EXHIBIT 2.3
PURCHASE AGREEMENT
THIS AGREEMENT made this 21st day of August, 1998, by and between
KanMap, Inc. and Cherokee Methane Corporation, the persons signatory hereto as
named in Exhibit "A" attached hereto; (hereinafter referred to as "SELLERS") and
Loch Exploration, Inc. (hereinafter referred to as "BUYER") or assigns.
WITNESSETH:
WHEREAS, SELLERS are the owners and holders of all of the issued and
outstanding capital stock of KanMap, Inc., a Kansas corporation (KM"), the
number of shares owned and held by each of the SELLERS being set forth in
Exhibit "A" attached hereto and ▇▇▇▇▇ ▇. ▇▇▇▇ is the owner and holder of fifty
percent (50%) of all of the issued and outstanding capital stock of Cherokee
Methane Corporation, a Kansas corporation ("CMC") the number of shares owned and
held by the SELLERS being set forth in Exhibit "A" attached hereto; and
WHEREAS KM owns certain intangible and tangible assets (the "KM
ASSETS") including, but not limited to; interests in oil and gas leased,
equipment, tools, inventory, supplies, rolling stock, oil and gas reserves,
office equipments, furniture, etc.; and CMC owns certain intangible and tangible
assets (the "CMC ASSETS") including but not limited to; gas gathering systems,
gas gathering contracts, right of ways, compression and dehydration facilities,
etc.; and
WHEREAS SELLER(S) is (are) willing to sell to BUYER and BUYER is
willing to purchase from SELLER(S) all the KM ASSETS, fifty percent (50%)
working interest in and to the CMC ASSETS, all upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, it is agreed to as follows:
ARTICLE I
Sale and Purchase
1.1 AGREEMENT TO SELL AND PURCHASE. Subject to the terms and
conditions of this Agreement, SELLER(S) agree to sell and
BUYER agrees to purchase and pay for all of the Assets which
are owned and held by SELLER(S).
1.2 PURCHASE PRICE. The purchase price to be paid by BUYER to
SELLER(S) for said Assets shall be as follows:
1.2.1 The sum of $600,000.00 for all the KM ASSETS; plus
1.2.2 Fifty percent (50%) interest in and to the CMC
ASSETS.
a) It is the intent of BUYER to acquire ALL the
Assets of Cherokee Methane Corporation. SELLER(S)
shall provide reasonable assistance to BUYER, as
necessary, to obtain the remaining CMC ASSETS.
b) The fund described in 1.2.1 above shall be
reduced by the cost of completion of certain
remaining obligations of KanMap, Inc. These
obligations are estimated at approximately
$200,00.00 and are as follows:
- Completion of seven (7) new ▇▇▇▇▇ (the
▇▇▇▇▇▇▇▇ ▇▇▇▇▇) located in ▇▇▇▇▇▇ County,
Kansas (TAI '96B).
- Completion of three (3) new ▇▇▇▇▇ and four
(4) recompletion ▇▇▇▇▇ located in ▇▇▇▇▇▇▇▇▇▇
County, Kansas (TAI '96A).
- Completion of construction of a gas
gathering system segment located in
▇▇▇▇▇▇▇▇▇▇ County, Kansas (CMC Expansion
'98).
1.3 PAYMENT. The purchase price shall be paid as follows:
1.3.1 KANMAP, INC. The sum of $4,000.00, as a deposit,
within five (45) days of the date of execution of
this Agreement, payable in cash or certified
funds to KanMap, Inc.
a) In the event SELLER(S) are unable to perform
their obligations under this Agreement on or
prior to the closing date, SELLER(S) shall
immediately return such deposit in full to
purchaser.
b) In the event that BUYER is unable to perform its
obligations under this agreement on or prior to
the closing date, SELLER(S) shall be entitled to
retain the deposit as liquidated damages.
plus,
1.3.2 The sum of $71,000.00 payable in cash or
certified funds, upon closing, on or about
September 1, 1998, but no later than October 21,
1998.
1.3.3 The sum of $175,000.00 payable as periodic
installments. The amount and frequency of such
installments shall be twenty-five percent (25%)
of the net proceeds of production, payable by
check, monthly, from new ▇▇▇▇▇ caused to be
completed by BUYER.
1.3.4 The equivalent of $150,000.00 of capital stock
(approximately 300,000 shares of stock) in Loch
Energy, Inc.
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1.4 CLOSING. The consummation of this transaction (the "Closing")
shall take place on or about September 1, 1998, but no later
than September 31, 1998 at a mutually agreeable location in
Independence, Kansas.
1.5 EFFECTIVE TIME. This transaction shall be effective for all
purposes as of 12:01 a.m., September 1, 1998 (the "Effective
Time").
ARTICLE II
Representations of SELLER(S)
SELLER(S) represent to BUYER as follows:
2.1 RIGHT, TITLE. SELLER(S) have good right, title and authority
to enter into this Agreement and to sell, free and clear of
any lien, claim or encumbrance.
2.2 CORPORATE STATUS, AUTHORITY. KanMap, Inc. and Cherokee Methane
Corporation (CORPORATIONS) are Kansas corporations, in good
standing, authorized to transact business in the State of
Kansas.
2.3 CAPITALIZATION. The CORPORATIONS each have authorized capital
of 10,000 shares of common stock, with par value of $10.00 per
share, of which 10,000 shares are issued and outstanding.
There are no outstanding warrants, options, calls,
subscriptions, contracts, right or other agreements or
commitments obligating the CORPORATIONS or SELLER(S) to issue,
purchase or sell any shares of capital stock of the
CORPORATIONS, nor are there any securities, debts, obligations
or rights outstanding which are convertible into or
exchangeable for shares of the capital stock of the
CORPORATIONS.
2.4 TAX RETURNS. The CORPORATIONS have filed all federal, state
and local income tax, severance tax, production tax, excise
tax, employment tax and ad valorem tax returns due for all
prior periods and there are no taxes, interest or penalties
due from the CORPORATIONS to any income tax authority except
as may be accrued and shown upon the financial statements of
the CORPORATIONS.
2.5 FINANCIAL STATEMENTS. The financial statements of the
CORPORATIONS up through the statements dated December 31,
1996, shall have been prepared in a consistent manner, in
accordance with generally accepted accounting principles, and
fairly represent the financial condition of the CORPORATIONS
from an historic standpoint, but without reference to the fair
adverse changes in the financial condition of the
CORPORATIONS.
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2.6 ASSETS. The assets of the CORPORATIONS as of the Effective
Time shall consist of "Cash" and "Cash Equivalents", "Accounts
Receivable", "Fixed Assets", and "Other Assets" as previously
described.
The description of assets set forth in the financial
statements are general and approximate in character and do not
constitute any warranty as to quantity, quality, fitness,
condition, value, productivity, performance, collectability or
recoverability.
2.7 LIABILITIES. The liabilities of the CORPORATIONS as of the
Effective Time shall consist only of liabilities as agreed by
the parties.
2.8 DEPRECIATION, DEPLETION, AND AMORTIZATION, ADJUSTMENTS,
CONTINGENCIES. The entries appearing on the CORPORATIONS'
financial statements for depreciation, depletion and
amortization are subject to final adjustment to conform with
generally accepted accounting principles and have no necessary
relationship to the actual condition or value of the assets of
the CORPORATIONS.
2.9 CONTRACTS, COMMITMENTS. The CORPORATIONS and their assets are
not subject, as of the Effective Time, to any contracts or
commitments except as follows:
2.9.1 The liabilities of the CORPORATIONS as appear from
financial statements.
2.9.2 Contracts for purchase and sale of natural gas into
and from certain natural gas gathering systems.
2.9.3 Advance Payment Agreement with Cherokee Methane
Corporation.
2.9.4 The general duties to comply with all applicable
federal, state and local laws, statutes, rules and
regulations, including without limitation, those
relating to environmental protection.
2.9.5 A Purchase and Management Agreement with Crescent
Investments, Inc., subsequently assigned to ▇▇▇▇▇▇
Industries, Inc. relating to the sale of Section 29
of IRS Code Federal Tax Credits from SELLER(S)
interest in certain qualifying natural gas ▇▇▇▇▇.
2.10 SUITS, CLAIMS. There are, to the knowledge of SELLER(S), no
suits, claims or administrative proceedings pending or
threatened against the CORPORATIONS, except to the extent of
class constituting liabilities and reflected on the financial
statements as hereinabove described.
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2.11 EMPLOYMENT. The CORPORATIONS are not subject to any collective
bargaining agreement or any contract or obligation with any
employee, consultant or contractor which would bind the
CORPORATIONS beyond the Effective Time. Further, the
CORPORATIONS do not have in effect any employee benefit plan,
retirement plan, pension plan, or other arrangement for the
benefit of past or present employees which would bind the
CORPORATIONS subsequent to the Effective Time or with respect
to which any unfunded liability exists.
2.12 INSURANCE. Pending closing, SELLER(S) shall cause the
CORPORATIONS to maintain in force its existing public
liability, auto liability, and ▇▇▇▇▇▇▇'▇ compensations
insurance coverages.
2.13 PROHIBITIONS. The execution of this document is not in any way
prohibited by the CORPORATIONS' Articles of Incorporation or
Bylaws, or by any contract, covenant or agreement to which the
SELLER(S) or the CORPORATIONS are parties, or by the order of
any court or regulatory body by virtue of any judicial or
administrative proceedings to which SELLER(S) or the
CORPORATIONS are parties.
2.14 ACCESS. SELLER(S) will afford BUYER complete access to the
corporate records, financial statements and business records
of the CORPORATIONS, and to the assets described and the
technical files and data pertaining thereto.
2.15 ENVIRONMENTAL MATTERS. SELLER(S) are not aware of any
violations with respect to the CORPORATIONS or their assets of
any applicable environmental law, statute, rule or regulation.
2.16 TITLE. SELLER(S) have no actual knowledge of any adverse
claims to the CORPORATIONS' title to its assets.
2.17 CONDITION. SELLER(S) make no warranty or representation
whatsoever as to the condition of the assets of the
CORPORATIONS and that such condition is strictly "AS IS".
ARTICLE II
Miscellaneous
3.1 EMPLOYMENT AGREEMENT. BUYER shall employ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇-▇▇▇▇
at a salary of $3,000.00 per month, for a minimum period of
one year. Her responsibilities shall include the day to day
activities and administrative management of the field office
located in Independence, Kansas and shall be consistent with
those currently performed and as further agreed upon by the
parties.
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3.2 CONSULTING AGREEMENT. BUYER shall retain ▇▇▇▇▇ ▇. ▇▇▇▇ for
consulting purposes and to provide guidance and direction for
field operations, at a rate of $1,500.00 per month, for a
minimum period of six months.
3.3 FIELD OFFICE SHOP AND YARD. ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇-▇▇▇▇ are the owners of the real estate located at ▇▇▇▇
▇. ▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, containing offices,
shop and yard. It is the intent of the above named owners to
rent these facilities, in whole or part, to BUYER at a rate to
be mutually agreed upon and commensurate with those rates used
in the prevailing area.
3.4 BUYER is granted a First Right of Refusal to purchase property
at 2101 W. Maple for a period of 24 months after the effective
date.
SELLER(S)
KanMap, Inc. Cherokee Methane Corporation
By: //s// ▇▇▇▇▇ ▇. ▇▇▇▇ By: //s// ▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇
President President
BUYER
Loch Energy, Inc.
By: //s// ▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇
President
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