EXHIBIT 10.135
ASSET ACQUISITION AGREEMENT
BETWEEN
CASTLE EXPLORATION COMPANY, INC.
AND
AMERICAN REFINING AND EXPLORATION COMPANY
DEVEN RESOURCES, INC.
CMS/CASTLE DEVELOPMENTAL ENERGY FUND I, L.P.
EFFECTIVE AS OF OCTOBER 1, 1999
THIS AGREEMENT, dated December 14, 1999 but effective as of
Effective Date, by and among AMERICAN REFINING AND EXPLORATION COMPANY, a
Pennsylvania corporation, whose address is Suite 215, 100 Four Falls Corporate
Center, West Conshohocken, Pennsylvania, 19428 ("AREC"), DEVEN RESOURCES, INC.,
a Pennsylvania corporation whose address is Suite 615, 983 Old Eagle School
Road, Wayne, Pennsylvania 19087 ("DRI") and CMS/CASTLE DEVELOPMENTAL ENERGY FUND
I, L.P., a Delaware partnership with an office at c/o CMS Affiliated
Partnerships, One Bala Plaza, Suite 412, Bala Cynwyd, Pennsylvania 19004("CMS")
(hereinafter AREC, DRI and CMS are sometimes collectively referred to as the
"Sellers" or individually as a "Seller") and CASTLE EXPLORATION COMPANY, INC., a
Pennsylvania corporation, whose address is 61 McMurray Road, Suite 204,
Pittsburgh, Pennsylvania 15241 ("CECI" or "Buyer").
WITNESSETH
WHEREAS, CMS and AREC own undivided working interests in the Assets;
and
WHEREAS, DRI owns a Net Profits Interest in the Assets; and
WHEREAS, Buyer is the previous operator of the Assets, surrendering
operation to AREC on June 17, 1997 and whose parent, Castle Energy Corporation,
owns an undivided working interest in the Assets; and
WHEREAS, the Sellers desire to sell and convey and Buyer desires to
purchase and acquire the Assets, effective as of the Effective Date.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound hereby, agree as follows:
ARTICLE I--DEFINITIONS
1. The following terms shall have the meanings ascribed to them below
when used in this Agreement:
1.1. "Agreement", shall mean this Asset Acquisition Agreement.
1.2. "Affiliate", shall mean any Person, more that 50% of which is
owned, owns, or controlled by, directly or indirectly, any party to this
Agreement.
1.3. "Assets", shall mean all of Sellers' interests in:
1.3.1. the Equipment, the Oil and Gas Properties, Pipeline
Interest, Oil and Gas Contracts, Net Profits Interest and the Wells; and
1.3.2. Copies of all documents in Sellers' possession, under
Sellers' control or in the possession of Sellers' agents or representatives,
relating to the Equipment, the Oil and Gas Properties, and the Wells to include,
by way of example and not limitation, Production, financial, and engineering
records, and all other files whether kept manually or on in electronic form,
that covers, deals with or relates to the Assets or any part thereof; provided,
however, that nothing herein shall require Sellers to disgorge their own
geological interpretations, internal corporate, partnership, and legal records,
or management information systems ("Books and Records").
1.4. "Assignment" or "Assignments", shall mean those Assignments
and Bills of Sale in substantially in the form of Exhibit "A" and Exhibit "A-1".
The Assignments shall contain special warranty deed language, conveying the
Assets without warranty, either expressed or implied, except those claiming by,
through or under the Seller, but not otherwise, with full substitution and
subrogation all as more particularly set forth in the Agreement, with all
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Equipment conveyed "AS IS" and "WHEREAS", WITHOUT WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE OR MERCHANTABILITY.
1.5. "Closing", shall mean the consummation of the transactions
contemplated by this Agreement.
1.6. "Closing Date", shall mean the date on which the Closing
shall occur, which date shall in no event be later than December 14, 1999,
unless extended by mutual agreement of the parties hereto.
1.7. "Effective Date", shall mean 7:01 a.m. Eastern Standard Time,
October 1, 1999.
1.8. "Encumbrance", shall mean any mortgage, lien, security
interest, pledge, charge, encumbrance, claim, limitation, reversionary interest,
preferential right to purchase any of the Oil and Gas Properties, irregularity,
burden, hypothecation or defect.
1.9. "Environmental Condition", shall mean any condition of the
soil, subsurface, surface waters, ground waters, atmosphere or other
environmental medium, whether or not yet discovered, which results, or could
reasonably be expected to result, in any damage, loss, cost, expense, claim,
demand, investigation, lien or liability relating to the Assets under any
Environmental Law.
1.10. "Environmental Law ", shall mean the Resource Conservation
and Recovery Act of 1976, as amended, the Clean Air Act, as amended, the Clean
Water Act, as amended, and the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, and all federal, state, and other
governmental regulations, orders, interpretations or rulings issued thereunder,
and other Legal Requirements relating to air or water quality, hazardous or
solid wastes, hazardous substances the prevention or remediation of pollution or
environmental damage, protection of the environment or any other environmental
matters.
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1.11. "Equipment", shall mean those items of equipment (i) located
on the Oil and Gas Properties; (ii) appurtenant thereto, and/or, (iii) used in
connection with the Oil and Gas Properties, the Pipeline and/or the Wells.
1.12. "Existing Burdens", shall mean Lease Burdens and Permitted
Encumbrances of record as of the Effective Date or of which Buyer has received
written notice prior to the Closing Date.
1.13. "Final Settlement Statement", shall mean that Final
Settlement Statement as provided for in Paragraph 10.8.
1.14. "Lease Burdens", shall mean all Royalties and Overriding
Royalties and such other rights to share in the Production from the Wells of
record as of the Effective Date, other than the Net Profits Interest.
1.15. "Lease Operating Expenses", shall mean any and all costs and
expenses properly charged by the operator of the Wells pursuant to the
applicable operating agreement governing operations on such Wells.
1.16. "Legal Requirements", shall mean any law, statute,
ordinance, decree, requirement, order, judgment, rule or regulation including by
way of example and not limitation the terms of any license, permit, certificate,
or abandonment approval promulgated, issued or enacted by any governmental
authority to include, without limitation, any bonding requirements of Buyer or
other regulatory approval governing the transfer of operations to Buyer.
1.17. "Net Profits Interest", shall mean that interest in the Net
Profits from the Oil and Gas Properties created by: (a) the Assignment from AREC
to DRI dated May 29, 1997 and recorded in Book 1708, Page 125 of the Records of
Armstrong County, Pennsylvania, as corrected by that Correction of Assignment
dated August 29, 1997 and recorded in Book 1736, Page 171, and that Assignment
from AREC to DRI dated May 29, 1997 and recorded in Book 1911, page 110 of the
Records of Fayette County, Pennsylvania.
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1.18. "Net Revenue Interest", shall mean a Revenue Interest less
all Lease Burdens.
1.19. "Oil and Gas Contracts", shall mean any contracts that
affect or relate to the Oil and Gas Properties or the Production covered thereby
including amendments thereto. "Oil and Gas Contracts" includes, by way of
example and not limitation, area of mutual interest agreements, acreage
contribution agreements, advance payment agreements, bottom hole agreements,
division orders, drilling contracts, dry hole agreements, exploration
agreements, farm-in and farm-out agreements, Gas Balancing Agreements (including
claims to recover natural gas or money under Gas Balancing Agreements for
Seller's under production before the Effective Date), natural gas and oil sales,
exchange, treating and processing contracts, operating agreements, net profits
agreements, participation agreements, storage agreements, support agreements,
transfer orders, transportation agreements, water rights agreements, and salt
water disposal agreements.
1.20. "Oil and Gas Properties", shall mean those oil and gas
leasehold right conveyed to CMS from CECI by: (a) Assignment dated May 21, 1991
and recorded at Book 840, Page 27 in the records of Fayette County, Pennsylvania
on June 1991, as corrected by that Correction of Assignment dated November 24,
1993, but effective as of the date of first production and recorded in Book
1296, Page 275 of the Records of Fayette County, Pennsylvania; (b) Assignment
dated May 21, 1991 and recorded at Book 840, Page 31 of the Records of Fayette
County, Pennsylvania on June 19, 1991, as amended by that Correction of
Assignment dated November 24, 1993, but effective as of the date of first
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production, and recorded in Book 1296, Page 280 of the Records of Fayette
County, Pennsylvania; (c) Assignment dated May 21, 1991 and recorded in Book
840, Page 35 of the Records of Fayette County, Pennsylvania on June 19, 1991, as
corrected by that Correction of Assignment dated November 24, 1993, but
effective as of the date of first production, and recorded in Book 1296, Page
286 of the Records of Fayette County, Pennsylvania; (d) Assignment dated May 21,
1991 and recorded in Book 840, Page 39 of the Records of Fayette County,
Pennsylvania on June 19, 1991, as corrected by that Correction of Assignment
dated November 24, 1993, but effective as of the date of first production, and
recorded in Book 1296, Page 290 of the Records of Fayette County, Pennsylvania;
(e) Assignment dated May 21, 1991 and recorded in Book 840, Page 43 on June 19,
1991, as corrected by that Correction of Assignment dated November 24, 1993 but
effective as of the date of first production and recorded in Book 1296, Page 295
of the Records of Fayette County, Pennsylvania; (f) Assignment dated May 21,
1991 and recorded in Book 840, Page 47 of the Records of Fayette County on June
19, 1991, as corrected by that Correction of Assignment dated November 24, 1993,
but effective as of the date of first production, and recorded in Book 1296,
page 300 of the records of Fayette County, Pennsylvania; (g) Assignment dated
June 13, 1991 and recorded in Book 1116, Page 66 of the Records of Armstrong
County, Pennsylvania on July 5, 1991, as corrected by that Correction of
Assignment dated November 24, 1993, but effective as of the date of first
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production, and recorded in Book 1358, Page 249 of the Records of Armstrong
County, Pennsylvania; (g) Assignment dated May 21, 1991, but effective March 18,
1991, and recorded in Book 1116, Page 54 of the Records of Armstrong County,
Pennsylvania as corrected by that Correction of Assignment dated November 24,
1993, but effective as of March 18, 1991, and Recorded in Book 1358, Page 212 of
the Records of Armstrong County, Pennsylvania; (h) Assignment dated May 21,
1991, but effective as of August 7, 1990 and recorded in Book 1116, Page 46 of
the Records of Armstrong County, Pennsylvania on July 5, 1991, as corrected by
that Correction of Assignment dated November 24, 1993 but effective as of August
7, 1990 and recorded in Book 1358, Page 217 of the Records of Armstrong County,
Pennsylvania; (i) Assignment dated May 21, 1991, but effective as of June 16,
1989, and recorded in Book 1116, Page 62 of the Records of Armstrong County,
Pennsylvania on July 5, 1991, as corrected by that Correction of Assignment
dated November 24, 1993, but effective as of June 16, 1989, and recorded in Book
1358, Page 222 of the Records of Armstrong County, Pennsylvania; (j) Assignment
dated February 12, 1993 but effective as of the date of first production and
recorded in Book 1135, Page 236 of the Records of Armstrong County, Pennsylvania
on March 15, 1993, as corrected by that Correction of Assignment dated November
24, 1993, but effective as of the date of first production, and recorded in Book
1358, Page 228 of the Records of Armstrong County, Pennsylvania; (k) Assignment
dated May 21, 1991 but effective as of March 18, 1991, and recorded in Book 116,
Page 58 of the Records of Armstrong County, Pennsylvania on July 5, 1991, as
corrected by that Correction of Assignment dated November 24, 1993, but
effective as of March 18, 1991, and recorded in Book 1358, Page 234 of the
Records of Armstrong County, Pennsylvania; (l) Assignment dated May 21, 1991,
but effective as of the date of first production, and recorded in Book 1116,
Page 50 of the Records of Armstrong County, Pennsylvania on July 5, 1991, as
corrected by that Correction of Assignment dated November 24, 1993, but
effective as of the date of first production, and recorded in Book 1358, Page
239 of the Records of Armstrong County, Pennsylvania; (m) Assignment dated May
21, 1991, but effective as of April 1989, the date of first production, and
recorded in Book 1116, Page 42 of the Records of Armstrong County, Pennsylvania
on July 5, 1991, as corrected by that Correction of Assignment dated November
24, 1993, but effective as of the date of first production, and recorded in Book
1358, Page 244 of the Records of Armstrong County, Pennsylvania; and (n) any
other real property interest in or under the Wells.
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1.21. "Ordinary Course of Business", shall mean the ordinary
course of business and conduct of operations consistent with past custom and
practice, and shall include, without limitation, operations of a kind and nature
conducted in a manner consistent with those of a reasonably prudent operator in
the same or similar circumstances.
1.22. "Outstanding Obligations", shall mean those Royalties, and
Overriding Royalties accruing on or before the Effective Date and which Seller
has not paid as of the Closing Date, a list of which is set forth on Schedule
1.22.
1.23. "Overriding Royalty", shall mean a non-operating interest
carved out of a Working Interest's share of the oil and gas produced at the
surface, free of production expenses.
1.24. "Permitted Encumbrances", shall mean those Encumbrances as
may exist on the Oil and Gas Properties from time to time in the Ordinary Course
of Business, which are: (a) liens for Taxes not yet due and payable, or if due
and payable, are being contested in good faith in the Ordinary Course of
Business; (b) inchoate, statutory or operators liens securing obligations for
labor, services, materials and supplies furnished to the Oil and Gas Properties,
but only if such liens are not delinquent and will be discharged in the Ordinary
Course of Business; (c) Encumbrances that arise under Oil and Gas Contracts of a
type and nature customary in the oil and gas industry to secure the payment of
amounts that are not yet delinquent or, if delinquent, are being contested in
good faith in the Ordinary Course of Business; (d) Encumbrances that arise as a
result of Oil and Gas Contracts that can be terminated on thirty (30) days
notice, orders and laws.
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1.25. "Person", shall mean an individual, group, partnership,
corporation, trust, Limited Liability Company or other entity.
1.26. "Pipeline", shall mean the gas gathering system located on
the Oil and Gas Properties.
1.27. "Pipeline Interest", shall mean Sellers' interest in the
Pipeline.
1.28. "Production", shall mean all hydrocarbons produced, saved
and sold from the Wells.
1.29. "Revenue Interest", shall mean the gross revenues from
Production attributable to a Working Interest.
1.30. "Royalty", shall mean that proportionate share of Production
payable to the owner of the mineral estate or its designee, free of all expenses
of Production.
1.31. "Taxes", shall mean all ad valorem, severance, and other
taxes or fees levied upon or measured by Production, personal property taxes,
real property taxes, and any and all other taxes or fees of whatever type or
kind assessed or which are based upon the ownership of the Assets.
1.32. "Wells", shall mean Sellers' interest in those wells set
forth on Schedule 1.32 hereto.
1.33. "Working Interest", shall mean an interest in the leases
embodying operating rights, operating obligations (including, but not limited
to, obligations to bear the costs and expenses of exploring for and producing
hydrocarbons) and the right to share in Production.
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ARTICLE II--PURCHASE AND SALE OF THE ASSETS
2.1. Transfer. Subject to the terms of this Agreement, Sellers
hereby agree to sell, transfer, convey and deliver unto the Buyer, and Buyer
hereby agrees to purchase, acquire and accept, the Assets, effective as of the
Effective Date.
2.2. Closing. At the closing, subject to the provisions of Article
X, the Buyer will deliver to Seller the Purchase Price in accordance with
Article III below.
2.3. Closing Date. The date of the Closing shall be December 14,
1999 or such other date as shall be mutually agreeable to the parties.
2.4. Assignments. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties contained
herein, at Closing, Sellers shall convey, transfer, assign and deliver all of
the Assets (by executing and delivering one or more counterparts of the
Assignment, together with a description of the respective Assets attached
thereto) to Buyer. The Assignment shall provide for a Special Warranty of title
to the Assets by, through and under the Sellers, but not otherwise.
ARTICLE III--PURCHASE PRICE
3. Price. The purchase price for the Assets (the "Purchase Price")
shall be Eight Hundred Twenty Six Thousand Three Hundred Sixty Eight Dollars
($826,368.00).
3.1. Manner of Payment. At the Closing, the Buyer will pay to
Sellers' the Purchase Price in immediately available funds. Each of the Sellers
hereby expressly agrees to provide Buyer in writing before the Closing Date with
individual wiring instructions. In the absence of individual wiring instructions
from each Seller, each Seller agrees that the Buyer may wire transfer the
Purchase Price to AREC's account for further distribution to DRI and CMS and,
that Buyer's wire transfer of the Purchase Price to AREC's account shall be
deemed full compliance and satisfaction of the payment terms of this Agreement
as to all Sellers.
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3.2. Allocation of Revenues and Assumption of Liabilities. Subject
to the terms and provisions hereof, as of the Effective Date:
3.2.1. Buyer purchases and acquires the Assets and assumes the
liabilities and obligations pertaining to the Assets which accrue on and after
the Effective Date (to include by way of example and not limitation, all
obligations: (i) under the leases which constitute a portion of the Oil and Gas
Properties; (ii) under the Oil and Gas Contracts; (iii) referenced herein or on
Exhibits hereto; and (iv) other Legal Requirements), as evidenced by the
execution of this Agreement and the execution and acceptance of each Assignment,
but excluding however: (x) liabilities and obligations of Sellers attributable
to Sellers' ownership or operation of the Assets, either incurred or accruing
prior to the Effective Date; or, (y) liabilities or obligations arising from a
breach of any the obligations of Sellers under this Agreement.
3.2.2. Sellers shall retain and bear the liabilities and
obligations attributable to Sellers' ownership or operation of the Assets, (to
include, by way of example and not limitation: (i) costs for leases or leasehold
interests under any existing letter of intent, prospect acquisition agreement,
or other contract or document to which Seller is a party and (ii) all
Outstanding Obligations),and arising and/or incurred prior to the Effective Date
(whether or not actually invoiced or billed prior to or subsequent to the
Effective Date), excluding however: (x) liabilities specifically assumed by the
Buyer under this Agreement; and (y) liabilities arising from a breach of any of
Buyer's obligations under this Agreement.
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3.2.3. Sellers shall receive all proceeds of Production
actually sold and delivered before the Effective Date, and Buyer shall receive
all proceeds of Production actually sold and delivered after the Effective Date.
3.2.4. Seller shall receive all revenues and benefits
attributable to the Assets earned to the period prior to the Effective Date and
Buyer shall receive all revenues and benefits attributable to the Assets earned
on or after the Effective Date. Taxes assessed against the Assets shall be pro
rated at the Closing Date as of the Effective Date.
3.3 Purchase Price Adjustment. At Closing, the Purchase Price
shall be adjusted upwards by the amount of all Lease Operating Expenses actually
paid by Seller for the intervening period between the Effective Date and the
Closing Date, and downwards by: (i) any unpaid Lease Operating Expenses incurred
prior to Effective Date unpaid as of the Closing Date, a list of which will be
provided Buyer prior to the Closing; (ii) any Outstanding Obligations; and (iii)
any adjustments under Article VII below.
ARTICLE IV--THE SELLER'S REPRESENTATIONS AND WARRANTIES
4. The Sellers represent and warrant that:
4.1. Organization. Each of AREC and DRI is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation, CMS is a partnership duly organized and validly existing
under the laws of the State of its formation, and each Seller is in good
standing and qualified to do business in each jurisdiction where it is required
for the conduct of each Sellers' business.
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4.2. Authority. Each Seller has all requisite power and authority
to carry on its business as presently conducted, to enter into this Agreement to
sell the Assets on the terms described in this Agreement, and to perform its
obligations under this Agreement. The consummation of the transaction
contemplated by this Agreement will not violate, nor be in conflict with, any
provisions of its Certificate of Incorporation, Partnership Agreement or other
governing document of any Seller, or any material agreement or instrument to
which a Seller is a party or by which a Seller or any of the Assets is bound, or
any judgment, decree, order, statute, rule or regulation applicable to a Seller
or any of the Assets.
4.3. Binding Obligation. This Agreement has been duly executed and
delivered on behalf of Sellers. All documents and instruments required hereunder
to be executed and delivered to Buyer shall have been duly executed and
delivered. This Agreement does, and such documents and instruments will,
constitute legal, binding obligations of the Sellers in accordance with their
terms.
4.4. No Breach of Statute, Decree or Contract. The execution,
delivery and performance of this Agreement by a Seller does not and will not
breach any Legal Requirement, will not at the Closing conflict with or result in
a breach of or default under any agreement or any order, writ, injunction,
decree, contract, agreement or instrument to which a Seller is a party or by
which the Assets are or may be bound, will not result in the creation or
imposition of any lien, charge or encumbrance of any nature upon any of the
Assets, and will not give to others any interest or rights in, or with respect
to any of the Assets, except to the extent of Permitted Encumbrances.
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4.5. No Litigation or Adverse Events. Except as set in Schedule
4.5, to the best of Sellers' knowledge there is no suit, claim or action, or
legal, administrative, arbitration or other proceeding, or governmental
investigation, pending or, to the Sellers' knowledge, threatened, by or against
the Sellers or any of them or the Assets, and no event or condition of any
character, to the Sellers' knowledge, pertaining to the Sellers or Assets, that
could prevent the consummation of the transactions contemplated by this
Agreement or which might result in a material loss of any portion of the Assets,
a material diminution in the value of any of the Assets or a material
interference with the use and enjoyment of any of the Assets.
4.6. Taxes. Since AREC became Operator, AREC has paid and
discharged all Taxes, assessments, excises and other levies which, if not paid,
could constitute liens or charges against the Assets except for Taxes being
contested in good faith and by appropriate proceedings. Sellers remains
responsible for their share of any Taxes due and owing for periods prior to the
Effective Time.
4.7. Accuracy of Documents. All copies of Oil and Gas Contracts,
provided by the Sellers in connection with the transactions contemplated hereby,
are complete and accurate and have not been amended or modified by any oral
agreements.
4.8. Broker's Fees. The Sellers have not employed or retained any
broker or finder in connection with the sale of the Assets hereunder to the
Buyer, which would give rise to any fees to any third party in connection with
such sale.
4.9. Title. The Assignments will convey to Buyer, subject to
Existing Burdens, Sellers' title to the Assets without reservation. Other than
the Existing Burdens, Sellers have not created any liens, claims or Encumbrances
affecting the Assets. Sellers shall provide a Special Warranty of title to the
Assets to Buyer by, through and under Sellers, but not otherwise, with full
power of substitution and subrogation.
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EXCEPT FOR THE SPECIAL WARRANTIES OF TITLE GIVEN BY SELLERS IN
THE ASSIGNMENTS, SELLERS DISCLAIM ANY WARRANTIES EXPRESS AND IMPLIED, INCLUDING
WITHOUT LIMITATION ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE (INCLUDING WARRANTIES WITH RESPECT TO THE PRESENCE OF ENVIRONMENTAL
CONDITIONS, EXCEPT AS SET FORTH IN PARAGRAPH 4.13, OR NATURALLY OCCURRING
RADIOACTIVE MATERIAL AFFECTING SUCH PERSONAL PROPERTY) OF ANY PROPERTY REAL,
PERSONAL OR MIXED OR EQUIPMENT (INCLUDING PIPELINE EQUIPMENT) CONVEYED TO AND
ACQUIRED BY BUYER, WITH ALL SUCH REAL AND PERSONAL PROPERTY AND EQUIPMENT BEING
TRANSFERRED, ASSIGNED, SOLD, PURCHASED, ACCEPTED AND ACQUIRED "AS IS" AND "WHERE
IS" WITHOUT WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY.
4.10. Status of Leases.
4.10.1. Payments. Since AREC became Operator, all Royalties,
Overriding Royalties, rentals, shut-in royalties and other such payments due
under the Oil and Gas Properties have been properly and timely paid (except
where Royalty payments have been legally suspended to Royalty owners whose
whereabouts are unknown or who have title defects). AREC and CMS remain
responsible for their share of any payments which may be determined to be due
for periods prior to the Effective Time.
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4.10.2. Working Interests. The Working Interests of AREC and
CMS, in the Oil and Gas Properties is represented on Schedule 1.32.
4.10.3. Net Revenue Interests. AREC's and CMS's Net Revenue
Interests in, and DRI's Net Profits Interest from, the Oil and Gas Properties is
represented on Schedule 1.32.
4.10.4. Compliance with Laws. AREC as operator of the Oil and
Gas Properties has complied in all material respects with all applicable laws,
regulations and orders of all governmental agencies having jurisdiction over
those Assets.
4.11. Necessary Action. Sellers shall take or cause to be taken
all such actions, as would a prudent businessman under the same or similar
circumstances, as may be necessary and advisable to consummate and make
effective the sale of the Assets contemplated by this Agreement and to assure
that the Sellers will not be under any material corporate, legal or contractual
restriction that would prohibit or delay the timely consummation of such
transactions; provided, however, that Sellers shall not be required to (i) file
suit or assume any additional liabilities in performing its obligations
hereunder, or (ii) to perform any title curative except as set forth in Article
VI hereof.
4.12. No Default. AREC and CMS are not in default under, and have
not received a notice of default or termination (to include a self-executing
termination clause under an oil and gas lease) with respect to, any provision of
an oil and gas lease, an Oil and Gas Contract affecting the Oil and Gas
Properties, or the title of the Sellers thereto. Except for Permitted
Encumbrances, no condition exists that with notice or lapse of time or both
would constitute a default under any mortgage, indenture, loan credit agreement
or other agreement or instrument evidencing indebtedness for borrowed money, or
create a lien, charge or other Encumbrance on the Oil and Gas Properties.
Neither AREC nor CMS have received any notice of default with respect to, any
order, writ, injunction or decree of any court, commission or administrative
agency in connection with the ownership, development or operation of the Oil and
Gas Properties, or any part thereof, which would materially adversely affect the
value of the Oil and Gas Properties.
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4.13. Environmental Claims. To the best of Sellers' knowledge
there is no Environmental Condition in, on or under any of the Assets which has
not been disclosed to Buyer prior to the Closing Date. The Sellers have not
received and have no knowledge of any notice of or any threat of any claim,
suit, proceeding, inquiry, investigation, or judicial or administrative action
arising out of or based upon any Environmental Law, pertaining to directly or
indirectly, any of the Assets.
4.14. Existing Burdens. AREC and CMS represent that to the Lease
Burdens and other Existing Burdens on the Wells do not reduce the Net Revenue
Interest below the percentages set forth on Schedule 1.32. AREC and CMS do not
warrant the represented Net Revenue Interest, except by, through and under AREC
and CMS, but not otherwise. DRI represents that it is entitled to receive thirty
percent (30%) of AREC's Net Profits from the Oil and Gas Properties and that it
has not created or permitted any Existing Burden on or against its Net Profits
Interest except that mortgage and first security interest granted to PNC Bank,
National Association ("Mortgage"), which Mortgage shall be removed at Closing.
DRI does not warrant its Net Profits Interest, except by, through and under it,
but not otherwise.
4.15. Permits. All permits necessary for the operation of the
Wells are in full force and effect.
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4.16. Production. AREC, as operator of the Assets, has advised
Buyer of all notices received by it, whether received orally or in writing, as
to any mechanical difficulty or downhole problem with any Well which is or with
the passage of time would materially adversely affect Production from such Well.
4.17. Preferential Right to Purchase. Sellers have not granted to
any person a preferential right to purchase the Assets or production therefrom,
or incurred an overproduced gas balancing obligation or other production
inbalance.
ARTICLE V--THE BUYER'S REPRESENTATIONS AND WARRANTIES
5. The Buyer represents and warrants to each Seller as follows:
5.1. Corporate. The Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the Commonwealth of
Pennsylvania. The Buyer has duly authorized the execution, delivery and
performance of this Agreement by all necessary corporate action, and the same is
a binding obligation of the Buyer, enforceable in accordance with its terms.
5.2. No Breach of Statute or Contract. The execution, delivery and
performance of this Agreement will not breach any statute or regulation of any
governmental authority, and will not at the Closing conflict with or result in a
breach of or default under any of the terms, conditions, or provisions of the
Buyer's Certificate of Incorporation or by-laws or any order, writ, injunction,
decree, agreement or instrument to which the Buyer is a party or by which it is
or may be bound.
5.3. Environmental Inspection. Buyer acknowledges that it has had
ample opportunity to inspect the Assets, has actually inspected the Assets and
is aware of their condition. In acquiring the Assets, Buyer is relying on its:
(i) own knowledge of the Assets based upon its inspection of the Assets pursuant
to Article VII hereof; (ii) as the former operator of the Assets; (iii) the
prior owner of the Assets and original assignor to CMS; (iv) Affiliate, Castle
Energy Corporation, currently owing a Working Interest in the Assets, and not on
any representation or warranty given by the Sellers herein.
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5.4. Prior Operator. Buyer acknowledges that it was the operator
of the Assets from the initial drilling of the Wells until June 17, 1997 when
operations transferred to AREC and who, or its Affiliate, has owned a Working
Interest in the Assets since their creation.
5.5. Retention of Records. Buyer acknowledges that it has retained
and has in its possession the original records and title reports relating to the
Oil and Gas Properties.
5.6. Sophisticated Buyer. Buyer represents and warrants that it is
an experienced and sophisticated oil and gas company, familiar with the Assets,
operation of the Assets and other oil and gas properties, and is making this
acquisition based upon its own due diligence and knowledge of the Assets without
reliance on any representation or warranty of Sellers other than those expressly
set forth in this Agreement.
5.7. Broker's Fees. Buyer has not employed or retained any broker
or funder in connection with the purchase of the Assets hereunder from the
Sellers which would give rise to any fees to any third party in connection with
such sale.
ARTICLE VI--TITLE
6.1. Pre-Closing Examination. Prior to the Closing Date, Buyer
shall conduct such examinations of the Title to the Assets as Buyer deems
necessary, in its sole and absolute discretion, to include, by way of example
and not limitation, review of courthouse records, physical inspection of the
surface estate of the Oil and Gas Properties, those Books and Records in AREC's
possession and those title reports and other land records in its own possession
relating to the Oil and Gas Properties, to determine that since June 17, 1997,
neither AREC nor CMS had created a condition such that they, or either of them
could not convey to Buyer "Good and Defensible Title" ("Title Defect").
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6.2. Good and Defensible Title. For the purposes of this
Agreement, "Good and Defensible Title" shall mean such title to the Assets, by,
through and under the Sellers, but not otherwise, which Sellers, or Buyer as
successor in interest to Sellers, would be expected to: (a) receive not less
than the Net Revenue Interest set forth on Schedule 1.32 in all hydrocarbons
produced, saved and sold from the Oil and Gas Properties; (b) bear not more than
AREC's and CMS's Working Interest, without increase, as set forth on Schedule
1.32; and, (c) free from any Encumbrance created by Sellers.
6.3. Notice of Title Defect. Not later than twelve o'clock noon,
the last working day prior to the Closing Date, Buyer must notify Sellers, in
writing, of any matter that Buyer considers to be a Title Defect ("Title Defect
Notice"), which Title Defect Notice shall include: (i) a specific description of
the matter Buyer asserts as a Title Defect; and (ii) a specific description of
the Oil and Gas Property or the portion of the Oil and Gas Property that is
affected by the Title Defect.
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6.3.1. For the purposes of this Article VI, the hypothecation
of DRI's Net Profits Interest to PNC Bank, National Association ("PNC") and
AREC's Working Interest to PNC shall not be deemed a "Title Defect" provided
that such hypothecations shall be released at Closing.
6.4. Title Failure. Sellers shall have until February 14, 2000 in
which to attempt to cure any Title Defect or to advise Buyer of their inability
to do so or their election not to do so. Any Title Defect that Sellers are
unwilling to cure shall be deemed a title failure ("Title Failure")
6.5. Title Failure Adjustments. Buyer shall be entitled to a
credit in the Final Settlement Statement, under Paragraph 10.8 below, for any
Title Failure in accordance with that schedule of Asset values set forth in
Schedule 10.6; provided however, Buyer shall not be entitled to any credit for
Title Failure unless and until the aggregate amount of Title Failures exceed Ten
Thousand Dollars ($10,000) and then only for the amount in excess of such
amount.
ARTICLE VII--ENVIRONMENTAL EXAMINATION
7.1. Pre-Closing Examination. Prior to the Closing Date, Buyer and its
authorized representatives, at Buyer's sole risk and expense, shall have the
right to enter upon and inspect the real and personal properties comprising the
Oil and Gas Properties, and to conduct such well, environmental and other tests
and assessments as Buyer shall deem appropriate. Buyer shall repair any damages
to the Oil and Gas Properties resulting from its inspection. As part of its
inspection of the Oil and Gas Properties, Buyer and its authorized
representatives shall have the right to conduct soil and water tests and
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borings, and generally to conduct such tests, examinations, investigations and
studies as may be necessary or appropriate in Buyer's sole judgment to make an
environmental assessment of the Oil and Gas Properties. Buyer shall keep any
data or information acquired through such examination and the results of all
analyses of such data and information strictly confidential and shall not
disclose the same to any person or agency without the prior written approval of
Sellers unless such disclosure is required by law. If Buyer has discovered in
its environmental assessment an Environmental Condition, Buyer shall notify
Seller of such circumstances as soon as practicable, but in no event less than
one (1) day prior to Closing.
7.2. Environmental Condition Attributable to Buyer. Should an
identified Environmental Condition be attributable to the acts of Buyer while it
was the "Driller" (as that term is defined in that certain Turnkey Drilling
Contract by and between CMS and Buyer) of the Oil and Gas Properties, then
Sellers shall have no responsibility for the cure or remediation thereof and
Buyer will accept the Assets "AS IS" without right of offset or adjustment for
any such Environmental Condition. A list of Environmental Conditions for which
Buyer is responsible may be attached hereto after the Closing Date as Schedule
7.3.
7.3. Environmental Conditions Attributable to AREC and CMS. If
Buyer properly notifies Sellers of an Environmental Condition related to an Oil
and Gas Property and attributable to AREC and/or CMS, Buyer may (i) waive the
Environmental Condition and close, or (ii) request AREC and CAMI to cure the
Environmental Condition. If Buyer asks AREC and CMS to cure an Environmental
Condition, and if the aggregate amount of all such Environmental Conditions
exceeds Ten Thousand Dollars ($10,000), AREC and CMS have the option (i) to cure
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the Environmental Condition, or (ii) to exclude the Oil and Gas Property
affected by the Environmental Condition from this Agreement. If AREC and CMS
elect to cure the Environmental Condition, but the cure has not been completed
by Closing, the Oil and Gas Property affected by the Environmental Condition
shall not be conveyed to Buyer at Closing, the Purchase Price shall be reduced
by the amount allocated to such Oil and Gas Property in Schedule 10.6. If the
Environmental Condition is cured by February 14, 2000, within five (5) days
after the Environmental Condition is cured, Seller will convey to Buyer the Oil
and Gas Property affected by the Environmental Condition and the amount
allocated for such Oil and Gas Property on Schedule 10.6 shall be paid to
Sellers as part of the Final Settlement Statement.
7.3.1. An Environmental Condition shall be deemed "cured"
when: (i) the Buyer and Sellers agree, in writing, that the Environmental
Condition has been cured; or (ii) when the Sellers present to Buyer the
certification by a licensed environmental engineer that the Environmental
Condition has been "cured". Any disagreement between the parties shall be
resolved in accordance with the Dispute Resolution provision of Paragraph 14.11
below.
7.4. Environmental Purchase Price Adjustment. Notwithstanding any
provision hereof to the contrary, there shall be no reduction in the Purchase
Price for uncured Environmental Defects unless, and only to the extent that, the
aggregate amount of such uncured Environmental Defects exceeds Ten Thousand
Dollars ($10,000), and then only for the amount in excess of such amount.
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ARTICLE VIII--CONDITIONS TO THE BUYER'S OBLIGATIONS TO CLOSE
8. The Buyer's obligation to close shall be subject to the satisfaction
of the following conditions prior to or at the Closing, unless waived by the
Buyer.
8.1. Compliance With Agreement. The Sellers shall have performed
and complied in all respects with all his obligations under this Agreement which
are to be performed or complied with by it prior to or at the Closing.
8.2. No Adverse Change. Neither the Assets nor the business of the
Sellers shall have been adversely affected in any material way, subsequent to
the execution hereof, and there shall have been no substantial uninsured or
underinsured claim of personal injury or of damage to the Assets.
8.3. Litigation. No litigation or other proceeding shall have been
commenced or threatened against the Buyer or the Sellers, which in the sole
opinion of the Buyer would materially and adversely affect its ownership, or the
value, of the Assets.
8.4. Accounting. Buyer shall have received from Sellers a complete
accounting of all funds paid to and expended by Sellers as the operator of the
Assets subsequent to the Effective Date.
ARTICLE IX--CONDITIONS TO THE SELLERS' OBLIGATION TO CLOSE
9. The Sellers' obligation to close shall be subject to the
satisfaction of the following conditions prior to or at the Closing, unless
waived by the Sellers:
9.1. Compliance With Agreement. The Buyer shall have performed and
complied in all material respects with all its obligations under this Agreement
which are to be performed or complied with by it prior to or at the Closing.
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9.2. Litigation. No litigation or other proceeding shall have been
commenced or threatened against the Sellers or the Buyer, which in the sole
opinion of the Sellers would materially and adversely affect its ownership, or
the value, of the Assets.
9.3. Accounting. Buyer shall account to Sellers for all funds
received or obligations paid, by Buyer subsequent to the Operations Assumption
Date and attributable to the Assets prior to the Effective Date.
9.4. Operations. Buyer having assumed and conducted operations in
accordance with Article XI hereof and in the Ordinary Course of Business.
ARTICLE X--CLOSING; TERMINATION; POST CLOSING
10. Closing.
10.1. Place. The Closing shall take place at such location as
mutually agreed upon by the Buyer and the Sellers.
10.2. Termination. At any time before the Closing, this Agreement
may be terminated: (i) by mutual consent of the parties; (ii) by either the
Buyer or the Sellers if there has been a material misrepresentation, material
breach of warranty or material breach of covenant by the other; (iii) by the
Buyer if any condition set forth in Article VIII shall not be satisfied at the
Closing; or (iv) by the Sellers if any condition set forth in Article IX shall
not be satisfied at the Closing.
10.3. Transfer of Assets. Sellers will, subject to the provisions
of this Agreement: (i) execute and deliver to Buyer one or more Assignments
satisfying the requirements of Paragraph 2.4; and (ii) transfer to Buyer by
check all of Sellers' right, title and interest in and to any funds currently
held by AREC, as operator, in escrow or suspense with respect to and
attributable to the Assets along with associated records regarding and a list by
interest owner of such funds, to the extent that such records were transferred
to AREC by CECI when AREC assumed operations on June 17, 1997 or created by
AREC.
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10.4. Transfer of Books and Records. Not later than thirty (30)
days after Closing, AREC will transfer, convey and deliver unto Buyer (to the
extent not theretofore delivered) copies of all of the Books and Records in
AREC's possession as operator, whether in manual or electronic form, subject to
any contractual restrictions with third parties. To the best of Sellers'
knowledge and belief, Sellers are not a party to any document and none of the
Books and Records is subject to any contract which would restrict or otherwise
prevent the transfer of all Books and Records in Sellers' possession, or the
possession of Sellers' agents or representatives, to Buyer. Sellers shall have
reasonable access during normal business hours for any reasonable purpose to the
files delivered to Buyer hereunder and in Buyer's possession; provided, however,
Buyer shall have no obligation to keep or maintain the files or any other
records or documents beyond three (3) years after the Closing Date unless Buyer
surrenders such documents to Sellers or Sellers consent to the destruction of
the such files, records or documents prior to such date. Sellers shall not be
obligated to make or deliver any geological or engineering interpretations in
the Books and Records. Sellers may make and retain such copies of the Books and
Records as Sellers' deem necessary for the conduct of their respective business;
provided, however, that Sellers will not, without the express written consent of
the Buyer, permit any third party, other than Sellers' attorneys and
accountants, access to such records, except as may be required to comply with
any order of any court or governmental agency to include the Internal Revenue
Service.
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10.5. Taxes. All Taxes shall be pro-rated between AREC, CMS and
Buyer as of the Effective Date. AREC and CMS shall be charged for all such Taxes
based on ownership of the Assets or Production the Assets actually sold prior to
the Effective Date. Buyer shall be charged for all such Taxes based on ownership
of the Assets or Production from the Assets actually sold as of the Effective
Date. Buyer shall pay all documentary, filing and recording fees for the
Assignments required in connection with the transaction contemplated by this
Agreement.
10.6. Purchase Price Allocation. Sellers and Buyer recognize that
reporting requirements of Sec. 1060(b) of the Internal Revenue Code, and the
regulations promulgated thereunder, may apply to the transaction contemplated by
this Agreement. If so, Sellers and Buyer agree that the Purchase Price shall be
allocated among the assets as mutually agreed by Sellers and Buyer to comply
with and satisfy the requirements of Sec. 1060(b) and applicable regulation.
Sellers and Buyer agree that no Asset shall be allocated a negative value. The
allocated value of the Assets is set forth on Schedule 10.6.
10.7. Payment. Buyer shall pay to Sellers the Purchase Price
pursuant to Article II.
10.8. Final Settlement Statement. Within sixty (60) days after the
Closing, or as soon as practical thereafter, Buyer shall prepare, in accordance
with this Agreement, the Final Settlement Statement, setting forth any
appropriate adjustments or payments not finally determined as of the Closing
Date. Buyer shall submit the Final Settlement Statement to Sellers and shall
afford Sellers access to Buyer's records pertaining to the computation of the
Final Settlement Statement. Sellers shall deliver to Buyer a written report
containing any changes which Sellers propose be made to the Final Settlement
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Statement. The parties shall employ that degree of effort as would prudent
business persons engaged in on going business relationships to reach agreement
as to the amounts due pursuant to such Final Settlement statement no later than
thirty (30) days after the submission of the Final Settlement Statement to
Sellers. The date upon which such agreement is reached shall be called the
"Settlement Date".
10.8.1. On the Settlement Date, should one party be obligated
to the other by reason of the Final Settlement Statement, the indebted party
shall pay to the other party, in immediately available funds, those monies
determined to be due under the Final Settlement Statement. Until paid, all past
due amounts under this Paragraph 10.8 shall bear interest at the rate of prime
plus two percent (2%), to move, as established by PNC Bank, Pittsburgh,
Pennsylvania (computed based on a 360 day year).
ARTICLE XI--OPERATIONS
11.1. Effective the Closing Date , CECI shall assume and take over
all duties as operator of the Assets ("Operations Assumption Date").
11.2. AREC and CECI shall cooperate in the completion of all
documentation required by the Commonwealth of Pennsylvania for the change of
operator. CECI agrees to post the required operator's bond and plugging bonds as
required by the Pennsylvania Department of Environmental Protection.
ARTICLE XII--INDEMNIFICATION
12.1. Indemnification of the Buyer. AREC and CMS shall jointly
indemnify and hold the Buyer harmless against, and reimburse the Buyer on demand
for, all actual damage, loss, cost or expense (including reasonable attorneys'
fees incurred in defending or settling any claim for such damage, loss, cost or
expense) incurred by the Buyer resulting from any material breach of the
Sellers' representations, warranties or covenants in this Agreement.
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12.2. Indemnification of the Sellers. The Buyer shall indemnify
and hold the Sellers, individually and jointly harmless against, and reimburse
the Sellers on demand for, all actual damage, loss, cost or expense (including
reasonable attorneys' fees incurred in defending or settling any claim for such
damage, loss, cost or expense) incurred by the Sellers resulting from any
Environmental Condition created after the Closing Date, any material breach of
the Buyer's representations, warranties or covenants in this Agreement.
12.3. Notwithstanding the above, nothing in this Agreement shall
be construed to: (i) require the Buyer to indemnify Sellers against pre-existing
liabilities of Sellers, including liabilities for Environmental Conditions,
incurred, created or existing prior to the Effective Date; (ii) require Sellers
to indemnify Buyer against pre-existing liabilities of Buyer, including
liabilities for Environmental Conditions, incurred, created or existing prior to
the Effective Date; (iii) amend any contractual rights between the parties
regarding any Title Defect or Environmental Condition; or (iv) alter or amend
each Party's obligation or rights under any Environmental Law or Oil and Gas
Contracts for any Environmental Condition, whether know, unknown as of the
Closing Date.
ARTICLE XIII--NOTICES
13.1. Notices. Any notice, request demand, statement or other
communication required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered in person, or if telegraphed, or
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by courier, or mailed by certified mail, return receipt requested, when actually
received, and may be given as follows:
If to Sellers:
American Refinery and Exploration Company
100 Four Falls Corporate Center, Suite 215
West Conshohocken, Pennsylvania 19428
Attention: Thomas F. Halloran
Deven Resources, Inc.
983 Old Eagle School Road, Suite 615
Wayne, Pennsylvania 19087
Attention: Gary J. Novinskie
CMS/Castle Developmental Energy Fund I, L.P.
c/o CMS Affiliated Partnership
One Bala Plaza, Suite 412
Bala Cynwyd, Pennsylvania 19004
Attention: Richard A. Mitchell
with copies to:
Ehmann, Van Denbergh & Trainor, PC
Two Penn Center Plaza, Suite 725
Philadelphia, Pennsylvania 19102-1707
Attention: C. Warren Trainor, Esquire
If to Buyer:
Castle Exploration Company, Inc.
61 McMurray Road, Suite 204
Pittsburgh, PA 15241
Attention: Timothy M. Murin
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with copies to:
Castle Exploration Company, Inc.
5623 North Western
Oklahoma City, Oklahoma 73118
Attention: William C. Liedtke, Esquire
Or to such other address as such party may designate by ten (10) days advance
written notice to the other party.
ARTICLE XIV--MISCELLANEOUS
14.1. Exclusiveness. This Agreement embodies all of the
representations, warranties and agreements of the parties hereto with respect to
the subject matter hereof, and all prior understandings, representations and
warranties (whether oral or written) with respect to such matters are
superseded. This Agreement may not be amended, modified, waived, discharged or
terminated except by an instrument in writing signed by the party or an
executive officer of a corporate party against whom enforcement of the change,
waiver, discharge or termination is sought.
14.2. Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provisions were omitted.
14.3. Successors. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
14.4. Assignment. This Agreement may not be assigned without the
prior written consent of the other party.
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14.5. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same agreement.
14.6. Neither Party Drafter. The parties hereto agree that this
Agreement is the product of negotiation between the parties, that counsel during
its negotiations has represented each and that neither party shall be deemed the
drafter hereof.
14.7. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the Commonwealth of
Pennsylvania without giving effect to conflicts of laws provisions.
14.8. Paragraph Headings. The paragraph headings in this Agreement
are for convenience of reference only and shall not be deemed to alter or affect
any provision hereof.
14.9. Costs. Each party agrees to bear its legal, accounting and
other fees incurred in the negotiation of the transaction contemplated hereby,
the conduct of its due diligence and the preparation of the documents addressed
herein.
14.10. Exhibits. The Exhibits and Schedules attached hereto,
together with all documents incorporated by reference therein, form an integral
part of this Agreement and are hereby incorporated into this Agreement wherever
reference is made to them to the same extent as if they were set out in full at
the point at which such reference is made. Any Schedule attached hereto after
the Closing Date shall be deemed to have been a party of this Agreement as of
the Closing Date. Any such "Post-Closing" Schedule shall be initialed and dated
by each party hereto or, if the finding of the Mediation (as set forth in
Paragraph 14.11 below), then the results of the Mediation may be attached hereto
and shall become a part hereof for all purposes.
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14.11. Dispute Resolution. The parties will attempt in good faith
to resolve any and all controversies of every kind and nature between the
parties to this Agreement arising out of or in connection with the existence,
construction, validity, interpretation, performance, non-performance, operation,
Title, Environmental Condition, breach, continuance or termination of this
Agreement (each a "Dispute") promptly by negotiations between senior executives
of the parties who have the authority to resolve the Dispute. Within twenty (20)
days after the receipt of a notice of the existence of a dispute, the receiving
party shall submit to the other (or others) a written response. The notice and
response shall included (a) a statement of each party's position and a summary
of the evidence and arguments supporting its (their) position, and (b) the name
and title of the executive who will represent the party. The executives shall
meet at a mutually acceptable time and place within thirty (30) days of the date
of the disputing party's notice and thereafter as often as they deem reasonably
necessary to exchange relevant information and to attempt to resolve the
dispute. If the matter has not been resolved within sixty (60) days of the
disputing party's notice, or of the party receiving said notice will not meet
within the allotted thirty (30) day period, either party may initiate an action
before a neutral arbitrator under the rules of the American Arbitration
Association sitting in Philadelphia, Pennsylvania or under Alternative Dispute
Resolution ("Mediation"). Any judgment, award or finding on behalf of one party
against the other by the Mediation may be enforced by the Court of Common Pleas
of Montgomery County, Pennsylvania or any other court of competent jurisdiction.
The losing party in any such Mediation shall pay all costs associated therewith.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first written above.
SELLERS
-------
Attest: AMERICAN REFINING AND
EXPLORATION COMPANY
/s/ C. Warren Trainor By: /s/ Thomas F. Halloran
- ----------------------------------------------------- -------------------------------------
Assistant Secretary Thomas F. Halloran, President
Attest: DEVEN RESOURCES, INC.
/s/ C. Warren Trainor By: /s/ Gary J. Novinskie
- ----------------------------------------------------- -------------------------------------
Assistant Secretary Gary J. Novinskie, Vice President
Attest: CMS/CASTLE DEVELOPMENTAL
ENERGY FUND I, L.P.
By: CMS Energy Associates, L.P.
Its general partner
By: MSPS Energy, Inc.
Its general partner
/s/ Thomas D. Eyidio
- -----------------------------------------------------
Thomas D. Eyidio - Secretary
By: /s/ Marian E. Cohen
-------------------------------------
Name: Marian E. Cohen
-------------------------------------
Its: Vice President
-------------------------------------
BUYER
-----
Attest: CASTLE EXPLORATION COMPANY, INC.
/s/ Susan Pyle By: /s/ Richard E. Staedtler
- ----------------------------------------------------- -------------------------------------
Secretary Name: Richard E. Staedtler
-------------------------------------
Its: CEO
-------------------------------------
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