Exhibit 10.1
PURCHASE AND SALE AGREEMENT
by and between
CEDAR RIDGE LLC
Seller
and
NEW FRONTIER ENERGY, INC.
Buyer
CONFIDENTIAL
PURCHASE AND SALE AGREEMENT
This PURCHASE and SALE AGREEMENT ( the "Agreement") is made this 1st day of
November , 2006, to be effective as of 7:00 am Mountain Standard Time on the 1st
day of November, 2006 (the "Effective Date") by and between CEDAR RIDGE LLC, a
limited liability company formed under the laws of the State of Colorado,
located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Seller"), and NEW FRONTIER ENERGY, INC., a corporation formed under the laws of
the State of Colorado located at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ( the "Buyer"). The Buyer and Seller may be collectively referred to
herein as the "Parties" and individually as a "Party."
RECITALS
A. WHEREAS, Seller owns certain oil and gas properties described herein
and desires to sell such properties; and
B. WHEREAS, Buyer desires to purchase such properties.
NOW, THEREFORE, in consideration of their mutual promises contained
herein, Buyer and Seller agree to the purchase and sale of the oil and gas
properties described below, in accordance with the following terms and
conditions:
AGREEMENT
1. Purchase and Sale.
(a) Property Being Sold. Subject to the terms and conditions
of this Agreement, Seller agrees to sell and convey and Buyer agrees to
purchase and accept the Subject Property for the Purchase Price as
defined hereinafter. Except as set forth in Section 1(b) below, the
term "Subject Property" or, where the context so requires, "Subject
Properties," shall mean:
(i) Leaseholds. All of Seller's right, title and
interest in and to all oil and gas leaseholds, oil, gas and
other minerals, including working interests, carried working
interests, rights of assignment and reassignment, net revenue
interests, record title interests, undeveloped locations and
all other interests under or in oil, gas or mineral leases,
and interests in rights to explore for and produce oil, gas or
other minerals which are described in Exhibit "A" (the
"Leases");
(ii) Rights in Production. All of Seller's right,
title and interest in and to all reversionary interests,
backin interests, overriding royalty interests, production
payments, net profits interests, mineral and royalty interests
in production of oil, gas or other minerals relating to the
Leases;
(iii) ▇▇▇▇▇. All of Seller's right, title and
interest in and to (including fixtures and improvements)
producing, non-producing and shut-in oil and gas ▇▇▇▇▇ and
saltwater disposal or injection ▇▇▇▇▇ located on the Leases
that are described on Exhibit "B" (hereinafter "▇▇▇▇▇");
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(iv) Contract Rights. All of Seller's right, title
and interest in or derived from unit agreements, orders and
decisions of regulatory authorities establishing or relating
to units, unit operating agreements, operating agreements, gas
purchase agreements, pooling agreements, Division Orders, oil
purchase agreements, gathering agreements, transportation
agreements, processing or treating agreements, farmout
agreements and farmin agreements and any other agreements
described in Exhibit "C", which relate to any of the Leases or
▇▇▇▇▇ described in Exhibits "A" or "B" (hereinafter the
"Contracts"), to the extent such contracts are assignable, any
non-assignable contracts are specifically described under a
separate heading in Exhibit "C";
(v) Easements. All of Seller's right, title and
interest in and to all rights-of-way, easements, licenses,
surface leases, and servitudes appurtenant to or used in
connection with the property described in Exhibits "A" or "B"
(hereinafter "Easements");
(vi) Permits. All of Seller's right, title and
interest in and to all permits and licenses of any nature
owned, held or operated in connection with operations for the
exploration and production of oil, gas or other minerals to
the extent the same are used or obtained in connection with
any of the Leases, Contracts, Easements or ▇▇▇▇▇, as such
permits and licenses are described on Exhibit "B" (hereinafter
"Permits");
(vii) Equipment. All of Seller's right, title and
interest in and to all personal property, improvements,
surface equipment, down-hole equipment and pipelines,
buildings and inventory used or obtained in connection with
the Leases, Easements, ▇▇▇▇▇ or Permits that are described on
Exhibit E; and
(viii) Remaining Interests. All other rights and
interests in, to or under or derived from the Subject
Property, even though the same may be improperly described in
or omitted from the Exhibits. It is the express intent of the
parties that all of Seller's right, title and interest in any
and all oil and gas properties described on Exhibits "A", "B"
or "C" be assigned to Buyer hereunder.
(b) Property Not Being Sold. The term "Subject Property" or,
as the context requires, "Subject Properties," shall not include any of
the following:
(i) Receivables. All trade credits, accounts
receivable, notes receivables and other receivables
attributable to Seller's interests in the Subject Properties
with respect to any period prior to the Effective Date;
(ii) Claims and Causes of Action. All claims and
causes of action of Seller arising from breaches, acts,
omissions or events or damage to or destruction of property
occurring prior to the Effective Date;
(iii) Geophysical Data. All of Seller's seismic,
geophysical, geophysical, geological, geochemical and other
geotechnical information and data not specifically transferred
or licensed to Buyer; and
(iv) Electronic Data. All of Seller's electronic
mapping data and digital images of documents.
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(v) Liabilities. Except for the Assumed Liabilities below, Buyer is not
purchasing, accepting or being transferred any liabilities of Seller.
2. Purchase Price. Buyer agrees to pay to Seller for the Subject
Property the following consideration: (i) Eight Million Dollars (US)
($8,000,000.00), (the "Cash"), and (ii) to assume responsibility subsequent to
the Effective Date for (a) one-half (1/2) of Seller's obligations and
liabilities arising under that certain Gas Gathering Agreement dated effective
June 1, 2005 by and between Slaterdome Gathering Line, LLLP, Slaterdome Gas,
Inc., Seller and Buyer (the "Gas Gathering Agreement") due and payable between
the Effective Date and June 1, 2007; and (b) all of Seller's obligations and
liabilities due and payable under the Gas Gathering Agreement from and after
June 1, 2007. All of Seller's obligations and liabilities under the Gas
Gathering Agreement, as described in this Section, are herein referred to as the
"Assumed Liabilities") and the Cash and Assumed Liabilities are collectively
referred to as the "Purchase Price"), which shall be adjusted in accordance with
the terms of this Agreement. Except as set forth in this Agreement, the Cash
portion of the Purchase Price shall be payable at Closing to Seller in
immediately available funds. Buyer shall pay to Seller the sum of six hundred
thousand dollars (US) ($600,000.00) upon execution of this Agreement as a
performance deposit (the "Performance Deposit"), which Performance Deposit shall
be credited to the Purchase Price at Closing. The Performance Deposit shall be
refunded to Buyer if (i) Seller is unable to close this transaction; or (ii)
this Agreement is terminated by either party pursuant to Section 6(d) hereof.
Buyer with Seller's approval has allocated the Purchase Price among the Subject
Property as set forth on Exhibit F. Buyer and Seller agree to use the values so
allocated as the values for the individual Subject Properties for all purposes,
including but not limited to filing all tax returns.
3. Effective Date and Closing. The conveyance of the Subject Property
to Buyer shall be effective as of November 1, 2006 at 7:00 a.m. where the
Subject Properties are located (the "Effective Date"), but title thereof shall
be delivered at the "Closing", which shall take place on or before November 30,
2006 (the "Closing Date") unless extended by the mutual agreement of the
Parties.
4. Representations and Warranties of Seller. Seller represents and
warrants to Buyer as of the date hereof and will represent and warrant at the
Closing, as follows:
(a) Corporate Authority. Seller is a limited liability company
duly organized and in good standing under the laws of the State of
Colorado, is duly qualified and in good standing to carry on its
business in the state where the Subject Properties are located, and
has all the requisite power and authority to enter into, deliver and
perform this Agreement and carry out the transactions contemplated
under this Agreement.
(b) Valid Agreement. This Agreement constitutes the legal,
valid and binding Agreement of Seller. At the Closing, all instruments
required hereunder to be executed and delivered by Seller shall be
duly executed and delivered to Buyer and shall constitute legal, valid
and binding obligations of Seller. The execution and delivery by
Seller of this Agreement, the consummation of the transactions set
forth herein and the performance by Seller of Seller's obligations
hereunder have been duly and validly authorized by all requisite
corporate action on the part of Seller and will not violate, conflict
with, require the consent or approval of any person or entity under,
or result in any violation or breach of any provision of (i) any
agreement, contract, mortgage, lease, license or other instrument to
which Seller or the Subject Property is a party or by which Seller or
the Subject Property is bound; (ii) any governmental franchise,
license, permit or authorization or any judgment or order of judicial
or governmental body applicable to Seller or Subject Property, or
(iii) any law, statute, decree, rule or regulation of any jurisdiction
in the United States to which Seller or the Subject Property is
subject.
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(c) Authorization. This Agreement has been duly authorized,
executed and delivered by Seller. All instruments required to be
delivered by Seller at the Closing shall be duly authorized, executed
and delivered by Seller. This Agreement and all documents executed by
Seller in connection with this Agreement shall constitute legal, valid
and binding obligations of Seller, enforceable against Seller in
accordance with their terms, subject to the effects of bankruptcy,
insolvency, reorganization, moratorium and similar laws from time to
time in effect, as well as general principles of equity.
(d) Leases. Each of the Leases are in full force and effect
and are valid and subsisting documents covering the entire estates
which they purport to cover; and all royalties, rentals and other
payments due under the Leases have been fully, properly and timely
paid. Seller will use its commercially reasonable efforts to take all
action necessary to keep the Leases in force and effect until the
Closing.
(e) Taxes. All due and payable ad valorem, property,
production, severance and similar taxes and assessments based on or
measured by the ownership of property or the production of
hydrocarbons or the receipt of proceeds therefrom on the Subject
Property, which become due prior to the Closing Date for any periods
prior to the Effective Date, have been properly paid.
(f) Brokers. Seller has incurred no obligation or liability,
contingent or otherwise for brokers' or finders' fees with respect for
this transaction for which Buyer shall have any obligation or
liability.
(g) Maintenance of Interests. Seller has maintained and will
continue to maintain from date of this Agreement until the Closing,
and has operated and will continue to operate the Subject Property in
a reasonable and prudent manner, in full compliance with applicable
law, including the Environmental Laws, and orders of any governmental
authority, to maintain insurance and bonds now in force with respect
to the Subject Property, to pay when due all costs and expenses coming
due and payable in connection with the Subject Property, and to
perform all of the covenants and conditions contained in the Leases
and all related agreements.
(h) Suits and Claims. No suit, action, claim, or other
proceeding is now pending or, to Seller's knowledge, threatened before
any court, governmental agency against the Subject Property or Seller,
and Seller shall promptly notify Buyer of any such proceeding which
arises or is threatened prior to the Closing.
(i) Access. To the same extent Seller has such right, at all
times prior to the Closing, Buyer and the employees and agents of
Buyer shall have access to the Subject Property at Buyer's sole risk,
cost and expense at all reasonable times, and shall have the right to
conduct equipment inspections, environmental audits, and any other
investigation of the Subject Property on one day's prior notice to
Seller and upon agreement with Seller as to time and place of such
actions.
(j) Environmental Matters. Seller has complied with and is
currently complying with all Environmental Laws (as such term is
defined in Section 7(f) applicable to the Subject Properties, or any
material limitations, restrictions, conditions, standards, obligations
or timetables contained in any Environmental Laws. Seller is not aware
of any actual or alleged material violation of Environmental Laws, or
any material liabilities or potential material liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise), including
any investigatory, remedial or corrective obligations relating to
Seller or the Subject Properties arising under Environmental Laws.
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(k) Operating Costs. All costs incurred, and currently due and
payable, in connection with the operation of the Subject Property have
been fully paid and discharged by Seller; all costs incurred, but not
yet due and payable, in connection with the operation of the Subject
Property will be fully paid and discharged in the ordinary course of
business.
(l) Bankruptcy. There are no bankruptcy, reorganization or
receivership proceedings pending, being contemplated by, or threatened
against Seller.
(m) Compliance with Contracts and Leases. Seller has complied
with all material terms of the Contracts specified on Exhibit "C" and
with the Leases described on Exhibit "A" and "B",and there are no
material breaches of the terms of the Contracts, Leases or agreements
affecting the Subject Property. Except as included on Exhibit "C",
there are no material contracts or agreements which would affect the
Properties and be binding upon Buyer after Closing. To Seller's best
knowledge, each of the Contracts are in full force and effect and
Seller has is not aware of any default with respect to any of the
Contracts.
(n) Compliance with Laws. To Seller's best knowledge, the
Subject Property has been owned, used, possessed and operated in
compliance with all applicable federal, state and local laws, rules,
orders and regulations. Seller has not violated or received notice of
the violation of any regulations, rules or orders promulgated by any
federal, state or local regulatory agency or governmental authority
which, if adversely decided, would have a material adverse effect on
the ownership or operation of the Subject Properties or the revenues
attributable thereto.
(o) No Liens. Except for Permitted Encumbrances, the Subject
Properties will be conveyed to Buyer at the Closing free and clear of
all liens, claims and encumbrances.
(q) Governmental Approvals. Seller shall obtain all required
local, federal governmental and/or agency permissions, approvals, and
consents, as may be required to sell the Subject Property, except for
consents and approvals which are customarily obtained after closing.
(r) Accuracy of Data. Seller represents that (i) the Data, or
copies thereof, constitute all of the files and information that
Seller has used in the ordinary course of operating and owning the
Subject Property, (ii) the Data does not contain any untrue statements
of material fact, (iii) Seller has made, or prior to Closing will
make, all Data available to Buyer and (iv) Seller has not
intentionally withheld any of the Data from Buyer.
(s) Existing Condition. Seller has and will continue to
operate the Subject Property in the ordinary course of business and in
substantially the same manner as it was operated prior to the
Effective Date. There have been no material adverse changes in the
condition of the Subject Property from the Effective Date to the
Closing Date.
(t) Gas Imbalance. Except for the pipeline imbalance reflected
on Exhibit G ("Gas Imbalance"), there do not exist any gas imbalances
associated with the Subject Property.
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5. Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as of the date hereof and will represent and warrant at the
Closing, as follows:
(a) Corporate Authority. Buyer is a corporation duly organized
and in good standing under the laws of the State of Colorado, is duly
qualified and in good standing to carry on its business in the state
where the Subject Property is located, and has all the requisite power
and authority to enter into and perform this Agreement and carry out
the transactions contemplated under this Agreement.
(b) Valid Agreement. This Agreement constitutes the legal,
valid and binding Agreement of Buyer. At the Closing, all instruments
required hereunder to be executed and delivered by Buyer shall be duly
executed and delivered to Buyer and shall constitute legal, valid and
binding obligations of Buyer. The execution and delivery of Buyer of
this Agreement, the consummation of the transactions set forth herein
and the performance by Buyer of Buyer's obligations hereunder have been
duly and validly authorized by all requisite corporate action on the
part of Buyer and will not conflict with or result in any violation of
any provision of (i) any agreement, contract, mortgage, lease, license
or other instrument to which Buyer is a party or by which Buyer is
bound; (ii) any governmental franchise, license, permit or
authorization or any judgment or order of judicial or governmental body
applicable to Buyer, or (iii) any law, statute, decree, rule or
regulation of any jurisdiction in the United States to which Buyer is
subject.
(c) Governmental Approvals. Buyer shall obtain all required
local, federal governmental and/or agency permissions, approvals,
permits, bonds and consents, as may be required to assume Seller's
obligations and responsibilities attributable to the Subject Property.
(d) Bonding. On or before Closing, Buyer shall have obtained
and posted all appropriate bonds with all governmental agencies having
jurisdiction over the Subject Properties or the Buyer.
(e) Independent Evaluation. Buyer is an experienced and
knowledgeable investor in the oil and gas business. Buyer has been
advised by and has relied solely on its own expertise and legal, tax,
reservoir engineering, environmental and other professional counsel
concerning this transaction, the Subject Property and value thereof.
(f) Physical and Environmental Matters. Buyer will be provided
the opportunity to conduct an independent inspection of the Subject
Properties, the public records and Seller's files, including without
limitation for the purpose of detecting the presence of any
environmentally hazardous substance or contamination, including
petroleum, and the presence and concentration of naturally-occurring
radioactive materials and satisfied itself as to the physical condition
and environmental condition of the property, both surface and
subsurface.
(g) Brokers. Buyer has incurred no obligation or liability,
contingent or otherwise for brokers' or finders' fees with respect to
this transaction for which Seller shall have any obligation or
liability.
6. Title Matters.
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(a) Examination of Files and Records. Upon execution of and
pursuant to the terms of this Agreement, Buyer shall have the right to
conduct its investigation of the status of title to the Subject
Properties. Seller will make available to Buyer its existing Lease,
Well and title files, production records, Easements, Contracts,
division orders and other information, available in Seller's files
relating to the Subject Property and such other information reasonably
requested from Seller by Buyer (collectively "Data"). Existing
abstracts and title opinions will not be updated by Seller. Upon
reasonable advanced notice from Buyer, all such Data shall be made
available at Seller's office during normal working hours. Seller will
also permit Buyer to examine and copy at Buyer's expense such Data. If
Closing does not occur, Buyer shall promptly return all such Data and
other materials provided by Seller to Buyer hereunder.
(b) Notice of Title Defect. Buyer will review title to the
Subject Property prior to Closing and notify Seller in writing of any
Title Defect (defined below) it discovers as soon as reasonably
practicable after its discovery, but in no event less than three (3)
business days prior to the Closing Date. Any notice provided hereunder
shall include reasonable evidence to substantiate the Buyer's position,
including a description of the Title Defect, the basis for the Title
Defect, the portion of the Lease or other part of the Subject Property
affected by the Title Defect, the amount by which Buyer believes the
value of the Subject Property has been reduced because of the Title
Defect and the computations and information upon which Buyer's belief
is based. Buyer will be deemed to have conclusively waived any Title
Defect about which it fails to notify Seller in writing within the
applicable period specified in the preceding sentence except as
otherwise provided herein.
(c) Procedure. If Buyer properly notifies Seller of a Title
Defect, Buyer and Seller shall promptly meet and, in good faith,
negotiate in an effort to agree upon the validity of each claimed Title
Defect and the resolution of such claimed Title Defects. Absent an
agreement on the claimed Title Defect, Buyer shall have the option to
either (i) waive the Title Defect and proceed to Closing, or (ii)
request that Seller cure the Title Defect, but Seller shall have no
obligation to cure any Title Defect. If Seller elects not to cure a
Title Defect, Buyer may either (i) reduce the Purchase Price to account
for such Title Defect in an amount not to exceed the Allocated Value of
the affected portion of the Subject Property and receive an assignment
of such affected Subject Property from Seller or (ii) reject title to
the affected Subject Property, cause Seller to retain the Subject
Property, and reduce the Purchase Price by the Allocated Value of the
affected Subject Property. If Seller elects to attempt to cure the
Title Defect, Seller will have ninety (90) days following the Closing
Date to attempt to cure the Title Defect, and during such ninety (90)
day period the Allocated Value of the affected portion of the Subject
Property shall be placed in escrow with a mutually agreed upon escrow
agent and title to the Subject Property will remain with Seller. With
respect to a Title Defect that Seller is unable to cure within such
ninety (90) day period following the Closing Date, Buyer may at its
option either (i) direct the escrow agent, with Seller's consent, to
refund to Buyer that portion of the Purchase Price that accounts for
such Title Defect in an amount not to exceed the Allocated Value of the
affected portion of the Subject Property and receive an assignment of
the affected Subject Property from Seller, or (ii) direct the escrow
agent, with Seller's consent, to pay the Allocated Value of the
affected Subject Property to Buyer, in which case Seller will retain
title to the affected Subject Property.
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(d) Right to Terminate Agreement. Notwithstanding anything in
this Section 6 or Section 7 that follows, in the event the sum of the
Title Defects and Environmental Defects (defined below) equals or
exceeds ten percent (10%) of the Purchase Price and Seller elects not
to cure such Title Defects or Environmental Defects or if Seller elects
to cure the Title Defects and correct the Environmental Defects and at
the end of the ninety (90) day period the sum of the uncured Title
Defects and uncorrected Environmental Defects exceeds ten percent (10%)
of the Purchase Price, either party may elect to terminate this
Agreement without liability to the other party, in which case Buyer
shall be entitled to a refund of the Performance Deposit and, if such
termination occurs after the Closing, a refund of the Purchase Price.
If the termination occurs after the Closing, Buyer shall re-assign the
Subject Property to Seller free and clear of all liens, security
interests, mortgages, deeds of trust, pledges, charges and other
burdens created by, through and under Buyer and account to Seller for
all revenues and expenses that were credited, charged, received or paid
by Buyer.
(e) Definition of Title Defect. For purposes of this
Agreement, the term "Title Defect" shall mean a matter, individually in
excess of ten thousand dollars ($10,000.00) or a combination of matters
in the aggregate in excess of fifty thousand (US) dollars ($50,000.00),
that would cause the title to the Subject Property to fail to qualify
as Good and Defensible Title (defined below) or which would otherwise
reduce the net revenue interest to be conveyed to Buyer as set forth in
Exhibits "A" and "B". As used herein, the term "Good and Defensible
Title" shall mean, as to each of the Subject Properties, title to the
Subject Properties by virtue of which Seller can successfully defend
against a claim to the contrary made by a third party, based upon
industry standards in the acquisition of oil and gas properties, and in
the exercise of reasonable judgment and in good faith, such that (i)
Seller (and upon Closing, Buyer), by virtue of its ownership interests
in the Leases described in Exhibit "A", is entitled to receive a
fractional decimal interest of not less than the Net Revenue Interest
set forth in Exhibits "A" and "B", for the Subject Properties without
reduction, suspension, or termination throughout the productive life of
each such Subject Property (the "Net Revenue Interest); (ii) Seller is
obligated to bear (and after Closing shall obligate Buyer to bear) a
fractional decimal interest of not more than the "Working Interest" set
forth on Exhibits "A" and "B" of the costs and expenses related to the
maintenance, development, drilling, production, equipping, testing,
completing, sidetracking, reworking and operation of each Subject
Property which are set forth on Exhibit "B" without increase throughout
the productive life of each Subject Property; and (iii) the Subject
Properties are subject to no liens, encumbrances, obligations or
defects except those which are Permitted Encumbrances.
As used herein, the term "Permitted Encumbrances" shall mean:
(1) Lessors' royalties, overriding royalties, payments out of
production, reversionary interests and other burdens affecting
Seller's Net Revenue Interest if the net cumulative effect of such
burdens does not operate to (i) reduce the Net Revenue Interest of
Seller in any Subject Property to less than the Net Revenue Interest
for such Subject Property as set forth in Exhibit "B"; or (ii)
increase the Working Interest of Seller in any such Subject Property
to greater than the Working Interest therefore as set forth in Exhibit
"B" (unless Seller's Net Revenue Interest therein is increased in the
same proportion);
(2) Preferential rights to purchase and required third party consents
to assignments and similar agreements with respect to which (i)
waivers or consents are obtained from the appropriate parties; or (ii)
the appropriate time period for asserting such rights has expired
without an exercise of such rights;
(3) All rights to consent by, required notices to, filings with, or
other actions by governmental entities (including but not limited to
federal, state, local and foreign) in connection with the sale or
conveyance of oil and gas leases or interests therein if the same are
customarily obtained subsequent to such sale or conveyance;
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(4) Non-consent penalties applied against the interest of Seller
arising under applicable operating agreements, which are scheduled on
Exhibit "C" (including non-consent balances) and taken into account in
the calculation of the interests shown on Exhibits "A" and "B";
(5) Easements, rights-of-way, servitudes, permits, surface leases and
other rights in respect of surface operations which do not interfere
with or detract from the operations, value or use of the Subject
Properties by Buyer;
(6) Such Title Defects as Buyer has waived or released or is deemed to
have waived pursuant to the terms of this Agreement;
(7) The terms and conditions of all Leases and Contracts, provided the
same do not result in a decrease in the Net Revenue Interest or an
increase of the Working Interest in any of the Properties (unless
Seller's Net Revenue Interest therein is increased in the same
proportion);
(8) Rights of reassignment, to the extent any exist as of the date of
this Agreement, upon the surrender or expiration of any lease;
(9) Liens for taxes or assessments not yet due or not yet delinquent;
and
(10) Liens, if any, to be released at Closing in a form acceptable to
Buyer.
(f) Definition of Allocated Value. The term "Allocated Value"
shall be the value agreed upon by the Parties for the Subject Property
as set forth in Exhibit F.
7. Environmental Matters.
(a) Inspection. Prior to Closing and upon reasonable prior
notice to Seller, Buyer will have access to and the opportunity to
inspect the Subject Property for all purposes, including without
limitation, for the purposes of detecting the presence of hazardous or
toxic substances, pollutants or other contaminants, environmental
hazards, naturally occurring radioactive materials (NORM), produced
water, air emissions, contamination of the surface and subsurface and
any other Environmental Defect (defined below). Prior to Closing and
subject to the other provisions of this Agreement, Buyer will have
satisfied itself as to the physical and environmental surface and
subsurface condition of the Subject Property and method of operation.
(b) Notice of Environmental Defect. Buyer will notify Seller
in writing of any Environmental Defect (defined below) it discovers as
soon as reasonably practicable after its discovery, but in no event
less than three (3) business days prior to the Closing Date. Any notice
provided hereunder shall include: (i) appropriate evidence to
substantiate the Buyer's position, including a description of the
Environmental Defect, (ii) Buyer's basis for believing that Seller is
in violation of an Environmental Law, the portion of the Lease or other
part of the Subject Property affected by the Environmental Defect,
(iii) the amount by which Buyer believes the value of the Subject
Property has been reduced because of the Environmental Defect and the
evidence, computations and information upon which Buyer's belief is
based. Except as expressly set forth in this Agreement, including
without limitation as set forth in Section 7(g), below, Buyer will be
deemed to have conclusively waived any Environmental Defect about which
it fails to notify Seller in writing within the applicable period
specified in this Section 7(b).
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(c) Procedure. If Buyer properly notifies Seller of an
Environmental Defect, Buyer shall have the option to either (i) waive
the Environmental Defect and proceed to Closing, or (ii) request that
Seller correct the Environmental Defect within ninety (90) days of such
notice, but Seller shall have no obligation to correct any
Environmental Defect.. If Buyer requests that Seller correct an
Environmental Defect and Seller elects not to correct such
Environmental Defect, Buyer may, at its sole option, either (i) reduce
the Purchase Price to account for such Environmental Defect in an
amount not to exceed the Allocated Value of the affected portion of the
Subject Property and accept a conveyance of the Subject Property or
(ii) remove the affected portion of the Subject Property from the
Subject Property being conveyed and adjust the purchase price
accordingly. If Seller elects to attempt to correct the Environmental
Defect, Seller will have ninety (90) days following the Closing Date to
attempt to correct the Environmental Defect, and the portion of the
Purchase Price attributable to such Environmental Defect will be held
in an escrow account with a mutually acceptable escrow agent, and title
to the Subject Property will remain with Seller. With respect to a
Environmental Defect that Seller is unable to cure within such ninety
(90) day period following the Closing Date, Buyer may either (i) waive
the Environmental Defect and take title to the affected Subject
Property with the amount in the escrow account being paid to the
Seller, or (ii) receive a refund from the escrow account for the
Allocated Value of the affected Subject Property and allow Seller to
retain title to the affected Subject Property.
(d) Right to Terminate Agreement. Notwithstanding anything in
this Section 7 or the preceding Section 6, in the event the sum of the
Title Defects and Environmental Defects exceeds ten percent (10%) of
the Purchase Price and Seller elects not to cure such Title Defects and
correct such Environmental Defects or if Seller elects to cure the
Title Defects and correct the Environmental Defects and at the end of
the ninety (90) day period the sum of the uncured Title Defects and
uncorrected Environmental Defects exceeds ten percent (10%) of the
Purchase Price, either Party may elect to terminate this Agreement
without liability to the other Party in which case Buyer shall be
entitled to a refund of the Performance Deposit and, if such
termination occurs after the Closing, a refund of the Purchase Price.
If the termination occurs after the Closing, Buyer shall re-assign the
Subject Property to Seller free and clear of all liens, security
interests, mortgages, deeds of trust, pledges, charges and other
burdens created by, through and under Buyer and account to Seller for
all revenues and expenses that were credited, charged, received or paid
by Buyer.
(e) Definition of Environmental Defect. As used herein, an
"Environmental Defect" shall mean a condition affecting a Subject
Property that is a violation of Environmental Law and which
individually would cost in excess of ten thousand dollars ($10,000.00)
to remediate or several conditions affecting the Subject Property that
is a violation of Environmental Law and which in the aggregate in
excess of fifty thousand (US) dollars ($50,000.00) to remediate.
10
(f) Definition of Environmental Laws. As used herein, the term
"Environmental Laws" shall mean any and all federal, state and local
laws, statutes, regulations, rules, orders, ordinances, judgments, or
permits of any governmental authority pertaining to health, welfare,
the environment, wildlife and natural resources in effect in any and
all jurisdictions in which the Subject Property is located, including
without limitation, the Clean Water Act, as amended, the Clean Air Act,
as amended, and the Federal Water Pollution Control Act, as amended,
the Oil Pollution Act of 1990 ("OPA90"), as amended, the Rivers and
Harbors Act of 1899, as amended, the Safe Drinking Water Act, as
amended, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), as amended, the Superfund Amendments and
Reauthorization Act of 1986 ("▇▇▇▇"), as amended, the Resource
Conservation and Recovery Act ("RCRA"), as amended, the Hazardous and
Solid Waste Amendments Act of 1984, as amended, the Toxic Substances
Control Act, as amended, the Occupational Safety and Health Act
("OSHA"), as amended, and the Hazardous Materials Transportation Act,
as amended.
(g) Environmental Indemnity. Notwithstanding anything herein
to the contrary, for a period of one year following the date of
Closing, Seller assumes full responsibility for, and agrees to
indemnify, defend, and hold harmless Buyer from and against any and all
loss, liability, claims, fines, expenses, costs (including reasonable
attorneys' fee) and causes of action (collectively "Claims") caused by
or arising from an Environmental Defect attributable to Seller's
activities or omissions while Seller was operator of the Subject
Property. From and after one year following the date of Closing, Buyer
assumes full responsibility for and agrees to indemnify, defend, and
hold harmless Seller from and against all loss, liability, claims,
fines, expenses, costs (including reasonable attorneys' fee) and causes
of action caused by or arising from an Environmental Defect
attributable to Buyer's activities or omissions for all periods after
the date of Closing. The Claims covered by Seller's indemnity herein
shall be limited to those arising from or in connection with claims,
lawsuits or causes of action against Buyer by third parties, or
proceeding, investigations or order of regulatory or governmental
agencies.
8. Conditions Precedent to Each Party's Obligation to Close.
(a) Conditions Precedent to Seller's Obligation to Close. Each
and every obligation of Seller to consummate the transactions described
in this Agreement shall be subject to the fulfillment on or before the
Closing Date of the following conditions precedent:
(i) All representations and warranties of Buyer contained
in this Agreement shall be true and correct in all
material respects at and as of Closing as though such
representations and warranties were made at and as of
such time and Buyer shall deliver a certificate at
Closing to such effect; and
(ii) Buyer shall have complied in all material respects with
all obligations and conditions contained in this
Agreement to be performed or complied with by Buyer on
or prior to the Closing.
(b) Conditions Precedent to Buyer's Obligation to Close. Each
and every obligation of Buyer to consummate the transactions described
in this Agreement shall be subject to the fulfillment on or before the
Closing Date of the following conditions precedent:
(i) All representations and warranties of Seller contained
in this Agreement shall be true and correct in all
material respects at and as of Closing as though such
representations and warranties were made at and as of
such time and Seller shall deliver a certificate at
Closing to such effect; and
(ii) Seller shall have complied in all material respects
with all obligations and conditions contained in this
Agreement to be performed or complied with by Seller on
or prior to the Closing.
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(iii) All consents and approvals, if any, whether required
contractually or by applicable federal, state, local or
tribal Law, or otherwise necessary for the execution,
delivery and performance of this Agreement by Seller
(except for consents and approvals of governmental
entities or tribal authorities customarily obtained
subsequent to the transfer of title) shall have been
obtained and delivered to Buyer by the Closing and
shall not have been withdrawn or revoked;
9. Covenants of Seller and Buyer Prior to Closing.
(a) Operations. Until Closing, Seller shall do the following:
(i) Operate the Subject Property in a good and
workmanlike manner and in substantially the same manner as it
previously operated the Subject Property;
(ii) Maintain insurance now in force with respect to
the Subject Property;
(iii) Notify Buyer of any claim or demand which might
adversely affect title to, the environmental condition of or
the operation of the Subject Property;
(iv) Pay costs and expenses attributable to the
Subject Property as they become due.
(b) Negative Covenants. Until Closing, Seller shall not do any
of the following with regard to the Subject Property without first
notifying Buyer:
(i) Abandon any Well unless required to by a
regulatory agency;
(ii) Release or terminate all or any portion of a
Lease, Contract or Easement;
(iii) Commence or consent to an operation if the
estimated cost of the operation exceeds seven thousand five
hundred dollars ($7,500.00) net to the Seller's interest
except for those operations for which Buyer provides its
consent;
(iv) Remove, dispose, convey, encumber, mortgage or
pledge of any of the Subject Property or Equipment; or
(v) Amend a Lease, Contract or Easement or enter into
any new contracts affecting the Subject Property.
(vi) Incur or consent to any expenses as operator of
the subject property that are not both normal recurring
operating expenses and which individually exceed $20,000 per
well, unless Buyer has expressly consented in writing to such
expense.
(c) Notice of Loss. From the date hereof until Closing, Seller
shall promptly notify Buyer of any material loss or damage to
the Subject Property, Equipment, ▇▇▇▇▇, or any part thereof.
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(d) Buyer's and Seller's Covenant Regarding New Operations and
Management Services. Prior to Closing, Buyer and Seller agree
that neither Party will propose any new ▇▇▇▇▇ or workovers or
recompletions of existing ▇▇▇▇▇ on the Subject Property,
except as may be necessary to preserve Seller's interest in
any Leases and ▇▇▇▇▇ comprising the Subject Property. Further,
Seller agrees that between the Effective Date and the Closing
Date neither Seller nor its Affiliates shall charge Buyer with
any payroll attributable to Cedar Ridge employees or for any
services billed by CBM Services, International relating to
management, supervision or operation of the Leases or ▇▇▇▇▇
described In Exhibits A and B.
10. Closing. The Closing shall be held at Seller's counsel offices,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or
such other place as the Parties shall mutually agree. Seller shall provide Buyer
a "Preliminary Closing Settlement Statement" two (2) business days prior to
Closing respecting adjustments to the Purchase Price as well as wiring
instructions designating the account or accounts to which the Cash is to be
delivered. At the Closing, the following shall occur:
(a) Buyer and Seller shall agree upon a "Closing Settlement
Statement," which shall include adjustments to the Purchase Price,
which are known as of the Closing Date, as follows:
(i) The estimated amount to be received by Buyer,
including any applicable bonuses, for Seller's interest in the
quantity of saleable oil in storage on the Effective Date, net
of all applicable taxes and net of any charges attributable to
such oil that are deducted under the Contract by the purchaser
before remitting payment, which estimated amount shall be
corrected to the actual amount received in the Final
Settlement Statement (defined below);
(ii) The amounts of all operating and capital
expenditures that are attributable to the Leases, ▇▇▇▇▇ or
Equipment for the period from the Effective Date to the
Closing Date;
(iii) All amounts due and payable by Buyer, as a
current working interest owner in the Subject Property, to
Seller, as operator of the Subject Property, as of the
Effective Date, plus any additional amounts properly billed by
Seller, as operator, to Buyer, as a working interest owner,
for operations conducted on the Subject Property for the
period of time between the Effective Date and the Closing
Date;
(iv) The amount received by Sellers for the sale or
other disposition of produced natural gas and crude oil, net
of all taxes for which Seller was not reimbursed, for the
period from the Effective Date to the Closing Date;
(v) The amount of proceeds (other than accounts
receivable) received by Seller for disposition after the
Effective Date of any substances produced from the Subject
Property; and
(vi) Any ad valorem, property, production, severance
and similar taxes and assessments on the Subject Property for
the calendar year 2006 shall be prorated between Seller and
Buyer as of the Effective Date. Upon receipt of an invoice for
ad valorem taxes for 2006, Buyer shall forward a copy of same
to Seller and Seller shall be responsible for payment to Buyer
of Seller's prorated shares of such taxes within thirty (30)
days of receipt of such statement. In the event Seller
receives such ad valorem tax statement, Seller shall forward
such statement to Buyer and Seller shall deliver to Buyer
Seller's prorated shares of such taxes no later than ten (10)
days prior to the date on which such taxes are due and
payable. It is the intent of this provision that Seller shall
bear its proportionate part of ad valorem taxes for tax year
2006 only, which taxes are billed in 2007.
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(vii) Upward or downward, as appropriate, by an
amount equal to Three Dollars ($3.00) per MMBtu for the Gas
Imbalance existing as of the Effective Date.
(b) Seller shall execute, acknowledge and deliver the following:
(i) an Assignment, Conveyance and ▇▇▇▇ of Sale in a
mutually satisfactory and recordable form containing a special
warranty of title, substantially in the form of which is
attached hereto as Exhibit "D" (the "Assignment");
(ii) counterpart assignments of operating rights and
of record title to the Leases on officially approved forms to
satisfy applicable governmental requirements;
(iii) letters-in-lieu of transfer orders, and other
instruments conveying title to the Subject Property and the
production therefrom to Buyer. Buyer shall record and file the
Assignment and Deed of record in a timely manner.
(c) Buyer shall deliver the remaining amount due of the Purchase
Price, as adjusted pursuant to this Section 10 and Sections 6 and 7,
to Seller, or, if applicable, Seller's Qualified Intermediary under a
IRS Section 1031 "Like Kind" exchange, by wire transfer and Buyer
shall deliver to Seller an executed notice of assumption of the
Assumed Liabilities in a form to be mutually agreed to by the Parties.
The Final Purchase Price provided for under this Agreement excludes
any sales taxes or other taxes in connection with the sale of property
pursuant to this Agreement. If a determination is ever made that a
sales tax or other transfer tax applies, Buyer shall be liable for
such tax. Buyer shall also be liable for any applicable conveyance,
transfer and recording fees, and real estate transfer stamps or taxes
imposed on any transfer of property pursuant to this Agreement.
(d) The Parties shall execute and deliver any designations of
operator requested by Buyer and any other instruments necessary to aid
in the transfer of operations to Buyer. Once executed at Closing,
Seller shall file any Change of Operator notifications with the
appropriate governmental agency(ies) providing filed copies to Buyer.
(e) Seller shall deliver the Data (as defined hereinafter) to
Buyer.
(f) Seller shall deliver exclusive possession of the Subject
Property to Buyer.
(g) The Parties shall execute and deliver all necessary side
letter agreements to fulfill the purpose of this Agreement.
11. Post-Closing Covenants.
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(a) Final Settlement Statement. Not more than ninety (90) days
after the Closing, Seller shall prepare and deliver to Buyer, in
accordance with this Agreement, a Final Settlement Statement setting
forth each adjustment or payment which was not finally determined as of
the Closing and showing the calculation of such adjustments. As soon as
practicable after receipt of the Final Settlement Statement, Buyer
shall deliver to Seller a written report containing any changes which
Buyer proposes be made to the Final Settlement Statement. The parties
shall undertake to agree with respect to the amounts due pursuant to
such post-Closing adjustments no later than one hundred twenty (120)
days after the Closing. The date upon which such agreement is reached
or upon which the Final Purchase Price is established shall be called
the "Final Settlement Date". In the event that (1) the Final Purchase
Price is more than the amount paid to Seller at Closing, Buyer shall
pay to Seller in immediately available funds the amount of such
difference, or (2) the Final Purchase Price is less than the amount
paid to Seller at Closing, Seller shall pay to Buyer in immediately
available funds the amount of such difference. Payment by Buyer or
Seller shall be made within five business days of the Final Settlement
Date and denominated in US Dollars.
(b) Additional Payments Received. After the Final Settlement
Date, Seller covenants and agrees that it will hold and promptly
transfer and deliver to Buyer, from time to time as and when received
by it, any cash, checks with appropriate endorsements (using its
reasonable efforts not to convert such checks into cash), or other
property that it may receive which properly belongs to Buyer, and will
account to Buyer for all such receipts.
(c) Assumption of Obligations. From and after the Effective
Date, Buyer assumes, will be bound by, and agrees to perform all
express and implied covenants and obligations of Seller relating to the
Subject Property, whether arising under (i) the Leases, prior
assignments of the Leases, the Contracts (including without limitation
the Gas Gathering Agreement), the Easements, the Permits or any other
contractually-binding arrangements to which the Subject Property (or
any component thereof) may be subject and which will be binding on
Buyer and/or the Subject Property (or any component thereof) after the
Closing or (ii) any applicable laws, ordinances, rules and regulations
of any governmental or quasi-governmental authority having jurisdiction
over the Subject Property. Buyer also assumes Seller's proportionate
part of the expenses and costs of plugging and abandoning the ▇▇▇▇▇ and
restoration of operation sites, all in accordance with the applicable
laws, regulations and contractual provisions. Buyer shall assume the
risk of any change in the condition of the Subject Property from the
Effective Date to the Closing, unless such change constitutes a Defect
under Section 7 above, except to the extent any change of condition is
attributable to the willful misfeasance or gross negligence of Seller.
The Buyer understands and agrees that the Subject Property is
subject to all existing Contracts relating to the Subject Property.
Buyer shall assume and be responsible for all such obligations of
Seller as of the Effective Date. Buyer shall assume all rights and
duties of the operator of any of the Subject Property which are
presently operated by Seller, including but not limited to all
necessary filings with state agencies to properly effectuate such
transfer.
(d) Cooperation and Providing Information. In the event that
Buyer is required to provide audited financial statements for the
Subject Properties acquired under this agreement pursuant to Rule
3-05(b) of Regulation SX, Item 2.01 of Form 8-K, or under any other
federal securities law requirement, then Seller and its Affiliates
agree to use their commercially reasonable efforts to provide documents
and other materials as reasonably requested by Buyer's auditors within
10 business days of a request from either Buyer or Buyer's auditors.
15
12. Costs and Revenues After Effective Date. Seller shall be
responsible for the payment of all costs, liabilities and expenses incurred in
the ownership and operation of the Subject Property prior to the Effective Date
and not yet paid or satisfied. Buyer shall be responsible for payment (at
Closing or thereafter if not reflected on the Preliminary Closing Settlement
Statement) of all costs, liabilities and expenses incurred in the ownership and
operation of the Subject Property after the Effective Date to the Closing Date.
Such costs and expenses shall include any necessary and reasonable expenses
incurred by Seller in the operation, protection or maintenance of the Subject
Property. All hydrocarbons produced from the Subject Property prior to the
Effective Date, all oil stock balances held in the tanks as of the Effective
Date, and all proceeds from the sale thereof shall be the property of Seller.
All hydrocarbons produced after the Effective Date shall be the property of
Buyer. Seller shall remit production proceeds, if any, received by Seller from
sale of hydrocarbons belonging to Buyer, less expenses which Buyer is
responsible for paying pursuant to this section, to Buyer immediately upon
receipt. To the extent possible, adjustments shall be made to the Purchase Price
to account for such costs and revenues in the Preliminary Settlement Closing
Statement or if not liquidated by such date, they shall be addressed in the
Final Settlement Statement.
13. Casualty Loss. If, prior to the Closing Date, any portion of the
Subject Property shall be destroyed by fire or other casualty, Buyer shall have
the right to treat such affected property as a Title Defect under Section 6
above. Should the portion of Subject Property affected be material in Buyer's
reasonable opinion, Buyer shall have the right to exclude the affected Subject
Property from this Agreement by giving notice thereof to Seller and the purchase
price will be adjusted accordingly.
14. Independent Investigation and Disclaimer. The express representations of
Seller set forth in this Agreement are exclusive and in lieu of any and all
other representations. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT
AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE ASSIGNMENT, SELLER MAKES
ABSOLUTELY NO REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED OR STATUTORY, AS TO
(a) TITLE TO ANY OF THE SUBJECT PROPERTY, (b) THE ABILITY OF ANY COMPONENT OF
THE SUBJECT PROPERTY TO PRODUCE ANY HYDROCARBONS, (c) THE AMOUNTS, QUALITY OR
DELIVERABILITY OF HYDROCARBON RESERVES ATTRIBUTABLE TO THE SUBJECT PROPERTY, OR
ANY PART THEREOF, (d) GEOLOGICAL GEOPHYSICAL OR OTHER INTERPRETATION OF ANY
ECONOMIC EVALUATION, (e) PRESENT OR FUTURE SALES PRICES, OPERATING COSTS, OR
OTHER ECONOMIC FACTORS, OR (f) THE CONDITION OR STATE OF REPAIR OF ANY WELL OR
EQUIPMENT RELATING TO THE SUBJECT PROPERTY. BUYER AGREES AND ACKNOWLEDGES THAT,
PRIOR TO CLOSING IT WILL HAVE ACCESS TO, AND THE OPPORTUNITY TO INSPECT, THE
SUBJECT PROPERTY FOR ALL PURPOSES, INCLUDING WITHOUT LIMITATION FOR PURPOSES OF
DETERMINING ITS PHYSICAL AND ENVIRONMENTAL CONDITION, BOTH SURFACE AND
SUBSURFACE; AND FURTHER THAT BUYER HAS MADE ITS OWN INDEPENDENT INVESTIGATION,
ANALYSIS AND EVALUATION OF THE SUBJECT PROPERTY, AND EACH COMPONENT THEREOF
(INCLUDING BUYER'S OWN ESTIMATE AND APPRAISAL OF THE EXTENT AND VALUE OF THE
PETROLEUM, NATURAL GAS AND OTHER HYDROCARBON RESERVES [IF ANY] RESPECTING EACH
COMPONENT OF THE SUBJECT PROPERTY). THE PERSONAL PROPERTY (SURFACE AND
SUBSURFACE) CONVEYED AS PART OF THE SUBJECT PROPERTY ARE SOLD HEREUNDER "WHERE
IS, AS IS, WITH ALL FAULTS", AND WITHOUT ANY WARRANTIES OR REPRESENTATIONS OF
ANY KIND OR CHARACTER, EXPRESS OR IMPLIED OR STATUTORY, REGARDING THE CONDITION
OR STATE OF REPAIR OF ANY OF THE EQUIPMENT COMPRISING PART OF THE SUBJECT
PROPERTY.
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15. Termination. This Agreement may be terminated in accordance with
the following provisions and the Performance Deposit shall be refunded to Buyer:
(a) By the Seller if Sellers conditions set forth in Section 8(a) are
not satisfied through not fault of Seller, or are not waived by
Seller, as of the Closing Date;
(b) By the Buyer if the Buyers conditions set forth in Section 8(b)
are not satisfied through not fault of Buyer, or are not waived
by Buyer, as of the Closing Date;
(c) By either the Buyer or the Seller pursuant to Sections 6(d) or
7(d).
15. Indemnification.
(a) By Seller. Except as specifically provided herein, Seller
agrees to indemnify and hold harmless Buyer, its officers, directors,
employees and agents, from all claims, losses, costs, liabilities and
expenses (including reasonable attorneys' fees and costs) arising out
of or resulting from Seller's ownership or operation of the Subject
Property prior to the Closing Date.
(b) By Buyer. Except as specifically provided herein, Buyer
agrees to indemnify and hold harmless Seller, its officers, directors,
employees and agents, from all claims, losses, costs, liabilities and
expenses (including reasonable attorneys' fees and costs) arising out
of or resulting from Buyer's ownership or operation of the Subject
Property after the Closing Date.
16. Miscellaneous.
(a) Further Assurances. Seller agrees to execute any documents
which it has the authority to execute, whether before or after the
Closing, to aid Buyer in clearing or perfecting title and ownership to
the Subject Property, and assuming duties as operator of Subject
Property, and to facilitate the receipt of the proceeds of the sale of
the production therefrom and attributable thereto. Buyer shall make any
request for execution of such document in writing and shall provide
Seller with a copy of the document.
(b) Entire Agreement. This Agreement together with the
Exhibits attached hereto, shall constitute the complete agreement
between the parties hereto and shall supersede all prior agreements and
negotiations, whether written or oral, and any representations or
conversations with respect to the Subject Property.
(c) Confidentiality. If the Closing does not occur, then for a
period of five (5) years, Buyer will use its best efforts to keep all
the information furnished by Seller to Buyer hereunder or in
contemplation hereof strictly confidential including without limit the
Purchase Price and other terms of this Agreement, and will not use any
of such information to Buyer's advantage or in competition with Seller,
except to the extent such information (i) was already in the public
domain, not as a result of disclosure by Buyer, (ii) was already known
to Buyer, (iii) is developed by Buyer independently from the
information supplied by Seller, or (iv) is furnished to Buyer by a
third party independently of Buyer's investigation pursuant to the
transaction contemplated by this agreement.
(d) Notices. All communications required or permitted under
this Agreement shall be in writing and may be sent by facsimile. Such
communication shall be deemed made when actually received, or if mailed
by registered or certified mail, postage prepaid, addressed as set
forth below, shall be deemed made three days after such mailing. Faxes
will be deemed to be received when reflected in the fax confirmation
sheet. Either party may, by written notice to the other, change the
address for mailing such notices.
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Notices to Seller: Cedar Ridge LLC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Manager
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Notices to Buyer: New Frontier Energy, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
Fax No.▇▇▇-▇▇▇-▇▇▇▇
(e) Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, and their successors
and assigns; provided, no assignment by either party shall be made
without the express consent of the other party and if such consent is
granted, no assignment shall relieve such party of any of its
obligations hereunder.
(f) Counterparts. This Agreement may be executed in any number
of counterparts, which taken together shall constitute one instrument
and each of which shall be considered an original.
(g) Law Applicable and Venue. This Agreement shall be governed
by and construed in accordance with the laws of the state of the
location of the Subject Properties. If the Subject Properties are
located in more than one state, the laws of the State of Colorado shall
govern.
This Agreement shall be subject to the exclusive jurisdiction
of the courts in the County of Arapahoe in the State of Colorado. The
parties to this Agreement agree that any breach of any term or
condition of this Agreement shall be deemed to be a breach occurring in
the State of Colorado by virtue of a failure to perform an act required
to be performed in the State of Colorado and irrevocably and expressly
agree to submit to the jurisdiction of the courts of the State of
Colorado for the purpose of resolving any disputes among the parties
relating to this Agreement or the transactions contemplated hereby. The
parties irrevocably waive, to the fullest extent permitted by law, any
objection which they may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this
Agreement, or any judgment entered by any court in respect hereof
brought in the State of Colorado, and further irrevocably waive any
claim that any suit, action or proceeding brought in the State of
Colorado has been brought in an inconvenient forum.
(h) Incorporation of Exhibits. All exhibits and schedules
referred to herein are attached hereto and are made a part hereof by
this reference.
(i) Survival. Except for the special warranty of title which
is incorporated in the Assignment, all other indemnities,
representations, warranties and provisions of this Agreement and except
for the representations and warranties provided for in Section 4(e)
which shall survive indefinitely, all other indemnities,
representations, warranties and provisions of this Agreement shall
survive the Closing for a period of one (1) year after the Effective
Date at which time all such indemnities, representations, warranties
and other provisions hereof shall expire.
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(j) Assignment. Neither Party may assign its rights or
delegate its duties hereunder except with the prior, written consent of
the other Party.
(k) Headings. The headings of the articles and sections of
this Agreement are for guidance and convenience of reference only and
shall not limit or otherwise affect any of the terms and provisions of
this Agreement.
(l) Timing. Time is of the essence in this Agreement.
(m) Attorneys' Fees. The prevailing party in any dispute
hereunder shall be entitled to recover its attorneys' fees and costs.
(n) Expenses. All fees, costs and expenses incurred by the
Parties in negotiating this Agreement and in consummating the
transactions contemplated by this Agreement shall be paid by the Party
that incurred such fees, costs and expenses.
(o) Amendment and Waiver. This Agreement may be altered,
amended or waived only by a written agreement executed by the Party to
be charged. No waiver of any provision of this Agreement shall be
construed as a continuing waiver of the provision.
(p) Announcements. Neither Party shall announce or otherwise
publicize the existence of this Agreement, its terms and conditions or
the transactions contemplated hereby without first providing the other
Party the opportunity to review the proposed announcement and obtaining
the other Party's prior, written consent to such proposed announcement,
which consent shall not be unreasonably withheld. If either Party is
required by law to make an announcement concerning this Agreement, the
other Party shall be provided the opportunity to review and consent to
such announcement prior to the release of such announcement and failure
to respond to a proposed announcement, required by law, within three
business days from notification will constitute consent..
(q) Successors and Assigns. This Agreement is binding upon and
shall inure to the benefit of the Parties and, except where prohibited,
their successors, representatives or assigns.
(r) Third-Party Beneficiaries. Unless expressly stated to the
contrary, no third party is intended to have any rights, benefits or
remedies under this Agreement.
(s) Severance. If any provision of this Agreement is found to
be illegal or unenforceable, the other terms of this Agreement shall
remain in effect and this Agreement shall be construed as if the
illegal or unenforceable provision had not been included.
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(t) Availability of ss.1031 "Like-Kind" Exchange. Seller may
desire to exchange, for other property of like kind and qualifying use
within the meaning of Section 1031 of the Internal Revenue Code of
1986, as amended and the Regulations promulgated thereunder, title in
the property which is the subject of this contract. Owner expressly
reserves the right to assign its rights, but not its obligations,
hereunder to a Qualified Intermediary as provided in IRC Reg.
1.1031(k)-1(g)(4). Buyer makes no representation of any kind to Seller
that any particular tax treatment will be given as a result of the
Like-Kind Exchange. Buyer shall not be obligated to pay any additional
costs or incur any additional obligations in its purchase of the
Subject Property if such costs are the result of Seller's Like-Kind
Exchange, and Seller shall hold harmless and indemnify Buyer from and
against all claims, losses and liabilities, if any, resulting from such
a Like-Kind Exchange.
[SIGNATURES ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed below by their duly authorized representatives.
SELLER BUYER
CEDAR RIDGE LLC NEW FRONTIER ENERGY, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------ ------------------------------
Title: Managing Member Cedar Ridge, LLC Title: President
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Date: November 3, 2006 Date: November 3, 2006
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