EXHIBIT 10.1
FORM 8-K
MOUNTAIN OIL, INC.
SEC FILE NO. 333-37842
AGREEMENT
AGREEMENT MADE MARCH 1, 2003, BETWEEN MOUNTAIN OIL, INC. (MOLI), A UTAH
CORPORATION OF 0000 XXXX XXXX XXXXXX (XXXXXXX 00), XXXXXXX, XXXXXX OF UINTAH,
STATE OF UTAH, HEREIN REFERRED TO AS A SELLER LESSOR, AND MOUNTAIN OIL AND GAS,
INC. (MOG), A UTAH CORPORATION, HAVING ITS PRINCIPAL OFFICE AT 000 XXXX 000
XXXXX, XXXXX X, XXXXXX, XXXXXX OF UINTAH, STATE OF UTAH, HEREIN REFERRED TO AS
LESSEE AND PURCHASER.
THE PARTIES RECITE AND DECLARE THAT:
1. MOLI IS THE OWNER OF AN OIL AND GAS EXPLORATION, PRODUCTION AND
DEVELOPMENT BUSINESS, WHICH INCLUDES, BUT IS NOT LIMITED TO, OFFICE BUILDING,
FIXTURES, OFFICE EQUIPMENT, OIL INVENTORY, ACCOUNTS RECEIVABLE, DEPOSITS IN BANK
ACCOUNTS, INSURANCE ACCOUNTS, UTILITIES DEPOSITS, LEGAL CLAIMS, VEHICLES, OIL
AND GAS SERVICE AND PRODUCTION EQUIPMENT AND FIXTURES, AND OTHER ASSETS.
2. MOG DESIRES TO PURCHASE CERTAIN ASSETS OF MOLI AND ASSUME CERTAIN
LIABILITIES (SEE ATTACHMENT A AND B), AND TO LEASE WITH AN OPTION TO BUY OTHER
ASSETS OF MOLI (SEE ATTACHMENT C)
SECTION ONE
PURCHASE OF INITIAL ASSETS
MOG HEREBY AGREES TO PURCHASE AND MOLI AGREES TO SELL THE ASSETS IN
ATTACHMENT A UNDER THE FOLLOWING TERMS:
1. EFFECTIVE MARCH 1, 2003, MOLI SHALL SELL, CONVEY, DELIVER AND TRANSFER
OWNERSHIP TO MOG THE ASSETS IN ATTACHMENT A.
2. AS CONSIDERATION FOR THE ASSETS, EFFECTIVE MARCH 1, 2003, MOG SHALL
ASSUME THE LIABILITIES SET FORTH IN ATTACHMENT B AND ON MARCH 1, 2003 SHALL
DELIVER TO MOLI CERTIFICATES REPRESENTING 807,266 SHARES OF MOLI COMMON STOCK
DULY ENDORSED FOR TRANSFER, WITH SIGNATURE GUARANTEES.
SECTION TWO
TERMS OF LEASE
MOLI HEREBY LEASES THE ASSETS IN ATTACHMENT C (THE "LEASED PROPERTY") TO
MOG FOR THE TERM BEGINNING COMMENCING MARCH 1, 2003 THROUGH APRIL 30, 2004,
SUBJECT TO THE FOLLOWING TERMS:
1. MOLI SHALL DELIVER TO MOG LEASED PROPERTY AND MOG SHALL HAVE THE
EXCLUSIVE RIGHT TO POSSESS AND OPERATE IN THE DISCRETION OF THE MOG. TITLE TO
THE LEASED PROPERTY SHALL AT ALL TIMES REMAIN IN MOLI UNLESS TRANSFERRED TO MOG
BY SALE, AND MOG SHALL HAVE ONLY THE RIGHT TO RETAIN POSSESSION OF THE LEASED
PROPERTY PURSUANT TO THE TERMS OF THIS AGREEMENT. MOG SHALL NOT ALLOW ANY
ENCUMBRANCE OR SECURITY INTEREST TO ATTACH TO ANY OF THE LEASED PROPERTY.
2. MOG SHALL DURING THE TERM OF THIS LEASE, ASSUME AND PAY THE ALL
LIABILITIES AND EXPENSES ASSOCIATED MAINTAINING AND OPERATING THE LEASED
PROPERTY. MOG SHALL INDEMNIFY AND HOLD HARMLESS MOLI AND ITS AGENTS, EMPLOYEES
AND ASSIGNS WITH RESPECT TO, AND GIVE MOLI PROMPT WRITTEN NOTICE OF ALL CLAIMS,
LIABILITIES, AND EXPENSES (INCLUDING ATTORNEYS' FEES) RELATING TO THE
POSSESSION, USE, MAINTENANCE, REPAIR, OPERATION, OR CONDITION OF THE LEASED
PROPERTY. MOLI'S RIGHTS UNDER THIS PARAGRAPH SHALL SURVIVE THE EXPIRATION OR
TERMINATION OF THIS AGREEMENT.
3. MOG SHALL BE ENTITLED TO RECEIVE ALL INCOME GENERATED FROM THE LEASED
PROPERTY DURING THE TERM OF THIS LEASE AND SHALL BE RESPONSIBLE TO PAY ALL
EXPENSES ASSOCIATED WITH THESE ASSETS DURING THE TERM OF THIS LEASE.
4. MOG SHALL PAY TO MOLI THE SUM OF $6,500.00 PER MONTH AS THE LEASE
PAYMENT BEGINNING ON MARCH 25, 2003, AND ON THE 25TH DAY OF EACH MONTH
THEREAFTER UNTIL THE END OF THE TERM OF THIS LEASE. IF ANY PAYMENT IS MORE THAN
10 DAYS LATE, MOG SHALL PAY A LATE CHARGE EQUAL TO 5% OF SUCH AMOUNT, PLUS
INTEREST ON SUCH AMOUNT AT THE LESSER OF 18% PER ANNUM OR THE MAXIMUM LEGAL
RATE. MOG MAY NOT WITHHOLD ANY AMOUNT FOR ANY REASON, INCLUDING ANY CLAIMS
AGAINST MOLI.
5. MOG SHALL PAY AND INDEMNIFY MOLI AGAINST ALL LICENSING, FILING,
REGISTRATION, SALES, USE, PROPERTY, AND OTHER FEES, TAXES OR PENALTIES IMPOSED
WITH RESPECT TO THE LEASED PROPERTY (EXCEPT TAXES MEASURED SOLELY BY MOLI'S NET
INCOME). LESSEE SHALL PROPERLY MAKE ALL RELATED REPORTS OR RETURNS.
6. MOG SHALL MAINTAIN, WITH RESPECT TO THE LEASED PROPERTY, IN FORM AND
AMOUNTS ACCEPTABLE TO MOLI, COMMERCIAL GENERAL LIABILITY INSURANCE AND ALL-RISK
INSURANCE NAMING MOLI AS ADDITIONAL INSURED AND LOSS PAYEE, NOT ABLE TO BE
ALTERED OR CANCELED WITHOUT 30 DAYS' WRITTEN NOTICE TO MOLI, AND PROVIDING
PRIMARY COVERAGE. MOG SHALL PROVIDE EVIDENCE OF SUCH INSURANCE UPON DEMAND.
MOLI MAY COLLECT INSURANCE PROCEEDS AND APPLY THEM TO MOG'S OBLIGATIONS. MOG
GRANTS MOLI POWER OF ATTORNEY TO SIGN INSTRUMENTS REPRESENTING PROCEEDS OF SUCH
INSURANCE.
7. ON THE OCCURRENCE OF ANY DEFAULT UNDER THIS AGREEMENT, MOLI MAY DO ANY
ONE OR MORE OF THE FOLLOWING AND EXERCISE ANY OTHER LEGAL REMEDIES: (A)
TERMINATE THE LEASE OF THE LEASED PROPERTY BY WRITTEN NOTICE, (B) ENFORCE
PERFORMANCE AND/OR RECOVER DAMAGES, (C) CAUSE MOG TO DELIVER POSSESSION OF THE
LEASED PROPERTY TO MOLI, (D) RETAIN, USE, RE-LEASE OR SELL ANY OF THE LEASE
PROPERTY AND ANY ATTACHMENTS, AND (E) RECOVER (I) ALL ACCRUED AMOUNTS DUE, (II)
COLLECTION COSTS AND EXPENSES, INCLUDING ATTORNEYS' FEES, AND (III) INTEREST ON
ALL AMOUNTS DUE HEREUNDER AT THE LESSER OF 18% PER ANNUM OR THE MAXIMUM LEGAL
RATE, COMPOUNDED DAILY, BEFORE AND AFTER JUDGMENT. NO WAIVER OF ANY DEFAULT
SHALL WAIVE ANY LATER DEFAULT. MOLI'S FAILURE TO EXERCISE ANY RIGHT SHALL NOT
WAIVE THAT RIGHT OR ANY OTHER RIGHT.
SECTION THREE
PURCHASE OPTION
MOG SHALL HAVE THE OPTION DURING THE TERM OF THIS LEASE TO PURCHASE THE
LEASED PROPERTY ON THE FOLLOWING TERMS:
1. MOG SHALL PAY TO MOLI THE SUM OF $650,000.00 (THE "PURCHASE PRICE").
2. MOG SHALL CONVEY TO MOLI TEN PERCENT OF THE OUTSTANDING SHARES OF MOG'S
COMMON STOCK.
3. MOG SHALL HAVE THE RIGHT OF FIRST REFUSAL TO PURCHASE ITS SHARES BACK
FROM MOLI SHOULD MOLI DECIDE TO SELL THE SHARES IT HOLDS IN MOG.
SECTION FOUR
REPRESENTATIONS OF THE PARTIES
THE PARTIES REPRESENT TO EACH OTHER AS FOLLOWS:
1. EACH PARTY IS A CORPORATION VALIDLY EXISTING AND IN GOOD STANDING UNDER
THE LAWS OF THE STATE OF UTAH AND IS DULY QUALIFIED TO OWN ITS PROPERTIES AND
ASSETS AND TO CARRY ON ITS BUSINESS AS NOW BEING CONDUCTED.
2. EACH PARTY HAS THE REQUISITE POWER AND AUTHORITY TO EXECUTE AND DELIVER
THIS AGREEMENT AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY. THE
EXECUTION AND DELIVERY OF THIS AGREEMENT BY EACH OF THE PARTIES AND THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY HAVE BEEN DULY AUTHORIZED.
3. THIS AGREEMENT HAS BEEN DULY EXECUTED AND DELIVERED BY EACH OF THE
PARTIES AND CONSTITUTES THE VALID AND BINDING OBLIGATION OF EACH OF THE PARTIES,
ENFORCEABLE AGAINST EACH IN ACCORDANCE WITH THE TERMS HEREOF. NO OTHER ACT,
APPROVAL, OR PROCEEDING ON THE PART OF EITHER OF THE PARTIES OR ANY OTHER PARTY
IS REQUIRED TO AUTHORIZE THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE
PARTIES OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY.
4. THIS AGREEMENT, AND THE EXECUTION AND DELIVERY HEREOF BY THE PARTIES,
DOES NOT AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY WILL NOT
(I) CONFLICT WITH OR RESULT IN A BREACH OF THE CHARTER OR BYLAWS OF EITHER OF
THE PARTIES OR ANY OTHER GOVERNING DOCUMENTS OF EITHER PARTY, (II) VIOLATE ANY
STATUE OR LAW OR ANY JUDGMENT, DECREE, ORDER, WRIT, INJUNCTION, REGULATION, OR
RULE OF ANY COURT OR GOVERNMENTAL AUTHORITY, WHICH VIOLATION MIGHT MATERIALLY
AND ADVERSELY AFFECT THE ABILITY OF EITHER OF THE PARTIES TO PERFORM ITS
OBLIGATIONS UNDER THIS AGREEMENT.
5. NEITHER PARTY HAS INCURRED LIABILITY, CONTINGENT OR OTHERWISE, FOR
BROKERS' OR FINDERS' FEES RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT FOR WHICH THE OTHER PARTY SHALL HAVE ANY RESPONSIBILITY WHATSOEVER.
SECTION FIVE
SUBLEASES
MOG MAY NOT SUBLET ANY OF THE ASSETS SUBJECT TO THE LEASE REFERENCED
ATTACHMENT C WITHOUT THE PRIOR APPROVAL OF THE MOLI.
SECTION SIX
MISCELLANEOUS PROVISIONS
1. ENTIRE AGREEMENT. THIS INSTRUMENT AND THE INSTRUMENTS OF CONVEYANCE,
CERTIFICATES AND OTHER DOCUMENTS DELIVERED IN CONNECTION HEREWITH STATES THE
ENTIRE AGREEMENT AND SUPERSEDES ALL PRIOR AGREEMENTS BETWEEN THE PARTIES
CONCERNING THE SUBJECT MATTER HEREOF. THIS AGREEMENT MAY BE SUPPLEMENTED,
ALTERED, AMENDED, MODIFIED, OR REVOKED BY WRITING ONLY, SIGNED BY BOTH PARTIES.
2. COUNTERPART. THIS AGREEMENT MAY BE EXECUTED BY MOLI AND MOG IN ANY
NUMBER OF COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL INSTRUMENT,
BUT ALL OF WHICH TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.
FURTHERMORE, A FAXED SIGNATURE SHALL BE DEEMED AN ORIGINAL SIGNATURE FOR
PURPOSES OF THIS SECTION SIX, PARAGRAPH 2.
3. WAIVER. ANY OF THE TERMS, PROVISIONS, COVENANTS, REPRESENTATIONS,
WARRANTIES, OR CONDITIONS HEREOF MAY BE WAIVED ONLY BY A WRITTEN INSTRUMENT
EXECUTED BY THE PARTY WAIVING COMPLIANCE. THE FAILURE OF ANY PARTY AT ANY TIME
OR TIMES TO REQUIRE PERFORMANCE OF ANY PROVISIONS HEREOF SHALL IN NO MANNER
AFFECT SUCH PARTY'S RIGHT TO ENFORCE THE SAME.
4. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF UTAH.
5. AGREEMENT FOR THE PARTIES' BENEFIT ONLY. THIS AGREEMENT IS NOT
INTENDED TO CONFER UPON ANY PERSON NOT A PARTY HERETO ANY RIGHTS OR REMEDIES
HEREUNDER, AND NO PERSON OTHER THAN THE PARTIES HERETO IS ENTITLED TO RELY ON
ANY REPRESENTATION, COVENANT, OR AGREEMENT CONTAINED HEREIN.
6. SEVERABILITY. IF ANY TERM OR OTHER PROVISION OF THIS AGREEMENT IS
INVALID, ILLEGAL, OR INCAPABLE OF BEING ENFORCED BY ANY RULE OF LAW OR PUBLIC
POLICY, ALL OTHER CONDITIONS AND PROVISIONS OF THIS AGREEMENT SHALL NEVERTHELESS
REMAIN IN FULL FORCE AND EFFECT SO LONG AS THE ECONOMIC OR LEGAL SUBSTANCE OF
THE TRANSACTIONS CONTEMPLATED HEREBY IS NOT AFFECTED IN ANY ADVERSE MANNER TO
ANY PARTY.
7. BINDING EFFECT; ASSIGNMENT. ALL THE TERMS, PROVISION, COVENANTS,
REPRESENTATIONS, AND CONDITIONS OF THIS AGREEMENT SHALL BE BINDING UPON AND
INURE TO THE BENEFIT OF AND BE ENFORCEABLE BY THE PARTIES HERETO AND THEIR
RESPECTIVE SUCCESSORS.
8. ENFORCEMENT. SHOULD MOLI OR MOG DEFAULT IN THE PERFORMANCE OF THIS
AGREEMENT, THE NON-DEFAULTING PARTY SHALL BE ENTITLED TO ENFORCE SPECIFIC
PERFORMANCE OF THIS AGREEMENT, OR EXERCISE ANY OTHER RIGHT OR REMEDY IT MAY HAVE
AT LAW OR IN EQUITY BY REASON OF SUCH DEFAULT. IN ANY ACTION TO ENFORCE THIS
AGREEMENT OR OBTAIN ANY REMEDY, THE NON-PREVAILING PARTY SHALL REIMBURSE THE
PREVAILING PARTY FOR ALL COSTS AND EXPENSES OF SUCH ACTION AND OF COLLECTING OR
ENFORCING ANY JUDGMENT RENDERED THEREIN, INCLUDING ATTORNEYS' FEES.
EXECUTED AS OF THE DATE FIRST ABOVE MENTIONED.
MOUNTAIN OIL, INC. MOUNTAIN OIL AND GAS, INC.
/S/: XXXXXX XXXXXXXX /S/: XXXXX XXXXXXXX
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PRESIDENT, MOUNTAIN OIL, INC. PRESIDENT,MOUNTAIN OIL & GAS
