EXHIBIT 10.5
 

 

 
REAL ESTATE PURCHASE AGREEMENT
BY AND BETWEEN

LANDRICA DEVELOPMENT COMPANY
 
AS SELLER
 
AND
 
SYNTHETIC FUELS LLC
 
AS BUYER
 

 
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TABLE OF CONTENTS
 
 
PAGE
1.
PURCHASE AND SALE OF THE PROPERTY
4
     
2.
PURCHASE PRICE
5
     
3.
OPERATION OF THE PROPERTY THROUGH CLOSING
7
     
4.
TITLE TO THE PROPERTY AND SURVEY
8
     
5.
SELLER’S REPRESENTATIONS AND WARRANTIES
9
     
6.
BUYER’S REPRESENTATIONS AND WARRANTIES
12
     
7.
INDEMNIFICATION AND SURVIVAL
13
     
8.
CLOSING
15
     
9.
CONDITIONS TO CLOSING
18
     
10.
CASUALTY LOSS AND CONDEMNATION
20
     
11.
BROKERAGE
21
     
12.
DEFAULTS AND REMEDIES
21
     
13.
ADDITIONAL AGREEMENTS
22
     
14.
MISCELLANEOUS
22

 
 
Schedules
 
1.1
 
Land Description-Plant Site and Surface
1.2(a)
 
Permits
1.2(b)
 
Service Contracts
1.5(a)
 
Excluded Property
1.5(b)
 
Personal Property
2.2
 
Realty Excluded from Mortgage
2.3(c)
 
Bonds to be Released
5.11(a)
 
Storage Tanks
5.11(b)
 
Drums and Totes
5.15
 
Insurance Policies
8.2(a)
 
Warranty Deed – Realty
8.2(b)
 
Assignment and Bill of Sale
8.2(e)
 
Assignment of Service Contracts
8.3(c)
 
Promissory Notes and Combination Mortgage and Security Agreement
13.1
 
KFx Technologies Plant

 
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INDEX OF DEFINED TERMS
 
 

DEFINED TERM  SECTION  PAGE AAA Rules  7.1(e)  14 Actions  5.13  12 Adjusted
Purchase Price  2.5  7 Agreement  Preamble  4 Applicable Law  5.11  11 Assignee
 Preamble  4 Bonds  2.3(a)  6 business day  14.4  23 Buyer  Preamble  4 Claim
Notice  7.1(d)  14 Closing  8.1  15 Closing Date  8.1  16 Damages  7.1(b)  13
Dispute Notice  7.1(e)  14 Due Diligence Period  9.1  18 Earnest Money  2.1  5
Effective Date  Preamble  4 Environmental Assessment  4.5  9 EO  5.7  10
Evergreen  2.3(c)  6 First Note  2.3(b)  6 Hazardous Material  5.11  11
Indemnified Persons  7.1(b)  13 Indemnifying Person  7.1(b)  13 Laboratory  13.1
 22 Opinion Letter  4.4  8 Permitted Exceptions  4.1  8 Premises  1.1  4
Property  1  4 Purchase Price  2  5 Rail Lease  1.2  5 Real Property  1.1  4
Realty Excluded from Mortgage  2.2  6 Releases  2.3(c)  6 Response Period
 7.1(d)  14 Second Payment  2.2  6 Second Note  2.2  6 Seller  Preamble  4
Service Contracts  1.2  5 Survey  4.3  8 Service Contacts  7.1(a)  13 Third
Payment  2.2  6 Title Commitment  4.2  8 Title Company  4.2  8 Title Policy  4.2
 8

 
 
 
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REAL ESTATE PURCHASE AGREEMENT
 

 
THIS REAL ESTATE PURCHASE AGREEMENT (this “Agreement”) is entered into as of the
20th day of August, 2010 (the “Effective Date”), between Landrica Development
Company, Seller, a South Dakota corporation authorized to transact business in
Wyoming, (“Seller”), and Synthetic Fuels LLC, a Colorado limited liability
company, or its permitted assignee hereunder (“Buyer”).
 
WHEREAS, Seller owns and has conducted certain mining and coal beneficiation
operations at its property, facilities and offices located at and around 3574
North Garner Lake road, Gillette, Campbell County, Wyoming; and
 
WHEREAS, Seller desires to sell the Property (as defined herein) to Buyer, and
Buyer desires to purchase the Property from Seller, each upon and subject to the
terms and conditions of this Agreement; and
 
WHEREAS, Buyer will organize and establish a corporation to take title to the
Property at Closing (the “Assignee”).
 
NOW, THEREFORE, in consideration of and in reliance upon the terms, covenants
and conditions contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller and Buyer agree as follows:
 
1.           PURCHASE AND SALE OF THE PROPERTY
 
Seller agrees to sell and convey and Buyer agrees to purchase the following
described property (collectively the “Property”):
 
1.1           that certain 1,200 +/- acre tract of land with the improvements
listed in Schedule 1.1 hereto, located at and around 3574 North Garner Lake
Road, Gillette, Campbell County, Wyoming, as more particularly described in
metes and bounds in the attached Schedule 1.1, together with all improvements
and fixtures thereon (the “Real Property”) and all of Seller's right, title and
interest, if any, in and to all easements, tenements, hereditaments, privileges
and appurtenances in any way belonging or relating to the Real Property,
including, without limitation, (i) any land to the midpoint of the bed of any
highway, street, road or avenue, open or proposed, in front of, abutting or
adjoining the Real Property, (ii) any land lying in or under the bed of any
creek, stream, bayou or river running through, abutting or adjacent to the Real
Property, (iii) any riparian, appropriative, or other water rights of Seller
appurtenant to the Real Property and relating to surface or subsurface waters,
(iv) any coal, oil, gas or other minerals or mineral rights relating to the Real
Property or to the surface or subsurface thereof (v) any strips, gores or pieces
of property abutting, bounding or which are adjacent or contiguous to the Real
Property, and (vi) all easements, right-of-ways, rights of ingress or egress and
reversionary interests benefiting the Real Property (collectively, the
“Premises”); all existing surveys, blueprints, drawings, plans and
specifications (including, without limitation, structural, heating, ventilation
and air conditioning, mechanical and plumbing plans and specifications and
operating
 
 
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manuals) and other documentation for or with respect to the Premises or any part
thereof; all market, demographic and geographic data and appraisals concerning
the Premises; and such other existing books, records and documents used in
connection with the operation of the Premises or any part thereof;
 
1.2           all of Seller’s right, title and interest to and under each lease,
service contract or other agreement pertaining to the Premises to which Seller
is a party including, but not limited to, permits and licenses (“Permits”)
employment, union, purchase, service and maintenance agreements, equipment
leases and any other agreements, contracts affecting or relating or pertaining
in any way to the Premises, which Buyer elects to have assigned to Buyer (the
“Service Contracts”); provided, however, that nothing contained in this Section
1.2 shall be construed to require Buyer to accept or to prohibit Buyer from
rejecting the transfer, conveyance, or assignment of any particular lease,
service contract, or other agreement in Buyer’s sole and absolute discretion;
provided however that Buyer will accept the Rail Use and Access Lease Agreement
(the “Rail Lease”), between Seller and Bison Pipeline LLC pertaining to the
limited use of Seller’s rail loop as long as the Rail Lease contain provisions
that it may be terminated prior the end of 2010. A list of Permits is attached
to this Agreement as Schedule 1.2(a).  A list of all Service Contracts is
attached to this Agreement as Schedule 1.2(b);
 
1.3           all keys to any parts of the Premises;
 
1.4           all of Seller’s right, title and interest in any warranties and
guaranties affecting the Premises; and,
 
1.5           except for the personal property located on the Property which is
excluded from this Agreement and is listed on Schedule 1.5(a), all of the
equipment and other personal property owned by Seller thereon and located on or
about or used in connection with the Real Property, including, without
limitation, the personal property listed on Schedule 1.5(b).
 
2.          PURCHASE PRICE
 
The total consideration to be paid by Buyer to Seller for the Property is Two
Million Dollars ($2,000,000.00), the assumption or replacement of reclamation
bonds as set forth below, and certain preferred stock as set forth below (the
“Purchase Price”), which shall be paid as follows:
 
2.1           Cash
 
Concurrent with the execution of this Agreement, Buyer will deliver to an Escrow
Account at the Campbell County Abstract Company of Gillette, Inc. the sum of One
Hundred Thousand Dollars ($100,000.00) (“Earnest Money”) in certifiable funds,
which shall be held pursuant to this agreement to be paid to Seller at Closing
or to the Parties as provided in Section 12.  Said sum is considered and
recognized by Buyer and Seller as a deposit on the above stated Purchase Price
and as earnest money for Buyer’s performance hereunder, subject to the material
satisfaction of all Conditions Precedent to Closing as provided in this
Agreement.  In the event that the Conditions Precedent to Closing are not
materially satisfied or waived in writing by Buyer and Closing does not occur,
the Earnest Money shall be released to Buyer.

 
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At Closing, Buyer shall pay to Seller or its designee the Earnest Money and an
additional Four Hundred Thousand Dollars ($400,000.00), for a total of Five
Hundred Thousand Dollars ($500,000.00).
 
2.2           Second Payment
 
At Closing, Buyer shall execute and deliver to Seller or its designee a
Promissory Note in the amount of One Million Five Hundred Thousand Dollars
($1,500,000.00) secured by a Second Mortgage and Senior Security Interest in the
Property (the “Second Note”).  The Real Property on which the disposal wells and
related operations are or will be located will be excluded from the Second Note
(referred to as “Realty Excluded from Mortgage” as set forth on Schedule
2.2).  Interest on the amount of the Second Note shall accrue at the rate of 4%
per annum. Five Hundred Thousand Dollars ($500,000.00) plus the accrued interest
shall be paid to Seller on or before the first anniversary date of the Closing
(the “Second Payment”).  One Million Dollars ($1,000,000) plus the accrued
interest shall be paid to Seller on or before the second anniversary date of the
Closing (the “Third Payment”).
 
2.3           Reclamation Bonds
 
(a)  At Closing, Seller shall provide to Buyer the Reclamation Bonds totaling
Six Million One Hundred Twenty Three Thousand One  Hundred  Sixty  Five  Dollars
($6,123,165.00)  and  the  Plugging, Abandonment and Reclamation Bond pertaining
to the injection well operations totaling One Hundred Forty One Thousand Dollars
($141,000.00) (together called the “Bonds”).  The transfer of the Bond money
will be accomplished pursuant to the rules, regulation and approval of the State
of Wyoming by either an assignment of the Bonds, an assumption of the Bonds, or
by another mutually agreed approach which is approved by the State of Wyoming.
 
(b)  At Closing, Buyer shall execute and deliver to Seller or its designee a Six
Million Three Hundred Thousand Dollar ($6,3000,000) Promissory Note secured by a
Mortgage and Security Interest in the Property, payable in one year (12 months)
from Closing (the “First Note”).  Interest on the First Note shall be payable
quarterly at the rate of four per cent (4%) per annum.  The Realty Excluded from
Mortgage will be excluded from the Second Note.
 
(c)  If, prior to one year (12 months) from Closing a third party with the
capability of assuming all or a portion of the Bonds through a self-bonding
mechanism such as the posting of the expansion of an existing “statewide” or
“cash” bond, then Buyer shall provide to Seller either a cash payment or full
releases from the Department of Environmental Quality of the State of Wyoming so
as to enable Seller to recoup the value of the Bonds (the “Bonds to be Released”
in Schedule 2.3(c)), addressed to Seller’s parent company, Evergreen Energy Inc.
(“Evergreen”) and Wachovia Securities, a Wells Fargo Company, for the Fort Union
Mine Reclamation Bond totaling Six Million One Hundred Twenty Three  Thousand
One Hundred Sixty Five Dollars ($6,123,165.00).  The combined total Releases
provided on the forms set forth on Schedule 2.3 which are required to be paid
one (1) year from Closing shall be Six Million Two Hundred Sixty Four Thousand
One Hundred Sixty Five Dollars ($6,264,165.00).  The difference between the
First Note and the Bond payoff amount shall be paid by Buyer to Seller in cash.
 
 
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(d)  Should the amount of the Bonds be reduced prior to payment to Sellers
pursuant to Section 2.3(b or c), the amount of the reduction in the Bond amount
shall be immediately returned to Seller, with a corresponding reduction in the
Second Note.
 
2.4           Foreclosure
 
Upon Buyer’s default on either the First Note or the Second Note, Seller, if it
desires, will have the option to (i) foreclose on the Mortgages which securitize
the Notes and Buyer shall take the required steps to transfer the Bonds and
Property back to Seller without cost to Seller and take the other steps required
to return all of the Bonds and Property to Seller; or (ii) take an assignment of
the shares of Assignee, free and clear of liens, encumbrances (except for
Seller’s mortgage), debts and obligations, other than the obligations which it
assumed at Closing .
 
2.5           Adjusted Purchase Price
 
At Closing, Buyer shall pay to Seller the Purchase Price as outlined above,
subject, however, to such adjustments as are or may be required by this
Agreement (such amount, as adjusted, being referred to as the “Adjusted Purchase
Price”).
 
2.6   Preferred Stock
 
(a)  If Buyer or any assignee or affiliate of Buyer who intends to develop a
project on the Premises raises capital, in any combination of equity and debt,
sufficient to finance the construction of a commercially viable coal to liquids
facility, Evergreen shall receive Two Million Dollars ($2,000,000) of preferred
shares.
 
(b)  Evergreen shall have the option to exchange its preferred shares for common
shares at either; (i)  the same terms of other parties who received preferred
shares during the financing; or (ii) at eighty five percent (85%) of the market
value of the common shares at the time of conversion.
 
3.           OPERATION OF THE PROPERTY THROUGH CLOSING
 
3.1           Seller represents and warrants that:  from the Effective Date
through the Closing Date (as hereinafter defined), Seller has managed the
Property in a prudent and custodial manner and has kept the Premises and the
Personal Property in the good condition and repair, ordinary wear and tear
excepted; from the Effective Date to the Closing Date and Seller has not entered
into any new tenant leases or options to lease (or any extension thereof)
affecting the Property, and has not created or entered into, as applicable, any
encumbrance, mortgage, security interest, or agreement (or modifications of
extensions thereof) of any kind regarding title to the Property; and, Seller has
kept all present insurance in full force and effect and has paid all premiums in
connection therewith.
 

 
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4.           TITLE TO THE PROPERTY AND SURVEY
 
4.1           State of Title
 
Seller shall convey to Buyer good and marketable title in fee simple to the
Premises by a recordable statutory warranty deed, free from all liens and
encumbrances other than: any liens, encumbrances, exceptions, covenants,
conditions and restrictions of record which are reviewed and approved by Buyer,
including those which may be reflected in Schedule B of the “Title Commitment”
(as hereinafter defined) or on the “Survey” (as hereinafter defined), and
general real estate taxes for the year 2010 to the extent not yet due and
payable (collectively, the “Permitted Exceptions”).  Buyer’s sole remedy with
respect to title or survey matters is to terminate the Agreement and receive
back the Earnest Money.
 
4.2           Evidence of Title
 
Buyer shall obtain at Seller’s expense a Wyoming standard form of title
insurance commitment (the “Title Commitment”) for an ALTA Owner’s Title
Insurance Policy (the “Title Policy”) through Campbell County Abstract Company
of Gillette, Inc., (the “Title Company”) proposing to insure in the name of
Buyer or its designee good and marketable title to the Premises in fee simple
free and clear of all liens and encumbrances, subject only to the Permitted
Exceptions.  The Title Policy expense shall be borne by Seller at Closing.  The
Title Commitment shall be accompanied by copies of all documents of record
referred to in the Title Commitment as same are provided by the Title Company.
 
4.3           Survey
 
Within 30 days after the Effective Date, at Buyer’s expense, Buyer shall arrange
to be furnished to Buyer a survey of the Premises (the “Survey”), certified to
Buyer, Buyer’s financing source and the Title Company.  Buyer shall be
responsible for providing prior to Closing a survey description of the real
property to be excluded under Schedule 2.2. The Survey may be an ALTA/ACSM Land
Title Survey, meeting the Minimum Standard Detail Requirements for ALTA/ACSM
Land Title Surveys as adopted by American Land Title Association, American
Congress on Surveying & Mapping and National Society of Professional Surveyors,
2005.  Buyer’s cost to obtain the Survey shall be credited to Buyer by being
deducted from the Third Payment to be made pursuant to the Agreement; provided
however that the cost of such Survey which may be deducted from the Third
Payment shall not exceed Fifty Thousand Dollars ($50,000.00).
 
4.4           Coal and Minerals
 
During the Due Diligence Period and after the Effective Date, at Buyer’s
expense, Buyer may obtain an Opinion Letter from an experienced title attorney
authorized to practice law in the State of Wyoming, acceptable to Buyer,
reflecting the opinion that Seller’s right, title and interest of the coal
underlying certain portion of the Real Property is as reflected in the Permit
application for renewal of KFx Mine Permit #486 for a 6th term submitted to WDEQ
on November 6, 2009, which application includes maps with surface and mineral
ownership and leases, water rights and other information and that the Seller has
the ability to convey all of such interest to the Buyer (the “Opinion Letter”).

 
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4.5           Environmental Assessment

During the Due Diligence Period and after the Effective Date, at Buyer’s
expense, Buyer may retain a professional company engaged in the business of
performing and preparing environmental site assessments for the purpose of Buyer
determining that the Property is not subject to any material pollution or
contamination which would create any additional material burdens for Buyer for
which Seller has not agreed to indemnify and hold Buyer harmless from under this
Agreement or any of the document to be executed and delivered at Closing (the
“Environmental Assessment”).
 
4.6           Title Defects
 
If the Title Commitment, Survey, Opinion Letter or Environmental Assessment
discloses any matter other than a Permitted Exception which would have a
material negative effect on the value or use of the Property, Buyer shall have
the option either to (i) terminate this Agreement within 10 business days of
receipt of each of the Title Commitment, Opinion Letter, Environmental
Assessment and Survey, in which event this Agreement, without further action of
the parties, shall become null and void and neither party shall have any further
rights or obligations under this Agreement and the Earnest Money shall be
returned to Buyer, or to (ii) notify Seller in writing of such unacceptable
matter within 10 business days of Buyer’s receipt of each of the Title
Commitment, Environmental Assessment, Opinion Letter and the Survey of the
Property.  Seller shall then have 10 business days after receipt of such notice
within which to (a) remedy or remove any such unacceptable matter; (b) terminate
this Agreement, in which event this Agreement, without further action of the
parties, shall become null and void and neither party shall have any further
rights or obligations under this Agreement and the Earnest Money shall be
returned to the Buyer; or (c) with Buyer’s consent, which may be given or
withheld in Buyer’s sole discretion, obtain title insurance without exception
therefore.

5.
SELLER’S REPRESENTATIONS AND WARRANTIES

 
As a material inducement for Buyer to enter into this Agreement, Seller
represents and warrants to Buyer as follows:
 
5.1           Seller is duly organized and in good standing under the laws of
South Dakota, is qualified to do business in Wyoming, and has the power and
authority, and has obtained all necessary consents and approvals, subject to
approval by the Wyoming Department of Environmental Quality of the transfer of
various permits and Bonds associated with the Premises, to enter into this
Agreement, to consummate the transactions contemplated hereunder, and to perform
all of its obligations hereunder.  The persons signing this Agreement on behalf
of Seller and those signing any and all documents to be executed by or on behalf
of Seller pursuant to this Agreement have been properly authorized to do so.
 
5.2           Seller is not in default, and no condition exists that with notice
or lapse of time or both would constitute a default by Seller under (i) any
mortgage, loan agreement, evidence of indebtedness, or other instrument or
agreement to which such entity is a party or by which it or its properties or
assets may be bound or affected, or (ii) any judgment, order, or injunction of
any court, arbitrator, or governmental agency that would reasonably be expected
to affect
 
 
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materially and adversely the business, financial condition, or results of
operations of Seller, individually or taken as a whole.
 
5.3           Seller is not now under any legal disability, which would impede
or void any of Seller’s contractual obligations hereunder nor is Seller a debtor
in any proceeding under the bankruptcy laws of the United States.  Except for
the required approvals set forth in Section 5.1, which is a condition precedent
to Closing, Seller can fully perform and comply with the terms of this Agreement
without obtaining the consent, approval or other action of any governmental
authority or agency.  Neither the execution nor delivery of this Agreement nor
its performance by Seller will conflict with or result in the breach of any
contract, agreement, law, rule or regulation to which Seller is a party or by
which Seller is bound.
 
5.4           Seller has good and marketable fee simple title to the Real
Property, is the sole owner of record of the Property, and, with the exception
of the Permitted Exceptions and the Excluded Assets reflected on Schedule
1.5(a), has not entered into any agreement to sell, mortgage or otherwise
encumber or dispose of its interest in the Property or any part thereof.
 
5.5           Except for the preferential right to purchase certain lands
included within the Real Property in favor of Ranchers Energy Corporation, as
set forth in the Notice of Preferential Rights filed at Book 1346 of Photos,
pages 627 through 629, Register of Deeds, Campbell County, Wyoming, Seller is
the owner of the Property free of any lien, claim or encumbrance, other than any
which will be paid in full and discharged at Closing.
 
5.6           Except for the sale of some of the personal property and the
excluded assets listed on Schedule 1.5(a), since the Fort Union plant was idled
on March 20, 2008, with respect to Seller, there has not been:
 
 
(a)
Other than the sale of some personal property and the Rail Lease, any material
adverse change in the Property;

 
 
(b)
Any damage, destruction, or loss, whether covered by insurance or not materially
adversely affecting the Property;

 
 
(c)
Other than the sale of some personal property and the Rail Lease, any sale,
transfer or lease by Seller of any Property;

 
 
(d)
Any mortgage, pledge or the creation of any security interest, lien, or
encumbrance on any asset of Seller, other than Tax Liens with respect to Taxes
not yet due; or

 
 
(e)
Other than the sale of some personal property and the Rail Lease, any
transaction not in the ordinary course of business of Seller.

 
5.7           Seller is a wholly owned subsidiary of Evergreen Operations, LLC,
a Delaware limited liability Company, (“EO”) which is wholly owned by Evergreen,
a Delaware corporation.
 
 
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5.8           Seller's Parent companies, EO and Evergreen are not in default,
and no condition exists that with notice or lapse of time or both would
constitute a default by them under (i) any mortgage, loan agreement, evidence of
indebtedness, or other instrument or agreement to which such entity is a party
or by which it or its properties or assets may be bound or affected, or (ii) any
judgment, order, or injunction of any court, arbitrator, or governmental agency
that would reasonably be expected to affect materially and adversely the
business, financial condition, or results of operations of Seller, individually
or taken as a whole.
 
5.9           Seller parent companies, EO and Evergreen, are not now under any
legal disability, which would impede or void any of Seller’s contractual
obligations hereunder nor is Seller a debtor in any proceeding under the
bankruptcy laws of the United States.  Except for the required approvals set
forth in Section 5.1, which is a condition precedent to Closing, Seller can
fully perform and comply with the terms of this Agreement without obtaining the
consent, approval or other action of any governmental authority or
agency.  Neither the execution nor delivery of this Agreement nor its
performance by Seller will conflict with or result in the breach of any
contract, agreement, law, rule or regulation to which Seller is a party or by
which Seller is bound.
 
5.10           All Service Contracts are in full force and effect; to Seller’s
knowledge there are no defaults thereunder; Seller has performed all of its
obligations thereunder; and has full right and power to assign its interest
thereunder.
 
5.11.           To Seller’s knowledge, the Property is not, and as of the
Closing will not be, in violation of any federal, state, or local law,
ordinance, or regulation relating to industrial hygiene or to the environmental
conditions on, under, or about the Property (“Applicable Law”), including, but
not limited to, soil and groundwater conditions; and, to Seller’s knowledge,
there are no Hazardous Materials (as defined below) present on the Property,
other than in such amounts as permitted by Applicable Law.  Seller further
warrants and represents that during the time in which Seller owned the Property,
neither Seller nor, to Seller’s knowledge, after due and diligent inquiry, any
third party has used, generated, manufactured, produced, stored, or disposed of
on, under, or about the Property or transported to or from the Property any
Hazardous Materials in violation of Applicable Law or that releases of Hazardous
Materials in violation of applicable law have been investigated and cleaned up
in accordance with DEQ or other agency requirements.  There is no proceeding or
inquiry by any governmental authority with respect to the presence of Hazardous
Materials on the Property or the migration of Hazardous Materials from or to the
Property; and, there are no storage tanks located in or under the Property other
than those listed in Schedule 5.11(a) or any drums or totes other than those
listed in Schedule 5.11(b).  The term “Hazardous Material” means, but is not
limited to, any substance, material, or waste which is toxic, ignitable,
reactive, or corrosive; which is or can be injurious to the health, safety, or
welfare of the public or environment, and which is regulated by any local or
state governmental authority or the United States Government.  The term
“Hazardous Material” includes, without limitation, any material or substance
which is (i) defined as a “hazardous waste,” “extremely hazardous waste,”
“restricted hazardous waste,” “hazardous substance,” “pollutant or contaminant,”
or “hazardous material,” by any local or state law, (ii) oil and petroleum
products and their by-products, (iii) asbestos or asbestos-containing materials,
(iv) designated as a “hazardous substance” pursuant to the Federal Water
Pollution Control Act, (v) defined as a “hazardous waste” pursuant to the
Federal Resource Conservation and Recovery Act, or (vi) defined as a “hazardous
substance” pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act.  Seller has disclosed to Buyer in writing
 
 
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all information in Seller's possession or otherwise available to Seller which
relates to the environmental condition of the Property.
 
5.12.           The current zoning classification allows the Property to be used
as a coal mine and coal processing facility and uses ancillary thereto.  To
Seller’s knowledge the Property is in full compliance with all laws, ordinances,
codes, rules, regulations, orders, requirements, covenants, conditions,
restrictions, and other matters of record applicable to the Property.
 
5.13.           Seller has not been served with pleadings or other notices
instituting any actions, suits, investigations, or proceedings against Seller or
with respect to the Property or otherwise affecting any portion of the Property,
at law or in equity, before or by any federal, state, municipal, or other
governmental court, department, commission, board, bureau, agency or
instrumentality, (collectively, the “Actions”) and, to Seller’s knowledge, no
such Actions are pending or threatened.
 
5.14.           To Seller’s knowledge the information set forth in the Schedules
to this Agreement and in any other materials furnished by Seller to Buyer
pursuant to the terms of this Agreement is true, accurate and complete in all
material respects.
 
5.15.           The schedule of insurance policies attached hereto as Schedule
5.15 contains a true and complete list and description of all insurance policies
owned by or on behalf of Seller with respect to the Property or any part
thereof.  Such policies are in full force and effect.  Seller is current on all
premium payments thereunder and has satisfied all policy conditions precedent
thereto.
 
5.16.           At Closing, there shall be no unpaid-for improvements, or
materials, machinery or fuel delivered to, or labor performed at, the Property
which might form the basis of a mechanic’s lien or construction lien against the
Property and all mechanic’s liens or construction liens affecting the Property
shall be paid or bonded off so that they are not encumbrances on title.
 
5.17.           Seller has not received any notice of any proposed condemnation
proceedings against all or any part of the Property.
 
6.
BUYER’S REPRESENTATIONS AND WARRANTIES

 
Buyer represents and warrants to Seller as follows:
 
6.1           Buyer is duly organized and in good standing under the laws of the
State of Colorado, and has the power and authority, and has obtained all
necessary consents and approvals to enter into this Agreement, to consummate the
transactions contemplated hereunder, and to perform all of its obligations
hereunder.
 
6.2           Assignee is or will be at Closing duly organized and in good
standing under the laws of its state of incorporation and is duly qualified to
do business in Wyoming.
 
6.3           The person signing this Agreement on behalf of Buyer and those
signing any and all documents to be executed by or on behalf of Buyer pursuant
to this Agreement have been properly authorized to do so.
 
 
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6.4           Except as otherwise set forth in this Agreement, Buyer
acknowledges that it has not received ANY REPRESENTATION, COVENANT OR WARRANTY
OF ANY KIND, EXPRESS OR IMPLIED AND SELLER IS CONVEYING THE PROPERTY COVERED
HEREBY "AS IS", "WHERE IS", AND "WITH ALL FAULTS", AND WITHOUT REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, (ALL OF WHICH SELLER HEREBY DISCLAIMS AND NEGATES)
AS TO FITNESS FOR ANY PARTICULAR PURPOSE, RISING FROM COURSE OF PERFORMANCE,
COURSE OF DEALING, OR FROM USAGES OF TRADE.  Notwithstanding the foregoing, the
parties agree that nothing herein allows Seller to disclaim any warranty of
title to the Property and Seller agrees that such warranties shall survive
Closing and Seller agrees to provide any curative documents or instruments in
the future necessary to convey any portion of the Property.
 
7.           INDEMNIFICATION AND SURVIVAL
 
7.1.           Indemnification and Survival of Representations and Warranties
and Covenants
 
 
(a)
All of the representations, warranties and covenants of the parties contained in
this Agreement or any agreement or instrument delivered in connection with
Closing shall survive the Closing and continue in full force and effect for
eighteen (18) months from the Closing Date (“Survival Period”) and shall not
merge with the statutory warranty deed or Seller’s transfer of title to the
Property to Buyer.

 
 
(b)
Each party (an “Indemnifying Person”) agrees to indemnify and hold the other
party and its respective affiliates, officers, directors, employees,
representatives and agents (such other party and each of the foregoing persons
or entities is hereinafter referred to individually as an “Indemnified Person”
and collectively as “Indemnified Persons”) harmless from any and all losses,
liabilities, damages, penalties, obligations, awards, fines, deficiencies,
diminution in value, interest, claims (including third party claims, whether or
not meritorious), costs and expenses, whatsoever (including reasonable
attorneys’, accountants’, and environmental consultants’ fees and disbursements)
(collectively, “Damages”) suffered by them arising out of, related to or
resulting from a breach by the Indemnifying Person of his/its representations,
warranties and covenants contained in this Agreement after the Closing Date
provided that the Indemnified Person makes a written claim for indemnification
against the Indemnifying Person within the Survival Period.  This
indemnification shall run to the benefit of any assignee of Buyer or Seller.

 
 
(c)
Damages in each case shall be net of the amount of any insurance proceeds and
indemnity and contribution actually recovered by the Indemnified Person after
subtracting the cost of recovery and the amount of premiums paid and making
adjustment for any premium increases.

 

 
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(d)
Indemnification Procedures.  In the event that any Indemnified Person incurs or
suffers any Damages with respect to which indemnification may be sought pursuant
to this Section 7.1, the Indemnified Party must assert the claim by giving to
the Indemnifying Party written notice stating the nature, basis and amount, if
known of the claim (“Claim Notice”).  Within thirty (30) days of receipt of the
Claim Notice (“Response Period”), the Indemnifying Person shall respond to the
Indemnified Person in writing to accept or dispute the claim, in which event
such response shall provide specific detail of any allegations in the Claim
Notice that are disputed.  In the event that the Indemnifying Party fails to
respond within the thirty-day period or elects not to dispute the Claim Notice,
then such claim shall conclusively be deemed to be an obligation of the
Indemnifying Party and shall be paid in full within 30 days following the end of
the Response Period.

 
 
(e)
Dispute Resolution.  In the event of any controversy or dispute arising out of
or relating to this Agreement or any breach thereof, or any Claim Notice
disputed pursuant to the procedure in Section 7.1(d) which the parties are
unable to resolve through negotiation, the party asserting such claim or breach
shall give written notice (the “Dispute Notice”) to each other party setting
forth in reasonable detail the nature of such claim or alleged breach.  Such
dispute, if not otherwise resolved by the parties, shall be settled by
arbitration before a single arbitrator selected by the parties.  Except to the
extent expressly provided otherwise herein, or except as may otherwise be
mutually agreed by Buyer and Seller, such arbitration will be conducted in
Cheyenne, Wyoming in accordance with, and governed by, the current Construction
Industry Arbitration Rules of the American Arbitration Association (the “AAA
Rules”).  If the parties fail to agree upon an arbitrator within 15 days after
the date of the Dispute Notice, then Seller and Buyer, shall select an
arbitrator in the manner provided by the AAA Rules.  The results of the
arbitration shall be final, binding and not subject to appeal.  Notwithstanding
anything to the contrary in this Agreement including but not limited to this
Section 7.1, The parties shall have full access to the Wyoming court system, and
applicable federal courts, to the extent necessary to realize the benefits of
the equitable remedy of specific performance pursuant to Article 12 hereof, and
all other equitable remedies.

 
 
(f)
The parties acknowledge and agree that after the Closing Date the foregoing
indemnification provisions in this Section 7.1 shall be, with the exception of
an intentional breach or fraud, the exclusive remedy of each party with respect
to the breach of the representations, warranties and covenants of the other
party contained in this Agreement.

 

 
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8.           CLOSING
 
8.1           Closing Date
 
The “Closing” of the transaction contemplated by this Agreement shall occur at
the offices of the Title Company, or at such other place as shall be mutually
agreed to by the parties hereto after the satisfaction or waiver of all
contingencies and conditions precedent to Closing, including, but not limited
to, those set forth in Sections 4.6 (Title Defects) and 9 (Conditions to
Closing).  The Closing shall occur on the later of that date which is (i) five
(5) days after satisfaction of all conditions to Closing or (ii) October 29,
2010; provided however, that notwithstanding (i) and (ii) above, in no event
shall the Closing occur later than November 30, 2010 without mutual agreement of
the parties (“Closing Date”).
 
8.2           Seller’s Closing Documents
 
Seller shall deliver, or cause to be delivered, to Assignee the following at
Closing:
 
 
(a)
a fully executed statutory warranty deed in the form attached hereto as Schedule
8.2(a) in recordable form with any county or state approvals, if any, obtained,
subject only to the Permitted Exceptions, sufficient to transfer and convey to
Buyer fee simple title to the Premises as required by this Agreement;

 
 
(b)
a fully executed special warranty, bill of sale and assignment in the form
attached hereto as Schedule 8.2(b) sufficient to transfer to Buyer title to the
Personal Property, permits and intangible property;

 
 
(c)
any and all fully executed affidavits, certificates or other documents required
by the Title Company including, without limitation, a closing statement prepared
by the Title Company, in order to cause it to issue the Title Policy in the form
and condition required by this Agreement;

 
 
(d)
a pro forma of the Title Policy insuring fee simple title to the Premises in
Buyer in the amount of the Purchase Price subject only to the Permitted
Exceptions, and otherwise in the form and condition required by this Agreement,
with the original of the Title Policy to be delivered by the Title Company to
Buyer as soon as possible after the Closing;

 
 
(e)
fully executed assignments of those Service Contracts Buyer elects to take an
assignment of in the form attached hereto as Schedule 8.2(e);

 
 
(f)
all of the Service Contracts, any and all documents referred to in Section 1.2,
and all other documentation concerning the Property in the possession or control
of Seller;

 
 
(g)
any warranties and guarantees which are in any way applicable to the Property or
any part thereof;

 
 
(h)
tax certificates (including, without limitation, bulk sales certificates to the
extent same are required pursuant to applicable law) from appropriate
authorities or other satisfactory evidence showing that all real and personal
property taxes then due and payable on the Property have been paid (Seller shall
pay the cost of all such tax certificates);

 
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(i)
all other documents required to perfect the conveyance, transfer and assignment
of the Property to Buyer including, without limitation, a closing statement
prepared by the Title Company;

 
 
(j)
such documentation required under Internal Revenue Code Section 1445 and the
regulations issued thereunder regarding withholding taxes from a foreign person
upon a disposition of real property;

 
 
(k)
a certificate executed by Seller certifying that all of the representations of
Seller contained in the Agreement are true and correct in all material respects
as of the Closing Date;

 
 
(l)
evidence of authority of the person who has signed this Agreement on behalf of
Seller, of the person or persons who are to execute all of Seller’s closing
documents on Seller’s behalf and evidence of Seller’s authority to consummate
the transactions proposed in this Agreement in form and substance reasonably
satisfactory to the Title Company and Buyer;

 
 
(m)
all keys and all other property to be conveyed to Buyer hereunder; and

 
 
(n)
any and all documents executed by Seller’s lender(s) necessary to terminate the
lien of any loans to Seller secured by a lien on the Premises or the Personal
Property for filing in the county recorder’s office in the county in which the
Property is located (if applicable) and/or the Wyoming Secretary of State’s
Office and, if applicable, terminations or satisfactions of any mechanic’s or
construction liens filed against the Property necessary to terminate the lien of
such encumbrance.

 
 
(o)
(p)
An opinion letter from Seller's attorney, for the benefit of Buyer, that states
that the representations of Seller made under Section 5 are all true and correct
and that the documents and items to be delivered to Buyer at Closing under
Section 8.2 are sufficient to convey the Property to Buyer free and clear of any
and all encumbrances, liens and burdens other than the Permitted Exceptions, and
allow the Buyer to operate the same.

 
8.3.           Buyer’s Closing Requirements and Documents
 
Buyer shall deliver or cause to be delivered to Seller at Closing:
 
 
(a)
the Adjusted Purchase Price as required pursuant to Section 2.5 above;

 
 
(b)
execution and delivery of the documents necessary to close this transaction as
reasonably required by the Title Company, including, without limitation, a
closing statement prepared by the Title Company;

 
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(c)
delivery to Seller of the First and Second Notes in the form of Schedule 8.3(c).

 
8.4           Closing Prorations
 
A statement of prorations shall be prepared by the Title Company in conformity
with the provisions of this Agreement and submitted to Buyer and Seller for
review at least five (5) business days prior to the Closing.  The following
items are to be prorated effective as of the Closing Date:
 
 
(a)
amounts due and prepayments under those Service Contracts which Buyer elects to
assume; personal property taxes.
 

 
 
(b)
real estate taxes and assessments, if any, for the current tax year shall be
assumed by Buyer and prorated to the Closing Date and Buyer shall receive a
credit at Closing for such prorated amounts.  Seller shall pay all personal
property taxes, real estate taxes, assessments and penalties for years prior to
Closing, if any.  The proration of taxes shall be based on the most recently
available tax rates and valuations, and if such proration was based upon an
estimate of such taxes and assessments for the immediately preceding calendar
year, then upon demand the parties hereto shall promptly and equitably adjust
all such taxes and assessments as soon as actual figures for the Premises for
such year are available;

 
 
(c)
periodically recurring fees for transferable licenses or permits issued in
respect of the Property or the use of any part or equipment thereof; and

 
 
(d)
any other items of prepaid income or accrued expense relating to the Property.

 
8.5           Seller’s Credits and Charges
 
Seller shall be entitled to a credit for the amount of any deposits made to
utility, telephone and other public or private companies providing service to
the Property, which remain on deposit for the benefit of Buyer.  Seller shall
pay all water, sewer, gas, electric, telephone and any other utility charges, if
any, for service to the Property prior to the Closing Date.  Seller shall pay
all transfer taxes, documentary fees and conveyance fees due at Closing, and all
“rollback” taxes resulting from a preferential real estate tax designation
applicable to the Property.  Seller shall pay all sales and use taxes payable
with regard to this transaction.
 
8.6           Closing Costs
 
Seller and Buyer shall be responsible for the fees of their respective attorneys
and the expense of preparation of the documents for which each is responsible to
deliver.  Buyer shall be responsible for recording fees of the documents it
desires to record.
 
 
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8.7           Possession
 
Upon Closing, Seller shall deliver to Buyer full and complete possession of the
Property, subject only to the Permitted Exceptions, rights of others under
assigned Service Contracts and continuing rights of Seller to access the
processors and the laboratory.  Except for and excluding the Rail Lease (which
was entered into prior to the Effective Date), Seller shall deliver the Premises
free and clear of all leases and tenancies, including any leases entered into by
Seller after the Effective Date.
 
9.           CONDITIONS TO CLOSING
 
9.1           Due Diligence
 
Seller agrees to allow Buyer, Buyer’s agent and representatives reasonable
access to the Property (to be coordinated with Seller’s personnel or its agent,
during business hours) during the period commencing on the Effective Date hereof
and extending to the Closing, (“the Due Diligence Period”) for purposes of any
non-intrusive physical and environmental inspection of the Property and review
of the Leases, expenses and other due diligence matters (the "Due Diligence
Inspections").  Buyer shall not conduct or allow any physically intrusive
testing of, on or under the Property (other than sampling building materials for
asbestos or lead content and other testing required by Buyer’s financing source)
without first obtaining Seller’s written consent, which consent shall not be
unreasonably withheld, conditioned or delayed as to the timing and scope of work
to be performed.
 
Upon execution of this Agreement, Seller will cause to be made available to
Buyer for inspection the following information to the extent available to Seller
or its agents concerning the Property and its operation which Buyer, Buyer’s
financing source, or their respective representatives shall reasonably
request:  all documents referred to in this Agreement; the Service Contracts;
copies of all permits, licenses or governmental approvals necessary for, or
convenient to, the operation of the Property; copies of all guarantees and
warranties; copies of all environmental audits or reports, soils reports and
engineered foundation reports; any geophysical records, data or reports; reports
of any engineers or experts as they relate to the coal or other minerals
regarding the Property in Seller’s files, possession or control; surveys; and
any other information requested by Buyer, Buyer’s financing source, or their
respective representatives.
 
If Buyer is reasonably satisfied that the results of the Due Diligence
Inspections indicate a material decrease in the value or use of the Property of
which Buyer was not previously aware,  Buyer shall have the right to terminate
this Agreement.  This Agreement shall terminate if Buyer sends written notice to
Seller setting forth the issue discovered pursuant to the Due Diligence
Inspections on or before 5:00 p.m. (Denver, Colorado time) of the 30th day after
the Effective Date.  If Buyer does provides such notice, this Agreement shall be
terminated unless the parties mutually agree on a resolution of the issues, and
the parties shall be relieved of all further obligations hereunder.  For
purposes of this Agreement, material decrease shall mean more than Three Hundred
Thousand Dollars ($300,000.00).
 
9.2           Conditions Precedent to Buyer’s Obligation to Close:
 
The following shall be additional conditions precedent to Buyer’s obligation to
consummate the purchase contemplated herein:
 
 
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(a)
All representations by Seller set forth in this Agreement shall be true and
correct in all material respects at the Closing, as if made as of the Closing
Date;

 
 
(b)
Seller shall have delivered the items set forth under Section 8.2 of this
Agreement.

 
 
(c)
Seller shall have performed, observed and complied in all material respects with
all covenants and agreements required to be performed by Seller at or prior to
the Closing;

 
 
(d)
Seller has received no notice of a moratorium or pending proceeding and there
shall be no proceeding, which would or could affect the availability at regular
rates and connection fees of electric, gas, telephone or other services or
utilities servicing the Property;

 
 
(e)
Seller has received no notice of a pending proceeding and there shall be no
pending proceeding which could or would cause the change, re-designation,
redefinition or other modification of the zoning classification of, or of any
building or environmental code requirements applicable to, the Property or any
portion thereof;

 
 
(f)
Seller has received municipal or county approvals (including, without
limitation, from planning and zoning boards) if such approvals are required to
consummate the transaction and permit Buyer’s intended use and/or ownership of
the Property.

 
 
(g)
Except for the Rail Lease, any leases shall have been terminated effective as of
the Closing Date, and the tenants thereunder shall have vacated at least two (2)
business days before the Closing Date;

 
 
(h)
Buyer is satisfied that the Permits can be transferred to Buyer.  Currently
Buyer is permitted to perform coal mining, processing and enhancement, disposal
well operations and water well operations under the existing Mine Permit.

 
 
 (i)
By thirty (30) days after the Effective Date, Buyer has not notified Seller and
provided a detailed explanation that it believes a revised Mine Plan submitted
as part of a Mine Permit Revision would not be approved for the following new
activities on the Property: coal-to-liquid fuels processing, oil and water
separation, liquid treatment and power production.  If Seller has not been
notified as provided in this subparagraph (i), this condition shall be
considered as being satisfied.

 
 
(j)
The Parties have entered into the Lease and Storage Agreements contemplated by
Sections 13.1 and 13.2.

 

 
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(k)
The physical condition of the Property shall be substantially the same on the
Closing Date as on the Effective Date, reasonable wear and tear excepted.

 
9.3           Conditions Precedent to Seller's Obligation to Close:
 
 
(a)
Representations and Warranties; Performance.  Each of the representations and
warranties made by Buyer herein will be true and correct in all material
respects as of the Closing with the same effect as though made at that time
except for changes contemplated, permitted, or required by this Agreement and
Buyer will have performed and complied with all agreements, covenants, and
conditions required by this Agreement to be performed and complied with by it
prior to the Closing.

 
 
(b)
Buyer shall have delivered the items set forth under Section 8.3 of this
Agreement

 
 
(c)
Buyer shall have paid the Purchase Price to Seller as provided herein.

 
 
(d)
All liability of Seller, its parent and affiliates, in connection with the
reclamation bond posted with the State of Wyoming in the approximate amount of
Six Million Two Hundred Sixty Four Thousand One Hundred Sixty Five Dollars
($6,264,165.00), shall have been released.

 
10.           CASUALTY LOSS AND CONDEMNATION
 
The risk of loss by fire or other casualty to the Property shall be borne by
Seller until the Closing has occurred.  Buyer shall have the option either to
terminate this Agreement or to consummate the transaction contemplated by this
Agreement notwithstanding such condemnation, destruction or material damage.  If
Buyer elects to consummate the transaction contemplated by this Agreement, Buyer
shall be entitled to receive the condemnation proceeds or receive the proceeds
of insurance applicable thereto with no reduction in Purchase Price, and Seller
shall, at Closing and thereafter, execute and delivery to Buyer all required
proofs of loss, assignments of claims and proceeds and other similar items.  If
Buyer elects to terminate this Agreement, Buyer shall send a written notice of
such termination to Seller within 20 business days after receiving written
notice from Seller that the Property or any part thereof has been condemned, or
destroyed or materially damaged by fire or other casualty in excess of One
Hundred Thousand Dollars ($100,000.00), in which event this Agreement shall,
without further action of the parties, become null and void and neither party
shall have any rights or obligations under this Agreement.  If there is any
other condemnation, damage or destruction of an amount which is One Hundred
Thousand Dollars ($100,000.00) or less to the Property or any part thereof,
Seller shall either repair such damage to Buyer's satisfaction prior to Closing
or, at Seller’s option, assign all condemnation, damage or destruction to Buyer
by executing and delivering to Buyer at Closing and thereafter all required
proofs of loss, assignments of claims and proceeds and other similar items.  If
Seller elects to assign insurance claims as aforesaid, Buyer shall receive a
credit at Closing in an amount equal to any deductible(s) applicable
thereto.  Notwithstanding the foregoing, in the case of condemnation, if Seller
repairs the damage, if any,
 
 
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to the Property due to the condemnation, Buyer shall be entitled to the
difference between the condemnation proceeds and the cost to Seller to repair
such damage.
 
11.           BROKERAGE
 
Buyer and Seller shall each indemnify and hold the other harmless from and
against any and all claims of all brokers and finders claiming by, through or
under itself and in any way related to the sale and purchase of the Property
pursuant to this Agreement, including, without limitation, attorneys’ fees
incurred by the party to be indemnified in connection with such
claims.  Specifically, Seller shall be responsible for any and all fees or
commissions that may be or become due and owing to Kintz Marketing Group and
shall indemnify Buyer with respect thereto.
 
12.           DEFAULTS AND REMEDIES
 
12.1           Buyer’s Default.  Buyer and Seller each acknowledge that it would
be difficult to ascertain the actual damages, which would be suffered by Seller
if Buyer defaults in consummating the purchase and sale contemplated by this
Agreement.  If Buyer fails or refuses to perform any of its obligations
hereunder, then Seller’s sole remedy shall be to give Buyer written notice of
Buyer’s default and the right to cure such default before Closing.  If such
default is not cured before Closing and Seller is not in material default
hereunder, then Seller, at its option, may seek the remedy of specific
performance from Buyer, and, in addition, retain the Earnest Money. Buyer shall
pay liquidated damages of $100,000, such being agreed between Buyer and Seller
to be a necessary condition to this Agreement to compensate Seller for expenses
and expenditures incurred and made in connection herewith, the damages sustained
as a result of withdrawing the Property from the market, and otherwise for
Buyer’s non-compliance with this Agreement.  Upon termination and payment of the
liquidated damages, this Agreement shall become null and void and of no further
force or effect and both parties shall be released of further liability and
obligation hereunder, and Seller shall have no further remedy, either at law or
in equity.
 
12.2           Seller’s Default.  If Seller fails or refuses to perform any of
its obligations hereunder or if any of Seller’s representations contained herein
are untrue in any material respect, then if Buyer desires to exercise its
remedies arising from any such default, Buyer shall have the right to give
Seller written notice of any such default and the right to cure such default
prior to Closing.  If such default is not cured before Closing and Buyer is not
in default hereunder, then Buyer shall have the right to either (i) terminate
this Agreement by notifying Seller thereof, and neither party hereto shall have
any further rights or obligations hereunder except that Seller shall return the
Earnest Money to Buyer and pay Buyer’s proven actual damages suffered up to a
maximum of $100,000 to compensate Buyer for its actual expenses; or (ii) enforce
specific performance of the obligations of Seller hereunder.
 
 
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13.           ADDITIONAL AGREEMENTS – Buyer and Seller agree to the following:
 
13.1           Lease of Laboratory.  Buyer shall, at Seller’s request, lease the
building laboratory (identified as “7-KFx Technologies Plant” on Schedule 13.1),
which currently houses the research and test facility (“Laboratory”) to Seller
and/or its designee for a period of two (2) years after Closing, for a rental of
Ten Dollars ($10) and on other terms and conditions as the Parties may mutually
agree.  Such Lease Agreement shall be negotiated and executed prior to Closing.

13.2           Processors.   Buyer shall assume responsibility for demolition,
destruction, sale and/or maintenance of the Processors.  Buyer shall have no
authority or right, at any time, to use the Processors for the beneficiation of
coal.

13.3           Ingress and Egress.  While the Laboratory is located on the Real
Property, Buyer shall provide Seller with reasonable access to the Laboratory
and Seller shall coordinate with Buyer if and when any large equipment from the
Laboratory is removed from the Real Property which might disrupt Buyers
operations.
 
14.           MISCELLANEOUS
 
14.1           This Agreement constitutes the entire agreement between Seller
and Buyer with respect to the Property and shall not be modified or amended
except in a written document signed by Seller and Buyer.  Any prior agreement or
understanding between Seller and Buyer concerning the Property is hereby
rendered null and void.  This Agreement shall be construed in accordance with
the laws of the State of Wyoming.
 
14.2           Time is of the essence of this Agreement and all provisions
hereof.
 
14.3           All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given (i) one business day after
delivery to Federal Express or other nationally recognized overnight express
carrier, if sent for overnight delivery with fee prepaid, (ii) upon receipt if
sent via facsimile with receipt confirmed, or (iii) upon receipt if delivered by
hand, addressed as follows or to such other address or addresses of which the
respective party shall have notified the other:
 
If to Buyer:
Copy to:
   
Synthetic Fuels LLC
 
Attn:  James Nairne, Manager
 
2278 Monitor Street
 
Dallas, Texas
 
Phone:  (214) 748-1088
 
Fax:  (469) 916-9737
 

 
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If to Seller:
Copy to:
   
Landrica Development Company
Evergreen Energy Inc.
Attn:  President and CEO
Attn:  General Counsel
1225 17th Street, Suite 1300
1225 17th Street, Suite 1300
Denver, Colorado 80202
Denver, Colorado 80202
Phone: (303) 293-2992
Phone: (303) 293-2992
Fax: (303) 293-8430
Fax: (303) 293-8430

 
or to such other address as Seller furnishes to Purchaser pursuant to the above.
 
14.4           For purposes of this Agreement, “business day” shall mean any day
of the year, other than (i) a Saturday or a Sunday, and (ii) any day in which
banks located in Dallas, Texas are required or authorized by law to remain
closed.  Any time period provided for herein which shall end on a non-business
day shall extend to 5:00 P.M. Denver Time of the next business day.
 
14.5           This Agreement shall be binding upon and inure to the benefit of
each of the parties hereto and their respective successors and assigns.  Buyer
may assign this Agreement without Seller’s consent to any entity affiliated with
Buyer.  Buyer may assign this Agreement to any other entity only with the prior
approval of Seller, which approval shall not be unreasonably withheld,
conditioned or delayed.
 
14.6           If any provision of this Agreement shall be unenforceable or
invalid, the same shall not affect the remaining provisions of this Agreement.
 
14.7           This Agreement shall be given a fair and reasonable construction
in accordance with the intentions of the parties hereto, and without regard or
aid of canons requiring construction against the party drawing this Agreement.
 
14.8           The caption headings in this Agreement are for convenience only
and are not intended to be a part of this Agreement and shall not be construed
to modify, explain or alter any of the terms, covenants or conditions herein
contained.
 
14.9           No failure or delay of either party in the exercise of any right
given to such party hereunder or the waiver by any party of any condition
hereunder for its benefit shall be deemed to be a waiver of any other provision
of this Agreement.
 
14.10           This Agreement may be executed in one or more counterparts, each
of which when so executed and delivered shall be deemed an original, but all of
which taken together shall constitute but one and the same instrument.
 
14.11           Seller may have the transaction contemplated by this Agreement
restructured so as to qualify as a like-kind exchange pursuant to the Internal
Revenue Code, as long as such may be done at no additional cost to Buyer and
without any delay in the Closing.
 

 
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14.12           In the event of a default by one of the parties to this
Agreement, the non-defaulting party may secure the services of an attorney to
seek a remedy as provided herein.  The prevailing party in any such effort shall
be entitled to receive from the non-prevailing party all reasonable attorney’s
fees and costs.
 

 

 
[SIGNATURE PAGE FOLLOWS]
 

 
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IN WITNESS WHEREOF, the Buyer and Seller have executed this Agreement as of the
date first written above.
 
BUYER:

SYNTHETIC FUELS LLC,
a Colorado limited liability company

By:  /s/ James C.
Nairne                                                                
    James C. Nairne,
Its:     Managing Member

SELLER:
 
Landrica Development Company,
a South Dakota corporation

By:   /s/ Thomas H. Stoner,
Jr.                                                                
    Thomas H. Stoner, Jr.
Its:      President and CEO

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