PURCHASE AND SALE AGREEMENT
FLY CREEK PROSPECT
(COAL BANK DRAW AND XXXXXX DOME)
MOFFAT COUNTY, COLORADO
AND
CARBON COUNTY, WYOMING
BETWEEN
SKYLINE RESOURCES, INC.
(AS SELLER)
CEDAR RIDGE, LLC.
(AS BUYER)
PURCHASE AND SALE AGREEMENT
THIS ASSET SALE AGREEMENT (this "Agreement"), dated February 17, 2003, by and
between, SKYLINE RESOURCES, INC., a Colorado corporation with a mailing address
of 0000 Xxxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxxxxx 00000 ("Seller") and CEDAR
RIDGE, LLC, a Colorado limited liability company with a mailing address of 000
Xxxxxxxx Xxxxxx, Xxxxx 000, XX Xxx 0000, Xxxx Xxxxx, Xxxxxxxx 00000-0000
("Buyer"), sometimes jointly referred to as the "Parties" herein.
WITNESSETH:
That Seller desire to sell to Buyer and Buyer desires to purchase from
Seller on the terms set forth in this Agreement those certain oil and gas
interests and associated assets described herein. Accordingly, in consideration
of the mutual promises contained herein, the mutual benefits to be derived by
each party hereunder and other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, Buyer and Seller agree as follows:
1. SALE AND PURCHASE OF ASSETS
1.1 Assets To Be Sold.
1.1.1Seller shall sell, transfer, and assign, or cause others to sell,
transfer and assign to Buyer, and Buyer shall purchase and
receive 36.666667%66.666667% of Seller' rights, title, and
interests in and to the following:
a) the oil and gas leases and fee minerals listed and described
in Exhibits "A", "AA", and "AB", with all such leases
delivering a minimum of an 80.000000% net revenue interest
(collectively, "Leases")
b) all coalbed methane gas xxxxx, all conventional gas xxxxx,
disposal xxxxx, stratigraphic test xxxxx, monitor xxxxx and
other xxxxx located on the Leases or on lands pooled
therewith (collectively the "Xxxxx");
c) all equipment listed on Exhibit "A1", pipelines, machinery,
fixtures, flowlines, materials, improvements, and other
real, personal, movable, immovable and mixed property
located on, used in the operation of, or relating to the
production, treatment, sale, or disposal of hydrocarbons,
water, and associated substances produced from the Leases
(the "Personal Property");
d) all natural gas, natural gas liquids, condensate, products,
and other hydrocarbons, whether gaseous or liquid, produced
from or allocable to the Assets after the Effective Date
(the "Hydrocarbons");
e) to the extent transferable, all contracts, permits,
rights-of-way, easements, licenses, servitudes and
agreements (including but not limited to those described on
Exhibit "A2") relating to the Leases, Xxxxx or Personal
Property or the ownership or operation thereof, or the
production, treatment, sale, storage or disposal of
hydrocarbons, water, or substances associated therewith (the
"Applicable Contracts"), Buyer shall be responsible for
obtaining any and all bonds required by Moffat and Routt
Counties, Colorado, Carbon County, Wyoming, the State of
Colorado, the State of Wyoming, and the federal government
and, its agencies. Seller shall cancel all bonds currently
in force effective as of the Effective Date defined herein;
and
f) Copies of records relating to the Leases, Xxxxx,
Hydrocarbons, Applicable Contracts and Personal Property,
owned by Seller and which Seller are not prohibited from
transferring to Buyer by law or existing contractual
relationship (collectively the "Records"), as follows: all
(i) lease, land, and division order files (including any
abstracts of title, title opinions, certificates of title,
title curative documents, and division orders contained
therein) (the "Land Files"), (ii) the Applicable Contracts;
(iii) all well, facility, and historic production files (the
"Well Files") and (iv) all geological files (including
structure maps, logs and isopach maps) relating directly to
the Leases (the "Geologic Data"), said Geologic Data being
accepted "as is, where is" without warranty or
representation of any nature or kind as to the accuracy,
completeness, materiality, validity or fitness for any
purpose of such Geologic Data and with all faults and same
is delivered for the purpose of Buyer's independent
evaluation and any use or reliance thereon is at Buyer's
sole risk.
All such Leases, Xxxxx, Personal Property, Hydrocarbons,
Applicable Contracts, and Records are hereinafter
collectively referred to as the "Assets."
1.1.2The transfer of the Assets will be made at Closing (as
hereinafter defined in Section 10.2.1), but shall be made
effective as of the Effective Date (as hereinafter defined).
Seller and Buyer shall execute such additional documents as may
be necessary to transfer the interests herein sold and purchased
on the records of any purchaser of hydrocarbons produced from or
allocable to the Assets.
1.2 Exclusions and Reservations: Specifically excepted and reserved from
this transaction are the following, hereinafter referred to as the
"Excluded Assets".
a) Any of Seller's reserve estimates, economic analyses, pricing
forecasts, legal opinions or analyses, or information considered
by Seller as confidential or protected by "Attorney Client
Privilege";
b) Subject to the provisions of Section 11.2, all rights and claims
arising, occurring, or existing in favor of Seller prior to the
Effective Date including, but not limited to, any and all
contract rights, claims, penalties, receivables, revenues,
recoupment rights, recovery rights, accounting adjustments,
mispayments, erroneous payments, personal injury, property
damage, royalty or other rights and claims of any nature in favor
of Seller relating to any time period prior to the Effective
Date;
c) All corporate, financial, and tax records of Seller; however,
Buyer shall be entitled to receive copies of any financial and
tax records which directly relate to the Assets, or which are
necessary for Buyer's ownership, administration, or operation of
the Assets;
d) All rights, titles, claims and interests of Seller related to the
Assets for all periods prior to the Effective Date (i) under any
policy or agreement of insurance or indemnity, (ii) under any
bond, or (iii) to any insurance or condemnation proceeds or
awards;
e) All amounts due or payable to Seller as adjustments or refunds
under any contracts or agreements affecting the Assets for all
periods prior to the Effective Date;
f) Subject to the terms hereof, all monies, proceeds, benefits,
receipts, credits, income or revenues (and any security or other
deposits made) attributable to the Assets prior to the Effective
Date; and
g) All Seller's patents, trade secrets, copyrights, names, marks and
logos.
1.3 Conveyancing Instruments. The Assets to be conveyed by Seller to Buyer
pursuant to Section 1.1.1 be conveyed "as is, where is" with the
express conditions and limitations contained in this Agreement. The
Assets to be transferred to Buyer pursuant to Section 1.1.1 shall be
transferred pursuant to an Assignment, Xxxx of Sale and Conveyance as
provided in Section 10.2 hereof in substantially the form of Exhibit
"B" (the "Assignment").
2. PURCHASE PRICE AND EFFECTIVE DATE
2.1 Purchase Price. As consideration for the sale of the Assets, Buyer
shall pay to Seller or their respective designee, United States
dollars ($ 900,000.00) (the "Purchase Price"), as set forth below. The
Purchase Price as adjusted in accordance with Section 2.4 shall be
referred to as the "Adjusted Purchase Price."
2.1.1A deposit in the amount of $25,000.00 of the Purchase Price (the
"Deposit") has been paid as an up front payment at the time the
Letter of Intent was executed by the Parties.
2.1.2At the time of Closing, Buyer shall pay Seller $375,000.00.
During the development of the Prospect, Buyer shall carry
Seller's 30.000000% working interest through $500,000.00 worth of
all costs. In the event that Buyer does not invest the entire
$900,000.00 Purchase Price as set forth above, then Buyer shall
earn its proportionate share of the 36.666667% for every dollar
invested up to the maximum investment of $900,000.00 (e.g.,
$400,000.00/$900,000.00 = $44.444444% x 36.666667% = 16.30%
working interest for Buyer in Prospect).
2.2 Transfer of Purchase Price. The Deposit and Adjusted Purchase Price
shall be paid by Buyer on the dates set forth herein to Seller's
address as set forth above.
2.3 Allocation of Purchase Price. The Purchase Price shall be allocated
among tangibles and intangibles comprising the Assets as follows:
Fifty Percent (50.00%) of the Purchase Price shall be attributed to
the Leases and associated agreements (with all Leases delivering a
minimum of an 80% net mineral interest), and Fifty Percent (50.00%) of
the Purchase Price shall be attributed to the xxxxx, equipment and
other Personal Property. Buyer and Seller agree to be bound by the
allocation of the Purchase Price among tangible and intangible Assets
set forth herein for all purposes; to consistently report such
allocations for all federal, state and local income tax purposes; and
to timely file all reports required by the Internal Revenue Code of
1986, as amended, concerning the Purchase Price allocations.
2.4 Adjustments to Purchase Price. The Purchase Price shall be adjusted in
accordance with this Section 2.4.
2.4.1The Purchase Price shall be increased by the following amounts
(without duplication):
2.4.1.1 the amount of any property or ad valorem taxes paid by Seller
prorated in accordance with Section 5.1;
2.4.1.3 any other amount agreed upon by Seller and Buyer; or
2.4.1.4 an amount equal to any appropriate increases in value of the
Assets, as determined in accordance with Section 7.7.
2.4.2 The Purchase Price shall be decreased by the following amounts:
2.4.2.1 it has been determined by Buyer that Skyline's mineral
ownership in the Prospect is less than 10,500 net mineral
acres but more than 8,925 net mineral acres, and that the
net revenue interest to be delivered under the currently
held leases is less than 80%. Therefore, the parties have
agreed that Skyline shall acquire all of the interest set
forth in Exhibit "AB" at its sole cost and expense and
provide Cedar Ridge its 36.666667% of 8/8th s working
interest in these leases within thirty (30) days of closing.
In the event that Skyline fails to acquire the leases set
forth on Exhibit "AB" within the time period provided, then
Cedar Ridge shall have the option to acquire these interests
and be credited with all of the lease expenses (including,
but not limited to, brokerage costs, recording fees, and
lease bonus) incurred to acquire these interests against the
$500,000 carry described in Article 2.1.2 hereof, and in the
Participation Agreement executed by the Parties of even
date; 2.4.2.2 the amount of any property or ad valorem taxes
prorated in accordance with Section 5.1; and 2.4.2.3
reductions due to Force Majeure as provided in Section 11.4.
2.5 Effective Date of Sale. The effective date of the sale of the Assets
described in Section 1.1, thereof, shall be February 28, 2003, as of
11:59 p.m., local time where the Assets are located (the "Effective
Date"). It is understood and agreed that Cedar Ridge shall not incur
any additional liability whatsoever as a result of amending the
Effective Date from March 1, 2003 at 7:00 a.m. to February 28, 2003 at
11:59 p.m. to accommodate Skyline's tax year end.
3. ASSUMPTION OF LIABILITIES AND INDEMNIFICATION
3.1 Payment of Invoices. After the Closing, Seller will pay only that
portion of invoices received that are applicable to work performed or
material received in the period prior to the Effective Date; other
charges and invoices will be returned to the vendor for rebilling to
Buyer. Similarly, after the Closing, Buyer will pay only that portion
of invoices received that are applicable to work performed or material
received in the period on or subsequent to the Effective Date; other
charges and invoices will be returned to the vendor for rebilling to
Seller, and billed by Buyer to the working interest owners under the
applicable joint operating agreement.
3.3 Liabilities After Closing and Indemnities.
3.3.1Buyer shall observe and comply with all covenants, terms, and
provisions, express or implied, contained in the agreements,
leases, easements, permits, commingling authorizations and other
contracts appertaining to the interest acquired in the Assets as
of the time of Closing of this purchase and sale; and this
purchase and sale is made expressly subject to all agreements,
leases, easements, permits, commingling authorizations and other
contracts specifically identified on the attached Exhibit "A2".
Buyer shall assume and be responsible for its proportionate share
of all obligations of Seller accruing under such agreements after
the Effective Date.
3.3.2Buyer specifically assumes the risk of description, title, and
the condition of the Assets and shall inspect the Assets prior to
the Closing.
5. TAXES AND PAYABLES
5.1 Payment of Taxes. All real estate, occupation, ad valorem, personal
property taxes and charges on any of the equipment, facilities, plants
or other assets for the current tax year shall be prorated as of the
Effective Date. Ad valorem or property taxes on the mineral estate,
the producing leasehold or the produced mineral, which are based on
the production and/or revenue received and which are taxed in a year
following the year of production, shall be subject to proration based
on the production and revenue received by Buyer and Seller. Seller
shall be responsible for taxes based on production and revenue
received up to the Effective Date; Buyer shall be responsible for its
proportionate share of taxes based on production and revenue from the
Effective Date and thereafter, regardless of the year in which the tax
is due or paid. Seller shall be responsible for all oil and gas
severance taxes, production taxes, windfall profits taxes, and any
other similar taxes applicable to oil and gas production occurring
prior to the Effective Date, and Buyer shall be responsible for its
proportionate share of all such taxes applicable to oil and gas
production occurring on and after the Effective Date. Seller shall pay
all such items for all periods prior to such date and shall be
entitled to all refunds and rebates with regard to such periods. Buyer
shall be responsible for its proportionate share of all sales, use and
similar tax arising out of the sale of the assets. At Closing, Buyer
shall pay Seller its proportionate share of all state and local sales
or use taxes applicable to that portion of the assets which are
tangible personal property, and Seller shall remit such amount to the
appropriate taxing authority in accordance with applicable law;
provided, however, that if Buyer holds a direct payment permit which
is valid at the time of Closing, Buyer shall assume all responsibility
for remitting to the appropriate taxing authority its proportionate
share of the state and local sales and use taxes due, and shall
provide Seller with any exemption certificates or other documentation
required under applicable law in lieu of paying Seller the taxes due.
Should this purchase and sale constitute an isolated or occasional
sale and not be subject to sales or use tax with any of the taxing
authorities having jurisdiction over this transaction, no sales tax
will be collected by Seller from Buyer at the date of Closing. Seller
agrees to cooperate with Buyer in demonstrating that the requirements
for an isolated or occasional sale or any other sales tax exemption
have been met.
6. REPRESENTATIONS AND WARRANTIES
6.1 Seller's Representations and Warranties. Seller represents and
warrants to Buyer that, as of the date hereof and as of Closing,
the following statements are accurate:
6.1.1Seller is a corporation duly organized and validly existing,
in good standing, under the laws of the State of Colorado.
Seller has the corporate power and authority to own its
property and to carry on its business as now conducted and
to enter into and to carry out the terms of this Agreement.
6.1.2The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on
behalf of Seller and Seller is not subject to any charter,
by-law, lien, or encumbrance of any kind, agreement,
instrument, order, or decree of any court or governmental
body (other than any governmental approval required) which
would prevent consummation of the transactions contemplated
by this Agreement.
6.1.3Seller is not a party to, or in any way obligated under,
nor does Seller have any knowledge of, any contract or
outstanding claim for the payment of any broker's or
finder's fee in connection with the origin, negotiation,
execution, or performance of this Agreement for which Buyer
will have any liability.
6.1.4EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THE ASSETS
ARE TO BE SOLD AS IS, WHERE IS AND WITH ALL FAULTS AND
SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED IN FACT OR BY LAW, WITH RESPECT TO ORIGIN, QUANTITY,
QUALITY, OPERATING CONDITION, SAFETY OF EQUIPMENT, TITLE TO
PERSONAL PROPERTY, COMPLIANCE WITH GOVERNMENT REGULATIONS,
MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSES,
CONDITION, THE QUANTITY, VALUE OR EXISTENCE OF RESERVES OF
OIL, GAS OR OTHER MINERALS PRODUCIBLE OR RECOVERABLE FROM
THE LEASES OR XXXXX, OR OTHERWISE, CONCERNING ANY OF THE
ASSETS. ALL XXXXX, PERSONAL PROPERTY, DATA, RECORDS,
MACHINERY, EQUIPMENT AND FACILITIES THEREIN, THEREON AND
APPURTENANT THERETO ARE TO BE CONVEYED BY SELLER AND
ACCEPTED BY BUYER PRECISELY AND ONLY "AS IS, WHERE IS".
6.2 Buyer's Representations and Warranties. Buyer represents and warrants
to Seller that, as of the date hereof and as of Closing, the following
statements are accurate:
6.2.1Buyer is a limited liability company duly organized and validly
existing, in good standing, under the laws of the State of
Colorado and has the corporate power and authority to own its
property and to carry on its business as now conducted and to
enter into and to carry out the terms of this Agreement.
6.2.2The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on behalf of
Buyer and Buyer is not subject to any charter, by-law, lien or
encumbrance of any kind, agreement, instrument, order or decree
of any court or governmental body which would prevent
consummation of the actions contemplated by this Agreement.
6.2.3Buyer is not a party to, or in any way obligated under, nor does
Buyer have any knowledge of, any contract or outstanding claim
for the payment of any broker's or finder's fee in connection
with the origin, negotiation, execution, or performance of this
Agreement for which Seller will have any liability.
6.2.4Buyer shall comply with all applicable laws, ordinances, rules
and regulations and shall promptly obtain and maintain all
permits and bonds required by public authorities in connection
with the Assets purchased.
6.2.5Buyer has made, or arranged for others to make, an inspection of
the Assets. Subject to Seller' foregoing representations and
warranties, Buyer, at Closing, will accept all Assets in "as is
and where is" condition, with an expressed acceptance and
understanding of the representations and disclaimers contained
herein.
7. TITLE MATTERS
7.1 Asset Title Review. Prior to Closing, Seller will have made available
to Buyer, without express or implied warranty of any kind regarding
the accuracy of such information, copies of all information in
Seller's possession regarding Seller's title to the Assets, which
information Buyer may copy at its sole cost and expense (unless
prohibited by agreement between Seller and a third party). Buyer may
review the information at Seller' office at 0000 Xxxxxxxxxx, Xxxxx
000, Xxxxxxxx, Xxxxxxxx 00000; or any other location where such
information may be available, depending on the files reviewed.
7.2 Title Adjustments. If prior to Closing, Buyer determines the existence
of a "Title Defect" as defined in Section 7.3 below, Buyer shall
notify Seller in writing of any matter Buyer considers to be a Title
Defect as soon as Buyer becomes aware of such Title Defect but, in any
event, by not later than 4:00 p.m. MST on March 21, 2003 (the "Defect
Notice Date"). Such notice ("Notice of Title Defect") shall include
(i) a specific description of the matter Buyer asserts as a Title
Defect, (ii) a specific description of the Asset or portion of the
Assets that is affected by the Title Defect, (iii) Buyer's calculation
of the amount by which each Title Defect has diminished the value of
the Assets, such amount to be determined by Buyer in good faith and in
a commercially reasonable manner, and (iv) all necessary and desirable
supporting documentation. Buyer shall be deemed to have waived any
Title Defect that Buyer fails to assert in its Notice of Title Defect
prior to the date set forth in this Section 7.2. This provision shall
be used by Buyer for further reductions in the value of the Prospect
caused by a lack of quality of title to the mineral acreage (e.g. loss
of wellbore caused by loss of leasehold on which well is located,
leasehold or mineral interest that cannot be delivered to Buyer at a
minimum of an 80% net revenue interest, etc.). These reductions would
be calculated in addition to the obligations and reductions as
described 2.4.2 above is taken into account.
7.3 Title Defect. The term "Title Defect" shall refer to any defect or
deficiency in title, except for Permitted Encumbrances that (i)
creates a lien, claim, encumbrance or other obligation affecting the
interests of Seller in the Assets, (ii) diminishes or eliminates
Seller's net revenue interest below 80% (defined as Seller' share of
the proceeds from the sale of hydrocarbons produced from and allocable
to the Assets, net of all royalties, overriding royalties, or other
burdens on production or non-operating interests applicable thereto)
from that set forth on Exhibit "A", (iii) increases Seller's working
interest (defined as Seller's share of the costs of operation,
development or production borne by the owner of such interest) from
that set forth in Exhibit "A" without a corresponding increase in
Seller's net revenue interest, or which creates an obligation to pay
costs or expenses in an amount greater than such interest.
7.4 Permitted Encumbrances. As used in this Section 7, the term "Permitted
Encumbrance" means:
(a) lessor's royalties, non-participating royalties, overriding
royalties, and division orders and sales and transportation
contracts containing customary terms and provisions covering oil,
gas or associated liquefied or gaseous hydrocarbons, reversionary
interests, and similar burdens if the net cumulative effect of
such burdens does not operate to reduce the net revenue interest
in any Asset to an amount less than the net revenue interest set
forth on Exhibit "A" or increase the working interest of any
Asset from that set forth in Exhibit "A" without a corresponding
increase in the revenue interest;
(b) subject to the provisions of Section 9.2 hereof, preferential
rights to purchase and required non-governmental third party
consents to assignments and similar agreements with respect to
which prior to Closing (i) waivers or consents are obtained from
the appropriate parties, or (ii) the appropriate time period for
asserting such rights has expired without an exercise of such
rights;
(c) liens for taxes or assessments not yet due or delinquent or, if
delinquent, that are being contested in good faith in the normal
course of business;
(d) 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 and Buyer and Seller have no reason to believe they
cannot be obtained;
(e) conventional rights of reassignment requiring less than ninety
(90) days notice to the holders of such rights;
(f) such Title Defects as Buyer may have waived;
(g) easements, rights-of way, servitudes, permits, surface leases and
other rights in respect of surface operations; provided they do
not materially interfere with Buyer's operation or use of the
Assets;
(h) defects, irregularities and deficiencies in title of or to any
rights-of-way, easements, surface leases or other rights which in
the aggregate do not materially impair the use of such
rights-of-way, easements, surface leases or other rights for the
purpose of which such rights will be held by Buyer and would not
have a material adverse effect on the operation or value of any
of the Assets;
(i) environmental laws and regulations to the extent valid and
applicable to the Assets;
(j) vendors', carriers', warehousemen's, repairmen's, mechanics',
workmen's, materialmen's, construction or other like liens
arising by operation of law in the ordinary course of business or
incident to the construction or improvement of any property in
respect of obligations which are not yet due;
(k) all other liens, claims, charges, encumbrances, contracts,
agreements, instruments, obligations, defects, and irregularities
affecting the Assets relating to obligations not yet in default,
and/or which individually or in the aggregate are not such as to
interfere materially with the operation, value, or use of any of
the Assets, do not materially prevent Buyer from receiving the
proceeds of production from the Assets, do not reduce the net
revenue interest of any of the Assets to less than the net
revenue interest set forth on Exhibit "A" and do not obligate
Buyer to bear costs and expenses relating to the maintenance,
development, and operation of any of the Interests in any amount
greater than the working interest set forth on Exhibit "A"
(unless the net revenue interest for such Asset is greater than
the net revenue interest set forth in Exhibit "A" in the same
proportion as any increase in such working interest).
7.5 Remedies for Title Failures. With respect to each Defect asserted
by Buyer in the Notice of Title Defect, if Seller requests,
Seller and Buyer shall discuss and agree whether a particular
matter constitutes a Title Defect. Seller shall have the right
but not the obligation to cure any Title Defect asserted in such
Notice at its own expense prior to Closing, in which case the
parties shall proceed to Closing without adjustment of the
Purchase Price. If Seller fails to cure any Title Defect on or
prior to Closing, it shall be deemed to be a title failure
("Title Failure") for the relevant Asset. Notwithstanding any
other provision of this Agreement, it is specifically agreed and
understood that liquidated amounts due and owing in respect of
vendors', carriers', warehousemen's, repairmen's, mechanics',
workmen's, materialmen's, construction or other like liens shall
be treated as Title Defects in accordance with the provisions of
Section 7, including, without limitation, the provisions of
Section 7.5 (a)-(c). Buyer and Seller shall negotiate in good
faith to reach agreement regarding the value of any Title
Failure, and unless waived by Buyer shall mutually agree to one
of the following options with respect to each Title Failure:
(a) if the Title Failure results from a difference in net
revenue interest from that shown on Exhibit "A", the parties
shall proceed to Closing and reduce the Purchase Price by an
amount ("Defect Amount") determined by multiplying the
Purchase Price by a fraction the numerator of which shall be
the difference between the actual net revenue interest being
conveyed and the net revenue interest shown on Exhibit "A"
and the denominator of which shall be the net revenue
interest shown on Exhibit "A"; (b) if the Title Failure
results from a difference in the working interest from that
shown on Exhibit "A", the parties shall proceed to Closing
and reduce the Purchase Price by a Defect Amount determined
by multiplying the Purchase Price by a fraction the
numerator of which shall be the difference between the
actual working interest being conveyed and the working
interest shown on Exhibit "A" and the denominator of which
shall be the working interest shown on Exhibit "A"; (c) if
the Title Failure is one other than described in items (a)
or (b), the Defect Amount shall be an amount determined in
good faith by the mutual agreement of Buyer and Seller,
taking into account the portion of the Purchase Price to be
allocated by agreement of Seller and Buyer to the portion of
the Assets affected by the Title Failure, the legal effect
of the Title Failure, and the potential economic effect of
the Title Failure over the life of the Assets.
7.6 Termination Amount. Notwithstanding anything to the contrary herein,
if the aggregate amount of adjustments to the Purchase Price for Title
Failures reaches an amount equal to 25% of the $400,000.00 Purchase
Price set forth in Section 2.1 (the "Termination Amount"),either party
shall have the option to terminate this Agreement, without any
liability, upon written notice to the other party on or prior to the
Closing. For purposes of determining either party's right to terminate
this Agreement pursuant to this Section 7.6, the amount of Title
Defect adjustments shall be the amounts set forth in Buyer's Notices
of Title Defects, with the addition of the diminution in value
calculated in 2.4.2 unless Buyer and Seller agree to a lesser amount
in accordance with Section 7.5. If either party exercises its option
to terminate this Agreement pursuant to this Section 7.6, this
Agreement shall become void and have no effect, and neither party
shall have any further right or duty to or claim against the other
party under this Agreement, except as expressly provided to the
contrary in this Agreement.
7.7 Increase in Purchase Price. Seller shall be entitled to an increase in
the Purchase Price with respect to any interest to which Seller has
(i) record title ownership of a net revenue interest that is greater
than the net revenue interest set forth on Exhibit A of this Agreement
and/or (ii) an ownership interest in any Personal Property greater
than the interest for such Asset set forth on Exhibit A (the
"Additional Interest"). In the event that Seller is entitled to an
adjustment, such adjustment shall be calculated in the same manner as
downward adjustments to the Purchase Price in accordance with Section
2.4.2.
8. ENVIRONMENTAL MATTERS
8.1 Environmental Review. Promptly after signing this Agreement, Buyer
shall have access to environmental data in Seller' files for the
Assets to be sold herein. Buyer shall review the information at
Seller's office at 0000 Xxxxxxxxxx, Xxxxx 000, Xxxxxxxx, XX 00000, or
other locations specified by Seller. Buyer specifically acknowledges
that such access is given as an accommodation only, that Seller makes
no representations whatsoever as to the accuracy, completeness, or
reliability of any such environmental information so or otherwise
disclosed to or obtained by Buyer and that Buyer relies and depends on
and uses any and all such environmental information exclusively and
entirely at its own risk and without any recourse to Seller
whatsoever. Seller shall cooperate with Buyer for the performance by
Buyer of any additional environmental testing at Buyer's expense,
which testing shall be conducted in a reasonable manner so as not to
interfere with Seller's operation of the Assets, and Seller and Buyer
shall cooperate to ensure that such testing is performed on an
expedited basis before Closing.
8.2 Material Contamination. If as a result of information provided
pursuant to Section 8.1, or any additional information which Buyer
obtains from other sources, or any such testing done by Buyer, it is
determined prior to Closing that the environment associated with the
Assets has been materially contaminated ("Materially Contaminated" or
"Material Contamination", such terms being defined as the violation of
existing applicable federal or state laws or regulations or common law
principles existing as of the Effective Date, with respect to
environmental conditions, to the extent that as to each claim or all
claims in the aggregate (i) prosecution, if instituted, would be
reasonably likely to result in a penalty, fine or damage payment of
$2,500.00 or more or (ii) removal and remediation of such
contamination required by federal or state laws or regulations
existing as of the Effective Date would be reasonably likely to result
in expenditures of $ 2,500.00 or more, Buyer shall notify Seller in
writing of any and all such Material Contamination claims no later
than 4:00 p.m. MST, on March 24, 2003. Such notification shall include
(i) a detailed description of such claims, (ii) a copy of any
environmental assessment, reports, data and information pertaining to
such claims, and (iii) Buyer's calculation of the amount by which such
claims have diminished the value of the Assets, such amount to be
determined by Buyer in good faith and in a commercially reasonable
manner. As used in this Section 8, the term Damages shall mean any and
all damage, loss, injury, liabilities, or expenses (including but not
limited to reasonable attorneys' fees and all costs of court,
reasonable costs of investigating any claim, site assessments, testing
and remedial actions).
8.3 Remedies for Material Contamination. Either:
(a) Prior to or at Closing, Seller and Buyer shall mutually agree in
writing separate and apart from this Agreement that Seller shall
correct or make arrangements for the correction of such Material
Contamination and that Closing shall proceed with Seller
indemnifying Buyer against all Damages attributable to such
Material Contamination and without reduction of the Purchase
Price; however, the estimated cost to correct attributable to
such Damages shall be placed in an escrow account requiring dual
signatures for release until such time as the Material
Contamination is corrected; or
(b) Buyer shall correct or make arrangements for the correction of
such Material Contamination and the parties shall proceed to
Closing with a reduction of the Purchase Price in an amount
mutually agreed to by the parties and with Buyer defending,
indemnifying and holding Seller harmless against all Damages
attributable to such Material Contamination.
If the parties are unable to agree upon one of the foregoing
options, either party shall be entitled to terminate this
Agreement without further liability for either party, unless
Buyer agrees to waive such Material Contamination and assume all
liability and obligations relating thereto. Each party shall
cooperate with the other party's reasonable corrective work, and
any operations unreasonably interfering with the corrective work
shall cease until correction is completed.
8.4 Indemnities for Material Contamination. The indemnities provided for
in paragraphs (a)-(b) of Section 8.3 by Buyer and Seller, as the case
may be, for Damages relating to Material Contamination identified in
the notice to Seller under Section 8.2 shall be limited to Damages (i)
from actions by governmental authorities having jurisdiction and
authority over the relevant Assets and (ii) based on environmental
laws, statutes, regulations and cleanup standards in effect at the
time of Closing.
9. ADDITIONAL COVENANTS
9.1 Operations Prior to Closing. After the date of this Agreement and
prior to the Closing, Seller shall use and maintain the Assets in
substantially the same manner in which they have been used and
maintained prior to this Agreement. Unless Seller and Buyer otherwise
agree, Seller shall only enter into agreements or transactions in
relation to the Assets which (i) individually involve a fair market
value of less than Ten United States dollars ($10,000.00), and (ii)
are entered into in the ordinary course of business consistent with
past practices. In the event that an expenditure for purposes other
than day-to-day operations is proposed or contemplated, Seller shall
submit such proposal to Buyer for concurrence. Buyer will assume its
proportionate share of the risk of any consequences that arise as a
result of Buyer's failure or refusal to approve and pay such
expenditure. Additionally, after the signing of this Agreement and
prior to Closing, Seller shall have the right to make any changes,
repairs or modifications, or incur any expenditures necessary relative
to the premises to prevent or react to an emergency or environmental
incident. With regard to the preceding sentence, Seller shall attempt
to secure Buyer's consent prior to any such expenditure or action,
however, Seller shall have the right to effect such expenditure or
action with or without such approval, acting as would any prudent
operator under similar circumstances. Unless Buyer and Seller
otherwise agree, Seller shall not materially alter the Assets (other
than the use of supplies and consumables) or remove any improvements,
equipment or property which comprise the Assets (other than the use of
supplies and consumables). If because of legally binding agreements
which existed prior to the date of this Agreement, Seller, after the
date of Agreement, but prior to Closing, acquires assets related to
the Assets or otherwise improves the Assets, the Purchase Price shall
be increased by an amount equal to the consideration to be paid by
Seller for such acquisition or improvement of the Assets, and the
acquired asset or improvement shall be transferred hereunder. Seller
shall promptly notify Buyer of any material matter affecting the
Assets known to Seller which arises from the date of this Agreement to
the date of Closing.
9.2 Preferential Rights and Consents to Assign. The transfer by Seller of
the Assets, or any portion thereof, may be subject to the approval of
lessors or governmental agencies having jurisdiction, or other forms
of consent, rights of first refusal or preferential rights of purchase
in favor of third parties. The process of obtaining such approvals and
consents may continue after Closing. Seller shall attempt to obtain
the necessary non-governmental approvals and consents to assign and
request releases of the rights of first refusal/preferential rights of
purchase. If consents are denied or third parties exercise a right of
first refusal/preferential right of purchase then either Buyer or
Seller may terminate this Agreement and the up front Deposit,
excluding interest thereon, shall be refunded to Buyer. If neither
Buyer nor Seller elect to terminate this Agreement, the affected
Assets shall be deleted from this Agreement and the Purchase Price
decreased with the remaining Assets to be sold hereunder. If the Asset
is deleted as the result of the exercise of a right of first
refusal/preferential right of purchase, the Purchase Price shall be
decreased by the amounts calculated in Sections 2.4.2, and 7.1 et seq.
contained herein. If the Asset is deleted as a result of the denial of
consent from third parties, the PurchasePrice shall be decreased in
the manner provided for the deletion of an Asset with defect as
described in Sections 2.4.2 and 7.5 hereof, and the remaining Assets
shall be sold hereunder.
10. CLOSING, TERMINATION AND FINAL ADJUSTMENTS
10.1 Conditions Precedent. Each party's obligation to consummate the
transactions contemplated by this Agreement is subject to the
satisfaction or waiver by the other party of the following conditions:
10.1.1 Each party shall have performed and complied with all terms of
this Agreement required to be performed or complied with by it at
or prior to Closing.
10.1.2 No action or proceeding by or before any governmental authority
shall have been instituted or threatened (and not subsequently
dismissed, settled or otherwise terminated) which might restrain,
prohibit or invalidate any of the transactions contemplated by
this Agreement, other than an action or proceeding instituted or
threatened by a party or any of its affiliates.
10.1.3 The representations and warranties contained in Section 6 shall
be true and correct in all material respects on the Closing Date
as though made on and as of the Closing Date.
10.2 Closing.
10.2.1 The Closing of the transactions contemplated herein and the
transfer of the Assets shall occur on March 24, 2003, at the
office of Cedar Ridge, 1825 Xxxxxxxx, Xxxxxx, Xxxxxxxx 00000, at
10:00 a.m., local time, or such other date, time, and place as
Seller and Buyer may agree in writing (the "Closing").
10.2.2 At Closing, the following shall occur:
10.2.2.1Buyer and Seller shall execute and acknowledge an
Assignment in substantially the form of Exhibit "B", in form
and substance sufficient to convey title to the Assets in
accordance with the terms of this Agreement; additionally
Seller shall provide to Buyer an Assignment in substantially
the form of Exhibit "B", in form and substance sufficient to
convey title to the Assets shown on Exhibit "AB" within one
week following acquisition of same;
10.2.2.2Buyer and Seller shall execute and acknowledge any such
other instruments as are reasonably necessary to effectuate
the conveyance of the Assets to Buyer, including without
limitation, separate assignments of the Assets on officially
approved forms in sufficient counterparts to satisfy
applicable statutory and regulatory requirements for the
transfer of the Assets;
10.2.3 At the Closing, upon and against delivery of the documents and
materials described in this Section 10.2, Buyer shall pay to
Seller the Adjusted Purchase Price as provided in Section 2.1 and
shall deliver to Seller the Guaranty as provided for in Section
4.1 hereof.
10.3 Termination. This Agreement and the transactions contemplated hereby
may be terminated in the following instances:
10.3.1 By Buyer or Seller in accordance with Section 7.6;
10.3.2 By Buyer or Seller in accordance with Section 8.3;
10.3.3 By Buyer or Seller if any condition set forth in Section 10.1
has not been satisfied or waived by Closing;
10.3.4 By mutual written agreement of Buyer and Seller; and
10.4 Final Adjustments. Within ninety (90) days after the date of Closing,
Seller shall prepare a final accounting (the "Final Accounting") for
the adjustments to the Purchase Price provided for in Section 2.4 and
any amounts arising pursuant to Section 11.2 (b). Seller shall submit
the Final Accounting statement to Buyer, along with copies of third
party vendor invoices or other evidence of expenses agreed to by Buyer
and Seller, and Buyer shall have thirty (30) days to audit same and
confirm the accuracy thereof. Upon agreement by Buyer and Seller as to
the accuracy of said Final Accounting, or upon the expiration of said
thirty (30) day period, whichever occurs first, Seller or Buyer,
whichever the case may be, shall promptly pay to the other such sum as
may be found due, after making adjustments for any payments made at
Closing in accordance with the Closing Statement.
If Buyer and Seller are unable to agree to all adjustments respecting
the Final Accounting, within thirty (30) days after Buyer's receipt of
the Final Accounting submitted by Seller, such adjustments which are
not in dispute shall be made between Buyer or Seller at the expiration
of such 30-day period, and as to the adjustments, which remain in
dispute, Buyer and Seller shall continue to negotiate in good faith to
reach a final agreement as to such disputed adjustments. Provided,
however, if Buyer and Seller are unable to agree to such final
adjustments within sixty (60) days after Seller provides the Final
Accounting to Buyer, the parties shall submit such disagreement to
arbitration which shall be conducted under the rules of the American
Arbitration Association to the extent such rules do not conflict with
the terms hereof. The costs and expenses of the arbitration shall be
shared equally by Seller and Buyer. Within five (5) days after the
decision of the arbitrator, the Buyer or Seller, as the case may be,
shall promptly make a cash payment to the other equal to the sum as
may be found to be due as the Final Accounting.
Nothing in this Section 10.4. shall limit any right of either party to
assert a claim for revenues or reimbursement after the Final
Accounting, and in this regard (i) should any party receive revenues
to which the other is entitled, such party shall pay over such
revenues to the appropriate party within 30 days of receipt thereof,
and (ii) should any party pay for costs or expenses for which the
other party is responsible, such party shall reimburse the other party
within 30 days of the date the responsible party receives an invoice
for such costs and expenses.
11. MISCELLANEOUS
11.1 Force Majeure. In the event any physical asset(s), including fixtures
and improvements, valued at less than Five (5%) percent of the
Purchase Price and to be sold hereunder is damaged by fire or other
calamity before Closing, Seller may repair the damage at its cost or,
at its sole option, either reduce the Purchase Price by the cost of
the damage or withdraw the damaged Asset from the sale and reduce the
Purchase Price by the undamaged value thereof. Should Buyer and Seller
not agree as to the amount of such price reduction or if the value, as
mutually agreed exceeds Five percent (5%), this Agreement will be
terminated.
11.3 Books and Records. With the exception of books of account, tax returns
and correspondence relating thereto, technical and interpretive data
excluded from this sale, any documents of overall significance to
Seller' business and all of the Excluded Assets, Seller shall deliver
to Buyer at Closing or within a reasonable time thereafter copies of
the Records.
11.4 Publicity. Seller and Buyer shall consult with each other with regard
to all press releases or other public or private announcements made
concerning this Agreement or the transactions contemplated hereby, and
except as may be required by applicable laws or the applicable rules
and regulations of any governmental agency or stock exchange, neither
Buyer nor Seller shall issue any such press release or other publicity
without the prior written consent of the other party, which shall not
be unreasonably withheld.
11.5 Entire Agreement. This Agreement constitutes the entire agreement
between Seller and Buyer with respect to the transactions contemplated
herein, and supersedes all prior oral or written agreements,
commitments, understandings, or information otherwise furnished by
Seller to Buyer with respect to such matters. No amendment shall be
binding unless in writing and signed by representatives of both
parties. Headings used in this Agreement are only for convenience of
reference and shall not be used to define the meaning of any
provision. This Agreement is for the benefit of Seller and Buyer only
and not for the benefit of third parties.
11.6 Notices. All notices and consents to be given hereunder shall be in
writing and shall be deemed to have been duly given if delivered
either by personal delivery, telex, telecopy or similar facsimile
means, by certified or registered mail, return receipt requested, or
by courier or delivery service, addressed to the parties hereto at the
following addresses:
If to Seller: If to Buyer:
Skyline Resources, Inc. Cedar Ridge, LLC
0000 Xxxxxxxxxx 000 Xxxxxxxx Xxx., Xxxxx 000
Xxxxx 000 XX Xxx 0000
Xxxxxxxx, XX 00000 Xxxx Xxxxx, XX 00000
Attn: Xx. Xxxxx X. Xxxxx Attn: Xx. Xxxxxxx X. Xxxxxxx
President/CEO General Counsel
Telephone No.: (000) 000-0000 Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000 Facsimile No.: (000) 000-0000
or at such other address and number as either party shall have
previously designated by written notice given to the other party in
the manner herein above set forth. Notices shall be deemed given when
received, if sent by facsimile means (confirmation of such receipt by
confirmed facsimile transmission being deemed receipt of
communications); and when delivered and receipted for (or upon the
date of attempted delivery where delivery is refused), if
hand-delivered, sent by express courier or delivery service, or sent
by certified or registered mail, return receipt requested.
11.7 Governing Law. This Agreement shall be governed by the laws of the
State of Colorado, without giving effect to any principles of
conflicts of law. The validity of the conveyances affecting the title
to real property shall be governed by and construed in accordance with
the laws of the jurisdiction in which such property is situated. The
provisions contained in such conveyances and the remedies available
because of a breach of such provisions shall be governed by and
construed in accordance with the laws of the State of Colorado without
giving effect to the principles of conflict of laws.
11.8 Confidentiality. Buyer acknowledges that all information furnished or
disclosed pursuant hereto must remain confidential prior to Closing.
Buyer may disclose such information only to its subsidiaries or
affiliates, agents, advisors or representatives (herein
"Representatives") who have agreed, prior to being given access to
such information, to be bound by the terms of this Agreement. In the
event that Closing of the transactions contemplated by this Agreement
does not occur for any reason, Buyer and its Representatives shall
promptly return to Seller any and all materials and information,
including any notes, summaries, compilations, analyses or other
material derived from the inspection or evaluation of such material
and information, without retaining copies thereof.
11.9 Conflict of Interest. Conflicts of interest related to this Agreement
are strictly prohibited. Except as otherwise expressly provided
herein, neither Buyer nor any director, employee or agent of Buyer
shall give to or receive from any director, employee or agent of
Seller any gift, entertainment or other favor of significant value, or
any commission, fee or rebate. Likewise, neither Buyer nor any
director, employee or agent of Buyer shall enter into any business
relationship with any director, employee or agent of Seller (or of any
affiliate of Seller), unless such person is acting for and on behalf
of Seller, without prior written notification thereof to Seller. Each
party shall promptly notify the other party of any violation of this
Section 11.9, and any consideration received by a party as a result of
such violation shall be paid over or credited to the other party. Each
party, or its designated representative(s), may audit any and all
records of the other party for the sole purpose of determining whether
there has been compliance with this Section 11.9.
11.10Survival. The terms and provisions of this Agreement shall survive
the Closing.
11.11Brokers' Fees. Seller and Buyer warrant that neither has incurred any
liability, contingent or otherwise, for brokers' or finders' fees
relating to this agreement for which the other shall have
responsibility. All fees, costs, and expenses incurred by Seller or
Buyer relating to this agreement shall be paid by the party incurring
same. All recording and transfer fees incurred as a part of closing
shall be paid by Buyer. All other recording and transfer fees incurred
shall be paid by Seller.
11.12Commissions or Fees. Each of Buyer and the Seller, for itself and for
its respective directors, partners, employers, and agents warrants,
covenants and represents to the other that, except as otherwise
expressly provided in this Agreement, neither it nor any of its
directors, employees, partners or agents has given to or received from
the other party, for any such party's directors, partners, employees
or agents any commission, fee, rebate, gift or other thing or service
in connection with this Agreement, and Buyer and Seller each agree
that its books and records shall be subject to reasonable audit by the
other as may be required to substantiate compliance with this
provision.
11.13Further Cooperation. After the Closing, each party shall execute,
acknowledge, and deliver all documents, and take all such acts which
from time to time may be reasonably requested by the other party in
order to carry out the purposes and intent of this Agreement.
11.14Counterparts. This Agreement may be executed in one or more
counterparts with the same effect as if all signatures of the parties
hereto were on the same document, but in such event each counterpart
shall constitute an original, and all of such counterparts shall
constitute one Agreement; but in making proof of this Agreement, it
shall not be necessary to produce or account for more than one such
counterpart signed by each party.
11.15Exhibits. All of the Exhibits referred to in this Agreement are hereby
incorporated into this Agreement by reference and constitute a part of
this Agreement. Each party to this Agreement and its counsel has
received a complete set of Exhibits prior to and as a part of the
execution of this Agreement.
11.16Severabilitv. If any term or provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law, all other
conditions and provisions of the Agreement shall nevertheless remain
in full force and effect so long as the economic or legal substance of
the transaction contemplated hereby is not affected in any adverse
manner to the other party.
11.17Expenses and Recording. Except as otherwise specifically provided,
all fees, costs and expenses incurred by Buyer or Seller in
negotiating this Agreement or in consummating the transactions
contemplated by this Agreement shall be paid by the party incurring
the same, including, without limitation, legal and accounting fees,
costs and expenses. Buyer shall be responsible for the filing and
recording of the assignments, conveyances or other instruments
required to convey title to the Assets to Buyer and Buyer shall bear
all required documentary, filing and recording fees and expenses
incurred in connection therewith.
11.18Mediation. The parties hereto agree to submit to the terms of that
certain Mediation Agreement attached hereto as Exhibit "C".
EXECUTED as of the date first above written.
SELLER: BUYER:
SKYLINE RESOURCES, INC. CEDAR RIDGE, LLC
/s/ Xxxxx X. Xxxxx /s/ Xxxxx X. Xxxxx
--------------------------------- ------------------------------
Xxxxx X. Xxxxx, President Xxxxx X. Xxxxx, Manager
EXHIBIT "B"
Attached to and made a part of that certain Purchase and Sale Agreement dated
February 17, 2003 by and between Skyline Resources, Inc., as Seller, and Cedar
Ridge, LLC, as Buyer.
Form of Assignment
THE STATE OF COLORADO
COUNTIES OF MOFFAT AND ROUTT
THE STATE OF WYOMING
COUNTY OF CARBON
ASSIGNMENT. XXXX OF SALE AND CONVEYANCE
THIS ASSIGNMENT, XXXX OF SALE AND CONVEYANCE (this "Assignment") dated March 7 ,
2003 but effective from and after 11:59 p.m., February 28, 2003 (said date and
time hereinafter referred to as the "Effective Date"), by and between, SKYLINE
RESOURCES, INC., a Colorado corporation, with a permanent mailing address of
0000 Xxxxxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000, hereinafter sometimes
referred to as "Assignor," and CEDAR RIDGE, LLC., a Colorado limited liability
company, with a permanent mailing address of 000 Xxxxxxxx Xxxxxx, Xxxxx 000, XX
Xxx 0000, Xxxx Xxxxx, Xxxxxxxx 00000-0000, hereinafter sometimes referred to as
"Assignee;"
WITNESSETH:
1. Conveyance. For and in consideration of the sum of One Hundred and no/100
Dollars ($100.00), cash in hand paid, and other valuable consideration,
including the assumption by Assignee of certain obligations and liabilities
described in that certain Purchase and Sale Agreement dated February 17,
2003, by and between Assignor and Assignee ("Asset Sale Agreement"), the
receipt and sufficiency of which are hereby acknowledged, Assignor, subject
to said Asset Sale Agreement (which Asset Sale Agreement is incorporated
herein by reference for all purposes), does hereby sell, transfer, assign,
convey, set over and deliver, unto Assignee, with Special Warranty, all of
its right, title and interest in and to the following (collectively, the
"Assets"):
A. the oil and gas leases listed and described in Exhibits "A", "AA", and
"AB" (collectively, "Leases");
B. all gas xxxxx, stratigraphic test xxxxx, monitor xxxxx and other xxxxx
(collectively "Xxxxx") located on the Leases;
C. all equipment, machinery, fixtures, flowlines, platforms, materials,
improvements, and other real, personal, and mixed property located on,
used in the operation of, or relating to the production, treatment,
sale, or disposal of hydrocarbons, water, and associated substances
produced from the Leases (the "Personal Property");
D. all natural gas, natural gas liquids, condensate, and other
hydrocarbons, whether gaseous or liquid produced from or allocable to
the Assets after the Effective Date (the "Hydrocarbons");
E. all contracts, permits, rights-of-way, easements, licenses, servitudes
and agreements relating to the Leases and Xxxxx, or the ownership or
operation thereof, or the production, treatment, sale, storage or
disposal of hydrocarbons, water, or substances associated therewith
(the "Applicable Contracts"); and
F. all of the files, records, information and data relating to the
Leases, Xxxxx, Hydrocarbons, Applicable Contracts and Personal
Property, owned by Assignor and which Assignor is not prohibited from
transferring to Assignee by law or existing contractual relationship
(collectively, the "Records"), including, without limitation: (i)
lease, land, and title records (including any abstracts of title,
title opinions, certificates of title, title curative documents,
division orders, and division order files) (the "Land Files"), (ii)
the Applicable Contracts; (iii) all well, environmental, and
production files (the "Well Files").
2. Excluded Assets. The Assets do not include accounts receivable associated
with the Assets and relating to operations prior to the Effective Date. In
the event Assignor is unsuccessful in collecting all or any portion of said
receivables, Assignor shall so advise Assignee, and Assignee shall
cooperate with Assignor in attempting to collect said receivables for the
benefit of the Assignor. Tools, pulling machines, trucks or other equipment
temporarily located on said lands or waterbottoms likewise are not included
as Assets and are not to be conveyed hereunder (which equipment Assignor
may recover at any time). The Assets do not include any of Assignor's
proprietary or licensed raw or processed geological and geophysical data
(including magnetic tapes, field notes, or seismic lines), nor any of
Assignor's subjective or interpretive information or materials (including
structure maps and isopach maps) pertaining to the Data. All such excluded
Assets are hereinafter collectively referred to as the "Excluded Assets".
TO HAVE AND TO HOLD unto Assignee, its, successors, sublessees, and assigns
forever, subject to the terms, conditions and reservations set forth
herein, contained in the Lease, in the Asset Sale Agreement, and the
Applicable Contracts.
3. Disclaimer and Subrogation.
A. EXCEPT AS EXPRESSLY PROVIDED IN THE ASSET SALE AGREEMENT, THE ASSETS
ARE TO BE SOLD AS IS, WHERE IS AND WITH ALL FAULTS AND ASSIGNOR MAKES
NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED IN FACT OR BY LAW,
WITH RESPECT TO ORIGIN, QUANTITY, QUALITY, OPERATING CONDITION, SAFETY
OF EQUIPMENT, TITLE TO PERSONAL PROPERTY, COMPLIANCE WITH GOVERNMENT
REGULATIONS, MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSES,
CONDITION, THE QUANTITY, VALUE OR EXISTENCE OF RESERVES OF OIL, GAS OR
OTHER MINERALS PRODUCIBLE OR RECOVERABLE FROM THE LEASES OR XXXXX, OR
OTHERWISE, CONCERNING ANY OF THE ASSETS. ALL XXXXX, PERSONAL PROPERTY,
DATA, RECORDS, MACHINERY, EQUIPMENT AND FACILITIES THEREIN, THEREON
AND APPURTENANT THERETO ARE TO BE CONVEYED BY ASSIGNOR AND ACCEPTED BY
ASSIGNEE PRECISELY AND ONLY "AS IS, WHERE IS".
B. All descriptions set forth herein and all information heretofore or
hereafter furnished Assignee by Assignor concerning the Assets, and
the operation thereof, have been and shall be furnished solely for
Assignee's convenience and have not constituted and shall not
constitute a representation or warranty of any kind by Assignor, and
any reliance thereupon by Assignee shall be at Assignee's sole risk
and liability.
C. Notwithstanding the foregoing, this Assignment is made with full
substitution and subrogation in and to all rights and actions of
warranty with respect to the Assets which Assignor or its affiliates
may have against former owners thereof.
4. Further Assurances. Assignor shall execute, acknowledge and deliver or
cause to be executed, acknowledged and delivered such instruments and shall
take such other action as may be reasonably necessary or desirable to
effectively consummate the conveyance to Assignee of the Assets intended to
be conveyed hereby, provided nothing in this Section shall be interpreted
so as to modify the disclaimer by Assignor in Section 3.A.
5. Consent Required. Thus Assignment is subject to approval by the
__________[name of governmental agency] pursuant to _________________ [cite
applicable statute]. The process of obtaining such approval may continue
hereafter.]
6. Further Assignment. Assignee shall not assign any interest it acquires in
the Assets, assign any rights acquired, or delegate any duties assumed
herein or hereafter, without any such transferee, assignee, sublessee or
delegee having agreed in writing to be bound by all of the terms and
provisions contained in thus Assignment and in the Asset Sale Agreement;
and any such transferee, assignee, sublessee or delegee shall assume all
(or, if assigned less than all of Assignee's interest, its proportionate
share of all) duties and obligations set forth herein and in the Asset Sale
Agreement or arising from this Assignment or the Asset Sale Agreement; and
any such transfer, assignment, sublease or delegation shall so provide.
Notwithstanding anything herein to the contrary, Assignee shall remain
responsible to Assignor for all obligations and liabilities under this
Assignment and under said Asset Sale Agreement.
7. Indemnification. As additional consideration for the sale of the Assets,
Assignee shall observe and comply with all covenants, terms, and
provisions, express or implied, contained in the agreements, leases,
easements and all other contracts appertaining to Assignee's proportionate
share of Assignor's interest in the Assets as of the time of execution
hereof, and this Assignment is made expressly subject to all such
agreements, leases, easements and other contracts as specifically
identified in the Asset Sale Agreement.
Assignee specifically assumes the risk of description, title, and the
condition of the Assets and shall inspect the Assets prior to the Closing.
8. Brokers' Fees. Assignor and Assignee warrant that neither has incurred any
liability, contingent or otherwise, for brokers' or finders' fees relating
to thus agreement for which the other shall have responsibility. All fees,
costs, and expenses incurred by Assignor or Assignee relating to thus
agreement shall be paid by the party incurring same. All recording and
transfer fees shall be paid by Assignee.
10. Commissions or Fees. Assignee and Assignor, for itself and for its
respective directors, partners, employers, and agents warrants, covenants
and represents to the other that, except as otherwise expressly provided in
this Assignment, neither it nor any of its directors, employees, partners
or agents has given to or received from theother party, or any such party's
directors, partners, employees or agents any commission, fee, rebate, gift
or other thing or service in connection with thus Assignment, and Assignee
and Assignor each agree that its books andrecords shall be subject to
reasonable audit by the other as may be required to substantiate compliance
with this provision.
11. Conflicts. In case of any conflict between the terms and provisions of the
Asset Sale Agreement and the terms and provisions of this Assignment, the
terms and provisions of the Asset Sale Agreement shall prevail.
12. Topical Headings. The topical headings used herein are for convenience only
and shall not be construed ashaving any substantive significance or as
indicating that all of the provisions of thus agreement relating to any
topic are to be found in any particular section.
13. Entire Agreement. This Assignment constitutes the entire understanding
between Assignor and Assignee withregard to the subject matter hereof,
superseding all prior statements, representations, discussions, agreements
and understandings.
14. Successors and Assigns. The terms hereof shall inure to and be binding upon
the respective heirs, successors and assigns of Assignor and Assignee.
EXECUTED the day and year first above written, but effective as of the Effective
Date.
SKYLINE RESOURCES, INC. CEDAR RIDGE, LLC
/s/ Xxxxx X. Xxxxx /s/ Xxxxx X. Xxxxx
----------------------------- ----------------------------
Xxxxx X. Xxxxx, President/CEO Xxxxx X. Xxxxx, Manager
THE STATE OF COLORADO ss.
COUNTY OF DENVER ss.
This instrument was acknowledged before me this 7th day of March, 2003, by
Xxxxx X. Xxxxx, President and CEO of Skyline Resources, Inc., a Colorado
corporation, on behalf of said corporation.
[SEAL]
Notary Public in and for the
My commission expires: State of Colorado
Printed Name of Notary Public
THE STATE OF COLORADO ss.
COUNTY OF DENVER ss.
This instrument was acknowledged before me this 7th day of March, 2003, by Xxxxx
X. Xxxxx, Manager of Cedar Ridge, LLC, a Colorado limited liability company, on
behalf of said limited liability company.
[SEAL]
---------------------- Notary Public in and for the
My commission expires: State of Colorado
Printed Name of Notary Public
EXHIBIT "A-Lease Schedule"
EXHIBIT "AA-List of Leases"
Attached to and made a part of that certain Assignment, Conveyance and Xxxx of
Sale effective February 28, 2003, by and between Skyline Resources, Inc., as
Assignor, and Cedar Ridge, LLC, as Assignee.
ASSETS
Description of Leases as shown on Exhibit A attached
All of Assignor's right, title, and interest in and to the following Oil and Gas
Leases, only insofar as described below, and covering lands in Moffat and Routt
Counties, Colorado, and Carbon County, Wyoming, including but not limited to
Assignor's operating rights and working interest in those certain Operating
Agreements set forth herein following the Oil and Gas Lease Descriptions.
As shown on attachement Exhibit "A-List of Leases"
"AB" Skyline Lease Acquisitions
Exhibit "A1" To the Purchase and Sale Agreement
Between Skyline Resources, Inc. and Cedar Ridge LLC
XXXXX
1. Robiduox 23-13 T.D. 1700', API Well # 00-000-00000
2. State of Wyoming 34-13-89 #1 T.D. 2130'. API Well # 00-000-00000
3. Xxxxxxxx 13-12-89 T.D. 2690'. API Well # 00-000-00000
4. Moffat 26-12-89 #1 T.D. 3809' API Well # 00-000-00000
5. Federal 26-12-89 #1 T.D. 3383' API Well # 00-000-00000.
6. Moffat 23-12-89 #1 T.D. 3137' API Well # 00-000-00000
7. Moffat 23-12-89 #2 T.D. 3262' API Well # 00-000-00000
8. Moffat SWD 26-12-89 #1 T.D. 4494'. API Well # 00-000-00000
9. CF&I #1 Well Deep Creek Sand, located in the NE, SE, SW Section13 Township
12 North, Range 89 west, Moffat County, Colorado.
EQUIPMENT
1. All Production Equipment located at the disposal site in the NW NW Section
26 T12N, R89W, Moffat County Colorado as well as all electrical lines and
gathering lines.
2. All equipment located on each well site listed above.
"A2" Contracts and Agreements
Exhibit B
Exhibit I Fee Lease Schedule
Exhibit II Federal Lease Schedule
EXHIBIT "II"
FEDERAL LEASE SCHEDULE
Attached to and made a part of that certain Assignment,
Conveyance and Xxxx of Sale by and between Skyline
Resources, Inc., as Assignor, and Cedar Ridge, LLC, as Assignee
---SPLIT TABLE - SEE BELOW---
------------------------------------------------------------------------------------------------------------------------------------
LESSOR/SERIAL NUMBER COUNTY, ST LEGAL DESCRIPTION GROSS NET EFFECTIVE EXPIRATION
ACRES ACRES DATE DATE
------------------------------------------------------------------------------------------------------------------------------------
Federal Leases
XXX-00000 Xxxxxx,XX 12N-89W 960.0000 640.0320 6/1/98 6/30/08
23: NE4
24: S2NE, W2NW, SENW
25: NESW, NWSE
26: W2NE, E2NW, SWNW, S2
XXX-00000 Xxxxxx, XX 00X-00X 24: S/2 25: NE, S/2NW, NWSW, S/2S/2, NESE 800.0000 122.6728 3/1/96 3/1/06
XXX-00000 Xxxxxx, XX 00X-00X 11: Lots 1,2,3,4, 12: Lots 5,6, 14: X/0XX,
X/0XX, XXXX, 00:X/0X/0, XXXX, XX 603.2900 92.5091 3/1/96 3/1/06
XXX-00000 Xxxxxx, XX 00X-00X 13: NENW 40.0000 26.6680 12/1/00 11/30/10
XXX-000000 Xxxxxx, XX 00X-00X 80.0000 53.3360 7/1/93 6/30/03
13: E2NE
XXX-000000 Xxxxxx, XX 00X-00X 40.0000 8.8884 9/1/93 8/31/03
28: SWNW
WYW-141261 Carbon, WY 13N-89W 200.0000 133.3400 4/1/97 3/31/07
21: SE4
22: NWSW
WYW-142911 Carbon, WY 12N-88W 377.6100 251.7526 10/1/97 9/30/07
7: Xxxx 0,0, XX0, X0XX
18: X0XX
XXX-000000 Xxxxxx, XX 12N-89W 1039.7400 693.1947 10/1/97 9/30/07
1: Xxxx 0, 0, X0X0, X0X0
2: Xxxx 0, 0, X0XX, X0XX
11: W2NW
13: XXXX, X0XX, X0XX
14: E2NE, NESE
XXX-000000 Xxxxxx, XX 00X-00X 240.0000 160.0080 12/1/97 11/30/07
13: W2NE, NW4
XXX-000000 Xxxxxx, XX 00X-00X 749.3000 499.5583 6/1/99 5/31/09
2: Xxxx 0, 0, X0XX
0: Xxx 0, XXXX, XX0
0: Lot 1
9: X0XX, XXXX, X0X0XX, X0X0X0XX, X0XXXXXX, S2SWNWSW
11: E2NW
13N-89W
32: NENW
WYW-148457 Carbon, WY 12N-88W 1721.5300 1147.7441 8/1/99 7/30/09
8: Xxxx 0-0, XXXX, X0XX, XXXX, XX0
00: Xxxx 0, 0, 0
00: Xxxx 0-00, X0XX, X0XX, SESW, SWSE
15: Xxxx 0,0, X0, XX0, XXXX
16: Lots 5-11
18: S2SE
22: Lots 1-3
23: Lots 1-3
24: Xxx 0
XXX-000000 Xxxxxx, XX 00X-00X 710.5300 473.7104 6/1/00 5/30/10
7: Xxx 00, X0XX, SESE
17: Lots 5-7, 9-12, SWNE
18: Xxxx 0,0, 00-00, X0XX
00: Lots 1-4
21: Xxx 0
XXXXXXX "XX"
XXXXXXX LEASE SCHEDULE
Attached to and made a part of that certain Assignment,
Conveyance and Xxxx of Sale by and between Skyline
Resources, Inc., as Assignor, and Cedar Ridge, LLC, as Assignee
---SPLIT TABLE - SEE ABOVE---
------------------------------------------------------------------------------------------------------------
LESSOR/SERIAL NUMBER RECORDED WORKING Min. Own. EII ORRI Royalty Additional N.R.I.
INTEREST Net RESERVED Interest Interest
------------------------------------------------------------------------------------------------------------
Federal Leases
COC-61760 N/A 66.6700% 960 7.500000% 12.5000% -- 80.00%
COC-58896 N/A 66.6700% 184.0000 3.000000% 12.5000% 7.50% 77.00%
COC-58897
N/A 66.6700% 138.7567 3.000000% 12.5000% 7.50% 77.00%
COC-64224 N/A 66.6700% 40.0000 6.500000% 12.5000% 81.00%
WYW-129585 N/A 66.6700% 80.0000 3.000000% 12.5000% 7.50% 77.00%
WYW-130140 N/A 66.6700% 13.3320 3.000000% 12.5000% 7.50% 77.00%
WYW-141261 N/A 66.6700% 200.0000 3.000000% 12.5000% 7.50% 77.00%
WYW-142911 N/A 66.6700% 377.6100 7.500000% 12.5000% -- 80.00%
WYW-142924 N/A 66.6700% 1039.7400 7.500000% 12.5000% -- 80.00%
WYW-143587 N/A 66.6700% 240.0000 3.000000% 12.5000% 7.50% 77.00%
WYW-148257 N/A 66.6700% 749.3000 7.500000% 12.5000% -- 80.00%
WYW-148457 N/A 66.6700% 1721.5300 7.500000% 12.5000% -- 80.00%
WYW-150405 N/A 66.6700% 710.5300 7.500000% 12.5000% -- 80.00%
Exhibit III State Lease Schedule
EXHIBIT "III"
STATE LEASE SCHEDULE
Attached to and made a part of that certain Assignment, Conveyance and Xxxx of
Sale by and between Skyline Resources, Inc.,
as Assignor, and Cedar Ridge, LLC, as Assisgnee
---SPLIT TABLE - SEE BELOW---
---------------------------------------------------------------------------------------------------------------------------------
LESSOR/SERIAL NUMBER COUNTY, ST LEGAL DESCRIPTION GROSS NET EFFECTIVE
ACRES ACRES DATE
---------------------------------------------------------------------------------------------------------------------------------
State Leases
XXXXX XX XXXXXXX 00-00000 Xxxxxx, XX 00X-00X 80.0000 53.3360 4/2/00
28: E2NE
XXXXX XX XXXXXXX 00-00000 Xxxxxx, XX 00X-00X 120.2500 80.1707 4/2/00
6: Xxx 0, XXXX, XXXX
XXXXX OF WYOMING 99-00339 Carbon, WY 13N-88W 160.0000 106.6720 7/2/99
31: Resurvey Tract 65 (formerly NE4)
XXXXX XX XXXXXXX 00-00000 Xxxxxx, XX 00X-00X 160.0000 106.6720 7/2/99
28: W2E2
XXXXX XX XXXXXXX 00-00000 Xxxxxx, XX 00X-00X 320.0000 213.3440 7/2/99
21: W2
XXXXX XX XXXXXXX 00-00000 Xxxxxx, XX 00X-00X 80.0000 53.3360 7/2/99
9: X0XX
XXXXX XX XXXXXXX 00-00000 Xxxxxx, XX 13N-88W 145.3200 96.8848 7/2/99
32: Resurvey Tract 69 (formerly SE4)
XXXXX XX XXXXXXX 00-00000 Xxxxxx, XX 00X-00X 623.3600 415.5941 10/21/02
Tract 49 (formerly Sec. 16: All)
XXXXX XX XXXXXXX 00-00000 Xxxxxx, XX 00X-00X 321.0000 214.0107 10/21/02
Tract 79 (formerly Sec. 5: Xxxx 0 & 0, X/0XX)
XXXXX XX XXXXXXX 00-00000 Carbon, WY 13N-89W 640.0000 426.6880 4/1/95
27: SE4
34: NE4, X0
XXXXX XX XXXXXXX 00-00000 Xxxxxx, XX 00X-00X 16: NENE, S/2NE, W/2, LOTS 1,2,3,4, N/2SE 589.8200 393.2330 7/1/02
STATE LEASE SCHEDULE
Attached to and made a part of that certain Assignment, Conveyance and Xxxx of
Sale by and between Skyline Resources, Inc.,
as Assignor, and Cedar Ridge, LLC, as Assisgnee
---SPLIT TABLE - SEE ABOVE---
----------------------------------------------------------------------------------------------------------------------------------
LESSOR/SERIAL NUMBER EXPIRATION RECORDED WORKING Min. Own. EII ORRI Royalty Additional N.R.I.
DATE INTEREST Net RESERVED Interest Interest
----------------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxx
XXXXX XX XXXXXXX 00-00000 4/1/05 N/A 66.6700% 80.0000 3.333333% 16.666667% 80.00%
XXXXX XX XXXXXXX 00-00000 4/1/05 N/A 66.6700% 120.2500 3.333333% 16.666667% 80.00%
XXXXX XX XXXXXXX 00-00000 7/1/04 N/A 66.6700% 160.0000 3.333333% 16.666667% 80.00%
XXXXX XX XXXXXXX 00-00000 7/1/04 N/A 66.6700% 160.0000 3.333333% 16.666667% 80.00%
XXXXX XX XXXXXXX 00-00000 7/1/04 N/A 66.6700% 320.0000 3.333333% 16.666667% 80.00%
XXXXX XX XXXXXXX 00-00000 7/1/04 N/A 66.6700% 80.0000 3.333333% 16.666667% 80.00%
XXXXX XX XXXXXXX 00-00000 7/1/04 N/A 66.6700% 145.3200 3.333333% 16.666667% 80.00%
XXXXX XX XXXXXXX 00-00000 10/21/07 N/A 66.6700% 623.3600 3.333333% 16.666667% 80.00%
XXXXX XX XXXXXXX 00-00000 10/21/07 N/A 66.6700% 321.0000 3.333333% 16.666667% 80.00%
XXXXX XX XXXXXXX 00-00000 HBP N/A 66.6700% 640.0000 2.333333% 16.666667% 4.00% 77.00%
XXXXX XX XXXXXXX 00-00000 7/1/07 N/A 66.6700% 589.8200 3.333333% 16.666667% 80.00%
EXHIBIT "C"
MEDIATION AGREEMENT
INTRODUCTION
------------
Skyline Resources, Inc. (Skyline), and Cedar Ridge, LLC. (Company) have entered
into a Purchase and Sale Agreement dated February 17, 2003, and covering real
properties, royalty interests, working interests, and mineral interests. The
parties anticipate that differences may arise as a result of the transfers
covered in the Agreement and seek to resolve differences, if any, in a
cost-effective manner as set forth in this Exhibit "C".
1. TERMS OF THE AGREEMENT
A. Mediation Concerning All Other Costs And Damages.
1. With respect to any and all disputes, claims, losses and damages
arising out of the Agreement, Skyline, and Company agree to
submit those disputes to non-binding mediation (the Mediation).
The Mediation shall address all claims for recovery of the
unreimbursed costs at law, or in equity, including claims based
on contract, tort, and equitable theories.
2. In the event any claim or controversy arising under this
agreement is not resolved by informal negotiations within thirty
days (or any mutually agreed extension) after the submission by
either party of an itemized list of claims and any documentation
supporting those claims, the matter shall be referred to the
Denver office of the American Arbitration Association (AAA) for
mediation, that is, an informal, non-binding conference or
conferences between the parties in which a neutral mediator will
seek to guide the parties to a resolution of the dispute.
Each party may be represented at any meeting by up to four
persons of its choice, with at least one representative being a
member of management, with the authority to settle the matter for
that company. The mediation will occur in Denver, Colorado at the
offices of AAA or such other place selected by the parties,
within thirty days after the referral to AAA.
The parties shall have five working days to select a mediator
from the list of mediators at AAA. If the parties do not agree
within that period, they shall request that AAA assign one to the
case.
The mediation process shall continue until the matter is resolved
or the mediator makes a finding that there is no possibility of
settlement through mediation or either party chooses not to
continue further.
Mediation sessions are private. The parties and their
representatives may attend mediation sessions. Other persons may
attend only with the permission of the parties and with the
consent of the mediator.
Confidential information disclosed to a mediator by the parties
or by witnesses in the course of the mediation shall not be
divulged by the mediator. All records, reports, or other
documents received by a mediator while serving in that capacity
shall be confidential. The mediator shall not be compelled to
divulge such records or to testify in regard to the mediation in
any adversary proceeding or judicial forum.
The parties shall maintain the confidentiality of the mediation
and shall not rely on, or introduce as evidence in any arbitral,
judicial, or other proceeding:
a) views expressed or suggestions made by another party with
respect to a possible settlement of the dispute;
b) admissions made by another party in the course of the
mediation proceedings;
c) proposals made or views expressed by the mediator; or
d) the fact that another party had or had not indicated
willingness to accept a proposal for settlement made by the
mediator.
There shall be no stenographic record of the mediation process.
The expenses of witnesses for either side shall be paid by the
party producing such witnesses. All other expenses of the
mediation, including required traveling and other expenses of the
mediator and representatives of the parties, and the expenses of
any witness and the cost of any proofs or expert advice produced
at the direct request of the mediator, shall be borne equally by
the parties unless they agree otherwise.
Should the mediation not result in a settlement of any or all
issues, plaintiff will, within five working days of the
termination of the process, submit a final written offer for
settling all outstanding claims (including defendant's
counterclaims, if any) or a notice that it will not offer to
settle the dispute. Within five working days of its receipt of
the offer or notice, the defendant must either accept or reject
the offer, if any, or submit its own settlement offer as to all
outstanding claims. Within five working days of its receipt of
the defendant's response, plaintiff must accept or reject
defendant's offer as to all outstanding claims. If the claims are
not settled within three working days of the last settlement
offer, either party may submit the outstanding claims to Binding
Arbitration under the terms set forth in Section III hereto.
If the parties have settled any or all claims, they will promptly
execute settlement agreements and releases.
B. Tolling of Statutes of Limitations. All periods of limitations,
whether based on contract, statute, or common law, governing any
claims, whether sounding in contract, tort, equity or otherwise by a
party for recovery of its unreimbursed costs will be tolled as of the
date notice of an election to mediate is given (Tolling Period),
provided, however, that nothing in this agreement shall be deemed to
modify or alter any time bar existing prior to such notice. The
Tolling Period shall expire thirty (30) days after Company or Skyline
gives a written notice of termination of the Tolling Period, which
notice may not be given until after the parties complete the
procedures described in paragraph 2.13 above.
C. Nothing contained in this agreement shall constitute any modification
or waiver of the Purchase and Sale Agreement and neither party is
released from any of its existing or future obligations, if any,
thereunder.
D. Other Provisions
1. Legal Representation Satisfaction With Terms. In executing this
agreement the parties acknowledge that they have consulted with
and have the advice of counsel of an attorney of their choosing
and they are satisfied with the terms incorporated herein, and
that they have executed this agreement after independent
investigation and without fraud, duress, or undue influence
Furthermore, the parties acknowledge that this agreement is
executed by the parties who enjoy in connection with the subject
matter of this agreement equal bargaining power.
2. Mutually Drafted Settlement Agreements: This agreement has been
negotiated arm's length and between parties represented by
experienced legal counsel. Accordingly, any rule of law or a
legal decision that would require interpretation of any ambiguity
in this agreement against that party that has drafted the
applicable version is not applicable and is hereby waived.
Revisions of this agreement shall be interpreted in a reasonable
manner to effect the purpose of the parties and this agreement.
Further, each party hereto acknowledges that he, she, or it has
read this agreement, fully understands its terms and effects, and
that this agreement is being signed freely by them.
3. Entire Agreement: This agreement contains the entire written
agreement and understanding between the parties hereto concerning
the subject matters of this agreement, and supersedes and
replaces any and all prior and contemporaneous written or oral
negotiations, proposed agreements, except for the Agreement. Each
party acknowledges that no other party or any agent or attorney
of any party, has made any promise, representation or warranty
whatsoever, expressed or implied, not contained herein concerning
the subject matter hereof to induce either party to execute this
agreement, and each party acknowledges that it has not executed
this agreement in reliance of any such promise, representation,
or warranty not contained herein.
4. Applicable Law: This agreement is made and entered into in the
State of Colorado and the parties agree that it shall in all
respects be interpreted, enforced, and governed under the laws of
this state.
5. Performance of Agreement: The parties, without further
consideration, agree to execute and deliver such other documents
and take such other action as may be reasonably necessary to
effectively consummate the subject of this agreement. The parties
further agree that they will do nothing to interfere with any
other parties full use and enjoyment of the benefits of this
agreement.
6. Successors In Interest: This agreement shall be binding and inure
to the benefit of the parties and their respective heirs,
executors, administrators, personal representatives, successors,
transferees and assigns.
7. Severability of Terms: Should any provision of this agreement be
declared or determined by any court to be illegal or invalid, the
validity of the remaining parts, terms, or provisions shall not
be affected thereby except illegal or invalid part, term or
provision shall not be deemed to be part of this agreement.
8. Modification of Agreement: Any amendment or modification of this
agreement must be in writing and signed by the parties.
9. Notices: Any and all notices required or permitted under this
agreement shall be in writing and shall be deemed given when: (1)
hand delivered; (2) sent by facsimile; (3) sent by overnight
mail; or (4) upon receipt after mailing when mailed by certified
mail, return receipt requested, postage prepaid, addressed to the
party to whom it is intended. Said Notices shall be sent to the
following persons:
Skyline: COMPANY
Skyline Resources, Inc. Cedar Ridge, LLC
Attention: Xxxxx X. Xxxxx Attention: Xxxxxxx X. Xxxxxxx, Xx.
0000 Xxxxxxxxxx, Xxxxx 000 000 Xxxxxxxx Xxx., Xxxxx 000
Xxxxxxxx, XX 00000 Xxxx Xxxxx, XX 00000
10. Headings: The headings used in this agreement are for convenience
only and do not impart any substantive significance.
11. No Waiver: No waiver by any party to this agreement of any breach
of any term or provision of this agreement shall be construed to
be nor be a waiver of any other term or provision hereof.
2. BINDING ARBITRATION AGREEMENT
In the event the parties are unable to resolve any and all differences
under the mediation provisions set forth herein, they agree to enter into
Binding Arbitration on the following terms.
A. ARBITRATORS
1. Unless the parties otherwise agree, three arbitrators will decide
the claim.
2. At least two of the arbitrators will be attorneys admitted to
practice in the State of Colorado. The arbitrators will disclose
to the parties before selection of details of his or her previous
representation or work for either parties and any financial or
personal interest in or bias with respect to each party or the
property or interest or with respect to the results of the
arbitration proceeding. One of the three arbitrators may be a
registered professional in the most relevant discipline, actively
engaged in his or her profession on behalf of oil and gas
producers for not less than five years.
3. Each party shall select and provide to the other party for that
party's consideration a list of five arbitrators. A party
receiving nomination must be accepted or rejected in writing. If
after thirty working days after the notice of arbitration the
parties have failed to select the arbitrator, then application
shall be made to the AAA to provide a list of five qualified
nominees. Each party will have five working days after receiving
the list to strike two nominees. If more than two nominees remain
after each party makes the strikes, the AAA will select the
remaining arbitrator from the remaining nominees. A similar
procedure will be followed for the selection of the technical
arbitrator, except the two attorney arbitrators will propose a
list of at least three nominees for strikes and select the
technical arbitrator if necessary.
If either party fails to respond to a nomination or fails to vote
on the nomination, the opposing party may select the arbitrators
and proceed with the arbitration proceeding as provided in these
arbitration terms. To avoid prejudice toward either party, either
a neutral third party will be engaged to contact the nominees
regarding availability and qualification or the parties will make
all contacts with potential arbitrators jointly.
4. Throughout the proceedings, the arbitrators will promptly provide
the parties with copies of all documents filed by each party and
not provided to the other party by the arbitrators relating to
the proceedings. The arbitrators will decide all claims and other
issues in dispute (except as specifically provided herein)
including whether any claim may be arbitrated, conduct of the
arbitration, discovery issues, admissibility of evidence, and
interpretation and application of these arbitration terms.
5. The arbitrators have authority and power to proceed Ex Parte if
either party fails after reasonable notice to strike proposed
arbitrators, attend hearings or conferences with the arbitrators,
furnish the arbitrators with required papers, information, or
briefs, or take any action required by these arbitration terms.
6. If an arbitrator becomes unwilling or unable to serve or proceed
with the arbitration, a replacement arbitrator will be selected
under paragraph A.3 of this agreement, provided, however,
nominations must be made within five days of an arbitrator's
notice to the parties of his or her resignation or the parties
becoming aware of the arbitrator's inability to proceed.
B. REPRESENTATION
The parties may be represented by legal counsel or other technical or
professional persons.
C. PRE-HEARING PROCEDURES
1. Unless the parties agree otherwise, a preliminary hearing with
the arbitrator will be held within 20 days of the selection of
the arbitrator to assist the arbitrator in establishing
proceedings, setting the hearing date within the next 150 days,
and for other purposes necessary or desirable for the efficient
and expedited disposition of the proceedings.
Unless the parties agree otherwise, the maximum length of the
arbitration hearing will be five (5) consecutive and mutually
convenient working days. The arbitrator will select the dates if
the parties cannot agree. The arbitrator will send notice of the
arbitration hearing to each to each party stating the procedures
to be followed including the order of testimony.
2. Discovery. The parties intend there be a good faith but limited
exchange of information, but only that information relevant to a
disputed issue, without duplicating the costly, time-consuming,
and burdensome procedures available in civil litigation.
a) The parties will, within 30 days of the close of the
preliminary hearing, designate and exchange the names and
addresses of all witnesses who will be called at the
arbitration hearing, a brief statement of each witness'
expected testimony, and lists and copies of exhibits that
may be presented at the hearing. A witness will be
designated as a fact witness, an expert witness, or both.
Unless otherwise agreed, each side may add no more than one
additional witness to the list of witnesses who will be
called after the period for producing that list has passed.
b) The parties may depose any person who will be called to
testify at the hearing.
c) Each party may submit to the arbitrator one set of request
for production of relevant documents, one set of
interrogatories containing not more than 30 questions,
including subparts, soliciting relevant information, and
requests for depositions of individuals with relevant
information who are not identified by the opposing party as
witnesses. The arbitrator may order responses if discovery
requests are reasonable in scope. Each party requesting
documents, interrogatories, or depositions of persons who
will not testify at the hearing will reimburse the opposing
party for the opposing party's reasonable cost to respond to
the request, including but not limited to attorney's fees,
reproduction costs, staff time, and travel expenses.
d) Time limit set for each deposition is eight hours. The
arbitrator may allow additional time if it can be shown that
the deposition cannot reasonably be completed within eight
hours. Each deposition will be held at a location convenient
to the deponent.
e) The arbitrator may subpoena persons designated as witnesses,
representatives of the parties, and persons with information
relevant to the dispute to appear for oral deposition.
f) The arbitrator will establish a procedure to resolve
discovery disputes and rule on the depositive motions
promptly and efficiently. The procedure may include
presenting motions by letter as opposed to formal pleadings
and resolution by telephone conferences.
g) The arbitrator may impose sanctions that he or she deems
appropriate, including but not limited to award of
attorney's fees for a party's failure to identify witnesses
and the substance of their testimony, to provide copies of
exhibits, or to respond timely and in good faith to
discovery requests. The arbitrator may extend any deadline
in the interest of fairness if a party fails to comply with
the arbitration terms.
3. At least 30 days before the arbitration hearing, the parties will
jointly prepare and file with the arbitrators an agreed
pre-hearing statement setting out the disputed issues to be
decided by the arbitration. A statement of agreed facts, the
identity of all witnesses to be called, a list of exhibits that
will be used, and the copies of documents concerning the disputed
issues that the parties agree should be provided to the
arbitrators.
4. Each party will also submit a pre-hearing brief unless the
parties agree otherwise. Plaintiffs brief as to all claims will
be due 30 days before the arbitration hearing. Defendant's brief
as to all claims, including defendant's counter-claims, will be
due 20 days before the hearing.
D. HEARING
1. The arbitration will be held in Denver, Colorado at a location
agreed to by the parties unless the parties otherwise agree.
2. The hearing will begin on a Monday no later than one hundred
twenty (120) working days after the preliminary hearing. The
maximum length of the hearing is five consecutive working days.
Each party will have one half of the scheduled time for its case
including direct, redirect, and rebuttal testimony,
cross-examination of the opposing party's witnesses, and opening
and closing statements, but excluding time attributable to the
opposing party's objections during the hearing and questions. The
arbitrator will preside at the hearing and rule on the admission
and exclusion of evidence and procedural questions and may
exercise all other powers conferred by statute on an arbitrator.
The hearing will be conducted as if it were an informal court
trial. The arbitrator may question any witnesses appearing at the
arbitration hearing. The parties may change these provisions by
agreement.
3. Attendance of Witnesses and Production of Evidence
a) The arbitrator may subpoena witnesses and require production
of documents.
b) In addition to presenting at the arbitration hearing through
the testimony of qualified witnesses, either party may
submit testimony by affidavit. Either party may submit
testimony by affidavit as follows: Testimony offered by
affidavit must be submitted to the opposing party and the
arbitrator at least 30 days before the arbitration hearing.
Either the opposing party or any arbitrator may, by written
notice at least 15 days before the arbitration hearing,
request the individual affiant appear at the arbitration
hearing for cross examination. If the affiant is not
previously identified as a witness, the opposing party will
also have a reasonable opportunity to depose the affiant and
require that the affiant appear at the hearing. If after
notice within five working days of the deposition, the
affiant is not able to appear at the hearing, the hearing
will be rescheduled. If the affiant does not appear as
requested either for the arbitration hearing or the
deposition for whatever reason after timely request by a
party, the testimony of the affiant will be disregarded by
the arbitrator for all purposes. A party may not advance an
issue at the arbitration hearing unless the party identified
the issue in writing to the opposing party and the
arbitrators at least 45 days before the hearing, a party not
introduce or advance documentary evidence at the arbitration
hearing unless it furnished a copy and identified it as an
exhibit to the opposing party as provided in C.2.a. of this
agreement, and to the arbitrators at least 45 days before
the hearing. A party may not call a witness unless the
opposing party has had an opportunity to depose the witness
and the nature of the testimony was previously disclosed in
writing to the opposing party as provided in C.2.a. of this
agreement and to the arbitrators at least 45 days before the
hearing.
c) If a witness is unable for good cause to appear at the
hearing, the arbitrator may extend or postpone the hearing
as reasonably necessary in the interest of fairness.
d) All witnesses will give all testimony at hearing under oath
administered by a court reporter, and the arbitrator must be
present when evidence is given and/or admitted.
4. The arbitrator will be guided by common sense and justice in
allowing evidence to be presented. No federal or state rule
relating to the order of proof, the conduct of the hearing, or
the presentation and admissibility of evidence will be applicable
in the arbitration hearing except that the arbitrator must
recognize and apply the attorney client privilege and
work-product immunity doctrine during the pre-hearing discovery
and at the hearing. Any relevant evidence including hearsay may
be admitted by the arbitrator if reasonable persons would
reasonably rely on it in the conduct of serious affairs,
regardless of the admissibility of the evidence in a court of
law.
5. The parties may provide Closing Briefs of no more than twenty
(20) pages within ten days after they have made their closing
arguments. Time limits within which the arbitrator is required to
make his or her decision will begin on the date the hearing
closes.
6. The parties acknowledge that they have agreed to this arbitration
provision to expedite settlement of any disputes, and the
arbitrator is instructed that any extension of time must be
reasonable and of the shortest length necessary to accommodate
the reason for the delay.
E. AWARD AND ENFORCEMENT
1. Unless the parties agree otherwise, the arbitrator will decide
each claim and disputed issue within 30 days after the date the
hearing closes based on applicable law and testimony, documents,
and other materials the parties submit before and during the
arbitration hearing. The decision must be within the bounds set
by contingents of the parties. The decision must be in writing,
including findings of fact and conclusions of law. The arbitrator
must sign the opinion and must indicate whether he or she
supports the decision on each claim and disputed issue.
2. The decision of the arbitrator is final and binding on the
parties and non-appealable.
3. The arbitrator may award compensatory damages only. The
arbitrator may not award, and the parties specifically waived
rights to multiple damage awards that may be allowed by statute,
punitive or exemplary damages, specific performance, recission,
or any other legal or equitable remedy.
4. Judgment may be entered on the award and the award may be
judicially enforced. The award is final and binding and no appeal
from the award may be taken on the grounds of error in
application of law or findings of fact. After the arbitrator
issues his or her decision, an aggrieved party may request an
appropriate court to vacate the decision of the arbitrator only
under the circumstances set out in Section 10, U. S. Arbitration
Act.
F. GENERAL TERMS
1. The parties may modify any time period provided in the
arbitration terms agreement.
2. The substantive law, including time bars, applicable to all
claims and disputed issues, is the law of the State of Colorado
without regard to the choice of law rules of any other
jurisdiction. The substantive law applicable to these arbitration
provisions is the United States Federal Arbitration Act. The
arbitration will be held in accordance with these arbitration
terms and for matters not specifically addressed in these
arbitration terms in accordance with the U.S. (Federal)
Arbitration Act, 9 USC,ss.1, et seq. This agreement in which
these arbitration terms are referenced is a contract involving
commerce within the meaning of the United States Arbitration Act
and, accordingly, the arbitrator is vested with all powers and
authorities conferred under the act and under these arbitration
terms.
3. Except as expressly provided in A.5 of this agreement, no party
may have any ex parte communication with any arbitrator. For the
purposes of this agreement, ex parte communications means both
oral communications without the participation of a representative
from the opposing party (or the written consent of the opposing
party) and written communications unless a complete copy of the
communication is provided to the representative of the opposing
party simultaneously with service on the arbitrator.
4. If the arbitrator's award as to all claims exceeds or equals
plaintiff s final settlement offer as to all claims in provided
in the mediation agreement attached hereto or the total amount
claimed if plaintiff declined or failed to make a settlement
offer, the arbitrator will award plaintiff an additional sum
equal to its reasonable cost. If the arbitrator's awards as to
all claims equals or is less than defendant's settlement offer as
to all claims as provided in the mediation agreement or zero if
defendant declined or failed to make a settlement offer, the
arbitrator will award defendant a sum equal to its reasonable
cost. If the arbitrator's award of all claims is greater than
defendant's final settlement offer as to all claims, but less
than plaintiffs final settlement offer as to all claims, or the
total amount claimed if plaintiff declined to fail to make a
settlement offer, each party will pay its own costs and its
one-half share of the arbitrator fees and expenses and other
arbitration costs. Costs as used in this section of the agreement
includes a party's attorney's fees and expenses, staff time and
expenses, including the party's discovery costs under C-D of this
exhibit and the party's one-half share of the arbitrator's fees
and expenses and other arbitration costs.
5. Subject to F.6 of this agreement, either party may hire a court
reporter to produce a stenographic record at depositions, the
hearing, or other proceedings. The requesting party must notify
the other party of the arrangements in advance and must pay the
costs incurred. If the opposing party wants a copy of the record,
that party will be provided a copy on payment of one-half of the
cost of the stenographic record.
6. All proceedings and all information obtained during discovery or
the proceedings and the settlement agreement if any or the
arbitrator's award will be kept confidential and may not be
disclosed or used by either party for a period of four years from
the date of the arbitrator's award except as provided in these
arbitration terms and except in connection with an action to
enforce or challenge the arbitrator's award if any, or as may be
required by law or court order.
7. In computing any period described or allowed by these arbitration
terms, the day of the act, event, or default from which the
designated period begins to run will not be included. The last
day of the period is included unless it is a Saturday, Sunday, or
legal holiday, in which event the period runs until the end of
the next day that is not a Saturday, Sunday or U.S. legal
holiday. The last day of the period will end for the purposes of
compliance with this agreement at 6:00 p.m., Mountain Standard
Time.
8. Whenever these arbitration terms provide for notice, exchange, or
information or other communications between the parties, the
notice will be delivered to the representative designated in the
mediation agreement. Notice to or service on any person other
than a party's designated representative will not constitute
notice or service on a party for purposes of these arbitration
terms. Written notice to a party may be accomplished by personal
service, overnight courier, facsimile or U.S. mail. Service is
accomplished upon receipt at the business office of the
designated representative. Notices, exchanges of information, and
other communications must also be delivered to designated
counsel, if any, for each party in the same manner as notice or
service is provided a party's designated representative.
9. An action to enforce or challenge these arbitration terms
including an action to confirm or validate an arbitration award
must be brought in U.S. Federal District Court in Denver,
Colorado unless the amount in controversy is less than the
minimum jurisdictional amount established for that court in which
case it shall be brought in the applicable Colorado state court.
10. Any party that proceeds under this arbitration agreement after it
knows or should have known that a party or arbitrator has not
complied with any provision or requirements of this agreement and
that fails to file a written objection with the arbitrators
within five days after it knows or should have known of the
non-compliance will be deemed to have waived its right to object.
SKYLINE RESOURCES, INC.
/s/ Xxxxx X. Xxxxx
-----------------------------
Xxxxx X. Xxxxx, President/CEO
CEDAR RIDGE, LLC
/s/ Xxxxx X. Xxxxx
-----------------------------
Xxxxx X. Xxxxx, Manager
