TAPO Energy, LLC West Union, WV 26456 May 15, 2009 Re: Purchase of Property- Letter Agreement Dear Mr. Polling:
000
X Xxxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, XX
00000 phone 000-000-0000/ fax
000-000-0000
TAPO
Energy, LLC
X.X. Xxx
000
Xxxx
Xxxxx, XX 00000
May 15,
2009
Re: Purchase of Property- Letter
Agreement
Dear Mr.
Polling:
This Letter Agreement shall serve to
memorialize our understanding with respect to TAPO’s purchase of an aggregate of
420 acres (the “Indigo Property”) in Xxxxxxx Township and Freeport Township,
Xxxxxx County, Pennsylvania and Batello District, Monogalia County, West
Virginia (less certain acreage previously transferred to TAPO in connection with
the Modification and Settlement Agreement dated March 3, 2008 which acreage
equals a total of 60 acres offsetting the existing three xxxxx owned by
Indigo-Energy, Inc. (“Indigo”)) from Indigo for an aggregate purchase price of
$630,000 (which is equal to 420 acres less the 60 acres offset netting 360 acres
at $1,750 per acre) and shall constitute a binding agreement. The Indigo
Property is described in more detail on Exhibit A to this letter
Agreement.
TAPO shall purchase and Indigo shall
sell the Indigo Property on the terms set forth below which both parties
acknowledge shall constitute fair and sufficient consideration.
1. Upon Indigo’s receipt of
the payment set forth in Section 2 below, Indigo shall transfer the Indigo
Property to TAPO free and clear of any security interests, mortgages, liens or
other encumbrances, except that TAPO acknowledges that Indigo shall have the
right to continue to operate the three existing xxxxx (the “Existing Xxxxx”) on
the Indigo Property and that Indigo has granted certain third parties a working
interest in the Existing Xxxxx.
2. In
consideration for the transfer of the Indigo Property to TAPO, TAPO shall pay
Indigo the sum of $630,000 (the “Purchase Price”), which amount constitutes the
full purchase price for the Indigo Property. Payment shall be made by
TAPO by wiring the Purchase Price to the account of Indigo-Energy, Inc. as per
the wire instructions set forth on Schedule 1 hereto. Purchase Price
is to be deposited into the Indigo account within 5 days of date of signing this
Letter Agreement.
3. TAPO
acknowledges that the Xxxxx Family has the right to certain coal deposits on the
Indigo Property and that TAPO will not interfere with respect to the Xxxxx
Family’s right to exploit such coal deposits.
4. TAPO
acknowledges that the Existing Xxxxx are connected to the pipeline and meters of
Equitable Gas and that TAPO will not take any actions which interfere with the
connection of the Existing Xxxxx to the Equitable pipeline.
5. Indigo
and TAPO both acknowledge that they are in discussions with respect to TAPO’s
purchase of the Existing Xxxxx. Indigo hereby agrees that they will
not negotiate the sale of the Existing Xxxxx to any third party for the next 60
days while such negotiations continue. In the event that Indigo
receives an unsolicited third party offer to purchase the Existing Xxxxx it will
give TAPO a right of first refusal to purchase the Existing Xxxxx on the same
terms.
6. In
addition to the Purchase Price set forth in Section 2 hereof, Indigo shall be
entitled to, and TAPO hereby agrees to pay to Indigo an “override royalty” equal
to one sixteenth working interest (.03125%) of all net revenues generated by
TAPO on the Indigo Property. In order to enforce this section of this
Letter Agreement, TAPO covenants to provide Indigo with monthly written
statements indicating the amounts received by TAPO as revenues from the
operation of any xxxxx on the Indigo Property (not including the Existing
Xxxxx). Indigo shall have the right to audit the books and records of
TAPO upon 15 days prior written notice to TAPO. The right to audit
given to Indigo shall be exercised by Indigo in good faith and only for the
purpose of determining the amount of revenues received by TAPO for xxxxx
produced on the Indigo Property.
7. Indigo
agrees to execute any documentation necessary in order to effectuate the
transfer of the Indigo Property to TAPO. Said property shall be
transferred and recorded within 10 days of funding per Section 2
above.
8. This
Agreement shall be binding upon and inure to the benefit of Indigo and TAPO and
their respective administrators, representatives, executors, successors and
assigns, either by reason of death, incapacity, merger consolidation, and/or
purchase or acquisition of substantially all of Indigo’s assets or
otherwise.
9. Indigo
and TAPO acknowledges that they have been represented by counsel in connection
with this Letter Agreement, and have executed the same with knowledge of its
consequences. This Letter Agreement is made and entered into under
New York law and shall be interpreted, enforced and governed under the laws of
the laws of New York without regard to its conflicts of laws
principles.
10.
This Letter Agreement sets forth the entire agreement between Indigo and TAPO
with respect to the Indigo Property and fully supersedes any and all prior
agreements or understandings between Indigo and TAPO pertaining to the subject
matter hereof.
11. From
and after the date hereof, the parties hereto shall take all actions, including
the execution and delivery of all documents, necessary to effectuate the terms
hereof.
If the foregoing terms and conditions
of this binding Letter Agreement are acceptable to TAPO, please so indicate by
signing in the indicated place.
| By: |
/s/ Xxxxxx Xxxxxx
|
|
|
Xxxxxx Xxxxxx,
President
|
||
ACCEPTED
AND AGREED
TAPO
ENERGY, LLC
/s/
Xxxxx
Pooling
By:
Xxxxx Pooling
Title:
Managing Member
SCHEDULE
1
Wire
Instructions
Bank of
America
Branch
NV1-155-01-01
0000 X.
Xxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxx,
XX 00000
000-000-0000
000-000-0000
fax
Indigo-
Energy, Inc.
Account #
005012537333
Wire
Routing ABA # 02609593
