PURCHASE AND SALE AGREEMENT by and between Atlas America, LLC and Miller Petroleum, Inc.
Exhibit
10.1
by
and between
Atlas
America, LLC
and
Xxxxxx
Petroleum, Inc.
This
PURCHASE AND SALE AGREEMENT (this “Agreement”) is effective as of June 11, 2008
(the “Effective Date”) and is by and between Atlas America, LLC, a Delaware
limited liability company with offices at 0000 Xxxxxxxxxx Xxxxxxx Xxxx, Xxxx
Xxxxxxxx, XX 00000 (“Atlas”) and Xxxxxx Petroleum, Inc., a Tennessee corporation
with offices at 0000 Xxxxx Xxxxxxx, Xxxxxxxxxx XX 00000 (“Xxxxxx”).
1. Assignment
of Leases and Xxxxx.
(a) On
June
12, 2008 (the “Closing Date”), at 9:00 AM Eastern Time, or at such other time as
the parties may agree, Atlas and Xxxxxx shall close the transactions described
in this Article 1 (the “Closing”). The parties contemplate closing this
transaction by transmitting documents and funds electronically, except with
respect to documents to be recorded of record, which documents will be prepared
and notarized at the offices of Stansberry, Petroff, Xxxxxx & Xxxxxxx, P.C.,
Attorneys at Law, 0 Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxx 00000 or at
such
other place as the parties may agree.
(b)(i) Except
as
described in Exhibit A-1 (Schedule of Leases Being Assigned) and Exhibit
B
(Exceptions) (each of which exhibits are attached to and incorporated into
this
Agreement), at the Closing Xxxxxx shall assign to Atlas, in the form of
assignment attached to this Agreement as Schedule 1: (A) an unencumbered,
undivided 100% working interest and an 80% net revenue interest (“NRI”) in and
to the oil and gas leases comprising 27,620 acres known as Koppers North
and
Koppers South and located in Xxxxxxxx County, Tennessee; and (B) an
unencumbered, undivided 100% working interest and an 82.5% NRI (net of a
5%
overriding royalty interest to Xxxxxx) in and to the oil and gas leases
comprising of 1,952 acres adjacent to Koppers North and Koppers South and
located in Xxxxxxxx County, Tennessee (together with the leases described
in
Section 1(b)(i)(A) above, the “Leases”).
(ii) Notwithstanding
the assignment of the Leases described in Section 1(b) above, Xxxxxx shall
retain for itself and not assign to Atlas the following 12 xxxxx as to depths
from the surface down to and to the bottom of the shallower of (i) the Monteagle
(Big Lime); or (ii) the deepest producing formation completed with respect
to
each such well as of the Effective Date: Well Nos. 6A, 7A, 9B, 00X, 00X,
00X,
00X, 00X, 00X, 00X, 28B and 32B as listed in Exhibit A-1 (each a “Retained
Well”), which is attached to and made a part of this Agreement, together with
title to the well heads and all associated equipment associated with the
Retained Xxxxx, and a 40-acre square centered
on each Retained Well and all lease rights associated with same.
(c) As
consideration for the Leases, Atlas shall, at the Closing, deposit by electronic
funds transfer $19,000,000 in the Escrow Account, as that term is described
in
that certain Escrow Agreement by and among Atlas, Xxxxxx, Wind City Oil &
Gas, LLC (“Wind City”) and Citizens Bank of Pennsylvania entered into as of June
10, 2008 (the “Escrow Agreement”). Subject to the limitations described in
Section 1(e) below, upon the conveyance of recordable assignments of the
Leases
from Wind Mill Oil and Gas, LLC, (Wind Mill),Wind City and/or Wind City Oil
& Gas Management, LLC (WCOG) (which assignments shall include all leases
previously assigned by Xxxxxx to Wind Mill, Wind City or WCOG (together the
“Wind Entities”), all xxxxx and equipment associated with those leases, all
pipeline rights and rights of way, all contract rights, all other equipment,
property or real property rights of any kind associated with the aforedescribed
assets in a form reasonably acceptable to Atlas (the “Wind Assignments”), and
upon the filing of record in Xxxxxxxx County, Tennessee by Atlas of the Wind
Assignments and the assignments from Xxxxxx to Atlas of the Leases, Atlas,
Xxxxxx shall, and Wind City has agreed that it will, direct the escrow agent
to
deposit by electronic transfer: (i) $10,600,000 into an account designated
by
the Wind Entities pursuant to instructions received from the Wind Entities;
and
(ii) $9,025,000 into an account designated by Xxxxxx pursuant to instructions
from Xxxxxx. If as a result of any
litigation of certain claims that CNX Gas Company, LLC may assert against
Xxxxxx
with regard to the validity of Xxxxxx’x assignment of the Leases to Atlas (the
“Litigation”), Atlas is required to reassign the Leases, then Atlas shall
reassign the Leases and the Xxxxx and Xxxxxx shall pay Atlas $19,625,000.
(d) At
the
Closing, Xxxxxx shall assign to Atlas, in the form of assignment attached
to
this Agreement as Schedule 1, an unencumbered, undivided 100% working interest
and an 80% NRI in eight existing drilled, but not completed oil and gas xxxxx
on
Koppers South (the “Xxxxx”). The Xxxxx are described in Attachment B to Schedule
1. Xxxxxx shall have the option to repurchase the Xxxxx within one year from
the
Closing Date or within 30 days after the pipeline to be built by Atlas has
been
completed and is ready to accept gas for transport.
(e) Atlas
shall undertake to record the assignments of the Leases within 24 hours of
the
Closing, and shall endeavor to accomplish the same as soon as reasonably
possible after the Closing within that 24-hour period, provided that nothing
has
been filed of record at any time during the seven-day period before the
Effective Date that would inhibit Xxxxxx’x ability to transfer good and
marketable title to the Leases and provided there is no order of any court
or
other legal impediment to Atlas actually filing the Leases of record in Xxxxxxxx
County, Tennessee. If there has been a filing of record within the seven-day
period prior to the Effective Date or if there is an order of court or other
legal impediment to Atlas actually filing the Leases of record in Xxxxxxxx
County, Tennessee, then Atlas and Xxxxxx shall, and Wind City has agreed
to
direct the escrow agent to release the funds from the Escrow Account to Atlas
and this Agreement and all agreements referenced in this Agreement shall
terminate forthwith.
2. Right
to Participate.
(a) Atlas
hereby grants to Xxxxxx the right to participate in up to ten xxxxx to be
drilled on the leasehold acreage subject to the Leases (the “Acreage”) at up to
a 25% working interest (at cost and with no obligation to participate in
promotion expenditures).
(b) Atlas
will provide Xxxxxx with notice of its intent to drill a well on the Acreage
at
least 30 days in advance of spudding the well, which notice will include
the
location of the proposed well and Atlas’s estimate of the cost to complete it
(“Notice to Drill).
(c) If
Xxxxxx
chooses to participate, it shall deliver notice (the “Participation Notice”) to
Atlas within 25 days of receiving the applicable Notice to Drill, which
Participation Notice will include the working interest percentage, up to
25%, at
which Xxxxxx will participate for that well. Xxxxxx shall wire funds, in
accordance with instructions contained in the Participation Notice, sufficient
to pay for Xxxxxx’x pro rata share (based on the working interest percentage
selected by Xxxxxx) of the estimated cost described in the Notice to Drill
before or upon delivering the Participation Notice. If Atlas fails to spud
the
well within 60 days of the anticipated spud date, then Atlas shall refund
Xxxxxx’x contribution. If Xxxxxx fails to timely deliver a Participation Notice,
together with the required funding contribution, then Xxxxxx will be deemed
to
have elected not to participate in that well.
(d) Atlas
shall be the operator with respect to all xxxxx drilled on the
Acreage.
3. Drilling
Contract, Pre-Payment, and Lien.
(a) At
the
Closing, the parties shall enter into a two-year drilling contract, in the
in
the form of drilling contract attached to this Agreement as Schedule 3(a),
providing for the use of up to two drilling rigs (the “Drilling Contract”). The
Drilling Contract will, among other things, provide for payment $23.50 per
linear foot and a fuel surcharge for fuel costs exceeding $3.50 per gallon.
(b) Atlas
shall pay Xxxxxx $500,000, as pre-payment under the Drilling Contract for
drilling services, when Xxxxxx demonstrates to Atlas’s reasonable satisfaction
that Xxxxxx has title to a complete RD20 drilling rig and associated equipment
or upon the parties reaching an agreement pursuant to which the $500,000
will be
used only to acquire a drilling rig and associated equipment to be agreed
upon
by the parties, at which time the Exhibit A referenced in the Security Agreement
will be added to the Security Agreement.
(c) Xxxxxx
hereby grants to Atlas a valid first priority lien on any drilling rig and
associated equipment acquired by Xxxxxx as described in Section 3(b) above,
which lien shall be released by Atlas upon Xxxxxx completing the performance
of
and delivering reporting invoices to Atlas amounting to $500,000 pursuant
to the
Drilling Contract, provided that amount is not subject to good faith dispute
by
Atlas. As a condition precedent to the Atlas payment obligation described
in
this Section, the Leases will have been recorded in accordance with Section
1(e)
above and Xxxxxx will have executed a security agreement in the form of security
agreement attached to this Agreement as Schedule 3(c).
(d) For
two
years after the Closing Date, Atlas shall xxxxx Xxxxxx the opportunity to
bid on
any other drilling or service work that Atlas bids out in
Tennessee.
4. Atlas
Volunteer Pipeline.
(a) At
the
Closing, the parties shall enter into a natural gas transportation agreement
in
the form of natural gas transportation agreement attached to this Agreement
as
Schedule 4(a), which agreement will provide Xxxxxx access to the Atlas Volunteer
Pipeline, to the extent that capacity is available, on substantially the
same
terms as those offered to other producers delivering into the system, which
include a transportation fee of $0.55 per mcf (subject to annual XXXXX
adjustment) plus each producer’s pro rata share of the cost of compression.
(b) At
the
Closing, the parties shall enter into a natural gas processing agreement
in the
form of natural gas processing agreement attached to this Agreement as Schedule
4(b), pursuant to which Atlas will provide gas processing services to Xxxxxx
on
substantially the same terms as those services are provided to other producers
delivering gas into the Atlas Volunteer Pipeline and deliver back to Xxxxxx
gas
with a heating value of 1,100 Btus per cubic foot.
5. Condition
Precedent.
(a) The
rights and obligations of the parties under this Agreement are contingent
upon
Xxxxxx and the Wind Entities entering into mutual and comprehensive releases
amongst themselves and on behalf of their respective officers, directors,
members, and agents, which release results in an unencumbered assignment
of the
Leases from the Wind Entities to Xxxxxx.
6. Xxxxxx
Representations and Warranties.
(a) As
of the
Closing Date, Xxxxxx represents and warrants that:
(i) Except
as
noted herein it
will
have good and marketable title in and to the interests in the Leases and
Xxxxx
to be conveyed to Atlas pursuant to Article 1 of this Agreement and that
it will
not in any manner, directly or indirectly, by contract or otherwise, have
encumbered, conveyed, or otherwise transferred any such rights to any third
party or taken any other action inconsistent with performing its obligations
pursuant to this Agreement.
(ii) As
of the
Effective Date, entering into this Agreement will not cause Xxxxxx to be
in
default or breach of any other agreement with any of its affiliates or any
of
its or their directors, officers, employees, or agents, or with any third
party.
The parties are aware of an action filed by CNX on June 11, 2008 in the Chancery
Court for Xxxxxxxx County, Tennessee. Xxxxxx is of the information and belief
that the claims of breach of contract are groundless but makes no warranty
as to
the outcome of that action.
(iii) As
of the
Effective Date, all action required by Xxxxxx’x bylaws and any other governing
documents, including any required resolutions of its board of directors,
has
been taken as may be required for Xxxxxx to perform all of its obligations
under
this Agreement and to authorize the officer executing this Agreement on behalf
of Xxxxxx to legally obligate and bind Xxxxxx to perform its obligations
pursuant to this Agreement.
(iv) As
of the
Effective Date and as of the Closing Date, no consent, approval, order or
authorization of, or registration, qualification, designation, declaration
or
filing with, any governmental authority is required on the part of Xxxxxx
or any
of its affiliates in connection with the execution and delivery by Xxxxxx
of
this Agreement.
(v) The
execution, delivery, and performance of this Agreement will not, with or
without
the giving of notice or the lapse of time, or both, (A) violate any provision
of
law to which Xxxxxx is subject or (B) violate any order, judgment or decree
applicable to Xxxxxx.
(vi) No
promise, agreement, statement or representation that is not expressly set
forth
in this Agreement or in any other written, executed agreement between the
parties or their respective affiliates has been made to Xxxxxx by Atlas,
any
affiliate of Atlas or any Atlas affiliate, counsel or agent with respect
to the
terms of Agreement, and Xxxxxx is not relying upon any such promise, agreement,
statement, or representation by Atlas or any Atlas affiliate, counsel or
agent.
(b) Xxxxxx
shall indemnify,
defend, and hold harmless Atlas, its affiliates, and their respective directors,
officers, members, employees, agents and other representatives (each an “Atlas
Indemnitee”) from and against any loss, liability and expense (including taxes,
penalties, judgments, fines, amounts paid or to be paid in settlement, costs
of
investigation and preparation, and fees, expenses and disbursements of
attorneys) incurred or suffered by any Atlas Indemnitee in so far as such
loss,
liability or expense arises out of or is based upon the breach of any
representation or warranty set forth in this Article.
7. Atlas
Representations and Warranties.
(a) Atlas
represents and warrants that:
(i) As
of the
Effective Date, entering into this Agreement will not cause Atlas to be in
default or breach of any other agreement with any of its affiliates, or any
of
its or their directors, officers, employees, or agents, or with any third
party.
(ii) As
of the
Effective Date, all action required by Atlas’s operating agreement and any other
governing documents, including any required resolutions of its board of
directors, has been taken as may be required for Atlas to perform all of
its
obligations under this Agreement and to authorize the officer executing this
Agreement on behalf of Atlas to legally obligate and bind Atlas to perform
its
obligations pursuant to this Agreement.
(iii) As
of the
Effective Date and as of the Closing Date, no consent, approval, order or
authorization of, or registration, qualification, designation, declaration
or
filing with, any governmental authority is required on the part of Atlas
or any
of its affiliates in connection with the execution and delivery by Atlas
of this
Agreement.
(iv) The
execution, delivery, and performance of this Agreement will not, with or
without
the giving of notice or the lapse of time, or both, (i) violate any provision
of
law to which Atlas is subject or (ii) violate any order, judgment or decree
applicable to Atlas.
(v) No
promise, agreement, statement or representation that is not expressly set
forth
in this Agreement or in any other written, executed agreement between the
parties or their respective affiliates has been made to Atlas by Xxxxxx,
any
affiliate of Xxxxxx or any Xxxxxx affiliate, counsel or agent with respect
to
the terms of Agreement, and Atlas is not relying upon any such promise,
agreement, statement, or representation by Xxxxxx or any Xxxxxx affiliate,
counsel or agent.
(vi) Atlas
shall indemnify,
defend, and hold harmless Xxxxxx, its affiliates, and their respective
directors, officers, members, employees, agents and other representatives
(each
a “Xxxxxx Indemnitee”) from and against any loss, liability and expense
(including taxes, penalties, judgments, fines, amounts paid or to be paid
in
settlement, costs of investigation and preparation, and fees, expenses and
disbursements of attorneys) incurred or suffered by any Xxxxxx Indemnitee
in so
far as such loss, liability or expense arises out of or is based upon the
breach
of any representation or warranty set forth in this Article.
8. Miscellaneous
(a) Neither
party may assign its rights or obligations without the written approval of
the
other, which approval shall not be unreasonably withheld.
(b) This
Agreement will be governed by the laws of Tennessee, without giving effect
to
the choice of laws principles of any jurisdiction.
(c) The
failure of a party to demand strict performance of the terms of, or to exercise
any right conferred in, this Agreement will not be construed as a waiver
or
relinquishment of its right to assert or rely upon any such term or right
in the
future, or consent to any continuing or subsequent failure or
breach.
(d) If
any provision, or any part or portion of any provision of this Agreement
becomes
or is declared unlawful, invalid, void or otherwise unenforceable, the rights
and obligations of the parties will be reduced only as much as is required
to
remove the unenforceability. The balance of this Agreement will remain in
effect.
(e) Neither
completion of their respective obligations nor any termination or cancellation
of this Agreement will be deemed to relieve either party of any obligations
that
by their nature survive termination of this Agreement, including but not
limited
to all representations, warranties and indemnity obligations.
(f) Article
and paragraph headings contained in this Agreement are inserted for convenience
and are not intended to affect any interpretation or construction of this
Agreement).
(g) Any
notices, documents, or information required or permitted to be given or
furnished under the terms of this Agreement will be deemed to have been received
upon receipt, if the notice is delivered to the applicable party representative
at the address or fax number referenced below by certified U.S. Mail, return
receipt requested, overnight courier, or fax. A party may change its
representative designated to receive notices and the applicable address and
fax
information by providing notice of that change to the other party.
| ATLAS | XXXXXX | |
|
Atlas
America, LLC
Westpoint
Corporate Center One
0000
Xxxxxxxxxx Xxxxxxx Xxxx
X.X.
Xxx 000
Xxxx
Xxxxxxxx, XX 00000
Attn:
Vice Preside-t - Land
Phone:
(000) 000-0000
Fax:
(000) 000-0000
|
Xxxxxx Petroleum, Inc.
Attn: Xxxxx Xxxxxx, CEO
0000 Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax:
000-000-0000
|
(h) This
instrument may be executed in more than one counterpart, but all counterparts
will constitute one and the same agreement.
(i) Any
dispute between the parties that arises in connection with this Agreement,
will
be resolved by binding arbitration conducted in Pittsburgh, Pennsylvania.
Except
as provided in this Section, all disputes will be subject to the Commercial
Dispute Resolution Rules of the American Arbitration Association (“AAA”). The
parties may agree on an arbitrator, but if such agreement has not been reached
within 20 days of the filing of any claim for arbitration pursuant to this
Section, either party may request that the AAA appoint an arbitrator. Any
arbitrator appointed by the AAA must have substantial experience in the oil
and
gas industry with respect to natural gas exploration and production. The
non-prevailing party shall pay all of the costs of the arbitration including
the
arbitrator’s fees, any fees paid to any arbitration forum, and the prevailing
party’s costs, including its reasonable attorneys’ fees.
(j) Except
with respect to the assignments and other agreements to be entered into at
Closing pursuant to this Agreement, this Agreement supercedes and replaces
all
previous or contemporaneous written or oral agreements between the parties.
No
amendment to this Agreement will be effective unless it is in writing and
signed
by the partiesk) This
Agreement shall expire on June 19, 2008.
(k) The
parties agree to keep the terms of this Agreement and all proprietary documents
and other information exchanged in connection with its negotiation confidential,
except as they may be required to be disclosed by law or regulation. This
requirement will not apply to information that is of record or otherwise
in the
public domain or to information already in a party’s possession from a third
party.
[Signed
on the next page]
IN
WITNESS WHEREOF, the parties have caused their duly authorized representatives
to execute this Agreement as of the Effective Date.
Atlas
America, LLC
By:
_________________________________________
Print
Name: __________________________________
Print
Title: ___________________________________
Xxxxxx
Petroleum, Inc.
By:
_________________________________________
Print
Name: __________________________________
Print
Title: ___________________________________
[Signature
Page to Purchase and Sale Agreement]
EXHIBIT
A-1
Schedule
of Leases Being Assigned
EXHIBIT
A-2
Exhibit
of Lease with a Purchase Option
EXHIBIT
B
Exceptions
SCHEDULE
1
Form
of Assignment
SCHEDULE
3(a)
Form
of Drilling Contract
SCHEDULE
3(c)
Form
of Security Agreement
SCHEDULE
4(a)
Form
of Transportation Agreement
SCHEDULE
4(b)
Form
of Processing Agreement
