MEMORANDUM OF UNDERSTANDING
This confidential Memorandum of Understanding ("MOU") is entered into on
this day of March, 2006 by and between Sundial Resources, Inc. ("Sundial"), XX
00, Xxx 000, Xxxxxx, Xxxxx 00000, Xx XxXxxxxxx and Xxxxxx XxXxxxxxx, Xx.
("McDermetts") and Universal Property Development and Acquisition Corporation
("UPDA"), 00000 XX Xxxxxxx 0, Xxxxx 000, Xxxx Xxxxx, XX 00000.
RECITALS
WHEREAS, Sundial is actively engaged directly and/or through associates in
the Energy related Project Business Development and the ownership, management,
engineering, procurement, construction, installation, operation, and plant and
facility maintenance of oil and gas xxxxx and facilities. Key to the success of
Sundial and its associates is their capability, experience, qualifications,
technologies, market and industry relationships, key industry strategic alliance
partners and their abilities to identify attractive business and project
development opportunities with great upside potential which are in need of
funding.
WHEREAS, UPDA is a public company engaged in the project funding and
business development, with the ability to fund business development through
formation of joint ventures or strategic alliances for its own account as well
as serving independent clients.
NOW, THEREFORE, Sundial, McDermetts and UPDA are desirous to enter into
this MOU in joining forces as strategic alliance partners through the
establishment of a "C" corporation. The new corporation will be incorporated in
the State of Nevada whereas UPDA will own Seventy Five percent (75%) and
McDermetts will own Twenty five percent (25%) of the interest in the said new
corporation. In consideration of these respective interests, Sundial shall
assign to the new corporation all of its right, title and interest in and to
those certain leases known as Threasher, Medlin, Nantz, Xxxxxxxx and the xxxxx,
personal property and equipment located thereon and UPDA shall pay to Sundial
the sum of One Hundred Thousand Dollars ($100,000.00). All parties acknowledge
that their ownership interests shall be fully dilutible on a pari passu basis,
with percentage ownership remaining the same subject to dilution. All parties
specifically acknowledge the receipt and sufficiency of the consideration set
forth herein.
AGREEMENTS
The parties agree that the foundation of this MOU and the impending new
corporation is based on the following principles:
A. The purpose of a new corporation enables the Parties together to
explore the business development and funding opportunities in various endeavors
with each party retaining its own separate identity, operation, ownership,
organization, and relationships.
B. The new corporation shall not preclude any party from separately
pursuing other business opportunities, joint ventures, and strategic alliances
with other parties so long as the confidentiality obligations undertaken
hereunder are not breached.
C. The Parties agree that the formation, identity, organizational
structure, and by-laws of the said new corporation shall be decided on a
separate accord by and between the Parties. However, the parties have agreed to
form a new corporation domiciled in the State of Nevada.
D. Each party has the right to assign its respective stock in the new
corporation to other entities that the party owns or controls. Any reassignment
or sale of the new corporation stock to an entity that the said party does not
own or control must be approved by unanimous consent of all stockholders of the
new corporation and the existing shareholders must be given a right of first
refusal to purchase the respective share of the selling partner and such
transfer of title and or ownership will not diminish in any way the privileges
or rights of any party to this Agreement.
E. The parties desire to exchange certain proprietary or confidential
information for the purpose of exploring potential business development and
funding opportunities, which shall be held in strict confidence and not shared
with third parties, unless written permission is granted by the granting/giving
party.
F. The parties are willing to provide such information for such purpose in
accordance with the terms hereof.
G. Upon execution of this MOU and pursuant to its terms, UPDA shall
establish on behalf of the parties a new corporation domiciled in the state of
Nevada.
H. UPDA shall provide the sum of Four Hundred Thousand Dollars
($400,000.00) to the new corporation which sum shall represent the total
consideration due for UPDA's above-referenced interest in the new corporation
and the amount estimated by Sundial to be necessary for the completion of the
work contemplated by this MOU, such sums including but not limited to the
purchase and/or lease and installation of all necessary equipment, site work,
well workover, retention of a Certified Petroleum Xxxxxxx, all general and
administrative and travel and any and all other expenses until such time as said
work has been completed.
I. Any additional funds necessary for the completion of said work shall be
contributed by the parties in conformance with their respective interests in the
new corporation as set forth above. Should either party be either unable or
unwilling to make such additional contributions then the other party may, in its
sole discretion, make such additional contributions in which event, the party
electing to make such additional contribution shall receive an increased
interest in the new corporation in conformance therewith.
J. The parties agree that all funds provided by UPDA shall be reimbursed
to UPDA from the first net revenues generated from the target area. Net revenues
shall equal gross revenues less royalties, utilities, management fees and other
necessary costs associated with the day-to-day operation of the business. All
expenditures in excess of five thousand dollars must be approved by UPDA and all
payments of any amount shall be issued by UPDA's accountants.
K. After completion of the work contemplated by this MOU, Sundial shall
act as manager and operator of the xxxxx and/or leases. A Management/Operating
Agreement shall be negotiated and executed by and between the new corporation
and Sundial providing that, as on site managers, Sundial shall receive an
ongoing management fee of Five percent (5%) of gross revenues, less royalties
and utilities, for the operation of the xxxxx after they are brought on line. It
is further agreed that the new corporation shall employ UPDA's accountants for
all bookkeeping/financial record-keeping and that UPDA shall be entitled to
audit the books and records of the new corporation at its reasonable convenience
or as required by statute or regulation or as requested by UPDA's accountants.
All specific terms and conditions consistent herewith will be set forth in the
operating agreement and/or other appropriate contracts. Upon execution of this
MOU, Sundial shall submit a proposed Operating Agreement for review by the
parties.
L. The parties hereby agree a three (3) member board will be appointed to
oversee the new corporation. Two (2) directors will be chosen by UPDA, and one
(1) will be chosen by Sundial.
CONFIDENTIAL INFORMATION
1. "Confidential Information" shall mean all confidential or proprietary
written, recorded, electronic or oral information or data (including without
limitation research, developmental, engineering manufacturing, technical,
marketing, sales, financial, operating, performance, cost, business and process
information or data, know-how, and computer programming and other software and
software techniques) provided (whether such confidentiality or proprietary
status is indicated orally, or whether or not the specific words "confidential"
or "proprietary" are used) to a Party(s) (the "Receiving Party(s)") by the other
Party (the "Disclosing Party(s)") in the course of the exchange of such
information or data between the Parties. The Confidential Information shall also
without limitation include specific business transaction opportunity specific
funding, credit enhancement, contacts, buyers, sellers, investors, and or joint
venture partners ("Sources").
A. "Party" shall include any of the Party's subsidiaries or affiliates.
B. "Person" shall be broadly interpreted to include, without limitation,
any corporation, company, partnership, other identity or individual.
C. "Representatives" shall mean, as to any Person, its directors,
officers, employees, agents and advisors (including, without limitation,
financial advisors, attorneys and accountants).
2. Confidentiality and Non-Use. In any consideration of each Party's providing
Confidential Information, the Parties agree as follows:
A. The Receiving Party(s) shall hold confidential and not disclose to any
Person without prior written consent of the Disclosing Party(s), all
Confidential Information and any information about the Proposed Transaction, or
the terms or conditions or any other facts relating thereto, including, without
limitation, the fact that discussions are taking place with respect thereto or
the status thereof, or the fact that Confidential Information has been made
available to the Receiving Party(s) or its Representatives; provided, however
that the Receiving Party(s) may disclose such Confidential Information to its
Representatives who are actively and directly participating in its evaluation of
the Proposed transaction or otherwise need to know the Confidential Information
for the purpose of evaluating the Proposed Transactions;
B. The Receiving Party(s) shall cause all its Representatives to observe
the terms of this MOU and shall be responsible for any breach of the terms of
this MOU by it or its Representatives; and
C. The Receiving Party(s) shall return or destroy all Confidential
Information (including all copies thereof) within 30 days of receipt of a
written request therefore by the Disclosing Party(s).
3. In addition to the forgoing, each of the Receiving Party(s) will not use the
Confidential Information for any purpose other than in connection with the
Proposed Transaction between the Parties.
4. Exceptions to the Confidentiality and Non-Use Obligations. The obligations
imposed by Section 2 hereof shall not apply, or shall cease to apply, to any
Confidential Information if or when, but only to the extent that, such
Confidential Information:
A. Was known to the Receiving Party(s) prior to the receipt of the
Confidential Information hereunder; or
B. Was, or becomes, through no breach of the Receiving Party(s)
obligations hereunder, known to the public; or
C. Becomes known to the Receiving Party(s) from sources other than the
Disclosing Party(s) under circumstances not involving any breach of any
confidentiality obligation; or
D. Is independently developed by the Receiving Party(s), as evidenced by
the written records thereof.
It shall not be a breach of the confidentiality obligations hereof for a
Receiving Party(s) to disclose Confidential Information where, but only to the
extent that, such disclosure is required by law or applicable legal process,
and/or the course of conduct of ordinary business of the new corporation for the
mutual benefits on a need to know basis.
MISCELLANEOUS PROVISIONS
1. No Representations and Warranties. The Parties hereby make no
representations or warranties, express or implied, of any kind to the
other Party with respect to the Confidential Information, including
without limitation with the respect to the accuracy or completeness
thereof. Notwithstanding the foregoing the Parties hereby warrant that
their representations made herein and within the related materials and
their execution of the within is made in good faith.
2. Termination; Duration of Obligations. Unless sooner terminated by mutual
written agreement of the Parties hereto or by integration into a
definitive joint venture agreement and creation of the new corporation
contemplated hereby, this MOU and the obligations hereunder shall
terminate five years from the date hereof. Notwithstanding anything to the
contrary, in the event that UPDA is unable to provide the funds as
outlined in the paragraph G above, then this MOU shall terminate,
releasing the Parties from any and all conditions outlined herein, unless
extended in writing by the Parties.
3. Waivers; Amendments; Assignment; Counterparts. This MOU may not be
modified, amended or waived except by a written instrument duly executed
by all Parties. No failure or delay by any Party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any right, power or privilege
hereunder. This MOU may not be assigned without the prior written consent
of the others and the MOU shall be binding on, and inure to the benefit
of, the respective successors of the Parties hereto. This MOU may be
signed in two or more counterpart originals, each of which shall
constitute an original document.
4. Governing Law; Disputes. This MOU is made subject to and shall be
construed under the laws of the State of Nevada, without giving effect to
its principles or rules regarding conflict laws.
5. Remedies. Without prejudice to the rights and remedies otherwise available
to the Parties, each Party shall be entitled to equitable relief by way of
injunction or otherwise if the Receiving Party(s) or any of its
Representatives breach or threaten to breach any of the provisions of this
MOU and the Receiving Party(s) shall not plead in defense thereto that
there would be an adequate remedy at law.
6. Entire MOU. This MOU together with all aforementioned Attachments and
Exhibits represents the entire Agreement between the Parties and
supersedes all prior communications, agreements and discussions by and
between the Parties; this MOU is the understanding between the Parties
relating to the subject matter hereof.
IN WITNESS WHEREOF, each of the Parties has caused this MOU to be
executed by their respective, fully authorized representatives as of the date
first written above.
Universal Property Development and Acquisition Corporation
By:
--------------------------------------
Xxxxx Xxxxxxxx, CEO, COO
Sundial Resources, Inc.
By:
--------------------------------------
Xxxxx Xxxxxxx, its
------------------
