<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): September 30, 1995
CASTLE ENERGY CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
DELAWARE
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation or Organization)
0-10990 76-0035225
- ------------------------ ------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
One Radnor Corporate Center, Suite 250, 100 Matsonford Road, Radnor, PA 19087
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(610) 995-9400
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
================================================================================
<PAGE>
Castle Energy Corporation ("Castle" or "the Company"), the Registrant,
submits the following information:
ITEM 2. Acquisition or Disposition of Assets
On September 30, 1995, Powerine Oil Company ("Powerine"), one of the
Company's subsidiaries, completed the sale of its Powerine Refinery to Kenyen
Projects Limited ("Kenyen"), Houston, Texas, a private purchaser. The 49,500
barrel/day Powerine Refinery, located in Santa Fe Springs, California, was shut
down in July 1995. Castle understands that Kenyen intends to disassemble the
refining plant and reassemble it in India.
In consideration for the Powerine Refinery, Powerine received
$3,000,000 in cash and a note in the principal amount of approximately
$19,600,000. The principal of the note and accrued interest are payable in three
equal installments on April 30, June 30, and September 30, 1996, and are secured
by the equipment sold. The purchaser is required to substitute a letter of
credit for such security by March 31, 1996. Powerine retained Powerine
Refinery's real property, certain other assets and all of Powerine's
liabilities. Powerine anticipates that it will use substantially all of the
proceeds of the sale to satisfy its obligations.
On September 30, 1995, Castle announced that its agreement to sell the
Indian Refinery, an 86,000 barrel/day Refinery located in Lawrenceville,
Illinois which is owned by Indian Refining Limited Partnership ("IRLP"), a
Castle subsidiary, to CORE Refining Corporation ("CORE"), a company formed by
William S. Sudhaus, a director and the President of Castle, had been terminated
by mutual agreement between Castle and CORE. The agreement had been subject to
CORE's obtaining financing for the transaction, which, CORE had informed Castle,
CORE had been unable to obtain.
As a result of the termination of the CORE agreement, and, in
accordance with previously announced plans, IRLP commenced the shutdown of the
Indian Refinery. The operations of the Indian Refinery were terminated as of
September 30, 1995.
IRLP anticipates that it will seek to sell the plant and other assets
of the Indian Refinery. IRLP will use the proceeds of such sales to meet its
vendor and environmental obligations.
Management believes that losses resulting from the retirement of the
Indian Refinery and from the sale of the Powerine Refinery, together with
current operating losses and existing net operating loss and depletion
carryforwards, will offset Castle's gain from its settlement with
Metallgesellschaft Corp. completed in October 1994 and result in Castle having a
net operating loss carryforward at September 30, 1995.
Castle does not expect any material gain or loss during the fourth
quarter from the disposition of either the Powerine Refinery or the Indian
Refinery. The Company recorded anticipated net losses resulting from the
disposition of both refineries at December 31, 1994 and adjusted the net loss at
June 30, 1995 in anticipation of the sale of the Powerine Refinery.
<PAGE>
As a result of the sale of the Powerine Refinery and the abandonment of
the Indian Refinery, the Company has discontinued the operations of its refining
segment.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
7(b) Pro Forma Financial Information:
7(b)(b) Introduction to Pro Forma Financial Information
7(b)(1) Pro Forma Consolidated Balance Sheet - June 30, 1995 and
Related Notes
7(b)(2) Pro Forma Consolidated Statement of Operations - Nine Months
Ended June 30, 1995 and Related Notes
7(b)(3) Pro Forma Consolidated Statement of Operations - Fiscal Year
Ended September 30, 1994 and Related Notes
7(b)(4) Pro Forma Consolidated Statement of Operations - Fiscal Year
Ended September 30, 1993 and Related Notes
7(b)(5) Pro Forma Consolidated Statement of Operations - Fiscal Year
Ended September 30, 1992 and Related Notes
7(c) Exhibits:
Exhibit Number Description
- -------------- -----------
10.1 Asset Purchase Agreement, between Kenyen Projects Limited
and Powerine Oil Company, dated September 29, 1995.
10.2 Letter Agreement, dated September 29, 1995, between CORE
Refining Corporation and Castle Energy Corporation.
<PAGE>
ITEM 7(b)(b)
CASTLE ENERGY CORPORATION
INTRODUCTION TO PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION
Effective September 30, 1995, Castle Energy Corporation ("Castle")
disposed of or retired both of its two refineries. The following pro forma
financial statements assume the disposition of both the Powerine Refinery and
the Indian Refinery occurred earlier than September 30, 1995.
Powerine Oil Company ("Powerine"), a wholly-owned subsidiary of the
Company, sold the Powerine Refinery to Kenyen Projects Limited ("Kenyen"), a
private purchaser, effective September 30, 1995. Since the disposition was
accomplished through the sale of the refining plant and related assets rather
than through the sale of the stock of Powerine, Powerine remains liable for
certain refinery closing costs, outstanding trade payables and environmental
liabilities. Powerine also retained ownership of real property and certain other
assets not sold to Kenyen.
Indian Refining Limited Partnership ("IRLP"), another wholly-owned
subsidiary of Castle, retired the refining plant assets of the Indian Refinery
as of September 30, 1995 and anticipates selling such assets for salvage. As a
result, IRLP remains liable for certain refinery closing costs, outstanding
trade payables and environmental liabilities.
The following pro forma consolidated balance sheet illustrates the
effects of the disposition of the Powerine Refinery and retirement of the Indian
Refinery, as though such events occurred on June 30, 1995. The following pro
forma consolidated statement of operations illustrates the effects of the
disposition and retirement of the Refineries as though such events occurred on
October 1, 1991. For financial and SEC reporting purposes, the Company first
reported the effects of the anticipated disposition of the Refineries at
December 31, 1994 and adjusted such effects at June 30, 1995 in anticipation of
the sale of the Powerine Refinery to Kenyen.
The gain from the MG Settlement (described in the Company's September
30, 1994 Form 10-K,) has been included as a separate adjustment in the pro forma
consolidated financial statements because a) the decision to settle with MG
influenced in the Company's decision to sell its refining segment, b) the gain
from the MG settlement created a significant tax motivation for the Company to
sell its refining segment and c) the two transactions are, accordingly, related.
THE PRO FORMA CONSOLIDATED STATEMENTS OF THE COMPANY DO NOT PURPORT TO
REPRESENT WHAT THE COMPANY'S FINANCIAL POSITION OR RESULTS OF OPERATIONS WOULD
ACTUALLY HAVE BEEN IF THE REFINERY DISPOSITION AND RETIREMENT IN FACT HAD
OCCURRED ON SUCH DATES OR TO PROJECT THE COMPANY'S FINANCIAL CONDITION OR
RESULTS OF OPERATIONS AS OF ANY FUTURE DATE OR FOR ANY FUTURE PERIOD. The pro
forma adjustments are based upon available information and upon certain
assumptions that the Company believes are reasonable under the circumstances.
The pro forma consolidated statements and accompanying notes should be read in
conjunction with the historical consolidated financial statements of the Company
and notes thereto and the other financial information regarding the Company.
<PAGE>
ITEM 7(b)(1)
CASTLE ENERGY CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF 06/30/95
("000's" Omitted)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Adjustment
----------
Disposal of 06/30/95
06/30/95 Refining Pro
ASSETS Historical Segment (a) Forma
---------- ----------- --------
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents .......................... $ 9,989 ($4,140) $ 5,849
Restricted cash .................................... 5,914 (3,962) 1,952
Temporary investments .............................. 3,000 3,000
Accounts receivable - trade ........................ 61,613 (49,060) 12,553
Inventories ........................................ 37,159 (37,159)
Deferred income taxes .............................. 91,216 (84,686) 6,530
Prepaid expenses and other current assets .......... 2,818 (2,772) 46
Refinery segment assets held for disposal, net ..... 16,549 16,549
-------- --------- ---------
Total Current Assets ............................. 211,709 (165,230) 46,479
Property, Plant and equipment, net:
Refining
Natural gas transmission ........................... 23,148 $ 23,148
Furniture and fixtures ............................. 290 290
Exploration and production ........................... 17,970 17,970
Gas contracts ........................................ 36,859 36,859
Other assets, net .................................... 10,046 1,333 11,379
-------- --------- ---------
Total Assets ..................................... $300,022 ($163,897) $ 136,125
======== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt .................. $ 24,370 (13,310) $ 11,060
Current portion of long-term debt -related party.... 250 250
Accounts payable ................................... 23,677 (22,626) 1,051
Accrued expenses ................................... 57,486 (44,294) 13,192
Income taxes payable ............................... 84,686 (82,936) 1,750
Other liabilities .................................. 3,112 (731) 2,381
-------- --------- ---------
Total current liabilities ........................ 193,581 (163,897) 29,684
Long-term debt ....................................... 30,326 30,326
Deferred income taxes ................................ 6,530 6,530
Other long-term liabilities .......................... 30,656 30,656
-------- --------- ---------
Total liabilities ................................ 261,093 (163,897) 97,196
Commitments and contingencies
Stockholder's deficit:
Series B participating preferred stock;
Common stock; par value - $.50; 6,683,646
shares issued and outstanding at
June 30, 1995 .................................... 3,342 3,342
Additional paid-in capital ........................... 62,724 62,724
Retained earnings (deficit) .......................... (27,137) ($27,137)
-------- --------- ---------
38,929 0 38,929
Total liabilities and stockholders' deficit $300,022 ($163,897) $136,125
======== ========= =========
</TABLE>
The Accompanying notes are an integral part of this
Pro Forma Consolidated Balance Sheet
<PAGE>
ITEM 7(b)(1)
CASTLE ENERGY CORPORATION
NOTES TO THE PRO FORMA CONSOLIDATED
BALANCE SHEET
JUNE 30, 1995
UNAUDITED
("000's" Omitted)
(a) Reflects the disposition of the Powerine Refinery and the retirement of the
Indian Refinery. Since the Company's refining subsidiaries are selling or
retiring their refining plants and some related assets rather than the
Company selling the stock of the refining subsidiaries, the refining
subsidiaries continue to own working capital, some assets and environmental
liabilities related to the refining segment. All such remaining refining
assets and liabilities applicable to the refining segment except for
environmental liabilities have been aggregated as under the heading,
"Refining segment assets held for disposal, net" because the Company
anticipates that such assets and liabilities will be realized as the
refineries are sold and closed over the next year. Environmental
liabilities have not been included in such heading because it is not
anticipated that such liabilities will be satisfied in the next year even
though such liabilities pertain to the refining segment. As noted in the
Company's Form 10-Q for the period ended June 30, 1995, the Company has
accrued both estimated costs to close the refineries and estimated proceeds
from the sale of the refining plants and related assets.
The deferred tax asset at June 30, 1995 has been reversed to the extent of
the tax effect of losses which would have been realized had the Refineries
been disposed of or retired on June 30, 1995 rather than on September
30, 1995, the actual date of disposition/retirement.
<PAGE>
ITEM 7(b)(2)
CASTLE ENERGY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended June 30, 1995
(Unaudited)
("000's" Omitted)
<TABLE>
<CAPTION>
Pro Forma Adjustments
---------------------
MG Settlement
and Provision Disposal
Historical for Impairment of Refining Pro Forma
06/30/95 Loss (d) Segment (a) 06/30/95
-------- -------- ----------- --------
REVENUES:
<S> <C> <C> <C> <C>
Refining .................................................. $ 670,913 ($670,913)
Natural Gas Production and Transmission ................... 58,989 $ 58,989
Exploration and Production ................................ 7,106 7,106
--------- --------- --------
Total Revenues .................................... 737,008 (670,913) 66,095
--------- --------- --------
EXPENSES:
Refining:
Cost of Materials Sold .................................. 565,281 (565,281)
Operating Costs ......................................... 83,787 (83,787)
Selling, General and Administrative ..................... 11,634 (11,634)
Depreciation and Amortization ........................... 4,938 (4,938)
Gain on MG Settlement ................................... (391,135) 391,135 (d)
Provision for Impairment Loss ........................... 339,404 (339,404)(e)
Natural Gas Production and Transmission:
Gas Purchases ........................................... 33,709 33,709
Operating Costs - Pipeline .............................. 789 789
General and Administrative .............................. 645 645
Depreciation and Amortization ........................... 8,538 8,538
Exploration and Production:
Oil and Gas Production .................................. 1,947 1,947
General and Administrative .............................. 369 369
Depreciation, Depletion and Amortization ................ 2,252 2,252
Corporate
General and Administrative .............................. 3,367 3,367
Depreciation ............................................ 59 59
------- ------- -------- ---------
Total Expenses .................................... 665,584 51,731 (665,640) 51,675
------- ------- -------- ---------
Operating Profit (Loss) ..................................... 71,424 (51,731) (5,273) 14,420
------- ------- -------- ---------
Other Income (Expense):
Interest Income ........................................... 1,476 (858) 618
Interest Expense .......................................... (7,894) 4,685 (3,209)
Other Income (Expense) .................................... 1,052 (1,110) (58)
------- ------- -------- ---------
(5,366) 2,717 (2,649)
------- ------- -------- ---------
Income (Loss) From Continuing Operations
Before Provision for (Recovery of)
Income Taxes .............................................. 66,058 (51,731) (2,556) 11,771
Provision for (Recovery of) Income Taxes (b) ................ 53,811 (19,323) (34,488)
------- ------- -------- ---------
Net Income (Loss) from Continuing Operations ................ $ 12,247 ($ 32,408) $ 31,932 $ 11,771
======= ======== ========= =========
Net Income (Loss) Per Share from Continuing
Operations ................................................ $ 1.80 ($ 4.81) $ 4.76 $ 1.75
======= ======== ======== =========
Weighted Average Number of Common and
Common Equivalent Shares Outstanding (c) .................. 6,786 (75) 6,711 6,711
======= ======== ======== =========
</TABLE>
The Accompanying notes are an integral part of this
Pro Forma Consolidated Statement of Operations
<PAGE>
ITEM 7(b)(2)
CASTLE ENERGY CORPORATION
NOTES TO THE PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
NINE MONTHS ENDED JUNE 30, 1995
UNAUDITED
("000's" Omitted)
(a) Gives retroactive effect to the disposition/retirement of the Company's
Refineries and the discontinuance of the Company's refining segment
operations as though the events occurred on October 1, 1994.
(b) Adjusts the Company's tax provision such that the resulting tax provision
reflects income tax expense related to the Company's non-refining business
segments. Net operating loss carryforwards applicable to such non-refining
segments effectively reduce the tax provision to zero.
(c) Reflects the reduction in outstanding shares that would have occurred if
the Company had not paid debt issuance costs and processing/offtake
agreement issuance costs applicable to the refining segment through
issuance of its own shares. As a result of the MG Settlement (described in
the Company's September 30, 1994 Form 10-K) such shares were later returned
to the Company.
(d) Gives retroactive effect to the MG Settlement (which closed on October 14,
1994) as though such settlement had closed on October 1, 1994. As a result
of the MG Settlement, among other things, MG released the Company from
certain debt and assumed certain debt, resulting in a $391,135 gain to the
Company.
(e) Reverses the loss provision for the disposition of its refining assets
recorded by the Company.
<PAGE>
ITEM 7(b)(3)
CASTLE ENERGY CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended September 30, 1994
(Unaudited)
("000" Omitted)
<TABLE>
<CAPTION>
Pro Forma
Adjustment
----------
Disposal of
Refining
Historical Segment (a) Pro Forma
---------- ----------- ---------
<S> <C> <C>
REVENUES
Refining:
Crude Oil Sales ....................................... $ 71,062 ($ 71,062)
Sales of Refined Product - Relate Party ............... 849,492 (849,492)
Sales of Refined Product - Third Parties............... 8,061 (8,061)
Other Revenues - Related Party ........................ 11,899 (11,899)
Natural Gas Production and Transmission:
Gas Sales ............................................. 61,228 $61,228
Operating Revenue ..................................... 31 31
Transportation
Exploration and Production:
Oil and Gas Sales ...................................... 8,069 8,069
Well Operations ........................................ 483 483
--------- -------- -------
Total Revenues ................................... 1,010,325 (940,514) 69,811
--------- -------- -------
EXPENSES
Refining:
Cost of Materials Sold - Refined Products:
Third Parties ........................................ 77,898 (77,898)
Related Parties ...................................... 618,325 (618,325)
Operating Costs ......................................... 132,281 (132,281)
Selling, General and Administrative .................... 23,758 (23,758)
Depreciation and Amortization .......................... 30,322 (30,322)
Natural Gas Production and Transmission:
Gas Purchases .......................................... 37,029 37,029
Operating Costs - Pipeline ............................. 1,973 1,973
General and Administrative ............................. 254 254
Depreciation and Amortization .......................... 11,360 11,360
Exploration and Production:
Oil and Gas Production ................................. 3,844 3,844
General and Administrative ............................. 213 213
Depreciation, Depletion and Amortization................ 2,092 2,092
Corporate, General and Administrative ...................... 5,499 5,499
--------- -------- -------
944,848 (882,584) 62,264
--------- -------- -------
OPERATING INCOME (LOSS) ...................................... 65,477 (57,930) 7,547
--------- -------- -------
OTHER INCOME (EXPENSE)
Interest Income ......................................... 1,292 (1,280) 12
Interest Expense ........................................ (28,487) 22,648 (5,839)
Other Income (Expense) .................................. 1,161 (738) 423
--------- -------- -------
(26,034) 20,630 (5,404)
--------- -------- -------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR
(RECOVERY OF) INCOME TAXES ............................... 39,443 (37,300) 2,143
PROVISION FOR (RECOVERY OF)
INCOME TAXES (b) ......................................... 526 (526)
--------- -------- --------
NET INCOME (LOSS) FROM CONTINUING
OPERATIONS ............................................... $ 38,917 ($36,774) $ 2,143
========= ======== =======
NET INCOME (LOSS) PER SHARE FROM
CONTINUING OPERATIONS .................................... $ 3.48 ($ 3.17) $ 0.31
========= ======== =======
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES
OUTSTANDING (c) ........................................... 11,209 (4,298) 6,911
========= ======== =======
</TABLE>
The accompanying notes are an integral part of this
Pro Forma Consolidated Statement of Operations.
<PAGE>
ITEM 7(b)(3)
CASTLE ENERGY CORPORATION
NOTES TO PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1994
Unaudited
("000's" Omitted)
(a) Gives retroactive effect to the disposition/retirement of the Company's
Refineries and the discontinuance of the Company's refining segment
operations as though the events occurred on October 1, 1993.
(b) Adjusts the Company's tax provision such that the resulting tax provision
reflects income tax expense related to the Company's non-refining business
segments. Net operating loss carryforwards applicable to such non-refining
segments effectively reduce the tax provision to zero.
(c) Reflects the reduction in outstanding shares that would have occurred if
the Company had not paid debt issuance costs and processing/offtake
agreement issuance costs applicable to the refining segment through
issuance of its own shares. As a result of the MG Settlement (described in
the Company's September 30, 1994 Form 10-K) such shares were later returned
to the Company.
<PAGE>
ITEM 7(b)(4)
CASTLE ENERGY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended September 30, 1993
(Unaudited)
("000's" Omitted)
<TABLE>
<CAPTION>
Pro Forma
Adjustment
----------
Disposal
Historical of Refining Pro Forma
09/30/93 Segment (a) 09/30/93
-------- ----------- --------
REVENUES:
<S> <C> <C> <C>
Refining ................................. $532,010 ($532,010)
Natural Gas Production and Transmission .. 56,676 $ 56,676
Exploration and Production ............... 10,124 10,124
--------- ---------- ---------
Total Revenues ................... 598,810 (532,010) 66,800
--------- ---------- ---------
EXPENSES:
Refining:
Cost of Materials Sold ................. 430,399 (430,399)
Operating Costs ........................ 54,747 (54,747)
Selling, General and Administrative .... 6,515 (6,515)
Depreciation and Amortization .......... 9,994 (9,994)
Natural Gas Production and Transmission:
Gas Purchases .......................... 34,441 34,441
Operating Costs - Pipeline ............. 961 961
General and Administrative ............. 913 913
Depreciation and Amortization .......... 9,495 9,495
Exploration and Production:
Oil and Gas Production ................. 2,655 2,655
General and Administrative ............. 1,529 1,529
Depreciation, Depletion and Amortization 2,696 2,696
Corporate
General and Administrative ............. 2,191 2,191
Depreciation
--------- ---------- ---------
Total Expenses ................... 556,536 (501,655) 54,881
--------- ---------- ---------
Operating Profit (Loss) .................... 42,274 (30,355) 11,919
--------- ---------- ---------
Other Income (Expense):
Interest Income .......................... 739 (708) 31
Interest Expense ......................... (21,111) 13,963 (7,148)
Other Income (Expense) ................... 1,451 (1,397) 54
--------- ---------- ---------
(18,921) 11,858 (7,063)
--------- ---------- ---------
Income (Loss) From Continuing Operations
Before Provision for (Recovery of)
Income Taxes ............................. 23,353 (18,497) 4,856
Provision for (Recovery of) Income Taxes (b) (35,970) 35,970
--------- ---------- ---------
Net Income (Loss) from Continuing Operations 59,323 (54,467) 4,856
========= ========== =========
Net Income (Loss) Per Share from Continuing
Operations ............................... $7.83 ($6.51) $1.32
========= ========== =========
Weighted Average Number of Common and
Common Equivalent Shares Outstanding (c) . 7,581 (3,891) 3,690
========= ========== =========
</TABLE>
The Accompanying notes are an integral part of this
Pro Forma Consolidated Statement of Operations
<PAGE>
ITEM 7(b)(4)
CASTLE ENERGY CORPORATION
NOTES TO THE PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1993
UNAUDITED
("000's" Omitted)
(a) Gives retroactive effect to the disposition/retirement of the Company's
Refineries and the discontinuance of the Company's refining segment
operations as though the events occurred on October 1, 1992.
(b) Adjusts the Company's tax provision such that the resulting tax provision
reflects income tax expense related to the Company's non-refining business
segments. Net operating loss carryforwards applicable to such non-refining
segments effectively reduce the tax provision to zero.
(c) Reflects the reduction in outstanding shares that would have occurred if
the Company had not paid debt issuance costs and processing/offtake
agreement issuance costs applicable to the refining segment through
issuance of its own shares. As a result of the MG Settlement (described in
the Company's September 30, 1994 Form 10-K) such shares were later returned
to the Company.
<PAGE>
ITEM 7(b)(5)
CASTLE ENERGY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended September 30, 1992
(Unaudited)
("000's" Omitted)
<TABLE>
<CAPTION>
Pro Forma
Adjustment
----------
Disposal
Historical of Refining Pro Forma
09/30/92 Segment (a) 09/30/92
-------- ----------- --------
<S> <C> <C> <C>
REVENUES:
Refining ..................................... $ 344,770 ($344,770)
Exploration and Production ................... 5,165 5,165
--------- --------- ---------
Total Revenues ....................... 349,935 (344,770) 5,165
--------- --------- ---------
EXPENSES:
Refining:
Cost of Materials Sold ..................... 281,430 (281,430)
Operating Costs ............................ 52,815 (52,815)
Share of processing agreement loss - related
party .................................... 31,611 (31,611)
Selling, General and Administrative ........ 3,966 (3,966)
Depreciation and Amortization .............. 9,683 (9,683)
Exploration and Production:
Oil and Gas Production ..................... 1,793 1,793
General and Administrative ................. 1,191 1,191
Depreciation, Depletion and Amortization ... 1,453 1,453
Corporate
General and Administrative ................. 1,706 1,706
--------- --------- ---------
Depreciation
Total Expenses ....................... 385,648 (379,505) 6,143
--------- --------- ---------
Operating Profit (Loss) ........................ (35,713) 34,735 (978)
--------- --------- ---------
Other Income (Expense):
Interest Income .............................. 1,235 (1,171) 64
Interest Expense ............................. (13,640) 13,506 (134)
Write-off .................................... (4,161) 4,161
Other Income (Expense) ....................... 91 (27) 64
--------- --------- ---------
(16,475) 16,469 (6)
--------- --------- ---------
Income (Loss) From Continuing Operations
Before Provision for (Recovery of)
Income Taxes ................................. (52,188) 51,204 (984)
Provision for (Recovery of) Income Taxes (b) ... 81 (81)
--------- --------- ---------
Net Income (Loss) from Continuing Operations ... (52,269) 51,285 (984)
========= ======== =========
Net Income (Loss) Per Share from Continuing
Operations ................................... ($8.21) $7.93 ($0.28)
========= ======== =========
Weighted Average Number of Common and
Common Equivalent Shares Outstanding (c) ..... 6,365 (2,869) 3,496
========= ======== =========
</TABLE>
The Accompanying notes are an integral part of this
Pro Forma Consolidated Statement of Operations
<PAGE>
ITEM 7(b)(5)
CASTLE ENERGY CORPORATION
NOTES TO THE PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1992
UNAUDITED
("000's" Omitted)
(a) Gives retroactive effect to the disposition/retirement of the Company's
Refineries and the discontinuance of the Company's refining segment
operations as though the events occurred on October 1, 1991.
(b) Adjusts the Company's tax provision such that the resulting tax provision
reflects income tax expense related to the Company's non-refining business
segments. Net operating loss carryforwards applicable to such non-refining
segments effectively reduce the tax provision to zero.
(c) Reflects the reduction in outstanding shares that would have occurred if
the Company had not paid debt issuance costs and processing/offtake
agreement issuance costs applicable to the refining segment through
issuance of its own shares. As a result of the MG Settlement (described in
the Company's September 30, 1994 Form 10-K) such shares were later returned
to the Company.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CASTLE ENERGY CORPORATION
Date: October 16, 1995 By: /s/ JOSEPH L. CASTLE
----------------- ------------------------------------
Joseph L. Castle
Chairman and Chief Executive Officer
ASSET PURCHASE AGREEMENT
BETWEEN
KENYEN PROJECTS LIMITED
AND
POWERINE OIL COMPANY
SEPTEMBER 29, 1995
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TABLE OF CONTENTS
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I. DEFINITIONS............................................................................................ 1
1.1 Definitions................................................................................... 1
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II. SALE OF ASSETS......................................................................................... 5
2.1 Sale of Assets................................................................................ 5
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2.2 "As Is" and "Where Is"........................................................................ 6
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III. PURCHASE PRICE......................................................................................... 6
3.1 Purchase Price................................................................................ 6
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3.2 Payment of Purchase Price..................................................................... 6
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3.3 Security for the Note......................................................................... 7
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IV. REPRESENTATIONS AND WARRANTIES OF THE SELLER........................................................... 8
4.1 Organization and Good Standing................................................................ 8
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4.2 Authorization; Enforceability................................................................. 9
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4.3 Consents and Approvals........................................................................ 9
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4.4 No Violation.................................................................................. 9
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4.5 Purchased Assets.............................................................................. 9
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4.6 No Broker.................................................................................... 10
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V. REPRESENTATIONS AND WARRANTIES OF THE BUYER........................................................... 10
5.1 Organization, Capitalization and Good Standing................................................ 10
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5.2 Authorization; Enforceability................................................................. 10
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5.3 Consents and Approvals........................................................................ 11
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5.4 No Violation.................................................................................. 11
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5.5 No Broker..................................................................................... 11
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5.6 Total Assets or Revenues...................................................................... 11
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VI. TAX MATTERS............................................................................................ 12
6.1 Transfer Taxes................................................................................ 12
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6.2 Property Taxes.................................................................................12
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6.3 Refunds or Credits; Tax Benefits.............................................................. 14
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6.4 Contests.......................................................................................14
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VII. COVENANTS OF THE SELLER................................................................................ 15
7.1 Access to Information......................................................................... 15
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7.2 Actions Prior to Closing Date................................................................. 15
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7.3 Ability to Shop............................................................................... 16
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7.4 Confidentiality............................................................................... 16
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7.5 Insurance..................................................................................... 17
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7.6 Commercially Reasonable Efforts; Cooperation.................................................. 17
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7.7 Purchased Assets Value Schedule............................................................... 17
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7.8 Limits on Letter of Credit Draws.............................................................. 17
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7.9 Replacement for Purchased Assets.............................................................. 18
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7.10 Permitted Liens............................................................................... 18
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7.11 Maintenance of Purchased Assets............................................................... 19
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VIII. COVENANTS OF THE BUYER................................................................................. 19
8.1 Confidentiality............................................................................... 19
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8.2 Commercially Reasonable Efforts; Cooperation.................................................. 20
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8.3 Access to Utilities Systems................................................................... 20
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8.4 Access to Facilities.......................................................................... 20
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8.5 Collateral Assignment......................................................................... 21
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IX. CONDITIONS TO OBLIGATIONS OF THE BUYER................................................................. 21
9.1 Truth of Representations and Warranties....................................................... 21
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9.2 Compliance with Covenants..................................................................... 21
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9.3 Absence of Suit............................................................................... 22
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9.4 Proceedings and Instruments Satisfactory; Certificates........................................ 22
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9.5 Deliveries at Closing......................................................................... 22
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9.6 Release of Liens.............................................................................. 22
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X. CONDITIONS TO OBLIGATIONS OF THE SELLER................................................................ 22
10.1 Truth of Representations and Warranties....................................................... 22
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10.2 Compliance with Covenants..................................................................... 23
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10.3 Absence of Suit............................................................................... 23
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10.4 Proceedings and Instruments Satisfactory; Certificates........................................ 23
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10.5 Release of Liens.............................................................................. 23
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10.6 Deliveries at Closing......................................................................... 23
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XI. REMOVAL OF PURCHASED ASSETS............................................................................ 24
11.1 Commencement of Removal....................................................................... 24
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11.2 Scope of the Buyer's Responsibilities......................................................... 24
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11.3 Confirmation of Asbestos Removal.............................................................. 25
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11.4 Indemnification............................................................................... 26
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11.5 Completion of Removal; Liquidated Damages..................................................... 26
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11.6 Risk of Loss.................................................................................. 27
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XII. INDEMNIFICATION........................................................................................ 28
12.1 Requirement of Indemnification................................................................ 28
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12.2 Procedures Relating to Indemnification........................................................ 28
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12.3 Defense of Third-Party Claim.................................................................. 30
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12.4 Payment....................................................................................... 30
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12.5 Limitation on Indemnification................................................................. 31
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12.6 Bulk Transfer Laws............................................................................ 32
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XIII. CLOSING................................................................................................ 33
13.1 Time and Place................................................................................ 33
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13.2 Items to be Delivered by the Seller........................................................... 33
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13.3 Items to be Delivered by the Buyer............................................................ 33
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XIV. TERMINATION............................................................................................ 34
14.1 Termination................................................................................... 34
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14.2 Survival after Termination.................................................................... 35
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14.3 Deposit....................................................................................... 35
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XV. POST-CLOSING COVENANTS..................................................................................35
15.1 Security...................................................................................... 35
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15.2 Allocations................................................................................... 35
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15.3 Licenses...................................................................................... 35
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15.4 Sale of Platinum Catalyst Inventory............................................................36
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XVI. AMENDMENT AND WAIVER................................................................................... 36
16.1 Amendment..................................................................................... 36
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16.2 Extension; Waiver............................................................................. 36
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XVII. MISCELLANEOUS.......................................................................................... 37
17.1 Notices....................................................................................... 37
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17.2 Expenses...................................................................................... 38
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17.3 Governing Law................................................................................. 38
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17.4 Successors and Assigns........................................................................ 38
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17.5 Partial Invalidity............................................................................ 39
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17.6 Execution in Counterparts..................................................................... 39
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17.7 Titles and Headings........................................................................... 39
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17.8 Entire Agreement.............................................................................. 39
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17.9 Announcements................................................................................. 39
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17.10 Construction.................................................................................. 40
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17.11 Arbitration................................................................................... 40
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17.12 Jurisdiction.................................................................................. 41
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17.13 Further Actions............................................................................... 42
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<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the "Purchase Agreement"), dated September
29, 1995, is made by and between POWERINE OIL COMPANY, a California corporation
(the "Seller"), and KENYEN PROJECTS LIMITED, a Jersey corporation (the "Buyer").
WITNESSETH:
WHEREAS, the Seller wishes to sell to Buyer and Buyer wishes to
purchase from the Seller certain of the assets of the Seller upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements set forth herein, and intending to be legally
bound, the Seller and the Buyer hereby agree as follows:
I. DEFINITIONS
Section 1.1 Definitions. When used in this Purchase Agreement, the
following words or phrases have the following meanings:
"AAA" shall have the meaning set forth in Section 17.11 hereof.
"Agents" shall have the meaning set forth in Section 7.3 hereof. "Affiliate"
shall mean a Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with
another Person or beneficially owns or has the power to vote or direct the vote
of 50% or more of any class of voting stock or of any form of voting equity
interest of such other Person in the case of a Person that is not a corporation.
For purposes of this definition, "control," including the terms "controlling"
and "controlled," means the power to direct or cause the direction of the
management and policies of a Person, directly or indirectly, whether through the
ownership of securities or partnership or other ownership interests, by contract
or otherwise.
"Asbestos Certification Date" shall have the meaning set forth in
Section 11.3 hereof.
"Asbestos Price Adjustment" shall have the meaning set forth in Section
3.1 hereof.
"Base Purchase Price" shall have the meaning set forth in Section 3.1
hereof.
"Buyer" shall have the meaning set forth in the preamble hereto.
"Buyer Indemnitees" shall mean the Buyer, any present or future parent
or subsidiary of the Buyer, the Buyer's successors and assigns and their
respective officers, directors, employees, counsel, agents, investment bankers,
accountants, and Affiliates.
"Buyer's Asbestos Removal Costs" shall have the meaning set forth in
Section 11.3 hereof.
"Closing" and "Closing Date" shall have the respective meanings set
forth in Section 13.1 hereof.
"Collateral Assignment" shall have the meaning set forth in Section
3.3(a) hereof.
"Contract" shall mean a contract, indenture, bond, note, mortgage, deed
of trust, lease, agreement or commitment, whether written or oral.
"Damages" shall mean losses, costs, liabilities, reasonable expenses,
taxes, interest, consultant fees, penalties, investigation expenses, inspection
costs, laboratory costs and "response" costs (as such term is defined in the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
42 U.S.C. ss.9601 et seq. and the California Hazardous Substances Account Act,
Health & Safety Code ss.25300 et seq.) or other damages (including, without
limitation, reasonable attorneys' fees and expenses and any and all reasonable
expenses whatsoever incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation).
"Deposit" shall mean the sum of $2,699,964 previously delivered by the
Buyer to the Seller by wire transfer of immediately available funds.
"Dispute" shall have the meaning set forth in Section 17.11 hereof.
<PAGE>
"Environmental Law" shall mean any federal, state and local laws,
ordinances, regulations, requirements, orders, directives, guidelines or permit
conditions in existence as of the date hereof or as later enacted, promulgated,
issued or adopted, regulating or relating to Hazardous Substances, including,
without limiting the generality of the foregoing, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss.9601 et
seq. and the California Hazardous Substances Account Act, Health & Safety Code
ss.25300 et seq., and those relating to industrial hygiene, safety, health,
environmental protection, pollution of the environment (including air, surface,
water, groundwater, soil and subsurface strata), or the use, analysis,
generation, manufacture, storage, discharge, recycling, processing, release,
threatened release, disposal, presence, transportation, investigation or
remediation of Hazardous Substances.
"Excluded Assets" shall have the meaning set forth in Section 2.1
hereof.
"Force Majeure" shall mean Acts of God, such as earthquakes, floods or
similar natural disasters, or acts of third parties beyond the control of the
Buyer or the Seller, such as strikes, riots or war; provided, however, that
Force Majeure shall not include any such conditions as and to the extent that
the Buyer is insured against any Damages arising from or relating to its
inability to remove the Purchased Assets as a result of such conditions.
"Governmental Entity" shall mean a court, legislature, governmental
agency, commission, or administrative or regulatory authority or
instrumentality, domestic or foreign, including but not limited to the United
States Securities and Exchange Commission.
"Hazardous Substances" shall mean any chemical, substance, material,
object, condition, waste or combination thereof which is or may be hazardous to
human health or safety or to the environment, due to its harmful or potentially
harmful properties or effects, including those listed, defined or regulated
under any Environmental Laws, including without limiting the generality of the
foregoing "hazardous substances" as that term is defined in 42 U.S.C. ss.9601,
"extremely hazardous substances" as that term is defined in 42 U.S.C.
ss.11049(3), "regulated substance" as that term is defined in 42 U.S.C.
ss.6991(2), petroleum, petroleum products, petroleum by-products, petroleum
additives, petroleum intermediates, pesticides, asbestos and all chemicals,
substance, materials or wastes that are now or hereafter may be listed, defined
or regulated as hazardous or toxic by any agency or entity, or under any
federal, state or local law, regulation, ordinance, rule, policy or procedure.
"ILRF" shall have the meaning set forth in Section 6.2 hereof.
"Law(s)" shall mean a law, ordinance, rule, or regulation enacted or
promulgated, or an Order issued or rendered, by any Governmental Entity.
"Letter of Credit" shall mean an irrevocable direct pay letter of
credit in an amount equal to the sum of the original principal amount of the
Note plus all interest payable thereunder in accordance with the scheduled
maturity thereof plus the original principal amount of any additional notes
delivered by the Buyer to the Seller pursuant to Section 3.2(e) or Section 15.4
hereof plus all interest payable thereunder in accordance with the scheduled
maturity thereof. The Letter of Credit shall be issued by a United States
commercial banking institution reasonably acceptable to the Seller and Seller
shall be entitled to draw upon the Letter of Credit upon the occurrence of any
event of default under the Note or any other note delivered by the Buyer to the
Seller hereunder, which draw shall be in the amount of the sum of the
then-outstanding principal balance of the Note and any other note delivered by
the Buyer to the Seller hereunder plus all accrued and unpaid interest thereon
and all premiums payable with respect thereto plus the Seller's costs and
expenses incurred in connection with the collection thereof. The Letter of
Credit shall contain such other terms and provisions as are, and shall be in a
form, reasonably acceptable to the Seller.
"Liability" shall mean a liability, obligation, claim, or cause of
action of any kind or nature whatsoever, whether absolute, accrued, contingent,
or other and whether known or unknown.
"Lien" shall mean a lien, mortgage, deed to secure debt, pledge,
security interest, lease, sublease, charge, levy, or other encumbrance of any
kind.
<PAGE>
"Note" shall have the meaning set forth in Section 3.2(b) hereof.
"Order" shall mean an order, writ, ruling, judgment, injunction or
decree of, or any stipulation to or agreement with, any arbitrator, mediator, or
Governmental Entity.
"PCOR" shall have the meaning set forth in Section 6.2 hereto.
"Permitted Lien" shall mean any Lien listed or described on Schedule
7.10 attached hereto.
"Person" shall mean an individual, corporation, partnership, limited
liability company, association, joint stock company, Governmental Entity,
business trust, unincorporated organization, or other legal entity.
"Platinum Catalyst Inventory" shall mean the Seller's inventory as of
the date hereof of the precious metals platinum and rhenium used as catalysts in
the operation of the Refinery.
"Platinum Price Adjustment" shall have the meaning set forth in Section
3.1 hereof.
"Purchase Agreement" shall have the meaning set forth in the preamble
hereto.
"Purchase Price" shall have the meaning set forth in Section 3.1
hereof.
"Purchased Assets" shall have the meaning set forth in Section 2.1
hereof.
"Purchased Assets Value Schedule" shall have the meaning set forth in
Section 7.7 hereof.
"Refinery" shall mean the Powerine Refinery located in Santa Fe
Springs, California.
"Required Filings and Approvals" of a party shall mean any filing of
this Agreement with and the approval of such by all Governmental Entities and
such other applications, registrations, declarations, filings, authorizations,
Orders, consents, and approvals as may be required to be made or obtained by
such party from any Person prior to consummation of the Transactions.
"Security Agreement" shall have the meaning set forth in Section 3.3(a)
hereof.
"Seller Indemnitees" shall mean the Seller, any present or future
parent or subsidiary of the Seller, the Seller's respective successors and
assigns and their respective officers, directors, employees, counsel, agents,
investment bankers, accountants, and Affiliates.
"Seller" shall have the meaning set forth in the preamble hereto.
"Takeover Proposal" shall mean any proposal, other than as contemplated
by this Purchase Agreement, for an acquisition of or including the Purchased
Assets, whether through a merger, consolidation, reorganization, other business
combination, recapitalization, acquisition of any shares of capital stock or
assets, or otherwise.
"Tax" shall mean any Federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, capital stock, franchise, profits,
gains, withholding, social security, unemployment, disability, real property,
personal property, sales, use, rental, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.
<PAGE>
"Termination Date" shall mean September 30, 1995.
"Third Party Claim" shall have the meaning as set forth in Section
12.2.
"Transactions" shall mean the transactions contemplated by the Purchase
Agreement.
II. SALE OF ASSETS
Section 2.1 Sale of Assets. Subject to the terms and conditions of this
Purchase Agreement, on the Closing Date the Seller will sell, transfer, and
convey to the Buyer, and the Buyer will purchase from the Seller, by appropriate
instruments of assent and transfer, all of the property, assets and accessions
of the Seller as of the Closing Date described as purchased assets on Schedule
2.1 attached hereto (the "Purchased Assets"), provided that the Purchased Assets
shall not include the assets as are indicated as excluded assets on Schedule 2.1
attached hereto (the "Excluded Assets"). The Buyer will purchase the Purchased
Assets free and clear of all Liens, other than any Liens arising from acts of
Buyer, the Lien described in Section 11.5(c) hereof, the Lien contemplated by
the Security Agreement and any Permitted Liens.
Section 2.2 "As Is" and "Where Is". The Buyer shall acquire the
Purchased Assets "AS IS" AND "WHERE IS," EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES IN ARTICLE IV HEREOF, AND ANY AND ALL OTHER REPRESENTATIONS AND
WARRANTIES WITH RESPECT TO THE PURCHASED ASSETS, WHETHER EXPRESS OR IMPLIED, ARE
HEREBY DISCLAIMED INCLUDING ANY REPRESENTATIONS OR WARRANTIES AS TO
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.
III. PURCHASE PRICE
Section 3.1 Purchase Price. The purchase price to be paid by the Buyer
for the Purchased Assets shall be (a) the sum of (i) $24,325,000 (the "Base
Purchase Price") plus (ii) the amount, if any, by which $1,500,000 exceeds
Buyer's Asbestos Removal Costs (the "Asbestos Price Adjustment") plus (iii) the
amount, if any, by which $875,000 exceeds the amount equal to 50% of the
proceeds of the sale of the Platinum Catalyst Inventory pursuant to Section 15.5
hereof, minus (b) the amount, if any, by which the amount equal to 50% of the
proceeds of the sale of Platinum Catalyst Inventory exceeds $875,000 (any such
positive or negative adjustment resulting from the sale of the Platinum Catalyst
Inventory is hereinafter referred to as the "Platinum Price Adjustment") (the
Base Purchase Price, as it may be adjusted by the Asbestos Price Adjustment and
the Platinum Price Adjustment, is hereinafter sometimes referred to as the
"Purchase Price").
Section 3.2 Payment of Purchase Price. The Purchase Price shall be
payable as follows:
(a) Buyer has previously delivered the Deposit to the Seller in cash by
wire transfer of immediately available funds, which is being held by the Seller
in escrow pending Closing and is to be credited to the account of the Seller at
Closing as a partial payment of the Purchase Price;
(b) The Buyer shall pay to the Seller at Closing $300,036 in cash by
certified check or wire transfer in immediately available funds;
(c) The Buyer shall deliver to the Seller at Closing a secured
promissory note in the original principal amount of $19,763,074, which note
shall be in substantially the form of Schedule 3.2(b) attached hereto (the
"Note");
<PAGE>
(d) The Buyer shall pay the Asbestos Price Adjustment, if any, in cash
by wire transfer of immediately available funds within five business days after
the Asbestos Certification Date;
(e) The Buyer shall deliver to the Seller a separate secured promissory
note in an original principal amount equal to that amount which, with scheduled
interest and principal payments being made at the times and, in the case of
interest payments, the rate set forth in the Note, would result in total
payments to the Seller of an amount equal to the Platinum Price Adjustment if
such Platinum Price Adjustment results in an increase in the Purchase Price,
which note shall be in substantially the form of the Note and shall be delivered
within five business days after the calculation of the Platinum Price
Adjustment; and
(f) The Seller shall give the Buyer a credit under the Note in a
principal amount such that the sum of such principal plus the interest that
would have accrued thereon until the scheduled payment thereof equals the amount
of the Platinum Price Adjustment, if the Platinum Price Adjustment results in a
reduction of the Purchase Price, with such credit being effective within five
business days after the calculation of the Platinum Price Adjustment.
Section 3.3 Security for the Note.
(a) The obligations of the Buyer under the Note and any additional note
delivered pursuant to Section 3.2(e) hereof shall be secured by a first priority
purchase money security interest in the Purchased Assets granted by the Buyer to
the Seller pursuant to the terms and conditions of a Security Agreement
substantially in the form of Schedule 3.3(a) attached hereto (the "Security
Agreement") and by either a collateral assignment to the Seller of a note to be
acquired by the Buyer in connection with the Buyer's resale of the Purchased
Assets pursuant to the terms and conditions of a Collateral Assignment of Note
substantially in the form of Schedule 3.3(a-2) attached hereto (the "Collateral
Assignment") or a pledge of such other proceeds as the Buyer receives in
connection with such resale, which Collateral Assignment or other pledge shall
be executed and delivered by the Buyer to the Seller as promptly as practicable
after the Buyer completes such resale; provided, however, that the Buyer shall
have no obligation with respect to such Collateral Assignment or other pledge to
the extent that the Buyer has delivered the Letter of Credit to the Seller on or
before the date on which the Buyer completes such resale of the Purchased
Assets.
(b) Promptly following the delivery by the Buyer of the Letter of
Credit to the Seller, the Seller shall execute such documents and shall take
such other action as is necessary to terminate and release its security interest
in the Purchased Assets and to release the Collateral Assignment or other pledge
as contemplated by Section 3.3(a) hereof, it being understood that
the Buyer shall use its best efforts to deliver the Letter of Credit to the
Seller as soon as practicable but in any event on or before March 31, 1996 and
that the Buyer's failure to deliver the Letter of Credit by such date shall
constitute an event of default under the Note and any additional note delivered
pursuant to Section 3.2(e) hereof.
<PAGE>
IV. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Seller represents and warrants to the Buyer as follows, subject to
and qualified by any fact or facts disclosed in this Purchase Agreement or the
Schedules hereto:
Section 4.1 Organization and Good Standing. The Seller is a corporation
duly organized, validly existing, and in good standing under the Laws of the
state of its incorporation, with all requisite corporate power and authority to
own, operate, and lease its properties and to carry on its business as now being
conducted.
Section 4.2 Authorization; Enforceability. The Seller has the requisite
corporate power and authority to enter into and consummate the Transactions. The
execution and delivery of this Purchase Agreement and the consummation of the
Transactions have been duly approved and authorized by the Board of Directors of
the Seller and by the Board of Directors of Powerine Holding Corp. in its
capacity as the sole stockholder of the Seller. No other corporate proceedings
on the part of the Seller will be necessary to authorize this Purchase Agreement
and the Transactions. This Purchase Agreement has been duly executed and
delivered by the Seller and, assuming this Purchase Agreement is a legal, valid,
and binding obligation of the Buyer, constitutes a legal, valid, and binding
obligation of the Seller, enforceable against the Seller in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, moratorium, or other similar Laws now or hereafter in
effect affecting the enforceability of creditor's rights or by general
principles of equity.
Section 4.3 Consents and Approvals. Assuming the accuracy of the
representations of the Buyer in Section 5.6 hereof, there are no Required
Filings and Approvals of the Seller in connection with the execution and
delivery of this Purchase Agreement and the consummation of the Transactions
except for the consent of the licensor as described in Section 15.3 hereof.
Section 4.4 No Violation. The execution, delivery, and performance of
this Purchase Agreement by the Seller and the consummation by it of the
Transactions contemplated hereby will not (a) violate any provision of the
charter or by-laws of the Seller or (b) except with respect to the licenses
described in Section 15.3 hereof and the obligations giving rise to the
Permitted Liens, violate, conflict with, result in a breach of any provision of,
constitute a default or an event which, with notice or lapse of time or both,
would constitute a default under, result in the termination of or accelerate the
performance required by, result in a right of termination or acceleration under,
or result in the creation of any Lien upon any of the Purchased Assets under any
of the terms of, any Contract to which the Seller is a party.
Section 4.5 Purchased Assets. The Seller has good and valid title to
the Purchased Assets, with full power and authority to transfer the Purchased
Assets to the Buyer. At the Closing, good and valid title to the Purchased
Assets will pass to the Buyer, free and clear of all Liens except as provided in
the last sentence of Section 2.1 hereof. Notwithstanding the foregoing, no
representation or warranty is made hereunder with respect to the process
licenses described in Section 15.3(c) hereof.
Section 4.6 No Broker. The Seller has not engaged or authorized any
broker, investment banking firm, finder, agent, or other Person to act on its
behalf, directly or indirectly, as a broker or finder in connection with the
Transactions, except Lazard Freres & Co. LLC. The Seller shall be responsible
for and agrees to indemnify the Buyer from and against any fees or commissions
payable to Lazard Freres & Co. LLC in connection with the Transactions.
<PAGE>
V. REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
Section 5.1 Organization, Capitalization and Good Standing. The Buyer
is a corporation duly organized, validly existing, and, to the extent
applicable, in good standing under the laws of its jurisdiction of organization.
The Buyer was incorporated and capitalized on December 8, 1994, has engaged in
business continuously since that date and was not formed for the purpose of
consummating the Transactions.
Section 5.2 Authorization; Enforceability. The Buyer has the requisite
corporate power and authority to enter into this Purchase Agreement and to
consummate the Transactions. The execution and delivery of this Purchase
Agreement and the consummation of the Transactions have been duly approved and
authorized by the Board of Directors and the stockholders entitled to vote
thereon of the Buyer. No other corporate proceedings on the part of the Buyer
are necessary to authorize this Purchase Agreement and the Transactions. This
Purchase Agreement has been duly executed and delivered by the Buyer and,
assuming this Purchase Agreement is a legal, valid, and binding obligation of
the Seller, constitutes a legal, valid, and binding obligation of the Buyer,
enforceable against the Buyer in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
moratorium, or other similar Laws now or hereafter in effect affecting the
enforceability of creditor's rights or by general principles of equity.
Section 5.3 Consents and Approvals. There are no Required Filings and
Approvals of the Buyer in connection with the execution and delivery of this
Purchase Agreement and the consummation of the Transactions.
Section 5.4 No Violation. The execution, delivery, and performance of
this Purchase Agreement by the Buyer and the consummation by it of the
Transactions will not (a) violate any provision of the charter or the by-laws of
the Buyer or (b) violate, conflict with, result in a breach of any provision of,
constitute a default or an event which, with notice or lapse of time or both,
would constitute a default under, result in the termination of or accelerate the
performance required by, result in a right of termination or acceleration under,
or result in the creation of any Lien upon any of the assets of the Buyer under
any of the terms of, any Contract to which the Buyer is a party or to which it
or any of its assets may be subject.
Section 5.5 No Broker. The Buyer has not engaged or authorized any
broker, investment banking firm, finder, agent, or other Person to act on its
behalf, directly or indirectly, as a broker or finder in connection with the
Transactions.
Section 5.6 Total Assets or Revenues. The Buyer does not regularly
prepare a balance sheet or an income statement. The aggregate amount of all
assets held by the Buyer, directly or indirectly, are less than the sum of
$13,000,000 plus the Buyer's actual costs and expenses incurred and paid or to
be paid by the Buyer incidental to the consummation of the Transactions. No
other Person both (a) holds, directly or indirectly, assets equal to or in
excess of $10,000,000 or had annual net sales equal to or in excess of
$10,000,000, as set forth in its most recent regularly prepared balance sheet or
statement of income and expenses, respectively, and (b) either (i) holds 50% or
more of the Buyer's voting securities or (ii) has the contractual power
presently to designate 50% of more of the members of the Buyer's Board of
Directors. The Buyer understands that the Seller is relying on this
representation, among other things, in determining whether any notice must be
filed with the United States Department of Justice and Federal Trade Commission
in connection with the Transactions.
<PAGE>
VI. TAX MATTERS
Section 6.1 Transfer Taxes. (a) The Buyer intends to sell or cause to
be sold all of the Purchased Assets to a third party and has no present
intention to hold or use the Purchased Assets for any purpose other than for
resale. At Closing, the Buyer will present to the Seller a properly completed
and executed California Resale Certificate certifying that the Buyer holds a
valid California seller's permit issued pursuant to the California Sales and Use
Tax Law and that the Purchased Assets will be resold by the Buyer in the form of
tangible personal property. The California Resale Certificate to be presented by
the Buyer shall be substantially in the form set forth as Schedule 6.1 to this
Purchase Agreement.
(b) The Buyer shall be responsible for the payment of all
sales, transfer or similar Taxes imposed on the transfer of the Purchased Assets
hereunder. The Buyer or the Seller, as the case may be, shall execute and
deliver to the other at the Closing any certificates or other documents as the
other may reasonably request to comply with any reporting, notification, or
filing requirements relating to, or to perfect any exemption from, any transfer,
sales or other similar Taxes.
Section 6.2 Property Taxes.
(a) On the Closing Date, the Buyer shall file with the
Assessor's Office of Los Angeles County (i) a Preliminary Change of Ownership
Report ("PCOR") and (ii) an Improvement Lift Request Form ("ILRF") with respect
to the Purchased Assets. The form of PCOR and the ILRF to be filed on the
Closing Date shall be delivered by the Buyer to the Seller prior to the Closing
Date, and such PCOR and ILRF shall be in form and substance acceptable to the
Seller. The Buyer and the Seller shall use their best efforts to obtain separate
assessments and separate liens from the Los Angeles County Assessor for the
Purchased Assets and the Excluded Assets (including without limitation, the real
property on which the Purchased Assets are located).
(b) The Buyer shall be responsible for the payment of all
property and similar Taxes (including, without limitation, real property taxes,
personal property taxes and taxes on improvements and fixtures and any
supplemental assessments thereon) assessed with respect to the Purchased Assets
for all periods following Closing. The Seller shall be responsible for the
payment of all property or similar Taxes assessed with respect to the Purchased
Assets for all periods through and including the Closing Date. The Seller shall
give notice to the Buyer of all bills received by the Seller for property Taxes
that, if not duly and timely paid, would result in a lien on any of the
Purchased Assets, together with notice and evidence of payment thereof in each
case within 14 days after receipt or payment thereof. In the event that the
Seller does not pay any such property Taxes on or before the date on which such
property Taxes are due, the Buyer may, but shall be under no obligation to, pay
such property Taxes for the benefit of the Seller. The Buyer shall give to the
Seller prompt notice and evidence of any such payment, and the Buyer shall
thereafter be permitted to set off against any installment or installments of
principal and accrued interest due under the Note an amount equal to such
payment.
(c) At or within 30 days after the Closing, the Buyer shall
deposit with the Seller into an interest bearing trust account for the benefit
of the Buyer and for the purposes set forth in this Section 6.2(b) the sum of
$249,855. On November 1, 1995 and February 1, 1996, the Buyer shall pay to the
Seller the amount of $99,942 and $149,913, respectively, to pay the Buyer's
allocable share of the property and other similar Taxes payable with respect to
the Purchased Assets to the Los Angeles County Assessor on such dates. If, on or
before March 1, 1996, the Los Angeles County Assessor has granted separate liens
with respect to the Purchased Assets, the Seller shall deliver to the Buyer an
amount equal to the excess of the amount then held in trust, including all
accrued interest, over the amount, if any, of the remaining tax payments due
with respect to the Purchased Assets on November 1, 1995 and February 1, 1996 as
set forth above. If the Los Angeles County Assessor has not granted separate
liens with respect to the Purchased Assets by March 1, 1996, the Seller shall
pay to the Los Angeles County Assessor on November 1, 1996 and February 1, 1997,
out of the amounts then held in trust, the Buyer's allocable share of the
property and other similar Taxes payable with respect to the Purchased Assets
and shall give notice of any such payment to the Buyer.
<PAGE>
(d) In the event that the Buyer does not deposit the sum of
$249,855 with the Seller within 30 days after the Closing as contemplated by
Section 6.2(c) hereof, the Buyer shall thereafter pay to the Seller as
liquidated damages for such breach an amount equal to 10% per annum on such
$249,855 for the period commencing on the 31st day after the Closing through and
including the date on which such amounts are deposited with the Seller. If the
Buyer does not deposit such amount with the Seller and pay all liquidated
damages with respect thereto to the Seller on or before the 60th day after the
Closing, the Seller shall be permitted to declare an event of default under the
Note.
Section 6.3 Refunds or Credits; Tax Benefits. Any refunds or credits of
property, sales, transfer or similar Taxes with respect to the Purchased Assets,
to the extent that such refunds or credits are attributable to any taxable year
or period ending on or before the Closing Date, shall be for the account of the
Seller. Any refunds or credits of property, sales, transfer or similar Taxes
with respect to the Purchased Assets, to the extent that such refunds or credits
are attributable to any taxable year or period beginning after the Closing Date
and an overpayment of property, sales, transfer or similar Taxes made by the
Buyer, shall be for the account of the Buyer. Each party hereby agrees to
promptly remit to the other party any such amount due to the other party under
this Section 6.3 upon receipt thereof or, if an amount is credited to the
account of the party, upon such amount being so credited.
Section 6.4 Contests. If the Buyer believes that it is entitled to a
refund of any property, sales, transfer or similar Taxes for any reason (for
example, property taxes due to the removal of Purchased Assets from the
property), the Buyer shall have the right, at its sole cost and expense, to
contest and/or protest the amount or validity, in whole or in part, of any such
property, sales, transfer or similar Taxes by appropriate proceedings diligently
conducted in good faith; provided, that the Buyer shall reimburse the Seller for
any charges, penalties, fines, interest, late charges, costs and expenses
incurred by the Seller in connection with its cooperation in connection with any
such contest or protest. Further, promptly after any taxing authority, or agent
thereof, asserts a claim for, makes an assessment of, or otherwise investigates
or disputes, including, without limitation, in connection with an audit, the
amount of property, sales, transfer or similar Taxes for which the Buyer is or
may be liable under this Article VI to the Seller, the Seller shall provide
written notice thereof to the Buyer and the Buyer shall indemnify and hold
harmless the Seller Indemnitees from and against any property, sales, transfer
or similar Taxes for which the Buyer is liable under this Article VI and all
damages, awards, claims, action, costs and expenses (including, without
limitation, attorney's fees and costs) arising from or related to such property,
sales, transfer or similar Taxes. The Seller agrees not to settle or resolve any
claim, assessment or dispute arising in any audit or proceeding that relates to
or affects the amount of property, sales, transfer or similar Taxes for which
the Buyer is liable under this Article VI without the Buyer's prior written
consent, which consent shall not be unreasonably withheld.
<PAGE>
VII. COVENANTS OF THE SELLER
The Seller hereby covenants and agrees with the Buyer as follows:
Section 7.1 Access to Information. From and after the date of this
Purchase Agreement and until the Closing Date or termination of this Agreement,
the Buyer and its authorized representatives shall upon reasonable notice have
access during normal business hours to all properties, books, records,
Contracts, and documents of the Seller relating solely to any of the Purchased
Assets, and the Seller shall furnish or cause to be furnished to the Buyer and
its authorized representatives information solely with respect to the Purchased
Assets as the Buyer may reasonably request.
Section 7.2 Actions Prior to Closing Date. From and after the date of
this Purchase Agreement and until the Closing Date or termination of this
Agreement:
(a) the Seller shall not undertake or institute any action,
other than in the ordinary course of business or as may be required in
connection with the shutdown of the Refinery or any other business exigency,
which could reasonably be expected to have a material adverse effect on the
Purchased Assets taken as a whole.
(b) the Seller shall not sell, pledge, convey, transfer, lease
or encumber any of the Purchased Assets, except in the ordinary course of
business.
(c) the Seller shall promptly notify the Buyer of any material
lawsuits, claims, proceedings, or investigations of which the Seller has
knowledge that may be threatened, brought, asserted, or commenced against or
involving any of the Purchased Assets or the Transactions.
Section 7.3 Ability to Shop. The Seller shall not, and shall not permit
its Affiliates or their respective officers, directors, employees, counsel,
agents, investment bankers, accountants, or other representatives (collectively,
"Agents") to, directly or indirectly: (a) initiate contact with any Person in an
effort to solicit any Takeover Proposal; (b) cooperate with, or furnish or cause
to be furnished any non-public information concerning the Purchased Assets to,
any Person in connection with any Takeover Proposal; (c) negotiate with any
Person with respect to any Takeover Proposal; or (d) enter into any agreement or
understanding with any Person with the intent to effect a Takeover Proposal.
Section 7.4 Confidentiality. The Seller shall use its commercially
reasonable efforts to insure that all confidential information which the Seller
or any of its respective Agents may now possess or may hereafter create or
obtain relating to the Purchased Assets or the financial condition, results of
operations, business, properties, assets, liabilities, or future prospects of
the Buyer, including without limitation the details of the financial or
ownership background of the Buyer and any other Person affiliated with the Buyer
in connection with the Transactions and the Buyer's source and method of
financing the Letter of Credit, the Deposit and the payment of the Base Purchase
Price, shall not be published, disclosed, or made accessible by any of them to
any other Person at any time or used by any of them except pending the Closing
in the business and for the benefit of the Seller, in each case without the
prior written consent of the Buyer; provided, however, that the restrictions of
this sentence shall not apply (a) to disclosure to existing or prospective
lenders or other investors or to others whose consent may be required or
desirable in connection with the consummation of the Transactions, (b) as may
otherwise be required by law, (c) as may be necessary or appropriate in
connection with the enforcement of this Purchase Agreement, (d) to disclosure to
any potential purchasers of any or all of the Excluded Assets, (e) as may be
necessary or appropriate to report the Transactions to any taxing authority
(including, without limiting the generality of the foregoing, the Internal
Revenue Service, the California Franchise Tax Board, the California State Board
of Equalization and the Los Angeles County Assessor) or to contest or protest
the assessment of Taxes imposed by any such taxing authority or (f) to the
extent such information shall have otherwise become publicly available not in
violation of the provisions of this Purchase Agreement.
<PAGE>
Section 7.5 Insurance. The Seller shall use its commercially reasonable
efforts to maintain in effect until the Closing insurance covering the Purchased
Assets, of the types and in the approximate amounts in effect at the date of
this Agreement, and shall notify the Buyer if the Seller receives written notice
that any such policy has been cancelled or has lapsed. The Seller shall have no
obligation to maintain any insurance with respect to the Purchased Assets, or in
any other manner to protect the Purchased Assets, at any time after the Closing.
Section 7.6 Commercially Reasonable Efforts; Cooperation. The Seller
agrees to use all commercially reasonable efforts to cause the conditions set
forth in Article IX and Article X to be satisfied and to take, or cause to be
taken, all action and to do, or cause to be done, and to assist and cooperate
fully with the other parties in doing, all things necessary, proper, or
advisable to consummate the Transactions.
Section 7.7 Purchased Assets Value Schedule. Attached hereto as
Schedule 7.7 is a schedule of the fair value of the Purchased Assets (the
"Purchased Assets Value Schedule"), which sets forth the fair value of each unit
included within the Purchased Assets in the discretion of the Seller.
Section 7.8 Limits on Letter of Credit Draws. Notwithstanding the terms
and provisions of the Letter of Credit, the Seller shall not deliver a draw
notice thereunder to the issuer thereof after the Buyer has given notice to the
Seller that the Buyer is not able to remove any of the Purchased Assets from the
premises of the Seller on which such Purchased Assets are located due to Force
Majeure and the Seller shall thereafter refrain from delivering any such draw
notice until the earlier to occur of (a) April 1, 1997 or (b) the receipt of
notice from the Buyer to the Seller that the Force Majeure condition no longer
prevents the Buyer from removing the Purchased Assets. The Buyer shall give
notice to the Seller promptly, and in any event not more than two business days,
after such Force Majeure condition no longer prevents the Buyer from so removing
such Purchased Assets. If the Seller disputes the existence or continuation of
any such Force Majeure condition, it shall give notice thereof to the Buyer, and
any such dispute regarding the existence or continuation of a Force Majeure
condition shall be resolved by arbitration in accordance with the provisions of
Section 17.11 hereof.
Section 7.9 Replacement for Purchased Assets. In the event that any of
the Purchased Assets in existence on the date of this Purchase Agreement do not
exist at Closing or are not transferable at Closing by the Seller to the Buyer
with the quality of title specified in Section 2.1 hereof, other than any such
Purchased Assets, including without limitation consumable catalysts, chemicals
and spare parts, that are used or disposed of in the ordinary course of business
or as a result of the shutdown of the Refinery or any other business exigency
and other than two LPG bullets, one 18-ton linkbelt rough terrain crane and one
8 1/2 ton Rodesson crane, which are addressed in the last sentence of this
Section 7.9, the Seller and the Buyer shall adjust the Base Purchase Price and
the scheduled payment thereof in accordance with the fair value attributable to
such Purchased Assets as set forth on the Purchased Assets Value Schedule. The
Seller shall cause the aforementioned bullets and cranes to be made available
for delivery to the Buyer on or before April 30, 1996.
<PAGE>
Section 7.10 Permitted Liens. As and to the extent the Seller receives
payments under the Note, the Seller shall discharge any indebtedness of the
Seller secured by any Permitted Liens and shall use its reasonable efforts to
cause the holder of each Permitted Lien whose indebtedness has been paid in full
to release such Permitted Lien promptly after such payment; provided, however,
that the Seller shall cause the liens held by Wickland Oil Company to be
released on or before November 15, 1995 and shall cause all other Permitted
Liens to be released on or before the 31st day after payment by the Buyer to the
Seller of the April 30, 1996 installment under the Note.
Section 7.11 Maintenance of Purchased Assets. After the shutdown of the
Refinery, the Seller, at its sole cost, agrees to drain and remove all liquid
hydrocarbons (which shall exclude sludge, hydrocarbon vapors or gases and
similar materials) from all of the process units as promptly as practicable and
to maintain such process units in proper mothballed conditions with an inert
(nitrogen) purge through the Closing to the extent such drainage and removal is
completed prior to Closing. To the extent such drainage and removal is completed
after Closing, the Seller shall, at its sole cost, place such process units
under an inert (nitrogen) purge following such drainage and cleaning. After the
later to occur of Closing or the placement of such process units under an inert
(nitrogen) purge, the Buyer shall be responsible, at its sole cost, for
maintaining such purge. The Seller further agrees, at its sole cost, to drain
and remove all liquid hydrocarbons from all of the other Purchased Assets within
120 days after Closing and, promptly following such draining and removal, to
degas such other Purchased Assets. The Seller shall give notice to the Buyer of
its schedule for degassing such other Purchased Assets to permit the Buyer to
coordinate the performance of its obligations under Sections 11.2(b) hereof with
the completion of the Seller's performance of its obligations under this Section
7.11.
VIII. COVENANTS OF THE BUYER
The Buyer covenants and agrees with the Seller as follows:
Section 8.1 Confidentiality. The Buyer shall use its commercially
reasonable efforts to insure that all confidential information which the Buyer,
its Affiliates, or any of their respective Agents may now possess or may
hereafter create or obtain relating to the Purchased Assets shall not be
published, disclosed, or made accessible by any of them to any other Person at
any time or used by any of them except pending the Closing in the business and
for the benefit of the Seller, in each case without the prior written consent of
the Seller; provided, however, that the restrictions of this sentence shall not
apply (a) after the Closing, (b) to disclosure to existing or prospective
lenders or other investors or to others whose consent may be required or
desirable in connection with the consummation of the Transactions, (c) as may
otherwise be required by law, (d) as may be necessary or appropriate in
connection with the enforcement of this Purchase Agreement, (e) as may be
necessary or appropriate to report the Transactions to any taxing authority
(including, without limiting the generality of the foregoing, the Internal
Revenue Service, the California Franchise Tax Board, the California State Board
of Equalization and the Los Angeles County Assessor) or to contest or protest
the assessment of Taxes imposed by any such taxing authority or (f) to the
extent such information shall have otherwise become publicly available not in
violation of the provisions of this Purchase Agreement.
<PAGE>
Section 8.2 Commercially Reasonable Efforts; Cooperation. The Buyer
agrees to use all commercially reasonable efforts to cause the conditions set
forth in Article IX and Article X to be satisfied, and to take, or cause to be
taken, all action and to do, or cause to be done, and to assist and cooperate
fully with the other parties in doing, all things necessary, proper or advisable
to consummate the Transactions. The Buyer further agrees to comply with the
provisions of Section 7.8 and Section 7.9 hereof as they relate to the Buyer.
Section 8.3 Access to Utilities Systems. The Buyer agrees to permit the
Seller, at Seller's expense, access after Closing to any utilities systems,
including electrical, natural gas, plant air, fire water and boilers, that may
be included in the Purchased Assets as and to the extent reasonably necessary to
permit the Seller to perform its obligations hereunder and to remediate the
Excluded Assets as necessary.
Section 8.4 Access to Facilities. The Buyer agrees to permit the
Seller, at the Seller's expense, access after Closing to the following
facilities for purposes of permitting the Seller to perform its obligations
hereunder:
(a) sour water stripper;
(b) sulphur plant, including the sulphur recovery and
tail gas treating units;
(c) refinery tankage, offsite piping, pumps and vapor
recovery equipment;
(d) flare system;
(e) waste water and storm water systems;
(f) process control equipment;
(g) environmental and safety monitoring systems;
(h) fire trucks and other fire fighting and safety
equipment;
(i) tools and equipment, including laboratory equipment;
and
(j) utilities associated with the foregoing.
Section 8.5 Collateral Assignment. As promptly as practicable after the
acquisition by the Buyer of the note described in the Collateral Assignment or
other proceeds of the resale of the Purchased Assets, the Buyer shall execute
and deliver to the Seller the Collateral Assignment and perform its obligations
as set forth thereunder or shall pledge such proceeds, subject to the limitation
set forth in Section 3.3(a) hereof.
<PAGE>
IX. CONDITIONS TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer to purchase the Purchased Assets at the
Closing are subject to the fulfillment at or prior to the Closing of each of the
following conditions, unless waived in writing by the Buyer.
Section 9.1 Truth of Representations and Warranties. The
representations and warranties made by the Seller in this Purchase Agreement
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
or given on and as of such date.
Section 9.2 Compliance with Covenants. The Seller shall have performed
and complied in all material respects with all of its covenants and obligations
under this Purchase Agreement which are to be performed or complied with by it
prior to or at the Closing, and Buyer and the Seller shall have agreed upon the
allocations, if any, contemplated by Section 6.2(c) hereof.
Section 9.3 Absence of Suit. No action, suit, proceeding or
investigation shall have been commenced or threatened by any Person other than a
holder of a Permitted Lien against the Buyer, the Seller, or any of their
officers, directors, or Affiliates seeking to modify in any material respect, or
to restrain or prevent, and no Law shall have been enacted, issued or
promulgated which has the effect of modifying in any material respect or
restraining or preventing, the Transactions or questioning the validity or
legality of the Transactions.
Section 9.4 Proceedings and Instruments Satisfactory; Certificates. All
proceedings, corporate or otherwise, to be taken by the Seller in connection
with the Transactions shall have occurred and all certificates and other
documents reasonably incident thereto as the Buyer may reasonably request shall
have been delivered to the Buyer.
Section 9.5 Deliveries at Closing. All documents and instruments
required to be delivered by the Seller at the Closing shall have been delivered
to the Buyer as provided in Section 13.2.
Section 9.6 Release of Liens. All Liens shall have been released to the
extent necessary for the Seller to be able to deliver to the Buyer title to the
Purchased Assets of the quality set forth in Section 2.1 hereof.
<PAGE>
X. CONDITIONS TO OBLIGATIONS OF THE SELLER
The obligations of the Seller to be performed hereunder shall be
subject to the satisfaction prior to or at the Closing of the following
conditions unless waived in writing by the Seller.
Section 10.1 Truth of Representations and Warranties. The
representations and warranties of the Buyer in this Purchase Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same effect as though such representations and warranties had been made or given
on and as of such date.
Section 10.2 Compliance with Covenants. The Buyer shall have performed
and complied in all material respects with all of its covenants and obligations
under this Purchase Agreement which are to be performed or complied with by the
Buyer prior to or at the Closing, and the Buyer and the Seller shall have agreed
upon the allocations, if any, contemplated by Section 6.2(c) hereof.
Section 10.3 Absence of Suit. No action, suit, proceeding, or
investigation shall have been commenced or threatened by any Person other than a
holder of a Permitted Lien against the Buyer, the Seller, or any of their
officers, directors, or Affiliates seeking to modify in any material respect, or
to restrain or prevent, and no Law shall have been enacted, issued, or
promulgated which has the effect of modifying in any material respect or of
restraining or preventing, the Transactions or questioning the validity or
legality of the Transactions.
Section 10.4 Proceedings and Instruments Satisfactory; Certificates.
All proceedings, corporate or otherwise, to be taken by the Buyer in connection
with the Transactions shall have occurred and all certificates and other
documents reasonably incident thereto as the Seller may reasonably request shall
have been delivered to the Seller.
Section 10.5 Release of Liens. All Liens shall have been released to
the extent necessary for the Seller to be able to deliver to the Buyer title to
the Purchased Assets of the quality set forth in Section 2.1 hereof.
Section 10.6 Deliveries at Closing. All documents and instruments
required to be delivered by the Buyer at the Closing shall have been delivered
to the Seller as provided in Section 13.3.
<PAGE>
XI. REMOVAL OF PURCHASED ASSETS
Section 11.1 Commencement of Removal. As promptly as practicable after
Closing, the Buyer shall retain a dismantling contractor to dismantle and remove
the Purchased Assets from the Refinery, and such dismantling shall commence no
later than January 1, 1996; provided, however, that the Buyer shall not sell or
remove from the Refinery any of the Purchased Assets, other than any asbestos
and asbestos-containing materials that may be deemed to be Purchased Assets,
until the Buyer shall have delivered the Letter of Credit to the Seller. The
contractor shall be reasonably satisfactory to the Seller and shall be bonded in
an amount which, in the reasonable discretion of the Seller, is adequate to
protect the interests of the Seller and which shall be not less than $5,000,000,
which bond shall be maintained until the Seller shall have confirmed in writing
to the Buyer that all of the Buyer's obligations under Section 11.2 hereof have
been satisfied.
Section 11.2 Scope of the Buyer's Responsibilities. In connection with
dismantling and removing the Purchased Assets, the Buyer shall be responsible at
its sole cost for:
(a) removing and disposing of all asbestos-containing
materials from all Purchased Assets and all asbestos-containing materials which
are disturbed or otherwise impacted by the removal of the Purchased Assets;
(b) promptly following the Seller's performance of its
obligations under Section 7.11 hereof, cleaning (with steam and/or solvents, as
appropriate) and removing all sludge from the Purchased Assets as necessary,
including final disposition of any resulting materials or other material removed
during the performance of the Buyer's duties hereunder;
(c) removing all Purchased Assets that are affixed to the real
estate down to but excluding foundation level, it being understood that the
Buyer shall have no obligation to remove any such concrete foundation;
(d) plugging or otherwise sealing on a permanent basis
reasonably satisfactory to the Seller all pipelines attached to but not included
in the Purchased Assets, except for any such pipelines specified in writing by
the Seller;
(e) removing all above-ground power and other utility
transmission lines or systems other than such lines and/or systems as are
specified in writing by the Seller;
(f) complying with all Laws, including all Environmental Laws,
and all requirements of all Governmental Entities, including, without
limitation, the United States and the California Occupational Safety and Health
Administrations;
(g) complying with all closure requirements under the federal
and California hazardous waste laws, including the Resource Conservation and
Recovery Act, 42 U.S.C. ss.6901 et seq. and the California Hazardous Waste
Control Law, Health & Safety Code ss.ss.25100- 25250.25 to the extent that such
closure requirements are applicable to the performance by the Buyer of its
obligations hereunder;
<PAGE>
(h) removal and disposal of all Hazardous Substances, debris
or waste created by or emanating or resulting from the dismantling and removal
of, or otherwise embodied in, the Purchased Assets;
(i) filling and grading to the grade level of the undisturbed
real estate any holes, trenches or other excavations created by or resulting
from the dismantling and removal of the Purchased Assets; and
(j) maintaining occurrence based (as opposed to claims made)
general liability insurance in the amount of at least $20 million on the
Purchased Assets on a combined primary and excess basis with an aggregate
deductible not greater than $250,000 for the period from Closing through the
delivery by the Buyer of the certification contemplated by Section 11.5(a)
hereof, and providing to the Seller a certificate of insurance confirming such
coverage and naming the Seller and its Affiliates as additional insureds
thereon.
Section 11.3 Confirmation of Asbestos Removal. Promptly following the
satisfaction by the Buyer of its responsibilities pursuant to Section 11.2(a)
hereof, the Buyer and the contractor retained by the Buyer to perform such
services shall give joint written notice to the Seller certifying (a) that such
services have been fully performed and (b) as to the total cost paid by the
Buyer to such contractor in connection with the performance of such services
("Buyer's Asbestos Removal Costs"). The Buyer shall also furnish to the Seller
such documentation as the Seller may reasonably request in connection with such
certification, including without limiting the generality of the foregoing copies
of all invoices, bid proposals and other payment documentation. The date on
which such notice is given is referred to herein as the "Asbestos Certification
Date."
Section 11.4 Indemnification. The Buyer shall indemnify and hold the
Seller Indemnities harmless from and against any Damages suffered by them
resulting from, arising out of, or incurred with respect to, or in the case of
any Third Party Claim, alleged to result from, arise out of or have been
incurred with respect to, the performance by the Buyer of its obligations under
this Article XI, all in accordance with the provisions of Article XII hereof.
Such Damages shall include, but shall not be limited to, Damages with respect to
any claim for any investigatory cost, cleaning cost, governmental response
costs, natural resources damage, property damage, personal injury or penalty
arising out of, based on or resulting from circumstances forming the basis of
any violations or alleged violation of any Environmental Law; provided, however,
that the Buyer shall have no liability hereunder for any preexisting
environmental conditions, except as and to the extent exacerbated by the Buyer.
Section 11.5 Completion of Removal; Liquidated Damages.
(a) All Purchased Assets shall be removed from the Seller's
premises, and all necessary action contemplated by this Article XI shall be
completed as soon as practicable after the Closing and, in any event, on or
before April 1, 1997, and the Buyer shall deliver to the Seller written notice
from its contractor and the Buyer's President or Chief Operating Officer
certifying to such completion. Notwithstanding the foregoing, the Buyer may, by
written notice given to the Seller on or before September 30, 1996, extend the
date by which its obligations hereunder must be completed to a date not later
than July 1, 1997. The Buyer shall continue to pursue such removal and other
action until completion with all appropriate speed.
<PAGE>
(b) In the event that the Purchased Assets are not removed or
the other action contemplated by this Article XI is not completed on or before
April 1, 1997 or, if the Buyer has given notice of a later date in accordance
with Section 11.5(a) hereof, such later date, the Buyer shall, in addition to
all other obligations hereunder, be obligated to pay the Seller as liquidated
damages $10,000 in cash for each calendar day (or any portion thereof) during
which such failure continues. The Buyer agrees that the amount of Damages for
such delay will be difficult or impossible to prove, that such sum is a
reasonable estimate of such Damages and that such sum constitutes liquidated
damages and not a penalty. The Buyer shall be deemed to have failed to comply
with its obligation hereunder until the Seller has received the certification
described in Section 11.5(a) hereof. The delivery of such certification shall
not be dispositive of the Buyer's performance of its obligations hereunder, and
Sellers shall be entitled to collect and receive the aforementioned liquidated
damages for all periods during which any failure of performance remains uncured,
including any period during which the parties may be contesting the existence of
any such failure.
(c) In addition to the liquidated damages set forth in Section
11.5(b) hereof, in the event the Buyer has not removed any of the Purchased
Assets from the Seller's premises by 12:01 a.m. on April 1, 1997 or, if the
Buyer has given notice of a later date in accordance with Section 11.5(a)
hereof, such later date, the Seller shall have the right to cause such remaining
Purchased Assets to be removed from such premises and placed into storage,
disposed of or sold in any commercially reasonable manner, in each case solely
for the account of the Buyer. All expenses incurred by the Seller in connection
with such removal, storage, disposition and/or sale for the account of the Buyer
will be the responsibility of the Buyer, and the Seller shall pay the net
proceeds of any such sale, after deducting the expense thereof (including,
without limitation, any Taxes payable upon any such sale) and any liquidated
damages payable by the Buyer to the Seller pursuant to Section 11.5(b) hereof,
to the Buyer. The Seller shall have a lien for any such expenses and liquidated
damages on any Purchased Assets not removed from the Seller's premises on or
before April 1, 1997 or, if the Buyer has given notice of a later date in
accordance with Section 11.5(a) hereof, such later date.
Section 11.6 Risk of Loss. The parties agree that title to, and risk of
loss for, the Purchased Assets shall be transferred to the Buyer at Closing. The
Seller agrees to permit the Purchased Assets to remain on the premises of the
Seller following Closing without rental or other use charges for so long as the
Buyer is complying with its obligations under this Article XI. The Seller shall
have no liability or responsibility to any Person for any Damages to or relating
to the Purchased Assets after Closing, regardless of the cause of such Damages,
and the Buyer shall indemnify and hold the Seller harmless from and against all
such Damages, except for any such Damages resulting from the negligence of the
Seller or any of the Seller's Agents.
<PAGE>
XII. INDEMNIFICATION
Section 12.1 Requirement of Indemnification. (a) The Seller shall
indemnify and hold the Buyer Indemnitees harmless from and against any Damages
suffered by them resulting from, arising out of, or incurred with respect to, or
(in the case of claims asserted against any Buyer Indemnitee by a third party)
alleged to result from, arise out of or have been incurred with respect to (i)
the falsity, breach, or inaccuracy of any representation, warranty, covenant, or
agreement of the Seller contained in this Purchase Agreement or in any schedule,
exhibit, document, or instrument delivered in connection herewith or (ii) any
Liability whatsoever of the Seller, which shall include any Liability arising
out of or related to any claim described in Section 11.6 hereof resulting from
the negligence of the Seller or any of Seller's Agents.
(b) The Buyer shall indemnify and hold the Seller Indemnitees
harmless from and against any Damages suffered by them resulting from, arising
out of, or incurred with respect to, or (in the case of claims asserted against
any Seller Indemnitee by a third party) alleged to result from, arise out of, or
have been incurred with respect to (i) the falsity, breach, or inaccuracy of any
representation, warranty, covenant, or agreement of the Buyer contained in this
Purchase Agreement or in any schedule, exhibit, document, or instrument
delivered in connection herewith, (ii) any Liability whatsoever of the Buyer,
whether arising prior to, on, or after the Closing Date, including without
limitation, any Liability arising out of the Buyer's ownership of the Purchased
Assets or dismantling, removal or use of any of the Purchased Assets on or after
the Closing or (iii) the assessment of sales, transfer or similar Taxes in
connection with the sale and/or transfer of the Purchased Assets hereunder.
Section 12.2 Procedures Relating to Indemnification. (a) A party (the
"indemnified party") seeking indemnification under this Purchase Agreement in
respect of, arising out of, or involving a claim or demand made by any Person
against the indemnified party (a "Third Party Claim") shall notify the
indemnifying party in writing of the Third Party Claim within 20 days after
receipt by the indemnified party of written notice of the Third Party Claim;
provided, however, that failure to give such notification shall not affect the
indemnification provided under this Purchase Agreement, except to the extent the
indemnifying party shall actually have been prejudiced by the failure.
Thereafter, the indemnified party shall deliver to the indemnifying party,
promptly after the indemnified party's receipt thereof, copies of all notices
and documents (including court papers) received by the indemnified party
relating to the Third Party Claim.
(b) The indemnifying party shall have the right, within 30
days after being so notified, to assume the defense of such Third Party Claim
with counsel reasonably satisfactory to the indemnified party. In any such
proceeding the defense of which the indemnifying party shall have so assumed,
the indemnified party shall have the right to participate therein and retain its
own counsel at its own expense unless (i) the indemnified party and the
indemnifying party shall have mutually agreed to the retention of such counsel,
(ii) the indemnified party shall have received a written opinion of counsel to
the effect that there may be one or more legal defenses available to it which
are different from or additional to those available to the indemnifying party,
or (iii) the named parties to any such proceeding (including the impleaded
parties) include both the indemnifying party and the indemnified party, and
representation of both parties by the same counsel would be inappropriate in the
opinion of the indemnified party's counsel due to actual or potential differing
interests between them; in any such case, such separate counsel may be retained
by the indemnified party at the indemnifying party's expense (provided that the
indemnifying party shall not be required to bear the fees and expenses of more
than one counsel (plus any local counsel as may be reasonably required) for each
group of similarly situated persons). To the extent that the settlement of such
a Third Party Claim, the defense of which has been assumed by the indemnifying
party, involves the payment of money only, the indemnifying party shall have the
right, in consultation with the indemnified party, to settle those aspects
dealing only with the payment of money, provided that the indemnifying party
pays such money and such settlement includes a general release from the other
parties to such Third Party Claim in favor of the indemnified party. In
connection with any such defense or settlement, the indemnifying party shall not
enter into a consent decree involving injunctive or non-monetary relief or
consent to an injunction without the indemnified party's prior written consent.
(c) With respect to all Third Party Claims, the indemnified
party shall cooperate in all reasonable respects with the indemnifying party in
connection with such claims and the defense or compromise of the claims. Such
cooperation shall include the retention and (upon the indemnifying party's
request) the provision to the indemnifying party of records and information
reasonably relevant to the Third Party Claim, making employees available on a
mutually convenient basis to provide additional information, and explanation of
any material provided under this Purchase Agreement. If the indemnifying party
shall have assumed the defense of a Third Party Claim, the indemnified party
shall not, without first waiving the indemnity as to such claim, admit any
liability with respect to, or settle, compromise, or discharge, the Third Party
Claim, without the indemnifying party's prior written consent.
<PAGE>
Section 12.3 Defense of Third-Party Claim. The failure by the
indemnifying party to notify the indemnified party of its election to defend any
Third Party Claim within 30 days after written notice thereof shall have been
given to the indemnifying party shall be deemed a waiver by the indemnifying
party of its right to defend such Third Party Claim. If the indemnifying party
shall not assume the defense of any such Third Party Claim, the indemnified
party may defend against and, subject to obtaining the consent of the
indemnifying party, which shall not be unreasonably delayed or denied, settle
such Third Party Claim in such manner as it may deem appropriate.
Section 12.4 Payment. The indemnifying party shall pay directly all
Damages or shall, if the indemnified party elects to pay any Damages directly,
promptly reimburse the indemnified party for any Damages paid by the indemnified
party that is the subject of an indemnification given under this Article XII.
The indemnifying party shall reimburse the indemnified party promptly upon
demand for the amount of any judgment rendered or settlement entered into with
respect to any Third Party Claim, the defense of which was not assumed by the
indemnifying party, and, promptly upon demand, for all Damages paid by the
indemnified party in connection with the defense against such Third Party Claim.
Section 12.5 Limitation on Indemnification. (a) An indemnified party
shall not be entitled to assert later than the date which is six months after
the Closing Date any right of indemnification for any Damages suffered by it as
a result of the falsity, inaccuracy, or breach of any representation or warranty
(but not the breach of any covenant or agreement) by the indemnifying party set
forth herein; provided however, that (i) any claim with respect to the falsity,
inaccuracy, or breach of a representation or warranty with respect to title to
Purchased Assets may be brought at any time, (ii) any claim with respect to the
Buyer's storage, dismantling or removal of the Purchased Assets from the
property of the Seller may be brought at any time prior to 180 days after the
date on which all Purchased Assets have been removed and the Buyer has so
certified to the Seller, as set forth in Section 11.5(b) hereof, and (iii) if
there shall then be pending any claim for such indemnification hereunder which
has been asserted prior to the applicable date by the indemnified party with
reasonable specificity, the indemnified party shall continue to have the right
to be indemnified with respect thereto.
(b) A Buyer Indemnitee shall not be entitled to
indemnification hereunder for any Damages suffered by it as a result of the
falsity, inaccuracy, or breach of any representation or warranty by the Seller
unless the aggregate amount of Damages suffered by all Buyer Indemnitees for all
such falsities, inaccuracies, and breaches exceeds $250,000, and then the Seller
shall be responsible only for the amount of such Damages that exceeds $250,000.
(c) A Seller Indemnitee shall not be entitled to
indemnification hereunder for any Damages suffered by it as a result of the
falsity, inaccuracy, or breach of any representation or warranty by the Buyer
unless the aggregate amount of Damages suffered by all Seller Indemnitees for
all such falsities and breaches exceeds $250,000, and then the Buyer shall be
responsible only for the amount of such Damages that exceeds $250,000.
(d) The aggregate amount which an indemnified party shall be
entitled to receive as indemnification under this Article XII shall be reduced
by the amount of all tax benefits or savings actually available to and utilized
by such party as a result of any loss, liability, cost, expense, or damage
giving rise to such indemnification.
(e) A Buyer Indemnitee shall not be entitled to be indemnified
hereunder for any Damages suffered by it as a result of the falsity, breach, or
inaccuracy of any representation, warranty, covenant, or agreement of the Seller
contained in this Purchase Agreement or in any schedule, exhibit, document, or
instrument delivered in connection herewith of which the Buyer had knowledge
prior to the Closing.
(f) A Seller Indemnitee shall not be entitled to be
indemnified hereunder for any Damages suffered by it as a result of the falsity,
breach, or inaccuracy of any representation, warranty, covenant, or agreement of
the Buyer contained in this Purchase Agreement or in any schedule, exhibit,
document, or instrument delivered in connection herewith of which the Seller had
knowledge prior to the Closing.
(g) Except as provided in Articles III, VI and XI, each of the
parties acknowledges and agrees that, from and after the date of this Purchase
Agreement, its sole and exclusive remedy with respect to any and all claims
relating to the subject matter of this Purchase Agreement shall be pursuant to
the indemnification provisions in this Article XII; provided, however, that the
procedural provisions of this Article XII shall not prevent any applicable
crossclaims from being asserted in any other action initiated by a third party.
<PAGE>
(h) Notwithstanding any provision in this Purchase Agreement
to the contrary, the provisions of this Section 12.5 shall not apply to the
Buyer's obligation to indemnify and hold the Seller Indemnitees harmless from
and against any Damages suffered by any of them resulting from, arising out of
or incurred with respect to, or alleged to result from, arise out of or have
been incurred with respect to, the assessment of sales, transfer or other
similar Taxes in connection with the sale and/or transfer of the Purchased
Assets hereunder.
Section 12.6 Bulk Transfer Laws. The Buyer hereby waives compliance by
the Seller with the provisions of any applicable bulk transfer Laws of any
jurisdiction in connection with the sale of the Purchased Assets to the Buyer;
provided, however, that the Seller hereby agrees to indemnify the Buyer against
and hold the Buyer harmless from, at all times after the Closing Date, any and
all Liabilities (including reasonable legal fees) related to or arising out of
the failure to comply with such bulk sales laws.
XIII. CLOSING
Section 13.1 Time and Place. The closing of the Transactions (the
"Closing") shall take place at the offices of Duane, Morris & Heckscher, One
Liberty Place, Philadelphia, PA 19103 as promptly as practicable after the
satisfaction or waiver of the conditions set forth herein, or at such other date
and place as may be agreed upon by the parties (the "Closing Date").
Section 13.2 Items to be Delivered by the Seller. At the Closing, the
Seller shall deliver in accordance with this Purchase Agreement, among other
things, the following:
(a) A bill of sale for the transfer and conveyance to the
Buyer of the Purchased Assets together with a memorandum of sale, substantially
in the form of Schedules 13.2(a) and 13.2(b) attached hereto.
(b) A certificate, signed by an officer of the Seller, stating
that the representations and warranties made by the Seller in this Purchase
Agreement are true and correct in all material respects on and as of the Closing
Date with the same effect as though such representations and warranties had been
made on or given on and as of the Closing Date, that the Seller has in all
material respects performed and complied with all of its obligations under this
Purchase Agreement which are to be performed or complied with by it prior to or
on the Closing Date, and that to the knowledge of the Seller all conditions to
the obligations of the Buyer to be performed hereunder have been satisfied or
waived. The delivery of such certificate shall be and constitute a
representation and warranty of the Seller as of the Closing Date to each of the
facts stated therein.
(c) A certified copy of the duly adopted resolutions of the
Board of Directors of the Seller authorizing and recommending the Transactions.
(d) A copy of each approval, consent, assignment, contract,
novation, release, or waiver made or obtained by the Seller in connection with
the Transactions.
(e) Form UCC-1 financing statements signed by Seller covering
the Purchased Assets to be filed with the California Secretary of State and to
be recorded in the real estate records of Los Angeles County as a notice filing
only with respect to ownership of such assets by Buyer.
<PAGE>
(f) Such other documents, instruments, or certificates as the
Buyer may reasonably request.
Section 13.3 Items to be Delivered by the Buyer. At the Closing, the
Buyer shall deliver, among other things:
(a) A certificate, signed by an officer of the Buyer, stating
that the representations and warranties made by the Buyer in this Purchase
Agreement are true and correct in all material respects on and as of the Closing
Date with the same effect as though such representations and warranties had been
made on or given on and as of the Closing Date, that the Buyer has in all
material respects performed and complied with all of its obligations under this
Purchase Agreement which are to be performed or complied with by it prior to or
on the Closing Date, and that to the knowledge of the Buyer all conditions to
the obligations of the Seller to be performed hereunder have been satisfied or
waived. The delivery of such certificate shall be and constitute a
representation and warranty of the Buyer as of the Closing Date to each of the
facts stated therein.
(b) The Note and the Security Agreement.
(c) A certified copy of the duly adopted resolutions of the
Buyer's Board of Directors authorizing the Transactions.
(d) A memorandum of sale for the Purchased Assets
substantially in the form included in Schedule 13.2 attached hereto.
(e) Such other documents, instruments, and certificates as the
Sellers may reasonably request.
XIV. TERMINATION
Section 14.1 Termination. This Purchase Agreement may be terminated and
the purchase and sale of the Purchased Assets abandoned at any time prior to the
Closing Date:
(a) by mutual consent of the Seller and the Buyer; or
(b) by the Buyer if, by the Termination Date, or any later
date to which the Closing is extended pursuant to Section 13.1 hereof, any of
the conditions provided in Article IX of this Purchase Agreement have not been
met and have not been waived in writing by the Buyer, except as a result of the
willful acts or omission of the Buyer; or
(c) by the Seller if, by the Termination Date, or any later
date to which the Closing may be extended pursuant to Section 13.1 hereof, any
of the conditions provided in Article X of this Purchase Agreement have not been
met and have not been waived in writing by the Seller, except as a result of the
willful acts of omissions of the Seller.
Section 14.2 Survival after Termination. The obligations contained in
Sections 7.4, 8.1, 14.3, 17.2, 17.3, 17.9, 17.11 and 17.12 hereof shall survive
any termination of this Purchase Agreement.
Section 14.3 Deposit. Upon any termination of this Purchase Agreement,
the Seller shall return the Deposit to the Buyer.
<PAGE>
XV. POST-CLOSING COVENANTS
Section 15.1 Security. The Buyer and the Seller acknowledge that each
of them shall have an interest in the security of the Refinery following
Closing. The Buyer and the Seller agree that, for so long as both the Buyer and
the Seller remain present on the Refinery property, they shall jointly arrange
for security to protect the Purchased Assets and the Excluded Assets from
vandalism, sabotage or other damage following Closing, and the cost of such
security shall be shared equally by the Buyer and the Seller. The Buyer and the
Seller acknowledge that the foregoing provisions of this Section 15.1 are
intended solely as a cost-sharing arrangement and are not intended to, and shall
not, of themselves create any liability or risk of loss with respect to the
Excluded Assets on the part of the Buyer or with respect to the Purchased Assets
on the part of the Seller.
Section 15.2 Allocations. The Buyer and the Seller acknowledge that the
determination of the amount of certain expenses required by this Agreement to be
borne by either the Buyer or the Seller, including without limitation certain
utilities expenses, will require that an allocation of certain expenses be made
between the Buyer and the Seller, and the Buyer and the Seller agree to
cooperate in good faith to arrive at an equitable allocation of such expenses.
Section 15.3 Licenses. The Buyer and the Seller shall cooperate in
connection with obtaining the consent of the licensor to the transfer to the
Buyer of any licenses currently held by the Seller and necessary for the Buyer
to use the Purchased Assets, it being understood that (a) all fees and expenses
incurred in connection with any such transfer that represent accrued and unpaid
royalties or termination fees that are the obligation of the Seller under such
licenses shall be borne by the Seller and any other fees shall be borne by the
Buyer; (b) the Buyer and the Seller shall use their respective best efforts in
joint negotiations with the licensors to permit the Seller to assign such
licenses to the Buyer and to reduce the amount of the Seller's obligations as
set forth in Section 15.3(a) hereof; (c) the Seller shall not be obligated to
transfer or assign any such license to the Buyer unless and until the equipment
to which such license relates is dismantled and ready for shipment by the Buyer
and provided, further that if the Buyer, the Seller and the licensor have not
agreed upon the amount due from the Seller pursuant to Section 15.3(a) hereof,
the Seller may assign such licenses to the Buyer on a quitclaim basis, without
any representation or warranty as to the authority or power of the Seller to
assign such licenses or as to the rights granted to the Buyer pursuant to such
assignment; and (d) the Buyer's obligation to consummate the Transactions shall
not be conditioned upon the consent of any such licensor to the assignment of
such license by the Seller to the Buyer.
Section 15.4 Sale of Platinum Catalyst Inventory. The Buyer and the
Seller acknowledge that the Seller intends to use its best efforts to sell all
of the Platinum Catalyst Inventory as promptly as possible after Closing at the
highest obtainable price. The Seller shall give the Buyer notice of any such
sale, which notice shall specify the proceeds received by the Seller in
connection therewith and shall set forth the calculation of the Platinum Price
Adjustment, if any.
<PAGE>
XVI. AMENDMENT AND WAIVER
Section 16.1 Amendment. This Purchase Agreement may be amended or
modified in whole or in part at any time by an agreement in writing executed in
the same manner as this Purchase Agreement.
Section 16.2 Extension; Waiver. At any time prior to the Closing Date,
the Seller or the Buyer may: (a) extend the time for the performance of any of
the obligations or other acts of the other; (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
duly executed and delivered on behalf of such party. The failure of any party
hereto to enforce at any time any provision of this Purchase Agreement shall not
be construed to be a waiver of such provision, nor in any way to affect the
validity of this Purchase Agreement or any part hereof or the right of such
party hereafter to enforce each and every such provision. No waiver of any
breach of this Purchase Agreement shall be held to constitute a waiver of any
other or subsequent breach.
XVII. MISCELLANEOUS
Section 17.1 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, sent by Federal Express, Express Mail, or similar
overnight delivery or courier service, or delivered (in person or by telecopy,
telex, or similar communications equipment) against receipt to the party to whom
it is given, addressed as follows:
if to the Seller, to:
Powerine Oil Company
12354 Lakeland Road
Santa Fe Springs, CA 90670
Attention: A. L. Gualtieri, Chairman
Telecopy No: (310) 944-8522
with a copy to:
Duane, Morris & Heckscher
4200 One Liberty Place
Philadelphia, Pennsylvania 19103-7396
Attention: Thomas G. Spencer, Esq.
Telecopy No.: (215) 979-1020
if to Buyer:
Kenyen Projects Limited
15406 Paladora Drive
Houston, TX 77083
Attention: Vas P. Kenyen
Telecopy No.: (713) 879-1315
with a copy to:
Marshall B. Brown, P.C.
2600 South Gessner, Suite 300
Houston, TX 77063-3291
Attention: Marshall B. Brown, Esq.
Telecopy no: (713) 665-5566
or to such other address as the Person to whom notice is given may have
previously furnished to the other party in writing in accordance herewith.
<PAGE>
Section 17.2 Expenses. Each party shall bear its own expenses in
connection with this Purchase Agreement and the Transactions.
Section 17.3 Governing Law. This Purchase Agreement shall be governed
by and construed in accordance with the laws of the State of California, without
regard to its rules on conflicts of law.
Section 17.4 Successors and Assigns. This Purchase Agreement shall not
be assigned by either party without the written consent of the other party and
any attempted assignment without such written consent shall be null and void and
without legal effect, except that the Seller may assign any or all of its rights
hereunder to a purchaser or purchasers of some or all of the Excluded Assets,
including without limitation the real estate on which the Purchased Assets are
located, provided that, if continued ownership or control of any Excluded Assets
that may hereafter be sold by the Seller is necessary for the performance by the
Seller of any of its obligations hereunder, the purchaser of such Excluded
Assets shall have agreed in writing to assume any such obligations of the Seller
pursuant to a written agreement that, by its express terms, specifies that the
Buyer shall be a third party beneficiary thereof and shall be entitled to
enforce its rights hereunder directly against any such purchaser. This Purchase
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns and shall inure to the
benefit of the Persons entitled to indemnity under Article XII.
Section 17.5 Partial Invalidity. In case any one or more of the
provisions contained herein shall, for any reason, be held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision of this Purchase
Agreement, but this Purchase Agreement shall be construed as if such invalid,
illegal, or unenforceable provision or provisions had never been contained
herein unless the deletion of such provision or provisions would result in such
a material change as to cause completion of the Transactions to be unreasonable
or would materially and adversely frustrate the objectives of the parties as
expressed in this Purchase Agreement.
Section 17.6 Execution in Counterparts. This Purchase Agreement may be
executed in counterparts, both of which shall be considered one and the same
agreement, and shall become a binding agreement when one or more counterparts
have been signed by both of the parties and delivered to each of the parties.
Section 17.7 Titles and Headings. Titles and headings to Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Purchase Agreement.
Section 17.8 Entire Agreement. This Purchase Agreement, together with
all schedules and exhibits hereto and any documents delivered pursuant to this
Purchase Agreement, contains the entire understanding of the parties hereto with
regard to the subject matter contained herein.
Section 17.9 Announcements. Announcements to the public, employees,
customers, or suppliers concerning the Transactions by the Seller or the Buyer
shall be subject to the approval of the other parties in all essential respects,
except that the approval by the other parties shall not be required as to any
statements and other information which a party may submit to any Governmental
Entity or pursuant to any Law.
<PAGE>
Section 17.10 Construction. The parties acknowledge that both parties
and their counsel have participated fully in the negotiation and preparation of
this Purchase Agreement and agree that, in any construction or interpretation of
this Purchase Agreement, no provision shall be construed against the interest of
either party on the basis that such party drafted such provision.
Section 17.11 Arbitration.
(a) Any controversy, dispute or claim arising out of or
relating to this Agreement, or the breach hereof (whether arising in contract,
tort, statute or any other legal or equitable theory), that solely involves the
Seller and the Buyer (a "Dispute"), including, but not limited to, any dispute
as to whether any matter submitted by a party is arbitrable within the scope of
this Section 17.11, shall be settled by final and binding arbitration in
accordance with the then existing Rules of Practice and Procedure of the
American Arbitration Association ("AAA"), except as expressly modified in this
Agreement. The only exceptions to the preceding provisions of this Section 17.11
are that either party shall have the absolute right, at any time prior to the
entry of the award by the arbitrators, to seek any provisional remedy including
but not limited to temporary injunctive relief (without waiver of any other
rights or remedies under this Agreement) against the other party from any court
of competent jurisdiction on such grounds as would exist for the granting of
such provisional remedy in the absence of this Agreement and that the provisions
of this Section 17.11 shall not prevent any applicable cross-claims from being
asserted in any other action initiated by a third party.
(b) The arbitration shall be conducted by three arbitrators.
The Seller or the Buyer may submit a Dispute covered by this Section 17.11 to
arbitration by filing a demand for arbitration and providing written notice to
the other party. The parties shall mutually select the arbitrators within five
business days after the filing of the demand for arbitration, so long as the
persons meet the qualifications set forth below. If the parties do not, for any
reason whatsoever, mutually select the arbitrators within five business days
after the filing of the demand for arbitration, either party may submit a
written request to AAA for a list of seven persons qualified to serve as the
arbitrators. A person shall be deemed qualified to serve as an arbitrator if
such person is (a) impartial; (b) a lawyer or retired judge; and (c) willing and
able to conduct the arbitration in accordance with the provisions of this
Section 17.11. Within two business days after the last party actually receives
the list from AAA, the parties (or their authorized representatives) shall meet
and take turns striking names from the list, with the party striking first
chosen by a coin toss, until three names remain. The persons whose names remain
on the list shall serve as the arbitrators. If the parties do not, for any
reason, meet to strike names from the list within the foregoing period, the
arbitrators shall be selected by AAA within two business days after the
expiration of the foregoing period, and the selection of the arbitrators by AAA
shall be final and binding and shall not be subject to challenge for any reason
whatsoever.
(c) The arbitration shall be conducted in Los Angeles,
California. The arbitrators shall issue an award in writing, which shall set
forth in general the reasons therefor, not later than ten business days
following the conclusion of the arbitration. The award shall be final and
binding, and judgment thereon may be entered by any court of competent
jurisdiction. Each party shall bear such party's own attorney's fees and
expenses in connection with the arbitration and shall bear one-half of the
arbitrators' fees and expenses and the cost of a transcript of the arbitration
proceedings.
<PAGE>
Section 17.12 Jurisdiction. Any action, suit or proceeding concerning
this Purchase Agreement, including without limitation any such action, suit or
proceeding to obtain an enforceable court order with respect to an arbitration
award pursuant to Section 17.11 hereof, may be brought only in any United States
District Court in the State of California or the appropriate State court in the
State of California and the parties hereto consent to the personal jurisdiction
of such courts. In any action, suit, or proceeding to enforce an arbitration
award pursuant to Section 17.11 or any order entered with respect thereto, each
party covenants and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such action, suit, or proceeding, any claim that it is not
subject personally to the jurisdiction of such court, that its property is
exempt or immune from attachment or execution, that the action, suit, or
proceeding is brought in an inconvenient forum, that the venue of the action,
suit, or proceeding is improper, or that such arbitration award or order may not
be enforced in or by such court. In any such action, suit, or proceeding, each
party waives personal service of any summons, complaint, or other process and
agrees that service thereof may be made in accordance with Section 17.1. Within
30 days after such service, or such other time as may be mutually agreed upon in
writing by the attorneys for the parties to such action or proceeding, the party
so served shall appear or answer such summons, complaint, or other process.
Should the party so served fail to appear or answer within such 30-day period or
such extended period, as the case may be, such party shall be deemed in default
and judgment may be entered by the other party against such party.
Section 17.13 Further Actions. At any time and from time to time, each
party hereto agrees, without further consideration, to take such actions and to
execute and deliver such documents as may be reasonably necessary to effectuate
the purposes of this Purchase Agreement and to more effectively carry out the
terms and the transfer of assets contemplated by this Purchase Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement to be duly executed as of the date and year first above written.
KENYEN PROJECTS LIMITED
By: /s/ Vas P. Kenyen
---------------------------
Title: Attorney in Fact
---------------------------
POWERINE OIL COMPANY
By: /s/ A. L. Gualtieri
---------------------------
Title: President
---------------------------
CASTLE ENERGY CORPORATION
One Radnor Corporate Center
Radnor, PA 19087
September 29, 1995
William S. Sudhaus
CORE Refining Corporation
606 Pugh Road
Strafford, PA 19087
Re: Stock and Asset Purchase Agreement
-----------------------------------
Dear Bill:
This will confirm our agreement, pursuant to Section 13.1(a) of the
Stock and Asset Purchase Agreement, dated as of May 25, 1995, as amended (the
"Purchase Agreement"), among Castle Energy Corporation, a Delaware corporation,
certain of Castle's subsidiaries, and CORE Refining Corporation, a Delaware
corporation, that the Purchase Agreement is hereby terminated, effective
immediately. This letter shall not affect any provisions of the Purchase
Agreement which by the terms of the Purchase Agreement survive termination.
Sincerely,
CASTLE ENERGY CORPORATION
By: /s/ JOSEPH L. CASTLE II
-------------------------------
Joseph L. Castle II
AGREED:
September 29, 1995
CORE REFINING CORPORATION
By: /s/ WILLIAM S. SUDHAUS
------------------------
William S. Sudhaus
