EXHIBIT 10.1
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") dated May 16, 2005, is
by and between XXXXXX FAMILY INVESTMENTS, LLLP, a Colorado limited liability
limited partnership, 00000 X. Xxxxx, Xxxx 000, Xxxxxxxxx, Xxxxxxxx 00000
("Xxxxxx"); DNR OIL & GAS, INC., a Colorado corporation, 00000 X. Xxxxx, Xxxx
000, Xxxxxxxxx, Xxxxxxxx 00000 ("DNR"); and XXXXXXX OPERATING CO., a Colorado
corporation, 00000 X. Xxxxx, Xxxx 000, Xxxxxxxxx, Xxxxxxxx 00000 ("Xxxxxxx"),
(Xxxxxx, DNR and Xxxxxxx may hereinafter collectively be referred to as
"Seller"); and COLORADO OIL AND GAS, INC., 0000 Xxxxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxx 00000 ("Buyer"). The transaction contemplated by this Agreement may be
referred to as the "Transaction."
RECITALS
A. The entities comprising Seller own certain oil and gas properties and
related interests (collectively, the "Properties" as defined in Section 1.1
below).
B. Each of the entities comprising Seller has authorized Xxxxxxx to act for
them and on their behalf in connection with all matters related to this
Agreement.
C. Seller desires to sell, assign, and convey to Buyer and Buyer desires to
purchase and accept the Properties from Seller.
D. To accomplish the foregoing, the parties wish to enter into this
Agreement.
AGREEMENT
NOW, THEREFORE, for $100.00, the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Seller and Buyer agree as follows:
SECTION I
TRANSFER OF THE PROPERTIES
1.1 Sale and Purchase. Except for the Excluded Properties described in
Section 1.2, upon the terms and conditions hereinafter set forth, Seller agrees
to sell, assign, and convey to Buyer and Buyer agrees to buy and accept from
Seller the following:
(a) All rights, titles and interests of Seller, of whatever kind or
character, whether legal or equitable, and whether vested or
contingent, in and to the oil, gas and other minerals in and under or
that may be produced from the lands described in Exhibit A hereto (the
"Lands") including, without limitation, interests in oil, gas and/or
mineral leases described on Exhibit A (the "Leases") covering such
Lands, overriding royalties, production payments and net profits
interests in such Lands or such Leases, and fee mineral interests, fee
royalty interests and other interests in such oil, gas and other
minerals, subject to any depth limitations that may be set forth in
such Exhibit A or of record;
(b) All rights, titles and interests of Seller in and to, or otherwise
derived from, all presently existing and valid oil, gas and/or mineral
unitization, pooling, and/or communitization agreements, declarations
and/or orders covering the Leases and Lands and the units created
thereby, including, without limitation, all units formed under orders,
rules regulations, or other official acts of any federal, state, or
another authority having jurisdiction, voluntary unitization
agreements, designations and/or declarations, relating to the Lands;
(c) All of Seller's right, title and interest in the fixtures, personal
property and equipment located on the Lands and used in the operation
of the xxxxx as presently located on the lands including without
limitation well equipment, water xxxxx, casing, tanks, boilers,
buildings, tubing, pumping units, motors, pipelines, gathering lines,
power lines, and all other machinery, equipment, ancillary facilities
and improvements used in the operations (the "Equipment"). The
Equipment does not include (i) any vehicles, tools, pulling machines,
warehouse stock, equipment or material temporarily located on the
Lands; (ii) any leased personal property located on the Lands; (iii)
or any equipment, pipelines, fixtures, facilities or interest in land
owned by any contractor, purchaser or transporter of oil or gas from
the Lands, (iv) compressor and production unit from the UPRC.
(d) All of Seller's right, title and interest in all contracts and
contractual rights insofar and only insofar as they relate to the
Leases and Equipment including without limitation, unit agreements,
surface leases, oil and gas leases and/or subleases and assignments,
mineral deeds, royalty deeds, operating agreements, easements, right
of ways, farmout and farmin agreements, and all similar rights leases
or owned by Seller, and oil and gas sales, purchase, exchange and
processing contracts and agreements, whether of record or not (the
"Contracts").
(e) All of the "Records," as that term is defined in Section 2.1.
Seller's interest in the Lands, Leases, Xxxxx, Equipment, Contracts and
Records, except the Excluded Properties, shall hereinafter together be called
the "Properties."
1.2 Reservation. Notwithstanding the foregoing, Seller hereby reserves and
excepts from the Properties the following interests (collectively the "Reserved
Properties"):
(a) Xxxxxxx Lease/Overriding Royalty/Option/Reassignment.
(i) Xxxxxxx XXXX. Seller hereby reserves for itself and its
successors and assigns an overriding royalty interest in and to
the Xxxxxxx Lease (the Oil and Gas Lease dated 5/22/72 from
Xxxxxxxx Petroleum Company, dated 5/22/72, recorded in Book 188,
Page 177), equal to 7.5% of 8/8ths (with such overriding royalty
interests being the "Xxxxxxx XXXX").
(ii) Purchase Option. Buyer shall have the exclusive option to
purchase the Xxxxxxx XXXX from Seller for $500,000.00 on or
before June 1, 2007, such option to be exercisable one time for
the entire Xxxxxxx XXXX (the "Xxxxxxx Option"). If Buyer elects
to exercise the Xxxxxxx Option, it shall give Seller written
notice of the intent to exercise the Xxxxxxx Option, and
consummate the purchase of the Xxxxxxx XXXX within 15 business
days of giving Seller notice of exercise of the Xxxxxxx Option.
If Buyer fails to consummate the purchase of the Xxxxxxx Option
with the 15 business day period, or fails to timely exercise the
Xxxxxxx Option, Buyer shall have waived its right to exercise the
Xxxxxxx Option.
(iii) Reassignment Obligation. Buyer shall reassign to Seller, for no
consideration, the undrilled portions of the Xxxxxxx Lease if
Buyer has not drilled and completed two xxxxx as producing xxxxx
(or drilled and plugged and abandoned such xxxxx); one such well
in the NW/4SW/4 of Section 21, T13S, R44W, and one such well in
the SE/4NW/4 of Section 21, T13S, R44W, such xxxxx to be drilled
by Buyer on or before June 1, 2007. For the purposes of this
Reassignment Obligation, the undrilled portions of the Xxxxxxx
Lease shall be those lands outside the drilling and spacing unit
for the xxxxx capable of production in paying quantities located
on the Xxxxxxx Lease as of June 1, 2007.
(b) Xxxx Lease Overriding Royalty /Option/Reassignment.
(i) Xxxx XXXX. Seller hereby reserves for itself and its successors
and assigns an overriding royalty interest in and to the
following Oil and Gas Leases: (i) the Oil and Gas Lease from
Xxxxx X. Xxxx dated 6/9/60, recorded in Book 339, Page 309, (ii)
the Oil and Gas Lease from Xxxxxx Xxxx dated 6/9/60, recorded in
Book 339, Page 279 and (iii) the Oil and Gas Lease from Ivory X.
Xxxxxx dated 8/5/60, recorded in Book 341, Page 317
(collectively, the "Xxxx Leases") equal to 29.467392% of 8/8ths
(the "Xxxx XXXX").
(ii) Purchase Option. Buyer shall have the exclusive option to
purchase the Xxxx XXXX from Seller for $500,000.00, such option
to be exercisable one time on or before June 1, 2006 for the
entire Xxxx XXXX (the "Xxxx Option").
(iii) Repurchase Option. If Buyer has not attempted to recomplete and
commingle the Wabunsee and Topeka zones in the Xxxx #1-5 (SE/4
SE/4 5-33S-43W)wellbore before January 1, 2006, Seller shall have
the option to repurchase the Xxxx #1-5 Well and leases as
described in Exhibit A for the allocated value assigned to such
well in this Agreement.
(iv) Reassignment Obligation. If Buyer has not drilled a well in the
N/2 of Section 9, T33S, R43W and a second well in the S/2 of
Section 5, T33S, R44W, both to a depth sufficient to test the Red
Cave Formation (located between the depths of 1576 feet and 1650
feet in the Xxxx #1-5 wellbore), on or before June 1, 2006, then
Buyer shall assign to Seller for no consideration the previously
assigned rights to the undrilled portion of the Xxxx Lease.
(c) Seller reserves from the Properties those interests described in
Exhibit C, as fully defined and set forth in the Assignment, Xxxx of
Sale and Conveyance referenced in Section 1.5.
1.3 Purchase Price/Consideration. The Purchase Price for the Properties
shall be $2,500,000 (Two Million Five Hundred Thousand) ("Purchase Price"),
subject only to any applicable price adjustment as provided for under the terms
of this Agreement, plus 100,000 restricted shares of common stock in Colorado
Oil and Gas, Inc., a Colorado corporation valued at $1.00 per share (the (COG
Shares").
The COG Shares shall be issued and delivered to Seller at Closing with an
appropriate legend under Rule 144 indicating that such shares are "Restricted
Securities" under said Rule 144. Seller agrees to complete and execute
appropriate subscription documents for the COG Shares including a Subscription
Agreement and Letter of Investment Intent, and Investor Questionnaire to be
provided by Buyer to Seller prior to Closing. Seller shall be granted
"Piggy-Back" registration rights to have its COG Shares included for
registration in the first or any subsequent Registration Statement filed by
Buyer with the Securities and Exchange Commission with respect to its shares of
common stock that allows for registration and removal of resale restrictions of
the COG Shares. In any event Seller agrees not to sell or transfer its COG
Shares to any unaffiliated third party for a period of 12 months after the
Closing without express written consent of Buyer, which consent shall not be
unreasonably withheld.
1.4 Effective Date. This Agreement shall be effective June 1, 2005, at 7:00
a.m. Mountain Time unless the Buyer extends the Closing Date to after June 15,
2005, at 5:00 p.m. Mountain Time in which case the Effective Date shall be July
1, 2005, at 7:00 a.m. Mountain Time (the "Effective Date").
1.5 Form of Assignment. The assignment from Seller to Buyer shall be in the
form of the Assignment, Xxxx of Sale and Conveyance attached as Exhibit D and
made a part hereof (the "Assignment"). The Assignment shall reflect the
reservations of the Xxxxxxx XXXX and the Xxxx XXXX and shall convey the personal
property associated with the Properties "AS IS, WHERE IS".
1.6 1031 Exchange. Each entity comprising Seller reserves the right, at or
prior to Closing, to assign its rights under this Agreement with respect to all
or a portion of the Purchase Price, and that portion of the Properties
associated therewith ("1031 Properties"), to a Qualified Intermediary ("QI") (as
that term is defined in Section 1.1031(k)-1(g)(4)(v) of the Treasury
Regulations) to accomplish this Transaction, in whole or in part, in a manner
that will comply with the requirements of a like-kind exchange ("Like-Kind
Exchange") pursuant to Section 1031 of the Internal Revenue Code of 1986, as
amended ("Code"). If Seller so elects, Seller may assign its rights under this
Agreement to the 1031 Properties to the QI. Buyer hereby (i) consents to
Seller's assignment of its rights in this Agreement with respect to the 1031
Properties, and (ii) if such an assignment is made, agrees to pay all or a
portion of the Purchase Price into the qualified trust account at Closing as
directed in writing by Seller. Seller and Buyer acknowledge and agree that a
whole or partial assignment of this Agreement to a QI shall not release either
Party from any of its respective liabilities and obligations to each other or
expand any such respective liabilities or obligations under this Agreement.
Neither Party represents to the other that any particular tax treatment will be
given to either Party as a result of the Like-Kind Exchange. The Party not
participating in the Like-Kind Exchange shall not be obligated to pay any
additional costs or incur any additional obligations in its sale of the
Properties if such costs are the result of the other Party's Like-Kind Exchange,
and the Party participating in the Like-Kind Exchange shall hold harmless and
indemnify the other Party from and against all claims, losses and liabilities,
if any, resulting from such a Like-Kind Exchange.
SECTION II
DUE DILIGENCE
2.1 Access to Records. Seller shall give Buyer and its authorized
representatives, during regular business hours, at Buyer's sole risk, cost and
expense, access, with copying privileges, to all geological, geophysical,
production, engineering and other technical data and records, and to all
contract, land, title and lease records to the extent such data and records are
in Seller's possession and relate to the Properties (the "Records") and such
other information relating thereto as Buyer may reasonably request with the
following exception: Seller shall have no obligation to provide Buyer with
access to any documents, data or information which access Seller cannot legally
provide Buyer because of third-party restrictions on Seller.
Buyer shall keep all materials and data obtained from Seller confidential
in accordance with the terms of this Agreement, including Sections 5.4, 10.7 and
10.8. Buyer shall return any and all materials and data including Buyer's notes
and work papers as to any of the Properties not purchased at Closing.
2.2 Examination and Physical Inspection. Buyer and its authorized
representatives shall have physical access to the Properties at Buyer's sole
cost, risk and expense for the purpose of inspecting the Properties, conducting
such tests, examination, investigations and assessments as may be reasonable and
necessary or appropriate to evaluate the environmental and physical conditions
of the Properties. For those Properties which are not operated by Seller, Buyer
shall use its best efforts to obtain permission from the operator to conduct
such inspections. Buyer shall defend and indemnify Seller from any and all
liability, claims, causes of action, injury to Buyer's employees, agents or
contractors or to Buyer's property, and/or injury to Seller's property,
employees, agents or contractors which may arise out of Buyer's inspections. In
the event this Agreement fails to close, Buyer shall keep any and all data or
information acquired by all such examinations including the Independent
Environmental Review described in Section 2.8(a)(vi) and results of all analysis
of such data and information strictly confidential in accordance with the terms
of this Agreement and return such data and information to Seller.
2.3 Disclaimer. Except for the representations contained in this Agreement,
Seller makes no representation of any kind as to the Records or any information
contained therein. Buyer agrees that any conclusions drawn from the Records
shall be the result of its own independent review and judgment.
2.4 Defensible Title.
(a) As used herein, the term "Defensible Title" shall mean, as to each of
the Leases and Lands, such right, title and interest that (i) is
beneficially owned or deducible of record (either from the records of
the applicable county and/or, in the case of Federal leases, from the
records of the applicable office of the Bureau of Land Management and
state leases from the records of the applicable state land office)
and, in either case, free from reasonable doubt to the end that a
prudent person engaged in the business of the ownership, development
and operation of producing oil and gas properties and having knowledge
of all of the facts and their legal bearing would be willing to accept
the same; (ii) entitles Seller to receive not less than the interest
set forth in Exhibit B as the "Net Revenue Interest" or "NRI" with
respect to all of the oil, gas and hydrocarbon minerals produced,
saved and marketed from each unit or Xxxxx, as the case may be,
identified on Exhibit B hereto; (iii) obligates Seller to pay costs
and expenses relating to such unit or Xxxxx in an amount not greater
than the "Working Interest" or "WI" set forth in Exhibit B; and (iv)
except for Permitted Encumbrances, is free and clear of all liens and
encumbrances.
As used herein the term "Permitted Encumbrances" means:
(i) Lessors' royalties, overriding royalties, reversionary interests
and similar burdens if the net cumulative effect of such burdens
does not operate to reduce the Net Revenue Interest of any of the
Xxxxx to less than the Net Revenue Interest set forth in Exhibit
B;
(ii) preferential rights to purchase and required third party consents
to assignment and similar agreements with respect to which (i)
waivers or consents are obtained from the appropriate parties
prior to Closing, (ii) the appropriate time period for asserting
such rights has expired without an exercise of such rights, or
(iii) with respect to consent, such consent need not be obtained
prior to an assignment;
(iii) liens for taxes or assessments not yet due or not yet delinquent
or that are being contested in good faith; (iv) materialmen's,
mechanics', repairmen's, employees', contractors', operators' or
other similar liens or charges arising in the ordinary course of
business incidental to construction, maintenance or operation of
the Properties if they have not been filed pursuant to law; (v)
all rights to consent by, required notices to, filings with, or
other actions by governmental entities 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; (vi) customary rights of reassignment prior to
release or surrender of a lease, requiring notice to the holders
of the rights; (vii) easements, rights-of-way, permits, surface
leases and other rights in respect of surface operations; (viii)
the terms and conditions of all Leases and all agreements,
orders, instruments, (ix) the terms and conditions of all Leases
and all agreements, orders, instruments, documents and other
matters affecting the Properties which are customary in the oil,
gas and other mineral exploration, development or extraction
business or in the business of processing of gas and gas
condensate production for the extraction of products therefrom in
the area where the Properties are located, provided that the
foregoing do not operate to reduce the Net Revenue Interest, nor
increase the Working Interest, of Seller in the Xxxxx as
reflected in Exhibit B (unless, in the case of an increased
Working Interest, Seller's Net Revenue Interest is
proportionately increased); (x) rights reserved to or vested in
any municipality or governmental, statutory or public authority
to control or regulate any of the Properties in any manner, and
all applicable laws, rules and orders of governmental authority;
and (xi) all other liens, charges, encumbrances, contracts,
agreements, instruments, obligations, defects and irregularities
affecting the Properties that do not (or would not upon
foreclosure or other enforcement) reduce the net revenue
interests set forth in Exhibit B, nor prevent the receipt of
proceeds of production therefrom, nor increase the share of costs
above the working interest set forth for the Xxxxx as shown in
Exhibit B, nor are such as materially to interfere with or
detract from the ownership, operation, value or use of the
Properties.
2.5 Preferential Rights. If any of the Properties are subject to
preferential purchase rights, rights of first refusal, consents to assign,
lessor's approvals, or similar rights (collectively, "preferential rights"),
Seller shall promptly upon the execution of this Agreement by the parties hereto
notify all holder of preferential rights of its intention to sell the Properties
affected thereby. Seller shall promptly notify Buyer if the preferential rights
are exercised, or if the requisite period has elapsed without the rights having
been exercised.
2.6 Title Objection Procedure.
(a) On or before May 20, 2005, Buyer shall conclude its title review and
give notice to Seller of asserted title defects ("Title Defects")
which would cause title to any interest not to be Defensible Title. To
be effective, Buyer's written notice of a Title Defect must include
(i) a brief description of the matter constituting the asserted Title
Defect and (ii) supporting documents reasonably necessary for Seller
(or a title attorney or examiner hired by Seller) to verify the
existence of such asserted Title Defect, and (iii) the value of each
such Title Defect must exceed $10,000.00 ("Title Deductible"). If a
Title Defect does not reduce the Allocated Value of a property by more
than the Title Deductible, it shall not be considered to be a Title
Defect.
(b) If a Property is affected by a Title Defect at Closing, the Purchase
Price will be reduced by an amount mutually agreed to by Seller and
Buyer, unless, (i) Seller cures the Title Defect prior to Closing,
(ii) Buyer agrees to waive the relevant Title Defect, (iii) Seller
elects on or before Closing to cure such Title Defect no later than 90
days after Closing; or (iv) Seller, with Buyer's consent, such consent
not to be unreasonably withheld, elects on or before Closing to
indemnify Buyer against any loss attributable to the relevant Title
Defect. If Seller elects to cure the relevant Title Defect
post-Closing, Seller shall assign the affected Asset to Buyer at
Closing and the Purchase Price will not be reduced at Closing for such
Title Defect. If Seller cures the relevant Title Defect to Buyer's
reasonable satisfaction, there shall be no adjustment to the Purchase
Price; if Seller does not cure the relevant Title Defect to Buyer's
reasonable satisfaction, the Purchase Price shall be adjusted by an
amount equal to the Title Defect Value attributable to the applicable
Title Defect, such adjustment to be made within 15 days of the
determination that the alleged Title Defect will not be cured to
Buyer's reasonable satisfaction.
2.7 Casualty Loss. Prior to Closing, if a portion of the Properties is
destroyed by fire or other casualty, or is taken or threatened to be taken in
condemnation or under the right of eminent domain (with such event being a
"Casualty Loss"), Buyer shall purchase the Property at Closing for the Allocated
Value of the Property reduced by the estimated cost to repair or replace such
Property (with equipment of similar utility) up to the Allocated Value thereof
(the reduction being the "Net Casualty Loss"). Seller, at its sole option, may
elect to cure such Casualty Loss. If Seller elects to cure such Casualty Loss,
Seller may replace any personal property that is the subject of a Casualty Loss
with equipment of similar grade and utility. If Seller cures the Casualty Loss,
Buyer shall purchase the affected Property at Closing for the Allocated Value
thereof without any Purchase Price Adjustment for such Casualty Loss.
2.8 Environmental Objection Procedure.
(a) The following definitions shall apply to this Agreement:
(i) "Environmental Law" means any statute, rule, regulation, or code
of any federal, state, or local government authority relating to
pollution or protection of the environment, to the extent in
effect and consistently enforced before the Effective Date.
(ii) "Retained Remediation Obligations" means only the obligation to
remediate certain Environmental Defects identified in an
Environmental Defect Notice, except for Site Costs, which
obligation to remediate is retained by Seller pursuant to Section
2.8(b).
(iii) "Assumed Environmental Liabilities" means all liabilities and
obligations for environmental matters related to the Properties,
whether located on the Properties or offsite, before and after
the Effective Date, except for the Retained Remediation
Obligations.
(iv) "Site Costs" shall mean all costs of plugging and abandoning the
Xxxxx, disposing of equipment in connection with the Xxxxx and
restoring the land in connection with the Xxxxx in compliance
with any and all applicable laws, statues, ordinances, rules,
regulations, orders or determination of any governmental
authority and in compliance with all applicable leases and all
other applicable agreements.
(v) "Environmental Defect Notice" means a notice of an Environmental
Defect that is given by Buyer to Seller in accordance with the
provisions of Section 2.8(b). An Environmental Defect Notice must
be based on the independent Environmental Review or a notice of
violation of an Environmental Law received from a governmental
authority.
(vi) "Independent Environmental Review" means the environmental
assessment performed by a qualified independent third party
environmental consultant on behalf of Buyer.
(vii) "Environmental Deductible" means a deductible of $10,000.00 per
Environmental Defect with respect to an Incident (as hereinafter
defined) causing an Environmental Defect. "Incident" means a
spill, release, discharge or emission of a substance that
occurred or reoccurred in the same area on account of a single
cause or course of conduct.
(viii) "Environmental Defect" means a condition on the Properties that
exists before the Effective Date that violates a currently
allowed limit prescribed by an Environmental Law.
(b) An Environmental Defect Notice must be given to Seller no later than
5:00 p.m. Mountain Time on May 20, 2005, and must include all of the
following: (i) a description of the affected property including the
well name, if applicable, (ii) a detailed description of the condition
that causes the claimed Environmental Defect to be in violation of an
Environmental Law, (iii) a copy of the Independent Environmental
Review confirming violation of an Environmental Law or a copy of the
notice of violation of an Environmental Law received from a
governmental authority, and (iv) an estimate of the remediation costs
less Site Costs, which amount must exceed the Environmental
Deductible. Any notice that is not timely and properly given or that
does not satisfy all of the foregoing shall not be a valid
Environmental Defect Notice. If Seller does not receive an
Environmental Defect Notice as to any condition or item, Buyer shall
be deemed to have accepted the affected Properties "as is, where is,"
with all faults and waived Buyer's rights to assert an Environmental
Defect with respect to that interest in the Properties.
(c) If Buyer gives a valid Environmental Defect Notice, Seller, at
Seller's option, shall have the option of (i) remediating the
Environmental Defect before or within ninety (90) days after the
Closing (and at such time as the Environmental Defect is remedied, it
shall be excluded from the Retained Remediation Obligations and shall
become an Assumed Environmental Liability), (ii) contesting the
existence of an Environmental Defect or Buyer's estimate of the
remediation costs, or (iii) reducing the Purchase Price or refunding a
portion of the Purchase Price if after Closing by Buyer's estimate of
the remediation costs, less the Site Costs and Environmental
Deductible, in which event Seller shall be released from all further
liability or obligation to Buyer with respect to the Environmental
Defect and the Environmental Defect shall be an Assumed Environmental
Liability. If Seller selects option (i) above, then Seller shall place
in escrow the estimate of the remediation costs, less the Site Costs
and Environmental Deductible. If Seller selects option (ii) above,
then Seller shall place funds in escrow at such time and in such
amount, if any, as determined in accordance with sub-paragraph (d)
below. The escrowed amounts shall remain in escrow until the
remediation is completed. Seller also shall have the option to exclude
the Property from this transaction by notifying Buyer before or after
the Closing, in which event the Purchase Price shall be reduced by a
mutually acceptable amount and money refunded to Buyer, if
appropriate.
(d) If Seller contests the existence of an Environmental Defect or Buyer's
estimate of the remediation costs, Seller shall notify Buyer within
five (5) business days after Seller's receipt of the Environmental
Defect Notice. The notice shall state the basis for Seller's contest
of the Environmental Defect or the estimate of the remediation costs.
Within three (3) business days after Buyer's receipt of the notice,
representatives of Seller and Buyer, knowledgeable in environmental
matters, shall meet, and within five (5) days after Buyer's receipt of
the notice, either (i) agree to reject the Environmental Defect, in
which case Buyer shall waive the Environmental Defect, or (ii) agree
on the validity of the Environmental Defect and the estimated
remediation costs, in which case Seller shall have the options
provided in Section 2.8(c) (except for the right to contest).
(e) If Seller elects to remediate an Environmental Defect pursuant to
Section 2.8(c), Seller shall select the means and methods of effecting
the remediation in accordance with applicable Environmental Law and
any applicable agreement, but Seller shall not be required to perform
any activities if the cost thereof would be Site Costs, including
without limitation plugging and abandoning any Xxxxx. Seller's
responsibilities for remediation under this Section 2.8(e) shall be
limited to a standard appropriate for the use of an asset for oil and
gas activities.
(f) The rights and remedies granted to Buyer in this Section are the
exclusive rights and remedies relating to any environmental condition
on the Properties, and Seller shall have no other liability or
obligations with respect to environmental conditions on the
Properties.
2.9 Purchase Price Adjustments. The Purchase Price is based upon Seller
having an ownership in each Well of not less than the Net Revenue Interests
specified on Exhibit B. In accordance with Section 2.6, if Seller is unable to
deliver, at Closing, the Net Revenue Interests to each Well shown on Exhibit B,
the Purchase Price shall be reduced by an amount equal to a proportionate amount
of the mutually agreed value for such Well as specified in Exhibit E. Likewise,
if Seller shall have a greater Net Revenue interest, the Purchase Price shall be
increased proportionately. In addition, in the event the Working Interest set
forth on Exhibit B for any Well is not reduced by an amount corresponding to
such reduction in Net Revenue Interest, such condition shall be deemed a Title
Defect which is subject to the terms of Section 2.6 above. In the event that the
aggregate reduction in the Purchase Price on account of any adjustments for the
Title Defects and Environmental Defects, equals or exceeds ten percent of the
Purchase Price and Seller and Buyer cannot mutually agree upon the adjustment
amount, either Seller or Buyer shall have the right to terminate this Agreement
by written notice to the other party, in which event all right, duties and
obligations of either party hereunder shall cease. The parties acknowledge that
Closing may occur prior to the final calculation of the Purchase Price
adjustments contemplated by this Section 2.9. If this occurs, Seller and Buyer
shall adjust the Purchase Price accordingly at a post-Closing adjustment as
described in Section 3.
2.10 Acceptance.
(a) Buyer acknowledges and agrees that Seller may not operate some or all
of the Properties and, as non-operator, has no knowledge or only
limited knowledge of the environmental condition of the Properties.
Buyer acknowledges and agrees that Seller has made no effort to
investigate the environmental condition of or on the Properties and,
except as expressly provided in the following paragraph, makes no
representation or warranties as to the condition of the Properties.
Seller represents and warrants to Buyer that, to the best of Seller's
knowledge, Seller has not received any written notice from any
federal, state or local government authority that (i) the Properties
do not have a permit required under Environmental law, (ii) Seller is
in violation or potential violation of an Environmental Law, or (iii)
Seller is liable or potentially liable for response costs or other
remedial costs under the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601, et seq. with
respect to the Properties.
(b) After Closing, and except for Retained Remediation Obligations, Buyer
shall assume all responsibility and liability to plug and abandon the
Xxxxx and reclaim the Lands associated with the Xxxxx on the
Properties. In addition, Buyer shall assume all liability and pay,
perform, fulfill and discharge, and release Seller from and defend and
indemnify Seller against, any and all claims, costs, expenses,
liabilities and obligations relating to: (i) the Assumed Environmental
Liabilities, including but not limited to those arising out of events
occurring after the Effective Date that are within control of Buyer or
that are attributable to the acts of Buyer or its contractors or
subcontractors, and (ii) the Site Costs as defined in Section
2.8(a)(iv). Upon Closing, Seller agrees to remain and pay, perform,
fulfill and discharge, and indemnify Buyer against all claims relating
to the Retained Remediation Obligations, except for those claims
relating to the Retained Remedial Obligations arising out of events
occurring after the Effective Date that are within the control of
Buyer or that are attributable to the acts of Buyer or its contractors
or subcontractors.
(c) Physical Condition of Properties: BUYER UNDERSTANDS AND AGREES THAT
THIS SALE IS MADE ON AN "AS IS, WHERE IS" BASIS, AND BUYER HEREBY
RELEASES SELLER FROM ANY AND ALL LIABILITY OF EVERY KIND AND CHARACTER
WITH RESPECT THERETO, WHETHER OR NOT CAUSED BY OR ATTRIBUTABLE TO
SELLER'S NEGLIGENCE. WITHOUT LIMITING THE FOREGOING, BUYER WAIVES ITS
RIGHT TO RECOVER FROM SELLER AND FOREVER RELEASES AND DISCHARGES
SELLER FROM ANY AND ALL DAMAGES, CLAIMS, LOSSES, LIABILITIES,
PENALTIES, FINES, LIENS, JUDGMENTS, COSTS OR EXPENSES WHATSOEVER
(INCLUDING WITHOUT LIMITATION, ATTORNEYS FEES AND COSTS OF
LITIGATION), WHETHER DIRECT OR INDIRECT, KNOWN OR UNKNOWN, FORESEEN OR
UNFORESEEN, THAT MAY ARISE OUT OF OR BE CONNECTED IN ANY WAY WITH THE
PHYSICAL CONDITION OF THE PROPERTIES OR ANY LAW OR REGULATION
APPLICABLE THERETO, INCLUDING WITHOUT LIMITATION, THE COMPREHENSIVE
ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS
AMENDED (42 U.S.C. 9601 ET SEQ.), THE RESOURCE CONSERVATION AND
RECOVERY ACT OF 1976 (42 U.S.C. 6901 ET SEQ.), THE CLEAN WATER ACT (33
U.S.C. 466 ET SEQ.), THE SAFE DRINKING WATER ACT (14 U.S.C.
1401-1450), THE HAZARDOUS MATERIALS TRANSPORTATION ACT (49 U.S.C. 1801
ET SEQ.), AND THE TOXIC SUBSTANCE CONTROL ACT (15 U.S.C. 2601-2629).
(d) Buyer's Due Diligence: SELLER DOES NOT WARRANT OR REPRESENT THE
ACCURACY OR COMPLETENESS OF THE SEISMIC DATA, THE GEOLOGIC DATA,
FILES, CONTRACTS, ENVIRONMENTAL REPORTS OR ANY OTHER INFORMATION
RELATING TO THE PROPERTIES, QUANTITY OR QUALITY OF RESERVES, IF ANY,
OR ABILITY TO PRODUCE HYDROCARBONS FROM THE PROPERTIES, WHICH WERE
FURNISHED TO BUYER, AND BUYER RELIES THEREON AT BUYER'S SOLE RISK AND
EXPENSE. Seller makes this conveyance based upon the representation
that Buyer has conducted due diligence and has made an independent
evaluation of the condition of the Properties, production potential,
and otherwise. Buyer is charged with all knowledge obtainable from
materials made available by Seller relating to the Properties prior to
Closing and from county records and federal, state and regulatory
agency records.
SECTION III
ACCOUNTING
3.1 Accounting.
(a) All proceeds (including proceeds held in suspense or escrow) from the
sale of production actually sold and delivered by Seller prior to the
Effective Date attributable to the Properties shall belong to Seller
and all proceeds from the sale of production actually sold and
delivered after the Effective Date attributable to the Properties
shall belong to Buyer.
(b) All oil, condensate or liquid hydrocarbons and any products (liquid,
gas or solid) separated or processed therefrom (hereinafter in this
paragraph called "oil") in storage shall be measured or gauged and all
gas meter charts shall be replaced at the Effective Date. Buyer shall
pay Seller for such oil at the actual price received for the sale of
such oil. If not known, this Purchase Price shall be estimated at
Closing and paid to Seller with the actual final settlement of this
matter to occur at the post-Closing accounting, provided that Buyer
shall not pay Seller for oil in storage below the one foot level of
the bottom of the tank.
(c) Any gas imbalance shall be accounted for between Buyer and Seller as
follows: Buyer and Seller agree that the net gas imbalance
attributable to the Properties as of the Effective Date is believed to
be that which is set forth on Exhibit F (the "Agreed Imbalance"),
notwithstanding that the actual imbalance may be less or greater. The
Agreed Imbalance has been used by Buyer and Seller in negotiating the
Purchase Price under this Agreement. Buyer and Seller shall verify the
actual net gas imbalance in the post-Closing accounting and any
imbalance shall be accounted for between the parties at the price of
$6.00 per MCF but only as to those volumes which exceed or are less
than the Agreed Imbalance; provided that if an applicable operating or
gas balancing agreement requires cash balancing upon conveyance of the
interests, the adjustment price shall equal the greater of $6.00 per
MCF or the price received with respect to such cash balancing. Such
settlement shall be final and neither party thereafter shall make
claim upon the other concerning the gas balances of the Properties.
Buyer assumes all rights and liabilities relating to gas imbalances
discovered after the post-Closing settlement including any revenue
adjustment caused by such subsequently discovered imbalance.
(d) Except as otherwise specifically provided in this Agreement, all
normal and routine costs, expenses and contractual obligations
relating to the Properties (collectively, "Property Expenses") which
accrue prior to the Effective Date shall be paid and discharged by
Seller and all normal and routine contractual costs, expenses and
obligations relating to the Properties which accrue after the
Effective Date shall be paid and discharged by Buyer.
(e) The foregoing adjustments in subparagraphs (a) to (d) shall be made by
debits and credits between the parties at Closing or post-Closing as
provided for herein.
3.2 Sales Tax. The Purchase Price provided for hereunder 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 as well as any applicable
conveyance, transfer and recording fees, and real estate transfer stamps or
taxes imposed on any transfer of property pursuant to this Agreement. Buyer
shall defend and hold Seller harmless with respect to the payment of all such
taxes, if any, including any interest or penalties assessed thereon.
3.3 Post-Closing Adjustments. As soon as practicable after Closing, but in
any event within ninety (90) days thereafter, Seller shall prepare, in
accordance with this Agreement and (where applicable) in accordance with
generally accepted accounting principles consistently applied, a final
settlement statement (herein called the "Final Statement") setting forth each
adjustment or payment which was not finally determined as of the Closing Date,
and showing the calculation of the final settlement price based on such Final
Statement (the "final settlement price"). Seller shall submit the Final
Statement to Buyer and shall afford Buyer access to Seller's records pertaining
to the computations contained in the Final Statement. As soon as practicable
after receipt of the statement, Buyer shall deliver to Seller a written report
containing any changes which Buyer proposes be made to the Final Statement. The
parties shall agree with respect to the amounts due pursuant to such
post-Closing adjustment not later than sixty (60) days after Buyer's receipt of
Seller's Final Statement. The date upon which such agreement is reached shall be
herein called the "Settlement Date." In the event that (i) the final settlement
price is more than the amount previously paid to Seller, Buyer shall pay to
Seller in immediately available funds the amount of such difference; or (ii) the
final settlement price is less than the amount previously paid to Seller, Seller
shall pay to Buyer in immediately available funds the amount of such difference.
3.4 No Broker's Fees. Each of Seller and Buyer represents and warrants to
the other that it has not incurred liability, contingent or otherwise, for
brokers' fees, or finders' fees or similar fees in respect of this Agreement or
the transactions contemplated hereby.
3.5 Proration of Taxes. All ad valorem taxes, severance taxes, conservation
taxes, real property taxes, personal property taxes and similar obligations for
the Properties for the tax period in which the Effective Date occurs shall be
apportioned on a calendar year basis as of the Effective Date between Buyer and
Seller. Any tax based on the value of hydrocarbon production shall be prorated
only as to taxes on hydrocarbons produced in the year in which the Effective
Date occurs. The portion of apportioned tax liability, based on a good faith
estimate, shall be credited to Buyer's account, which shall be adjusted by the
parties by payment by one party to the other of the amount of the over- or
under-estimation when the amount of the tax liability is actually known. Buyer
shall file or cause to be filed all required reports and returns for taxes and
shall pay or cause to be paid to the taxing authorities all taxes for the tax
period in which the Effective Date occurs. All liability for Seller's
proportionate share of taxes attributable to the Properties for all years prior
to the year in which the Effective Date is effective shall be Seller's alone.
The amount of or a good faith estimate of taxes due but not paid as of Closing
shall be deducted from the Purchase Price and later adjusted by the parties by
payment by the one party to the other of the amount of the over or
underestimation when the amount of the tax liability is actually known. If such
deductions and adjustments are made, Buyer shall be responsible for payment of
the taxes. Buyer shall provide Seller with copies of the filed reports and proof
of payment promptly after filing and paying taxes.
3.6 Invoices for Property Expenses and Proceeds Received After the
Settlement Date. After the Settlement Date, those proceeds attributable to the
Properties received by a Party or invoices received for or Property Expenses
paid by one Party for or on behalf of the other Party with respect to the
Properties which were not already included in the Final Statement, shall be
settled as follows:
(a) Proceeds. Proceeds received by Buyer with respect to sales of
hydrocarbons produced prior to the Effective Date shall be remitted or
forwarded to Seller. Proceeds received by Seller with respect to sales
of hydrocarbons produced after the Effective Date shall be forwarded
to Buyer.
(b) Property Expenses. Invoices for Property Expenses received by Buyer
that relate to operations on the Properties prior to the Effective
Date shall be forwarded to Seller by Buyer, or if already paid by
Buyer, invoiced by Buyer to Seller. Invoices for Property Expenses
received by Seller that relate to operations on the Properties after
the Effective Date shall be forwarded to Buyer by Seller, or if
already paid by Seller, invoiced by Seller to Buyer.
(c) Duration. The provisions of this Section 3.6 shall apply until
November 30, 2005, after which time, Buyer specifically agrees to
assume, pay, become liable for and release Seller from all obligations
and liabilities for Property Expenses related to the Properties
attributable to the periods of time both before and after the
Effective Date.
SECTION IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Seller. Seller hereby covenants,
represents and warrants to Buyer as follows:
(a) Seller has full power, authority, and legal right to convey the
Properties. The entities defined herein as Seller are duly organized,
validly existing, and in good standing under the laws of the State of
Colorado and are duly qualified to do business in Colorado;
(b) The Properties are free and clear of all liens and encumbrances
arising by, through or under Seller except for those which Seller has
disclosed in writing to Buyer and those which Seller shall cause to be
released and discharged on or before the Closing Date;
(c) To the best of Seller's knowledge, Seller has filed all federal,
state, and other reports or returns, if any, required to be filed by
Seller in connection with the Properties when required and has either
discharged or caused to be discharged as the same have become due, all
taxes, costs, expenses, charges, and debts of every kind and character
including, without limitation, severance taxes, attributable or
relating to the Properties or to the operation thereof or revenues or
income therefrom attributable to the period prior to the Effective
Date except for those that have been disclosed in writing to Buyer;
(d) To the best of Seller's knowledge, there are no agreements to which
Seller is a party or by which Seller is bound, relating to the
Properties, requiring Seller to bear any of the costs associated with
operations under such agreement greater than Seller's proportionate
share of the ownership of the Properties affected thereby, except
those which have been disclosed in writing to Buyer;
(e) To the best of Seller's knowledge, no legal action, suit, or
proceeding to which the Seller is a party, judicial or administrative,
or governmental investigation is pending which could conceivably
involve the Properties or the production of oil and/or gas therefrom,
the operations being conducted thereon or the purchase, sale,
transportation, or processing of production of products therefrom,
which would have a material adverse effect on the Properties or on the
ability of Seller to perform its obligations under this Agreement,
except those which have been disclosed in this Agreement or otherwise
in writing to Buyer.
4.2 Representations and Warranties of Buyer. Buyer hereby covenants,
represents and warrants to Seller as follows:
(a) Buyer has full power and authority to make and perform this Agreement
according to the terms hereof and is a corporation duly organized,
validly existing, and in good standing under laws of the State of
Colorado;
(b) Buyer at present is duly qualified to do business in Colorado;
(c) Buyer's execution, delivery, and performance of this Agreement has
been duly authorized by all necessary corporate action, including, but
not limited to, an executed resolution of its Board of Directors
delivered to Seller before the Closing;
(d) Buyer is acquiring the Properties for its own account, for use in its
trade or business or for investment, and not with a view toward or for
sale in connection with any distribution thereof, nor with any present
intention of making a distribution thereof within the meaning of the
Securities Act of 1933;
(e) Buyer is presently qualified to hold leases of the United States
and/or hold leases..
(f) In entering into this Agreement, Buyer acknowledges and affirms that
it has relied and will rely solely on the terms of this Agreement and
upon its independent analysis, evaluation and investigation of, and
judgment with respect to, the business, economic, legal, tax or other
consequences of the transaction contemplated by this Agreement,
including its own estimate and appraisal of the extent and value of
the petroleum, natural gas and other reserves of the Properties, the
value of the Properties and future operation, maintenance and
development costs associated with the Properties. Buyer is aware of
the geologic factors and risks associated with operating oil and gas
xxxxx in the area of the Properties. Accordingly, Buyer assumes the
risk of the downhole condition of the Xxxxx. Except as expressly
provided in this Agreement, Seller shall not have any liability to
Buyer or its affiliates, agents, representatives or employees
resulting from any use, authorized or unauthorized, of the Records or
other information relating to the Properties provided by or on behalf
of Seller.
4.3 Survival of Representations and Warranties. All representations and
warranties contained in this Section 4 of this Agreement shall terminate one
year after Closing. The parties hereto have made no representations or
warranties except those expressly set forth in this Agreement.
SECTION V
ADDITIONAL AGREEMENTS AND COVENANTS
5.1 Affirmative Obligations of Seller Pending Closing. From the date of
this Agreement to Closing, Seller agrees that it shall conduct Seller's business
with respect to the Properties in a prudent manner, consistent with its recent
practices. Seller shall notify Buyer of any material change in the condition of
the Properties of which Seller becomes aware prior to Closing and shall consult
with Buyer regarding any expenditures in excess of $25,000.00 (U.S.) net to
Seller's interest to be made for the Properties between the date of this
Agreement and Closing.
5.2 Other Obligations of Seller Pending Closing. From the date of this
Agreement to the Closing Date, to the extent Seller is required to do so under
applicable agreements, Seller shall diligently attempt to pay all costs and
expenses incurred in connection with the development, operation and maintenance
of the Properties and all delay rentals, shut-in payments, and minimum royalties
owing on account of any lease.
5.3 Operating Approval. Prior to Closing, Buyer shall diligently pursue
from the appropriate governmental authorities the approvals necessary to operate
those Xxxxx currently being operated by Seller. Such approval shall include
filing and/or obtaining bonds covering the Properties as may be required by
applicable federal, state or local government agencies having jurisdiction over
the Properties or a commitment in writing by a surety company satisfactory to
the government agencies to issue the required bonds upon Closing. In lieu of the
foregoing, Buyer may employ a mutually agreed to third party contract operator.
5.4 Confidentiality. Buyer shall cause the information and data furnished
or made available by Seller to Buyer and its officers, employees, and
representatives (including bankers and financial advisors) in connection with
this Agreement or Buyer's investigation of the Properties, to be maintained in
confidence and not to be used for any purpose other than in connection with this
Agreement or Buyer's investigation of the Properties; provided, however, that
the foregoing obligation shall terminate on the earlier to occur of (i) the
Closing, (ii) such time as the information or data in question is disclosed to
Buyer by a third party that is not obligated to Seller to maintain same in
confidence, or (iii) such time as the information or data in question becomes
generally available to the oil and gas industry other than through the breach of
the foregoing obligation.
SECTION VI
CONDITIONS TO CLOSING
6.1 Conditions Precedent to Seller's Obligation to Close. Seller shall be
obligated to consummate the sale of the Properties as contemplated hereby on the
Closing Date, provided the following conditions precedent exist or have been
waived by Seller:
(a) For that portion of the Properties operated by a Seller, Buyer or
Buyer's third party contract operator shall have obtained bonds
covering the Properties as may be required by any federal, state or
local governmental agencies having jurisdiction over the Properties,
or a commitment by a surety company satisfactory to the governmental
agencies to issue required bonds upon Closing so as to allow Buyer to
become the designated operator of such Xxxxx;
(b) All representations and warranties of Buyer contained in this
Agreement or in connection with the Transaction 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
(c) Buyer shall have complied in all material respects with all agreements
and conditions of this Agreement to be performed or complied with by
Buyer on or prior to the Closing Date; and
(d) Before Closing, Buyer shall have delivered to Seller an executed
resolution of Buyer's Board of Directors authorizing Buyer's
execution, delivery and performance of this Agreement as provided in
Section 4.2(d) and 7.2(b) and an opinion letter from counsel attesting
that Buyer has full power and authority to enter into this Agreement
and perform its obligations under this Agreement.
6.2 Conditions Precedent to Buyer's Obligation to Close. Buyer shall be
obligated to consummate the purchase of the Properties as contemplated by this
Agreement on the Closing Date, provided that the following conditions precedent
have been satisfied or have been waived by Buyer:
(a) All representations and warranties of Seller contained in this
Agreement or in connection with this Transaction 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
(b) Seller shall have complied in all material respects with all
agreements and conditions required by this Agreement to be performed
or complied with by Seller on or prior to the Closing Date, necessary
for the conveyance of the Properties.
SECTION VII
CLOSING
7.1 Closing. The Closing Date shall be on or before June 1, 2005. The
Closing will be held at the offices of Seller or at any other mutually
acceptable location. Buyer may elect to extend the Closing Date by a maximum of
30 days. If Buyer extends the Closing Date to June 15, 2005, before 5:00 p.m.
Mountain Time, then the Effective Date will remain the same. If Buyer extends
the Closing Date to after 5:00 p.m. Mountain Time on June 15, 2005, then the
Effective Date shall be July 1, 2005, at 7:00 a.m. Mountain Time. In no event
shall the Closing Date be extended beyond July 1, 2005, at 5:00 p.m. Mountain
Time.
7.2 Obligations at Closing. At the Closing, the following shall occur:
(a) Seller shall deliver to Buyer the Assignment and Xxxx of Sale,
executed and properly notarized;
(b) Buyer shall deliver to Seller a corporate resolution signed by its
Board of Directors approving this acquisition of the Properties and an
opinion letter from its counsel attesting that Buyer has full power
and authority to enter into this Agreement and perform its obligations
under this Agreement.
(c) Buyer shall wire transfer to Seller the Purchase Price as adjusted
hereunder, subject to further adjustment after Closing as provided for
in this Agreement;
(d) Buyer and Seller shall execute the Settlement Statement;
(e) If Buyer requests, Seller shall execute transfer orders or letters in
lieu notifying purchasers of production of the change in ownership of
the Properties and such other instruments as may be necessary to
convey the Properties to Buyer;
(f) If Buyer requests, Seller shall execute all necessary forms to be
filed with the regulatory authorities concerning the change of
ownership and operation of the Properties and Buyer shall deliver to
Seller evidence that Buyer has obtained approval of such authorities
so that Buyer can operate the Properties, if applicable;
(g) Seller shall execute and acknowledge any federal or state assignment
forms; and
(h) Buyer and Seller shall execute such other instruments and take such
other action as may be necessary to carry out its obligations under
this Agreement.
SECTION VIII
POST CLOSING OBLIGATIONS
8.1 Files and Records. At Closing or as soon thereafter as practicable, and
at Buyer's expense, Seller shall furnish to Buyer copies of all Records relating
to the Properties and maintained by Seller except any document or record
discussing the value of the Properties or any document or record covered by
non-disclosure obligations.
8.2 Indemnity. Buyer shall release Seller from and shall fully protect,
indemnify, and defend Seller, its officers, agents and/or employees and hold
them harmless from any and all claims, losses, damages, demands, suits, causes
of action, and liabilities (including attorneys fees, costs of litigation and/or
investigation and costs associated therewith) (collectively referred to
hereafter as "Claims") relating to Buyer's ownership and operation of the
Properties, including without limitation, injury or death of any person or
persons, and/or damage to or loss of any Properties or resources arising out of
or connected directly or indirectly with the ownership or operation of the
Properties, or any part thereof, pertaining to the period subsequent to the
Effective Date. The indemnity obligation and release provided herein shall apply
regardless of cause or of any negligent acts or omissions of Seller, its
officers, agents, and/or employees. The obligations and indemnifications set out
in this Section 8 and Section 2.8(b) shall not be limited in duration and shall
survive termination of this Agreement indefinitely.
SECTION IX
RIGHTS AND REMEDIES
9.1 Termination. In the event that Closing does not occur as a result of
Buyer's material breach of this Agreement, then Seller shall have the option to
terminate the Agreement and retain all legal and equitable remedies Seller may
have for Buyer's breach of this Agreement. Buyer's material breach of this
Agreement shall include, without limitation, the failure to deliver the Purchase
Price, as adjusted hereunder, at Closing.
9.2 No Waiver. Consummation of Closing on the Properties shall not be
deemed to be a waiver by either party of any of its rights or remedies hereunder
for breach of warranty, covenant, or agreement herein by the other party.
However, the sole remedy of Buyer for a material breach by Seller of any
warranty or the non-satisfaction of a condition precedent to Buyer's obligation
to Close, which said breach or non-satisfaction has a material adverse effect on
the Properties to Buyer, and which Seller has not elected to remedy to the
satisfaction of Buyer, shall be as follows:
(a) Prior to Closing. Buyer may terminate this Agreement as provided
herein.
(b) Subsequent to Closing. Buyer waives the right to assert any claims
against Seller for rescission of this Agreement based upon breach of
representations and warranties or non-satisfaction of conditions
precedent. Such claims shall be limited to actual damages.
In no event shall fluctuations in the price of crude oil, gas or other
hydrocarbons or changes in the productive capacity of the xxxxx located on
the leases be a basis for a termination of this Agreement or a
re-conveyance of the Properties to Seller.
SECTION X
MISCELLANEOUS
10.1 Notices: All notices and other communications required, permitted, or
desired to be given hereunder must be in writing and sent by overnight courier,
properly addressed as shown herein below, and with all charges fully prepaid or
by hand delivery or by facsimile transmission. Date of service by courier or
hand delivery is the date on which such notice or other communication is
received by the addressee, by facsimile is the date sent, or if such date is on
a weekend or federal or state holiday, then on the next date which is not
Saturday, Sunday or such holiday. Each party may change its address by notifying
the other party in writing,
If to Seller:
R. Xxx Xxxxxx, Limited Partner
Xxxxxx Family Investments, LLLP
00000 X. Xxxxx,
Xxxx 000
Xxxxxxxxx, XX 00000
Attn: R. Xxx Xxxxxx
Fax: 000-000-0000
DNR Oil & Gas Inc.
00000 X. Xxxxx, Xxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, President
Fax: 000-000-0000
Xxxxxxx Operating Co.
00000 X. Xxxxx, Xxxx 000
Xxxxxxxxx, XX 00000
Attn: R. Xxx Xxxxxx, President
Fax: 000-000-0000
If to Buyer:
Colorado Oil & Gas, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Xxxx Xxxxxxx, CEO/President
Fax: 000-000-0000
10.2 Conveyance Costs. Seller shall be responsible for all filing and
recording of documents related to the transfer of the Properties from Seller to
Buyer but Buyer shall pay for all fees connected therewith. Within sixty (60)
days after Closing, Seller shall furnish Buyer and the operator or operators of
any unit or units which include any portion of the Properties, a copy of all
assignments as recorded in the appropriate county records. Seller shall file
assignments of the Properties with appropriate state and federal authorities, if
required by state and federal leases, if any, covering the Properties or as
required by applicable statutes, rules or regulations and Buyer shall pay all
costs and fees connected therewith. Seller shall furnish Buyer with all
pertinent recording data and evidence of all such required filings. Buyer shall
be responsible for any and all transfer fees or taxes that may be assessed on
the sale of the Properties.
10.3 Further Assurance. At the Closing and thereafter as may be necessary,
the Seller and Buyer shall execute, acknowledge and deliver such other
instruments and take such other action as may be reasonably necessary to carry
out their obligations under this Agreement.
10.4 Amendments and Severability. No alterations, modifications,
amendments, or changes in this Agreement shall be effective or binding unless
the same shall be in writing and signed by Seller and Buyer. The invalidity of
any one or more covenants or provisions of this Agreement shall not affect the
validity of the Agreement as a whole, and in case of any such invalidity, this
Agreement shall be construed as if such invalid provision had not been included
herein.
10.5 Successor and Assigns. The terms, covenants and conditions hereof
shall be binding upon and shall inure to the benefit of Seller and Buyer and
their respective successors and assigns; and such terms, covenants and
conditions shall be covenants running with the land and with each subsequent
transfer or assignment of the Properties.
10.6 Headings. The titles and headings in this Agreement have been included
solely for ease of reference and shall not be considered in the interpretation
or construction of this Agreement.
10.7 Securities Laws. Buyer shall notify Seller or Seller shall notify
Buyer, whichever is applicable, promptly of any federal and/or state securities
law(s) or Federal Trade Commission filing requirements and/or any other
disclosure requirements to which it believes it may be subject with respect to
the transactions provided for in this agreement. Buyer hereby agrees not to
identify Seller in any press release or filing with the Securities and Exchange
Commission unless required by SEC or State laws.
10.8 Media Releases or Other Disclosures to Third Parties or Shareholders.
Neither party, unless required to do so by law, shall release any information to
the press, other media shareholders or other third parties regarding this
purchase and sale. A party may release information to the extent required by law
or an applicable stock exchange but shall, to the extent possible, consult with
and consider in good faith the comments of the other party as to the content of
the release. The identity of the Seller, the names of specific xxxxx or leases
or the specific locations or legal descriptions of specific xxxxx or leases
shall not be disclosed in any release or disclosure of any kind or nature unless
required by SEC or state laws. Nor shall a copy of this Agreement be enclosed or
included within any such release unless required by SEC or state laws.
10.9 Governing Law. THIS CONTRACT SHALL BE GOVERNED BY AND CONSTRUED UNDER
THE LAWS OF THE STATE OF COLORADO.
10.10 Fax Execution. An executed copy of this Agreement transmitted by
facsimile delivery shall have the same effect as if the originally executed
Agreement had been delivered. This Agreement may be executed in multiple
counterparts, each of which shall be considered an original for all purposes.
10.11 Assignment. This Agreement may not be assigned without the prior
written consent of the other parties. For purposes of this provision, a merger
shall not be considered an assignment.
10.12 Exhibits. The following exhibits which are attached hereto are
incorporated into this Agreement and made a part hereof:
Exhibit A Leases and Lands
Exhibit B Xxxxx/Working Interests/Net Revenue Interests
Exhibit C Reserved Properties
Exhibit D Assignment, Xxxx of Sale and Conveyance
Exhibit E Allocated Values
Exhibit F Agreed Imbalances
10.13 Survival. The representations and warranties set forth in this
Agreement shall survive the Closing for a period of one year. A claim for a
breach of a representation or warranty must be made on or before one year after
Closing. Delivery of the Assignment at Closing will not constitute a merger of
this Agreement with such Assignment.
10.14 Limitation on Damages. The Parties shall not have any liability to
each other for consequential, special, punitive or exemplary damages arising out
of or related to a Party's breach of any provision of this Agreement.
10.15 No Third-Party Beneficiaries. This Agreement is intended to benefit
only the Parties hereto and their respective permitted successors and assigns.
There are no third party beneficiaries to this Agreement.
10.16 Several Liabilities of the Seller. All of Seller's liabilities and
obligations under this Agreement shall be several among each of the entities
comprising Seller, and not joint. In addition, the liability and obligations of
each Seller under the terms of this Agreement shall be tied directly to the
Properties owned by each Seller and capped at the amount of the Purchase Price
received at Closing by that particular Seller. Buyer hereby waives and releases
each of the entities and individuals comprising Seller from any liabilities and
obligations above each Seller's cap described in the preceding sentence.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year set forth below, but effective as of the Effective Date.
SELLER:
XXXXXX FAMILY INVESTMENTS, LLLP
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
DNR OIL & GAS, INC.
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
XXXXXXX OPERATING CO.
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
BUYER:
COLORADO OIL AND GAS, INC.
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
EXHIBIT "A"
LEASES/LANDS
------------
Page 1 of 4
EXHIBIT "A"
SPLIT TABLE - SEE BELOW
ILSR LSE LSE EX RECORDING
NUMBER LESSOR LESSEE DATE COUNTY ST BOOK PAGE
--------------------------------------------------------------------------------------------------------
XX-0000-00 Xxxxxxxx, Xxxxxxx X. Energy Minerals Corporation 12/9/1982 Weld CO 984 1911276
CO-1048-02 Xxxxxxxx, Xxx X. 12/9/1982 Weld CO
XX-0000-00 Xxxxxxxxx, Xxxxxx X. Energy Minerals Corporation 4/23/1981 Weld CO 960 1111991
XX-0000-00 Xxxx, Xxxxxxx Energy Minerals Corporation 1/15/1982 Weld CO 968 18982389
CO-1072-01 Xxxxxx, Xxxxxxx X. Energy Minerals Corporation 3/5/1990 Weld CO 0000 0000000
CO-1072-02 Xxxxxx, Xxxx X. Energy Minerals Corporation 3/12/1990 Weld CO 0000 0000000
SPLIT TABLE - SEE ABOVE
ILSR LSE WI/HRX &
NUMBER LESSOR TWP RGE SBC DESCRIPTION ASSIGNED
------------------------------------------------------------------------------
XX-0000-00 Xxxxxxxx, Xxxxxxx X. 7N 58W 7 NE/4NW4 100.00/80.00
CO-1048-02 Xxxxxxxx, Xxx X. 7N 58W 7 NE/4NW4 100.00/80.00
XX-0000-00 Xxxxxxxxx, Xxxxxx X. 7N 58W 18 SW/4NW4 100.00/80.00
XX-0000-00 Xxxx, Xxxxxxx 0X 59W 13 SW/4NW4 100.00/80.00
CO-1072-01 Xxxxxx, Xxxxxxx X. 0X 00X 00 XX/0XX0 100.00/80.00
CO-1072-02 Xxxxxx, Xxxx X. 7N 59W 27 SW/4NW4 100.00/80.00
Page 2 of 4
EXHIBIT "A" CONTINUED
SPLIT TABLE - SEE BELOW
ILSR LSE LSE EX RECORDING
NUMBER LESSOR LESSEE DATE COUNTY ST BOOK PAGE
--------------------------------------------------------------------------------------------------------
CO-1072-03 Xxxxxx, Xxxxxx Energy Minerals Corporation 3/12/1990 WELD CO 0000 0000000
CO-1072-04 Xxxxxxx, Ford L. Energy Minerals Corporation 3/12/1990 WELD CO 0000 0000000
CO-1072-05 Xxxxx, Xxxxxxxx X. Energy Minerals Corporation 3/22/1990 WELD CO 0000 0000000
XX-0000-00 Xxxxxx, X.X. Energy Minerals Corporation 4/6/1990 WELD CO 0000 0000000
CO-1072-07 Global Natural Resources
Corporation Energy Minerals Corporation 2/14/1990 WELD CO 0000 0000000
CO-1072-08 Pacific Enterprises Oil
Company Energy Minerals Corporation 3/2/1990 WELD CO 0000 0000000
CO-1072-09 Xxxxxx, Xxx X., III Energy Minerals Corporation 3/14/1990 WELD CO 0000 0000000
XX-0000-00 Xxxxxxx, Xxxxxxx X. Energy Minerals Corporation 3/14/1990 WELD CO 0000 0000000
CO-1072-11 Xxxxxx, Xxxxxx X. Energy Minerals Corporation 3/14/1990 WELD CO 0000 0000000
CO-1072-12 Xxxxxxx, Xxxxx X. Energy Minerals Corporation 4/23/1990 WELD CO 0000 0000000
CO-1072-13 Ivson, Dawg, J. Energy Minerals Corporation 4/23/1990 WELD CO 0000 0000000
CO-1072-14 Wilmed, Xxxxx Xxx Xxxxxxx Energy Minerals Corporation 4/23/1990 WELD CO 0000 0000000
CO-1072-15 Xxxxxxx, Xxxxxx Energy Minerals Corporation 4/23/1990 WELD CO 0000 0000000
CO-1072-16 Xxxxxxx, Xxxxxx Energy Minerals Corporation 4/23/1990 WELD CO 0000 0000000
CO-1072-17 Xxxxxxx, Xxxxxx X. Energy Minerals Corporation 4/23/1990 WELD CO 0000 0000000
CO-1072-18 Xxxxxxx, Xxxxx X. Energy Minerals Corporation 4/23/1990 WELD CO 0000 0000000
CO-1072-21 Snow, Xxxxxx X. Energy Minerals Corporation 4/23/1990 WELD CO 0000 0000000
CO-1071-00 Xxxxxx, Xxxxxxx X. Energy Minerals Corporation 3/5/1990 WELD CO 0000 0000000
SPLIT TABLE - SEE ABOVE
ILSR LSE WI/HRX &
NUMBER LESSOR TWP RGE SBC DESCRIPTION ASSIGNED
--------------------------------------------------------------------------------
CO-1072-03 Xxxxxx, Xxxxxx 7N 59W 27 SW/4 NW4 100.00/80.00
CO-1072-04 Xxxxxxx, Ford L. 7N 59W 27 SW/4 NW4 100.00/80.00
CO-1072-05 Xxxxx, Xxxxxxxx X. 7N 59W 27 SW/4 NW4 100.00/80.00
XX-0000-00 Xxxxxx, X.X. 0X 59W 27 SW/4 NW4 100.00/80.00
CO-1072-07 Global Natural Resources
Corporation 7N 59W 27 SW/4 NW4 100.00/80.00
CO-1072-08 Pacific Enterprises Oil
Company 7N 59W 27 SW/4 NW4 100.00/80.00
CO-1072-09 Xxxxxx, Xxx X., III 7N 59W 27 SW/4 NW4 100.00/80.00
XX-0000-00 Xxxxxxx, Xxxxxxx X. 7N 59W 27 SW/4 NW4 100.00/80.00
CO-1072-11 Xxxxxx, Xxxxxx X. 7N 59W 27 SW/4 NW4 100.00/80.00
CO-1072-12 Xxxxxxx, Xxxxx X. 7N 59W 27 SW/4 NW4 100.00/80.00
CO-1072-13 Ivson, Dawg, J. 7N 59W 27 SW/4 NW4 100.00/80.00
CO-1072-14 Wilmed, Xxxxx Xxx Xxxxxxx 7N 59W 27 SW/4 NW4 100.00/80.00
CO-1072-15 Xxxxxxx, Xxxxxx 7N 59W 27 SW/4 NW4 100.00/80.00
CO-1072-16 Xxxxxxx, Xxxxxx 7N 59W 27 SW/4 NW4 100.00/80.00
CO-1072-17 Xxxxxxx, Xxxxxx X. 7N 59W 27 SW/4 NW4 100.00/80.00
XX-0000-00 Xxxxxxx, Xxxxx X. 0X 59W 27 SW/4 NW4 100.00/80.00
CO-1072-21 Snow, Xxxxxx X. 7N 59W 27 SW/4 NW4 100.00/80.00
CO-1071-00 Xxxxxx, Xxxxxxx X. 7N 59W 27 SW/4 NW4 100.00/80.00
Page 3 of 4
EXHIBIT "A" CONTINUED
Lease
Date Book Page Lessor Lessee Property Description WI/NRI % Assigned
------------------------------------------------------------------------------------------------------------------------------------
Xxxxxx County, Colorado
Wilcat Ranches #1 809 15 Xxxxxxx X. Xxxxxxxx, Trustee Township 6 North, Range 59
West Section 35: NE/4 SE/4 100.00 80.00
809 11 Wildcat Ranches Township 6 North, Range 59
West Section 35: NE/4 SE/4 100.00 80.00
809 626 Denver Basin Oil Company and
First National Bank of Denver Township 6 North, Range 59
West Section 35: NE/4 SE/4 100.00 80.00
------------------------------------------------------------------------------------------------------------------------------------
Arapahoe County, Colorado
Car 81-8 9/26/1984 4292 390 Xxxxxxx Xxxxxx Cox Township 5 South, Range 00
Xxxx Xxxxxxx 00 Xxxx
Xxxxxxx 8: NE/4 SW/4 12.75 10.20
------------------------------------------------------------------------------------------------------------------------------------
Yuma County, Colorado
Seahaer #1-T5 5/8/1976 497 164 X.X. Xxxxxxx, ET UX Township 3 South, Range 42
West Section 15:100.00 100.00 80.00
6/4/1975 497 162 Xxxxx X. Xxxxxxxxx Xxxxxxxx 0 Xxxxx, Xxxxx 00
West Section 15:100.00 100.00 80.00
5/9/1975 497 142 K & L Land Enterprise Township 3 South, Range 42
West Section 15:100.00 100.00 80.00
Page 4 of 4
EXHIBIT "A" CONTINUED
Lease
Date Book Page Lessor Lessee Property Description WI/NRI % Assigned
------------------------------------------------------------------------------------------------------------------------------------
Cheyenne County,
Coloado
XXXX #0-00 2/28/1996 Recep-
tion 214765 Union Pacific Land Township 13 South, Range 42
Resources Company West Section 25: N/2 100.00 79.50
Xxxxxxxxx-Xxxxxxx 5/22/1972 188 177 Champlain Petroleum Township 13 South, Range 44
#2-21 Company West Section 21: W/2 SW/4,
E/2 NW/4 69.62463 55.17755
------------------------------------------------------------------------------------------------------------------------------------
Xxxx County,
Colorado
Xxxx #1-5 6/9/1960 339 309 Xxxxx X. Xxxx, ET UX Township 33 South, Range 43
West Section Section 99.33424 79.467392
6/9/1960 339 279 Xxxxxx Xxxx, ET UX Township 33 South, Range 43
West Section lots 1 & 2, S/2 99.334241 79.467392
8/5/1960 341 317 Ivory X. Xxxxxx, ET UX Township 33 South, Range 43
West Section & 4, S/2 99.334243 79.467392
Xxxxx #A-1
9/15/1983 502 182 Xxxxxxx Xxxxxx Township 33 South, Range 41
West Section 9: Xxxx 0, 0,
X/0 XX/0, XX/0 NE/4 100.00 80.00
9/15/1983 502 176 Xxxxxxxx Xxxxxx Township 33 South, Range 41
West Section 9: Xxxx 0, 0, X/0
XX/0, XX/0 NE/4 100.00 80.00
9/15/1983 502 179 Xxxxxxxx Xxxxxx Township 33 South, Range 41
West Section 9: Xxxx 0, 0, X/0
XX/0, XX/0 NE/4 100.00 80.00
10/12/1983 503 276 Commerce Ranch, Inc. Township 33 South, Range 41
West Section 9: Xxxx 0, 0,
XX/0 NE/4 100.00 80.00
End of EXHIBIT "A"
EXHIBIT "B"
XXXXX
-----
EXHIBIT "B"
Xxxxx County ST Legal WI NRI
#0-0 XXX XXXXXXXX XX XXXX 0-0X-00X 0.12750000 0.10200000
# 0 XXXXX XXX XXXX XX XXXX 00-0X-00X 1.00000000 0.80000000
#0 XXXXXXX XXXX XX XXXX 00-0X-00X 1.00000000 0.80000000
#0 XXXXXXX XXXX XX XXXX 0-0X-00X 1.00000000 0.80000000
#3 LIND WELD CO SWNE 13-7N-59W 1.00000000 0.80000000
#4 XXXXXXXXX WELD CO SWNW 18-7N-58W 1.00000000 0.80000000
#1 WILDCAT RANCH XXXXXX CO NESE 35-6N-59W 1.00000000 0.80000000
#1 XXXX XXXX CO SESE 5-33S-43W 0.99334240 0.79467392
#A-1 XXXXX XXXX CO SE 9-33S-41W 1.00000000 0.80000000
#0-00 XXXX XXXXXXXX XX NENE 25-13S-42W 1.00000000 0.07950000
#0-00 XXXXXXXX XXXXXXXX XX XXXX 00-00X-00X 0.06962463 0.55199550
#1-15 XXXXXXX XXXX XX XX 00-0X-00X 1.00000000 0.80000000
#1-9 K&L YUMA CO SE 9-3S-42W 1.00000000 0.80000000
EXHIBIT "C"
EXHIBIT "C" INTENTIONALLY LEFT BLANK
EXHIBIT "D"
EXHIBIT "D" INTENTIONALLY LEFT BLANK
EXHIBIT "D"
ASSIGNMENT,. XXXX OF SALE AND CONVEYANCE
THIS ASSIGNMENT, XXXX OF SALE AND CONVEYANCE (" Assignment"), dated
effective June 1,:2005 at 7:00 a.m. Mountain Time (the "Effective Time"), XXXXXX
FAMILY INVESTMENTS. LLLP, a Colorado limited liability limited partnership,
00000 X. Xxxxx, Xxxx 000, Xxxxxxxxx, Xxxxxxxx 80 III ("Xxxxxx"); DNR OIL & GAS,
INC., a Colorado corporation, 00000 X. Xxxxx, Xxxx 000, Xxxxxxxxx, Xxxxxxxx
00000 ("DNRj; and XXXXXXX OPERATING CO., a Colorado corporation, 00000 X. Xxxxx,
Xxxx 000, Xxxxxxxxx, Xxxxxxxx 00000 ("Xxxxxxx"). (Xxxxxx, DNR and Xxxxxxx may
hereinafter collectively be referred to as "Assignor" or "Seller"); and COLORADO
OIL AND GAS, INC., 0000 Xxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxx 00000 ("Assignee"
or "Buyer").:.
For S 100.00 and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor hereby sells, assigns,
transfers, grants, bargains and conveys to Assignee all of Assignor's right,
tide and interest in and to the following real and personal property interests
(collectively, the "Assets"):
a. The oil and gas leases described in Exhibit A (the "~"), insofar as said
Leases cover the land described in Exhibit A (the "Land" or "Lands"), together
with all the property and rights incident thereto and the contracts and
agreements relating to the Leases and Land, all operating agreements.
exploration agreements, pooling, communitization and unitization agreements,
farmout agreements, surface use agreements. product purchase and sale contracts,
transportation, processing, treatment or gathering agreements. leases, permits,
rights-of-way, easements, licenses, declarations, orders, contracts. and
instruments in any way relating to the Leases;
b. The oil and gas xxxxx specifically described in Exhibit B (the "Xxxxx"),
together with all injection and disposal xxxxx on the Leases or Lands or on
lands pooled or unitized therewith. and all personal property, equipment,
fixtures, improvements, permits, rights of-way and easements used in connection
with the production, gathering, treatment, processing, storing, sale or disposal
of hydrocarbons or water produced from the properties and interests described in
subsection a.;
c. The pooling and communitization agreements. declarations and orders. and
all other such agreements relating to the properties and interests described in
subsections a. and b. and to the production of Hydrocarbon, if any, attributable
to said properties and interests;
d. All existing and effective sales, purchase, exchange, gathering,
transportation and processing contracts, operating agreements, balancing
agreements, farmout agreements, service agreements, and other contracts,
agreements and instruments insofar as they relate to the properties and
interests described in subsections a. through c.;
e. The oil, gas and water gathering, pipeline and transportation systems
and all personal property, equipment, fixtures, improvements, permits,
rights-of-way. surface leases and easements used in connection therewith and all
contracts and agreements relating thereto; and
f. The files. records, and data of Assignor relating to the items described
in subsections a. through e. above (the "Records");
provided however, that Assignor hereby reserves the following overriding royalty
interest.
[add language reserving the overriding royalty]
TO HAVE AND TO HOLD the Assets unto Assignee and its successors and assigns
forever.
This Assignment is made subject to the following terms and conditions;
A. This Assignment is being made pursuant to the terms of the Purchase and
Sale Agreement dated effective June 1, 2005, between Assignor and Assignee (the
"PSA"). All capitalzed terms used but not otherwise defined herein shall have
the respective meanings ascribed to them in the PSA. If there is a conflict
between the terms of this Assignment and the terms of the PSA, the terms of the
PSA shall control in all respects. The Assignor and Assignee intend that the
terms of the PSA remain separate and distinct from and not merge into the terms
of this Assignment
B. ASSIGNOR WARRANTS TITLE TO 1JIE ASSETS FROM AND AGAINST ALL PERSONS
CLAIMING BY, THROUGH AND UNDER ASSIGNOR, BUT NOT OTHERWISE, AND EXCEPT FOR THAT
WARRANTY, THIS ASSIGNMENT IS MADE WITHOUT WARRANTY OF ANY KIND, EXPRESS, IMPLIED
OR STATUTORY.
C. ASSIGNOR EXPRESSLY DISCLAIMS AND NEGATES ANYW ARRANTY AS TO THE
CONDITION OF ANY PERSONAL PROPERTY, EQUIPMENT, FIXTURES AND ITEMS OF MOVABLE
PROPERTY COMPRISING ANY PART OF THE ASSETS, INCLUDING (i) ANY IMPLIED OR EXPRESS
WARRANTY OF MERCHANTABILITY, (ii) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR
A PARTICULAR XXXXXXX, (xx) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS, (iv) ANY RIGHTS OF ASSIGNEE UNDER APPLICABLE
STATUTES TO CLAIM DIMINUTION OF CONSIDERATION, AND (v) ANY CLAIM BY ASSIGNEE FOR
DAMAGES BECAUSE OF DEFECI'S, WHETHER KNOWN OR UNKNOWN BEING EXPRESSLY UNDERSTOOD
BY ASSIGNEE THAT SAID PERSONAL PROPER1Y, FIXI1JRES, EQUIPMENT AND ITEMS ARE
BEING CONVEYED TO ASSIGNEE "AS IS, WHERE IS," WITH ALL FAULTS AND IN THEIR
PRESENT CONDITION AND STATE OF REPAIR; PROVIDED, HOWEVER, THAT NOTHING CONTAINED
IN THIS ASSIGNMENT SHALL LIMIT ANY OF ASSIGNOR'S INDEMNITY OBLIGATIONS UNDER THE
PSA.
D. To the extent permitted by law, Assignee shall be subrogated to
Assignor's rights in and to representations, warranties and covenants given with
respect to the Assets. Assignor hereby grants and transfers to Ass~ its
successors and assigns, to the extent so transferable and permitted by law, the
benefit of and the right to enforce the covenants, representations and
warranties, if any, which Assignor is entitled to enforce with respect to the
Assets, but only to the extent not enforced by Assignor.
E. Assignee assumes and agrees to pay, perform, fulfi11 and discharge its
proportionate share of all claims, costs, expenses, liabilities and obligations
accruing or relating to the owning, developing. exploring, operating or
maintaining of the Assets after the Effective TlME, and all obligations arising
under aCXements covering or relating to the Assets, all as more particularly set
forth in the PSA. Assignor and Assignee have apportioned other liabilities and
obligations in the PSA
F. The references herein to liens, encumbrances, burdens, defects and other
matters shall not be deemed to ratify or create any rights in third parties or
merge with, modify or limit the rights of Assignor or Assignee, as between
themselves, as set forth in the PSA or other documents executed in connection
therewith.
G. Assignor to Assignee may execute separate governmental form assignments
of the Assets on officially approved forms, in sufficient counterparts to
satisfy applicable statutory and regulatory requirements. Those assignments
shall ~ deemed to contain all of the exceptions, reservations, warranties,
rights, titles, power and privileges set forth herein as fully as though they
were set forth in each such assignment. The interests conveyed by such separate
assignments are the same, and not in addition to, the Assets conveyed herein.
H. This Assignment binds and inures to the benefit of Assignor and Assignee
and their respective successors and assigns.
1. This Assignment may be executed in any number of counterparts, each of
which shall be deemed an original and all of which taken together shall
constitute but one and the same instrument. EXECUTED on the dates contained in
the acknowledgments of this Assignment, to be effective for all purposes as of
the Effective Time.
ASSIGNOR:
XXXXXX FAMILY INVESTMENTS, LLLP
By: /s/
-------------------------------
Name:
-----------------------------
Title:
----------------------------
DNR OIL & GAS, INC.
By: /s/
-------------------------------
Name:
-----------------------------
Title:
----------------------------
XXXXXXX OPERATING CO.
By:/s/
-------------------------------
Name:
-----------------------------
Title:
----------------------------
ASSIGNEE:
COLORADO OIL AND GAS, IN.C.
By:/s/
-------------------------------
Name:
-----------------------------
Title:
----------------------------
ACKNOWLEDGEMENTS
----------------
STATE OF COLORADO )
CITY AND ) .ss
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this ___ day of ____ 2005,
by_________ , as __________ of XXXXXX FAMILY INVESTMENTS, LLLP, a .Colorado
limited liability limited partnership, on behalf of such partnership.
Witness my hand and official seal.
My Commission Expires:
------------
--------------------------------
Notary Public
Name:
Address:
[seal]
STATE OF COLORADO )
CITY AND ) .ss
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this____ day of _____ 2005,
by________, as________ of DNR OIL & GAS, INC, a Colorado corporation, on behalf
of such corporation.
Witness my hand and official seal.
My Commission Expires:
------------
--------------------------------
Notary Public
Name:
Address:
[seal]
STATE OF COLORADO )
CITY AND ) .ss
COUNTY OF DENVER )
The forgoing instrument was acknowledged before me this ______ day of
_______2005, by _________, as_________ of XXXXXXX OPERATING CO. a Colorado
corporation, on behalf of such corporation.
Witness my hand and official seal.
My Commission Expires:
------------
--------------------------------
Notary Public
Name:
Address:
[seal]
STATE OF COLORADO )
CITY AND ) .ss
COUNTY OF DENVER )
The foregoing instrument was aclcnowledged before me this ______ day of______
2005, by__________, as _________ of COLORADO OIL AND GAS, INC., a Colorado
corporation, on behalf of such corporation.
Witness my hand and official seal.
My Commission Expires: __________
--------------------------------
Notary Public
Name:
Address:
[seal]
EXHIBIT "E"
Xxxxx County ST Legal WI NRI VALUATION
----- ------ -- ----- -- --- ---------
#1-8 COX ARAPAHOE CO NESW 8-5S-62W 0.12750000 0.10200000 16.42
# 0 XXXXX XXX XXXX XX XXXX 00-0X-00X 1.00000000 0.80000000 233.68
#0 XXXXXXX XXXX XX XXXX 00-0X-00X 1.00000000 0.80000000 261.93
#0 XXXXXXX XXXX XX XXXX 0-0X-00X 1.00000000 0.80000000 293.83
#3 LIND WELD CO SWNE 13-7N-59W 1.00000000 0.80000000 121.28
#0 XXXXXXXXX XXXX XX XXXX 00-0X-00X 1.00000000 0.80000000 1151.30
#1 WILDCAT RANCH XXXXXX CO NESE 35-6N-59W 1.00000000 0.80000000 145.36
#1 XXXX XXXX CO SESE 5-33S-43W 0.99334240 0.79467392 72.67
#A-1 XXXXX XXXX CO SE 9-33S-41W 1.00000000 0.80000000 77.66
#0-00 XXXX XXXXXXXX XX NENE 25-13S-42W 1.00000000 0.07950000 53.65
#0-00 XXXXXXXX XXXXXXXX XX XXXX 00-00X-00X 0.06962463 0.55199550 0.00
#0-00 XXXXXXX XXXX XX XX 00-0X-00X 1.00000000 0.80000000 47.80
#1-9 K&L YUMA CO SE 9-3S-42W 1.00000000 0.80000000 24.42
EXHIBIT F
AGREED IMBALANCES
-----------------
Shall be agreed to as that imbalance noted (as of the effective dates) on the
Bitter Creek Pipeline, LLC, Imbalances Summary Report.
