7
FINAL EXECUTION COPY
ASSET PURCHASE AGREEMENT
By and Between
NorAm Energy, LLC
Provins Family, LLC
And
O.I.L. ENERGY CORP.
(Collectively "Seller")
and
AURORA ANTRIM
NORTH, L.L.C.
("Purchaser")
Dated as of January 10, 2006
<PAGE>
TABLE OF CONTENTS
ARTICLE 1. Definitions
Section 1.01. Definitions
ARTICLE 2. Purchase and Sale
Section 2.01. Purchase and Sale Section 2.02. Liabilities
ARTICLE 3. Purchase Price
Section 3.01. Payments of Purchase Price
Section 3.02. Purchase Price Adjustments
Section 3.03. Post-Closing Adjustments of Purchase Price
ARTICLE 4. Representations and Warranties
Section 4.01. Representations and Warranties of Seller
Section 4.02. Representations and Warranties of Buyer
Section 4.03. As Is Where Is
Section 4.04. Actual Knowledge
ARTICLE 5. Covenants
Section 5.01. Covenants and Agreements of Seller
Section 5.02. Covenant and Agreement of Buyer.
Section 5.03. Covenant and Agreement of Seller and Buyer:
Price Allocation
ARTICLE 6. Title Matters
Section 6.01. Additional Title Opinions
ARTICLE 7. Conditions to Closing
Section 7.01. Conditions to
Obligations of Seller.
Section 7.02. Conditions to
Obligations of Buyer.
Section 7.03. Conditions to
Obligations of Seller and Buyer.
ARTICLE 8. Closing
Section 8.01. Date of Closing
Section 8.02. Place for
Closing
Section 8.03. Closing
Obligations
ARTICLE 9. Obligations after Closing
Section 9.01. Operation of Properties
Section 9.02. Sales Taxes; Recording Fees & Audit Fees
Section 9.03. Indemnifications
Section 9.04. Further Assurances
Section 9.05. Survival of Representations, Warranties and
Indemnification Obligations
Section 9.06. Access to Information
Section 9.07. Limitation of Action
Section 9.08. Post-Closing Audits and Disputes.
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ARTICLE 10. Dispute Resolution
Section 10.01. Resolution of Disputes
ARTICLE 11. Miscellaneous
Section 11.01. Exhibits and Schedules.
Section 11.02. Expenses
Section 11.03. Notices
Section 11.04. Amendment
Section 11.05. Assignment
Section 11.06. Headings
Section 11.07. Counterparts
Section 11.08. Governing Law
Section 11,09. Entire Agreement
Section11.10. Parties in Interest
Section 11.11. Severability
Section11.12. Conflict Between Agreement and Other Operative
Documents
Section 11.13. Public Announcements
EXHIBITS
Exhibit A:
AMI
Exhibit B:
Assignment
Exhibit C:
Base Purchase Price
Exhibit D:
Bill of Sale
Exhibit E:
Assignment of Leasehold Interest
Exhibit F:
Excluded Properties
Exhibit G:
Pipeline Easement Assignment
Exhibit H:
Leibenguth Opinion
Exhibit I:
Brandt Opinion
Exhibit J:
Certificate of Non-Foreign Status
Exhibit K:
Transfers of Well Permits
SCHEDULES
Schedule 2.01-1:
Identification of Properties
Schedule 2.02:
Assumed Liabilities
Schedule 3.02(a)(iii):
Pending Leases
Schedule 4.01(h)(ii):
Consents to Assignments
Schedule 4.01(i):
Absence of Changes
Schedule 4.010):
Tax Audit
Schedule 4.01(I):
Sellers Encumbrances
Schedule 4.01(n):
Contractual Breaches
Schedule 401(o):
Additional Drilling Obligations
Schedule 4.01(p):
Take or Pay Obligations
Schedule 4.01(q):
Sales Contracts
Schedule 4.01(s):
Legal Proceedings
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Schedule 4.01(w):
Water Discharge Permits
Schedule 4.01 (bb):
Insurance Policies
Schedule 4.01(dd):
Preferential Rights
Schedule 4.01(ff):
Partnerships
Schedule 4.01(gg):
Application of Purchase Consideration
Schedule 5.01(e):
Environmental Issues
Schedule 5.03:
Allocation of Purchase Price
Schedule 6.01(a):
Division Order Opinions to be prepared
Schedule 9.01:
Operating Fees
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<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET
PURCHASE AGREEMENT ("Agreement') dated this ________ day of
_____________________ 2006, is by and between NorArn Energy, LLC, a
Michigan
limited liability company, Provins Family, LLC, a Michigan limited
liability
company, and O.I.L. Energy Corp., a Michigan corporation
(collectively
"Seller"), and Aurora Antrim North, LLC, a Michigan limited
liability company (
"Buyer").
In
consideration of the mutual promises contained herein, the benefits
to
be derived by each party and other good and valuable consideration,
the receipt
and sufficiency of which are hereby acknowledged, Buyer and Seller
agree as
follows:
ARTICLE 1.
Definitions
Section
1.01. Definitions. Unless defined elsewhere in this Agreement,
all
capitalized terms used herein shall have the following
meanings:
Affiliate:
As to the party specified, (i) any Person controlling,
controlled by or under common control with such party, (ii) the
officers,
directors, members or partners of such party, (iii) any relative
(by blood,
adoption or marriage) within the second degree of any such party or
of any
Person described in (i) or (ii) above, and (iv) any Entity
controlled by any
relative described in (iii) above. The term "control" as used in
the preceding
sentence means with respect to any Person, the possession directly
or
indirectly, of the power to direct or cause the direction of the
management of
such Person, whether through the ownership of voting securities, or
by contract
or agency or otherwise.
AMIs:
Areas of mutual interest formed by exploration agreements or
participation agreements, as amended, between Buyer and Seller as
described on
Exhibit A.
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Antrim
Formation: The formations and strata from the surface of the
Earth
down to and including the base of the Antrim Shale formation,
together with
formations and strata below the base of the Antrim Shale formation
to the extent
that such formations and strata are used for the Wells for
operational purposes
for disposal of effluent produced from such Wells.
Assignment: The form of Assignment is attached hereto as Exhibit
B.
Base
Purchase Price: Twenty-Six Million Eight Hundred Fifty Thousand
and
NO/100 ($26,850,000.00) Dollars, plus (1) $150.00 per net leasehold
acre for the
Boyne Valley Twp. leasehold and (2) $75.00 per net leasehold acre
for the
Chandler Twp. and the Hudson JV leasehold; as calculated and agreed
by the
Parties and as detailed on Exhibit C hereto.
Bill of
Sale: The form of Bill of Sale of Personal Property and
Equipment
is attached hereto as Exhibit D.
Closing:
The consummation of the transactions contemplated by this
Agreement.
Closing
Date: The date of the Closing, as set forth in Section 8.01.
Closing
Payment: The Base Purchase Price adjusted to reflect known or
estimated Section 3.03 Post-Closing Adjustments.
Code: The
Internal Revenue Code of 1986, as amended and as in effect on
the Closing Date.
Contracts:
All Hydrocarbon sales, purchase, exchange and processing
contracts and agreements, transportation and charter agreements,
utility
agreements, production payment agreements, tax credit agreements,
farm-in and
farm-out agreements, joint operating agreements, equipment leases,
and all other
contracts or agreements of whatever kind or character, other than
the Leases,
affecting the Information, Interests, Pipelines and Personal
Property and
Equipment or any part thereof.
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Conveyance: The form of Assignment of Leasehold is attached hereto
as
Exhibit E.
Deep
Formations: All formations and strata below the base of the
Antrim
Shale formation, except to the extent that such formations and
strata are
included in the definition of Antrim Formation.
Effective
Time: 12:00 a.m., Eastern Standard Time on October 1, 2005.
Encumbrance: Any financing mortgage, lien, security interest or
pledge.
Entity: A
corporation, partnership, joint venture, limited liability
company, trust or incorporated organization or association,
Governmental
Authority or other entity.
Excluded
Properties: All rights, titles and interests of Seller in, to
and
under or derived from the lands, fee interests, royalties,
overriding royalties,
oil, gas and/or mineral leases, licenses, agreements and other
documents
described in Exhibit F to this Agreement.
Governmental Authority: The United States of America, any
state,
commonwealth, territory or possession thereof and any political
subdivision of
any of the foregoing, including, but not limited to, courts,
departments,
commission, boards, bureaus, agencies or other
instrumentalities.
Good and
Marketable Title: As to each of the Properties, the title that:
(1) as to the Interests, constitutes no less than the Net Revenue
Interest in
each Unit described on Schedule 2.01-1; (2) as to the Interests,
constitutes no
more than the Working Interests in each Unit described on Schedule
2.01-1; and
(3) as to all Properties, constitutes all of Seller's right, title
and interest
therein, free and clear of all Encumbrances, except for Permitted
Encumbrances.
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Hazardous
Substances: All hazardous or toxic, radioactive, or explosive
substances, wastes or materials, pollutants or contaminants
(including, without
limitation, asbestos, petroleum, polychlorinated biphenyls and
urea
formaldehyde), or other similar substances or materials which are
regulated by
any Law pertaining to environmental regulation, contamination or
clean-up,
including, but not limited to, the Comprehensive Environmental
Response,
Compensation, and Liability Act, the Resource Conservation and
Recovery Act, or
state lien or state superfund or environmental clean-up statutes
and all other
Laws pertaining to pollution, the environment, or the generation,
treatment,
storage, processing, disposal or discharge of hazardous
substances.
Hydrocarbons: Oil, gas, other liquid or gaseous hydrocarbons, and
other
minerals, or any of them or any combination thereof.
Information: All of Seller's technical information relating to
the
Interests, Pipelines and Personal Property and Equipment,
including, but not
limited to: (1) all geological, geochemical and geophysical
information,
geographic and structural geological maps, well logs and related
analyses and
correlations, paleontological data, stratigraphic studies and data
pertaining to
permeability or porosity, seismic and gravitational data and
production records,
engineering and geological data, consultants studies or reports
regarding any of
the foregoing and any and all interpretative analyses of the
foregoing that
pertain to the Properties, (2) copies of all of Seller's files,
documents,
accounting records, Leases, deeds and Contracts that pertain to the
Properties
and Seller's operation thereof, and (3) all title information
(including but not
limited to title opinions, abstracts, evidence that rentals,
royalties and other
payments due under the Leases and Contracts have been paid,
evidence that Taxes
have been paid, maps and surveys, lease records and data sheets) as
maintained
by Seller, that pertain to the Properties and (4) all plans for
exploration and
development, applications, inspection reports, environmental impact
statements,
assessments and studies, permits, licenses, orders. Consents,
notices,
correspondence and other statements and Instruments pertaining to
environmental
matters and requirements of any Governmental Authority that pertain
to the
Properties and Seller's operation thereof.
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Interests:
(a) All of Seller's Working Interests and the Net Revenue
Interests associated therewith (including reversionary Working
Interests, if
any) (i) in, to and under the Leases insofar as the Leases cover
the Antrim
Formation in the Land, (ii) in the Wells drilled on said Land and
jointly owned
by the Parties, and (iii) in the Units communitized for the
drilling of such
Wells, all as more fully described on Schedule 2.01-1; excepting
that Seller is
retaining its interest to and under the Leases insofar as the
Leases cover Deep
Formations in the Land and (iv) Seller's membership interest in
Hudson Pipeline
& Processing Co., LLC.
Land: The
land within the AMIs that is covered by the Leases.
Law: Any
law, statute, ordinance, decree, requirement, order, judgment,
rule or regulation of, including, but not limited to, the terms of
any license
or permit issued by, any Governmental Authority.
Leases:
All oil, gas and/or mineral leases described in Schedule
2.01-1.
The Parties' intentions are that Schedule 2.01-1 shall list all
oil, gas and/or
mineral leases in which Seller owns an interest, covering land
within the AMIs,
except leases that may be described on Exhibit F as Excluded
Properties. Any
such oil and gas lease that is inadvertently omitted shall be
subsequently added
as a Lease by amendment of the schedule and shall be assigned as
provided herein
in the same manner as if it were on the Schedule as originally
prepared.
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Net
Revenue Interest: The Interests, (expressed as a decimal interest)
on
either a Unit by Unit or Lease by Lease basis of Seller, in and to
Hydrocarbons
produced from or allocated to the Interests after deducting all
applicable
Production Burdens.
Operative
Documents: This Agreement, the Assignment, the Bill of Sale,
the
Pipeline Easement Assignment and the Conveyance.
Parties:
Collectively Seller and Buyer.
Pending
Leases: Any lease not included on Schedule 2.01-1 for which a
draft for payment has been issued or for which payment has been
tendered prior
to the Closing Date and identified on Schedule 3.02(a)(iii) for
Boyne Valley,
Chandler and Hudson Townships, Charlevoix County. Seller will be
responsible for
its proportionate share of the lease acquisition cost for any such
lease which
is included in the Purchase Price or as a Post-Closing
Adjustment.
Permitted
Encumbrances: Any or all of the following;
(i) Encumbrances that arise under Contracts to secure payment
of
amounts not yet delinquent but that have been taken into
consideration in
adjusting the Purchase Price, and of a type and nature customary in
the oil and
gas industry in Northern Michigan;
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(ii) Encumbrances securing payments to mechanics and materialmen
and
Encumbrances securing payment of taxes or assessments that are, in
either case,
not yet delinquent but that have been taken into consideration in
adjusting the
Purchase Price;
(iii) Production Burdens in amounts that do not operate to
reduce
the Net Revenue Interest of Seller in any Unit to less than that
indicated on
Schedule 2.01-1;
(iv) operating agreements, gas sales contracts, unitization,
pooling, communitization and spacing agreements described in
Schedule 2.01-1;
(v) orders of Governmental Authorities containing terms and
conditions customary in the oil and gas industry in Northern
Michigan and that
do not operate to reduce the Net Revenue Interest of Seller in any
Unit to less
than that indicated on Schedule 2.01-1;
(vi) any title defect which did not arise by, through or under
Seller's actions or inactions; and
(vii) other reasonable and customary Encumbrances that have
been
taken into consideration in adjusting the Purchase Price.
Person:
Any natural person or Entity.
Personal
Property and Equipment: All equipment, pipe, and other personal
property, fixtures and improvements in which Seller has interests,
situated upon
the Land or used or held for use in connection with the
exploration, development
or operation of the Interests or the production, treatment,
storage,
compression, sale, marketing or transportation of Hydrocarbons from
the
Interests or the disposal of brine produced in connection
therewith, including
the salt water disposal wells identified on Schedule 2.01-1 and the
associated
equipment, and also including leased equipment and leased personal
property (the
leases of which will be assigned to and assumed by Buyer at
Closing).
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Pipelines:
The gas and water pipelines and gathering systems and water
disposal systems of Seller, whether in Seller's name or in the name
of another
but held for the benefit of Seller, relating to the Interests,
together with all
machinery, equipment, appliances, material, supplies, buildings,
structures,
improvements and fixtures used in connection therewith and all
rights of way,
easements, surface leases, deeds, grants, servitudes and permits
appertaining or
relating thereto.
Pipeline
Easement Assignment: The assignment of pipeline easements
attached hereto as Exhibit G.
Production
Burdens: All royalty interests, overriding royalty interests,
production payments, net profit interests or other similar
non-operating
interests that constitute a burden on, and are measured by or are
payable out
of, the production of Hydrocarbons or the proceeds realized from
the sale or
other disposition thereof, other than Taxes and assessments of
Governmental
Authorities; which interests in the aggregate equals twenty (20%)
percent of the
Hydrocarbons.
Properties: The Interests and the following assets:
(i) All of Seller's right, title and interest in, to and under,
or
derived from the Units and all unitization, communitization and
pooling
agreements and orders creating same;
(ii) all of Seller's right in the easements, rights of way,
permits,
licenses, servitudes and other interests appertaining to the
Interests;
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(iii) all Hydrocarbon production attributable to the Interests
and
proceeds from the sale of such Hydrocarbon production accruing
after the
Effective Time, and all inventories of Hydrocarbons and accounts
receivable in
connection with the sale of Hydrocarbons from the Interests in
existence at the
Effective Time; (iv) (v) the Information, Pipelines, Personal
Property and
Equipment, and Contracts; (vi)
(v) all Seller's membership interest in Hudson Pipeline &
Processing
Co., LLC; and
(vi) all property and rights incident or attributable to any of
the
foregoing and necessary to continue operation of the Leases and
Lands in
substantially the same manner as they have been operated by Seller,
including,
but not limited to, leases acquired by Seiler covering lands to be
used as
locations for Personal Property and Equipment described on Schedule
2.01-1. The
Properties shall not include the Excluded Properties described on
Exhibit F.
Purchase
Price: The consideration paid by Buyer to Seller for the
transfer
of the Properties, which is equal to the Base Purchase Price with
the
adjustments provided for in Article 3.
Taxes: All
taxes, assessments. duties, fees, levies or other governmental
charges which are based upon, measured by or imposed with respect
to the
Properties, the production of Hydrocarbons therefrom or the receipt
of proceeds
therefrom, together with any interest thereon, any penalties,
additions to tax
or additional amounts with respect thereto and any interest in
respect to such
penalties, additions or additional amounts, including, without
limitation,
applicable franchise taxes, federal and state income taxes, state
and municipal
sales and use taxes, stamp, excise and excess profit taxes, federal
unemployment
and old age insurance taxes, property taxes, ad valorem taxes,
production taxes
and severance taxes.
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Units: All
pooled and communitized areas including any of the Leases or
any portion thereof as described on Schedule 2.01-1. covering or
relating to the
Antrim Formation. Wells: As the context suggests, all wells (or the
undivided
interest therein) located on the Units that produce or are capable
of producing
Hydrocarbons. Wells are listed on Schedule 2.01-1.
Working
Interest: The interest of Seller (expressed as a percentage) on
a
Unit by Unit basis before giving effect to any applicable
Production Burdens,
which percentage is the percentage of all costs and expenses
associated with the
exploration, development and operation of the Properties which are
required to
be borne by the Seller.
ARTICLE 2.
Purchase and Sale
Section
2.01. Purchase and Sale. Subject to the terms of this Agreement
and effective as of the Effective Time, Seller agrees to sell and
convey the
Properties to Buyer, and Buyer agrees to purchase the Properties
for the
Purchase Price. Notwithstanding the sale and purchase being
effective as of the
Effective Time, the transfer of the Properties shall not occur
until the Closing
Date.
Section
2.02. Liabilities. Buyer is not assuming, and upon Closing will
not assume or be responsible for, any liabilities, obligations or
duties of
Seller, whether in existence at Closing or arising thereafter,
excepting: (i)
the liabilities, obligations and duties described on Schedule 2.02;
(ii)
liabilities accounted for on Exhibit C as costs and expenses
incurred on or
before October 1, 2005, or accounted for in making the Post-Closing
Adjustments
under Section 3.03 below; and (iii) all liabilities, obligations
and duties
relating to the Properties which accrue or relate to periods of
time after
Closing.
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ARTICLE 3.
Purchase Price
Section
3.01. Payments of Purchase Price. The Purchase Price for the
Properties shall be payable as follows: (a) Simultaneous with the
execution of
this Agreement, Buyer shall pay to Seller the sum of One Million
and NO/100
Dollars ($1,000,000.00). Said sum shall be applied to the Purchase
Price at
Closing. On February 1, 2006, if Closing has not yet occurred,
Buyer shall pay
Seller an additional Five Hundred Thousand and NO/100 Dollars
($500,000.00). On
February 17, 2006, if Closing has not yet occurred, Buyer shall pay
Seller an
additional Five Hundred Thousand and NO/100 Dollars ($500,000.00).
All such
additional payments to Seller from Buyer shall be applied to the
Purchase Price
at Closing. In the event the transactions contemplated herein fail
to close by
February 28, 2006, said amounts paid by Buyer to Seller as
described within this
paragraph above shall not be refundable and shall be in full
settlement of any
and all claims Seller may have against Buyer for failure to close;
Seller, at
its option, may terminate this Agreement and the AMI shall remain
effective.
However, in the event Buyer fails to close due to a material breach
by Seller of
any provision contained in the Agreement, said sum shall be
refunded to Buyer. A
material breach shall be any breach(s) that reduces the value of
the Properties
by a total of ten percent (10%) or more of the Purchase Price; (b)
the Closing
Payment shall be payable on the Closing Date; and (c) the
post-closing
adjustments shall be paid by the owing party as provided in Section
3.03, below.
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Section
3.02. Purchase Price Adjustments. The Purchase Price to be paid
by
Buyer to Seller for the Properties shall be the Base Purchase Price
adjusted as
follows:
(a) Upward Adjustments. The Base Purchase Price shall be
adjusted
upward by (i) the amount of all capital expenditures and lease
operating
expenses paid by Seller relating to the Properties for the period
between
October 1, 2005 and Closing, however in the event Closing takes
place after
January 31, 2006, lease operating expenses for October 2005
relating to the
Properties shall not be included as an Upward Adjustment (ii)
prepaid plugging
and abandonment deposits held by Buyer relating to Seller's
Interests; (iii)
Pending Leases that have been executed and received prior to the
final
accounting for the Post-Closing Adjustments and (iv) any
outstanding accounts
receivable balances due Seller from Buyer; (v) interest expense on
Seller's
outstanding debt with Wells Fargo Energy Capital for the period
between January
17, 2006 and Closing.
(b) Downward Adjustments. The Base Purchase Price shall be
adjusted
downward by the amount of (i) all net production revenues received
by Seller
attributable to Seller's Interests in the Properties for periods
between October
1, 2005 and Closing, however in the event Closing takes place after
January 31,
2006, the adjustment period shall be for periods between November
1, 2005 and
Closing; (ii) any outstanding accounts receivable balances due
Buyer from
Seller; (iii) any agreed upon reduction in the Purchase Price
resulting from
good faith negotiations between Buyer and Seller of defect in Good
and
Marketable Title as to the Properties which had been identified by
Buyer on or
before December 15, 2005 and (iv) any cash advance, if any, by
Buyer to Seller
to cover Buyers pre-Closing share of capital expenditures and lease
operating
expenses relating to projects and properties in which Buyer has
interests
pursuant to its exploration and participation agreements with
Seller, that has
not been applied, or is not to be applied at the Closing, by Seller
to the
payment of such share of capital expenditures and lease operating
expenses,
including prepaid plugging and abandonment charges held by Seller
not relating
to Seller's Interests.
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(c) Buyer and Seller recognize that Hudson Pipeline &
Processing
Co., LLC ("HPPC"), of which Buyer and Seller's ownership constitute
a majority
interest, is the owner of the Aspen and Birch pipelines and certain
processing
equipment located at the Hudson 34 processing facility,
collectively the "HPPC
Facility." HPPC has identified certain repairs and corrections
needed with
respect to the HPPC Facility as of October 1, 2005, for which there
will be a
reduction of the Purchase Price in the amount of Ten Thousand and
NO/100 Dollars
($10,000.00), which amount shall represent the Parties' agreement
as to Seller's
total and final proportionate share of such repairs and
corrections.
(d) Buyer and Seller recognize that HPPC and Buyer and Seller
have
been constructing the Chestnut, Dogwood, Elm and Fig pipelines.
Buyer agrees to
reimburse Seller for expenditures paid by Seller, without regard to
when said
expenditures were paid by Seller, whether paid; (i) directly by
Seller, (ii)
through HPPC or (iii) directly to Buyer, in connection with said
pipelines; this
would include any agreed upon adjustments in connection with
billings associated
with the Dogwood pipeline. Seller shall then relinquish to Buyer,
at Closing,
all of its interest in HPPC and said pipelines.
(e) At Closing, Buyer shall also receive a credit against the
Purchase Price for the payment to Seller made pursuant to Article
3.01 (a)
above.
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Section
3.03. Post-Closing Adjustments of Purchase Price. Sixty (60)
days
after Closing, Seller shall prepare and submit to Buyer a proposed
accounting
showing all adjustments to the Purchase Price, calculated in accord
with Section
3.02 and consistent with past practice, for post-October 1, 2005
production
revenues, capital expenditures and lease operating expenses
relating to Seller's
Interests ("Post-Closing Adjustments") not made at Closing of which
it is then
aware. The accounting of the Post-Closing Adjustments will be
reviewed by Buyer
and Buyer shall notice Seller if it is taking any exception to the
any of the
Post-Closing Adjustments calculated by Seller within ten (10) days
of receiving
the accounting. Unless Seller is otherwise notified by Buyer within
the 10 day
notice period, the Post Closing Adjustments will be final. Payments
of each of
the Post-Closing Adjustments shall be made by the owing party in
immediately
available funds within five (5) days after the adjustment has
become final. If
the Parties cannot reach agreement with regard to any accounting
required by
this paragraph, the accounting adjustment shall become final as to
undisputed
matters and the disputed matters shall be submitted for resolution
to
arbitration under Article 10 of this Agreement.
ARTICLE 4.
Representations and Warranties
Section
4.01. Representations and Warranties of Seller. Subject to
Articles 4.03 and 4.04, Seller represents and warrants to Buyer
that, as of the
Effective Time and as of the Closing Date:
(a) Organization and Good Standing. NorAm Energy, LLC, is a
limited
liability company duly organized, validly existing and in good
standing under
the laws of the State of Michigan.
(b) This Paragraph
Intentionally Omitted.
(c) This Paragraph Intentionally Omitted.
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(d) Organization and Good Standing. Provins Family, LLC, is a
limited liability company duly organized, validly existing and in
good standing
under the laws of the State of Michigan.
(e) Organization and Good Standing. O.I.L. Energy Corp., is a
corporation duly organized, validly existing and in good standing
under the laws
of the State of Michigan.
(f) Organization and Good Standing. Hudson Pipeline &
Processing
Co., LLC, is a limited liability company duly organized, validly
existing and in
good standing under the laws of the State of Michigan.
(g) Authority and Authorization. Seller has all requisite
corporate
power and authority to carry on its business as presently
conducted, to execute
and deliver the Operative Documents, to consummate the transactions
contemplated
hereby and to perform its obligations under the Operative
Documents. The
execution and delivery of the Operative Documents and the
performance of the
obligations of the Seller contemplated thereby have been duly
authorized by the
Seller. All documents and instruments required hereunder to he
executed and
delivered by the Seller on or before the Closing Date have been
duly executed
and delivered. The Operative Documents to which it is a party and
such other
documents and instruments constitute legal, valid and binding
obligations of
Seller enforceable against it in accordance with their terms,
except as such
enforceability may be limited by bankruptcy, insolvency or other
laws relating
to or affecting the enforcement of creditors rights generally and
general
principles of equity (regardless of whether such enforceability is
considered in
a proceeding in equity or at law). No further corporate,
partnership or
individual action is necessary on the part of Seller to authorize
the execution
and delivery of the Operative Documents or the performance by
Seller of its
obligations as contemplated by the Operative Documents.
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(h) No Violations. The Operative Documents to which it is a
party
and the execution and delivery thereof by Seller do not, and the
fulfillment and
compliance with the terms and conditions thereof and the
consummation of the
transactions contemplated thereby will not:
(i) conflict with, or require the consent of any Person under
any of the terms, conditions or provisions of, the certificates
of
incorporation, organization, operating agreements or bylaws of
Seller or other
governing documents of Seller;
(ii) violate, conflict with or cause a default or breach with
respect to any provision of, or, except as set forth on Schedule
4.01(h)(ii),
require any filing, consent, authorization or approval under, any
agreement
relating to the Properties to which Seller is party or by which
Seller is bound
or under any Law applicable to or binding upon Seller or the
Properties
(assuming receipt of all routine governmental consents typically
received after
consummation of transactions of the nature contemplated by this
Agreement); or
(iii) result in the creation or imposition of any Encumbrance
on the Properties other than a Permitted Encumbrance.
(i) Absence of Certain Changes. Except as described on Schedule
4.01(i) since the Effective Time, none of the following has
occurred, nor has
Seller agreed or committed to do any of the following:
(i) any damage, destruction or loss to or of the Properties
whether or not covered by insurance, that has had, or would
reasonably be
expected to have, a material adverse effect upon the value or
operations of the
Properties;
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(ii) any sale, lease or other disposition of Properties other
than sales of Hydrocarbons in the ordinary course in business;
(iii) creation of any Encumbrance other than Permitted
Encumbrances pertaining to any of the Properties;
(iv) any amendment, waiver, or termination of any material
provision of any Contract, or any execution of a material new
Contract;
(v) except as disclosed to the Buyer prior to the Closing and
included in the calculation of the Purchase Price, any agreement to
expend more
than $25,000 with respect to the Properties.
(j) Payment of Taxes. Seller has paid in full all Taxes that
have
become due through the Closing Date relating to the Properties. All
tax or
information returns, statements and reports required to be filed by
Seller as to
the Properties by applicable Law have been timely filed, and to the
actual
knowledge of Seller such returns and reports are true, correct and
complete and
present accurately the information required to be shown therein.
There are no
assessed tax deficiencies against Seller as to the Properties, and
there are no
proposed or threatened deficiencies or assessments with respect to
Seller as to
the Properties. Except as disclosed on Schedule 4.010), there are
no audits of
Seller as to the Properties by any Governmental Authority in
progress or no tax
liens on or with respect to the Properties.
(k) Information. Taken as a whole, all Information supplied to
Buyer
by Seller or its representatives (i) is complete and accurate,
including,
without limitation, as to production history, Working Interests,
Net Revenue
Interests, geological and engineering information, and prices
received for
Hydrocarbon production dedicated to existing Gas Purchase
Agreements, if any,
and (i
