ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into
this 20th day of November, 2006, by and among WEST TEXAS ROYALTIES,
INC., a
Texas corporation ("Seller" or "West Texas"), and PLATINA ENERGY
GROUP,
INC., a Delaware corporation ("Purchaser").
EXPLANATORY STATEMENT
A. As part
of its business, Seller owns the assets as described in
Section 1.1 below (the "Assets").
B.
Purchaser desires to purchase and Seller desires to sell and
transfer
to Purchaser, all rights, title and interest in and to all the
Assets.
NOW, THEREFORE, for and in consideration of the Explanatory
Statement that
shall be deemed a substantive part of this Agreement, and the
mutual
covenants, promises, agreements, representations and warranties
contained
herein, and other good and valuable consideration the receipt and
sufficiency
of which is hereby acknowledged by the parties, the parties hereto
agree,
represent and warrant as follows:
1. Purchase
and Sale of Assets.
1.1. Assets. Purchaser
agrees to purchase from Seller, and Seller agrees to
sell, transfer and assign to Purchaser free and clear of any and
all
mortgages, liens, security interests, encumbrances, pledges,
leases,
equities, claims, charges, restrictions, conditions, conditional
sale
contracts, except as set forth herein, all of the Assets, as set
forth
in Schedule 1.1 which will consist of (i) a seventy five percent
(75%)
working interest in leases and options to lease, oil and gas
properties
comprised of approximately 20,000 gross acres (more or less)
located in
the Palo Doro Basin, Texas, and (ii) a seventy five percent (75%)
working
interest in oil and gas leases on 372 acres (more or less)
comprised of
approximately 21 wells located in Young County, Texas. Seller shall
retain
a 25% Working Interest in the assets that are to be transferred
pursuant
to schedule 1.2. Buyer will be designated the operator of the
properties,
pursuant to the terms of a Joint Operating Agreement. The exact
ownership
percentage being conveyed and the form of the Joint Operating
Agreement
will be determined five (5) business days prior to closing (the
"Assets").
1.2. Purchase Price for
Assets. The purchase price for the Young County Assets
is Twenty Five Thousand (25,000) shares (the "Shares") of the
Purchaser's
Series B Preferred Stock (the "Purchase Price") to be issued and
delivered
to Seller at Closing as defined below. Seller will receive a
portion of the
lease bonus when the Options to lease are exercised (as previously
agreed
by seller and the Optionor by separate agreement).
1.3. Inspection.
Purchaser or its designee shall have the right to enter upon
and inspect the Assets and all documents relating in any manner to
the
Assets at Purchaser's expense.
2.
Liabilities of Seller. Purchaser has not and shall not assume any
debts,
liabilities and obligations of Seller and the Seller shall be and
remain
solely liable and responsible for all debts, obligations, duties,
and
liabilities of the Seller and shall indemnify and hold Purchaser
harmless
therefrom.
3. Creditor
Matters. The transactions reflected by this Agreement are
intended by the parties to be a contemporaneous exchange between
the Seller
and the Purchaser accomplished at Closing. The transactions
reflected in
this Agreement represent a regularly conducted, noncollusive sale,
and have
been negotiated by the parties in an arm's length manner with due
regard for
the respective obligations of the parties and value of the Assets
transferred.
4.
Brokerage Commissions. Each party hereto represents to the other
parties
that it, he or she, as applicable, has not incurred any obligation
or
liability, contingent or otherwise, for brokerage fees, finder's
fees,
agent's commissions, or the like in connection with this Agreement
or the
transactions reflected hereby.
5.
Representations and Warranties.
5.1. Representations
and Warranties of Seller. The Seller represents and
warrants to the Purchaser as of the date hereof and as of the
Closing on the
Closing Date that:
5.1.1. Due
Organization; Good Standing, Authority of Seller. The Seller is
a
corporation duly organized, validly existing and in good standing
under
the laws of the State of Texas. The Seller has full right,
corporate power
and authority to own, lease, operate and sell, transfer and convey
any or all
of its properties and assets, and to carry on its business. The
Seller is
duly licensed, qualified and authorized to do business in each
jurisdiction
in which the properties and assets owned by it or the nature of the
business
conducted by it make such licensing, qualification and
authorization legally
unnecessary. The Seller is not in breach or violation of, and the
execution,
delivery and performance of this Agreement will not result in a
breach or
violation of, any of the provisions of the Seller's Articles of
Organization
amended to the date of this Agreement (the "Articles") or bylaws,
as amended
to the date of this Agreement (the "Bylaws") or any valid contracts
or lawful
agreements to which the Seller is a party. No actions, proceedings
or
transactions have been commenced or undertaken by the Seller which
(i) give
or would give rights to any person or entity, other than the
Purchaser, in
any of the Assets or (ii) interfere with the consummation of the
transactions
contemplated by this Agreement.
5.1.2.
Authorization and Validity of Agreements. The Seller has the legal
capacity, right, power and authority to enter into this Agreement.
The
Seller has the full right, power and authority to execute,
acknowledge,
seal and deliver this Agreement and to perform the transactions
contemplated
by this Agreement. The execution, acknowledgment, sealing and
delivery of
this Agreement by the Seller and the performance by the Seller of
the
transactions contemplated hereby have been duly and validly
authorized by
all necessary corporate action. This Agreement has been duly
executed,
acknowledged and delivered by the Seller and is the legal, valid
and binding
obligation of Seller, enforceable against the Seller in accordance
with its
terms.
5.1.3. Agreement
Not in Conflict with Other Instruments; Required Approvals
Obtained. The execution, acknowledgment, sealing, delivery, and
performance
of this Agreement by the Seller, and the consummation of the
transactions
reflected by this Agreement will not (a) violate or require any
consent,
approval, or filing under, (i) any common law, law, statute,
ordinance, rule
or regulation (collectively referred to throughout this Agreement
as "Laws")
of any federal, state or local government (collectively referred
to
throughout this Agreement as "Governments") or any agency,
bureau,
commission, instrumentality or judicial body of any Governments
(collectively
referred to throughout this Agreement as "Governmental Agencies"),
or (ii)
any judgment, injunction, order, writ or decree of any court,
arbitrator,
Government or Governmental Agency by which the Seller, any of the
Purchased
Assets or any of the Seller and Seller's Shareholders are bound;
(b) conflict
with, require any consent, approval, or filing under, result in the
breach
or termination of any provision of, constitute a default under, or
result in
the creation of any claim, security interest, lien, charge, or
encumbrance
upon any of the Assets pursuant to, (i) the Seller's Articles or
Bylaws,
(ii) any indenture, mortgage, deed of trust, license, permit,
approval,
consent, franchise, lease, contract or other instrument, document
or
agreement to which the Seller is a party or by which the Seller or
any of
the Assets is bound, or (iii) any judgment, injunction, order, writ
or decree
of any court, arbitrator, Government or Governmental Agency by
which the
Seller or any of the Assets is bound; and all permits, licenses
and
authorizations of any Government or Governmental Agency required to
be
obtained prior to the Closing have been obtained and were in
full force
and effect as of the Closing Date.
5.1.4. Conduct of
Business in Compliance with Regulatory and Contractual
Requirements. The Seller has conducted its business in compliance
with all
applicable Laws of the Government and Governmental Agencies and in
compliance
with all restrictions, covenants, agreements, contracts,
commitments,
understandings and arrangements applicable with respect
thereto.
5.1.5. Legal
Proceedings. There is no action, suit, proceeding, claim or
arbitration, or any investigation by any person or entity,
including, but not
limited to, any Government or Government Agency, (i) pending, to
which the
Seller is a party, or (ii) challenging the Seller's right to
execute,
acknowledge, deliver, perform under or consummate the transactions
reflected
by this Agreement, or (iii) asserting any right with respect to any
of the
Assets, and, in each such case, there is no known basis for any
such action,
suit, proceeding, claim, arbitration or investigation.
5.1.6. Tax
Matters. The Seller is not a party to, and is not aware of, any
pending or threatened action, suit, proceeding, or assessment
against it for
the collection of taxes by any Government or Governmental Agency.
The Seller
has duly and timely filed with all appropriate Governments and
Governmental
Agencies, all tax returns, information returns, and reports
required to be
filed by the Seller.
The Seller has paid in full all taxes, interest,
penalties, assessments and deficiencies owed by the Seller to all
taxing
authorities. All taxes and other assessments and levies which the
Seller is
required by applicable Law to withhold or to collect have been duly
withheld
and collected and have been paid over to the proper Governments
and
Governmental Agencies or are properly held by the Seller for such
payment.
All claims by the IRS or any state taxing authorities for taxes due
and
payable by the Seller have been paid for the liabilities for unpaid
taxes
(whether or not disputed). The Seller is not a party to, and is not
aware of,
any pending or threatened action, suit, proceeding, or assessment
against it
for the collection of taxes by any Government or Governmental
Agency.
5.1.7. Title of
Assets. The Seller currently and as of the Closing Date has
and will have, and Purchaser will acquire at Closing, sole and
exclusive,
good and marketable title by an through seller, but not otherwise
to all of
the Assets free and clear of any and all pledges, claims, threats,
liens,
restrictions, leases, security interests, charges and encumbrances,
except
as disclosed on Schedule 1.2 attached hereto and made a part
hereof. Except
as set forth below, the Seller does not have any knowledge of any
past,
present or future condition, state of facts or circumstances which
has
affected or which might affect adversely the Purchaser's full use
of the
Assets except as set forth in this Agreement. Purchaser discloses
that some
of the Young County leases, the subject matter of this conveyance,
have been
produced only intermittently over the past year. Assignor will not
warrant
or defend those oil and gas leases; however, Assignor has received
no demands
of any kind from the Lessor. Seller will deliver the property free
and clear
of all liens, encumbrances.
5.1.8. Full
Disclosure. This Agreement (including the Schedules and
Exhibits
hereto) does not contain any untrue statement of a material fact or
omit
to state any material fact necessary to make the statements
contained
herein not misleading. There is no fact known to the Seller which
is not
disclosed in this Agreement which does or may materially adversely
affect
the accuracy of the representations and warranties contained in
this
Agreement.
5.1.9. Disclaimer
of Fraudulent Intent. The transactions described in this
Agreement have been undertaken by Seller in good faith,
considering
its obligations to any person or entity to whom the Seller owes a
right
to payment, whether or not the right is reduced to judgment,
liquidated,
unliquidated, fixed, contingent, matured, unmatured, claims
(persons or
entities holding such claims are called "Creditors" under this
section),
and have undertaken these transactions without any intent to
hinder,
delay or defraud any such Creditors, and either have disclosed in
the
ordinary course of business or will undertake to disclose to all
such
Creditors the existence of this transaction, and has not and will
not
conceal this transaction or the proceeds of this transaction from
any
such Creditors. Seller further represents and warran
