PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (this "Agreement"), dated as of
October 6, 2000, is among ATLAS PIPELINE OHIO, LLC, a Pennsylvania limited
liability company ("Atlas Ohio"), and ATLAS PIPELINE PARTNERS, L.P., a Delaware
limited partnership ("Partnership" and collectively with Atlas Ohio, "Buyer"),
both having a business and mailing address of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, and KINGSTON OIL CORPORATION, an Ohio corporation, having a business
and mailing address of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ("Seller").
In consideration of the mutual promises contained herein, the benefits
to be derived by each party hereunder and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller
agree as follows:
ARTICLE 1.
PURCHASE AND SALE
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Section 1.1. Purchase and Sale. Seller agrees to sell and to convey,
and Buyer agrees to purchase and to pay for, the gas gathering system described
in Exhibit 1.1 and the transportation contracts associated therewith as shall be
mutually agreed upon by Buyer and Seller prior to Closing (the "Gathering
System"), subject to the terms and conditions of this Agreement.
Section 1.2. Liabilities. Subject to the terms and provisions of this
Agreement and the Exhibits, documents, certificates and other instruments
delivered pursuant hereto, Buyer hereby assumes all liabilities, obligations or
duties accruing, to be incurred or related to times after the Closing Date of
Seller with respect to the Gathering System. However, except as specifically
provided in this Agreement or in any Exhibit, document, certificate or other
instrument delivered pursuant to this Agreement, the purchase and sale of the
Gathering System is not, and shall not be deemed to be, a transfer to Buyer of
any liabilities, obligations or duties of Seller, and Buyer is not assuming and
upon Closing will not assume or be responsible for any liabilities, obligations
or duties of Seller accrued, incurred or related to times prior to the Closing
Date. For purposes of this Section 1.3 the phrase "liabilities, obligations or
duties" shall include, without limitation, any direct or indirect indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, fixed or unfixed, known or unknown, asserted or
unasserted, ▇▇▇▇▇▇ or inchoate, liquidated or unliquidated, secured or
unsecured.
Section 1.3. Excluded Interests. It is specifically agreed that Seller
is not selling and Buyer is not purchasing the following assets all of which
shall be deemed excluded from the definition of "Gathering System" ("Excluded
Interests"):
(a) Any cash, accounts receivable, notes receivable or cash
equivalents of Seller;
(b) Items sold, transferred, disposed of or consumed and
contracts terminated prior to the Closing Date in the ordinary course of
business (provided that Seller shall not sell, transfer or dispose of any item
with a fair market value exceeding $5,000 between the date hereof and the
Closing Date without the Buyer's written consent);
(c) Any right to use the Seller's name, marks or insignia, or
to use the name of any other subsidiary or corporate affiliate of Seller;
(d) Any insurance contracts or bonds held by Seller or its
affiliates for Seller's benefit or any employment, consulting, or accounting
service contracts; and
(e) Any certificate of deposit held in connection with the
bonding of Seller's water truck.
Section 1.4. Effective Time. The purchase and sale of the gathering
system shall be effective as of the time of Closing (the "Effective Time").
ARTICLE 2.
PURCHASE PRICE
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Section 2.1. Purchase Price. Simultaneously with the execution and
delivery hereof, Buyer shall pay to Seller for the Gathering System an amount
(the "Purchase Price") payable as follows: (i) One Million Two Hundred Fifty
Thousand Dollars ($1,250,000) in cash (the "Cash Payment"); and (ii) issuance of
Eighty Eight Thousand Two Hundred Thirty Five (88,235) common units limited
partnership interest units of Partnership (the "Units"). Upon receipt of the
Units, the Units shall be fully paid, validly issued and nonassessable and
Seller shall have all the rights of a registered unit holder as such rights are
more particularly described in the Partnership's First Amended and Restated
Agreement of Limited Partnership dated February 2, 2000 and shall hold the
Units, beneficially and of record, free and clear of all liens and encumbrances.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 3.1. Representations and Warranties of Seller. Seller
represents and warrants to Buyer as follows:
(a) Corporate Organization and Qualification. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio.
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(b) Corporate Authority. Seller has all requisite power and
authority to carry on its business as presently conducted, to enter into this
Agreement, and to perform its obligations under this Agreement. The consummation
of the transactions contemplated by this Agreement will not violate, or be in
conflict with, any provision of Seller's articles of incorporation, code of
regulations, or other governing documents, or any agreement or instrument to
which Seller is a party or by which Seller is bound, or any judgment, decree,
order, statute, rule or regulation applicable to Seller. No further action is
necessary on the part of Seller to authorize this Agreement or the transactions
contemplated by this Agreement.
(c) Transactions Authorized. The execution and delivery of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all requisite action, corporate and otherwise, on the part
of Seller and will not (i) require any consent, authorization or approval of, or
exemption by, or filing under any provision of any law, statute, rule or
regulation to which Seller or the Gathering System are subject, (ii) violate any
judgment, order, writ or decree of any court applicable to Seller or the
Gathering System, (iii) conflict with, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of the performance
required by, or require any consent, authorization or approval under any
agreement, contract, commitment, lease or other instrument, document or
undertaking to which Seller is a party or any part of the Gathering System is
bound or (iv) result in the creation or imposition of any encumbrance upon the
Gathering System.
(d) Execution of Agreement. This Agreement has been duly
executed and delivered on behalf of Seller and, at the Closing, all documents
and instruments required hereunder to be executed and delivered by Seller shall
have been duly executed and delivered. This Agreement does, and such documents
and instruments shall, constitute legal, valid and binding obligations of Seller
enforceable in accordance with their terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws presently or hereafter in effect relating to or affecting the
enforcement of creditors' rights generally and by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
(e) Payment of Taxes. To the best of Seller's knowledge,
Seller has paid in full all taxes and assessments due against Seller or the
Gathering System to any local, state, federal, or other taxing authority,
including without limitations, applicable corporation taxes, franchise taxes,
federal and state income taxes, state and municipal sales and use taxes, stamp,
excise and excess profits taxes, federal unemployment and old age insurance
taxes, property taxes, capital stock taxes, ad valorem taxes, production taxes,
severance, and all other taxes and assessments. All tax returns and reports
required by applicable law or governmental regulations have been filed by
Seller, and such returns and reports are true, correct and complete and present
fairly and accurately the information required to be shown therein. There are no
assessed tax deficiencies proposed or threatened, and no audit of Seller by any
federal, state or local authority is in progress. There are no tax liens upon
the Gathering System.
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(f) Information. To the best of Seller's knowledge, Seller has
provided Buyer with information relating to the Gathering System that is
complete and accurate in all material respects. No representation or warranty of
Seller contained in this Agreement contains or will contain any untrue statement
of material fact, or omits or will omit to state any material fact necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. To the best of Seller's knowledge, all contracts,
permits and other documents and instruments furnished or made available to Buyer
by Seller are or will be true, complete and accurate originals or copies of
originals and include all amendments, supplements, waivers and modifications
thereto. To the best of Seller's knowledge, there is no fact, development or
threatened development (excluding general economic factors affecting business in
general) that Seller has not disclosed to Buyer in this Agreement or the
Exhibits hereto that materially adversely affects or, so far as Seller can now
foresee, may materially adversely affect, the Gathering System, or the prospects
or condition (financial or otherwise) of the Gathering System.
(g) Seller's Encumbrances. Exhibit 3.1(g) hereto contains a
description of all indebtedness, borrowings, loan agreements, promissory notes,
pledges, mortgages, guarantees, and similar liabilities (direct and indirect)
that are secured by or constitute an encumbrance on the Gathering System
("Seller's Encumbrances").
(h) Availability of Assets and Legality of Use. The Gathering
System is in good and serviceable condition (normal wear and tear excepted) and
suitable for the uses for which intended and has been maintained in accordance
with industry practices of businesses of similar size as Seller and operating in
substantially the same geographic area. The Gathering System and its uses
conform in all material respects to all applicable laws. Seller shall have at
Closing good and marketable title to, or valid leasehold interest in, the
Gathering System, free and clear of all liens, mortgages, security interest,
pledges, charges and encumbrances
(i) Contract Obligations. Seller has not received written
notice that it is in default under any contract or agreement pertaining to the
Gathering System, and to the best of Seller's knowledge, no event has occurred
which would constitute such a default. Except for Seller's Encumbrances, there
are no contracts or other agreements pertaining to the Seller that require any
further action on the part of Seller or require Seller to perform any
obligations thereunder except those listed in the Exhibits hereto and royalty
payments. Without limiting the foregoing, and except as provided for such
Exhibits, Seller is not with respect to the purchased Gathering System a party
to any written or oral:
(1) agreement, contract or commitment for the future
purchase of, or payment for, supplies or products, or for the
performance of services by another party, involving in any one case
$5,000 or more;
(2) agreement, contract or commitment to sell or
supply products or to perform services, involving in any one case
$5,000 or more;
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(3) agreement, contract or commitment continuing over
a period of more than six months from the date hereof or exceeding
$5,000 in value;
(4) any other material agreement, contract or
commitment not made in the ordinary course of business consistent with
past practice.
(j) Broker's Fee. Seller has incurred no liability, contingent
or otherwise, for brokers' or finders' fees relating to the transactions
contemplated by this Agreement for which Buyer shall have any responsibility
whatsoever.
(k) Legal Proceedings. Except as set forth on Exhibit 3.1(k),
there is no suit, action or other proceeding pending, instituted or, to the best
of Seller's knowledge, threatened before any court or governmental body,
authority or agency and, to the best of Seller's knowledge, no cause of action
exists, that relates to the Gathering System. Seller is not a party or subject
to any injunction, judgment, order, notice of appeal, of any court or
governmental body, authority or agency except as set forth on Exhibit 3.1(k).
Except as set forth and explained on Exhibit 3.1(k), none of the matters set
forth thereon will have a material adverse effect on the Gathering System.
(l) General Compliance. To the best of Seller's knowledge,
Seller has complied in all material respects with all laws, rules, regulations,
ordinances and orders of all local, state, and federal governmental bodies,
authorities and agencies having jurisdiction over the Gathering System.
(m) Environmental Compliance. To the best of Seller's
knowledge, in addition to the representations contained in Section 5.3 hereof,
and not as a limitation thereof, Seller represents that it has acquired all
permits, licenses, approvals and consents from appropriate local, state, and
federal governmental bodies, authorities and agencies necessary or appropriate
to conduct operations on the Gathering System in compliance with all applicable
laws, rules, regulations, ordinances and orders in all material respects; and
Seller is in compliance with all such permits, licenses, approvals, and consents
and with all applicable environmental laws, rules, regulations, ordinances and
orders in all material respects.
(n) Tax Partnerships. Except as otherwise disclosed in the
Exhibits, no portion of the Gathering System (1) has been contributed to and is
currently owned by a tax partnership; (2) is subject to any form of agreement
whether formal or informal, written or oral, deemed by any state or federal tax
statute, rule or regulation to be or to have created a tax partnership; or (3)
otherwise constitutes "partnership property," as that term is used throughout
subchapter K of Chapter I of Subtitle A of the Internal Revenue Code of 1986
(the "Code"), of a tax partnership. For purposes of this Section 3.1(t) a "tax
partnership" is any entity, organization or group deemed to be a partnership
within the meaning of Section 761 of the Code or any similar state or federal
statute, rule or regulation, and that is not excluded from the application of
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the partnership provisions of Subchapter K of Chapter I of Subtitle A of the
Code and of all similar provisions of state tax statutes or regulations by
reason of elections made, pursuant to Section 761(a) of the Code and all such
similar state or federal statutes, rules and regulations.
(o) Locations of Business. Section 10.4 hereto accurately and
correctly sets forth the chief place of business of Seller and the location of
all other places of business of Seller.
(p) Books and Records. To the best of Seller's knowledge, all
books of account and other financial records of Seller directly relating to the
Gathering System (the "Books and Records") are complete and correct and have
been made available to Buyer. All of the Books and Records have been prepared
and maintained in accordance with good business practices and, where applicable,
in conformity with GAAP (except as otherwise stated therein) and in compliance
in all material respects with applicable laws, regulations and other
requirements.
(q) Bulk Sales Laws. There are no bulk sales laws of Ohio
applicable to the sale and transfer of the Gathering System as contemplated
hereby.
(r) Public Utility Status. Seller is not a regulated public
utility under applicable state or federal law including, without limitation, the
Public Utility Holding Company Act of 1935, as amended.
(s) Investment. Seller (i) is an "accredited investor" within
the meaning of Rule 501 promulgated under the Securities Act of 1933, as amended
(the "Securities Act"); (ii) has sufficient knowledge and experience in the
business of Partnership so as to be able to evaluate the risks and merits of its
acquisition of the Units; (iii) has had an opportunity to discuss Partnership's
business, management and financial affairs with Partnership's management; and
(iv) is acquiring the Units for its own account (and not for the account of
others) for investment and not with a view to the distribution hereof. Seller
will not sell or otherwise dispose of the Units (whether pursuant to a
liquidating dividend or otherwise) without registration under the Securities
Act, or an exemption therefrom, and Seller acknowledges that certificate or
certificates representing the Units will contain a legend to the foregoing
effect.
Section 3.2. Representations and Warranties of Buyer. Buyer, severally
and not jointly, represents and warrants to Seller that:
(a) Corporate Organization. Atlas Ohio is a limited liability
company duly formed, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. Partnership is a limited partnership duly formed,
validly existing and in good standing under the laws of the State of Delaware.
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(b) Corporate Authority. Subject to the provisions of Section
3.2(c), Buyer has all requisite power and authority to carry on its business as
presently conducted, to enter into this Agreement, to purchase the Gathering
System and issue the Units (with respect to Partnership) on the terms described
in this Agreement and to perform its other obligations under this Agreement. The
consummation of the transactions contemplated by this Agreement will not
violate, or be in conflict with, any provision of Buyer's charter, bylaws or
governing documents, or any agreement or instrument to which Buyer is a party or
by which Buyer is bound, or any judgment, decree, order, statute, rule or
regulation applicable to Buyer.
(c) Transactions Authorized. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby will have
been duly and validly authorized by all requisite action on the part of Buyer.
(d) Execution of Agreement. This Agreement has been duly
executed and delivered on behalf of Buyer, and, at the Closing, all documents
and instruments required hereunder to be executed and delivered by Buyer shall
have been duly executed and delivered. This Agreement does, and such documents
and instruments shall, constitute legal, valid and binding obligations of Buyer
enforceable in accordance with their terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws presently or hereafter in effect relating to or affecting the
enforcement of creditors' rights generally and by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
(e) Compliance With Law. To the best of Buyer's knowledge,
Buyer has all licenses, franchises, permits and other governmental
authorizations that are legally required to enable it to conduct its business
and is in compliance with all applicable laws and regulations in all material
respects.
ARTICLE 4.
COVENANTS
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Section 4.1. Covenants and Agreements of Seller. Seller covenants and
agrees with Buyer that:
(a) Title Information. Immediately upon execution of this
Agreement, Seller, shall give Buyer access, for purposes of inspection, review
and photocopying (at Buyer's expense or as mutually otherwise agreed) to all
title information in Seller's possession relating to the Gathering System, and
Seller shall use its best efforts to obtain any other currently existing title
information from third parties as may reasonably be requested by Buyer provided
it can be obtained without cost to Seller. Such title information includes
without limitation the following:
(1) Copies of all title opinions and reports
pertaining to the Gathering System;
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(2) All abstracts of title and status reports
pertaining to the Gathering System;
(3) Copies of all of the leases, prior conveyances of
interests created thereby, unitization, pooling and operating
agreements, division and transfer orders, mortgages, deeds of trust,
security agreements, chattel mortgages, financing statements and other
encumbrances affecting the title to or the value of the Gathering
System and copies of all other contracts and documents affecting the
title to or the value of the Gathering System;
(4) Evidence that all ad valorem, property,
production, severance, excise and similar taxes and assessments based
on or measured by the ownership of the Gathering System have been
properly and timely paid;
(5) Ownership maps and surveys relating to the
Gathering System;
(6) Copies of all lease records and data sheets and
to bonuses, rentals and royalties payable thereunder;
(7) Copies of all purchase, sale, processing and
gathering line agreements relating to the production from the Gathering
System;
(8) Copies of all agreements, deeds, leases, permits,
easements, notices, licenses and orders in any way relating to the
Gathering System; and
(9) Abstracts of title, title opinions, UCC search
certificates, status reports and other certificates and title
information.
(b) Operation Information. Immediately upon execution of this
Agreement, Seller shall give Buyer access for purposes of inspection, review and
photocopying (at Buyer's expense except as otherwise mutually agreed) to all
operation information in Seller's possession relating to the Gathering System,
and Seller shall use its best efforts to obtain any other information from third
parties which is reasonably requested by Buyer provided it can be obtained
without cost to Seller.
(c) Continuing Operation. Seller shall (1) maintain and
operate the Gathering System in a good and workmanlike manner, (2) maintain
insurance now in force with respect to the Gathering System and pay or cause to
be paid all costs and expenses incurred in connection therewith, (3) keep the
leases and the contracts relating to the Gathering System in full force and
effect, unless Buyer gives prior consent to the termination of any lease or
contract, and shall perform and comply with all of the covenants and conditions
contained therein and all agreements relating to the Gathering System in all
material respects; and (4) use commercially reasonable efforts to (a) prevent
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the occurrence of any event or condition that would have a material adverse
effect on or would restrain, prohibit or otherwise interfere with the effective
operation and enjoyment by Buyer of the Gathering System and (b) preserve for
the benefit of Buyer the goodwill of customers, vendors and others having
business relations with it related to the Gathering System.
(d) Continuing Management. Seller shall carry on the business
of Seller with respect to the Gathering System in substantially the same manner
as Seller has heretofore and shall not introduce any new method of management,
operation or accounting.
(e) New Agreements and Sales. Without the prior consent of
Buyer, or except as required by existing commitments, Seller shall not (1) enter
into any new material agreements or commitments with respect to the Gathering
System that extend beyond the Closing, (2) modify or terminate any of the
agreements relating to the Gathering System, or (3) encumber (other than
encumbrances that shall be released on or before Closing), sell or otherwise
dispose of any part of the Gathering System.
(f) Legal Proceedings. Seller shall promptly notify Buyer of
any suit, action or other proceeding before any court or governmental body,
authority or agency and any cause of action of which Seller has knowledge that
relates to the Gathering System or that might result in impairment or loss of
Seller's title to any portion of the Gathering System or the value thereof or
that might hinder or impede the operation and the enjoyment thereof.
(g) General Compliance. Seller shall comply in all material
respects with all laws, rules, regulations, ordinances and orders of all local,
state, and federal governmental bodies, authorities and agencies having
jurisdiction over the Gathering System.
(h) Access to Properties. At all times prior to the Closing,
Seller shall use its best efforts to give Buyer and the employees and agents of
Buyer access to inspect the Gathering System. Buyer agrees to indemnify and hold
Seller harmless from any costs, expenses or damages which Seller sustains as a
result of Buyer's inspection.
(i) Consummation of Transaction. Seller shall use its best
efforts to take or cause to be taken all such actions as may be necessary or
advisable to consummate and make effective the sale of the Gathering System and
the transactions contemplated by this Agreement and to assure that as of the
Closing Date Seller will not be under any material corporate, legal, or
contractual restriction that would prohibit or delay the timely consummation of
such transactions.
(j) Validity of Representations. Seller shall cause all the
representations and warranties of Seller contained in this Agreement to be true
and correct on and as of the Closing Date in all material respects. To the
extent the conditions precedent to the obligations of Buyer are within the
control of Seller, Seller shall cause such conditions to be satisfied on or
prior to the Closing Date.
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(k) Inability to Perform Covenant. Seller shall promptly
notify Buyer if Seller fails to perform or comply with any covenant or an
agreement contained in this Agreement or it is reasonably anticipated that
Seller will be unable to perform or comply with any covenant or agreement
contained in this Agreement.
(l) Release of Encumbrances. At the Closing, Seller shall
cause Seller's Encumbrances to be released so that the Gathering System may be
transferred to Buyer free and clear of any Seller Encumbrance.
(m) Advice of Changes. Seller shall advise Buyer promptly in
writing of any fact that, if known at the Closing Date, would have been required
to be set forth or disclosed in or pursuant to this Agreement, or which would
result in the breach in any material respect by Seller of any of its
representations, warranties, covenants or agreements hereunder; provided that no
such disclosure shall be deemed to modify, amend or supplement Seller's
representations and warranties.
(n) Update Exhibits. Seller shall promptly disclose to Buyer
any information contained in the representations and warranties of Seller
contained in Article 3 or in the Exhibits to this Agreement which is no longer
complete or correct; provided that no such disclosure shall be deemed to modify,
amend or supplement Seller's representations and warranties.
Section 4.2. Covenants and Agreements of Buyer. Buyer, severally and
not jointly, covenants and agrees with Seller that:
(a) Consummation of Transaction. Buyer shall use its best
efforts to take or cause to be taken all such actions as may be necessary or
advisable to consummate and make effective the purchase of the Gathering System,
issuance of the Units and the transactions contemplated by this Agreement and to
assure that as of the Closing Date Buyer will not be under any material
corporate, legal or contractual restrictions that would prohibit or delay the
timely consummation of such transactions.
(b) Validity of Representations. Buyer shall cause all the
representations and warranties of Buyer contained in this Agreement to be true
and correct on and as of the Closing Date. To the extent the conditions
precedent to the obligations of Seller are within the control of Buyer, Buyer
shall cause such conditions to be satisfied on or prior to the Closing Date.
(c) Confidential Data. Before Closing, Buyer shall exercise
all due diligence in safeguarding and maintaining the security of all
engineering, geological and geophysical data, reports and maps, and all other
confidential data made available to, reviewed by or in the possession of Buyer,
relating to the Gathering System, and Buyer shall only disclose such
confidential data to necessary third parties who have agreed to be bound by the
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same confidentiality provisions. In the event the Closing shall not occur, Buyer
shall return all confidential data to Seller and Buyer shall not utilize such
confidential information for any purpose whatsoever, including, but not limited
to, in furtherance of Buyer's business activities.
(d) Inability to Perform Covenant. Buyer shall promptly notify
Seller (1) if any representation or warranty of Buyer contained in this
Agreement is discovered to be or becomes untrue, or (2) if Buyer fails to
perform or comply with any covenant or agreement contained in this Agreement or
it is reasonably anticipated that Buyer will be unable to perform or comply with
any covenant or agreement contained in this Agreement.
ARTICLE 5.
ADDITIONAL AGREEMENTS
---------------------
Section 5.1. Title Procedure. If any of the information or material
supplied by Seller pursuant to this Agreement or any other information or data
obtained by Buyer from any other source reflects the existence of any
encumbrance, encroachment, defect in or objection to title that render title to
the Gathering System or any portion thereof less than good and marketable (all
of which are herein called the "Title Defects"), Buyer shall give Seller written
notice of the Title Defects. If Title Defects shall be so specified, Seller may
attempt to cure or to remove the Title Defects at the expense of Seller. If the
Title Defects are not cured or removed at or prior to the Closing, Buyer may
either waive the Title Defects and proceed with the Closing, mutually agree with
Seller to an adjustment to the Purchase Price and proceed with Closing, or elect
in writing to terminate this Agreement.
Section 5.2. Diminution of Value. If, prior to the Closing, any portion
of the Gathering System shall be destroyed by fire or other casualty, or if any
portion of the Gathering System shall be taken in condemnation or under the
right of eminent domain or if proceedings for such purposes shall be pending or
threatened, or there has been an adverse change, however caused, in the
production characteristics, allowable production, takes by purchasers, proceeds
of production or operating expenses of an Interest, Buyer may elect in writing
to terminate this Agreement, mutually agree with Seller to an adjustment to the
Purchase Price or proceed with the Closing; provided, however, that in such last
event all proceeds of insurance or condemnation shall be assigned by Seller to
Buyer. In the case of any condemnation, taking or destruction of a part of the
Gathering System not covered by insurance, the parties agree to negotiate in
good faith an appropriate adjustment to the Purchase Price.
Section 5.3. Environmental Representations and Indemnities.
(a) Rights of Inspection/Cancellation. Buyer shall have no
obligation to purchase Gathering System from Seller hereunder unless at Closing
each and every representation and warranty and covenant contained in Section
5.3(c) below shall be true and correct on the Closing Date. Buyer shall have the
right to conduct an Environmental Audit (as defined below) at any time prior to
the Closing Date, such Environmental Audit to be conducted at Buyer's expense,
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and to be of such scope, duration and detail as Buyer, in its sole discretion,
shall determine. Seller shall make available to Buyer access to all individuals,
property, documents and information necessary to conduct the Environmental
Audit. The results of the Environmental Audit are to be the sole property of
Buyer and, as such, Seller agrees to hold confidential any communications,
including report letters or the like, which Buyer, or its agents, provide to
Seller arising out of or related to the Environmental Audit. Buyer reserves the
right after, but not prior to, the Closing to provide third parties, including
governmental bodies, with information obtained during the Environmental Audit.
Seller hereby forever releases Buyer from any and all claims, liabilities,
damages or expenses arising from or related to the dissemination after the
Closing of information gathered or obtained during the Environmental Audit.
Buyer may, at its sole discretion, terminate this Agreement at any time prior to
Closing if Buyer determines, based upon the Environmental Audit, that the
environmental conditions of the Gathering System are unacceptable to Buyer, such
termination to be final and binding upon all parties to this Agreement.
(b) Definitions. "Environmental Activity" means any actual or
threatened storage, holding, existence, release, emission, discharge,
generation, processing, abatement, removal, disposition, handling,
transportation or disposal of any Hazardous Substance from, under, into and/or
on the Gathering System or otherwise relating to the Gathering System or any use
of the Gathering System which is regulated by or for which standards of conduct
or liability are imposed by any Environmental Requirements. "Environmental
Audit" includes, without limitation, investigations into Seller's environmental
practices, past and present, tests of soils, surface waters, groundwaters, air
and particulate matter on Seller's real estate and on real property near the
Gathering System, interviews with past and present employees of Seller and
residents or property owners of real property near Seller's real estate, and
reviews of all documents related to Seller's environmental practices, whether in
the possession of Seller, of governmental bodies, or third parties.
"Environmental Requirements" means all present laws including but not limited to
Federal, State, municipal, county or, local statutes and regulations,
authorizations, judgments, decrees, concessions, grants, orders, franchises,
permits, agreements and other restrictions and requirements relating to any
Hazardous Substances or Environmental Activity. "Hazardous Substances" includes
any pollutants, dangerous substances, toxic substances, hazardous wastes, solid
wastes, infectious wastes, hazardous materials, or hazardous substances as
defined in or pursuant to the Resource Conservation and Recovery Act, as
amended, the Comprehensive Environmental Response, Compensation and Liability
Act, as amended, or any other Federal, State, county or municipal, local or
other environmental law, ordinance, rule or regulation. "Release" means
releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing, or dumping, other than a release,
spill, leak, pumping, pouring, emitting, emptying, discharge, injection, escape,
▇▇▇▇▇, disposal, or dumping of petroleum products and byproducts which does not
violate Environmental Requirements.
12
(c) Environmental Warranty and Representation. Except with respect to
the matters disclosed on Exhibit 5.3(c) attached hereto Seller, after diligent
inquiry, makes the following warranties, representations and covenants:
(1) To the best of Seller's knowledge, the Seller is
and has been at all times in compliance in all material respects with
all applicable Environmental Requirements relating to the Gathering
System and use of the Gathering System and no material Environmental
Activity has occurred in violation of any applicable Environmental
Requirements which has not been remedied;
(2) No investigations, inquiries, orders, hearings,
actions or other proceedings by or before any court or governmental
agency are pending or, to the best knowledge of Seller, threatened in
connection with any Environmental Activity or alleged Environmental
Activity;
(3) No claims are being made or, to the best
knowledge of Seller, threatened by any third party against the
Gathering System relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from any Hazardous Substances;
(4) To the best of Seller's knowledge without any
inquiry, no portion of the Gathering System is located within 2,000
feet of a release of Hazardous Substance;
(5) To the best of Seller's knowledge, without any
inquiry, no occurrence or condition on any real property adjoining or
in the vicinity of the Gathering System exists which could cause the
Gathering System or any part thereof to be subject to any restrictions
on the ownership, occupancy, transferability or use of such property
under any Environmental Requirements;
(6) No notice, order, directive, complaint or other
communication, written or oral, has been made or issued to Seller by
any governmental agency or other person alleging the occurrence of
Environmental Activity in violation of any Environmental Requirements
with respect to the Gathering System; and
(7) To the best of Seller's knowledge, no part of the
Gathering System has been used for hazardous waste disposal or has been
contaminated by Hazardous Substances.
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(d) Indemnity.
---------
(1) Seller agrees to indemnify, hold harmless and
defend Buyer, their respective officers, directors, employees, agents,
successors and assigns against and in respect of, any and all damages,
claims, losses, liabilities and expenses, including, without
limitation, reasonable legal, accounting, consulting, engineering and
other expenses, (collectively "Losses") which may be imposed upon or
incurred by an indemnified party by any other party or parties
(including, without limitation, a governmental entity), arising out of
or in connection with any Environmental Activity which resulted from
the activities of Seller with respect to the Gathering System prior to
the Closing Date, including the exposure of any person to any such
Environmental Activity or exposure resulting from activities of Seller
and regardless of whether such Environmental Activity or any related
condition is discovered before or after the Closing. This indemnity
shall survive the Closing and be in addition to Seller's obligations
for breach of a representation or warranty set forth in other sections
of this Agreement.
(2) Buyer agrees to indemnify, hold harmless and
defend Seller, its officers, directors, employees, agents, successors
and assigns, against and in respect of, any and all Losses which may be
imposed upon or incurred by an indemnified party by any other party or
parties (including, without limitation, a governmental entity), arising
out of or in connection with any Environmental Activity which resulted
from the activities of Buyer with respect to the Gathering System after
the Closing Date, including the exposure of any person to any such
Environmental Activity or exposure resulting from activities of Buyer.
This indemnity shall survive the Closing and be in addition to Buyer's
obligations for breach of a representation or warranty set forth in
other sections of this Agreement.
(e) Obligations and Rights. In the event Buyer discovers or
determines the existence of any breach by Seller of its Section 5.3(c)
warranties (including, without limitation, a release of Hazardous Substances or
contamination) within eighteen (18) months after the Closing Date, the result of
which may require remedial action pursuant to any law or may be the basis for
the assertion of any third party claims, including claims of governmental
entities, Buyer shall promptly notify Seller thereof within said eighteen (18)
month period and thereafter Buyer may, at its option, proceed to take such
action as it deems appropriate, at Seller's sole cost and expense, and shall
have the rights to indemnity with respect to all such costs and expenses as set
forth in this Section. Prior, however, to the commencement by Buyer of any
efforts at remediation hereunder, other than in emergency situations in which
Buyer reasonably determines that there is an immediate risk to life or the
public health, Buyer shall first notify Seller in writing of the Environmental
Activity with details concerning the proposed plan of remediation and estimates
of the associated costs. Seller shall have a reasonable amount of time in which
to consent to the proposed plan of remediation, such amount of time being based
upon the exigency of the circumstances, but in no event to exceed thirty (30)
days. Such consent shall not be unreasonably withheld by Seller. Failure to
respond in writing within said period of time shall be deemed consent to the
proposed plan of remediation. In the event of a notice in writing of Seller's
disagreement with Buyer's proposed plan of remediation, the dispute shall be
14
submitted to arbitration (at which Seller may submit a proposed plan of
remediation), with the Seller selecting one arbitrator, the Buyer selecting a
second arbitrator, and the two so appointed selecting a third arbitrator, with
the cost of arbitration being shared equally by Seller and Buyer.
Section 5.4. No Waiver of Representations and Warranties. The election
by Buyer pursuant to Section 5.1, Section 5.2, and/or Section 5.3(a) to waive a
defect rather than terminate the agreement shall not in any manner affect the
continuing validity of Seller's representations, warranties and indemnities
hereunder and the right of Buyer to rely on the same, except that in cases in
which Buyer has expressly waived a known defect in writing, Buyer shall not
thereafter allege a breach of a representation or warranty on account of such
defect.
ARTICLE 6.
CONDITIONS TO CLOSING
---------------------
Section 6.1. Conditions to Obligations of Seller. The obligations of
Seller to consummate the transaction contemplated by this Agreement are subject,
at the option of Seller, to the satisfaction or waiver of the following
conditions:
(a) Validity of Representations. All representations and
warranties of Buyer contained in this Agreement shall be true in all material
respects at and as of the Closing as if such representations and warranties were
made at and as of the Closing, and Buyer shall have performed and satisfied in
all material respects all agreements, covenants and conditions required by this
Agreement to be performed and satisfied by Buyer at or prior to the Closing.
(b) Buyer's Certificate. Seller shall have received a
certificate from Buyer, dated as of the Closing Date, reasonably satisfactory in
form and substance to Seller and its Counsel, certifying as to the fulfillment
of all matters specified in Section 6.1(a) hereof. The matters set forth in such
certificate shall constitute representations and warranties of Buyer hereunder.
(c) Secretary's Certificate. Seller shall have received a
certificate, dated the Closing Date, of the Secretary or any Assistant Secretary
of Buyer with respect to the incumbency and specimen signature of each officer
or representative of Buyer executing this Agreement, the certificate referred to
in Section 6.1(b) and the ancillary agreements to which Buyer is a party.
(d) Actions or Proceedings. All corporate actions,
proceedings, instruments and documents required to carry out the transactions
contemplated by this Agreement or incidental thereto and all other related legal
matters shall be reasonably satisfactory to counsel for Seller, and such counsel
shall have been furnished with such certified copies of such corporate actions
and proceedings and such other instruments and documents as it shall have
reasonably requested.
15
(e) Opinion of Counsel. Seller shall have received an opinion,
dated as of the Closing, from Buyer's counsel, in form and substance reasonably
acceptable to Seller covering the matters set forth in Section 3.2(a), 3.2(b)
(except qualified as to knowledge in respect of Buyer's agreements), 3.2(c) (as
to requisite corporate action) and 3.2(d).
Section 6.2. Conditions to Obligations of Buyer. The obligations of
Buyer to consummate the transaction contemplated by this Agreement are subject,
at the option of Buyer, to the satisfaction or waiver of the following
conditions:
(a) Validity of Representations. All representations and
warranties of Seller contained in this Agreement shall be true in all material
respects at and as of the Closing as if such representations and warranties were
made at and as of the Closing, and Seller shall have performed and satisfied in
all material respects all agreements, covenants and conditions required by this
Agreement to be performed and satisfied by Seller at or prior to the Closing.
(b) Seller's Certificate. Buyer shall have received a
certificate from Seller, dated as of the Closing Date, reasonably satisfactory
in form and substance to Buyer and its counsel, certifying as to the matters
specified in Section 6.2(a) hereof. The matters set forth in such certificate
shall constitute representations and warranties of Seller hereunder.
(c) Secretary's Certificate. Buyer shall have received a
certificate, dated the Closing Date, of the Secretary or any Assistant Secretary
of Seller with respect to the incumbency and specimen signature of each officer
or representative of Seller executing this Agreement, the certificate referred
to in Section 6.2(b) and the ancillary agreements to which Seller is a party.
(d) Actions or Proceedings. All corporate actions,
proceedings, instruments and documents required to carry out the transactions
contemplated by this Agreement or incidental thereto and all other related legal
matters shall be reasonably satisfactory to counsel for Buyer, and such counsel
shall have been furnished with such certified copies of such corporate actions
and proceedings and such other instruments and documents as it shall have
reasonably requested.
(e) Opinion of Counsel. Buyer shall have received an opinion
dated as of the Closing from Seller's counsel, in form and substance reasonably
acceptable to Buyer covering the matters set forth in Section 3.1(a), 3.1(b)
(except qualified as to knowledge in respect of Seller's agreements), 3.1(c) (as
to requisite corporate action) and 3.1(d).
(f) Pending Legal Proceedings. There shall not be pending or
instituted, threatened or proposed, any action or proceeding by or before any
court or administrative agency or any other person challenging or complaining of
or seeking to collect damages or other relief in connection with this Agreement.
16
(g) Consents of Third Parties. All necessary consents,
permissions, and approvals by third parties or governmental authorities in
connection with the sale and transfer of the Gathering Assets and in connection
with the transfer of all permits and licenses necessary or appropriate for the
operation of the Gathering System shall have been obtained.
Section 6.3. Conditions to Obligations of Seller and Buyer. The
obligations of Seller and Buyer to consummate the transactions contemplated by
this Agreement are subject, at the option of each party, to the satisfaction or
waiver by both parties of the following condition:
(a) Prohibition of Transactions. No state or federal statute,
rule, regulation or action shall exist or shall have been adopted or taken, and
no judicial or administrative decision shall have been entered (whether on a
preliminary or final basis), that would prohibit, restrict or delay the
consummation of the transactions contemplated by this Agreement or make illegal
the payments due hereunder.
ARTICLE 7.
CLOSING
-------
Section 7.1. Date of Closing. Subject to the conditions stated in this
Agreement, the consummation of the transactions contemplated hereby (the
"Closing") shall be held on October 18, 2000 but in no event earlier than the
third business day after the date on which the last of the consents, permissions
and approvals necessary to consummate the transactions contemplated hereunder
has been obtained or given, or at such other time as Buyer and Seller may agree
upon in writing. The date Closing actually occurs is herein called the "Closing
Date."
Section 7.2. Place of Closing. The Closing shall be held at the offices
of Atlas America, Inc., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ or at such
other place as Buyer and Seller may agree upon in writing.
Section 7.3. Closing Obligations. At the Closing the following events
shall occur, each being a condition precedent to the others and each being
deemed to have occurred simultaneously with the others:
(a) Execution of Transfer Documents. Seller, and Buyer as
indicated, shall execute, acknowledge and deliver the following:
(1) An assignment, ▇▇▇▇ of sale and conveyance (in
sufficient counterparts to facilitate recording) in form and substance
as set forth in Exhibit 7.3(a)(1) hereto, or such other conveyances,
assignments, transfers, bills of sale and instruments acceptable to
Buyer, conveying good and marketable title to the Gathering System to
Atlas Ohio (or to such persons or entities, and in such percentages, as
Buyer may direct), free and clear of all liens, encumbrances, burdens,
claims and defects of title of any kind.
17
(2) Partnership and Seller shall execute and deliver
the Registration Rights Agreement.
(3) Partnership shall deliver to Seller a certificate
representing the Units.
(b) Delivery of Funds. Subject to the terms and conditions of
this Agreement, at the Closing, Buyer shall deliver to Seller the Cash Payment
by wire transfer of immediately available funds sent to Bank One NA, ABA 071 000
013, LS2 Clearing account 4811 5286, Re: Kingston Oil.
(c) Files. Seller shall deliver to Buyer in their present
locations all files and records relating to the Gathering System, including,
without limitation, all information and material referred to in Section 4.1(a),
Section 4.1(b) and Section 4.1(c), above, not previously delivered to Buyer.
(d) Seller's Certificates. Seller shall execute, acknowledge
and deliver to Buyer the certificates dated as of the Closing as required by the
terms of Section 6.2.
(e) Buyer's Certificates. Buyer shall execute, acknowledge and
deliver to Seller the certificates dated as of Closing as required by the terms
of Section 6.1.
ARTICLE 8.
OBLIGATIONS AFTER CLOSING
-------------------------
Section 8.1. Sales Taxes and Recording Fees. The party responsible by
law shall pay any applicable sales taxes or other transaction taxes, duties or
similar charges payable in connection with the sale of the Gathering System.
Buyer shall pay all other documentary, filing and recording fees required in
connection with the filing and recording of the assignments, deeds and other
conveyances described in Section 7.3(a), above.
Section 8.2. Rights, Duties, and Obligations. Subsequent to the
Closing:
(a) Claims Accruing after Closing Date. Buyer shall, severally
and not jointly, defend, indemnify and save and hold harmless Seller against all
Losses with respect to the Gathering System that accrue or relate to times after
the Closing Date (but not including those incurred by Seller with respect to the
sale of the Gathering System to Buyer or the negotiations leading to such sale;
not including those that result from or are attributable to the negligence or
willful misconduct of Seller, its employees or agents with respect to the
operation and maintenance of the Gathering System or from any representation of
Seller contained herein being untrue or a breach of any warranty or covenant of
Seller contained herein) and that are asserted or incurred on or before eighteen
(18) months after the Closing Date.
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(b) Claims Accruing before Closing Date. Seller shall defend,
indemnify and save and hold harmless Buyer against all Losses with respect to
the Gathering System that accrue or relate to times prior to the Closing Date
and with respect to the Excluded Interests or any debt, claims, liabilities or
obligations of Seller not expressly assumed by Buyer hereunder that accrue at
any time (but not including those incurred by Buyer with respect to the purchase
of the Gathering System by Buyer or the negotiations leading to such purchase
and not including those that result from or are attributable to any
representation of Buyer contained herein being untrue or a breach of any
warranty or covenant of Buyer contained herein) and that are asserted or
incurred on or before eighteen (18) months after the Closing Date.
(c) Claims from Breach of Seller's Warranties. Seller shall
defend, indemnify and save and hold harmless Buyer against all Losses that
result from or relate or are attributable to (i) any representation or warranty
of Seller contained herein being untrue or any warranty, agreement or covenant
of Seller contained herein being breached and (ii) any claims or actions raised
by any person challenging Buyer's interests in any portion of the Gathering
System that are asserted or incurred on or before eighteen (18) months after the
Closing Date.
(d) Claims from Breach of Buyer's Warranties. Buyer shall,
severally and not jointly, defend, indemnify and save and hold harmless Seller
against all claims, losses, damages, costs, expenses, and liabilities that
result from or relate or are attributable to any representation or warranty of
Buyer contained herein being untrue or any warranty, agreement or covenant of
Buyer contained herein being breached and that are asserted or incurred on or
before eighteen (18) months after the Closing Date.
(e) Procedure for Indemnification.
(1) Promptly after receipt by an indemnified party
under Section 5.3 or 8.2 of written notice (a "Notice of Claim") of the
commencement of any action, suit or proceeding against it, or written threat
thereof, such indemnified party shall, if a claim is to be made against an
indemnifying party under either of said Sections, as applicable, give notice to
the indemnifying party of the commencement of such action, suit or proceeding.
The indemnified party shall furnish to the indemnifying party in reasonable
detail such information as the indemnified party may have with respect to such
indemnification claims (including copies of any summons, complaint or other
pleading that may have been served on it and any written claim, demand, invoice,
billing or other document evidencing or assenting the same). Subject to the
limitations set forth in this Section 8.2(e), no failure or delay by the
indemnified party in the performance of the foregoing shall reduce or otherwise
affect the obligation of the indemnifying party to indemnify and hold the
indemnified party harmless, except to the extent that such failure or delay will
have adversely affected the indemnifying party's ability to defend against,
settle or satisfy any action, suit or proceeding against it, damage, loss, claim
or demand for which the indemnified party is entitled to indemnification
hereunder.
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(2) If the claim or demand set forth in the Notice of
Claim given by the indemnified party is a claim or demand asserted by a third
party, the indemnifying party shall have 45 days after the Date of Notice of
Claim to notify the indemnified party in writing of its election to defend such
third-party claim or demand on behalf of the indemnified party. If the
indemnified party elects to defend such third-party claim or demand, the
indemnifying party shall make available to the indemnified party and its agents
and representatives all records and other materials that are reasonably required
in the defense of such third-party claim or demand and shall otherwise cooperate
with, and assist the indemnifying party in the defense of, such third-party
claim or demand, and so long as the indemnifying party is defending such
third-party claim in good faith, the indemnified party shall not pay, settle or
compromise such third-party claim or demand. If the indemnifying party elects to
defend such third-party claim or demand, the indemnifying party shall have the
right to control the defense of such third-party claim or demand, at the
indemnifying party's own expense. If the indemnifying party does not elect to
defend such third-party claim or demand or does not defend such third-party
claim or demand in good faith, the indemnified party shall have the right, in
addition to any other right or remedy it may have hereunder, to defend such
third-party claim or demand at the indemnifying party's expense.
(3) In the event any indemnified party shall have a
claim under Section 5.3 or 8.2 against any indemnifying party that does not
involve a third-party claim, the indemnified party shall deliver a notice with
reasonable promptness to the indemnifying party. The failure by any indemnified
party to give an indemnity notice shall not impair such party's rights hereunder
except to the extent that an indemnifying party demonstrates that it has been
materially prejudiced thereby. If the indemnifying party notifies the
indemnified party that it does not dispute the claim described in such notice or
fails to notify the indemnified party within 45 days whether the indemnifying
party disputes the claim described in such indemnity notice, the amount
specified in the notice will be conclusively deemed a liability of the
indemnifying party under Section 5.3 or 8.2 and the indemnifying party shall
pay, as the case may be, the amount of such Loss to the indemnified party on
demand. If the indemnifying party has timely disputed its liability with respect
to such claim, the indemnifying party and the indemnified party will proceed in
good faith to negotiate a resolution of such dispute, and if not resolved
through negotiation within 45 calendar days of timely response by the
indemnifying party, such dispute shall be resolved by litigation in a court of
competent jurisdiction.
(4) The term "Date of Notice of Claim" shall mean the
date the Notice of Claim is effective pursuant to Section 10.4 of this
Agreement.
(f) Proceeds after Effective Time. Buyer shall be entitled to
receive all proceeds attributable to the Gathering System after the Effective
Time.
(g) Proceeds before Effective Time. Seller shall be entitled
to receive all proceeds attributable to the Gathering System prior to the
Effective Time
20
(h) Tax Matters and Post-Closing Taxes.
(1) Liability for Taxes. Seller shall be liable for,
shall pay and shall indemnify, defend and hold Buyer harmless against all taxes
relating to the Gathering System (including ad valorem, property, production,
severance and similar taxes and assessments based upon or measured by the
ownership of property or the production of hydrocarbons or the receipt of
proceeds therefrom) (collectively, the "Taxes") accruing on or before the
Effective Time. Buyer shall be liable for, shall pay and shall indemnify, defend
and hold Seller harmless against all Taxes accruing after the Effective Time.
(2) Allocation. In the case of Taxes that are payable
with respect to a taxable period that begins before the Closing Date and ends
after the Closing Date, the amount of Taxes attributable to the pre-Closing
portion of a taxable period shall be determined based on an interim closing of
the books of Seller as of the close of business on Closing Date, except that the
amount of any such Taxes that are imposed on a periodic basis shall be
determined by reference to the relative number of days in the pre-Closing and
post-Closings portion of such taxable period.
(3) Payment. Except as otherwise provided in this
Section, any amounts owed by an indemnitor to an indemnitee under this Section
shall be paid within ten (10) days after receipt of written notice from the
indemnitee; provided, however, that, if such amounts are being contested before
a taxing authority in good faith, the indemnitor shall not be required to make
payment until it is finally determined by such taxing authority, unless the
indemnitor has authorized the indemnitee to make payment to such taxing
authority.
(4) Filing of Tax Returns. The parties hereto
covenant and agree that: (a) Seller shall prepare and file with the applicable
governmental authorities all income tax returns with respect to any period that
ends on or before the Closing Date and all other Tax returns with respect to any
period that ends on or before the Closing Date and all other Tax returns
required to be filed (not taking into account extensions) on or prior to the
Closing Date and (b) Buyer shall prepare and file with the applicable
governmental authority all other Tax returns.
(5) Cooperation and Exchange of Information. Seller
and Buyer will provide each other with such cooperation and information as
either of them reasonably may request of the other in filing any Tax return,
amended return or claim for refund, determining a liability for Taxes or a right
to a refund of Taxes or participating in or conducting any audit or other
proceeding in respect to Taxes. Such cooperation and information shall include
providing copies of relevant Tax returns or portions thereof, together with
accompanying schedules and related work papers and documents relating to rulings
or other determinations by any tax authority. Each party shall take such action
and make available such other documents as are necessary to carry out the intent
of this Section. Each party agrees to notify the other party of any audit
adjustments that do not result in Tax liability but can reasonably be expected
21
to affect Tax returns of the other party. Each party will retain in accordance
with applicable record retention procedures all Tax returns, schedules and work
papers and all material records or other documents relating to Tax matters for
its taxable period first ending after the Closing Date and for all prior taxable
periods until the later of (a) the expiration of the statute of limitations of
the taxable periods to which such Tax returns and other documents relate,
without regard to extensions except to the extent notified by the other party in
writing of such extensions for the respective Tax periods, or (b) seven (7)
years following the due date (without extension) for such Tax returns. Any
information obtained under this Section shall be kept confidential in the manner
in which the obtaining party customarily protects its own proprietary and
confidential information, except as may be otherwise necessary with the filing
of Tax returns or claims for refund or in conducting an audit or other related
proceeding.
Section 8.3. Registration of Units. Partnership shall cause, at
Partnership's sole expense, the resale of all the Units (as hereinafter defined)
to be registered pursuant to all applicable laws, rules and regulations in
accordance with the Registration Rights Agreement between Partnership and Seller
in substantially the form of Exhibit 8.3 hereto (the "Registration Rights
Agreement").
Section 8.4. Further Assurances. From and after the Closing Date,
Seller shall, at the request of Buyer, execute, acknowledge and deliver to
Buyer, without further consideration, all such further assignments, conveyances,
endorsements, deeds, special powers of attorney, consents and other documents,
and take such other action, as Buyer may reasonably request (i) to transfer to
and vest in Buyer, and protect its rights, title and interest in, all the
Gathering System and (ii) otherwise to consummate the transactions contemplated
by this Agreement. In addition, from and after the Closing Date, Seller shall
afford Buyer and its attorneys, accountants and other representatives access,
during normal business hours, to any books and records relating to the Gathering
System that Seller may retain as may reasonably be required in connection with
the preparation of financial information or tax returns of Buyer.
Section 8.5. Survival. The representations, warranties, covenants,
agreements and indemnities included or provided in this Agreement, or in any
Exhibit, document, certificate or other instrument delivered pursuant hereto,
shall survive the Closing in accordance with the provisions hereof.
Section 8.6. Access to Information. Upon Seller's request, Buyer shall
provide Seller access during reasonable business hours to all files and records
delivered to Buyer pursuant to Section 7.3(d) of this Agreement; provided,
however, that Seller shall request access to such files only when necessary to
obtain needed information for pending legal proceedings or audits involving
Seller, and provided further that Seller shall disclose information obtained
from such files to third parties only upon the prior written consent of Buyer.
Section 8.7. Retention of and Access to Records; Cooperation. For a
period of not less than five (5) years after the Closing Date, Buyer shall
preserve and retain the corporate, accounting, legal, auditing and other books
22
and records of the Gathering System (including but not limited to, any
governmental or non-governmental actions, suits, proceedings or investigations
arising out of the conduct of the Gathering System and operations of the
Gathering System prior to the Closing Date); provided, however, that such
five-year period shall be extended in the event that any action, suit,
proceedings or investigation has been commenced or is pending or threatened at
the termination of such five-year period and such extension shall continue until
any such action, suit, proceeding or investigation has been settled through
judgement or otherwise or is no longer pending or threatened. Notwithstanding
the foregoing, Buyer may discard or destroy any of such books and records prior
to the end of such five-year period or period of extension, if applicable, if it
has given Seller 60 days' prior written notice of its intent to do so and Seller
has not taken possession of such books and records, at its expense, within such
60-day period. Notwithstanding anything to the contrary in this Section, Seller
shall retain all tax records of the Interests prepared prior to the Closing
Date.
ARTICLE 9.
TERMINATION OF AGREEMENT
------------------------
Section 9.1. Termination of Agreement. This Agreement and the
transactions contemplated hereby may be terminated in the following instances:
(a) By either Buyer or Seller if any condition set forth in
Section 6.3 shall not be satisfied or waived at the Closing.
(b) By Buyer pursuant to any of Section 5.1, 5.2 or 5.3, or if
any condition set forth in Section 6.2 shall not be satisfied or waived on or
before the Closing Date.
(c) By Seller if any condition set forth in Section 6.1 shall
not be satisfied or waived on or before the Closing Date.
(d) By the mutual written agreement of Buyer and Seller.
Section 9.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 9.1, this Agreement shall become void and have no effect;
and neither party shall have any further rights or duties hereunder.
Notwithstanding any other provision of this Agreement to the contrary, upon
termination of this Agreement (i) by Buyer as a result of a breach by Seller,
Seller shall remain liable to Buyer for any breach existing at the time of such
termination or (ii) by Seller as a result of a breach by Buyer, Buyer shall
remain liable to Seller for any breach existing at the time of such termination
and each party may seek such remedies, including damages and reasonable
attorneys fees, against the other with respect to any such breach as are
available at law or in equity.
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ARTICLE 10.
MISCELLANEOUS
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Section 10.1. Exhibits. The Exhibits referred to in this Agreement have
been separately bound and initialed by the duly authorized officers of Buyer and
Seller. All of such Exhibits are hereby incorporated in this Agreement by
reference and constitute a part of this Agreement. Each party to this Agreement
and its counsel has received a complete set of Exhibits prior to and as of the
execution of this Agreement.
Section 10.2. Expenses. Except as otherwise specifically provided in
this Agreement, all fees, costs and expenses incurred by Buyer or Seller in
negotiating this Agreement or in consummating the transactions contemplated by
this Agreement shall be paid by the party incurring the same, including, without
limitation, legal and accounting fees, costs and expenses.
Section 10.3. Publicity. All public announcements concerning the
transactions contemplated by this Agreement shall be jointly planned and
coordinated by and between Buyer and Seller. Except as may be required by law,
including without limitation the rules and regulations of the Securities and
Exchange Commission, no party shall act unilaterally in this regard without the
prior written approval of the other party, such approval not to be unreasonably
withheld.
Section 10.4. Notices. All notices and communications required or
permitted under this Agreement shall be in writing and any communication or
delivery hereunder shall be deemed to have been duly made if actually delivered
(including by confirmed telefax), or if mailed by registered or certified mail,
postage prepaid, addressed as follows:
If to Buyer: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Atlas Pipeline Partners GP, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copy to: ▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
Ledgewood Law Firm, P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Kingston Oil Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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With copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, Muething & ▇▇▇▇▇▇▇, P.L.L.
1400 Provident Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Either party may, by written notice so delivered to the other, change
the address to which delivery shall thereafter be made.
Section 10.5. Limitation of Liability. Except with respect to the
indemnification obligations specifically set forth herein, Seller and Buyer do
hereby covenant and agree that, after Closing, the recovery by either party
hereto of any damages suffered or incurred by it as a result of any breach by
the other party of any of its covenants, agreements, representations,
guaranties, warranties, disclaimers, waivers or continuing obligations under
this Agreement shall be limited to the actual damages suffered or incurred by
the non-breaching party as a result of the breach by the breaching party of its
covenants, agreements, representations, guaranties, warranties, disclaimer,
waivers, or continuing obligations hereunder and the breaching party shall not
be liable to the non-breaching party for consequential damages, including but
not limited to loss of profits, as a result of the breach.
Section 10.6. Amendment. This Agreement may not be altered or amended,
or any rights hereunder waived, except by an instrument in writing executed by
the party or parties to be charged with such amendment or waiver. No waiver of
any term, provision or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as, a further or continuing waiver
of any such term, provision or condition or as a waiver of any other term,
provision or condition of this Agreement.
Section 10.7. Assignment. Neither Buyer nor Seller may assign its
rights or delegate its duties or obligations under the terms of this Agreement
without the prior written consent of the other party; provided, however, that
Buyer may assign all or any portion of its rights and delegate all or any
portion of its duties and obligations under this Agreement to any affiliate of
Buyer. If Buyer makes such an assignment, Buyer shall remain liable for the
performance of all of Buyer's duties and obligations under this Agreement.
Section 10.8. Headings. The headings of the Articles and Sections of
this agreement are for guidance and convenience of reference only and shall not
limit or otherwise affect any of the terms or provisions of this Agreement.
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Section 10.9. Counterparts. This Agreement may be executed by Buyer and
Seller in any number of counterparts, each of which shall be deemed an original
instrument but all of which together shall constitute but one and the same
instrument.
Section 10.10. References. References made in this Agreement, including
use of a pronoun, shall be deemed to include where applicable, masculine,
feminine, singular or plural, individuals, partnerships or corporations. As used
in this Agreement, "party" shall mean any natural person, corporation,
partnership, trust, estate or other entity. As used in this Agreement,
"affiliate" of a party shall mean any partnership, joint venture, corporation or
other entity in which such party has an interest or which controls, is
controlled by or is under common control with such party.
Section 10.11. Governing Law. This Agreement and the transaction
contemplated hereby shall be construed in accordance with, and governed by, the
laws of the State of Ohio; and Seller and Buyer consent to venue and
jurisdiction in the state and federal courts for Muskingum County, Ohio.
Section 10.12. Entire Agreement. This Agreement (including the Exhibits
hereto) constitutes the entire understanding between the parties with respect to
the subject matter hereof superseding all negotiations, prior discussions and
prior agreements and understandings relating to such subject matter.
Section 10.13. Parties in Interest. This Agreement shall be binding
upon, and shall inure to the benefit of the parties hereto and, except as
otherwise prohibited, their respective successors and assigns, and nothing
contained in this Agreement express or implied, is intended to confer upon any
other person or entity any benefits, rights or remedies.
Section 10.14. Definition of "Knowledge." As used herein, "knowledge"
of Seller means all matters actually known by any of Seller's directors,
officers or ▇▇▇▇▇ ▇▇▇▇▇▇.
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IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of
the date first above mentioned.
SELLER:
KINGSTON OIL CORPORATION
By:____________________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President
BUYER:
ATLAS PIPELINE PARTNERS, L.P.
By: Atlas Pipeline Partners GP, LLC, its
General Partner
By:____________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Chief Operating Officer
ATLAS PIPELINE OHIO, LLC
By: Atlas Pipeline Operating Partnership, L.P.,
its sole member
By: Atlas Pipeline Partners GP, LLC,
its General Partner
By:____________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Chief Operating Officer
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Omitted Exhibits:
Exhibit 1.1: Gathering System Description
Exhibit 3.1(g): Seller's Encumbrances
Exhibit 3.1(k): Legal Proceedings
Exhibit 5.3: Environmental Exceptions
Exhibit 8.3: Form of Registration Rights Agreement
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