ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made as of August
31, 2005, between TRANS ENERGY, INC., a Nevada corporation ("Trans Energy"), and
PRIMA OIL COMPANY, INC., a Delaware corporation ("Prima"), (also sometimes
referred to collectively herein as "Seller" or "Sellers") and XXXXXX XXXXXXX
(also sometimes referred to herein as "Buyer"). For good and valuable
consideration, the value, receipt and sufficiency of which are hereby
acknowledged, and in consideration of the mutual covenants, agreements,
representations, and warranties contained in this Agreement, the parties agree
as follows:
1. Basic Transaction: Subject to the terms and conditions of this Asset
Purchase Agreement (the "Agreement"), Buyer agrees to purchase from Seller, and
Seller agrees to sell to Buyer certain assets described in Section 2 below (the
"Purchased Assets"). For purposes of this Agreement, the term "Business' shall
refer only to the operations and results of operations of the Xxxxxx County
Leases and the Xxxxxx County Xxxxx, as such terms are described below.
2. Purchased Assets: Except for the Excluded Assets described in Section 3
below, the Purchased Assets shall consist of the following assets of Seller in
connection with the Business:
a. All those certain leases for the production of oil and natural gas
located in Xxxxxx County, West Virginia, (the "Xxxxxx County Leases") and more
particularly described in that certain assignment and xxxx of sale by and
between Cobham Gas Industries, Inc., a West Virginia corporation ("Cobham") and
Belmont Energy, Inc., a Ohio corporation, as assignors, and Prima, as assignee,
dated November 5, 2004, and of record in the Office of the Clerk of County
Commission of Xxxxxx County, West Virginia in Assignment Book 27, at page 258, a
copy of which is attached hereto as Exhibit A (the "Cobham Assignment");
b. All those certain oil or natural gas xxxxx located on the Xxxxxx
County Leases, all as more particularly described and set forth on Schedule B
attached hereto (the "Xxxxxx County Xxxxx"), together with all of the equipment
and other tangible personal property physically attached to any of the Xxxxxx
County Xxxxx;
c. All of those certain vehicles and other equipment set forth and
described on Schedule C attached hereto (the "Equipment"), together with such
parts inventories and hand tools as shall be agreed upon by Buyer and Mr.
Xxxxxxxx Xxxxx on behalf of Seller;
d. All of Seller's well logs, maps, production data, sales records and
histories, royalty payment records and other information concerning the Xxxxxx
County Leases or the Xxxxxx County Xxxxx, whether in paper, electronic or other
format (the "Xxxxxx County Information");
e. Seller's $50,000.00 reclamation bond pursuant to which all of the
Xxxxxx County Xxxxx, among others, are permitted (the "Bond");
f. Seller's cash and trade accounts receivable generated by the
Business, net of all operating expenses related to the Business, realized on or
after August 1, 2005 (the "August Business Net Receipts"); and
g. All of the outstanding capital common stock of Cobham held by
Seller, or any related party thereto, it being understood that in the event
Cobham is not the record holder of the outstanding capital common stock of
Pennine Resources, Inc. and Belmont Energy, Inc., then such shares held by
Seller, or any of their related parties shall also be included among the assets
purchased by Buyer.
3. Excluded Assets: All other assets of Seller and Cobham not specifically
set forth and described herein or on the Exhibits and Schedules hereto shall be
excluded from the Purchased Assets, including without limitation, any other
assets of Sellers that are expressly excluded from the Purchased Assets in the
Purchase Agreement, and all parts and tools which Buyer and Xx. Xxxxx agree
shall be excluded from the purchased assets.
4. Consideration.
a. Buyer shall:
i. sell, assign, convey, release, relinquish or otherwise
transfer to Seller (i) all of the capital common stock of Trans Energy issued to
Buyer or to Texas Energy Trust Company on or about January 31, 2005, being
approximately 244,633 shares (the "Trans Energy Stock"), which said shares shall
be valued at the closing price per share of its publicly traded shares on the
Closing Date;
ii. sell, assign, convey, release, relinquish or otherwise
transfer all of Buyer's options, warrants and future rights to acquire
securities of Seller or any of their affiliated entities from any of the Seller
or any of their affiliated entities (the "Securities Rights");
iii. allow, and does hereby allow, Seller to utilize through
December 31, 2005 the Bond to comply with West Virginia bonding requirements for
the operation of oil and natural gas xxxxx other than the Xxxxxx County Xxxxx,
including without limitation existing and new xxxxx;
iv. assume, and does hereby assume, responsibility for the
payment of the BB&T Loan in the approximate amount of $79,089, the three Ford
Motor Credit loans in the total approximate amount of $17,750, plugging
liabilities related to the Xxxxxx County Xxxxx, all expenses related to
operation, maintenance and ownership of the Xxxxxx County Leases and the Xxxxxx
County Xxxxx incurred on or after August 1, 2005, whether paid or not, and all
other liabilities not specifically retained by Seller.
x. Xxxxxxx shall:
i. fulfill their remaining payment obligations to Buyer under
the purchase agreement between the parties dated November 5, 2004 (the "Purchase
Agreement"); provided, however, Sellers will be entitled to a $25,000.00 credit
in exchange for one of the Xxxx Deere 650 Dozer listed on Schedule C;
ii. retain, and does hereby assume, responsibility for the
payment of certain debts of or related to Cobham, including without limitation
all accounts or notes payable to Xxxxxxx Oilfield Services, LLC or any other
entity with whom Trans Energy files consolidated financial statements, all as
more particularly set forth and described on Schedule D attached hereto and
further warrant that there are no known trade accounts payable, unpaid royalties
or taxes that have not been retained by Seller
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c. The Consideration shall be delivered as follows:
i. At the Closing, Buyer shall deliver:
1. all of Buyer's stock certificates for all of Buyer's
Trans Energy Stock, duly endorsed for transfer, and
accompanied by irrevocable stock transfer powers duly
executed by Buyer in substantially the same form as
Exhibit E;
2. an executed release and surrender of Buyer's
Securities Rights in substantially the same form as
Exhibit F.
ii. At the Closing, Seller shall deliver:
1. an executed assignment, assumption, and xxxx of sale
for the Xxxxxx County Leases and Xxxxxx County Xxxxx
in substantially the same form as Exhibit G;
2. an executed xxxx of sale for the Equipment in
substantially the same form as Exhibit H;
3. all outstanding stock certificates for Cobham, duly
endorsed for transfer, and accompanied by irrevocable
stock transfer powers duly executed by Seller in
substantially the same form as Exhibit I.
iii. Within ninety (90) days after the Closing date herein,
Seller shall deliver to Buyer the August Business Net Receipts, together with an
itemization of revenues and expenses generated by the Business during the month
of August 2005.
d. Trans Energy, its subsidiaries, officers and directors will, and do
hereby, release Xx. Xxxxxxx and Cobham from all their claims of whatever kind,
whether known or unknown, fixed or contingent, as of July 31, 2005 and as of the
Closing Date, except as otherwise specifically set forth herein or agreed upon
in writing.
e. Xx. Xxxxxxx and Cobham will, and do hereby, release Sellers, their
officers, directors and subsidiaries from all their claims of whatever kind,
whether known or unknown, fixed or contingent, as of July 31, 2005 and as of the
Closing Date, except as otherwise specifically set forth herein or agreed upon
in writing.
f. Xx. Xxxxxxx and Cobham will, and do hereby, indemnify Seller, its
subsidiaries, officers and directors from all losses or claims arising out of or
related to the ownership or operations of the Xxxxxx County Leases and the
Xxxxxx County Xxxxx, whenever or however so arising.
g. Xx. Xxxxxxx and Cobham will, and do hereby, indemnify Seller, its
subsidiaries, officers and directors from all losses or claims arising out of
the assumed liabilities provided in Section 4(a)(iv).
5. No Assumed Liability: Except as otherwise expressly provided in Section
4(b)(ii), Seller assumes no liability of Buyer with respect to the operation of
the Purchased Assets or Cobham after the date of the Closing.
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6. Representations and Warranties of Buyer. Buyer represents and warrants
to Seller as follows:
a. Power and Authority. Buyer has full right, power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
hereby contemplated.
b. Conflicting Instruments. To Buyer's knowledge, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein will not, with or without the giving of notice
or the passage of time, (i) conflict with or result in the breach of any of the
terms and provisions of, or constitute a default under, any note, indenture,
mortgage, deed of trust, agreement, or other instrument or restriction to which
Buyer is a party, (ii) violate any law, order, rule, regulation, writ,
injunction or decree of any government, governmental instrumentality, agency or
body, arbitration tribunal, or court, domestic or foreign, having jurisdiction
over Buyer or its property, or (iii) result in the creation of any lien, charge
or encumbrance upon any of the properties of Buyer.
c. Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereunder have been conducted and carried out by Buyer
directly with Seller and without the assistance or intervention of any other
person so as, through action of the parties or otherwise, to give rise to any
valid claim against Buyer or Seller for a finder's fee, broker's fee, commission
or other like payment. Buyer has not engaged, retained or contracted with any
finder, broker or similar person with respect to the purchase of the Assets to
from Seller, so as to incur any liability for a finder's fee, broker's fee,
commission or like payment in connection with the execution of this Agreement or
the consummation of the transactions contemplated hereunder.
d. Trans Energy Stock and Securities Rights. Buyer is not a party to
any agreement, written or oral, creating rights with respect to Buyer's Trans
Energy Stock and Securities Rights in any third person or relating to the voting
of the Trans Energy Stock. Buyer is the lawful owner of the Buyer's Trans Energy
Stock and Securities Rights, free and clear of all security interests, liens,
encumbrances, equities and other charges. Buyer has disclosed to Seller any and
all of Buyer's existing warrants, options, stock purchase agreements, redemption
agreements, restrictions of any nature, calls or rights to subscribe of any
character.
7. Conditions to Seller's Obligations. Each and every obligation of Seller
under this Agreement shall be subject to the satisfaction, on or before the
Closing Date, of the following conditions:
a. Representations and Warranties True. The representations and
warranties by Buyer in this Agreement or any other instrument delivered by Buyer
under this Agreement or in connection with the transfer of the Purchased Assets
shall be true and accurate as of the date when made and at and as of the Closing
Date.
b. Buyer's Performance. Buyer shall have performed and complied in all
material respects with each and every covenant, agreement, obligation and
condition required to be performed by it prior to or on the Closing Date.
c. No Governmental Proceeding or Litigation. No order of any court or
administrative agency shall be in effect which restrains or prohibits the
transactions contemplated hereby, and no suit, action, investigation, inquiry or
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proceeding by any governmental body or other person or legal or administrative
proceeding shall have been instituted or threatened which questions the validity
or legality of the transactions contemplated hereby or seeks to impose any
liability on Seller as a result of the transactions contemplated hereby.
8. Other Actions.
a. Control. Nothing contained in this Agreement shall give Buyer the
right to control, direct or supervise the equipment, personnel or operations of
Seller's business prior to Closing without the written consent of Seller. The
operation of the Seller's business, including complete control and supervision
of all operations, equipment and employees prior to Closing shall be the sole
responsibility of Seller, unless otherwise agreed to in writing by the parties.
b. Cooperation After Closing. Each party shall promptly, at any time
and from time to time after the Closing Date, upon the request of the other
party, do, execute, acknowledge, deliver and perform all such further acts,
deeds, instruments, assignments, transfers, conveyances, registrations,
applications powers of attorney and assurances as may be required to convey and
transfer to and vest in the other party and protect the other party's right,
title and interest in and to and enjoyment of all the assets and consideration
intended to be assigned, transferred and conveyed to pursuant to this Agreement.
c. The Closing: The Closing of this sale will take place at Seller's
office at 10:00 a.m. on August 31, 2005 or such other place or date as Seller
and Buyer agree upon. The purchase and sale of the Purchased Assets shall be
effective as of the Closing, and possession of the Purchased Assets will be
delivered and accepted as of the Closing.
9. Fees and Expenses: Each of the parties hereto will bear all legal and other
expenses incurred by it or on its behalf in connection with the transactions
contemplated by this Agreement.
10. Post-Closing Covenants:
a. Generally: In case at any time after the Closing date any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the parties will take such further action (including the execution and
delivery of such further instruments and documents) as the other party
reasonably may request, at the sole cost and expense of the requesting party.
b. Post-Closing Receipts: In the event that any party after the Closing
date receives any funds properly belonging to the other party or parties in
accordance with the terms of this Agreement, the receiving party will promptly
so advise such other party or parties, will segregate and hold such funds in
trust for the benefit of such other party or parties and will promptly deliver
such funds, together with any interest earned thereon, to an account or accounts
designated in writing by such other party or parties.
c. Tax Matters: Buyer and Seller shall cooperate fully, as to the
extent reasonably required by the other party, in connection with the filing of
tax returns and any audit, litigation, or other proceeding with respect to
taxes. Such cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder.
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11. Indemnity by Buyer.
a. Buyer shall indemnify Seller and the officers, directors, successors
and assigns of Seller (collectively, "Seller Indemnitees"), and hold each of
them harmless against all claims, losses, damages (including natural resources
damages), costs (including environmental contamination and/or pollution response
and clean up costs), penalties and expenses, including reasonable attorneys'
fees ("Indemnity Amounts") resulting from any breach of Buyer's representations,
warranties, agreements and covenants contained in this Agreement and the
documents delivered pursuant hereto. Indemnity by Buyer shall survive the
Closing and shall be fully enforceable at law or in equity against Buyer and its
successors and assigns by Seller and its successors and assigns.
b. Seller will give to Buyer, prompt written notice upon learning of
any claim (a "Claim") as to which indemnity is prescribed by this Section. The
notice will specify the circumstances giving rise to the Claim. Within twenty
one (21) days after such notification, Buyer shall pay Seller such amount as is
specified in the notice or inform Seller in writing that it disagrees with the
computation of the amount. In the latter case, Buyer and Seller shall proceed in
good faith to determine the correct amount, and Buyer's payment shall be due ten
(10) days after agreement is reached as to the correct amount. Interest shall be
added to any payment made more than thirty (30) days after initial notification
of Buyer, commencing after the end of such 30-day period. Interest shall be
computed at the time-weighted average prime rate publicly announced by Xxxxxx
Guaranty Bank, New York, New York, and in effect during the period for which
interest is payable. As to any disputed claim involving this Agreement, the
parties agree it shall be referred to and finally settled by arbitration as
provided in Section 12.
c. Buyer, at its expense, shall have the responsibility of contesting,
defending, litigating or settling the Claim. Seller or Seller Indemnitees may
participate in the negotiation, litigation or settlement of any such Claim,
provided that (notwithstanding any other provision hereof) if Buyer agrees in
writing promptly after Buyer obtains knowledge thereof to be fully responsible
for any such Claim, Seller's participation shall be at its own expense. No Claim
shall be settled by Buyer unless the Seller Indemnitees are fully released from
all liability with respect thereto. Each of Buyer and the Seller Indemnitees
agrees that they will cooperate with the others as they may reasonably request
in the handling of any Claims.
d. Upon the settlement of any Claim as provided above or the final
resolution of any Claim by a court of competent jurisdiction, Buyer will notify
Seller promptly. Buyer promptly will pay such Claim and, in addition, will pay
to Seller an amount equal to any Indemnity Amounts incurred by any of the Seller
Indemnitees in connection with such Claim, and any amount required to make the
Seller Indemnitees whole after Taxes, with respect to the foregoing payments
taking into account as well any Tax benefits to such Seller Indemnitees. Seller
agrees to consult with Buyer prior to writing off or deducting the Claims for
Tax purposes.
e. If Buyer fails to comply with its obligations under this Section,
the Seller Indemnitees involved may elect, but shall not be obligated, to
contest, defend, litigate or settle any Claim in good faith, and Buyer promptly
will pay to Seller an amount equal to any Indemnity Amounts incurred by such
Seller Indemnitees in connection therewith, and any amount required to make the
Seller Indemnitees whole after Taxes, with respect to the foregoing payments.
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f. For purposes of this section, "Tax" or "Taxes" shall mean any tax
(including any income tax, capital gains tax, value added tax, sales tax,
property tax, gift tax, franchise tax, or estate tax), levy, assessment, tariff,
duty (including any customs duty), deficiency, or other fee, and any related
charge or amount (including any fine, penalty, interest, or addition to tax),
imposed, assessed, or collected by or under the authority of any governmental
body or payable pursuant to any tax-sharing agreement or any other contract
relating to the sharing or payment of any such tax, levy, assessment, tariff,
duty, deficiency, or fee.
12. Arbitration.
a. All disputes arising out of or in connection with this Agreement,
including any question regarding its existence, validity or termination, shall
be referred to and finally settled by arbitration under the Commercial
Arbitration Rules then in effect of the American Arbitration Association (the
"Rules") by three (3) arbitrators appointed as follows: (i) if there are two
parties to the dispute, each party shall appoint an arbitrator (who may be
non-neutral) and these arbitrators shall appoint a third arbitrator to act as
chairman (provided that if the two party appointed arbitrators do not agree on
the appointment of the third arbitrator within thirty (30) days of the
appointment of the second of said two party appointed arbitrators, then the
American Arbitration Association shall appoint the third arbitrator), (ii) if
there are three parties to the dispute (for purposes of this section only,
parties that are affiliated parties are counted as being one party and
affiliated parties shall mean parties controlling or majority owning, being
controlled or majority owned by or being under common control or majority
ownership with or being blood related to other parties hereto), each party shall
appoint one arbitrator (who may be non-neutral), or (iii) if there are more than
three parties to the dispute, then the three arbitrators (who shall be neutral)
shall be appointed by the American Arbitration Association at the request of any
of the parties to the dispute.
b. If any party to the dispute fails to nominate an arbitrator within
thirty (30) days from the date when the relevant claimant's request for
arbitration has been communicated to the other party, such appointment shall be
made promptly by the American Arbitration Association, and any party may request
such appointment be made.
c. At the request of any party to a dispute, the arbitrators shall
appoint experts, including an accountant, to assist them on technical questions
relating to valuation, accounting principles and practices and similar matters,
provided that such accountant shall be from a leading accounting firm having an
office in Parkersburg, West Virginia.
d. Such arbitral tribunal shall be constituted in accordance with this
section, and with respect to matters not dealt with in this section, in
accordance with the Rules, which Rules are hereby deemed to be incorporated
herein by reference except where inconsistent with the other provisions of this
section. The language of the arbitration shall be English. The seat of the
arbitration shall be Parkersburg, West Virginia except that hearings may be held
at any location convenient to the parties as shall be reasonably agreed among
them and the arbitrators.
e. The parties hereby exclude any reference to or right of appeal to
any court by any party, in particular in connection with any question of law
arising in the course of the reference or out of the award, except if necessary
to compel arbitration as the parties' exclusive remedy in accordance with the
terms of this section or to administer or enforce any award. Judgment upon the
award rendered may be entered in any court having jurisdiction thereof or having
jurisdiction over one or more of the parties or their assets, or application may
be made to such court for a judicial acceptance of the award and an order of
enforcement.
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13. Severability: Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
14. Descriptive Headings: The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
15. Notices: All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing. Such notices, demands and other communications will be sent to Buyer
and Seller at the addresses indicated below (or to such other address or to the
attention of such other party as the recipient party has specified by prior
written notice to the sending party):
If to Buyer:
Xx. Xxxxxx Xxxxxxx
Xx. 0, Xxx 000X
P. O. Xxx 0000
Xxxxxxxxxx Xxxx Xxxxxxxx 00000-0000
If to Seller:
Xx. Xxxxxxxx X. Xxxxx
Trans Energy, Inc.
Xxxx Xxxxxx Xxx 000
Xx. Xxxxx, Xxxx Xxxxxxxx 00000
With a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx Rice XxXxxxx Xxxxx & Love, LLP
P. O. Xxx 00
Xxxxxxxxxxx, Xxxx Xxxxxxxx 00000
16. No Third-Party Beneficiaries: This Agreement will not confer any rights
or remedies upon any person or entity other than Seller and Buyer and their
respective successors and permitted assigns.
17. Complete Agreement: This Agreement constitutes the entire agreement
among the parties and supersedes any prior understandings, agreements or
representations by or among the parties, written or oral, that may have related
in any way to the subject matter hereof. This Agreement may be amended or waived
only by a written agreement executed by both Seller and Buyer.
18. Assignment: No party hereto may assign any of such party's rights or
obligations under or in connection with this Agreement without the written
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consent of the other party hereto. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement will be binding
upon and enforceable against the respective heirs, personal representatives,
successors and permitted assigns of such party.
19. GOVERNING LAW; VENUE AND JURISDICTION: ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE EXHIBITS AND
SCHEDULES HERETO WILL BE GOVERNED BY THE INTERNAL LAW, AND NOT THE LAW OF
CONFLICTS, OF THE STATE OF WEST VIRGINIA. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF
ANY ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY IN THE COURTS OF THE STATE OF WEST VIRGINIA OR THE UNITED
STATES OF AMERICA, HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
IN WITNESS WHEREOF, the undersigned have signed this Agreement
as of the date set forth above.
TRANS ENERGY, INC.
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------
Its: Chief Executive Officer
PRIMA OIL COMPANY, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Its: President
XXXXXX XXXXXXX
/s/ Xxxxxx Xxxxxxx
-----------------------------------
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