction where it is required for the conduct of Buyer's business. The Buyer
has duly authorized the execution, delivery and performance of this Agreement by
all necessary action, and the same is a binding obligation of the Buyer,
enforceable in accordance with its terms.
5.2 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 Organization or any order, writ, injunction, decree,
agreement or instrument to which the Buyer is a party or by which it is bound.
5.3 Sophisticated Buyer. Buyer represents and warrants that it is
experienced and sophisticated in the oil and gas industry, that it is familiar
with the Assets, operation of the Assets and other Oil and Gas Properties, and
is making this acquisition based upon its own due diligence and knowledge of the
Assets without reliance on any representation or warranty of Seller other than
those expressly set forth in this Agreement.
5.4 Buyer and/or its representatives and agents have had the
opportunity to examine and have conducted field examination of the Assets.
5.5 Buyer shall be exclusively liable for the payment of a finder's
fee to WE Energy, LLC and Seller shall bear no responsibility therefore.
5.6 Public Company; Regulatory Requirements. Buyer is a publicly
traded company, regulated by State and Federal securities laws and regulations.
Buyer has complied with all state and federal securities laws and regulations
applicable to Buyer by virtue of entering this Agreement, including but not
limited to all public notice and reporting requirements.
ARTICLE VI -- COVENANTS
6.1 Retention of Good Faith Deposit. In the event that the
transaction contemplated by this Agreement fails to close through no fault of
the Seller, the Seller may retain all deposits paid to Seller. Should the
transaction fail to close as a result of actions of the Seller such that Buyer's
conditions to Closing under Article VII are not met, then Seller shall
immediately return $25,000.00 to Buyer in immediately available funds.
6.2 Post Closing Cooperation. Each of the parties hereto agrees to
use all reasonable efforts to take promptly, or cause to be taken, all actions
and to do promptly, or to cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including using its best
efforts to obtain all necessary waivers, consents and approvals and effecting
all necessary registrations and filings. In case at any time after the Closing
Date any further action is reasonably necessary or desirable to carry out the
purpose of this Agreement, the proper officers and/or directors of Buyer and
Seller shall take such necessary action.
6.3 Access and Information. Seller and Buyer shall afford the other
and their respective representatives such access during normal business hours
throughout the period prior to the Closing to such information as the other
party shall reasonably request. Subject to the requirements of law, each of
Seller and Buyer shall hold in confidence all such non-public information
regarding the other until such time as such information is otherwise publicly
available.
6.4 Expenses. Except as otherwise agreed in writing, all costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such expenses.
6.5 Certain Filings, Consents. Seller and Buyer shall cooperate with
one another (i) in promptly determining whether any filings are required to be
made or any consents, approvals, permits or authorizations are required to be
obtained under any federal, state or foreign law or regulation or any consents,
approvals or waivers are required to be obtained from parties to loan agreements
or other contracts material to Seller's or Buyer's business in connection with
the consummation of the transactions contemplated by this Agreement, and (ii) in
promptly making any such filings, furnishing information required in connection
therewith and seeking timely to obtain any such consents, permits,
authorizations, approvals or waivers.
6.6 Operations. At or before Closing, Seller shall execute, as
necessary, change of operator documentation for filing with the appropriate
agencies in Ohio so that Buyer will be the designated operator of the Oil and
Gas Properties operated by Seller prior to Closing and all other Assets owned by
Buyer after the Closing. At or before Closing, Buyer shall obtain required bond
necessary for transfer of ownership and release of Seller as operator of the Oil
and Gas properties being transferred as of the Closing Date.
6.7 Post Closing Operations. Commencing as of the Closing Date,
Buyer shall assume the position of operator of the Assets previously operated by
Seller. Seller agrees to handle all matters as operator of the Oil and Gas
Properties arising prior to the Closing Date as would a prudent operator under
the same or similar circumstances.
6.8 Suspended Revenues. At Closing, Escrow Agent shall retain an
amount to cover all suspended revenues attributable to an Asset conveyed to the
Buyer which are subject to any lease burdens or lease operators' expenses in
immediately available Federal funds. Suspended revenues attributable to the
Excluded Assets or any Asset not conveyed to the Buyer at Closing shall be
released to Seller. All other suspended revenue escrow amounts shall be paid and
released by agreement of the parties within ninety (90) days of Closing.
6.9 Insurance. From and after the Closing Date, upon consummation of
the transaction contemplated hereby, Buyer shall be entitled to the proceeds of
any insurance claim filed by Seller prior to the Closing Date and relating to
the Assets post Effective Date.
6.10 Post Closing Cooperation. Each of the parties hereto agrees to
reasonably cooperate, one with the other, to effectuate the purpose and intent
of this Agreement.
6.11 Post Closing Revenues. Each party hereto agrees to promptly
surrender to the other any revenues attributable to an Asset received by them
and which belongs to the other. To the extent that Buyer receives revenues
attributable to Seller's ownership of the Assets from which payment of royalty,
overriding royalty or other Lease Burdens must be paid, Buyer will surrender
such revenues to Seller net of such Lease Burdens and, on behalf of Seller, pay
such Lease Burdens.
6.12 Pre-Closing Inspection. Prior to the Closing, each Seller will
afford and assist Buyer, its agents and representatives in all phases of Buyer's
pre-Closing inspection of all of the Assets, to include, by way of example and
not limitation, examination of all accounting records, legal records, land
records, engineering and production records, environmental records and reports,
an environmental inspection of the Oil and Gas Properties and saltwater disposal
sites, tanks, tank batteries, pipelines and other Assets.
ARTICLE VII -- CONDITIONS TO THE BUYER'S OBLIGATIONS TO CLOSE
7.1 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.
7.2 Compliance With Agreement. Each Seller shall have performed and
complied in all respects with all its obligations under this Agreement which are
to be performed or complied with by it prior to or at the Closing.
7.3 No Adverse Change. Neither the Assets nor the business of the
Seller shall have been adversely affected in any material way, subsequent to the
execution hereof, and there shall have been, in Buyer's sole and exclusive
opinion, no substantial uninsured or underinsured claim of personal injury or of
damage to the Assets.
7.4 Representation and Warranties True at Closing. Seller's
representation and warranties contained in this Agreement shall be deemed to
have been made on the Execution Date and again at and as of the Closing and
shall then be true and correct in all material respects. At Closing, Buyer shall
be presented with a certificate of the President or other appropriate officer of
each Seller to this effect.
7.5 Litigation. No litigation or other proceeding shall have been
commenced or threatened against the Buyer or the Seller, which in the reasonable
opinion of the Buyer would materially and adversely affect its ownership, or the
value, of the Assets.
7.6 Accounting. Buyer shall have received from Seller: (i) a
complete accounting of all funds attributable to the Assets and paid to Seller
at the Closing , to include, by way of example and not limitation those funds to
be transferred in accordance with Paragraphs 3.3.4, 6.8 6.11; (ii) all joint
interest billing subsequent to the Closing Date; and (iii) an accounting for and
a transfer of all pre-paid drilling contracts using or employing the Assets
which work is to take place on or after the Closing Date.
7.7 Opinion of Counsel. Buyer shall have received an opinion of
Seller's counsel in form and substance satisfactory to Buyer, in form and
substance identical to that attached hereto as Exhibit D.
7.8 Legality. The Closing shall not violate any order or decree of
any court or governmental body of competent jurisdiction and no suit, action,
proceeding or investigation, shall have been brought or threatened by any person
which questions the validity or legality of this Agreement or the transactions
contemplated hereby.
7.9 Corporate Certificate. Seller shall have provided Buyer with a
copy of a certificate of the Secretary of the Seller attesting as to the
officers of the Seller, the Resolutions of the Board of Directors approving the
transaction contemplated hereby and the minutes of the special meeting of the
shareholders of the Seller approving the transaction.
7.10 Delivery of Closing Certificates. Seller shall have delivered
to the Buyer a certificate dated as of the Closing Date to the effect set forth
in Paragraphs 7.1 to 7.8 hereof.
7.11 NOV's. The NOV's listed on Schedule 1.24 are the only NOV's
received by any Seller and of which the Seller has notice as of the Closing
Date. Each of the NOV's is capable of being corrected within sixty days of the
Execution Date and will not prevent the transfer of operations to the Buyer on
the Closing Date.
7.12 Waiver of Preferential Right to Purchase. Seller shall have
provided Buyer with any notice of sale and/or waiver of preferential right to
purchase as may be required under an Applicable Operating Agreement.
7.13 Satisfaction of Encumbrances. Except as specifically permitted
by the Buyer in writing to be satisfied by the Escrow Agent post Closing, all
Encumbrances of Seller shall have been satisfied at or prior to Closing with
appropriate releases and satisfactions presented to Buyer at Closing.
7.14 Filings. All filings, whether Federal or state, to include any
Federal and/or state filings with the Internal Revenue Service and the
appropriate agencies of the State of Ohio, have been timely made and there are
no outstanding objections or administrative filings remaining for the receipt of
all necessary approvals to proceed forward with this transaction.
7.15 Sellers shall have delivered executed change of operator
documentation for filing with the appropriate agency in Ohio so that the Buyer
will be designated as the Operator of the Oil and Gas Properties effective the
Closing Date.
ARTICLE VIII -- CONDITIONS TO THE SELLER'S OBLIGATION TO CLOSE
8.1 The Seller' obligation to close shall be subject to the
satisfaction of the following conditions prior to or at the Closing, unless
waived by the Seller:
8.2 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.
8.3 Litigation. No litigation or other proceeding shall have been
commenced or threatened against the Seller or the Buyer, which in the reasonable
opinion of the Seller would materially and adversely affect its ownership, or
the value, of the Assets.
8.4 Representation and Warranties True at Closing. Buyer's
representation and warranties contained in this Agreement shall be deemed to
have been made as of the Effective Date and again at and as of the Closing and
shall then be true and correct in all material respects. At Closing, Seller
shall be presented with a certificate of the President of Buyer to this effect.
8.5 Legality. The Closing shall not violate any order or decree of
any court or governmental body of competent jurisdiction and no suit, action,
proceeding or investigation, shall have been brought or threatened by any person
which questions the validity or legality of this Agreement or the transactions
contemplated hereby.
8.6 Delivery of Closing Certificates. Buyer shall have delivered to
the Seller a certificate dated as of the Closing Date to the effect set forth in
Paragraphs 8.1 to 8.4 hereof.
8.7 Opinion of Counsel. Seller shall have received an opinion of
Buyer's counsel in form and substance satisfactory to Seller, in form and
substance identical to that attached hereto as Exhibit E.
8.8 Payment of Purchase Price. Buyer shall have paid the Adjusted
Purchase Price pursuant to Article III.
8.9 Operations. Buyer shall have presented to Seller proof of its
ability to post the requisite bonds and the documentation required for it to
take over as Operator of Seller's Xxxxx.
8.10 Title.
8.10.1 Pre-Closing Examination. Prior to Closing Date, Buyer
shall have conducted an examination of the Assets, as would a reasonably prudent
purchaser under the same and similar conditions to include physical inspection
of the surface estate of the Oil and Gas Properties, Equipment, Xxxxx and
Seller's books and records. Buyer will conduct such other examinations and
inspections as to title to the Assets as Buyer deems necessary.
ARTICLE IX -- CLOSING; TERMINATION; POST CLOSING
9.1 Closing.
9.1.1 Place. The Closing shall take place at such location as
mutually agreed upon by the Buyer and the Seller.
9.1.2 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.
9.1.3 Transfer of Assets. Seller will, subject to the
provisions of this Agreement: (i) execute and deliver to Buyer one or more
Assignments satisfying the requirements of Paragraph 2.5; and (ii) transfer to
Buyer by wire transfer all suspended funds in accordance with paragraph 7.6 and
6.8.
9.2 Transfer of Books and Records. Not later than thirty (30) days
after Closing, Seller will transfer, convey and deliver unto Buyer (to the
extent not theretofore delivered), at Buyer's sole cost and expense, the Books
and Records, subject to any contractual restrictions with third parties. To the
best of Seller's knowledge and belief, Seller is not a party to any agreement
and none of the Books and Records is subject to any contract which would
restrict or otherwise prevent the transfer of the Books and Records in Seller's
possession to Buyer.
9.3. Taxes. All Taxes shall be pro-rated between Seller and Buyer as
of the Closing Date. Seller shall be charged for all such Taxes based on
ownership of the Assets or Production actually sold prior to the Closing Date.
Buyer shall be charged for all such Taxes based on ownership of the Assets or
Production from the Assets actually sold commencing on the Closing Date. Buyer
shall pay all documentary, filing, conveyance and recording fees for the
Assignments.
9.4 Purchase Price Allocation. Seller and Buyer recognize that
reporting requirements of ss.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 ss.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 9.4.
9.5 Payment. Buyer shall pay to the Escrow Agent, on behalf of the
Seller, the Adjusted Purchase Price, in immediately available funds, pursuant to
the terms and conditions hereof adjusted, if at all, and the Additional
Consideration pursuant to Paragraph 3.3.
9.6 Thereafter, the Escrow Agent shall pay to the extent not
satisfied pre-closing the Encumbrances set forth in Schedule 1.8 hereto, in
their entirety. After the satisfaction of all: (i) Encumbrances; (ii) the
satisfaction of all of Seller's NOV's existing as of the Closing Date, to
include, by way of example and not limitation, those NOV's identified ,on
Schedule 1.24 to the extent not assumed by Buyer; (iii) any suspended or
delinquent payments due under a Lease or any other Asset; and (iv) satisfaction
of any fees and costs due the Escrow Agent, the Escrow Agent shall distribute
the net remaining portion of the Adjusted Purchase Price plus the Additional
Consideration to Seller in accordance with the provisions of the Escrow
Agreement. Upon the complete satisfaction of the Encumbrances set forth in
Schedule 1.8 hereto and the NOV's as set forth in Schedule 1.24 hereto, the
security for said obligations, if any, shall be released to Seller unless such
security constitutes a portion of the Assets acquired by the Buyer hereunder and
in that case the security shall be released to the Buyer. All costs and expenses
of the Escrow Agent shall be the obligation of the Seller with such costs being
satisfied out of the funds held by the Escrow Agent prior to distribution to the
Seller.
ARTICLE X -- MISCELLANEOUS
10.1 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 upon receipt by the addressee and may be hand
delivered, or sent by facsimile transmission (with the original delivered to the
addressee by the close of business the first business day following the day of
the facsimile transmission), certified mail, return receipt requested or by
overnight courier, and shall be sent to or delivered to the parties at the
following addresses:
If to Buyer:
Daleco Resources Corporation
000 Xxxxx Xxxxxx Xxxxxx
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Fax No: 000-000-0000
With copies to:
Xxxxxx, Van Denbergh & Xxxxxxx, PC
Xxx Xxxx Xxxxxx Xxxxx, Xxxxx 000
0000 Xxxx X. Xxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: C. Xxxxxx Xxxxxxx, Esquire
Fax No: 000-000-0000
If to Escrow Agent:
CRABBE, XXXXX & XXXXX, LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Xx., Esq.
Fax No: (000) 000-0000
If to Seller:
CENTURY ENERGY MANAGEMENT CO., INC.
0 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxx Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
With copies to:
CRABBE, XXXXX & XXXXX, LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Xx., Esq.
Fax No: (000) 000-0000
XXXXX & XXXXXXX, LLP
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
Or to such other address as such party may designate by ten (10) days advance
written notice to the other party. The original of any Notice given by facsimile
transmission shall be delivered to the addressee by close of business the next
business day after the day of the facsimile transmission.
10.2 Entire Agreement. This Agreement embodies all of the
representations, warranties, understandings and agreements of the parties hereto
with respect to the subject matter hereof, and all prior understandings,
representations and warranties (whether oral or written), to include the Letter
of Intent, 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.
10.3 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.
10.4 Successors. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
10.5 Assignment. This Agreement may not be assigned without the
prior written consent of the other party.
10.6 Confidentiality. Each of the parties hereto agrees not to
publish or other wise disclose the terms of this Agreement except to its
directors, officers, employees, accountants, investors and members without the
express written consent of the other party, except as required by law.
10.7 Survival of Warranties. All representations, warranties and
covenants of the Seller and Buyer in this Agreement shall survive the Closing.
10.8 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.
10.9 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.
10.10 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Ohio without
giving effect to conflicts of laws provisions.
10.11 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.
10.12 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.
10.13 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. Any Schedule attached hereto after
the Closing Date shall be deemed to have been a part of this Agreement as of the
Closing Date. Any such "Post-Closing" Schedule shall be initialed and dated by
each party hereto or, if the finding of the Mediation (as set forth in Paragraph
11.14 below), then the results of the Mediation may be attached hereto and shall
become a part hereof for all purposes.
10.14 Dispute Resolution - The parties will attempt in good faith to
resolve any and all controversies of every kind and nature between the parties
to this Agreement arising out of this Agreement (each a "Dispute") promptly by
negotiations between senior executives of the parties who have the authority to
resolve the Dispute. Within ten (10) days after the receipt of written notice of
the existence of a Dispute, the receiving party shall submit to the other (or
others) a written response. The notice and response shall included (a) a
statement of each party's position and a list of documents or basis upon which a
party believes a dispute exists position, and (b) the name and title of the
executive who will represent the party. The executives shall meet at a mutually
acceptable time and place within twenty (20) days of the date of the disputing
party's notice and thereafter as often as they deem reasonably necessary to
exchange relevant information and to attempt to resolve the dispute
10.15 Sales and other Transfer Taxes. Any and all sales and other
taxes levied upon or imposed on the transfer of the Assets as contemplated by
this Agreement shall be an obligation of the Seller.
10.16 Public Notice. Seller understands and acknowledges that Buyer
is a public entity and subject to the reporting requirements of the Securities
and Exchange Act of 1934, as amended ("34 Act"). In accordance with the
provisions of the Rules and Regulations of the Securities and Exchange
Commission promulgated under the '34 Act, the Xxxxxxxx-Xxxxx Act of 2002 and the
rules of the NASDAQ Exchange, the exchange on which the Buyer's common stock is
traded, Buyer must disclose the existence of this Agreement and file same as an
Exhibit to its quarterly and annual filings under the '34 Act. . The Buyer
acknowledges that its public filings are its sole responsibility .
10.17 Recording Fees. Buyer will be responsible for all fees, stamps
or other expenses associated with the filing the Assignments.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first written above.
SELLER:
Attest: CENTURY ENERGY MANAGEMENT CO., INC.
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------- --------------------------------
Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxxx,
Vice President
Attest: NEWPORT TRANSMISSION, INC.
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------- --------------------------------
Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxxx,
Vice President
Attest: BISCAYNE PETROLEUM CORP.
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------- --------------------------------
Secretray Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxxx
Vice President
Attest: RIVER RESOURCES, LLC
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------- --------------------------------
Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxxx
President
Attest: ROCKHOUND EXPLORATION &
DEVELOPMENT, LLC
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------- --------------------------------
Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxxx
President
Attest: CENTURY WELL SERVICE, INC.
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------- --------------------------------
Secretray Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxxx
Vice President
[SEAL]
BUYER
Attest: DALECO RESOURCES CORPORATION
May 22, 2006 By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------- --------------------------------
Xxxx X. Xxxxxxxxx
President
/s/ Xxxx Xxxxxxx
--------------------------------
Secretary Xxxx Xxxxxxx
ESCROW AGENT
CRABBE, XXXXX & XXXXX, LLP
By:
--------------------------------
Xxxxxxx X. Xxxxxx Xx., Esq.
A Member of the Firm
EXHIBITS
Exhibit A-1 Assignment and Xxxx of Sale with special Warranty
Exhibit A-2 Quit Claim Assignment
Exhibit A-3 Xxxx of Sale for Equipment and Personal Property
Exhibit A-4 Real Property Deed
Exhibit B Escrow Agreement
Exhibit C Registration Rights Agreement
Exhibit D Opinion of Seller's Counsel
Exhibit E Opinion of Buyer's Counsel
SCHEDULES
Schedule 1.8 Encumbrances
Schedule 1.11 Equipment
Schedule 1.13 Excluded Assets
Schedule 1.17 Gathering System
Schedule 1.18 Infrastructure
Schedule 1.19 Lease
Schedule 1.20 Lease Burdens
Schedule 1.25 NOV's
Schedule 1.29 Operating Agreements
Schedule 1.31 Outstanding Obligations
Schedule 1.33 Permits
Schedule 1.34 Permitted Encumbrances
Schedule 1.39 Real and Personal Property
Schedule 1.42 Surface Rights
Schedule 1.44 Xxxxx, Working Interests, Overriding Royalty Interests, Oil and
Gas Properties; Net Revenue Interests
Schedule 4.6 Litigation
Schedule 4.7 Taxes
Schedule 4.23 Seller's Insurance Policies
Schedule 9.4 Property Value Allocation
