SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
November 9, 1999
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Date of Report (Date of earliest event reported)
AMERICAN RESOURCES OFFSHORE, INC.
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(Exact name of Registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-21472 86-0713506
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(Commission File Number) (IRS Employer
Identification No.)
3141 Beaumont Centre Circle
Suite 203
Lexington, Kentucky 40513
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(Address of principal executive offices) (Zip Code)
(606)514-7425
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(Registrant's Telephone Number, including Area Code)
Not Applicable
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(Former name or former address, if changed since last report)
Item 1. Changes in Control of Registrant. Not Applicable.
Item 2. Acquisition or Disposition of Assets.
The Investment Agreement between the Registrant and Blue
Dolphin Exploration Company (discussed in the Registrant's 8-K
filed on August 6, 1999) provides that the Registrant must divest
itself of its Appalachian oil and gas properties and either
dissolve or sell its subsidiary. To comply with these
requirements, the Registrant entered into and has closed the
following agreements:
1. On November 9, 1999, the Registrant's wholly owned
subsidiary, Southern Gas Co. of Delaware, Inc.
("Southern") completed the sale of its oil and gas
properties and operations in the Appalachian region to
Nami Resources Company, LLC ("Nami"). A copy of the
Purchase and Sale Agreement is attached hereto as
Exhibit 10.100.
The total purchase price for Southern's oil and gas
properties and operations was the assumption by Nami of
$12.5 million of debt owed by Southern to Den norske
Bank ("the Bank"). The Registrant had guaranteed this
indebtedness, which was cancelled at the closing with
Nami.
2. On October 29, 1999, the Registrant entered into a
Stock Purchase Agreement with Southern Gas Holding, LLC
("Holding") for the divestiture of all the outstanding
stock of Southern owned by the Registrant (attached
hereto as Exhibit 10.101) for One Hundred Dollars
($100) and a full indemnity to the Registrant. Holding
is owned by Leonard Nave (a director of the Registrant)
and a family trust in which Mr. Nave is the trustee.
This transaction is more fully discussed in the
Registrant's proxy statement which was filed with the
Securities and Exchange Commission on November 4, 1999.
Item 3. Bankruptcy Receivership. Not Applicable.
Item 4. Change in Registrant's Certified Accountant. Not
Applicable.
Item 5. Other Events.
Den norske Bank Note:
On March 5, 1998, the Registrant and its wholly owned
subsidiary, Southern, jointly entered into a series of promissory
notes in the original principal amounts of $75 million, $15
million and $1.5 million (collectively the "Original Notes").
Effective August 1, 1999, the Original Notes were amended as
follows:
1. The Registrant executed an amended note in the
amount of $51,223,000 (the "Registrant's Note"),
which was guaranteed by Southern.
2. Southern executed an amended note in the amount of
$12.5 million ("Southern's Note"), which was
guaranteed by the Registrant.
As a result of the closing of the divestiture of Southern's
properties to Nami (discussed supra) the Registrant was released
from its obligations on Southern's Note and Southern was released
from its obligations on the Registrant's Note.
The Bank has declared, and the Registrant remains, in
default under the Registrant's Note.
Item 6. Resignation of Registrant's Directors. Not Applicable.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements. Not applicable.
(b) Pro Forma Financial Information. Not applicable.
(c) Exhibits.
Exhibit 10.100 Purchase and Sale
Agreement between Southern Gas
Co. of Delaware, Inc. and Nami
Resources, LLC.
Exhibit 10.101 Stock Purchase Agreement
between American Resources
Offshore, Inc. and Southern
Gas Holding, LLC.
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 hereunto duly authorized.
AMERICAN RESOURCES OFFSHORE, INC.
By: /s/Ralph A. Currie
------------------------------
Ralph A. Currie
Its: Chief Financial Officer
Dated: November 12, 1999
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and
entered into this day of August 1999, by and among SOUTHERN
GAS CO. OF DELAWARE, INC., a Delaware corporation ("Seller"), and
NAMI RESOURCES COMPANY L.L.C., a Kentucky limited liability
company ("Buyer").
WITNESSETH:
WHEREAS, Seller desires to sell, and Buyer desires to
purchase, certain assets employed by Seller in the operation of
Seller's oil and gas properties, in accordance with and subject
to the terms and provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants, representations and warranties herein
contained, and intending to be legally bound, Seller and Buyer
agree as follows:
1. Purchase and Sale of Assets
---------------------------
On and subject to the terms and conditions of this
Agreement, Buyer agrees to purchase from Seller and Seller agrees
to sell, transfer, convey, and deliver to Buyer, all right, title
and interest in the following assets of Seller (the "Assets"),
subject to the liabilities specified in Section 2 of this
Agreement:
A. To the extent transferable, the governmental
authorizations, permits and licenses listed on SCHEDULE 1.A to
this Agreement, together with any renewals, extensions, or
modifications thereof and applications therefor;
B. The Properties (as defined in SCHEDULE 1.B)
located in Bell, Clay, Knox, Laurel, Leslie, McCreary, Meade and
Whitley Counties in Kentucky, Antrim County in Michigan and
Campbell and Claiborne Counties in Tennessee, together with all
buildings, structures, improvements, fixtures, and fittings
thereon, and easements and rights-of-way and other appurtenances
thereto described on SCHEDULE 1.B to this Agreement;
C. The tangible personal property, including
equipment and supplies described on SCHEDULE 1.C to this
Agreement, subject to disposals and consumption thereof in the
ordinary course of business between the date of this Agreement
and the Closing Date or replacements thereof and alterations
thereto in the ordinary course of business between the date of
this Agreement and the Closing Date;
D. All of the written contracts, agreements,
commitments, instruments, and other similar arrangements and
rights thereunder relating to the Properties, to which Seller is
a party or by which it is bound, as listed in SCHEDULE 1.D[1] to
this Agreement (collectively, the "Contracts");
E. All inventory produced from the Properties after
July 1, 1999 (the "Effective Date"), including, without
limitation, oil, gas, casinghead gas and other consumable items;
F. All manufacturers', vendors' and suppliers'
warranties, to the extent assignable, in respect of any item of
property falling within the scope of the Assets;
G. To the extent transferable, all prepaid expenses
including prepaid casualty, property and liability insurance
premiums of Seller relating to the Assets, and all surety bonds,
surety deposits, lease deposits, letters of credit and other
instruments posted by or on behalf of Seller and relating to the
Assets as security for the performance of any contract or
agreement to be transferred to Buyer pursuant to this Agreement;
H. [INTENTIONALLY OMITTED]
I. All books, software, to the extent transferrable,
ledgers, files, documents, correspondence, written contracts,
agreements, commitments, understandings, financial information,
lists, plats, advertising and promotional materials, studies,
reports, and records of Seller relating to the Assets;
J. Subject to the terms of Section 15 hereof, all
accounts receivable, including, without limitation, all royalties
and revenue accruing prior to the Closing Date, but after the
Effective Date, all of which accounts are listed on SCHEDULE 1.J;
K. Any and all claims made by Seller against third
parties with respect to transactions relating to the Assets prior
to the Closing Date and any and all payments or other sums or
amounts payable or which may become payable with respect thereto;
L. [INTENTIONALLY OMITTED]
M. All other assets used in the operation of the
Properties, whether tangible or intangible, not herein above
expressly mentioned which, as of the Closing Date, are owned by
Seller or in which Seller has a right, title or interest, and are
located in Bell, Clay, Knox, Laurel, Leslie, McCreary, Meade and
Whitley Counties, in Kentucky, Antrim County in Michigan and
Campbell and Claiborne Counties in Tennessee.
2. Assumption of Liabilities
-------------------------
On and subject to the terms and conditions of this
Agreement, Buyer agrees to assume and become responsible for all
of the liabilities as listed on SCHEDULE 2 after the Closing
Date. Buyer shall not pay, perform, assume, or discharge any
liability or obligation of Seller not specifically listed on
SCHEDULE 2.
3. Purchase Price
--------------
The aggregate purchase price for the Assets shall
consist of $12,500,000.00 (the "Purchase Price"), plus or minus
any adjustments required by the prorations made under Section 15
of this Agreement. The Purchase Price shall be allocated among
the Assets in the manner set forth in SCHEDULE 3 to this
Agreement. The parties agree to allocate the Purchase Price (and
all other costs capable of being capitalized) among the Assets
for all purposes (including financial, accounting and tax
purposes) in accordance with SCHEDULE 3. The Purchase Price
shall be paid by Buyer's assumption of a mortgage and other
security instruments covering the Properties held by Den norske
Bank, A.S.A. (the "Bank") securing certain debt financing held by
the Bank with an unpaid principal balance of $12,500,000.00. Any
adjustments required by the prorations made under Section 15 of
this Agreement shall be paid at the times provided in Section 15.
In addition to the Purchase Price, Buyer shall pay, perform,
assume, and discharge the liabilities of Seller provided in
Section 2 of this Agreement.
4. Closing; Best Efforts
---------------------
The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at Lexington,
Kentucky, at the offices of Wyatt, Tarrant & Combs on or before
August 20, 1999, or at such other time, date, or place upon which
Buyer and Seller shall agree in writing (the "Closing Date").
Seller and Buyer covenant and agree that each of them shall use
their best efforts to consummate the transactions contemplated by
this Agreement on the Closing Date.
5. Representations and Warranties of Seller
----------------------------------------
Seller hereby represents and warrants to Buyer as follows:
A. CORPORATE STANDING. Seller is a corporation duly
organized, validly existing, and in good standing under the laws
of the jurisdiction of its incorporation. Seller has all
requisite power and authority to own, lease and operate its
Properties and to carry on its business as now being conducted
and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership
or leasing of its Properties makes such qualification necessary.
B. POWER AND AUTHORITY OF SELLER; AUTHORIZATION.
Seller has all requisite power and authority, corporate or
otherwise to enter into and, subject to the approval of its
shareholders, to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of
Seller, subject to the approval of this Agreement by the
shareholders of Seller. This Agreement has been duly executed
and delivered by Seller, and constitutes the legal, valid and
binding obligation of Seller enforceable against it in accordance
with its terms.
C. NO CONFLICT. The execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated hereby will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or the loss of a
material benefit under, or the creation of a lien, pledge,
security interest, charge or other encumbrance on assets (any
such conflict, violation, default, right of termination,
cancellation or acceleration, loss or creation, a "Violation")
pursuant to, any provision of the Articles of Incorporation or
Bylaws of Seller, or result in any Violation of any loan or
credit agreement, note, mortgage, indenture, lease, or other
agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Seller or the Properties or Assets,
except as set forth in SCHEDULE 5. C.
D. CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with,
any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign,
is required by or with respect to Seller in connection with the
execution and delivery of this Agreement, or the consummation by
Seller of the transactions contemplated hereby, except as set
forth in SCHEDULE 5.D.
E. SUBSIDIARIES. Seller does not have any ownership
interest in any other corporation, partnership, limited liability
company, joint venture or other entity.
F. [INTENTIONALLY OMITTED]
G. PROPERTY.
[a] To Seller's knowledge, SCHEDULE 5.G[1] sets
forth a complete and accurate list and description of all of
the producing Wells and the leasehold, subleasehold and
other interests related thereto, that Seller owns that are
part of the Properties. Except as set forth on SCHEDULE
5.G[1] Seller is not bound or committed to make any capital
improvement or expenditure with respect to such Properties.
[b] The sale and transfer of the Assets shall,
at the time of Closing , be free and clear of all
obligations, security interests, liens, and encumbrances,
except for Permitted Liens (as hereinafter defined), or as
described in SCHEDULE 5. G.[2], or unless expressly assumed
in writing by Buyer. "Permitted Liens" shall mean (i) liens
for taxes not yet due and payable; (ii) statutory liens of
landlords and liens of carriers, warehousemen, mechanics,
materialmen and repairmen incurred in the ordinary course of
business for sums not yet delinquent; and (iii) zoning,
building or other restrictions, variances, covenants, rights-
of-way, encumbrances, easements and other minor
irregularities in title, none of which, individually or in
the aggregate, (A) interfere with the present use or
occupancy of the Properties by Seller, (B) have more than an
immaterial effect on the value thereof or their present use,
or (C) would impair the ability of Seller to sell such
Properties for their present use.
[c] Except for Permitted Liens, to Seller's
knowledge, no mineral interests or real property owned or
leased by Seller is subject in any material respect to (i)
any governmental decree or order (or threatened or proposed
order known to Seller or Selling Shareholder) to be sold or
taken by public authority or (ii) any rights of way, use
restrictions, exceptions, variances, reservations or
limitations of any nature whatsoever, not of record.
[d] [INTENTIONALLY OMITTED]
[e] To the Seller's knowledge the rights,
privileges, easements, consents, permits, licenses,
agreements, properties and other assets presently owned,
leased or licensed by Seller and described in SCHEDULES 1.A,
1.B, 1.C, and 1.D[1] include all rights, properties and
other assets necessary to permit Seller to operate the
Properties in the same manner as the Properties have been
operated since January 1, 1999.
[f] [INTENTIONALLY OMITTED]
H. LEASES. To Seller's knowledge, SCHEDULE 5.H[1]
contains a complete and accurate list of all oil and gas and
other mineral leases and lease-purchase arrangements pursuant to
which Seller leases the Properties and real or personal property
from others. To Seller's knowledge, all such "producing" leases
are valid, binding and enforceable in accordance with their terms
and are in full force and effect; there are no known existing
defaults with respect thereto by any party thereto; Buyer, its
successors and assigns, shall (provided that they comply with the
terms and provisions of the leases with the lessors) have the
right under said leases to extract, produce, store, market and
sell the oil, gas, casinghead gas covered by such leases; and no
event has occurred which (whether with or without notice, lapse
of time or the happening or occurrence of any other event) would
constitute a default thereunder by Seller or, to Seller's
knowledge, by any other party thereto except as set forth in
SCHEDULE 5.H[2].
I. [INTENTIONALLY OMITTED]
J. [INTENTIONALLY OMITTED]
K. LIENS. SCHEDULE 5.K sets forth a complete and
accurate list and description of all liens and security interests
relating to or affecting the Assets.
L. LEGAL PROCEEDINGS. Except as set forth in
SCHEDULE 5.L, there are no claims of any kind or any actions,
suits, proceedings, arbitrations or investigations pending or, to
the knowledge of Seller threatened against or affecting any of
the Assets. No actions, suits, proceedings, activities or
investigations, individually or in the aggregate, would have a
material adverse effect on the condition or operation of the
Properties or the Assets, nor is there any judgment, decree,
injunction, rule or order of any governmental entity or
arbitrator outstanding against Seller having or which, insofar
as reasonably can be foreseen, in the future could have any such
effect. Further, there are no judgments, orders, injunctions,
decrees, stipulations or awards (whether rendered by a court,
administrative agency, or by arbitration, pursuant to a grievance
or other procedure) against or relating to the Assets.
M. ENVIRONMENTAL MATTERS. To Seller's knowledge,
Seller is in compliance with all applicable federal, state and
local laws, rules, regulations, ordinances and requirements
relating to human health, safety and the environment
("Environmental Laws") which relate to or affect the Assets.
N. LICENSES AND PERMITS; COMPLIANCE WITH LAWS. To
Seller's knowledge, Seller holds all permits, licenses,
variances, exemptions, orders and approvals of all governmental
entities for the operation of the Properties and is in compliance
with the terms thereof. A correct and complete list of such
licenses, permits and authorizations is set forth on SCHEDULE
1.A, and except as set forth all of such licenses, permits and
authorizations are transferrable to Buyer. Seller has complied
with and is not in any default under (and have not been charged
with or received notice with respect to, nor are threatened with
or under investigation with respect to, any charge concerning any
violation of any provision of) any federal, state or local law,
regulation, ordinance, rule or order (whether executive,
judicial, legislative or administrative) or any order, writ,
injunction or decree of any court, agency or instrumentality and
no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced
against any of them alleging any failures to comply.
O. EMPLOYEE BENEFIT PLANS.
Seller has no pension, profit sharing, annuity,
savings or similar related retirement plan for any of its
employees.
P. [INTENTIONALLY OMITTED].
Q. LABOR RELATIONS. Except to the extent set forth
in SCHEDULE 5.Q:
[a] To Seller's knowledge, Seller is in
compliance in all respects with all applicable laws
respecting employment and employment practices, including,
without limitation, laws relating to terms and conditions of
employment, wages and hours, and occupational safety and
health;
[b] There is no unfair labor practice charge or
complaint or any other matter against or involving Seller
pending or, to the knowledge of Seller threatened before
the National Labor Relations Board or any court of law;
[c] There is no labor strike, dispute, slowdown
or stoppage actually pending or, to the knowledge of Seller,
threatened against Seller;
[d] Seller is not a party to or bound by any
collective bargaining agreement or any similar labor union
arrangement;
[e] There are no charges, investigations,
administrative proceedings or formal complaints of
discrimination (including discrimination based upon sex,
age, marital status, race, color, religion, national origin,
sexual preference, disability, handicap or veteran status)
pending or, to the knowledge of Seller, threatened, before
the Equal Employment Opportunity Commission or any federal,
state or local agency or court against Seller or any
Subsidiary. There have been no governmental audits of the
equal employment opportunity practices of Seller and, to the
knowledge of Seller, no basis for any such claim exists; and
[f] Seller has received no notice that Seller is
in violation of the requirements of the Americans With
Disabilities Act.
[g] Seller's employees are not currently
represented by any labor organization for purposes of
collective bargaining, and Seller has no obligation to
bargain with any such labor organization over wages, hours,
working conditions, and other terms and conditions of
employment.
R. OSHA. Seller has not received any notice of any
violations under the Occupational Safety and Health Act of
1970, and has no knowledge of any violations thereunder.
S. [INTENTIONALLY OMITTED].
T. GOOD STANDING OF CONTRACTS. No event or condition
has occurred or exists, or, to the knowledge of Seller, is
alleged by any of the other parties thereto to have occurred or
existed, which constitutes, or with lapse of time or giving of
notice or both might constitute, a default or breach under any of
the Contracts to which Seller is a party.
U. [INTENTIONALLY OMITTED]
V. [INTENTIONALLY OMITTED]
W. [INTENTIONALLY OMITTED]
X. INSURANCE. SCHEDULE 5.X sets forth all insurance
policies, including property, casualty, liability and other
insurance maintained with respect to the Assets or Properties.
All premiums have been currently paid on such policies, and
Seller represents that all policies will be maintained and, if
necessary, renewed through the date of Closing. Seller shall,
to the extent of assignable, assign its rights of insurance
coverage to Buyer at the Closing.
Y. TAX MATTERS. Seller has paid all taxes,
assessments, fees and other governmental charges including,
without limitation, severance and property taxes levied upon the
Assets, other than those not yet due and payable.
Z. [INTENTIONALLY OMITTED]
AA. ACCOUNTS RECEIVABLE. To Seller's knowledge, all
accounts receivable of Seller which are reflected on SCHEDULE 1.J
(i) represent monies due for inventory sold and delivered or
services rendered in the ordinary course of business, and (ii)
are not subject to any refunds or adjustments or any defenses,
rights of set-off, assignment, restrictions, security interests
or other encumbrances. Except as shown on SCHEDULE 5.AA, all
such accounts receivable are current, and Seller is not aware of
any dispute regarding the collectability of any such accounts
receivable.
AB. BROKERS AND FINDERS' FEES. Neither Seller, nor
any of its officers, directors or employees, has employed any
broker, finder or financial advisor or incurred any liability for
fees or commissions payable to any broker, finder or financial
advisor in connection with the negotiations relating to or the
transactions contemplated by this Agreement.
AC. FOREIGN PERSON. Seller is not a "Foreign Person"
within the meaning of Sections 1445 and 7701 of the Internal
Revenue Code (the "Code"), because Seller is not a non-resident
alien, foreign corporation, foreign partnership, foreign trust or
foreign estate, as those terms are defined in the Code and any
regulations promulgated thereunder.
AD. FULL DISCLOSURE. To Seller's knowledge, no
representation or warranty of Seller contained in this Agreement
and no statement contained in this Agreement or in any
certificate or other instrument furnished or to be furnished to
Buyer hereunder contains or will contain any untrue statement of
a material fact or omits or will omit to state any material fact
necessary to make the statements contained herein or therein not
misleading.
6. Representations and Warranties of Buyer.
---------------------------------------
Buyer hereby represents and warrants to Seller as follows:
A. ORGANIZATION. Buyer is a limited liability
company duly organized, validly existing and in good standing
under the laws of the Commonwealth of Kentucky and has all
requisite power and authority, corporate or otherwise, to carry
on and conduct its business as it is now being conducted and to
own or lease its properties and assets.
B. AUTHORIZATION. This Agreement and its execution,
delivery and performance has been duly authorized by all
necessary company action on the part of Buyer and is within its
company powers. This Agreement has been duly executed and
delivered by Buyer, and constitutes the legal, valid and binding
agreement of Buyer enforceable in accordance with its terms.
C. NO CONFLICT. Neither the execution and delivery
of this Agreement nor the performance of the transactions
contemplated herein by Buyer will violate or conflict with any of
the provisions of any organizational instrument or document of
Buyer or violate or conflict with or constitute a default under
any mortgage, indenture, contract, agreement, license, permit,
instrument or trust or any order or ruling of any governmental
authority to which Buyer is a party or by which Buyer is bound,
or violate any provision of law, statute, rule or regulation to
which Buyer is subject.
D. BROKERS' AND FINDERS' FEES. Neither Buyer nor any
of its officers, directors or employees has employed any broker,
finder or financial advisor or incurred any liability for fees or
commissions payable to any broker, finder or financial advisor in
connection with the negotiations relating to or the transactions
contemplated by this Agreement.
E. SECURITIES LAWS. Buyer is an experienced and
knowledgeable investor in the oil and gas business. Buyer is not
acquiring the Assets with a view to, or for offer of resale in
connection with, a non-exempt distribution thereof within the
meaning of the Securities Act of 1933, or a distribution thereof
in violation of any applicable Securities Laws.
F. FULL DISCLOSURE. No representation or warranty of
Buyer contained in this Agreement and no statement contained in
this Agreement or in any certificate or other instrument
furnished or to be furnished to Seller hereunder contains or will
contain any untrue statement of a material fact or omits or will
omit to state any material fact necessary to make the statements
contained herein or therein not misleading.
7. Circumstances Prior to Closing
------------------------------
A. OBLIGATIONS OF SELLER PRIOR TO CLOSING
From the date of this Agreement until the Closing Date,
Seller shall, subject to the terms of Section 18:
[1] Operate the Properties only in the usual,
regular and ordinary course, and preserve intact for Buyer
the present relationship between the Seller and the
suppliers, clients, customers, lessors, third-parties and
others having business relations with Seller related to or
affecting the Assets;
[2] Take all action and to do all things
necessary, proper, or advisable in order to consummate and
make effective the transactions contemplated by this
Agreement;
[3] Afford Buyer, its accountants, counsel,
technical advisors, and other representatives free and
reasonable access during normal business hours to the
offices, equipment, personnel, facilities, records, files,
contracts, agreements, and books of account of Seller
relating to the Assets and the Properties and furnish Buyer
with all information concerning the Assets and the
Properties as Buyer shall reasonably request;
[4] Continue in force each of the policies of
insurance which insure the Assets and the Properties with
such amounts of coverage as are reasonably available, and
continue in force all bonds, surety contracts, or guaranties
relating to the Assets and the Properties set forth in any
Schedule to this Agreement;
[5] Not enter into any employment agreement
relating to the Assets with any person unless Seller has the
right to terminate such employment agreement without
liability;
[6] Not knowingly take any action or omit to take
any action which will result in the material violation by
Seller of any law applicable to this transaction or cause a
material breach by Seller of any of the representations and
warranties of Seller set forth in this Agreement or any
lease, agreement, contract, or commitment to which Seller is
a party;
[7] Use its best efforts to obtain prior to
Closing all consents by third parties required to be
obtained by Seller with respect to its performance of this
Agreement and cooperate with Buyer in connection with
Buyer's requests and applications for the governmental
authorizations, approvals and consents which are necessary
for the ownership and operation of the Properties and Assets
following the Closing Date;
[8] Give Buyer prompt written notification of any
material changes taking place after the delivery of any
Schedules and other documents which would have been
reflected in such documents had such changes occurred prior
to the time such documents were first delivered;
[9] Give Buyer prompt written notification upon
receipt of knowledge of any fact which would make any
representation or warranty contained in this Agreement
untrue in any material respect;
[10] Not (i) solicit, initiate, or encourage the
submission of any proposal or offer from any person relating
to the acquisition of the Assets, or (ii) participate in any
discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any
person to do or seek any of the foregoing. Seller will
notify Buyer immediately if any person makes any proposal,
offer, inquiry, or contact with respect to any of the
foregoing;
[11] Maintain its books of account and records in
the usual, regular and ordinary manner on a consistent
basis; and
[12] Give to Buyer and its agents and
representatives full access to all properties including and
relating to the Properties including the Wells. Buyer shall
fully compensate Seller for any damage or injury to the
Assets caused by Buyer and Buyer's agents during such
inspections and shall further indemnify and save Seller
harmless from any claims, demands, or causes of action
arising from such inspections.
B. OBLIGATIONS OF BUYER PRIOR TO CLOSING
From the date of this Agreement until the Closing Date,
Buyer shall:
[1] Use its best efforts to take all action and
to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by
this Agreement;
[2] Not knowingly take any action or omit to take
any action which will result in the material violation by Buyer
of any law applicable to this transaction or cause a material
breach by Buyer of any of the representations and warranties of
Buyer set forth in this Agreement; and
[3] Use its best efforts to obtain prior to
Closing all consents by third parties and all governmental
authorizations which are necessary for Buyer's performance of
this Agreement or for Buyer's ownership and operation of the
Properties and the Assets following the Closing Date.
8. CONDITIONS TO BUYER'S OBLIGATION
The obligation of Buyer to consummate on the Closing
Date the transactions contemplated by this Agreement will be
subject to the satisfaction of each of the following conditions
on or prior to the Closing Date, unless expressly waived, in
writing, by Buyer:
A. OPINION OF COUNSEL FOR SELLER
Buyer shall have received the written opinion of
counsel for Seller, dated the Closing Date, relating to and
addressing the matters described in Sections 5A, 5B, 5C and 5D
and, to the best of counsel's knowledge, 5AD.
B. REPRESENTATIONS AND WARRANTIES
The representations and warranties of Seller contained
in Section 5 of this Agreement shall be true and correct in all
material respects on and as of the Closing Date as if made on and
as of the Closing Date, except for changes contemplated by this
Agreement.
C. PERFORMANCE OF THIS AGREEMENT
Seller shall have performed and observed in all
respects its covenants and obligations as set forth in this
Agreement prior to or on the Closing Date.
D. CONSENTS
Seller shall have procured all of the third party
consents necessary for Buyer to operate the Properties and own
the Assets as they were operated and owned by Seller.
E. LITIGATION
No action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (i) prevent
consummation of any of the transactions contemplated by this
Agreement, (ii) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation, or (iii)
affect adversely the right of Buyer to own the Assets, and to
operate the Properties. No such injunction, judgment, order,
decree, ruling, or charge shall be in effect.
F. CONDITION OF ASSETS
A material portion of the Assets shall not have been
damaged or destroyed by fire, flood, or other casualty which is
not covered by Seller's insurance.
G. MATERIAL CLAIMS
No material claim shall have arisen, of which Seller is
aware, that is not adequately covered by insurance policies
maintained by Seller.
H. MATERIAL CHANGES
There shall not have been any material and adverse
change in the Properties or Assets of Seller, considered as a
whole from the date of the Agreement to the Closing Date.
I. FINANCING
Buyer shall have obtained the financing it needs to
consummate the transactions contemplated by this Agreement upon
terms and conditions satisfactory to it.
J. DOCUMENTS REGARDING REAL PROPERTY
Buyer shall have received (at its sole cost and
expense) with respect to the real property and improvements
conveyed to Buyer by Seller hereunder: a Phase 1 site assessment
from a reputable environmental engineering or consulting firm the
results of which are satisfactory to Buyer in its sole
discretion.
K. PERMITS AND APPROVALS
Any and all consents, permits, licenses, approvals, and
other actions of any person, jurisdiction, or authority required
in the reasonable opinion of Buyer and its counsel for lawful
consummation of the transaction contemplated herein and the
operation of the Business shall have been obtained, shall be in
full force and effect and shall be transferred to Buyer.
L. LEGAL MATTERS
All instruments and documents required to carry out
this Agreement and to consummate the transaction contemplated
hereby and all related corporate proceedings shall be reasonably
satisfactory to counsel for Buyer.
9. Conditions to Seller's Obligation
---------------------------------
The obligation of Seller to consummate, on the Closing
Date, the transactions contemplated by this Agreement will be
subject to the satisfaction of each of the following conditions
on or prior to the Closing Date, unless expressly waived, in
writing, by Seller:
M. OPINION OF COUNSEL FOR BUYER
Seller shall have received the written opinion of
counsel for Buyer, dated the Closing Date, relating to and
addressing the matters described in Sections 6A, 6B, 6C, and, to
the best knowledge of such counsel, 6F.
N. REPRESENTATIONS AND WARRANTIES
The representations and warranties of Buyer contained
in Section 6 of this Agreement shall be true and correct in all
material respects on and as of the Closing Date as if made on and
as of the Closing Date, except as contemplated by this Agreement.
O. PERFORMANCE OF THIS AGREEMENT
Buyer shall have performed and observed in all material
respects its covenants and obligations under this Agreement prior
to or on the Closing Date.
P. LITIGATION
There shall be no injunction, decree, or order issued
by any court, governmental agency, or authority, or any
litigation instituted by any governmental agency or authority,
challenging or seeking to prohibit or enjoin any of the
transactions contemplated by this Agreement.
Q. GOVERNMENTAL QUALIFICATION
Buyer shall be qualified with the Commonwealth of
Kentucky Department of Mines and Minerals to own interests in the
Assets.
F. RELEASES
Releases, in recordable form, duly authorized and
executed by and enforceable against the holders of, or any other
parties secured by, any loan agreements, mortgages, security
agreements, trust and indentures, assignment of leases, leases or
other liens or encumbrances releasing the Assets from the liens
or encumbrances of such instruments, except the Permitted Liens
shall have been executed and delivered to Buyer and Seller.
G. APPROVALS
The transactions contemplated by the Agreement shall
have been approved by Seller's Shareholders, the Bank and Hale
Energy Services, Inc.
H. PRODUCTION PAYMENT TRANSACTION
Seller and American Resources Offshore, Inc. shall have
been released from their obligations under the Production Payment
Transaction between Austin Energy Funding Partners and Seller.
I. RELEASE BY BANK
Seller and American Resources Offshore, Inc. shall have
been released from their obligations to Bank on the
$12,500,000.00 indebtedness being assumed by Buyer.
10 Closing Deliveries
------------------
A. SELLER'S OBLIGATIONS
At the Closing, Seller shall deliver to Buyer the
following:
[4] The Chief Executive Officer of Seller shall have
delivered a certificate to Buyer dated the Closing Date to the
effect that the conditions to Buyer's Obligation set forth in
Subsections 8B,C,D,E,F,G and H have been met.
[5] Copies of resolutions of the Board of Directors
and the Seller's Shareholders authorizing the execution and
delivery by Seller and performance by Seller of this Agreement
and the transactions contemplated hereby, certified as to the due
adoption and continuing effect by the Secretary of Seller;
[6] Special Warranty Bills of Sale and Assignments,
duly executed by Seller, in form and substance reasonably
satisfactory to Buyer and, such other documents as Buyer may
reasonably request in order to accomplish the sale of the Assets
to Buyer;
[7] Executed copies of all leases, contracts,
insurance policies, commitments and agreements that are assigned
to Buyer pursuant to the Bills of Sale and Assignments described
in Section 10A[3] hereof;
[8] Releases, in recordable form, duly authorized and
executed by and enforceable against the holders of, or any other
parties secured by, any loan agreements, mortgages, security
agreements, trusts and indentures, assignments of leases, leases
or other liens or encumbrances releasing the Assets from the
liens or encumbrances of such instruments, except the Permitted
Liens;
[9] An opinion of counsel for Seller relating to and
addressing the matters described in Section 8.A;
[10] Transfer orders, division orders, notices,
releases and acceptances and such other instruments as may be
necessary or appropriate to further assure Buyer that the
properties, rights, titles, interests, estates, remedies, powers
and privileges contemplated by this Agreement are granted,
bargained, sold, conveyed, assigned, transferred and delivered,
or otherwise vested in Buyer as intended so to be hereunder;
[11] Transfer orders or letters in lieu thereof,
executed and acknowledged by Seller and Buyer, directing all
third parties paying for production of Hydrocarbons from the
Assets to make payment to Buyer of proceeds attributable to such
production on and after the Effective Date; and
[12] Such other documents as are reasonably requested
by counsel for Buyer.
B. BUYER'S OBLIGATIONS
At the Closing, Buyer shall deliver to Seller the
following:
[13] The Purchase Price in the manner described in
Section 3 hereof;
[14] The Chief Executive Officer of Buyer shall have
delivered a certificate to Seller dated the Closing Date to the
effect that the conditions to Seller's obligation set forth in
Subsections 9B,C and D have been met;
[15] Copies of resolutions of the Board of Directors of
Buyer authorizing the execution and delivery by Buyer and
performance by Buyer of this Agreement and the transactions
contemplated hereby, certified as to the due adoption and continu
ing effect by the Secretary of Buyer;
[16] An opinion of counsel for Buyer relating to and
addressing the matters described in Section 9.A to this
Agreement;
[17] An assumption agreement reasonably satisfactory to
Seller; and
[18] Such other documents as are reasonably requested
by counsel for Seller.
11. Tax Returns
-----------
Seller and Buyer agree to file all federal, state, and
local tax returns, and to pay all taxes, interest, and penalties
in a manner consistent with the allocation of the Purchase Price
set forth in SCHEDULE 3 to this Agreement.
12. Transfer Tax
------------
Buyer shall pay applicable sales, use and transfer
taxes, if any, related to the transfer of any tangible personal
property.
13. Survival of Representations, Warranties, and Covenants
------------------------------------------------------
All representations and warranties contained in this
Agreement by any party to this Agreement and any certificate or
other instrument delivered by or on behalf of any party pursuant
to this Agreement shall be continuous and shall survive the
Closing for a period of one year following the Closing Date and
the covenants and agreements contained herein shall survive
without limitation as to time except as may be otherwise
specified herein.
14. Indemnification
---------------
C. REMEDIES.
[19] Seller shall jointly and severally indemnify
and reimburse Buyer for any and all claims, losses,
liabilities, damages (including, without limitation, fines,
penalties, and criminal or civil judgments and settlements),
costs (including, without limitation, court costs) and
expenses (including, without limitation, attorneys' and
accountants' fees) (hereinafter "Loss" or "Losses") suffered
or incurred by Buyer, any successors or assigns thereto (the
"Protected Parties") as a result of, or with respect to:
[a] Any breach or inaccuracy of any represen
tation or warranty of Seller set forth in Section 5;
[b] Any breach of or noncompliance by Seller
with any covenant or agreement of Seller contained in
this Agreement;
[c] the operation of the Properties and the
Assets prior to the Buyer's commencing operation of the
Properties as provided in Section 18;
[d] any liability of Seller whether or not
relating to the Properties or the Assets, that is not
expressly assumed by Buyer under this Agreement;
[e] any liability of Buyer arising by
operation of law (including any bulk transfer law of
any jurisdiction or under any common law of de facto
merger or successor liability), related to the Assets
that is not expressly assumed by Buyer under this
Agreement;
[f] any liability of Seller for the unpaid
taxes of any person as a transferee or successor, by
contract or otherwise;
[g] any and all actions, suits, proceedings,
claims, demands, assessments and judgments incident to
any of the foregoing.
[20] Except as otherwise limited by this Section
14, Buyer shall indemnify and reimburse Seller for any and
all claims, losses, liabilities, damages (including, without
limitation, fines, penalties, and criminal or civil
judgments and settlements), costs (including, without
limitation, court costs) and expenses (including, without
limitation, attorneys' and accountants' fees) (hereinafter
"Loss" or "Losses") suffered or incurred by Seller or any
successors or assigns thereto as a result of, or with
respect to:
[a] Any breach or inaccuracy of any
representation or warranty of Buyer set forth in
Section 6;
[b] Any breach of or noncompliance by Buyer
with any covenant or agreement of Buyer contained in
this Agreement;
[c] the operation of the Properties and the
Assets after Buyer's commencement of the operation of
the Properties as provided in Section 18; and
[d] Any and all actions, suits, proceedings,
claims, demands, assessments and judgments incident to
any of the foregoing.
D. THIRD PARTY CLAIMS. A party seeking
indemnification (the "Indemnitee") shall use all reasonable
efforts to minimize any liabilities, damages, deficiencies,
claims, judgments, assessments, costs, and expenses (including
without limitation taxes and attorney fees) in respect of which
indemnity may be sought under this Agreement. The Indemnitee
shall give prompt written notice to the party from whom
indemnification is sought (the "Indemnitor") of the assertion of
a claim for indemnification but in no event later than (a) 30
days after service of process in the event litigation is
commenced against the Indemnitee by a third party, or (b) 30 days
after the Indemnitee becomes aware of circumstances, not
involving the commencement of litigation by a third party, which
may give rise to a claim for indemnification. No such notice of
assertion of a claim shall satisfy the requirements of this
Subsection 14B unless it describes in reasonable detail and in
good faith the facts and circumstances upon which the asserted
claim for indemnification is made, to the extent known. The
Indemnitee shall consult with the Indemnitor with respect to the
payment, settlement, or defense of any claim, action, suit,
proceeding, or demand. If any action or proceeding shall be
brought against the Indemnitee in connection with any liability
or claim to be indemnified hereunder, the Indemnitee shall
provide the Indemnitor a period of 30 days to decide whether to
defend such liability or claim. During such period the
Indemnitee shall take all reasonable steps to protect the
interests of itself and the Indemnitor, including the filing of
necessary responsive pleadings, the seeking of emergency relief,
or other action necessary to maintain the status quo, subject to
reimbursement from the Indemnitor of its expenses in doing so.
If the Indemnitor determines that it shall defend such action or
proceeding, the Indemnitor shall defend such action or proceeding
at its expense, using counsel selected by any insurance company
insuring against any such claim and undertaking to defend such
claim, or by other counsel selected by the Indemnitor and
approved by the Indemnitee, which approval shall not be
unreasonably withheld or delayed. The Indemnitor shall keep the
Indemnitee fully apprized at all times as to the status of the
defense and shall consult with the Indemnitee prior to settlement
of any indemnified matter. In the event the Indemnitee has a
claim or claims against any third party growing out of or
connected with the indemnified matter, then upon receipt of
indemnification, the Indemnitee shall fully assign to the
Indemnitor the entire claim or claims and the Indemnitor shall
thereupon be subrogated with respect to such claim or claims of
the Indemnitee.
15. Prorations and Adjustments
--------------------------
E. REVENUES
Subject to the terms of SCHEDULE 15 hereof: (a) all
revenues that are (i) received by either party before or after
the Closing Date and (ii) attributable to the Properties for the
period prior to the Effective Date, shall be the sole property
and entitlement of Seller, and, to the extent received by Buyer,
Buyer shall fully disclose, account for and transmit same to
Seller promptly; and (b) all revenues that are (i) received by
either party before or after the Closing and (ii) attributable to
the Properties for the period on or after the Effective Date
shall be the sole property and entitlement of Buyer and, to the
extent received by Seller, Seller shall fully disclose, account
for and transmit same to Buyer promptly. All uncollected
accounts receivable as of the Closing Date that are attributable
to the Properties on and after the Effective Date shall be
transferred to Buyer, and all uncollected accounts receivable as
of the Closing Date that are attributable to the Properties prior
to the Effective Date shall be retained by Seller, except as set
forth on SCHEDULE 15.
F. EXPENSES
Subject to the terms of SCHEDULE 15 hereof, all current
royalties, security deposits, contract deposits, or advance
payments, property and payroll taxes, assessments, utility
charges, insurance premiums, and any other prepaid or deferred
expenses relating to the operation of the Properties shall be
prorated or reimbursed, as the case may be, as of the Effective
Date. Seller shall be responsible for all expenses and
liabilities allocable to the period prior to the Effective Date,
including payments due prior to the Effective Date under such
prorated contracts, and Buyer shall, to the extent agreed
hereunder, be responsible for all expenses and liabilities
allocable to the period subsequent to the Effective Date, except
as set forth on SCHEDULE 15.
G. TIME OF PRORATIONS AND ADJUSTMENTS
The prorations and adjustments contemplated by this
Section, to the extent practicable, shall be made on the Closing
Date. As to those prorations and adjustments not capable of being
ascertained on the Closing Date, any adjustment and proration
shall be made within 30 calendar days of the Closing Date.
H. DISPUTES
In the event of any disputes between the parties as to
such adjustments, the amounts not in dispute shall nonetheless be
paid at the time provided in Section 15. B, and such disputes
shall be determined by an independent certified public accountant
mutually acceptable to the parties, and the fees and expenses of
such accountant shall be paid one-half by Seller and one-half by
Buyer.
16. RECORDS
After the Closing, Seller and Buyer shall make
available to the other on reasonable request such books and
records of that party as may be appropriate for use in connection
with their respective tax returns, including any review thereof,
and for any other reasonable purpose. Such books and records
shall be retained for a period of 6 years; provided, however,
that after 3 years any portion of such books and records may be
destroyed in whole or in part, by the party in possession thereof
upon 30 days' notice to the other party, unless the party to whom
such notice is given shall object, in which event the objecting
party shall be given such records in lieu of destruction thereof.
17. PUBLIC STATEMENTS
Prior to the Closing Date, neither Seller nor Buyer
shall, without the prior written approval of the other party,
make any press release or other public announcement concerning
the transactions contemplated by this Agreement, except (1)
Seller and Buyer shall issue a mutually agreeable public
announcement or press release promptly after the signing of this
Agreement, and (2) to the extent that either party shall be so
obligated by law as advised in writing by counsel, in which case
the other party shall be so advised and the parties shall use
their best efforts to cause a mutually agreeable release or
announcement to be issued. Buyer and Seller may disclose
information with respect to the transaction contemplated hereby
to their respective employees, agents, consultants and third
parties only to the extent such persons have a need to know such
information.
18. SELLER'S EMPLOYEES AND MANAGEMENT OF PROPERTIES
Within five (5) days of the execution of this
Agreement, Seller intends to terminate all field employees and
employees located in the Corbin office of Seller. Buyer agrees
to immediately accept applications for employment by Buyer from
such employees.
Within twenty-four (24) hours after the execution of
this Agreement, Buyer shall commence operating the Properties and
shall conduct those operations in a reasonable and prudent
manner. In operating the Properties, Buyer shall not: (i)
terminate or enter into any contract that binds Seller; (ii)
sell, convey, encumber or assign any Assets of Seller, except in
the ordinary course of business; (iii) purchase any property,
material or equipment in the name of Seller; (iv) incur in
expense which will be the responsibility of Seller, other than
existing royalty and other obligations of Seller under existing
agreements; or (v) voluntarily change or affect operating
pressures without Seller's prior written consent.
Seller shall not be responsible for any cost or
expenses incurred by Buyer, including, but not limited to,
salaries, out-of-pocket expenses, or materials incurred by Buyer
or deemed by Buyer necessary for the operation of the Properties
without the prior written consent of Seller. Prior to commencing
operations, Buyer shall provide written evidence of insurance
coverage for said operations an amount satisfactory to Seller.
Buyer shall execute an indemnity agreement, in form and substance
satisfactory to Buyer and Seller, which will indemnify, defend
and hold harmless Seller from any and all claims, causes of
action, losses, damages, fines, attorney fees which Seller shall
incur or suffer, arising from injury to person or property,
resulting from any acts of Buyer, or Buyer's officers, agents,
servants, employees, or contractors, except as may result from
the negligence or intentional acts of Seller or Seller's agents,
servants, employees, successors or assigns.
Either Buyer or Seller may terminate this provision
within twelve hours advance notice to the other party, whether
oral or written, and thereupon, Buyer shall immediately cease all
operations on the Properties.
19. Confidentiality
---------------
A. PRIOR TO CLOSING
Unless and until the Closing of the transactions
contemplated by this Agreement shall have occurred, and except as
may be otherwise required by applicable law, Buyer shall, and
shall cause its employees, agents, and representatives to,
maintain in confidence and not otherwise use information,
documents, and data furnished to it, or to any person or entity
on its behalf, by Seller in connection herewith.
B. FAILURE TO CLOSE
If the Closing of the transactions contemplated by this
Agreement does not occur on the Closing Date, Buyer shall return
all written information, documents, and data furnished to Buyer
or to any person or entity on its behalf and all copies thereof.
Notwithstanding anything else in this Agreement to the contrary,
if the transactions contemplated by this Agreement are not
closed, Buyer's agreement to maintain in confidence all
information received by it shall continue in perpetuity and none
of such information shall be used by Buyer, its employees,
agents, or representative in the business operations of any such
person, except to the extent that such information was: (i)
possessed by Buyer prior to the disclosure thereof by Seller;
(ii) disclosed to Buyer by an independent third party without a
violation of any obligation of confidentiality on the part of
such third party to Seller; or (iii) ascertainable from public or
published information or trade sources.
C. REMEDIES
Buyer hereby acknowledges that there may not be an
adequate remedy at law for the breach of this Section 19 and
that, in addition to any other remedies available to Seller,
injunctive relief and specific performance may be granted to
Seller for such breach.
20. Notices
-------
All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall
be mailed by first class, registered, or certified mail, postage
prepaid, or sent via overnight courier service, or delivered
personally:
If to Buyer, to: Copy to:
Nami Resources Company L.L.C Richard C. Ward, Esq.
351 Railroad Avenue Wyatt, Tarrant & Combs
Manchester, Kentucky 40963 1700 Lexington Financial Center
ATTN: Mike Nami Lexington, Kentucky 40507
Fax: (606) 599-9705 Fax: (606) 259-0649
If to Seller, to: Copy to:
Southern Gas Co. of Delaware, Inc. David Stetson, Esq.
160 Morgan Street Southern Gas Co. of
Versailles, Kentucky 40383 Delaware, Inc.
ATTN: Leonard Nave 160 Morgan Street
Fax: (606) 873-5455 Versailles, Ky 40383
Fax: (606) 873-5455
or to such other address of which the addressee shall have
notified the sender in writing. Notices mailed in accordance with
this section shall be deemed given when mailed, and notices sent
by overnight courier service shall be deemed given when placed in
the hands of a representative of such service.
21. Third Party Rights
------------------
It is the intention of the parties that nothing in this
Agreement shall be deemed to create any right with respect to any
person or entity not a party to this Agreement.
22. Parties in Interest; Assignment
-------------------------------
All covenants and agreements contained in this
Agreement by or on behalf of any of the parties to this Agreement
shall bind and inure to the benefit of their respective heirs,
executors, successors, and assigns, whether so expressed or not.
No party to this Agreement may assign its rights or delegate its
obligations under this Agreement to any other person or entity
without the express prior written consent of the other party,
except that Buyer may assign its rights and delegate its
obligations to a subsidiary or affiliated corporation of Buyer,
provided that such assignment and delegation shall not relieve
Buyer of its obligations under this Agreement.
23. Construction; Governing Law
---------------------------
The section headings contained in this Agreement are
inserted as a matter of convenience and shall not affect in any
way the construction of the terms of this Agreement. This
Agreement shall be governed by and interpreted in accordance with
the laws of the Commonwealth of Kentucky.
24. Submission to Jurisdiction
--------------------------
Each of the parties submits to the jurisdiction of any
state or federal court sitting in Fayette County, Kentucky in any
action or proceeding arising out of or relating to this Agreement
and agrees that all claims in respect of the action or proceeding
may be heard and determined in any such court. Each party also
agrees not to bring any action or proceeding arising out of or
relating to this Agreement in any other court. Each of the
parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any
bond, surety, or other security that may be required of any other
party with respect thereto.
25. Entire Agreement; Amendment and Waiver
--------------------------------------
This Agreement, including the Schedules hereto,
constitutes and contains the entire Agreement between the parties
hereto with respect to the transactions contemplated hereby and
supersedes any prior writing by the parties. The parties may, by
mutual agreement in writing, amend this Agreement in any respect,
and any party, as to such party, may in writing (1) extend the
time for the performance of any obligations of any other party;
(2) waive any inaccuracies in representations and warranties by
any other party; (3) waive performance of any obligations by any
other party; and (4) waive the fulfillment of any condition that
is precedent to the performance by such party of any of its
obligations hereunder. No such waiver shall be deemed to
constitute the waiver of any other breach of the same or of any
other term or condition of this Agreement. Any such amendment or
waiver must be signed by an officer of the parties or party to
such amendment or waiver.
26. Severability
------------
The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of
the remaining provisions.
27. Counterparts
------------
This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of
more than one party but all of which taken together shall
constitute one and the same Agreement.
28. Expenses
--------
Each party to this Agreement shall pay any and all fees
and expenses that such party may incur in connection with the
negotiation, execution, or closing of this Agreement and the
other transactions contemplated by this Agreement.
29. Further Assurances
------------------
At and after the Closing, Buyer and Seller will,
without further consideration, execute and deliver such other
instruments and documents and do all other acts and things as the
other party or parties may reasonable request in order to effect
or confirm the transactions contemplated by this Agreement.
30. Schedules
---------
The Schedules attached to this Agreement constitute a
part of this Agreement and are incorporated herein by reference
in their entirety as if fully set forth in this Agreement at the
point where first mentioned.
31. Time of Essence
---------------
Time is of the essence to the performance of the
obligations set forth in this Agreement.
32. Termination
-----------
Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated at any time
prior to the Closing Date:
A. By the mutual written consent of Seller and
Buyer;
B. By the board of directors or members of either
party to this Agreement if any other party to this Agreement
shall have materially breached any of the representations and
warranties of such other party set forth in this Agreement and
such other party shall have failed to cure such breach within 30
days after receipt of written notice of such breach.
C. By Buyer by giving written notice to Seller on or
before the tenth day following the date of the Agreement if Buyer
is not satisfied with the results of its continuing business,
legal, and accounting due diligence regarding Assets.
D. By the board of directors of Seller or the members
of Buyer if the Closing shall not have occurred on or before
August 31, 1999.
I. By Buyer if any Schedule to this Agreement is not
accepted or agreed to by Buyer on or before the fifth day
following the date of this Agreement.
J. Buyer shall not be permitted to terminate this
Agreement as a result of any material or adverse change in the
Properties or Assets of Seller caused by Buyer's operation of the
Properties as provided in Section 18.
33. NORM
----
Buyer acknowledges that it has been informed that Oil
and Gas producing formations can contain naturally occurring
radio active material ("NORM"). Formation of scale or deposits
can concentrate NORM on equipment and in sludges. The presence
of NORM in certain concentrations require that certain health,
safety and in environmental precautions be taken.
34. Risk of Loss
------------
Subject to the terms of Section 18, Seller shall bear
all risk of loss to the Assets until the consummation of the
Closing, but Buyer shall have an insurable interest in the
Assets.
35. Independent Investigation and Disclaimer
----------------------------------------
Buyer acknowledges that (i) it has had and pursuant to
this Agreement it will have prior to the Closing, access to the
Properties and the employees of Seller and the opportunity to
inspect the Properties and (ii) in making its decision to enter
into this Agreement and to make the transactions contemplated
hereby, Buyer has relied solely upon its own independent
investigation of the Assets and upon the representations,
warranties, covenants, and agreements of Seller, set forth in
this Agreement and the special warranty of title to be made by
Seller in the Bill of Sale and other Assignments. Accordingly,
Buyer acknowledges, that except as expressly set forth in this
Agreement, Seller has not made, AND SELLER HEREBY EXPRESSLY
DISCLAIMS AND NEGATES, ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AT COMMON LAW, BY STATUTE, OR OTHERWISE, RELATING TO (A)
THE CONDITION OF THE ASSETS (INCLUDING ANY IMPLIED OR EXPRESSED
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
ABSENCE OF LATENT DEFECTS OR CONFORMITY TO MODELS OR SAMPLES OF
MATERIALS, OR ENVIRONMENTAL CONDITION), OR (B) ANY INFRINGEMENT
BY SELLER OF ANY PATENT OR PROPRIETARY RIGHT OF ANY THIRD-PARTY;
IT BEING AGREED BY BUYER THAT IS ACQUIRING THE ASSETS "AS-IS,"
"WHERE-IS", WITH ALL FAULT; provided, however, that (a) the
foregoing disclaimer and negation of representations and
warranties, (b) Buyer's independent investigation of the Assets,
(c) any failure on Buyer's part to conduct such investigation, or
(d) the occurrence of Closing, shall not affect or impair the
representations, warranties, covenants, indemnities or other
obligations of Seller under this Agreement or under the
agreements or documents to be executed by Seller at the Closing,
including the special warranty of title to be made by Seller in
the Bill of Sale and Assignments and any other express rights to
Buyer hereunder or thereunder.
36. Remedies
--------
Seller and Buyer represent and acknowledge that,
because of the unique nature of the Properties and the Assets,
failure of either party to carry out its obligation to perform
this Agreement on the Closing Date would cause irreparable
injury; Seller and Buyer accordingly agree that, in addition to
any other remedies available to Seller and Buyer, any such
failure by either party to perform this Agreement shall be
subject to the remedy of specific performance.
IN WITNESS WHEREOF, Seller and Buyer have caused this
asset purchase agreement to be executed by their duly authorized
officers as of the day and year first written above.
"SELLER"
SOUTHERN GAS CO. OF DELAWARE, INC.
By: /s/Leonard K. Nave
--------------------------------
Title: President
-----------------------------
"BUYER"
NAMI RESOURCES COMPANY L.L.C.
By: /s/Mike Nami
--------------------------------
Title: C.E.O.
-----------------------------
STOCK PURCHASE AGREEMENT
This stock purchase agreement (the "Agreement") is made and
entered into this 29th day of October, 1999, but effective
September 30, 1999, by and among American Resources Offshore,
Inc., a Delaware corporation, (the "Shareholder"), and Southern
Gas Holding, LLC, a Kentucky limited liability company (the
"Purchaser").
WITNESSETH:
WHEREAS, Shareholder owns and desires to sell, and Purchaser
desires to purchase, one hundred shares (100) of capital stock
of Southern Gas Co. of Delaware, Inc. (the "Shares"), in
accordance with and subject to the terms and provisions of this
agreement.
NOW, THEREFORE, in consideration of the mutual agreements
contained in this agreement, and intending to be legally bound,
the Shareholder and Purchaser agree as follows:
1.01 PURCHASE AND SALE OF SHARES: At the closing (as defined in
- ---- ---------------------------
section 3.01 of this agreement), Shareholder shall sell to
Purchaser, and Purchaser shall purchase from Shareholder, the
Shares.
2.01 PURCHASE PRICE; PAYMENT: The aggregate purchase price for
- ---- -----------------------
the Shares shall consist of One Hundred Dollars {$100.00} (the
"Purchase Price").
3.01 CLOSING: The closing of the transactions contemplated by
- ---- -------
this agreement (the "Closing") shall take place at the offices of
the Purchaser, within Five (5) days after all conditions of this
Agreement have been satisfied or waived as provided therein, or
at such other time, date, or place upon which Purchaser and the
Shareholder shall agree in writing (the "Closing Date"), but in
no event shall the closing date be later than October 1, 1999.
4.01 SHAREHOLDER'S AND THE PURCHASER'S CLOSING ITEMS
- ---- -----------------------------------------------
SHAREHOLDER SHALL DELIVER TO PURCHASER:
(a) the certificates representing the Shares, duly endorsed
in blank or with stock powers attached thereto duly signed
in blank, in proper form for transfer, free of any notation
of any adverse claims, conveying to Purchaser good and
marketable title to the Shares, free and clear of all liens,
claims, charges, pledges, rights, and encumbrances of any
nature whatsoever;
PURCHASER SHALL DELIVER TO THE SHAREHOLDER:
(a) immediately available funds in the amount and as
provided in section 2.01 of this agreement.
5.01 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
- ---- -------------------------------------------------
The Shareholder represents and warrants to Purchaser, and
acknowledge that Purchaser relies on such representations and
warranties in entering into and proceeding under this agreement,
that:
(a) The Shareholder is duly organized, validly existing, and in
good standing under the laws of Delaware. The Shareholder
has full corporate power and authority to own or hold under
lease the properties it now owns or holds under lease and to
carry on the business presently being conducted by it, and
the corporation has full corporate power and authority to
enter into this agreement and all other agreements
contemplated by this agreement and to consummate the
transactions contemplated hereunder and thereunder.
(b) This agreement has been duly executed and delivered by
Shareholder. The execution and delivery by Shareholder of
this agreement and the consummation by Shareholder of the
transactions contemplated hereby will not conflict with or
constitute a violation, breach, or default under any
material contract, trust agreement, mortgage, indenture, or
other agreement or instrument to which any shareholder is a
party or by which any shareholder is bound or to which any
shareholder or any of the properties of any shareholder is
subject.
(c) The Shareholder is the true and lawful owner of the Shares
and, as of the date of this agreement and at the closing,
has and will have full right, power, and authority to sell,
transfer, and deliver the Shares to Purchaser. The
shareholder has no knowledge of any adverse claims affecting
its Shares and there are no notations of any adverse claims
marked on the certificates for the Shares. At the closing,
Purchaser will acquire the Shares free and clear of any
security interests, mortgage, adverse claims, liens, or
encumbrances of any nature or description whatsoever.
(d) No provision of any contract, trust agreement, mortgage,
indenture, or other agreement or instrument to which the
Shareholder is a party or is bound or to which any
shareholder is subject requires the consent or
authorization of any other person or entity as a condition
precedent to the consummation of the transactions
contemplated by this agreement.
(e) No representation or warranty made by the Shareholder in
this agreement and no statement made by it in any
certificate, document, exhibit, or schedule furnished or to
be furnished in connection with the transactions herein
contemplated contains or will contain any untrue statement
of a material fact or omits or will omit to state any
material fact necessary to make such representation or
warranty or any such statement not misleading to Purchaser.
5.02 REPRESENTATIONS AND WARRANTIES OF PURCHASER
- ---- -------------------------------------------
Purchaser represents and warrants to the Shareholder, and
acknowledges that the Shareholder relies on such representations
and warranties in entering into and proceeding under this
agreement, that:
(a) This agreement has been duly authorized by all necessary
corporate action of Purchaser and has been duly executed and
delivered by Purchaser. The execution and delivery by
Purchaser of this agreement and the consummation by
Purchaser of the transactions contemplated hereby will not
conflict with or constitute a violation of any provision of
the articles of organization or operating agreement of
Purchaser or conflict with or constitute a violation,
breach, or default under any material contract, trust
agreement, mortgage indenture, or other agreement or
instrument to which Purchaser is a party or by which
Purchaser is bound or to which Purchaser or any of its
properties is subject.
(b) No provision of the articles of organization or operating
agreement of Purchaser or of any material contract, trust
agreement, mortgage, indenture, or other agreement or
instrument to which Purchaser is a party or by which it is
bound or to which Purchaser or any of its properties is
subject requires the consent or authorization of any other
person or entity as a condition precedent to the
consummation of the transactions contemplated hereby.
(c) No person or entity is entitled to any brokerage or finder's
fee or commission or other like payment in connection with
the negotiations relating to or the transactions
contemplated by this agreement, based on any agreement,
arrangement, or understanding with Purchaser, or any of
Purchaser's respective officers, directors, agents, or
employees.
(d) Purchaser is acquiring the Shares for investment and not
with a view to the sale or other distribution thereof.
Purchaser agrees that it will not at any time sell,
exchange, transfer, or otherwise dispose of the Shares under
circumstances which would constitute a violation of the
Securities Act of 1933, as amended, and the rules and
regulations promulgated by the Securities and Exchange
Commission thereunder or any state statute, rule, or
regulation relating to the sale of securities.
6.01 CONDITIONS TO PURCHASER'S OBLIGATION
- ---- ------------------------------------
The obligation of Purchaser to consummate on the closing date
the transactions contemplated by this agreement will be subject
to the satisfaction of each of the following conditions by the
time required but no later than on or prior to the closing date,
unless expressly waived by Purchaser:
(a) The representations and warranties of the Shareholder
contained in section 5 of this agreement shall be true and
correct in all material respects on and as of the closing
date as if made on and as of the closing date.
(b) No action or proceeding shall have been instituted or
threatened against the Shareholder or its members, before
any court or governmental department, agency, or commission
to restrain or prohibit, or to obtain substantial damages in
respect of, this agreement or the consummation of the
transactions contemplated hereby; and no party to this
agreement shall have received written notice from any court
or governmental department, agency, or commission of its
intention to institute any action or proceeding to restrain
or enjoin or commence any investigation (other than a
routine letter of inquiry) into the consummation of this
agreement and the transactions contemplated hereby or to
nullify or render ineffective this agreement or such
transactions if consummated, which in the opinion of
Purchaser would make it inadvisable to consummate such
transaction; provided, that in the event such an
investigation is instituted, this agreement may not be
abandoned by Purchaser for a period of 120 days (but
consummation hereof shall be delayed during such period),
and may not be abandoned thereafter except upon advice of
counsel that there is a reasonable probability that such an
investigation may result in an action or proceeding of the
type described in the second clause of this paragraph (G)(5)
(c) The Shareholder shall have tendered certificates
representing all of the Shares.
6.02 CONDITIONS TO THE SHAREHOLDER OBLIGATIONS
- ---- -----------------------------------------
The obligation of the Shareholder to consummate on the closing
date the transactions contemplated by this agreement will be
subject to the satisfaction of each of the following conditions
at the time required but no later than on or prior to the closing
date, unless expressly waived by the Shareholder' representative:
(a) The representations and warranties of Purchaser contained in
section 5 of this agreement shall be true and correct in all
material respects on and as of the closing date as if made
on and as of the closing date, except for changes resulting
from the ordinary course of Purchaser's business or as
contemplated by this Agreement.
(b) No action or proceeding shall have been instituted against
Purchaser which reasonably could have a material and adverse
effect on its businesses; no action or proceeding shall have
been instituted or threatened against any of the parties to
this agreement, before any court or governmental department,
agency, or commission to restrain or prohibit, or to obtain
substantial damages in respect of, this agreement or the
consummation of the transactions contemplated hereby; and
neither Purchaser nor Shareholder shall have received
written notice from any court or governmental department,
agency, or commission of its intention to institute any
action or proceeding to restrain or enjoin or commence any
investigation (other than a routine letter of inquiry) into
the consummation of this agreement and the transactions
contemplated hereby or to nullify or render ineffective this
agreement or such transactions if consummated, which in the
opinion of the Shareholder would make it inadvisable to
consummate such transactions.
7.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS
- ---- ------------------------------------------------------
All representations, warranties, and covenants by any party to
this agreement contained in this agreement or in any certificate
or other instrument delivered by or on behalf of any party
pursuant to this agreement shall be continuous and shall survive
the closing for a three year period expiring on the third
anniversary of the closing date.
8.01 INDEMNIFICATION AND RELEASE
- ---- ---------------------------
After the closing date and after proceeds, if any, of any
applicable insurance coverage owned by Shareholder has been
exhausted or payment denied, the Purchaser shall indemnify,
release and hold harmless the Shareholder against and in respect
of any claims, actions, demands, or causes of action of whatever
kind or character, whether joint or several, known or unknown,
which may have arisen or accrued prior to the date of execution
of this Agreement, including but not limited to any claim,
demand, cause of action or liability for any and all injuries,
harm, damages, penalties, costs, losses, expenses, attorneys'
fees, and/or liabilities whatsoever (including any defense,
counterclaim or right of setoff to the payment or performance of
any obligations or indebtedness of Borrower), whenever incurred
or suffered by any of them, including, without limitation, any
claim, demand, action, damage, liability, loss, cost, expense,
and /or detriment, of any kind or character, growing out of or in
any way connected with or in any way resulting from any breach of
any duty of loyalty, fair dealing, care, fiduciary duty, or any
other duty, confidence, or commitment, conflict of interest,
negligence, bad faith, tortuous interference with contractual
relations, breach of contract, interference with business, usury,
strict liability, lender liability, breach of warranty or
representation, fraud, or any other claim or cause of action
(herein being collectively referred to as "claims"), the
Purchaser hereby, for itself and its representatives, agents,
officers, directors, employees, shareholders, successors, heirs
and assigns (collectively call the "Indemnifying Parties"),
knowingly and willfully, fully, finally and completely release,
discharge, waive, acquit and relinquish the Shareholder, its
agents, officers, directors, employees, shareholders, and
successors and assigns (collectively called the "Indemnified
Parties") from the Claims. The Indemnifying Parties further
covenant and agree that the Purchaser is aware of any specific or
general claim, cause of action or liability, facts, events,
statuses or conditions which, either now or with the passage of
time or the giving of notice, or both, constitute or will
constitute a basis for any claim, actions, demands, and causes of
action of whatever kind or character, that they possess, jointly
or severally, against any or all of the Indemnified Parties, such
specific or general claim, cause of action or liability, facts,
events, statuses or conditions is or are specifically delineated
above, constitute a claim or claims as defined in this paragraph,
and are fully subject to and included within the release
contained herein. It is the intent of all parties hereto that
upon execution of the amendment all Claims shall be released and
extinguished. IT IS EXPRESSLY AGREED THAT THE CLAIMS RELEASED
HEREBY INCLUDE THOSE ARISING FROM OR IN ANY MANNER ATTRIBUTABLE
TO THE NEGLIGENCE (SOLE, CONCURRENT, ORDINARY OR OTHERWISE),
WILLFUL MISCONDUCT, OR OTHER CONDUCT OF ANY OF THE INDEMNIFIED
PARTIES.
10.01 CONSTRUCTION; GOVERNING LAW
- ----- ---------------------------
The table of contents and section headings contained in this
agreement are inserted as a matter of convenience and shall not
affect in any way the construction of the terms of this
agreement. This agreement shall be construed in accordance with
and governed by the laws of Kentucky.
11.01 ENTIRE AGREEMENT; AMENDMENT AND WAIVER
- ----- --------------------------------------
This agreement, including the schedules hereto, constitutes
and contains the entire agreement of the Shareholder, and
Purchaser with respect to the transactions contemplated hereby
and supersedes any prior writing by the parties. The parties may,
by mutual agreement in writing, amend this agreement in any
respect, and any party, as to such party, may in writing (1)
extend the time for the performance of any obligations of any
other party; (2) waive any inaccuracies in representations and
warranties by any other party; (3) waive performance of any
obligations by any other party; and (4) waive the fulfillment of
any condition that is precedent to the performance by such party
of any of its obligations hereunder. No such waiver shall be
deemed to constitute the waiver of any other breach of the same
or of any other term or condition of this agreement. Any such
amendment or waiver by Purchaser must be signed by an officer of
Purchaser and any such amendment or waiver by Shareholder must be
signed by the Shareholder' representative.
12.01 SEVERABILITY
- ----- ------------
If any provision of this agreement or the application thereof
to any person or circumstance shall to any extent be held in any
proceeding to be invalid or unenforceable, the remainder of this
agreement, or the application of such provision to persons or
circumstances other than those to which it was held to be invalid
or unenforceable, shall not be affected thereby, and shall be
valid and enforceable to the fullest extent permitted by law, but
only if and to the extent such enforcement would not materially
and adversely frustrate the parties' essential objectives as
expressed herein.
13.01 COUNTERPARTS
- ----- ------------
This agreement may be executed concurrently in one or more
counterparts, any one of which need not contain the signatures of
more than one party but all of which taken together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the Shareholder and Purchaser have
executed this agreement as of the day and year first written
above.
American Resources Offshore, Inc.
By: /s/David J. Stetson
---------------------------------
Its: General Counsel
--------------------------------
Southern Gas Holding, LLC
By: /s/Leonard K. Nave
---------------------------------
Its: President
--------------------------------
