EXHIBIT 10.17
PURCHASE AND SALE AGREEMENT
(Weld County Acreage, Colorado)
THIS PURCHASE AND CitySALE AGREEMENT ("Agreement") is dated October 23,
2012, and is entered into by and between XXX ENERGY LLC, a StateColorado limited
liability company whose address is 0000 00xx Xxxxxx, Xxxxx 000,Xxxxxxx, Xxxxxxxx
00000 ("Seller"), and SYNERGY RESOURCES CORPORATION ("Synergy"), a Colorado
corporation whose address is 00000 Xxxxxxx 00, Xxxxxxxxxxx, Xxxxxxxx 00000. Each
of the Seller and Synergy may be referred to individually as a "Party" or
collectively as the "Parties."
RECITALS
A. Seller wish to sell its interest in the Assets described in Section
1.2, below.
B. Synergy (i) has conducted a preliminary independent investigation of the
nature and extent of the Assets, (ii) will conduct further due diligence on the
Assets after execution of this Agreement, and (iii) desires to purchase the
Assets pursuant to the terms of this Agreement.
C. By this instrument, Synergy and Seller set forth their agreement concerning
the purchase and sale of the Assets.
AGREEMENT
In consideration of the mutual promises contained herein, Seller and
Synergy agree as follows:
ARTICLE I
PURCHASE AND placeCitySALE OF THE ASSETS
1.1 Purchase and Sale. The Seller hereby agrees to sell and Synergy hereby
agrees to purchase the Assets pursuant to the terms of this Agreement.
1.2 The Assets. As used herein, the term "Assets" refers to all of Seller's
right, title and interest, subject to the overriding royalty assignment from
Synergy provided in Exhibit E, in and to the following:
1.2.1 the xxxxx (the "Xxxxx") described in Exhibit A;
1.2.2 the leases (the "Leases") described in Exhibit B, but only insofar as
they cover the lands (the "Lands") specifically described in Exhibit B;
1.2.3 the personal property and fixtures located on, in and under the
Lands, including, without limitation, the equipment shown in Exhibit C;
1.2.4 all contracts and agreements that benefit or burden the Xxxxx, Leases
or Lands, including without limitation operating agreements, marketing
agreements, pooling agreements, rights-of-way, easements, surface agreements,
gas sale contracts, and gas processing contracts;
1.2.5 the oil, gas, casing head gas, condensate, distillate, liquid
hydrocarbons, gaseous hydrocarbons, products refined and manufactured there
from, and other minerals, produced from the Xxxxx and the accounts and proceeds
from the sale of the foregoing; and
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1.2.6 the files, records, seismic, seismic interpretation, electronic data
bases, seismic licensing and other documentary information (the "Information")
relating to the foregoing that are in Seller's possession and are not subject to
third-party confidentiality restrictions.
1.3 Purchase Price. The purchase price for the Assets shall be Forty Two Million
Dollars ($42,000,000), as adjusted in accordance with Section 1.4 (the "Purchase
Price"), which shall be paid as follows:
1.3.1 upon execution of this Agreement Synergy shall simultaneously execute
and deliver the Escrow Agreement annexed hereto as Exhibit D and deposit by wire
transfer xxxxxxx money in the amount of Two Million One Hundred Thousand Dollars
($2,100,000) in the account established by such Escrow Agreement.
1.3.2 the sum of Twenty Seven Million Nine Hundred Thousand Dollars
($27,900,000) by electronic funds transfer at Closing;
1.3.3 delivery to Seller at closing that number of restricted shares of
Synergy's common stock determined by the following formula: $12,000,000/x, where
"x" equals the volume weighted average closing price for Synergy's common stock
for the twenty trading days preceding the closing, provided, however that the
number of shares to be delivered at closing will not exceed 5% of Synergy's
outstanding shares of common stock on the date of closing. If the number of
shares is reduced to meet the 5% threshold, the cash component of the purchase
price to be paid at closing will be increased correspondingly. The restricted
shares will be subject to the six-month holding period required by Rule 144 of
the Securities and Exchange Commission.
1.4 Adjustments to Purchase Price. All adjustments to the Purchase Price shall
be made (i) according to the factors described in this Section 1.4, (ii) in
accordance with generally accepted accounting principles as consistently applied
in the oil and gas industry, and (iii) without duplication.
1.4.1 Settlement Statements. The Purchase Price shall be adjusted at
Closing pursuant to a "Preliminary Settlement Statement" prepared by Seller and
submitted to Synergy four days prior to Closing for Synergy's comment and
review. The Preliminary Settlement Statement shall set forth the adjustments to
the Purchase Price and the related calculations. After Closing, the Purchase
Price shall be further adjusted pursuant to the Final Settlement Statement
delivered pursuant to Section 9.1.
1.4.2 Upward Adjustments. The Purchase Price shall be adjusted upward by an
amount equal to (i) all direct and actual expenses attributable to the Assets
that were paid by or on behalf of Seller and that are attributable to the period
after the Effective Date; (ii) overhead at the rate of $500 per month, which
amount includes pumper charges, or portion thereof for each producing Well;
(iii) an amount equal to the value of oil or gas in storage or in the pipelines
as of the Effective Time that is credited to the Assets; provided that the value
of oil in the production tanks shall be calculated to include only the oil
stored above the load lines as of the Effective Time (i.e. Synergy is not
responsible for paying Seller "tank bottoms") and the value (1) for purposes of
the Preliminary Settlement Statement, to be the actual price received for such
oil, gas, or natural gas liquids, less applicable taxes, upon the first
unaffiliated third party sale thereof, if available, and upon such estimates, as
are reasonably agreed upon by the Parties, to the extent actual amounts sold, or
to be sold, and prices obtained, or to be obtained, are not known at Closing,
and (2) for purposes of the Final Settlement Statement, to be based upon actual
amounts sold and prices obtained, less applicable taxes; and (iv) any other
amount as may be agreed to in writing by Synergy and Seller.
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1.4.3 Downward Adjustments. The Purchase Price shall be adjusted downward
by (i) an amount equal to the revenues collected by the Seller from the sale of
oil, gas and other hydrocarbons produced after the Effective Date, provided
Seller has paid all royalties from amounts so collected, (ii) the amount of all
direct and actual expenses attributable to the Assets that the Seller otherwise
would be obligated to pay in respect of the period prior to the Effective Date
that Synergy either has paid or agrees to pay, (iii) the amount of any estimated
ad valorem tax required to be paid by Seller to Synergy pursuant to Article VI,
(iv) the amount of proceeds of production from any of the Xxxxx, which is shown
on Seller's books and records on the Effective Date as having been held in
suspense and withheld from payment to any third party as a result of a title
defect, unknown address or otherwise, and (v) any other amount as may be agreed
to in writing by Synergy and Seller.
1.5 Effective Date. The purchase and sale of the Assets shall become effective
at 12:00 a.m. on October 1, 2012 (the "Effective Date"), provided, however, that
notwithstanding anything herein to the contrary, the Effective Date will be
November 1, 2012 if the closing takes place on or after December 1, 2012.
1.6 Transfer of Operations. Synergy will take over as Operator of the Xxxxx upon
Closing.
ARTICLE II
SELLER'S REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties as to the Seller. Seller makes, as to
itself alone, the following representations and warranties:
2.1.1 Organization/Qualification. Seller is a limited liability company
which is duly organized, validly existing and in good standing under the laws of
the State of placeStateColorado.
2.1.2 Power and Authority. Seller has all requisite power and authority to
own its interest in the Assets, to carry on its businesses as presently
conducted, to execute and deliver this Agreement, and to perform its obligations
under this Agreement.
2.1.3 No Lien, No Violation. The execution and delivery of this Agreement
does not, and the fulfillment of and compliance with the terms and conditions
hereof will not, as of Closing, (i) create a lien or encumbrance on the Assets
or trigger an outstanding security interest in the Assets that will remain in
existence after Closing, (ii) violate, or be in conflict with, any material
provision of any statute, rule or regulation applicable to Seller or any
agreement or instrument to which Seller is a party or by which it is bound, or
(iii) to its knowledge, violate, or be in conflict with any statute, rule,
regulation, judgment, decree or order applicable to Seller.
2.1.4 Authorization and Enforceability. This Agreement is duly and validly
authorized and constitutes the legal, valid and binding obligation of Seller,
enforceable in accordance with its terms, subject, however, to the effects of
bankruptcy, insolvency, reorganization, moratorium and other laws for the
protection of creditors, as well as to general principles of equity, regardless
whether such enforceability is considered in a proceeding in equity or at law.
2.1.5 Liability for Brokers' Fees. Seller has not incurred any liability,
contingent or otherwise, for brokers' or finders' fees relating to the
transactions contemplated by this Agreement for which Synergy shall have any
responsibility whatsoever.
2.1.6 No Bankruptcy. There are no bankruptcy proceedings pending, being
contemplated by or threatened against Seller.
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2.1.7 Litigation. There are no actions, suits, ongoing governmental
investigations, written governmental inquiries or proceedings or outstanding
notices of violation pending against Seller or the Assets in any court or by or
before any federal, state, municipal or other governmental agency that would
affect Seller's ability to consummate the transaction contemplated hereby, or
materially adversely affect the ownership or operation of the Assets.
2.2 Representations and Warranties as to the Assets. Seller makes the following
representations and warranties regarding its interest in the Assets:
2.2.1 Liens. Except for the Permitted Encumbrances or as otherwise agreed
to in writing by Synergy, the Assets will be conveyed to Synergy free and clear
of all liens, restrictions and encumbrances created by, through or under Seller.
As used in this Agreement, "Permitted Encumbrances" means any of the following
matters to the extent the same are valid and subsisting and affect the Assets:
2.2.1.1 all matters not created by, through or under Seller, including
without limitation any matters created by, through or under any of the
Seller's predecessors in title;
2.2.1.2 all terms, conditions, restrictions, exceptions, reservations,
limitations and other matters contained in the agreements, instruments and
documents that create or reserve to Seller its interests in the Assets;
2.2.1.3 all landowner royalties, overriding royalties, net profits
interests, carried interests, production payments, reversionary interests
and other burdens on or deductions from the proceeds of production relating
to the Assets that are identifiable from the real property records of Weld
County, the lease records of the Colorado State Board of Land
Commissioners, or the case files of the Colorado State Office of the Bureau
of Land Management, in each case as of October 1, 2012;
2.2.1.4 the overriding royalty interests to be reserved by Seller
under the form of Assignment Xxxx of Sale and Conveyance attached hereto as
Exhibit E;
2.2.1.5 all liens for taxes and assessments not yet delinquent or, if
delinquent, that are being contested in good faith and in the ordinary
course of business and for which a Seller has agreed to pay pursuant to the
terms hereof or which have been prorated pursuant to the terms hereof;
2.2.1.6 any obligations or duties to any municipality or public
authority with respect to any franchise, grant, license or permit, and all
applicable laws, rules, regulations and orders of the United States and the
state, county, city and political subdivisions in which the Assets are
located and that exercises jurisdiction over such Assets, and any agency,
department, board or other instrumentality thereof that exercises
jurisdiction over such Assets;
2.2.1.7 all (i) easements, rights-of-way, servitudes, permits, surface
leases and other rights in respect of surface operations, pipelines,
grazing, hunting, logging, canals, ditches, reservoirs or the like, and
(ii) easements for streets, alleys, highways, pipelines, telephone lines,
power lines, railways and other similar rights-of-way on, over or in
respect of property owned or leased by a Seller or over which a Seller owns
rights-of-way, easements, permits or licenses;
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2.2.1.8 all rights to consent by, required notices to, filings with,
or other actions by governmental authorities in connection with the sale or
conveyance of oil and gas leases or interests therein that are customarily
obtained subsequent to such sale or conveyance; and
2.2.1.9 all defects and irregularities affecting the Assets which
individually or in the agPersonNamegregate do not operate to reduce the net
revenue interests of Seller, increase the proportionate share of costs and
expenses of leasehold operations attributable to or to be borne by the
working interests of Seller, or otherwise interfere materially with the
operation, value or use of the Assets.
2.2.2 Compliance with Law. To the best of Seller's knowledge, all of the
Xxxxx are operated in compliance with applicable laws and regulations in all
material respects.
2.2.3 Taxes. During Seller's period of ownership and with respect to ad
valorem taxes for all taxable periods during Seller's period of ownership
through the taxable period in which this Agreement is executed, all such ad
valorem taxes have been paid when due.
2.2.4 Preferential Purchase Rights. There are no preferential purchase
rights in respect of any of the Assets.
2.2.5 Tax Partnerships. The Assets are not subject to any tax partnership
agreements requiring a partnership income tax return to be filed under
subchapter K of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as
amended.
2.2.6 Material Agreements. Seller will make available to Synergy, under
paragraph 4.1 below, copies of all agreements that are material to the ownership
and operation of the Assets ("Material Agreements"). To Seller's knowledge all
such Material Agreements are in full force and effect and Seller is not in
breach of any Material Agreement.
2.2.7 Personal Property and Equipment. To Seller's knowledge, all personal
property constituting a part of the Assets is in a state of repair so as to be
adequate for normal operations.
2.2.8 Leases. To Seller's knowledge, as of the date of this Agreement and
at Closing , and subject to the Permitted Encumbrances (a) all conditions
necessary to keep each Lease in full force and effect in accordance with its
terms have been performed and all material obligations under the Leases have
been fully performed, including the proper and timely payment of all royalties,
rentals, shut-in payments and other payments due under the Leases, (b) there are
no requests or demands for payments, adjustments of payments or performance
pursuant to obligations under the Leases, and (c) Seller has not received a
written notice of default with respect to the payment or calculation of rentals
and royalties attributable to the Assets.
2.2.9 Oil and Gas Sales Contracts. Seller has not (i) sold forward any oil
or gas; or (ii) received any material advance, "take-or-pay" or other similar
payments under production sales contracts that entitle the purchasers to "make
up" or otherwise receive deliveries of oil or gas without paying at such time
the contract price therefore. No oil is subject to a sales contract (other than
division orders or spot sales agreements terminable on no more than thirty (30)
days' notice) and no person has any call upon, option to purchase or similar
rights with respect to the production from the Assets and the Assets are not
bound by futures, hedge, swap, collar, put, call, floor, cap, option or other
contracts that are intended to benefit from, relate to or reduce or eliminate
the risk of fluctuations in the price of commodities, including oil or gas,
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securities, foreign exchange rates or interest rates. Proceeds from the sale of
oil, condensate, and gas from the Assets are being received in all respects by
Seller in a timely manner and are not being held in suspense for any reason,
other than shown on the books of Seller
2.2.10 Plugging and Abandonment. There are no Xxxxx located on Leases or
units of which the Leases are a part that are currently obligated by law or
contract to be plugged and abandoned. All xxxxx that have been plugged and
abandoned have been plugged and abandoned in compliance with all applicable
requirements of regulatory authority having jurisdiction thereof.
2.2.11 No AMI or Farm-Out Obligations. No portion of the Assets is subject
to any area of mutual interest agreement, any farm-out agreement under which a
party thereto is entitled to receive assignments not yet made, or any similar
agreements.
2.2.12 Seller's Title.
(a) Seller represents and warrants to Synergy that to its knowledge
and subject to the Permitted Encumbrances, as of the date of this
Agreement and as of the Closing Date:
(i) The Leases are in full force and effect and are valid and
subsisting documents covering the entire estates that they purport
to cover; (ii) Seller has not been advised by the lessor of any
Lease of default under a Lease or of any demand to drill an
additional well on a Lease; and (iii) all royalties, rentals and
other payments due under the Leases have been fully, properly and
timely paid, or have been held in suspense as provided for herein
,and (iv) Seller owns, and will transfer to Synergy at Closing, the
Working Interests and Net Revenue Interests in the Leases and Xxxxx
described on Exhibits A and B, free of all liens and encumbrances,
except for Permitted Encumbrances. Seller will use its commercially
reasonable efforts to take all action necessary to keep the Leases
in force and effect until the Closing.
(ii) Seller owns the personal property, fixtures and equipment
shown in Exhibit C free of all liens and encumbrances, except for
Permitted Encumbrances.
2.2.13 Environmental Matters. To Sellers knowledge, and as to the Assets
(a) it is not in material violation of any Environmental Laws or any material
limitations, restrictions, conditions, standards, obligations or timetables
contained in any Environmental Laws, and (b) no notice or action alleging such
violation is pending or threatened against the Assets. For purposes of this
Agreement "Environmental Laws" means any federal, state or local statute, code,
ordinance, rule, regulation, policy, guidelines, permit, consent, approval,
license, judgment, order, writ, decree, injunction, or other authorization,
including the requirement to register underground storage tanks, relating to (a)
emissions, discharges, releases, or threatened releases of Hazardous Materials
into the natural environment, including into ambient air, soil, sediments, land
surface or subsurface, buildings or facilities, surface water, groundwater,
pub1icly owned treatment works, septic systems, or land, (b) the generation,
treatment, storage, disposal, use, handling, manufacturing, transportation, or
shipment of Hazardous Materials, or (c) otherwise relating to the pollution of
the environment, solid waste handling treatment, or disposal, or operation or
reclamation of mines or oil and gas xxxxx. The parties acknowledge that as of
the date of this Agreement Seller has not filed Air Pollution Emission Notices
(APENS) with the Colorado Department of Public Health and Environment with
respect to the Assets, and Seller represents it has commenced the process of
compiling and filing such notices.
"Hazardous Material" means (a) any "hazardous substance," as defined
by CERCLA, (b) any "hazardous waste," as defined by the Resource Conservation
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and Recovery Act, as amended, (c) any hazardous, dangerous, or toxic chemical,
material, waste, or substance within the meaning of and regulated by any
Environmental Law, (d) any radioactive material, including any naturally
occurring radioactive material, and any source, special, or byproduct material
as defined in 42 U.S.C. ss.2011 et seq. and any amendments or authorizations
thereof, (e) any asbestos-containing materials in any form or condition, or (f)
any polychlorinated biphenyls in any form or condition.
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2.2.14 Securities Law Matters. The sale of the Assets by Seller is
made pursuant to exemptions from registration under the Securities Act of 1933,
including but not limited to the exemption provided by Section 4(2) of the Act.
ARTICLE III
SYNERGY'S REPRESENTATIONS AND WARRANTIES
Synergy makes the following representations and warranties:
3.1 Organization and Standing. Synergy is a corporation duly organized, validly
existing and in good standing under the laws of the State of StateplaceColorado.
3.2 Power. Synergy has all requisite power and authority to carry on its
business as presently conducted and to execute and deliver this Agreement and
perform its obligations under this Agreement. The execution and delivery of this
Agreement and consummation of the transactions contemplated hereby and the
fulfillment of and compliance with the terms and conditions hereof will not
violate, or be in conflict with, any material provision of its governing
documents or any material provision of any agreement or instrument to which it
is a party or by which it is bound, or, to its knowledge, any judgment, decree,
order, statute, rule or regulation applicable to it.
3.3 Authorization and Enforceability. The execution, delivery and performance of
this Agreement and the transaction contemplated hereby have been duly and
validly authorized by all requisite corporate action on behalf of Synergy. This
Agreement constitutes Synergy's legal, valid and binding obligation, enforceable
in accordance with its terms, subject, however, to the effects of bankruptcy,
insolvency, reorganization, moratorium and similar laws for the protection of
creditors, as well as to general principles of equity, regardless whether such
enforceability is considered in a proceeding in equity or at law.
3.4 Liability for Brokers' Fees. Synergy has not incurred any liability,
contingent or otherwise, for brokers' or finders' fees relating to the
transactions contemplated by this Agreement for which Seller shall have any
responsibility whatsoever.
3.5 Litigation. There is no action, suit, proceeding, claim or investigation by
any person, entity, administrative agency or governmental body pending against
it before any governmental authority that impedes or is likely to impede its
ability (i) to consummate the transactions contemplated by this Agreement or
(ii) to assume the liabilities to be assumed by it under this Agreement.
3.6 Securities Laws. Synergy acknowledges that the Assets are or may be deemed
to be "securities" under the Securities Act of 1933, as amended, and certain
applicable state securities or Blue Sky laws and re-sales thereof may therefore
be subject to the registration requirements of such acts. The Assets are being
acquired solely for Synergy's own account for the purpose of investment and not
with a view to resale, distribution or granting a participation therein in
violation of any securities laws.
3.7 Synergy's Evaluation. In entering into this Agreement, Synergy acknowledges
and affirms that it has relied and will rely solely on the terms of this
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Agreement and upon its independent analysis, evaluation and investigation of,
and judgment with respect to, the business, economic, legal, tax, environmental
or other consequences of this transaction, including without limitation, its own
estimate and appraisal of the extent and value of the Assets, and the petroleum,
natural gas and other reserves associated with the Assets.
3.8 Seller's Related Parties. In entering into this Agreement, Synergy
acknowledges that Seller is related in some way(s) to Xx Xxx, Xxxxx Xxx and/or
Xxx Resources LLC ("Seller's Related Parties") one or more of whom may hold
separate interests in and to one or more of the Lands, Leases and/or Assets, and
nothing in this Agreement is intended to in any way convey, assign, bind or
affect Seller's Related Parties or any interest any of them may have in the
Assets.
ARTICLE IV
SYNERGY'S INSPECTION; CONDITION TO CLOSING
4.1 Access to Information. Immediately after execution of this Agreement, Seller
will make the Information available to Synergy and its representatives for
inspection and review at the offices of Seller during normal business hours, and
during non-business hours if reasonably requested by Synergy, so that Synergy
may perform such due diligence review as it believes appropriate. Subject to the
consent and cooperation of third parties, Seller will assist Synergy in
Synergy's efforts to obtain, at Synergy's expense, such additional data from
third parties as Synergy may reasonably request for the purposes of such due
diligence review. Synergy may inspect the Information and additional data only
to the extent such inspection does not violate any contractual commitment of
Seller or another Seller to a third party. Seller shall use commercially
reasonable efforts to obtain consent from any such third party to disclose the
Information and additional data to Synergy, provided that Synergy agrees to keep
same confidential and not disclose it to anyone other than its advisors in this
transaction, and provided further that Seller shall have no obligation to make
any payment to obtain such consent.
4.2 Access to the Assets. Immediately after execution of this Agreement, Seller
agree to grant Synergy access to the Assets during reasonable business hours,
and during non-business hours if reasonably requested by Synergy, so Synergy may
conduct, at its sole risk and expense, on-site inspections and environmental
assessments of the Assets. If Synergy or its agents prepares an environmental
assessment of any Asset, Synergy agrees to keep such assessment confidential and
promptly to furnish a copy of such assessment to Seller. In connection with any
on-site inspections, Synergy (i) agrees not to interfere with the normal
operation of the Assets, (ii) agrees to comply with all requirements of the
operators of the Assets and (iii) represents that it is adequately insured.
Synergy waives, releases and agrees to indemnify Seller, and its directors,
officers, shareholders, members, employees, agents and representatives against
all liabilities and obligations, including without limitation, personal injury,
death and/or property damage, arising from Synergy's activities on the Assets
except to the extent such liability or damages are caused by Seller's negligence
or willful misconduct. The provisions of this Section 4.2 shall survive
termination of this Agreement.
4.3 Title and Environmental Defects. For the purposes of this Agreement, a Lease
will be deemed to have a "Defect" if (i) the net acres owned by Synergy in such
Lease after delivery of Seller' assignment at Closing would be less than the net
acres as described in Exhibit F, if any, or (ii) Seller' title to the Lease in
question or the environmental condition of the lands covered thereby is
defective to a degree that a reasonably prudent operator in the Rocky Mountains
would not acquire an interest in such an undeveloped Lease for the purpose of
holding it as undrilled inventory until appropriate curative work had been
performed, or with respect to a Lease held by production, that a reasonably
prudent operator in the Rocky Mountains would diligently remediate the
environmental condition as expeditiously as possible.
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4.4 Notice of Title Defects. While Synergy will endeavor to provide Seller with
information concerning Defects as such Defects are discovered, Synergy must
notify Seller in writing of all Defects no later than the close of business on
November 15, 2012. Any such written notice must identify the Lease affected by
the Defect and specifically describe the matter constituting the Defect.
4.5 Seller's Right to Cure Defects and Effect of Failure to Cure. The Parties
may jointly agree before Closing that certain Leases have Defects that Seller
does not wish to cure and, in such event, the leases suffering these agreed
Defects will be excluded from the Assignment, Xxxx of Sale and Conveyance that
is delivered at Closing and the Purchase Price will be reduced by $3,500 for
each net mineral acre that originally had been anticipated would be covered by
such excluded leases, as shown on the annexed Exhibit F. As to all other Defects
as to which Synergy provides Seller timely notice, Seller will have the right,
but not the obligation, to cure or remediate the remaining Defects at its sole
cost and expense during the period ending at 10:00 a.m. on November 23, 2012. If
Seller fails adequately to cure or remediate any such Defect within that period,
then the leases suffering these uncured or un-remediated Defects will be
excluded from the Assignment, Xxxx of Sale and Conveyance that is delivered at
Closing and the Purchase Price will be reduced by $3,500 for each net mineral
acre that originally had been anticipated would be covered by such excluded
leases. Notwithstanding the above, the reduction in the Purchase Price for any
Defect with respect to the Xxxxx lease, (which covers the SENE of Section 22;
the S2NW and S2 Section 23; the S2S2 of Section 24; and the E2 and part of NW4
Section 26, all in Township 10 North, Range 61 West, Weld County) will be $
1,000 for each net mineral acre
ARTICLE V
COVENANTS AND AGREEMENTS
5.1 Covenants and Agreements of Seller as to Operations. Seller covenant and
agree with Synergy that, unless it obtains the prior written consent of Synergy
to act otherwise, it will use good faith efforts, within the constraints of the
applicable operating agreements and other applicable agreements and affording
Synergy's representatives sufficient information and time to reasonably respond,
not to (i) abandon any part of the Assets (except in the ordinary course of
business or the abandonment of Leases upon the expiration of their respective
primary terms or if not capable of production in paying quantities), (ii)
approve any operations on the Assets anticipated in any instance to cost the
owner of the Assets more than $10,000 per activity (except emergency operations,
operations required under presently existing contractual obligations, ongoing
commitments under existing AFEs, and operations undertaken to avoid a monetary
penalty or forfeiture under any applicable agreement or order), (iii) convey or
dispose of any part of the Assets (other than replacement of equipment or sale
of oil, gas, and other liquid products produced from the Assets in the ordinary
course of business) or enter into any new farm-out, farm-in or other similar
contract affecting the Assets, (iv) let lapse any insurance now in force with
respect to the Assets, (v) modify or terminate any contract relating to the
operation of the Assets, or (vi) enter into any new material contracts relating
to the Assets.
5.1.1 Maintenance of Interests. Seller has maintained, and will continue
from date of this Agreement until the Closing maintain, the Assets in a
reasonable and prudent manner, in full compliance with applicable law and orders
of any governmental authority, and will maintain insurance and bonds now in
force with respect to the Assets, to pay when due all costs and expenses coming
due and payable in connection with the Assets, and to perform all of the
covenants and conditions contained in the Leases and all related agreements.
5.2 Covenants and Agreements of the Parties.
5.2.1 Confidentiality. All data and information, whether written or oral,
obtained from Seller in connection with the transaction contemplated by this
Agreement, whether before or after the execution of this Agreement, and data and
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information generated by Synergy in connection with this transaction
(collectively, the "Confidential Information"), is deemed by the Parties to be
confidential and proprietary to Seller. Until the Closing (and until April 1,
2014, if Closing should not occur for any reason), except as required by law,
Synergy and its officers, agents and representatives will hold in strict
confidence the terms of this Agreement, and all Confidential Information, except
any Confidential Information which: (1) at the time of disclosure to Synergy by
Seller is in the public domain; (2) after disclosure to Synergy by Seller
becomes part of the public domain by publication or otherwise, except by breach
of this commitment by Synergy; (3) Synergy can establish by competent proof was
rightfully in its possession at the time of its disclosure to Synergy by Seller;
(4) Synergy rightfully receives from third parties free of any obligation of
confidence; or (5) is disclosed to Synergy's consultants, investors and lenders
and those engaged by Synergy to operate the Assets who similarly agree in
writing to protect the confidentiality of such Confidential Information and
agree to use such Confidential Information only for their due diligence
evaluation of the Assets.
5.2.2 Return of Information. If the transaction contemplated by this
Agreement does not close on or before December 21, 2012, for reasons other than
Seller' wrongful breach of this Agreement under circumstances where, Synergy is,
but for such breach, ready to close, if Seller so requests at any time, Synergy
shall (i) return to Seller all copies of the Confidential Information in
Synergy's possession that were obtained pursuant to any provision of this
Agreement, which Confidential Information is at the time of termination required
to be held in confidence pursuant to Section 5.2.1; (ii) not utilize or permit
utilization of the Confidential Information to compete with Seller; and (iii)
destroy any and all notes, reports, studies or analyses based on or generated
when incorporating or analyzing the Confidential Information.
5.2.3 Communication Between The Parties. If one Party develops information
during its due diligence that leads it to believe that the other Party may have
breached a representation or warranty under this Agreement, the Party
discovering the potential breach shall promptly inform the other Party of such
potential breach so that it may attempt to remedy or cure such breach prior to
Closing.
5.3 Like Kind Exchange. If either Party so requests, the other shall cooperate
fully, as and to the extent reasonably requested by such Party, in connection
with accommodating a like-kind exchange as provided for under Section 1031 of
the Internal Revenue Code and any corresponding state income tax provision
("Like-Kind Exchange"). Each party 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 Assets associated therewith ("1031
Assets"), to a Qualified Intermediary ("QI") to accomplish this transaction, in
whole or in part, in a manner that will comply with the requirements of a
Like-Kind Exchange.
ARTICLE VI
AD VALOREM TAX
Severance, ad valorem or other taxes against the Assets shall be prorated
as of the Effective Date. To be clear, 2011 ad valorem taxes (valued based on
2010 production and payable in 2012) shall be for Seller's account. A portion of
2012 ad valorem taxes (valued based on 2011 production and payable in 2013)
shall be prorated to the Effective Date and be credited to Synergy on the
Preliminary Settlement Statement. An estimate shall be made of unpaid severance
and other production taxes through the Effective Date, (to the extent not
withheld by third party operators or production purchasers), and this estimated
amount of 2012 taxes shall be credited to Synergy on the Preliminary Settlement
Statement. Synergy shall be responsible for payment of 2012 ad valorem taxes
which are payable in 2013. The estimate shall be a good faith estimate and shall
serve as a final settlement amount for such taxes. There shall be no
post-closing adjustment for such taxes. Seller represents that it has paid 2011
ad valorem taxes (payable in 2012), and will disclaim all rights to amounts held
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by third party operators or production purchasers for payment of 2011 and 2012
ad valorem taxes on the Assets. Seller will provide proof of its payment of 2011
ad valorem taxes, which were paid in 2012.
ARTICLE VII
RIGHT OF TERMINATION AND ABANDONMENT
7.1 Permissible Termination. This Agreement may permissibly be terminated
in accordance with the following provisions:
7.1.1 By Seller, if through no fault of Seller, the Closing does not occur
on or before December 21, 2012;
7.1.2 By Synergy, if through no fault of Synergy, the Closing does not
occur on or before December 21, 2012; or
7.1.3 By unanimous agreement of the Parties.
7.2 Liabilities Upon Impermissible Termination. If Closing does not occur
because a Party wrongfully fails to tender performance at Closing, then the
Parties who are ready to close shall retain all legal and equitable remedies
(including, without limitation, specific performance) for the breach; provided,
however, that no Party shall ever have any liability to any other for
consequential, special, punitive or exemplary damages.
ARTICLE VIII
CLOSING
8.1 Date and Place of Closing. The closing (the "Closing") of the transactions
contemplated hereby shall be held at 10:00 a.m. on November 30, 2012, in the
offices of Seller, or at such other time and place as all Parties may agree in
writing.
8.2 Closing Obligations. At Closing, the following events shall occur, each
being a condition precedent to the others and each being deemed to have occurred
simultaneously with the others:
8.2.1 Synergy shall pay to Seller no less than $27,900,000 of the Purchase
Price (the exact cash sum to be calculated in accordance with Section 1.3.2
above) by wire transfer in immediately available funds to such bank accounts and
in such proportions as are identified in advance of the Closing by Seller;
8.2.2 Synergy shall release and cause to be paid over to Seller the xxxxxxx
money deposit in the amount of $2,100,000 which was deposited by Synergy upon
execution of this Agreement pursuant to Exhibit D;
8.2.3 Synergy shall issue, execute and deliver to Seller the restricted
shares of Synergy's common stock in a number determined in accordance with the
formula set forth in Section 1.3.2 above;
8.2.4 Seller shall execute, acknowledge and deliver to Synergy an
Assignment, Xxxx of Sale and Conveyance, with reservation of overriding royalty
interest, in the form attached as Exhibit E, conveying the Assets to Synergy;
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8.2.5 Seller shall execute and deliver such certifications and other
documents as may be necessary to transfer operations of the Leases and Xxxxx to
Synergy;
8.2.6 Seller shall execute and deliver letters in lieu of transfer orders
addressed to each production purchaser authorizing Synergy to receive the
proceeds of oil and gas produced from the Xxxxx from and after the Effective
Date; and
8.2.7 the Parties shall take such other actions and deliver such other
documents as are contemplated by this Agreement.
ARTICLE IX
POST-CLOSING OBLIGATIONS
9.1 Final Settlement Statement. As soon as practicable after the Closing, but in
no event later than January 31, 2013, the Seller will prepare and deliver to
Synergy, in accordance with customary industry accounting practices, the final
settlement statement (the "Final Settlement Statement") setting forth each
adjustment or payment that was not finally determined as of the Closing and
showing the calculation of such adjustment and the resulting final purchase
price (the "Final Purchase Price"). As soon as practicable after receipt of the
Final Settlement Statement, but in no event later than February 14, 2013,
Synergy shall deliver to the Seller a written report containing any changes that
Synergy proposes to make to the Final Settlement Statement. Synergy's failure to
deliver a written report detailing proposed changes to the Final Settlement
Statement by that date shall be deemed an acceptance by Synergy of the Final
Settlement Statement as submitted by the Seller. If the Parties fail to agree
with respect to the changes proposed by Synergy by February 28, 2013, any
disagreement will be resolved pursuant to the provisions of Section 11.12.
Synergy and Seller agree to pay any additional amount due no later than 30 days
after the Final Purchase Price is established.
9.2 Information. Seller agrees to make the Information available for pick up by
Synergy at the offices of Seller as soon as is reasonably practical, but in any
event no later than seven days after Closing. Seller may retain copies of the
Information and shall have the right to review and copy the Information during
standard business hours upon reasonable notice for so long as Synergy retains
the Information. Synergy agrees that the Information will be maintained in
compliance with all applicable laws governing document retention. Synergy will
not destroy or otherwise dispose of Information after Closing, unless Synergy
first gives Seller reasonable notice and an opportunity to copy the Information
to be destroyed. If and to the extent certain portions of the Information are
subject to unaffiliated third party contractual restrictions on disclosure or
transfer, Seller agree to use reasonable efforts to obtain the waiver of such
contractual restrictions; provided, however, that Seller shall not be required
to expend any money in connection with obtaining such waivers. Seller agrees to
keep any Information retained by Seller confidential to the extent required by
Section 5.2.1.
9.3 Further Assurances. From time to time after Closing, each Party shall each
execute, acknowledge and deliver to the others such further instruments and take
such other actions as may be reasonably requested in order to accomplish more
effectively the purposes of the transactions contemplated by this Agreement.
9.4 COGCC Bonds. The Parties acknowledge that Seller has posted bonds with the
Colorado Oil and Gas Conservation Commission ("COGCC") with respect to its
operation of the Xxxxx on the Leases. Promptly after closing, Synergy agrees to
post its own bonds with the COGCC covering all the Xxxxx, or cause its existing
bonds posted with the COGCC to cover such Xxxxx, as required by law and/or any
and all COGCC rules. Synergy also agrees to promptly cooperate with Seller, by
executing such documents and taking such other reasonable actions, as are
necessary for Seller to obtain the return or release of its bonds with the COGCC
with respect to the Xxxxx.
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9.5 Financial Information and Records of Seller. Seller shall make available to
Synergy its financial information and records to the extent Synergy needs to
audit financial information pertaining to the Seller or the Assets to comply
with regulations of the SEC.
ARTICLE X
ASSUMPTION AND RETENTION OF OBLIGATIONS AND INDEMNIFICATION
10.1 Synergy's Assumption of Liabilities and Obligations. Upon Closing and
subject to the provisions of Section 10.3, Synergy shall assume and pay,
perform, fulfill and discharge all claims, costs, expenses, liabilities and
obligations attributable to the (i) the Assets for the period of time after the
Effective Date, (including, without limitation all liability for royalty and
overriding royalty payments in respect of the Assets, the payment of all
operating and other expenses associated with the Assets, the obligation to plug
and abandon all Xxxxx) (ii) proceeds of production from any Well, which is shown
on Seller's books and records as having been held in suspense and withheld from
payment to any third party as a result of a title defect, unknown address or
otherwise, (iii) requirement for posting of bonds with the Colorado Oil and Gas
Conservation Commission with respect to the Xxxxx, except as provided by Section
10.2, and (iv) all environmental liabilities (whether under common law or any
statute, law, ordinance, rule, regulation, code, order, judicial writ,
injunction, or decree issued by any governmental authority, in effect on or
before the Effective Date, relating to the control of any pollutant or
protection of the air, water, land, or environment or the release or disposal of
hazardous materials, hazardous substances or waste materials), whether such
environmental liabilities arise before or after the Effective Date
(collectively, the "Assumed Liabilities").
10.2 Seller's Retention of Liabilities and Obligations. Upon Closing and subject
to the provisions of Section 10.3, Seller shall retain all claims, costs,
expenses, liabilities and obligations accruing or relating to the Assets and
period of time prior to the Effective Date; including any liability, costs or
penalties associated with Seller's failure to file any APENS notices and the
costs of equipping the Xxxxx so as to be in compliance with federal and state
regulations pertaining to the same as of the Effective Date; provided, however,
that Seller shall not retain or otherwise have any other liability or
responsibility for any environmental liability (whether under common law or any
statute, law, ordinance, rule, regulation, code, order, judicial writ,
injunction, or decree issued by any governmental authority, in effect on or
before the Effective Time, relating to the control of any pollutant or
protection of the air, water, land, or environment or the release or disposal of
hazardous materials, hazardous substances or waste materials), whether such
environmental liability arises before or after the Effective Date (collectively,
but after giving effect to the exclusion of all environmental liabilities, the
"Retained Liabilities").
10.3 Indemnification. "Losses" shall mean any actual losses, costs, expenses
(including court costs, reasonable fees and expenses of attorneys, technical
experts and expert witnesses and the cost of investigation), liabilities,
damages, demands, suits, claims, and sanctions of every kind and character
(including civil fines) arising from, related to or reasonably incident to
matters indemnified against; excluding however any special, consequential,
punitive or exemplary damages, loss of profits incurred by a Party or Loss
incurred as a result of the indemnified Party indemnifying a third party. After
the Closing, the Parties shall indemnify each other as follows:
10.3.1 Seller's Indemnification of Synergy. Seller assume all risk,
liability, obligation and Losses in connection with, and shall defend,
indemnify, and save and hold harmless Synergy, its members, officers, directors,
employees and agents, from and against all Losses which arise from or in
connection with the Retained Liabilities.
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10.3.2 Synergy's Indemnification of Seller. Synergy assumes all risk,
liability, obligation and Losses in connection with, and shall defend,
indemnify, and save and hold harmless Seller, including its shareholders,
members, managers, officers, directors, employees and agents, from and against
all Losses which arise from or in connection with the Assumed Liabilities.
10.4 Procedure. The indemnifications contained in Section 10.3 shall be
implemented as follows:
10.4.1 Coverage. Such indemnity shall extend to all Losses suffered or
incurred by the indemnified Party.
10.4.2 Claim Notice. The Party seeking indemnification under the terms of
this Agreement ("Indemnified Party") shall submit a written "Claim Notice" to
the other Party ("Indemnifying Party") which, to be effective, must state (i)
the amount of each payment claimed by an Indemnified Party to be owing, (ii) the
basis for such claim, with supporting documentation, and (iii) a list
identifying to the extent reasonably possible each separate item of Loss for
which payment is so claimed. The amount claimed shall be paid by the
Indemnifying Party to the extent required herein within 30 days after receipt of
the Claim Notice, or after the amount of such payment has been finally
established, whichever last occurs.
10.4.3 Information. Within 60 days after the Indemnified Party receives
notice of a claim or legal action that may result in a Loss for which
indemnification may be sought under this Article X (a "Claim"), the Indemnified
Party shall give written notice of such Claim to the Indemnifying Party. If the
Indemnifying Party or its counsel so requests, the Indemnified Party shall
furnish the Indemnifying Party with copies of all pleadings and other
information with respect to such Claim. At the election of the Indemnifying
Party made within 60 days after receipt of such notice, the Indemnified Party
shall permit the Indemnifying Party to assume control of such Claim (to the
extent only that such Claim, legal action or other matter relates to a Loss for
which the Indemnifying Party is liable), including the determination of all
appropriate actions, the negotiation of settlements on behalf of the Indemnified
Party, and the conduct of litigation through attorneys of the Indemnifying
Party's choice; provided, however, that no such settlement can result in any
liability or cost to the Indemnified Party for which it is entitled to be
indemnified hereunder without its consent. If the Indemnifying Party elects to
assume control, (i) any expense incurred by the Indemnified Party thereafter for
investigation or defense of the matter shall be borne by the Indemnified Party,
and (ii) the Indemnified Party shall give all reasonable information and
assistance, other than pecuniary, that the Indemnifying Party shall deem
necessary to the proper defense of such Claim, legal action, or other matter. In
the absence of such an election, the Indemnified Party will use its best efforts
to defend, at the Indemnifying Party's expense, any claim, legal action or other
matter to which such other Party's indemnification under this Article X applies
until the Indemnifying Party assumes such defense, and, if the Indemnifying
Party fails to assume such defense within the time period provided above, settle
the same in the Indemnified Party's reasonable discretion at the Indemnifying
Party's expense. If such a Claim requires immediate action, both the Indemnified
Party and the Indemnifying Party will cooperate in good faith to take
appropriate action so as not to jeopardize defense of such Claim or either
Party's position with respect to such Claim.
10.5 Not Insurance. The indemnifications provided in this Article X
shall not be construed as a form of insurance.
10.6 Reservation as to Non-Parties. Nothing herein is intended to limit or
otherwise waive any recourse Synergy or Seller may have against any non-party
for any obligations or liabilities that may be incurred with respect to the
Assets.
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ARTICLE XI
MISCELLANEOUS
11.1 Exhibits. The Exhibits to this Agreement are hereby incorporated into this
Agreement by reference and constitute a part of this Agreement.
11.2 Expenses. All legal and accounting fees incurred in negotiating this
Agreement or in consummating the transactions contemplated by this Agreement
shall be paid by the Party incurring the same.
11.3 Notices. All notices and communications required or permitted under this
Agreement shall be in writing and addressed as set forth below. Any
communication or delivery hereunder shall be deemed to have been duly made and
the receiving Party charged with notice (i) if personally delivered, when
received, (ii) if sent by facsimile transmission or electronic mail, when
received (iii) if mailed, 5 business days after mailing, certified mail, return
receipt requested, or (iv) if sent by overnight courier, one day after sending.
All notices shall be addressed as follows:
If to Seller: Xxx Energy LLC
0000 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xx Xxx, Manager
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Synergy: Synergy Resources Corporation
00000 Xxxxxxx 00
Xxxxxxxxxxx, XX 00000
Attention: Xx Xxxxxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any Party may, by written notice so delivered to the other Parties, change
the address or individual to which delivery shall thereafter be made.
11.4 Amendments. Except for waivers specifically provided for in this Agreement,
this Agreement may not be amended nor any rights hereunder waived except by an
instrument in writing signed by the Party to be charged with such amendment or
waiver and delivered by such Party to the Party claiming the benefit of such
amendment or waiver.
11.5 Assignment. No Party may assign all or any portion of its respective rights
or delegate all or any portion of its respective duties hereunder unless it
continues to remain liable for the performance of its obligations hereunder.
11.6 Counterparts; Fax Signatures. This Agreement may be executed by the Parties
in any number of counterparts, each of which shall be deemed an original
instrument, but all of which together shall constitute but one and the same
instrument. Facsimile signatures shall be considered binding.
11.7 Governing Law. This Agreement and the transactions contemplated hereby and
any arbitration or dispute resolution conducted pursuant hereto shall be
construed in accordance with, and governed by, the laws of the State of
StateplaceColorado without reference to the conflict of laws principles thereof.
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11.8 Entire Agreement. This Agreement constitutes the entire understanding among
the Parties, their respective partners, members, trustees, shareholders,
officers, directors and employees with respect to the subject matter hereof,
superseding all negotiations, prior discussions and prior agreements and
understandings relating to such subject matter.
11.9 Binding Effect. This Agreement shall be binding upon, and shall inure to
the benefit of, the Parties and their respective successors and assigns.
11.10 Survival. The representations and warranties of the Parties contained in
Articles II and III (exclusive of those set forth in Section 2.2.13
"Environmental Matters" which shall terminate at Closing) and all claims, causes
of action and damages with respect thereto shall survive the Closing, but shall
terminate upon acceptance, agreement by the Parties or final resolution
regarding the Final Settlement Statement, in the manner described in Section 9.1
above. The indemnification provisions of Article X. shall, however, survive the
Closing and continue in full force and effect, together with any other provision
of this Agreement that expressly indicates that it is to survive the Closing.
11.11 Limitation on Damages; Provision for Recovery of Costs and Attorney's
Fees. The Parties expressly waive any and all rights to consequential, special,
incidental, punitive or exemplary damages, or loss of profits resulting from
breach of this Agreement. The prevailing party in any arbitration or legal
proceeding seeking a remedy for the breach of this Agreement shall, however, be
entitled to recover all reasonable attorneys' fees and costs incurred in such
litigation.
11.12 Arbitration. The Parties agree to submit any dispute involving this
Agreement (including but not limited to disputes involving Sections 4.5, 9.1,
10.4.2 or 10.4.3) to binding arbitration to be conducted as follows: The
arbitration proceeding shall be governed by Colorado law and shall be conducted
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") in Denver, Colorado, with discovery to be conducted in
accordance with the Federal Rules of Civil Procedure, and with any disputes over
the scope of discovery to be determined by the arbitrators. The arbitration
shall be before a three person panel of neutral arbitrators, consisting of one
person from each of the following categories: (1) an attorney who has practiced
in the area of oil and gas law for at least 10 years; (2) a retired judge at the
United States District Court or Appellate Court level having jurisdiction in
Colorado; and (3) a person with at least 10 years of oil and gas industry
experience as a petroleum engineer and with experience in the geologic basin
where the Assets are located. The AAA shall submit a list of persons meeting the
criteria outlined above for each category of arbitrator, and the Parties shall
select one person from each category in the manner established by the AAA. The
arbitrators shall conduct a hearing no later than 60 days after submission of
the matter to arbitration, and a written decision shall be rendered by the
arbitrators within 30 days of the hearing. At the hearing, the Parties shall
present such evidence and witnesses as they may choose, with or without counsel.
Adherence to formal rules of evidence shall not be required but the arbitration
panel shall consider any evidence and testimony that it determines to be
relevant, in accordance with procedures that it determines to be appropriate.
Any award entered in the arbitration shall be made by a written opinion stating
the reasons and basis for the award made and any payment due pursuant to the
arbitration shall be made within 15 days of the arbitrators' decision. The final
decision may be filed in a court of competent jurisdiction and may be enforced
by any Party as a final judgment of such court. Each Party shall bear its own
costs and expenses of the arbitration, provided, however, that the costs of
employing the arbitrators shall be borne 50% by Seller and 50% by Synergy.
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11.13 No Third-Party Beneficiaries. This Agreement is intended to benefit only
the Parties and their respective permitted successors and assigns.
11.14 Severability. If at any time subsequent to the date hereof, any provision
of this Agreement shall be held by any court of competent jurisdiction to be
illegal, void or unenforceable, such provision shall be of no force and effect,
but the illegality or unenforceability of such provision shall have no effect
upon and shall not impair the enforceability of any other provision of this
Agreement.
11.15 Waiver. No consent or waiver, express of implied, to or of any breach or
default in the performance of any obligation or covenant hereunder shall
constitute a consent or waiver to or of any other breach or default in the
performance of the same or any other obligations hereunder.
11.16 Public Disclosure. Synergy will be permitted to make public disclosure
regarding the execution of this Agreement and the Closing of this Agreement as
may be required by federal and/or state securities laws.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the 23rd
day of October, 2012.
SELLER: BUYER:
XXX ENERGY LLC SYNERGY RESOURCES CORPORATION
By: /s/ Ed Orrr By:/s/ Xxxxxxx Xxxxx
-------------------------- ------------------------------
Xx Xxx, Manager Xxxxxxx Xxxxx, Vice President
By:/s/ Xxxxxx Xxxxxx
------------------------------
Xxxxxx Xxxxxx, Board Member and
Chairman of Acquistions
