Document:

pedo_ex1048.htm

EXHIBIT 10.48

PURCHASE AND SALE AGREEMENT

 

Dated July 26, 2012

among

CONDOR ENERGY TECHNOLOGY LLC

as Buyer

and

ESENJAY OIL & GAS, LTD.,

WINN EXPLORATION CO., INC.,

LACY PROPERTIES, LTD.,

CRAIN ENERGY, LTD.

RAVCO, INC.

ARENTEE INVESTMENTS and

SCHIBI OIL & GAS, LTD.

as Sellers

 

  

  

  

 

TABLE OF CONTENTS

 

	
ARTICLE 1 – Sale and Purchase; Purchase Price and Closing

	 	 	1	 
	 	 	 	 	 
	 	1.1	
Sale and Purchase.

	 	 	1	 
	 	1.2	
Purchase Price.

	 	 	2	 
	 	1.3	
Closing.

	 	 	2	 
	 	 	 	 	 
	ARTICLE 2 -- Review Period; Cure Period 	 	 	5	 
	 	 	 	 	 
	 	2.1	
Review Period; Costs of Title Information and Environmental Due Diligence.

	 	 	5	 
	 	2.2	
Reserved

	 	 	6	 
	 	2.3	
CONDOR’s Determination of Approved Net Leasehold Acres.

	 	 	6	 
	 	2.4	
Notice of Title Defects and Cure Period.

	 	 	6	 
	 	 	 	 	 
	ARTICLE 3 – Determination of Purchase Price and Closing	 	 	7	 
	 	 	 	 	 
	 	3.1	
Determination of the Purchase Price for the Designated Interests.

	 	 	7	 
	 	3.2	
RESERVED.

	 	 	7	 
	 	3.3	
Pre-Closing Covenants

	 	 	7	 
	 	 	 	 	 
	ARTICLE 4 – Reservation of Overriding Royalty Interests; After Payout Interest	 	 	7	 
	 	 	 	 	 
	 	4.1	
Reservation of Overriding Royalty Interests.

	 	 	7	 
	 	4.2	
Terms and Conditions of the Esenjay ORI.

	 	 	7	 
	 	4.3	
After Project Payout Interest.

	 	 	 	 
	 	4.4	
Evolution Carried Costs

	 	 	 	 
	 	4.5	
Evolution ORI.

	 	 	 	 
	 	 	 	 	 
	
ARTICLE 5 -- Operational Provisions

	 	 	8	 
	 	 	 	 	 
	 	5.1	
Operator

	 	 	8	 
	 	5.2	
Data.

	 	 	8	 
	 	5.3	
Sellers’ Option.

	 	 	9	 
	 	5.4	
Indemnification.

	 	 	9	 
	 	5.5	
RESERVED

	 	 	 	 
	 	5.6	
RESERVED

	 	 	 	 
	 	5.7	
Right of First Offer

	 	 	 	 
	 	5.8	
Wells

	 	 	 	 
	 	5.9	
Indemnification

	 	 	 	 
	 	 	 	 	 
	
ARTICLE 6 – Representations

	 	 	9	 
	 	 	 	 	 
	 	6.1	
Representations of CONDOR.

	 	 	9	 
	 	6.2	
Representations of Each Seller.

	 	 	10	 
	 	 	 	 	 
	
ARTICLE 7 – Conditions Precedent

	 	 	12	 
	 	 	 	 	 
	 	7.1	
Conditions Precedent to the Obligations of Sellers.

	 	 	12	 
	 	7.2	
Conditions Precedent to the Obligations of CONDOR.

	 	 	12	 
	 	 	 	 	 
	
ARTICLE 8 – Seismic Data

	 	 	13	 
	 	 	 	 	 
	 	8.1	
Seismic Data.

	 	 	13	 
	 	 	 	 	 
	
ARTICLE 9 -- Termination

	 	 	13	 
	 	 	 	 	 
	 	9.1	
Termination.

	 	 	13	 
	 	9.2	
Effect of Termination.

	 	 	13	 

 

  

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ARTICLE 10 -- Miscellaneous

	 	 	14	 
	 	 	 	 	 
	 	10.1	
Further Assurances.

	 	 	14	 
	 	10.2	
Notices.

	 	 	14	 
	 	10.3	
Incorporation of Appendices.

	 	 	14	 
	 	10.4	
Entire Agreement.

	 	 	14	 
	 	10.5	
Amendment; Waiver.

	 	 	14	 
	 	10.6	
Intentionally Omitted.

	 	 	14	 
	 	10.7	
Confidentiality.

	 	 	15	 
	 	10.8	
Binding Effect; Benefits.

	 	 	15	 
	 	10.9	
Governing Law.

	 	 	15	 
	 	10.10	
BINDING ARBITRATION.

	 	 	16	 
	 	10.11	
Specific Performance.

	 	 	16	 
	 	10.12	
Expenses.

	 	 	16	 
	 	10.13	
Cost.

	 	 	16	 
	 	10.14	
Severability.

	 	 	16	 
	 	10.15	
Esenjay’s Representation of Sellers

	 	 	17	 
	 	10.16	
Presumption Concerning Interpretation and Construction.

	 	 	17	 
	 	10.17	
Survival.

	 	 	17	 
	 	10.18	
Headings.

	 	 	17	 
	 	10.19	
Timing

	 	 	17	 
	 	10.20	
Counterparts; Facsimile and Electronic Signatures

	 	 	17	 
	 	10.21	
Termination of Confidentiality Agreement

	 	 	17	 

 

	
Appendix 1

	
Defined Terms

	
Appendix 2

	
Description of the Appendix 2 Leases

	
Appendix 3

	
Form of  Assignment of Oil, Gas And Mineral Leases

	
Appendix 4

	
Form of Seismic Data License Agreement

	
Appendix 5

	
Certificate of Non-Foreign Status

	
Appendix 6

	
Proprietary Data

	
Appendix 7

	
Description of Contracts or Agreements

	
Appendix 8

	
Acreage Plat with AMI Outline

	
Appendix 9

	
Schedule of Leases Requiring Consent to Assignment

	
Appendix 10

	
Settlement and Release Agreement

 

  

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PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated July 26, 2012, is by and among Esenjay Oil & Gas, Ltd., a Texas limited partnership (“Esenjay”), Winn Exploration Co., Inc., a Texas corporation (“Winn”), Lacy Properties, Ltd., a Texas limited partnership (“Lacy”),  Crain Energy, Ltd., a Texas limited partnership (“Crain”); Ravco, Inc., a Texas corporation (“Ravco”); Arentee Investments, a Louisiana ____________ (“Arentee”); and Schibi Oil & Gas, Ltd., a Texas limited partnership, (“Schibi”); Esenjay, Winn, Lacy, Crain, Ravco, Arentee and Schibi are referred to, collectively, as “Sellers” and each a “Seller”), and Condor Energy Technology LLC, a Nevada limited liability company (“CONDOR” or “Buyer”). Each Seller and CONDOR may be referred to herein as a “Party” and, collectively, as the “Parties.”

 

R E C I T A L S

 

WHEREAS, Sellers own interests in oil and gas leases covering approximately (i) 1,823.51 net acres located in Morgan and Weld Counties, State of Colorado, which leases are more particularly described in Appendix 2A attached hereto and incorporated by reference herein (the “Appendix 2A Leases,” and the acreage covered by the Appendix 2A Leases the “Appendix 2A Acreage”)), (ii) 1,031.0 net acres located in Morgan and Weld Counties, State of Colorado, which leases are more particularly described in Appendix 2B attached hereto and incorporated by reference herein (the “Appendix 2B Leases,” and the acreage covered by the Appendix 2B Leases the “Appendix 2B Acreage”)), and (c) 640.0 net acres located in Morgan and Weld Counties, State of Colorado, which leases are more particularly described in Appendix 2C attached hereto and incorporated by reference herein (the “Appendix 2C Leases,” and the acreage covered by the Appendix 2A Leases the “Appendix 2C Acreage”)), in each case as to all depths.  The Appendix 2A Leases, Appendix 2B Leases, and Appendix 2C Leases shall collectively be referred to herein as the “Appendix 2 Leases,” and the Appendix 2A Acreage, Appendix 2B Acreage, and Appendix 2C Acreage shall be collectively referred to herein as the “Appendix 2 Acreage”; and

 

WHEREAS, the Parties hereto desire to enter into this Agreement to evidence the terms and conditions upon which: (i) Sellers will sell to CONDOR and CONDOR will purchase from Sellers the entire oil and gas leasehold estates created by  the Appendix 2 Leases, with respect to all depths, and subject to the Esenjay ORI (the “Designated Interests”). All capitalized terms used but not otherwise defined in the body of this Agreement shall have the meanings assigned to such terms in Appendix 1.

 

A G R E E M E N T

 

Subject to the terms and provisions of this Agreement and in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Sellers and CONDOR agree as follows:

 

ARTICLE 1 – Sale and Purchase; Purchase Price and Closing

 

1.1 Sale and Purchase.

 

 Subject to the terms and conditions herein set forth, Sellers agree to sell, assign and deliver to CONDOR and CONDOR agrees to purchase and acquire from Sellers at Closing (defined in Section 1.3 below), but effective as of 7:00 a.m., Central Time, on the Effective Date:

 

(a). the Designated Interests along with a copy of all records and data of Sellers or any Affiliate of any Seller concerning the Appendix 2 Leases or the Appendix 2 Acreage, including all technical data and interpretations made up until the time of Closing (the “Records”); and

 

  

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(b). a license to Esenjay’s proprietary seismic data covering those lands described in Appendix 6  (“Proprietary Data”) pursuant to the seismic license referred to in Section 8.1 below.

 

1.2 Purchase Price.

 

 The purchase price (the “Purchase Price”) for the Designated Interests shall be determined as follows:

 

(a). Five Hundred Seventy Five and No/100 Dollars ($575.00) for each Approved Net Leasehold Acre (as defined in Section 2.3 below) covered by the Appendix 2A Leases, for a total consideration of One Million Forty Eight Thousand Five Hundred Eighteen and 25/100 Dollars ($1,048,518.25) (assuming 1,823.51 Approved Net Leasehold Acres are delivered under the Appendix 2A Leases).

 

(b).  Two Hundred Fifty and No/100 Dollars ($250.00) for each Approved Net Leasehold Acre (as defined in Section 2.3 below) covered by the Appendix 2B Leases, for a total consideration of Two Hundred Fifty Seven Thousand Seven Hundred Fifty and 00/100 Dollars ($257,750.00) (assuming 1,031.00 Approved Net Leasehold Acres are delivered under the Appendix 2B Leases).

 

(c).  Five Hundred Seventy Five and No/100 Dollars ($575.00) for each Approved Net Leasehold Acre (as defined in Section 2.3 below) covered by the Appendix 2C Leases, for a total consideration of Three Hundred Sixty Eight Thousand and 00/100 Dollars ($368,000.00) (assuming 640.00 Approved Net Leasehold Acres are delivered under the Appendix 2C Leases).

 

(d).  The Purchase Price for the seismic data referred to in Section 8.1 below shall be One and No/100 Dollars ($1.00).

 

1.3 Closing.

 

 Closing shall be held on or before 10:00 a.m. local time in Corpus Christi, Texas, Forty-Five (45) days from the execution date of this Agreement, unless extended by up to an additional Fifteen (15) days pursuant to the provisions of Section 2.1 below. The Parties shall attend a closing in the offices of Esenjay (the “Closing”) at which the Parties shall perform the following obligations:

 

(a).  At Closing and thereafter, CONDOR shall perform all of the following:

 

1. Cash at Closing:  At Closing, CONDOR shall pay to each Seller such Seller’s Proportionate Share of the Purchase Price as follows:

 

(i).            Eight Hundred Thirty Eight Thousand Eight Hundred Fourteen and 60/100 Dollars ($838,814.60) (assuming 1,823.51 Approved Net Leasehold Acres are delivered under the Appendix 2A Leases, which amount shall equal Eighty Percent (80%) of the Purchase Price attributable to the Appendix 2A Leases), all subject to adjustment in accordance with Section 3.1 below;

(ii).           Two Hundred Six Thousand Two Hundred and 00/100 Dollars ($206,200.00) (assuming 1,031.00 Approved Net Leasehold Acres are delivered under the Appendix 2B Leases, which amount shall equal Eighty Percent (80%) of the Purchase Price attributable to the Appendix 2B Leases), all subject to adjustment in accordance with Section 3.1 below;

 

  

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(iii).          Forty Four Thousand One Hundred Sixty and 00/100 Dollars ($44,160.00) (assuming 640.00 Approved Net Leasehold Acres are delivered under the Appendix 2C Leases, which amount shall equal Twelve Percent (12%) of the Purchase Price attributable to the Appendix 2C Leases), all subject to adjustment in accordance with Section 3.1 below.

2. Equity at Closing:  Pacific Energy Development Corp. (“PEDCO”), which entity is a member of CONDOR and is scheduled to consummate a merger (the “Merger”) prior to the Closing with Blast Energy Services, Inc. (“Blast”), shall issue to each Seller such Seller’s Proportionate Share of Series A Convertible Preferred Stock of the surviving entity of the PEDCO/Blast merger (the “Stock”) as follows, subject to, and contingent upon, approval and ratification of such Stock issuances by Blast (in the event Blast does not approve such issuances of Stock, Blast shall pay to each Seller its Proportionate Share of cash in lieu of Stock in the amounts set forth below):

 

(i).           Two Hundred Seventy Nine Thousand Six Hundred Five (279,605) shares of Stock valued at $0.75 per share in satisfaction of Two Hundred Nine Thousand Seven Hundred Three and 65/100 Dollars ($209,703.65) of the Purchase Price (assuming 1,823.51 Approved Net Leasehold Acres are delivered under the Appendix 2A Leases, which amount shall equal Twenty Percent (20%) of the Purchase Price attributable to the Appendix 2A Leases), all subject to adjustment in accordance with Section 3.1 below;

(ii).           Sixty Eight Thousand Seven Hundred Thirty Three (68,733) shares of Stock valued at $0.75 per share in satisfaction of Fifty One Thousand Five Hundred Fifty and 00/100 Dollars ($51,550.00) of the Purchase Price (assuming 1,031.00 Approved Net Leasehold Acres are delivered under the Appendix 2B Leases, which amount shall equal Twenty Percent (20%) of the Purchase Price attributable to the Appendix 2B Leases), all subject to adjustment in accordance with Section 3.1 below;

(iii).           Fourteen Thousand Seven Hundred Twenty (14,720) shares of Stock valued at $0.75 per share in satisfaction of Eleven Thousand Forty and 00/100 Dollars ($11,040.00) of the Purchase Price (assuming 640.00 Approved Net Leasehold Acres are delivered under the Appendix 2C Leases, which amount shall equal Three Percent (3%) of the Purchase Price attributable to the Appendix 2C Leases), all subject to adjustment in accordance with Section 3.1 below.

3.  Cash at Spudding First Well on Appendix 2C Acreage:  Within ten (10) calendar days of the spudding of the first well on the Appendix 2C Acreage, or lands pooled or unitized therewith, CONDOR shall pay to each Seller such Seller’s Proportionate Share of the Purchase Price as follows:  Two Hundred Fifty Thousand Two Hundred Forty and 00/100 Dollars ($250,240.00) (assuming 640.00 Approved Net Leasehold Acres are delivered under the Appendix 2C Leases, which amount shall equal Sixty Eight Percent (68%) of the Purchase Price attributable to the Appendix 2C Leases), all subject to adjustment in accordance with Section 3.1 below; provided, however, that in the event CONDOR does not spud a well on the Appendix 2C Acreage or lands pooled or unitized therewith prior to the expiration of the Appendix 2C Leases, then no cash shall be due or owing to Sellers under this subsection.

 

  

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4. Equity at Spudding First Well on Appendix 2C Acreage:  Within ten (10) calendar days of the spudding of the first well on the Appendix 2C Acreage, or lands pooled or unitized therewith, PEDCO shall issue to each Seller such Seller’s Proportionate Share of Stock as follows, subject to, and contingent upon, approval and ratification of such Stock issuances by Blast (in the event Blast does not approve such issuances of Stock, Blast shall pay to each Seller its Proportionate Share of cash in lieu of Stock in the amounts set forth below):  Eighty Three Thousand Four Hundred Thirteen (83,413) shares of Stock valued at $0.75 per share in satisfaction of Sixty Two Thousand Five Hundred Sixty and 00/100 Dollars ($62,560.00) of the Purchase Price (assuming 640.00 Approved Net Leasehold Acres are delivered under the Appendix 2C Leases, which amount shall equal Seventeen Percent (17%) of the Purchase Price attributable to the Appendix 2C Leases), all subject to adjustment in accordance with Section 3.1 below; provided, however, that in the event CONDOR does not spud a well on the Appendix 2C Acreage or lands pooled or unitized therewith prior to the expiration of the Appendix 2C Leases, then no Stock shall be due or owing to Sellers under this subsection.

 

5. Stock Subscription Documentation. Any Seller who acquires Stock pursuant to this section shall execute and deliver to Blast a mutually acceptable subscription agreement governing the acquisition of such Stock; provided, however, that at the time of issuance of such Stock, such issuance shall be subject to compliance with applicable securities laws, such Seller shall be an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended, and such Seller shall make reasonable and standard investor qualification representations in such mutually acceptable subscription agreement.

 

6. Settlement Agreement: CONDOR and PEDCO (and/or Blast as successor in interest to PEDCO) shall execute and deliver to Esenjay the Settlement and Release Agreement in the form attached hereto as Appendix 10 and such other documents as required pursuant to the terms thereof.

 

7. Esenjay License.  Buyer shall execute and deliver to Esenjay a seismic license substantially in the form attached hereto as Appendix 4A covering the Proprietary  Data referred to in Section 8.1; and

 

(b). At Closing, each Seller or Esenjay, as applicable, shall perform the following:

 

1. Sellers shall execute, acknowledge and deliver to CONDOR an Assignment of Oil, Gas And Mineral Leases in the form attached hereto as Appendix 3, which assignment shall convey the Designated Interests to CONDOR (the “Assignment”);

 

2. Esenjay shall execute and deliver to CONDOR a seismic license  substantially in the form attached hereto as Appendix 4 covering the Proprietary Data referred to in Section 8.1 and deliver to such entity such data;

 

3. Each Seller shall execute and deliver to CONDOR a Certificate of Non-Foreign Status in the form attached hereto as Appendix 5; and

 

4. Esenjay shall execute and deliver to PEDCO (and/or Blast as successor in interest to PEDCO) the Settlement and Release Agreement in the form attached hereto as Appendix 10 and such other documents as required pursuant to the terms thereof.

 

  

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5. Esenjay shall provide to CONDOR all permitting and surface preparation and work done with respect to the Appendix 2C Acreage to date, and shall provide reasonable assistance and that of its consultants with James C. Karo & Associates to CONDOR to complete such permitting, surface work and hearings necessary to spud the first well on such acreage.  Any third party costs incurred by Esenjay subsequent to the execution of this Agreement for permit preparation, title curative, surface negotiations with respect to Appendix 2C Acreage shall be the sole responsibility of CONDOR.

 

(c). At Closing, CONDOR shall pay One Dollar ($1) to Esenjay for the seismic license to the Proprietary Data referred to in Section 1.3(b) above.

 

(d). At Closing, Esenjay shall deliver a copy of the Records to CONDOR.

 

(e). At Closing, pursuant to Section 5.1, Esenjay shall deliver to CONDOR evidence reasonably satisfactory to CONDOR that the Operating Agreement, dated December 1, 2008, by and between Esenjay Operating Inc. and the other parties thereto has been amended to exclude the Appendix 2 Acreage as to all depths.

 

The payments CONDOR is required to make under this Section 1.3 shall be made by wire transfer of immediately available funds to accounts designated by each Seller in writing.

 

ARTICLE 2 – Review Period; Cure Period

 

2.1 Review Period; Costs of Title Information and Environmental Due Diligence.

 

 For a period ending at 5:00 p.m. local time in Corpus Christi, Texas, thirty (30) days from the execution dated of this Agreement  (the “Review Period”), CONDOR and its representatives will have the right to review all land, legal, well and regulatory files and information in any Seller’s possession that pertain to the Appendix 2 Acreage and the Appendix 2 Leases. Each Seller shall provide CONDOR with true and correct copies of all land, legal, title, well and regulatory information in such Seller’s possession covering the Appendix 2 Acreage and the Appendix 2 Leases, including copies of all of the Appendix 2 Leases and copies of all title documentation, assignments, title opinions, abstracts of title, run-sheets and other title information and environmental reports or assessments in such Seller’s possession with respect to the Appendix 2 Acreage and the Appendix 2 Leases. The costs of title run sheets, title opinions and environmental assessments prepared for CONDOR will be the sole responsibility of CONDOR. CONDOR will provide copies of all title run sheets, title opinions, title curative information and environmental reports or assessments that CONDOR acquires to Esenjay during the Review Period. Except as expressly provided in this Agreement, no Party makes any representation as to the accuracy or reliability of any title information or data furnished to any other Party hereunder. During the Review Period, Sellers shall permit CONDOR and its representatives at reasonable times and at CONDOR’s sole risk, cost and expense, to conduct reasonable inspections of the Appendix 2 Leases and the Appendix 2 Acreage.  The Review Period may be extended for up to an additional fifteen (15) days upon the written request of CONDOR to Sellers in the event CONDOR requires additional time to conduct its due diligence review.  In such event, Closing will be extended for a like time period.

 

  

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2.2 Reserved.

 

2.3 CONDOR’s Determination of Approved Net Leasehold Acres.

 

 On or before the expiration of the Review Period, CONDOR shall determine, the number of Net Leasehold Acres covered by each of the Appendix 2 Leases that are acceptable to CONDOR in the good faith exercise of reasonable discretion (the “Approved Net Leasehold Acres”). In its determination of the Approved Net Leasehold Acres covered by an Appendix 2 Lease, CONDOR will use the formula set forth in the definition of Net Leasehold Acres in Appendix 1; provided, however, that CONDOR may exclude:

 

(a). any of the Appendix 2 Leases that a prudent person engaged in the business of the ownership, development and operation of oil and gas properties with knowledge of all the facts and their legal bearing would be unwilling to accept;

 

(b). any of the Appendix 2 Leases with respect to which CONDOR determines that there are material environmental liabilities that are unacceptable to CONDOR in the good faith exercise of reasonable discretion; and

 

(c). interests in oil, gas and other minerals covered by the Appendix 2 Leases and leasehold working interests in the Appendix 2 Leases that CONDOR determines, in the good faith exercise of reasonable discretion to be subject to any Title Defect (defined in Appendix 1).

 

The Approved Net Leasehold Acres attributable to the Appendix 2 Leases excluded for the reasons set forth in Section 2.3(a) and Section 2.3(b) above (the “Excluded Leases”) will be zero unless the reasons for exclusion are removed during the Cure Period to the satisfaction of CONDOR in the good faith exercise of reasonable discretion. All Excluded Leases shall be excluded from the Assignment from Sellers to CONDOR. CONDOR will acquire no rights in such Excluded Leases and following Closing, Sellers will have no further obligations to CONDOR with respect to such Excluded Leases under this Agreement.

 

2.4 Notice of Title Defects and Cure Period.

 

 On or before the expiration of the Review Period, CONDOR shall give Esenjay written notice identifying in reasonable detail all Title Defects that will be taken into account in determining the Approved Net Leasehold Acres and identifying any Excluded Leases and the reasons for such exclusion (the “Defect Notice”). All matters which would otherwise qualify as Title Defects, or would cause CONDOR to reduce the amount of Approved Net Leasehold Acres and which are not reflected in a timely submitted Defect Notice will be deemed waived by CONDOR as of the expiration of the Post-Closing Cure Period; provided, however, that the foregoing shall not abrogate or limit Sellers’ indemnity and hold harmless obligations under Section 5.4 or Sellers’ special warranty of title set forth in the Assignment. On or before 5:00 p.m. local time in Corpus Christi, Texas, three (3) days prior to the date of the Closing (the “Cure Period”), at Sellers’ sole cost and expense, Sellers will have the right to cure any Title Defects referred to in the Defect Notice and to attempt to remediate or remove any facts or circumstances that caused one or more of the Appendix 2 Leases to be Excluded Leases. Prior to the expiration of the Cure Period, Esenjay will give CONDOR notice of all Title Defects that Sellers believe they have cured and any change in circumstances or additional facts that should be considered by CONDOR in evaluating whether a lease should be an Excluded Lease. Esenjay will furnish CONDOR with said notice, all title curative materials reflecting that the Title Defects referred to in Esenjay’s notice do not exist or have been cured and information as to the change in circumstances or additional facts that should be considered by CONDOR in evaluating whether a lease should be an Excluded Lease. In the event CONDOR and Esenjay cannot agree as to whether any Lease identified in the Defect Notice for which Sellers believe they have cured any Title Defect should be treated as an Excluded Lease, the Parties will submit the matter to binding arbitration pursuant to Section 10.11.

 

  

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ARTICLE 3 – Determination of Purchase Price and Closing

 

3.1 Determination of the Purchase Price for the Designated Interests.

 

At the expiration of the Cure Period, CONDOR shall evaluate the title curative material, if any, submitted by Esenjay during the Cure Period and determine the number of Approved Net Leasehold Acres included in each of the Appendix 2 Leases. CONDOR shall promptly give Esenjay a written notice stating: (i) the number of Approved Net Leasehold Acres covered by each of the Appendix 2 Leases; and (ii) the Purchase Price, calculated in the manner described in Article 2 based on the number of Approved Net Leasehold Acres. Said notice shall identify any of the Appendix 2 Leases that are Excluded Leases.

 

3.2 RESERVED.

 

3.3 Pre-Closing Covenants.  From the date hereof to the date of the Closing, except as provided herein, or as otherwise consented to in writing by CONDOR, each Seller shall: (a) not sell, assign, transfer, dispose of or relinquish any of the Appendix 2 Leases (other than relinquishments resulting from the expiration of any of the Appendix 2 Leases which Seller does not have a right or option to renew); (b) exercise all rights or options it has to renew or extend any of the Appendix 2 Leases that are due to expire in 2012; (c) not incur any expenditures or liabilities with respect to the Appendix 2 Leases in excess of Ten Thousand Dollars ($10,000), individually, or in excess of Twenty-Five Thousand Dollars ($25,000) in the aggregate, or enter into any agreements committing to same, unless in case of an emergency; (d) not enter into any material new contract burdening any of the Appendix 2 Leases or any part thereof; and (e) promptly notify CONDOR upon receipt of written notice of any claim, demand or notice by any third party, governmental agency or court relating to the Appendix 2 Leases or the Appendix 2 Acreage, or any part thereof.

 

ARTICLE 4 – Reservation of Overriding Royalty Interests; After Payout Interest

 

4.1 Reservation of Overriding Royalty Interests.

 

 The Assignment shall include a reservation by Esenjay for the benefit Esenjay and the prospect generator Evolution Oil & Gas, LLC of an overriding royalty interest in production from the leases assigned equal to the amount, if positive, by which Twenty Percent (20%) of 8/8ths of such production exceeds the aggregate of all landowner royalties, overriding royalties and other burdens measured by or payable out of production that cover or affect the Appendix 2 Leases as of the Closing, proportionately reduced, as more particularly described in Section 4.2 below, to the interest in the Appendix 2 Leases assigned to CONDOR by Esenjay (the “Esenjay ORI”).

 

4.2 Terms and Conditions of the Esenjay ORI.

 

 The Esenjay ORI shall be a covenant running with the each of the Appendix 2 Leases and shall be subject to the following terms and provisions:

 

(a). The Esenjay ORI shall be inclusive of any overriding royalties or claims for overriding royalties created prior to Closing (whether or not of record and including but not limited to overriding royalty interests to which the prospect generator or any other third party may be entitled).

 

(b). If the Seller’s interest in any of the leases assigned to CONDOR by Sellers covers less than the entire and undivided estate in the oil, gas and minerals in the lands covered thereby, the Esenjay ORI shall be payable in the proportion which Sellers’ fractional interest in the oil, gas and mineral estate covered by such lease in such lands bears to the entire and undivided estate in the oil, gas and other minerals in and under such lands. If Sellers hold less than all of the oil, gas and mineral leasehold estate created by the leases assigned to CONDOR or if Sellers convey less than all of the oil, gas and mineral leasehold estate created by such leases, the Esenjay ORI shall be payable in the proportion which the fractional part of the oil, gas and mineral leasehold estate conveyed to CONDOR by Sellers bears to the entire and undivided oil, gas and mineral leasehold estate in the lands covered by the leases assigned to CONDOR by Sellers.

 

  

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(c). The Esenjay ORI shall be free and clear of all drilling, producing and operating costs, but shall be charged with its proportionate part of all production, severance, ad valorem and similar taxes applicable to said production and any other taxes imposed under the laws of any state or other political subdivision to which such interest in production is or may be subject. At the election of CONDOR, production, gathering, or other taxes (state or federal) levied against the Esenjay ORI may be paid by CONDOR and deducted from the overriding royalty interests payable to Esenjay. CONDOR shall pay the Esenjay ORI on the same basis as the landowner’s royalty under the applicable lease and in accordance with applicable law.

 

(d). CONDOR shall have the right and authority to pool or unitize the Esenjay ORI in the same manner and to the same extent that pooling or unitization is authorized under the respective provisions of the leases assigned to CONDOR, as the same may have heretofore or may hereafter be amended, with the same effect as though the Esenjay ORI was a part of the lessors’ royalties in said leases. In lieu of the overriding royalties above specified, Esenjay shall receive on production from a unit so pooled only such portion of the overriding royalties stipulated above as the number of acres covered by the lease or portion thereof which is placed in any such unit bears to the total acreage so pooled in the particular unit involved.

 

(e). The Esenjay ORI will apply to any renewals or extensions of the Appendix 2 Leases acquired within six (6) months of the expiration of the applicable Appendix 2 Lease, insofar as such renewal or extension covers any portion of the Appendix 2 Acreage; provided, however, the Esenjay ORI applicable to any extension or renewal of any of the Appendix 2 Leases shall be reduced to the extent that the landowner’s royalty under such extension or renewal lease is greater than the landowner’s royalty under the expiring lease for which such extension or renewal lease is acquired.

 

ARTICLE 5 – Operational Provisions

 

5.1           Operator.  As a condition to Closing, Sellers shall deliver evidence reasonably satisfactory to CONDOR that the Operating Agreement, dated December 1, 2008, by and between Esenjay Operating Inc. and the other parties thereto has been amended to exclude the Appendix 2 Acreage as to all depths.

 

5.2           Data. CONDOR shall provide Seller with drilling data with respect to all Operations of each well drilled on the Appendix 2 Acreage identical to drilling data customarily provided to other working interest owners and at the same time such data is generated by, or otherwise delivered to CONDOR, all of which drilling data shall be subject to the confidentiality provisions under Section 10.7 of this Agreement.   For a period of six (6) months from and after the expiration of the primary term of each Appendix 2 Lease, without the prior written consent of CONDOR, each Seller (including the principals and affiliates of each Seller) shall not acquire, either directly or indirectly, including, but not limited to, through “top-leasing,” lease renewals or acquisition of new leases, any interest in any oil and gas leases covering any land within the geographical area depicted on Appendix 8 attached hereto (the “AMI”) with respect to each such Appendix 2 Lease. If a Seller acquires any such interest during such time period in violation of this provision, at CONDOR’s election, such Seller shall promptly assign and convey such interest to CONDOR, with a special warranty of title, and at cost, and such leases shall be included in the AMI.  The provisions of this subsection shall survive Closing for so long as any of the Appendix 2 Leases, or any renewals or extensions thereof remain in effect.

 

  

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5.3           Sellers’ Option.  As to the leases owned by Sellers covering undivided interests in the Appendix 2A Acreage and the Appendix 2B Acreage that CONDOR is not acquiring under this Agreement (i.e. those leases expiring prior to June 1, 2013) (“Sellers’ Retained Leases”) CONDOR agrees that in the event CONDOR elects to drill a well on any of the Appendix 2A Acreage or Appendix 2B Acreage which includes any portion of Sellers’ Retained Leases in a drilling and spacing unit for such well, and such Retained Leases remain in effect as of the date the well is to be drilled, Sellers shall have the right and option to assign such Retained Leases to CONDOR as to all depths for a consideration of FIVE HUNDRED SEVENTY FIVE and No/100 DOLLARS ($575.00) per net mineral acre and delivering an EIGHTY PERCENT (80%) Net Revenue Interest.  Condor will provide written notice to Sellers at least 30 days prior to commencing drilling operations on a drilling and spacing unit including Retained Leases.  Within 15 days of receipt of such notice, Sellers may elect to sell the applicable Retained Leases to Condor by providing written notice to Condor of such election.  In the event Sellers so elect, Condor will deliver the consideration contemplated in this subsection to Sellers, and Sellers will deliver an assignment to Condor in the same manner as if the applicable Retained Leases were part of the Appendix 2 Leases (including the same allocation of the purchase price between cash and Stock, subject to approval by Blast). The Assignment will be delivered simultaneous with payment by Condor on a form substantially the same as the Assignment contemplated in this Agreement.  To the extent leases are acquired from Seller pursuant to this section, such acquired leases will be included in the AMI. The provisions of this subsection will survive Closing until termination of all of the Retained Leases.

5.4           Indemnification.  Sellers shall indemnify, defend and hold harmless CONDOR from and against any and all claims, demands, causes of action, suits, judgments, orders, damages, awards, fines, penalties, charges, appeals, settlements, losses, liabilities, costs and expenses (including court costs, expert witness fees and reasonable attorneys’ fees) (collectively, “Claims”) arising in connection with or related to the Subject Leases or the Subject Acreage attributable to the period of time prior to the date of the Closing, or any Claims that are attributable to a breach by any Seller of any of such Seller’s representations, warranties or covenants hereunder. All of Sellers’ indemnities set forth in this Agreement, including those set forth in this Section 5.4, shall survive the Closing for the applicable statute of limitations period.

 

ARTICLE 6  – Representations

 

6.1 Representations of CONDOR.

 

 CONDOR represents to each Seller as of the date hereof and as of the date of Closing, unless a representation below is expressly made only as of the date of Closing:

 

(a). CONDOR is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Nevada, and is duly qualified to carry on its business in all jurisdictions in which it is conducting business.

 

(b). CONDOR has all requisite power and authority to carry on business as presently conducted, to enter this Agreement, and to perform its obligations under this Agreement. The consummation of the transactions contemplated hereby will not violate, nor be in conflict with, any provision of CONDOR’s Articles of Organization or other governing documents, or any agreement or instrument to which CONDOR is a party or is bound, or any judgment, decree, order, statute, rule or regulation applicable to CONDOR.

 

  

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(c). The execution, delivery and performance of this Agreement and the transactions contemplated hereby have been duly and validly authorized by all requisite action on the part of CONDOR.

 

(d). CONDOR has incurred no obligation or liability, contingent or otherwise, for brokers’ or finders’ fees with respect to the matters provided for in this Agreement for which Sellers shall have any responsibility whatsoever; and any such obligation or liability that might exist shall be the sole obligation of CONDOR.

 

(e). RESERVED.

 

(f). As of the date of the Closing, CONDOR shall be authorized to do business in and to own and operate oil and gas leases in the State of Colorado and in good standing in the State of Colorado.

 

(g). From the date hereof until the date of the Closing, CONDOR has made available to Esenjay CONDOR’s officers for any inquiries pertaining to matters reasonably relevant to the transactions contemplated hereunder.

 

(h). As of the date of the Closing, CONDOR shall be an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended.

 

6.2 Representations of Each Seller.

 

 Each Seller represents and warrants to CONDOR as of the date hereof and as of the date of Closing, unless a representation below is expressly made only as of the date of Closing:

 

(a). Seller is a Texas limited partnership or corporation duly formed, validly existing and in good standing under the laws of the State of Texas, and is duly qualified to carry on its business in all jurisdictions in which it is conducting business.

 

(b). Seller has all requisite power and authority to carry on business as presently conducted, to enter this Agreement, and to perform its obligations under this Agreement. The consummation of the transactions contemplated by this Agreement will not violate, nor be in conflict with, any provision of Seller’s formation or governing documents, or any agreement or instrument to which Seller is a party or is bound, or any judgment, decree, order, statute, rule or regulation applicable to Seller.

 

(c). The execution, delivery and performance of this Agreement and the transactions contemplated hereby have been duly and validly authorized by all requisite action on the part of Seller.

 

(d). Seller is not a foreign person within the meaning of Sections 1445 and 7701 of the Internal Revenue Code of 1986, as amended.

 

(e). Seller has incurred no obligation or liability, contingent or otherwise, for brokers’ or finders’ fees with respect to the matters provided for in this Agreement for which CONDOR shall have any responsibility whatsoever; and any such obligation or liability that might exist shall be the sole obligation of Seller.

 

  

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(f). To the best of its knowledge, Seller is in compliance with the terms of the Appendix 2 Leases. Seller is in compliance with all permits relating to the Appendix 2 Leases. All of said permits are valid and are in full force and effect. The Appendix 2 Leases are valid, binding and enforceable in accordance with their terms and are in full force and effect.

 

(g). To the best of its knowledge, Seller has Good and Defensible Title to its interests in the Appendix 2 Leases.

 

(h). Other than the terms of the Appendix 2 Leases, no agreement applicable to the Appendix 2 Leases (other than this Agreement) contains express provisions that require the drilling of wells or other material development operations in order to earn or to continue all or any portion of the Appendix 2 Leases in force and effect.

 

(i). Seller has not entered into any agreement under which CONDOR will be obligated, by virtue of a prepayment arrangement, a gas balancing agreement, a production payment or any other agreement or dedication to deliver hydrocarbons from the Appendix 2 Leases at some future time without then or thereafter receiving full payment therefore, or to make payment at some future time for hydrocarbons already produced and sold.

 

(j). All rentals and other payments due under the Appendix 2 Leases have been properly and timely paid and all conditions necessary to keep the Appendix 2 Leases in force and effect have been fully performed.

 

(k). Seller has not received any notice that any part of the Appendix 2 Acreage must be remediated under the provisions of any environmental law and, to the best of Seller’s knowledge, Seller has complied with all applicable laws governing its ownership and operation of the Appendix 2 Leases.

 

(l). Seller has paid in full all taxes and assessments that have accrued and are due against any part of the leasehold interests covered by this Agreement or against Seller in respect to any of said leasehold interests by any local, state, federal or other taxing authority.

 

(m). There are no contracts or agreements that cover, affect or burden the Appendix 2 Leases other than the Operating Agreement, this Agreement, and any other contracts and agreements that are listed in Appendix 7.

 

(n). None of the statements, representations or warranties made by Seller in this Agreement contains any untrue statements of any fact or fails to disclose any fact necessary to be disclosed in order to make the statements, representations or warranties contained herein not misleading. Seller has no knowledge of any matter that adversely affects (or may adversely affect) the Appendix 2 Leases that has not been disclosed to CONDOR in writing.

 

(o). Seller is authorized to do business in the State of Colorado and is in good standing in the State of Colorado.

 

(p). There are no consents to assignment or preferential rights to purchase with respect to any of the Appendix 2 Leases, except as set forth in Appendix 9.

 

(q). None of the Appendix 2 Leases are subject to any tax partnership agreement pursuant to Subchapter K of Chapter 1 of Subtitle A of the Internal Revenue Code.

 

(r). Seller is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended.

 

  

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ARTICLE 7 – Conditions Precedent

 

7.1 Conditions Precedent to the Obligations of Sellers.

 

 The obligations of Sellers to be performed at Closing are subject to the satisfaction by CONDOR or waiver by Sellers before or at Closing, of each of the following conditions:

 

(a). Representations and Warranties. The representations and warranties by CONDOR set forth in this Agreement shall be true and correct in all material respects at and as of the date of Closing as though made at and as of Closing; and CONDOR shall have performed and complied with, in all material respects, all covenants and agreements required to be performed and satisfied by CONDOR at or prior to Closing.

 

(b). No Litigation.  There shall be no suits, actions or other proceedings pending or threatened to enjoin the consummation of any of the transactions contemplated by this Agreement or seeking substantial damages against Sellers in connection therewith.

 

(c). Approvals. All approvals required to be obtained for the assignment of the Appendix 2 Leases to be conveyed by each Seller to CONDOR at Closing shall have been obtained or waived or shall have expired without being exercised.

 

7.2 Conditions Precedent to the Obligations of CONDOR.

 

 The obligations of CONDOR to be performed at Closing are subject to the satisfaction by each Seller or waiver by Condor before or at Closing, of each of the following conditions:

 

(a). Representations and Warranties.  Except with respect to each Seller’s representation in Section 6.2(g), which is governed by Article 2, the representations and warranties by each Seller set forth in this Agreement shall be true and correct in all material respects at and as of the date of Closing as though made at and as of Closing; and each Seller shall have performed and complied with, in all material respects, all covenants and agreements required to be performed and satisfied by such Seller at or prior to Closing.

 

(b). No Litigation.  There shall be no suits, actions or other proceedings pending or threatened to enjoin the consummation of any of the transactions contemplated by this Agreement or seeking substantial damages against CONDOR in connection therewith.

 

(c). Approvals.  All approvals required to be obtained for the assignment of the Appendix 2 Leases to be conveyed by each Seller to CONDOR at Closing shall have been obtained or waived or shall have expired without being exercised.

 

(d).  Casualty and Condemnation.  A substantial part of the Appendix 2 Leases or the Appendix 2 Acreage: (i) shall not have been destroyed by a casualty loss; and (ii) shall not have been taken in condemnation and no proceedings for the purpose of condemnation shall be pending.

 

  

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ARTICLE 8 – Seismic Data

 

8.1 Seismic Data.

 

At Closing:

 

(a). Esenjay and Condor will execute and Esenjay will deliver to CONDOR a seismic license in the form attached hereto as Appendix 4 covering Esenjay’s Proprietary  Data;

 

ARTICLE 9 – Termination

 

9.1 Termination.

 

This Agreement may be terminated at any time before Closing as follows:

 

(a). By mutual written agreement of the Parties;

 

(b). By CONDOR, upon written notice to Esenjay at any time prior to Closing if (i) any Seller has breached any representation, warranty, or covenant contained in this Agreement, CONDOR has notified Esenjay of the breach, and the breach has continued without cure for a period of three (3) business days after the notice of the breach, (ii) CONDOR has given Esenjay notice pursuant to Section 3.1 that the Purchase Price is reduced by more than Ten Percent (10%), or (iii) Closing shall not have occurred on or before 10:00 a.m. local time in Corpus Christi, Texas, forty-five (45) days after the execution date of this Agreement (or sixty (60) days if the due diligence period has been extended as provided under this Agreement), by reason of the failure of any condition precedent under Section 7.2;

 

(c). By Sellers upon written notice to CONDOR from Esenjay at any time prior to Closing if (i) CONDOR has breached any representation, warranty, or covenant contained in this Agreement, Esenjay has notified CONDOR of the breach, and the breach has continued without cure for a period of three (3) business days after the notice of the breach, (ii) CONDOR has given Esenjay notice pursuant to Section 3.1 that the Purchase Price is reduced by more than ten percent (10%), or (iii) Closing shall not have occurred on or before 10:00 a.m. local time in Corpus Christi, Texas, forty-five (45) days from the execution date of this Agreement (or sixty (60) days if the due diligence period has been extended as provided under this Agreement), by reason of the failure of any condition precedent under Section 7.1.

 

9.2 Effect of Termination.

 

 If this Agreement is terminated by CONDOR because any Seller: (i) breached any representation, warranty, or covenant made by such Seller in this Agreement, and failed to cure such breach within three (3) business days after CONDOR gave notice of the breach; or (ii) failed to perform its obligations at Closing under circumstances in which all conditions precedent to such Seller’s obligations set forth in Article 7 have been satisfied, then CONDOR shall be entitled to all rights or remedies that CONDOR has or may have under law or in equity for such Seller’s breach or failure to perform under this Agreement. Likewise, if this Agreement is terminated by Sellers because CONDOR: (i) breached any representation, warranty, or covenant made by CONDOR in this Agreement, and failed to cure such breach within three (3) business days after Esenjay gave notice of the breach; or (ii) failed to perform its obligations at Closing under circumstances in which all conditions precedent to CONDOR’s obligations set forth in Article 7 have been satisfied, then Sellers shall be entitled to all rights or remedies that Sellers have or may have under law or in equity for CONDOR’s breach or failure to perform under this Agreement.

 

  

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ARTICLE 10 – Miscellaneous

 

10.1 Further Assurances.

 

 Each Seller and CONDOR shall execute, acknowledge and deliver or cause to be executed, acknowledged and delivered such instruments and take such other action as may be necessary or advisable to carry out such Party’s obligations under this Agreement and under any exhibit, appendix, document, certificate or other instrument delivered pursuant hereto.

 

10.2 Notices.

 

 All notices and other communications that are required or that may be given under the provisions of this Agreement shall be in writing addressed as set forth below, and the same shall be deemed to have been given on the same day if delivered upon the earliest of: (a) actual receipt by the Party to be notified; (b) three (3) days after deposit with the United States Postal Service, certified mail, postage prepaid, return receipt requested; (c) two (2) days after deposit with Federal Express or other reputable overnight service) for overnight delivery; (d) upon acknowledgment of receipt of telefax, email or other electronic transmission. All such notices shall be addressed as follows:

 

	 	If to Sellers: 	
Esenjay Oil & Gas, Ltd.

500 N. Water Street, Suite 1100 South

Corpus Christi, Texas 78401

Attn.:  Ms. Linda D. Schibi, Vice President, Land

Tel. No.  (361) 883-7464

FAX No. (361) 883-3244

Email: Schibi@epc-cc.com

	 	 	 
	 	If to CONDOR: 	
Condor Energy Technology LLC

4125 Blackhawk Plaza Circle, Suite 201

Danville, California 94506

Attn.:  Frank C. Ingriselli, President and Chief Executive Officer

With a copy to:  General Counsel

Tel. No.  (925) 263-2426

FAX No. (925) 403-0703

Email: ingriselli@pacificenergydevelopment.com

 

From time to time Sellers or CONDOR may designate another address or facsimile number or email address or telephone number for all purposes of this Agreement by notifying the other Parties of such change in accordance with the provisions hereof.

 

10.3 Incorporation of Appendices.

 

 The appendices attached hereto are incorporated in this Agreement and are made a part of this Agreement.

 

10.4 Entire Agreement.

 

 This Agreement (including the appendices attached hereto) constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, written and oral.

 

10.5 Amendment; Waiver.  This Agreement may not be altered, or amended, nor any rights hereunder waived, except by an instrument in writing executed by the Party or Parties to be charged with such amendment or waiver.

 

10.6 Intentionally Omitted.

 

  

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10.7 Confidentiality.

 

(a). From and after the date of this Agreement, each Seller  shall treat all information exchanged and relating to the transactions contemplated hereby as confidential, including all drilling data provided by CONDOR to Seller hereunder (the “Confidential Information”). Each Seller shall take reasonable precautions as may be necessary to prevent the disclosure of any portion of the Confidential Information to any third party. Without the prior written consent of CONDOR, no Seller shall disclose any of the Confidential Information, except to any of the following (on a confidential basis): (1) members, partners, managers, officers, directors, employees, attorneys, accountants, engineers and other agents or consultants engaged by such Party; (2) any bona fide third party who in good faith is seeking to purchase, acquire, invest, finance or otherwise participate with such Party in an interest in any portion of the lands within the AMI described in Appendix 8, or the wells, lands or leases therein, including any investors or potential investors in CONDOR, subject to the terms of a written confidentiality agreement; or (3) any parties to which such Party is required to disclose such information by law or by the rules of any recognized stock exchange on which the securities of such Party are traded. The Parties acknowledge that the breach of the terms of this provision may cause irreparable harm for which monetary damages would be inadequate and difficult to ascertain. Therefore, the Parties hereby agree that, in the event of a breach or threatened breach hereof, CONDOR  may seek an injunction, restraining order, specific performance, and such other remedies and relief, in law or at equity, or any combination thereof, which CONDOR may deem in its sole discretion as necessary or advisable. The filing of any particular cause of action hereunder shall not be deemed an election of remedies.

 

(b). For purposes of this Agreement, “Confidential Information” does not include information that: (1) is already known to the receiving Party as of the date of disclosure hereunder; (2) is already in possession of the public or becomes available to the public other than through the breach of this Agreement by the receiving Party or of any other person to whom Confidential Information is distributed pursuant to this Agreement; (3) is required to be disclosed under applicable law, stock exchange regulations, court order, or by a governmental order, decree, regulation or rule (provided that the receiving Party shall make all reasonable efforts to deliver prompt written notice to the disclosing Party prior to such disclosure); (4) is acquired independently from a third party that represents it has the right to disseminate such information at the time it is acquired by the receiving Party; or (5) is developed by the receiving Party independently of the Confidential Information received from the disclosing Party.

 

10.8 Binding Effect; Benefits.

 

 This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns. Nothing expressed or implied in this Agreement is intended to or shall be construed to give any person other than the Parties or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of this Agreement, it being the intention of the Parties that this Agreement shall be for the sole and exclusive benefit of the Parties and their respective successors and assigns and for the benefit of no other person.

 

10.9 Governing Law.

 

 This Agreement and the transactions contemplated hereby shall be construed in accordance with, and governed by, the laws of the State of  Colorado.

 

  

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10.10 BINDING ARBITRATION. ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE EXISTENCE OF TITLE DEFECTS OR ENVIRONMENTAL LIABILITIES, THE BREACH, TERMINATION, ENFORCEMENT, INTERPRETATION OR VALIDITY OF THIS AGREEMENT, INCLUDING THE DETERMINATION OF THE SCOPE OR APPLICABILITY OF THIS AGREEMENT TO ARBITRATE, SHALL BE DETERMINED BY ARBITRATION IN THE STATE OF COLORADO IN ACCORDANCE WITH THE PREVAILING COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION. THE HEARING SHALL BE COMMENCED WITHIN THIRTY (30) DAYS AFTER THE SELECTION OF THE ARBITRATOR AND A WRITTEN DECISION SHALL BE RENDERED BY THE ARBITRATOR WITHIN THIRTY (30) DAYS OF THE CONCLUSION OF THE HEARING. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, JUDGMENT ON THE AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. THIS CLAUSE SHALL NOT PRECLUDE THE PARTIES FROM SEEKING PROVISIONAL REMEDIES IN AID OF ARBITRATION FROM A COURT OF APPROPRIATE JURISDICTION. THE ARBITRATOR SHALL NOT AWARD CONSEQUENTIAL OR PUNITIVE DAMAGES TO ANY PARTY. THE COSTS AND EXPENSES OF THE ARBITRATION PROCEEDING, INCLUDING THE FEES OF THE ARBITRATOR AND ALL COSTS AND EXPENSES, INCLUDING LEGAL FEES AND WITNESS FEES, INCURRED BY THE PREVAILING PARTY OR PARTIES, SHALL BE BORNE BY THE NON-PREVAILING PARTY OR PARTIES.

 

10.11 Specific Performance.

 

The Parties agree and acknowledge that money damages may not be an adequate remedy for a breach of a provision of this Agreement by any Seller or CONDOR. As such, any Seller or CONDOR, in their sole discretion, may apply to a court for specific performance and/or injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement by any Seller or CONDOR.

 

10.12 Expenses.

 

Except as otherwise specifically provided in this Agreement, all fees, costs and expenses incurred by CONDOR or any Seller in negotiating this Agreement or in consummating the transactions contemplated by this Agreement shall be paid by the Party incurring the same, including with limitation, legal and accounting fees, costs and expenses.

 

10.13 Cost.

 

If any legal action, arbitration or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with this Agreement, the prevailing Party or Parties shall be entitled to recover reasonable attorney’s fees and other costs incurred in such action, arbitration or other proceeding, in addition to other relief to which such Party or Parties may be entitled. EACH PARTY HEREBY EXPRESSLY WAIVES, RELEASES AND DISCLAIMS ANY AND ALL RIGHTS TO RECOVER FROM THE OTHER PARTIES ANY CONSEQUENTIAL, SPECIAL, INCIDENTAL, INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES RESULTING FROM OR ARISING OUT OF THIS AGREEMENT OR ANY BREACH OF OR FAILURE TO PERFORM UNDER THIS AGREEMENT, INCLUDING LOST SALES, INCOME, PROFIT, REVENUE, PRODUCTION, RESERVES OR OPPORTUNITY.

 

10.14 Severability.

 

Each section, subsection and lesser section of this Agreement constitutes a separate and distinct undertaking, covenant or provision hereof. In the event that any provision of this Agreement shall be determined to be invalid or unenforceable, such provision shall be deemed limited by construction in scope and effect to the minimum extent necessary to render the same valid and enforceable, and, in the event such a limiting construction is impossible, such invalid or unenforceable provision shall be deemed severed from this Agreement, but every other provision of this Agreement shall remain in full force and effect.

 

  

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10.15 Esenjay’s Representation of Sellers.  Winn, Lacy, Crain, Ravco, Arentee and Schibi acknowledge that Esenjay is acting as their representative in connection with this Agreement. Esenjay’s representation of the other Sellers includes, but is not limited to, the negotiation and drafting of this Agreement and documents to be delivered at Closing. Winn, Lacy, Crain, Ravco, Arentee and Schibi covenant and agree that each shall be bound by all actions taken by Esenjay on each of their behalf under or in connection with this Agreement and shall be deemed to have received notice for all purposes under this Agreement upon Esenjay’s receipt of the same in accordance with Section 10.2.

 

10.16 Presumption Concerning Interpretation and Construction.

 

Notwithstanding the fact that preliminary drafts of this Agreement were prepared by Esenjay, Esenjay and CONDOR and their respective counsel have had opportunity to participate in the drafting of the final form of this Agreement, and each Party hereto and their respective counsel have had opportunity to review the final form of this Agreement. Accordingly, in the event of any ambiguity in the provisions of this Agreement, there shall be no presumption in favor of any Party hereto with respect to the interpretation or construction thereof. The Parties will treat the words “include,” “includes” and “including” as if followed by “without limitation.” Pronouns in masculine, feminine, and neuter genders will be construed to include any other gender, and words in the singular form will be construed to include the plural and vice versa, unless the context otherwise requires.

 

10.17 Survival.

 

Except for each Seller’s representation in Section 6.2(g), which shall expire upon Closing, and as otherwise specifically set forth herein, the representations and warranties of the Parties hereto shall survive the execution of this Agreement and the Closing for a period of two (2) years from the date of the Closing; provided, however, that the foregoing shall not abrogate or limit Sellers’ indemnity and hold harmless obligations under Section 5.4 or Sellers’ special warranty of title set forth in the Assignment.

 

10.18 Headings.

 

The section and subsection headings used in this Agreement are inserted for convenience only and shall be disregarded in construing this Agreement.

 

10.19 Timing. Time is of the essence hereof.

 

10.20 Counterparts; Facsimile and Electronic Signatures.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same agreement. Furthermore, this Agreement may be executed by the facsimile or electronic signature of any Party hereto, it being agreed that the facsimile or electronic signature of any Party hereto shall be deemed an original for all purposes.

 

10.21 Termination of Confidentiality Agreement.  Effective at Closing, the Parties agree that certain Confidentiality/Non-Compete Agreement, dated April 13, 2011, by and between Esenjay, South Texas Reservoir Alliance, LLC and PEDCO, will be deemed terminated and of no further force and effect.

 

[Signature page follows.]

 

  

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EXECUTED to be effective as of the Effective Date.

 

	BUYER:	 	
SELLERS:

	 
	 	 	 	 	 
	Condor Energy Technology LLC	 	
Esenjay Oil & Gas, Ltd.

	 
	 	 	 	 	 	 	 
	By:	/s/ Clark R. Moore 	 	
By:

	Esenjay Petroleum Corporation,	 
	 	Clark R. Moore	 	  	Its General Partner	 
	 	Executive Vice President and	 	 	 	 	 
	 	
General Counsel

	 	  	By:	
By: /s/ Linda D. Schibi

	 
	 	 	 	  	 	
Linda D. Schibi

	 
	 	 	 	  	 	
Vice President Land

	 

 

	 	 	 	
Winn Exploration Co., Inc.

	 
	 	 	 	  	  	 
	 	 	 	By:	
/s/ Michael W. Calley

	 
	 	 	 	  	
Michael w. Calley

	 
	 	 	 	  	
Vice President

	 

 

 

	 	 	 	
Lacy Properties, Ltd.

	 
	 	 	 	  	 	  	 
	 	 	 	By: 	Lacy Property Management, Inc.,	 
	 	 	 	 	Its General Partner	 
	 	 	 	  	 	  	 
	 	 	 	
 

	
By:

	
/s/ Darren T. Groce

	 
	 	 	 	  	 	
Darren T. Groce

	 
	 	 	 	  	 	
Interim President

	 
	 	 	 	  	 	  	 
	 	 	 	  	 	  	 
	 	 	 	
Crain Energy, Ltd.

	 
	 	 	 	  	 	  	 
	 	 	 	By: 	Crain Oil & Gas, LLC,	 
	 	 	 	  	Its General Partner	 
	 	 	 	  	 	  	 
	 	 	 	 	By:	
/s/ Darren T. Groce

	 
	 	 	 	  	 	
Darren T. Groce

	 
	 	 	 	  	 	
Interim President

	 

 

Signature page to Purchase and Sale Agreement

  

  

 

 

	
Ravco, Inc.

	 
	  	  	 
	
By:

	
/s/ Richard Voss

	 
	  	
Richard Voss

	 
	  	
President

	 
	  	  	 
	  	  	 
	
Arentee Investments

	 
	  	  	 
	
By:

	
/s/ Ronald Johnson

	 
	  	
Ronald Johnson

	 
	  	
President

	 
	  	  	 
	  	  	 
	
Schibi Oil & Gas, Ltd.

	 
	  	  	 
	
By:

	
/s/ Linda D. Schibi

	 
	  	
Linda D. Schibi

	 
	  	
President

	 

 

Signature page to Purchase and Sale Agreement

  

  

 

APPENDIX 1

 

(Attached to and made a part of Purchase and Sale Agreement between Esenjay Oil & Gas, Ltd., et al, and Condor Energy Technology LLC)

DEFINED TERMS

 

Unless such terms are otherwise defined herein, the following terms set forth below shall have the meanings ascribed to them below.

 

Affiliate means, with respect to a Person, any other Person directly or indirectly, Controlling, or under common Control with, the Person in question and includes any subsidiary of such Person and any “affiliate” of such Person within the meaning of Reg. §240.12b-2 promulgated under the Securities Exchange Act of 1934, and with respect to a Person who is an individual, the ancestors and descendants of such Person and members of such Person’s nuclear family and trusts of which such Persons are beneficiaries.

 

Agreement has the meaning set forth in the first sentence of this Agreement.

 

Appendix 2 Acreage has the meaning set forth in the first recital of this Agreement.

 

Appendix 2 Leases has the meaning set forth in the first recital of this Agreement.

 

Approved Net Leasehold Acres has the meaning set forth in Section 2.3.

 

Arentee has the meaning set forth in the first sentence of this Agreement.

 

Assignment has the meaning set forth in Section 1.3(b)1.

 

Buyer has the meaning set forth in the first sentence of this Agreement.

 

Claims has the meaning set forth in Section 5.4.

 

Closing has the meaning set forth in Section 1.3.

 

COGCC means the Colorado Oil and Gas Conservation Commission.

 

Control means the possession, directly or indirectly, through one or more intermediaries, of the following: (a) in the case of a corporation, more than fifty percent (50%) of the outstanding voting securities thereof; or (b) in the case of any Person, the power or authority, through ownership of voting securities, by contract or otherwise, to direct the management, activities or policies of the Person.

 

Confidential Information has the meaning set forth in Section 10.6.

 

Counsel to Esenjay means Branscomb PC, 802 N. Carancahua, Suite 1900, Corpus Christi, Texas 78401-0036, Attention: H. Scott Taylor.

 

Crain has the meaning set forth in the first sentence of this Agreement.

 

Cure Period has the meaning set forth in Section 2.4.

 

Defined Terms

Appendix 1 Page 1

  

 

Defect Notice has the meaning set forth in Section 2.4.

 

Designated Interests has the meaning set forth in the third recital of this Agreement.

 

Effective Date means Forty-Five (45) days from the execution date of this Agreement, unless extended up to Sixty (60) days as set forth in this Agreement.

 

Encumbrances means pledges, liens, mortgages, security interests, contract obligations, options, claims, defects and encumbrances. Notwithstanding anything to the contrary, for purposes of this Agreement, any of the Appendix 2A Leases or Appendix 2C Leases with an expiration date occurring prior to June 1, 2013, or any of the Appendix 2B Leases with an expiration date occurring prior to February 1, 2013,  shall be deemed to be subject to an Encumbrance hereunder.

 

Esenjay has the meaning set forth in the first sentence of this Agreement.

 

Esenjay ORI has the meaning set forth in Section 4.1.

 

Evolution has the meaning set forth in Section 4.3.

 

Excluded Leases has the meaning set forth in Section 2.3.

 

Good and Defensible Title means, for each of the Subject Leases, such record title that: (i) is free and clear of all Encumbrances, except Permitted Encumbrances; (ii) entitles Sellers to receive not less than the net revenue interest set forth in Appendix 2 in all hydrocarbons produced from the Subject Leases described in Appendix 2 at any time during the productive life thereof (after satisfaction of all royalties, overriding royalties, nonparticipating royalties, net profits interests or other similar burdens on or measured by production of hydrocarbons); and (iii) obligates Sellers to bear not more than the working interest set forth in Appendix 2 in the Subject Leases described in Appendix 2 at any time during the productive life or abandonment thereof.

 

Lacy has the meaning set forth in the first sentence of this Agreement.

 

Net Leasehold Acres means, with respect to each of the Subject Leases: (i) the number of gross acres covered by such Lease, times (ii) the percentage of the oil, gas and other minerals covered by such Lease, times (iii) the percentage of the estate of the lessee in said Lease (working interest) owned by Sellers.  For example, the number of Net Leasehold Acres attributable to a Lease covering an undivided one half interest in the oil, gas and other minerals rights in and under a 100 acre tract of land in which Sellers own 90% of the estate of the original lessee in such Lease would be 45 Net Leasehold Acres. The 45 Net Leasehold Acres in this example is derived as follows:  (100 acres) times [50% (the landowner’s interest in the oil, gas and other mineral rights)] times [90% (Sellers’ ownership percentage of the estate of the original lessee)].

 

Operating Agreement has the meaning set forth in Section 5.1.

 

Party and Parties have the meanings set forth in the second sentence of this Agreement.

 

CONDOR has the meaning set forth in the first sentence of this Agreement.

 

Defined Terms

Appendix 1 Page 2

  

 

Permitted Encumbrances means and includes the following:

 

	
  

	
(i)

	
production burdens, including overriding royalties, as of record and in existence as of the Effective Date that (a) do not reduce Sellers’ net revenue interest in any of the Appendix 2 Leases below the amounts set forth in Appendix 2 or (b) increase the proportionate share of costs and expenses of leasehold operations attributable to or to be borne by the working interest of Sellers’ in any of the Appendix 2 Leases below the amounts set forth in Appendix 2, unless there is a proportionate increase in Sellers’ applicable net revenue interest;

 

	
  

	
(ii)

	
the overriding royalties to be reserved by Esenjay as set forth in this Agreement;

 

	
  

	
(iii)

	
Liens for taxes or assessments or governmental charges not yet delinquent;

 

	
  

	
(iv)

	
Easements, rights-of-way, servitudes, permits, surface leases and other rights in respect of surface operations incidental to the ownership of the Subject Leases provided that same do not materially interfere with the operation, value or use of any of the Subject Leases;

 

	
  

	
(v)

	
All rights of consent required by any governmental authority (if any) in connection with the change of ownership or control of an interest in any federal, state or other lease if the same are customarily obtained after such change of ownership or control by timely filings or other actions;

 

	
  

	
(vi)

	
rights of reassignment, to the extent any exist as of the date of this Agreement, upon the surrender or expiration of any of the Subject Leases;

 

	
  

	
(vii)

	
all rights reserved to or vested in any governmental entity to control or regulate operations on any of the Subject Leases and all applicable laws;

 

	
  

	
(viii)

	
all defects and irregularities of title that would not reasonably be expected to result in claims that would materially and adversely affect Sellers’ title to, or ownership, operations, or value of the Subject Leases, including, without limitation (a) defects in the early chain of title consisting of the failure to recite marital status or the omission of succession or heirship proceedings; (b) defects or irregularities arising out of the lack of a survey; (c) defects or irregularities arising out of or relating to the lack of powers of attorney from corporations to execute and deliver documents on their behalf or lack of spousal joinder; (d) defects of title which result from the failure to file assignments or other documents in the state or federal records so long as such assignments or other documents are properly recorded in the county records; and (e) irregularities cured by possession under applicable statutes of limitation and statutes relating to acquisitive (or liberative) prescription; and

 

	
  

	
(ix)

	
all other liens, charges, encumbrances, instruments, obligations, defects and irregularities affecting the Subject Leases which, individually or in the aggregate, do not: (a) interfere materially with the operation, value, or use of any of the Subject Leases; or (b) do not prevent CONDOR from receiving the proceeds of production from any wells to be drilled on the Subject Leases.

 

Person means an individual, corporation, partnership, limited liability company, trust, unincorporated organization, government, any agency or political subdivision of any government, or any other form of entity.

 

Defined Terms

Appendix 1 Page 3

  

 

Post-Closing Cash has the meaning set forth in Section 1.3(a)3.

 

Proportionate Share means the following shares attributable to each respective Seller: Esenjay, Sixty Percent (60%); Winn, Twenty-Five Percent (25%); Crain, Eleven and Twenty-Five Hundredths Percent (11.25%); and Lacy, Three and Seventy-Five Hundredths Percent (3.75%).

 

Purchase Price has the meaning set forth in Section 1.2.

 

Ravco has the meaning set forth in the first sentence of this Agreement.

 

Records has the meaning set forth in Section 1.1(a).

 

Review Period has the meaning set forth in Section 2.1.

 

Schibi has the meaning set forth in the first sentence of this Agreement.

 

Seller has the meaning set forth in the first sentence of this Agreement.

 

Appendix 2 Acreage has the meaning ascribed to such term in the second recital of this Agreement.

 

Appendix 2 Leases has the meaning set forth in the second recital of this Agreement.

 

Title Defect means any fact that renders Sellers’ title to any of the Subject Leases less than Good and Defensible Title, including any Encumbrance (or any claim of an Encumbrance) other than a Permitted Encumbrance.

 

Stock has the meaning set forth in Section 1.3(a)2.

 

Winn has the meaning set forth in the first sentence of this Agreement.

 

Defined Terms

Appendix 1 Page 4

  

 

APPENDIX 2

 

(Attached to and made a part of Purchase and Sale Agreement between Esenjay Oil & Gas, Ltd., et al, and Condor Energy Technology LLC)

 

APPENDIX 2A LEASES

[“EXHIBIT A ACREAGE” AS DESCRIBED IN THE LOI]

APPENDIX 2B LEASES

[“EXHIBIT B ACREAGE” AS DESCRIBED IN THE LOI]

APPENDIX 2C LEASES

 

[“SECTION 16 ACREAGE” AS DESCRIBED IN THE LOI]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

 

APPENDIX 3

 

(Attached to and made a part of Purchase and Sale Agreement between Esenjay Oil & Gas, Ltd., et al, and Condor Energy Technology LLC)

 

FORM OF ASSIGNMENT OF OIL, GAS AND MINERAL LEASES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

 

ASSIGNMENT OF OIL, GAS AND MINERAL LEASES

 

	STATE OF COLORADO	§	 
	 	§	KNOW ALL MEN BY THESE PRESENTS:
	COUNTY OF WELD 	§	 

 

THIS ASSIGNMENT OF OIL, GAS AND MINERAL LEASES (this “Assignment”), dated _______________ ___, 2012 (the “Closing Date”), but effective as of 12:01 a.m. Central Clock Time on ___________, 2012 (the “Effective Date”) is from ESENJAY OIL & GAS, LTD., a Texas limited partnership (“Esenjay”), 500 North Water Street, Suite 1100 South, Corpus Christi, Texas 78401, WINN EXPLORATION CO., INC., a Texas corporation (“Winn”), 800 North Shoreline Blvd., Suite 1900 North, Corpus Christi, Texas 78401, CRAIN ENERGY, LTD., a Texas limited partnership (“Crain”), 222 East Tyler Street, Longview, Texas 75606,  LACY PROPERTIES, LTD., a Texas limited partnership (“Lacy”), 222 East Tyler Street, Longview, Texas 75606, ARENTEE INVESTMENTS a Louisiana company, (“Arentee”) 20124 Highway 124, Jonesville, Louisiana 71343, RAVCO, INC. a Texas corporation, (“Ravco”) 6838 Greenwood Drive, Corpus Christi, Texas 78415, SCHIBI OIL & GAS, LTD., a Texas Limited Partnership (“Schibi”) 5914 Beauvais Drive, Corpus Christi, Texas 78414,  (Esenjay, Winn, Crain, Lacy, Ravco, Arentee and Schibi are, collectively, “Assignors” and each an “Assignor”), to CONDOR ENERGY TECHNOLOGY LLC, a Nevada limited liability company (“Assignee”), 4125 Blackhawk Plaza Circle, Suite 201, Danville, California 94506. Terms used but not otherwise defined herein shall have the meanings given to them in that certain Purchase and Sale Agreement (the “Purchase Agreement”), dated July 26, 2012, by and among Assignors and Assignee.

For a valuable consideration, and in consideration of the covenants and agreements of Assignee herein contained, and upon and subject to the exceptions, reservations, conditions and other provisions hereinafter set forth, Assignors hereby sell, transfer, assign, and deliver to Assignee the entire leasehold estate and working interest in and to the leases described in Exhibit “A” attached hereto (herein referred to collectively as “said Leases” and severally as a “Lease”) INSOFAR AND ONLY INSOFAR as said Leases cover and affect the lands described in Exhibit “A” attached hereto. Said Leases are conveyed hereby free and clear of all burdens other than Permitted Encumbrances, including the overriding royalty interests reserved by Esenjay, and shall entitle Assignee to the working interest set forth above without suspension, reduction or termination so long as said Leases remain in force and effect.

Esenjay hereby RESERVES and EXCEPTS from this Assignment, and the other Assignors hereby grant, bargain, sell and convey to Esenjay, overriding royalty interests in said Leases (the “Esenjay ORI”), subject to the following terms and provisions, equal to amount, if positive, by which Twenty Percent (20%) of 8/8ths of such production exceeds the aggregate of all landowner royalties, overriding royalties and other burdens measured by or payable out of production that cover or affect said Leases, proportionately reduced, as more particularly described below, to the interest in said Leases assigned to Assignee by Esenjay.

 

The Esenjay ORI shall be a covenant running with each of said Leases and shall be subject to the following terms and provisions:

(a). The Esenjay ORI shall be inclusive of any overriding royalties or claims for overriding royalties created prior to the Closing Date (whether or not of record and including but not limited to overriding royalty interests to which the prospect generator or any other third party may be entitled).

 

  

1

  

 

(b). If Assignors’ interest in any of said Leases assigned to Assignee by Assignors covers less than the entire and undivided estate in the oil, gas and minerals in the lands covered thereby, the Esenjay ORI shall be payable in the proportion which Assignors’ fractional interest in the oil, gas and mineral estate covered by said Lease in such lands bears to the entire and undivided estate in the oil, gas and other minerals in and under such lands. If Assignors hold less than all of the oil, gas and mineral leasehold estate created by said Leases assigned to Assignee or if Assignors convey less than all of the oil, gas and mineral leasehold estate created by said Leases, the Esenjay ORI shall be payable in the proportion which the fractional part of the oil, gas and mineral leasehold estate conveyed to Assignee by Esenjay bears to the entire and undivided oil, gas and mineral leasehold estate in the lands covered by said Leases assigned to Assignee by Assignors.

 

(c). The Esenjay ORI shall be free and clear of all drilling, producing and operating costs, but shall be charged with its proportionate part of all production, severance, ad valorem and similar taxes applicable to said production and any other taxes imposed under the laws of any state or other political subdivision to which such interest in production is or may be subject. At the election of Assignee, production, gathering, or other taxes (state or federal) levied against the Esenjay ORI may be paid by Assignee and deducted from the overriding royalty interests payable to Esenjay. Assignee shall pay the Esenjay ORI on the same basis as the landowner’s royalty under the applicable lease and in accordance with applicable law.

 

(d). Assignee shall have the right and authority to pool or unitize the Esenjay ORI in the same manner and to the same extent that pooling or unitization is authorized under the respective provisions of said Leases assigned to Assignee, as the same may have heretofore or may hereafter be amended, with the same effect as though the Esenjay ORI was a part of the lessors’ royalties in said Leases. In lieu of the overriding royalties above specified, Esenjay shall receive on production from a unit so pooled only such portion of the overriding royalties stipulated above as the number of acres covered by said Lease or portion thereof which is placed in any such unit bears to the total acreage so pooled in the particular unit involved.

 

(e). The Esenjay ORI will apply to any renewals or extensions of said Leases acquired within six (6) months of the expiration of the applicable said Lease, insofar as such renewal or extension covers any portion of the lands covered by such Said Lease; provided, however, the Esenjay ORI applicable to any extension or renewal of any of said Leases shall be reduced to the extent that the landowner’s royalty under such extension or renewal lease is greater than the landowner’s royalty under the expiring lease for which such extension or renewal lease is acquired.

 

This Assignment is made subject to the covenants, provisions, and terms of the Purchase Agreement, , and each of said Leases.

 

  

2

  

 

TO HAVE AND TO HOLD, all and singular, the interests in said Leases conveyed hereby together with all and singular the rights and appurtenances thereto in any wise belonging unto Assignee and its successors in title and assigns forever; and Assignors hereby bind themselves and their successors and assigns to warrant and forever defend, all and singular, said interests unto Assignee and its successors and assigns against every person whomsoever lawfully claiming or to claim the same or any part thereof, by through and under Assignors only, but not otherwise. This Assignment is made with full substitution and subrogation of Assignee in and to all covenants, indemnities, representations and warranties by others heretofore given or made with respect to the interests in said Leases conveyed hereby or any part thereof.

This instrument may be executed in any number of counterparts, with the same force and effect as if all parties hereto had executed a single counterpart hereof.

All of the terms, provisions, covenants and agreements herein contained shall extend to and be binding upon the parties hereto, and their respective successors in title and assigns, and all terms, provisions and reservations contained in this Assignment shall be deemed covenants running with each of the said Leases.

 

[Signature page follows.]

 

  

3

  

IN WITNESS WHEREOF, Assignors and Assignee have executed this Assignment to be effective as of the Effective Date.

 

	  	
ASSIGNORS:

	  
	 	 	 
	  	
Esenjay Oil & Gas, Ltd.

	  
	 	 	 	 
	  	
By:

	
Esenjay Petroleum Corporation

	  
	  	  	
Its General Partner

	  
	  	  	 	  	  
	  	  	
By:

	
 

	  
	 	 	 	Linda D. Schibi	 
	  	  	 	
Vice President Land

	  
	  	  	 	  	  
	  	  	 	  	  
	  	
Winn Exploration Co., Inc.

	  
	  	  	  
	  	
By:

	 	  
	  	  	
Michael W. Calley

	  
	  	  	
Vice President

	  
	  	  	 	  	  
	  	  	 	  	  
	  	
Lacy Properties, Ltd.

	  
	  	  	  
	  	
By:

	
Lacy Property Management, Inc.

	  
	  	  	
Its General Partner

	  
	  	  	  	  	  
	  	  	
By:

	
 

	  
	 	 	 	Darren T. Groce	 
	  	  	 	
Interim President

	  
	  	  	  	  	  
	  	  	  	  	  
	  	
Crain Energy, Ltd.

	  
	  	  	  
	 	By:	Crain Oil & Gas, LLC	 
	  	  	
Its General Partner

	  
	  	  	 	  	  
	  	  	
By:

	 	  
	  	  	 	
Darren T. Groce

	  
	  	  	 	
Interim President

	  

 

Signature page to Partial Assignment of Oil, Gas and Mineral Leases

  

 

  

 

	  	
Arentee Investments

	  
	  	  	  
	  	
By: 

	 	  
	  	  	
Ronald Johnson

	  
	  	  	
President

	  
	  	  	 	  	  
	  	  	 	  	  
	  	
Ravco, Inc.

	  
	  	  	 	  	  
	  	
By: 

	 	  
	  	  	Richard Voss	  
	  	  	President	  
	  	  	 	  	  
	  	  	 	  	  
	  	
Schibi Oil & Gas, Ltd.

	  
	  	  	  	  	  
	  	
By: 

	 	  
	  	  	
Linda D. Schibi

	  
	  	  	
President

	  
	  	  	 	  	  
	  	  	 	  	  
	  	
ASSIGNEE:

	  
	  	  	  
	  	
Condor Energy Technology LLC

	  
	  	  	 	  
	  	
By:

	 	  
	  	  	
Frank C. Ingriselli

	  
	  	  	
President and Chief Executive Officer

 

Acknowledgments

 

	STATE OF TEXAS   	§	 
	 	§	 
	COUNTY OF NUECES	§	 

 

The foregoing instrument was acknowledged before me this ___ day of _______________, 2012, by Linda D. Schibi, Vice President Land of Esenjay Petroleum Corporation, a Texas corporation, on behalf of the corporation, acting in its capacity as General Partner of Esenjay Oil & Gas, Ltd., a Texas limited partnership.

 

	 	[Seal]	 	 
	 	 	Notary Public	 
	 	 	My commission expires: 	 	 

 

Signature page to Partial Assignment of Oil, Gas and Mineral Leases

  

 

  

 

	STATE OF TEXAS   	§	 
	 	§	 
	COUNTY OF NUECES	§	 

The foregoing instrument was acknowledged before me this ___ day of _______________, 2012, by Michael W. Calley, Vice President of Winn Exploration Co., Inc., a Texas corporation, on behalf of the corporation.

 

	 	[Seal]	 	 
	 	 	Notary Public	 
	 	 	My commission expires: 	 	 

 

	STATE OF TEXAS   	§	 
	 	§	 
	COUNTY OF GREGG	§	 

The foregoing instrument was acknowledged before me this ___ day of _______________, 2012, by Darren T. Groce, Interim President of Lacy Properties, Ltd., a Texas limited partnership, on behalf of the corporation, acting in its capacity as General Partner of Lacy Properties, Ltd., a Texas limited partnership.

 

	 	[Seal]	 	 
	 	 	Notary Public	 
	 	 	My commission expires: 	 	 

 

Signature page to Partial Assignment of Oil, Gas and Mineral Leases

  

 

  

 

	STATE OF TEXAS   	§	 
	 	§	 
	COUNTY OF GREGG	§	 

The foregoing instrument was acknowledged before me this ___ day of _______________, 2012, by Darren T. Groce, Interim President of Crain Energy, Ltd., a Texas limited partnership, on behalf of the corporation, acting in its capacity as General Partner of Crain Energy, Ltd., a Texas limited partnership.

 

	 	[Seal]	 	 
	 	 	Notary Public	 
	 	 	My commission expires: 	 	 

 

	STATE OF LOUISIANA 	§	 
	 	§	 
	COUNTY OF CATAHOULA	§	 

 

The foregoing instrument was acknowledged before me this ___ day of _______________, 2012, by Ronald Johnson, President of Arentee Investments, a Louisiana company, on behalf of the company.

 

	 	[Seal]	 	 
	 	 	Notary Public	 
	 	 	My commission expires: 	 	 

 

 

	STATE OF TEXAS 	§	 
	 	§	 
	COUNTY OF NUECES	§	 

The foregoing instrument was acknowledged before me this ___ day of _______________, 2012, by Richard Voss, President of Ravco, Inc., a Texas corporation, on behalf of the corporation.

 

	 	[Seal]	 	 
	 	 	Notary Public	 
	 	 	My commission expires: 	 	 

 

Signature page to Partial Assignment of Oil, Gas and Mineral Leases

  

 

  

 

	STATE OF TEXAS   	§	 
	 	§	 
	COUNTY OF NUECES 	§	 

 

The foregoing instrument was acknowledged before me this ___ day of _______________, 2012, by Linda D. Schibi, President of Schibi Oil & Gas, Ltd., a Texas limited partnership, on behalf of the partnership.

 

	 	[Seal]	 	 
	 	 	Notary Public	 
	 	 	My commission expires: 	 	 

 

 

 

	STATE OF ____________ 	§	 
	 	§	 
	COUNTY OF CALIFORNIA	§	 

 

The foregoing instrument was acknowledged before me this ___ day of _______________, 2012, by Frank C. Ingriselli, President and Chief Executive Officer, of Condor Energy Technology LLC, a Nevada limited liability company, on behalf of the corporation.

 

	 	[Seal]	 	 
	 	 	Notary Public	 
	 	 	My commission expires: 	 	 

 

Signature page to Partial Assignment of Oil, Gas and Mineral Leases

  

 

  

 

EXHIBIT “A”

Attached to and made a part of that certain

Assignment Of Oil, Gas And Mineral Leases, dated __________, 2012,

from Esenjay Oil & Gas, Ltd., et al. as Assignors, to Condor Energy Technology LLC, as Assignee

 

DESCRIPTION OF OIL AND GAS LEASES

 

 

 

 

  

  

  

 

APPENDIX 4

 

(Attached to and made a part of Purchase and Sale Agreement between Esenjay Oil & Gas, Ltd., et al, and Condor Energy Technology LLC)

 

FORM OF SEISMIC DATA LICENSE AGREEMENT – ESENJAY PROPRIETARY DATA

3D ONSHORE/OFFSHORE MASTER SEISMIC

DATA LICENSING AGREEMENT

This Agreement ("Agreement") is effective as of _______________, 2012 by and between Esenjay Oil & Gas, Ltd., hereinafter referred to as “Licensor”, and Condor Energy Technology Corp., a Nevada limited liability company, hereinafter referred to as "Licensee."

Licensor agrees to acquire or has acquired and grants to Licensee a non-exclusive, non-transferable license to use certain geophysical data delineated in various Supplemental Agreements to this Agreement which may be executed from time to time in the form attached hereto as Schedule "1" by either Line Number, Program Name, Mileage or Square Mileage, Kilometer, Block, or 3D Program Name, as well as all related support documentation (e.g., surveying data, surveyor’s notes, driller’s notes and observer’s notes delivered to Licensee with the geophysical data), and all tape, electronic and paper/physical copies of all or any part of the geophysical data or related support documentation, regardless of source.  Such geophysical data, referred to collectively hereinafter as the “Data.” LICENSOR HEREBY REPRESENTS AND WARRANTS THAT IT HAS THE EXCLUSIVE RIGHT AND AUTHORITY TO PROVIDE LICENSEE WITH THE DATA, AND THAT IT WILL IN NO WAY BREACH ANY OBLIGATION IT HAS TO ANY OTHER PERSON OR ENTITY BY PROVIDING THE DATA TO LICENSEE. LICENSOR AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS LICENSEE FROM AND AGAINST ALL CLAIMS, DAMAGES, LIABILITIES, AND JUDGMENTS BASED UPON OR ARISING OUT OF ANY BREACH BY LICENSOR OF THE FOREGOING REPRESENTATION AND WARRANTY.  This non-exclusive, non-transferable license to use the Data is made subject to the terms and conditions provided below.

I.

Licensee acknowledges that the Data includes trade secrets, copyright protected confidential and proprietary information of Licensor, and that Licensor’s (and, as applicable, Licensor’s co-owners’) title to and ownership rights in the Data shall at all times remain vested in Licensor (and, as applicable, Licensor’s co-owners).  The Data may not be directly or indirectly, by operation of law or otherwise, transferred to, disclosed to, shown to, sold to, traded to, disposed of, or otherwise made available to, any other person or entity other than Licensee except as specifically provided below in Section III. Licensee agrees to take any and all reasonable actions necessary to insure that its employees, representatives or agents do not violate the terms and conditions of this Agreement including, but not limited to, the limitations on access to the Data provided below.  In the event this Agreement is violated, Licensor will be entitled to all remedies available to it at law and in equity, including, but not limited to, the specific remedies set forth herein, provided, however, that Licensee shall not be liable for punitive, indirect, incidental or consequential damages resulting from or arising out of this provision “I”.  Licensee recognizes that Licensor, as owner or co-owner of the Data, may enter into agreements with other parties to license the Data provided to Licensee, and that Licensor is free to license, use, sell or in any other manner dispose of the Data upon such terms and conditions as Licensor may elect

II.

LICENSEE AGREES THAT THIS LICENSE TRANSACTION IS MADE ON AN "AS IS, WHERE IS" BASIS.  LICENSOR DOES NOT WARRANT THE ACCURACY OR QUALITY OF THE DATA, AND ANY ACTIONS TAKEN OR EXPENDITURES MADE BY LICENSEE AS A RESULT OF EXAMINATION, EVALUATION OR INTERPRETATION OF THE DATA SHALL BE AT THE SOLE RISK, RESPONSIBILITY AND LIABILITY OF LICENSEE, WITHOUT ANY RECOURSE TO LICENSOR.  EXCEPT AS EXPRESSLY PROVIDED HEREIN, LICENSEE FURTHER AGREES THAT LICENSOR SHALL NOT BE LIABLE FOR ANY REPRESENTATIONS, CONDITIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY CONDITION OR WARRANTY OF MERCHANTABILITY, QUALITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE DATA IS COMPLETE, WHOLLY ACCURATE, OR ERROR FREE.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, LICENSOR SHALL IN NO EVENT BE LIABLE TO LICENSEE OR ANY THIRD PARTIES FOR PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM OR ARISING OUT OF THIS AGREEMENT OR THE USE BY LICENSEE OR ANY THIRD PARTIES OF THE DATA.

 

  

  

  

LICENSOR AGREES TO INDEMNIFY, DEFEND AND HOLD HARMLESS LICENSEE FROM AND AGAINST ALL CLAIMS, DAMAGES, LIABILITIES AND JUDGMENTS BASED UPON OR ARISING OUT OF FIELD OPERATIONS CONDUCTED BY LICENSOR OR ITS SUB-CONTRACTORS DURING THE DATA ACQUISITION PROCESS.

III.

Licensee agrees that this license is personal, that the Data shall be for Licensee's internal use only, and that the Data shall not be directly or indirectly, by operation of law or otherwise, transferred to, disclosed to, shown to, sold to, traded to, disposed of, or otherwise made available to, any person or entity other than Licensee, except under the following conditions:

A.  The Data may be made available, shown, or a copy provided, to any person or entity solely for the purposes of reprocessing, analyzing, interpreting and/or creating derivative products for Licensee, subject to the following: (1) such person or entity is not itself engaged in the oil & gas exploration business; (2) such person or entity acknowledges and agrees in writing, either generally or specifically, that the Data is the confidential, proprietary property, copyright and trade secret of Licensor and will not be transferred to, disclosed to, described to, shown to or used to benefit any other person or entity;  (3) such  person or entity agrees in writing to be bound by the terms and conditions of this Agreement; and (4) the period of time during which the person or entity has access to the Data is no longer than is reasonably necessary for it to perform the work undertaken for Licensee.  All derivative products and reprocessed Data will be owned by and will remain the property of Licensor and shall be included in the definition of “Data” as that term is used in this Agreement.  Licensee hereby grants to Licensor all right, title, and interest in and to all derivative products and reprocessed Data and Licensor hereby grants back Licensee a non-exclusive, non-transferable license to all derivative products and reprocessed Data in accordance with the terms of this Agreement. Provided, however, Licensee shall not be under an obligation to provide Licensor with the original or copies of derivative Products.

 

B.  Such portions of the Data as are directly related, in the reasonable opinion of Licensee, to a specific drilling prospect generated by Licensee or to a leasehold interest which Licensee desires to offer for potential sale may be shown by Licensee at Licensee’s facilities to any person or entity, but not copied, separately analyzed or manipulated for or by such person or entity, (“Prospective Purchaser”) in order to interest such person or entity to enter into an agreement with Licensee to explore, operate, develop or buy all or a portion of such drilling prospect or lease or for purposes of a “Change in Control” as defined hereinbelow, but only if such person or entity acknowledges and agrees in writing, either generally or specifically, that the Data is the confidential, proprietary property, copyright and trade secret of Licensor and will not be transferred to, disclosed to, described to, shown to or used to benefit any other person or entity.  Licensor and Licensee intend that Licensee may show the applicable portions of the Data to any person or entity for the limited purpose described above only in connection with a specific drilling prospect of limited area or in connection with the potential sale of a specific leasehold interest or for the purposes of a Change of Control, but not to permit such person or entity to make a regional interpretation of the Data or any portion thereof, and only after such person or entity agrees in writing that the Data is the confidential, proprietary property, copyright and trade secret of Licensor and will not be disclosed to, described to, shown to or used to benefit any other person or entity.

C. The Data may be made available, shown, or a copy provided to any Related Entity, provided that such Related Entity shall have the same rights to use the Data as Licensee; and further provided that such Related Entity shall be bound by the terms of this Agreement to the same extent as Licensee. In the event that a Related Entity ceases to exist or no longer meets the definition of Related Entity under this Agreement, all rights of such entity to use the Data shall immediately terminate and all copies of the Data shall immediately be destroyed or returned to Licensee. Licensee shall promptly provide Licensor written notice confirming the return and/or destruction as required by this subsection. For purposes of this Agreement “Related Entity” means any entity in which Licensee holds an ownership interest or any entity that holds an ownership interest in Licensee.

 

  

  

  

The intent of this Agreement is to allow the Data to be used solely by Licensee for the purposes of analysis and interpretation in Licensee's search for hydrocarbon reserves.  Licensee shall take all reasonable measures necessary to safeguard the Data from unauthorized use or disclosure and, in any event, Licensee shall provide at least the same degree of care and control of the Data as Licensee exercises toward its own trade secret, proprietary, confidential and copyright protected information.  Other than as set out herein, the Data shall remain in the physical possession of Licensee and will not be made available to any person or entity.  At no time, under any circumstances, shall Licensee receive any fee from any person or entity for any use of the Data, nor shall the Data  be displayed on the Internet or any other publicly accessible media for any purpose, provided, however, the Data may be displayed to a Prospective Purchaser or a secure Internet data base or site.  If this section of the Agreement is breached, in addition to all other remedies available to Licensor at law or in equity, Licensee shall pay to Licensor as liquidated damages, and not as a penalty, an amount equal to 150% of the original license fees paid for the Data (but not to exceed 100% of the total acquisition and processing costs for the data), within three (3) business days of a written demand from Licensor.  Upon such payment there shall be delivered to any other party who has been given access to the Data an agreement similar in form and substance to this Agreement for the affected Data.  Only upon full execution of that agreement shall the other party have any rights of use in and to the Data.  Licensee acknowledges, covenants and agrees that any breach of this Agreement by any consultant, agent, employee, representative, or other advisor of Licensee, or by any prospective venture participant or prospective purchaser, or any of their respective consultants, agents, employees, representatives or other advisors, shall be a breach of this Agreement by Licensee.

 

IV.

This Agreement, the Supplemental Agreements and the license to use the referenced Data shall terminate ten (10) years from the execution date of this Agreement, but may be extended by written mutual agreement of the parties.  The license granted by this Agreement will, without notice, automatically terminate upon the Licensee: ceasing to carry on its business; making an assignment for the general benefit of its creditors; proposing any form of financial reorganization because of insolvency with creditors; becoming subject to any bankruptcy proceedings or any other proceedings or laws relating to its insolvency; or if a receiver, receiver and manager, trustee, custodian or similar agent is appointed or takes possession of all or substantially all of the property or business of the Licensee.  Immediately upon termination of the license granted by this Agreement, Licensee will return or cause to be returned to, or will destroy or cause to be destroyed, the Data.

V.

Except as provided herein, Licensee may not sell, assign or otherwise transfer this Agreement, the Data, or the license or any other rights or obligations hereunder, in whole or in part, without the prior written approval of Licensor. A Change of Control (as defined below) shall not constitute such a transfer.

A “Change of Control” shall mean each of (a) the sale of all or substantially all of the stock or assets of Licensee (or its ultimate parent company), (b) any merger, reorganization, combination, consolidation or amalgamation of Licensee (or its ultimate parent company) with any other entity, and (c) the acquisition, directly or indirectly, by any person or entity, or by any group of persons or entities acting together, that are involved, directly or indirectly, in whole or in part, in the business of exploring for or producing oil, gas or other minerals, of the power to direct or cause the direction of the management and policies of Licensee (or its ultimate parent company), whether through the ownership of voting securities, by contract or otherwise, including, without limitation, the direct or indirect acquisition of 50% or more of the outstanding equity interests in Licensee (or its ultimate parent company). Notwithstanding anything herein to the contrary, a “Change of Control” shall not include transactions the primary purpose of which concern the fundraising activities of Licensee, such as undertaking a public or private offering of securities that results in changes in ownership of Licensee or changes to the composition of the board of directors of Licensee. Licensee agrees to provide prompt written notice to Licensor at the appropriate address listed hereinbelow, in the event of a Change of Control or the entry by Licensee (or its ultimate parent company) into a publicly discloseable agreement that will cause a Change of Control.  This section shall apply even if Licensee continues to exist subsequent to the Change of Control in essentially the same form in which it existed prior to the Change in Control. Upon entry by Licensee into a publicly discloseable agreement that will cause a Change of Control, Licensee may either terminate the license granted under this Agreement and return the Data by the date of the Change of Control, or may pay to Licensor a re-license fee in the amount of $15,000.00 per square mile of Data covered by this Agreement.  In the event the Data is to be returned, Licensee shall be required to execute a Verification of Return/Destruction of Data form in the form attached as Exhibit A; however, Licensee shall not be required to destroy, erase or return corporate documents which contain Data derived from the Data, copies of such Data retained in back-up computer records for the period such records are normally retained and such copies required to be retained by law.  Except as provided for in this section, a Change of Control will not result in the termination of this Agreement or the charging of additional fees.  This Section is specifically intended to supersede statutory provisions to the contrary, if any.

 

  

  

  

VI.

Data licensed hereunder may be conveyed to a service company for reprocessing or storage, provided a written confidentiality agreement is obtained from such company prior to conveyance.  Licensee accepts full responsibility for insuring that any Data conveyed hereunder remains confidential and is not made available to any non-Licensee.  Any print or film of any version of the Data must contain the following statement:

“This Data is trade secret, is owned by Esenjay Oil & Gas, Ltd., and is licensed to (Licensee) under terms and conditions of a 2D & 3D Onshore/Offshore Master Seismic Data Licensing Agreement which strictly limits the use of such Data.  This Data shall be for Licensee's own internal use only, and shall not be shown, sold, traded, disposed of, or otherwise made available to any party except under certain specific conditions delineated in such licensing agreement.  Any unauthorized use or possession of this Data by any party is strictly prohibited.”

VII.

The terms of this Agreement shall be kept confidential by the parties hereto, and shall not be disclosed to any other person or entity, except as may be reasonably necessary to administer this Agreement (e.g., disclosure in connection with permitted disclosures of the Data pursuant to Section III, above), or as otherwise may be required by law.

 

VIII.

 

This Agreement shall be construed in accordance with the laws of the State of Colorado, without giving effect to principles of conflicts of law.  The parties agree that if, after the effective date of this Agreement, there are changes in laws or regulations (including the imposition of new laws) or in the interpretation or application of laws or regulations, which in the reasonable opinion of Licensor adversely affect the benefits, rights or protections afforded Licensor either pursuant to the terms of this Agreement or by operation of law then, at Licensor’s sole request the parties shall enter into negotiations and execute an amendment to this Agreement that places Licensor in substantially the same position as before the change of law.

 

IX.

The rights and remedies granted in this Agreement to Licensor in the event of default are cumulative and the exercise of any of those rights and remedies shall be without prejudice to the enforcement of any other right or remedy including, without limitation, injunctive relief, specific performance, and any other right or remedy available at law or in equity or authorized by this Agreement. Notwithstanding anything to the contrary contained herein, Licensee shall in no event be liable to Licensor or any third party for punitive, indirect, or consequential damages resulting from or arising out of this Agreement.

 

The rights of each party hereto, whether granted by this Agreement or by law or equity, may be exercised, from time to time, singularly or in combination, and the waiver of one or more of such rights shall not be deemed to be a waiver of such right in the future or any one or more of the other rights that the exercising party may have.  Any right, and any breach of a term, provision or condition of this Agreement by one party shall not be deemed to have been waived by the other party unless the waiver is expressed in writing and signed by an authorized representative of the waiving party.  The failure of either party to insist upon the strict performance of any term, provision or condition of this Agreement shall not be construed as a waiver or relinquishment in the future of the same or any other term, provision or condition.

The parties agree that any provision of this Agreement that is deemed to be or becomes void, illegal, invalid or unenforceable shall be severable herefrom and ineffective to the extent of such voidability, illegality, invalidity or unenforceability, and shall not invalidate, affect or impair the remaining provisions of this Agreement.  If and to the extent any court or governmental authority of competent jurisdiction holds any provision of this Agreement to be invalid or unenforceable, the parties will negotiate in good faith to equitably adjust the provisions of this Agreement with a view toward effecting its intended purposes; any such holding shall not affect the validity or effectiveness of the other provisions of the Agreement, which will remain in full force and effect.  No provision of this Agreement shall be construed to constitute Licensor as the agent, servant, or employee of Licensee.  The relationship of Licensor to Licensee shall be that of independent contractor.  Licensee shall not have the right to control or direct the details of the work performed by Licensor.  Licensor shall furnish at its own expense, and risk, all labor, materials, equipment, tools, and transportation and other items necessary in performance of the work covered herein.

 

  

  

  

X.

Licensor and Licensee agree that there are no understandings or agreements relative to this Agreement that are not fully expressed herein or in the Supplemental Agreements.  This Agreement including only any Supplemental Agreements sets forth the entire agreement between the parties and supersedes all prior agreements, prior data licenses, understandings, and communications between the parties, whether oral or written.

XI.

All notices to be given pursuant to this Agreement shall be in writing and shall be deemed to be sufficiently given if delivered by overnight courier, in which case the notice shall be deemed to have been received on the next business day after sending, or if delivered by hand to the representative named below, in which case the notice shall be deemed to have been received on the date of delivery, or if sent by certified mail, return receipt request, in which case the notice shall be deemed to have been received on the date of receipt.  Until written notice of change of address given pursuant to this Section, notices shall be addressed as follows:

 

	
  

	
(a)

	
Licensor:

Esenjay Oil & Gas, Ltd.

500 N. Water Street

Suite 1100 South

Corpus Christi, Texas 78401-0236

Attention: Eric Gardner

Phone: (361) 883-7464

Fax: (361) 883-3244

gardner@epc-cc.com

 

	
  

	
(b)

	
Licensee:

Condor Energy Technology LLC

c/o Pacific Energy Development Corp.

4125 Blackhawk Plaza Circle, Suite 201

Danville, California 94506

Attention: Frank C. Ingriselli, President and Chief Executive Officer

Phone: (925) 263-2426

Fax: (925) 403-0703

ingriselli@pacificenergydevelopment.com

  

XII.

Any delay or failure to perform under this Agreement arising from a force majeure event as specified herein shall not be deemed to be a default and shall not put an end to this Agreement, so that the same shall continue in suspense or part performance until such event shall have ceased.  A force majeure event means:  acts of God, earthquakes, fire, freezing, storm, tornados, floods, hurricanes, or other actions of the elements, explosion, accident, malicious mischief, sabotage, insurrections, riot, strikes, lockouts, boycotts, picketing, labor disturbances, loss of power, public enemy, war (declared or undeclared), rebellion, civil disturbance, compliance with any federal, state, or municipal law, or with any regulation, order, rule (including, but not limited to, priority, rationing or allocation orders or regulation) of governmental agencies, or authorities or representatives of any government (foreign or domestic); total or partial failure or loss or shortage of all or part of transportation or other facilities ordinarily available to and used by a party hereto in the performance of the obligations imposed by this Agreement, whether such facilities are such party’s own or those of others; or any cause, whether similar to or dissimilar from the causes herein enumerated, including without limiting the generality of the foregoing, any breakdown, either total or partial, of Licensor’s facilities for any cause whatsoever; provided, however, that all such causes are beyond the reasonable control of the party claiming force majeure and the settlement of strikes or lockouts shall be entirely within the discretion of the party having the difficulty and that even though the parties hereby agree that any force majeure shall be remedied as soon as practicable, the settlement of strikes or lockouts by acceding to the demands of the opposing party when such course is inadvisable in the discretion of the party having difficulty shall not be required.

[Signature page follows.]

 

  

  

  

ACCEPTED AND AGREED TO THIS ___ DAY OF ______, 2012.

 

	LICENSOR:	 	 	 	 
	 	 	 	 	 	 	 
	Esenjay Oil & Gas, Ltd. 	 	 	 	 
	 	 	 	 	 	 
	By:	
Esenjay Petroleum Corporation, 

	 	 	 	 
	 	Its: General Partner	 	 	 	 
	 	By: 	 	 	 	 	 
	 	 	Eric Gardner	 	 	 	 
	 	 	Vice President Exploration	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	LICENSEE:	 	 	 	 
	 	 	 	 	 	 	 
	Condor Energy Technology LLC	 	 	 
	 	 	 	 	 	 	 
	By:	 	 	 	 	 	 
	Name:	 	 	 	 	 	 
	Title: 	 	 	 	 	 	 

 

  

  

  

 

Exhibit A

 

VERIFICATION OF RETURN/DESTRUCTION OF DATA

 

Licensee, as defined in the 2D & 3D Onshore/Offshore Master Seismic Data Licensing Agreement (“Agreement”) effective as of   hereby represents, warrants and verifies to Licensor, as defined in the Agreement, that all Data, as defined in the Agreement (including any Data provided to any other person or entity in accordance with the terms of the Agreement), has been returned to Licensor [destroyed].  Specifically, as of the date of this Verification, all Data has been completely removed from the computer systems, files, offices, warehouses, or other locations within the possession, custody or control of Licensee.  In addition, all references to the Data have been [returned/destroyed], by permanently deleting or otherwise permanently eliminating them from all computers, files, storage facilities, and any and all other paper, electronic, digital or other forms of media within the possession, custody or control of Licensee.

Licensee acknowledges and agrees that Licensor is relying on this Verification of Return of Data as confirmation that Licensee is not retaining any Data in any form and, further, as Licensee’s acknowledgment that retaining any Data would entitle Licensor to liquidated damages as provided in the Agreement as well as all other remedies available to Licensor at law or in equity.

Verified this _______  day of ______________, 2011.

 

	 	 	 	 	 
	 	 	By: ________________________________	 
	 	 	Print Name:  ______________________________	 
	 	 	Company and Title:   ________________________	 

 

  

  

  

 

ONSHORE 3D

 

SCHEDULE "1"

Supplemental Agreement to a

2D & 3D Onshore/Offshore Master Seismic Licensing Agreement

between

Esenjay Oil & Gas, Ltd.

and

Condor Energy Technology LLC, a Nevada limited liability company

(f). _________________________

 

(g). Dated  _______________, 2012

_______________________________ agrees to license square miles of 3-D geophysical data acquired by Licensor as delineated by area and mileage and at rates as specified below, under terms and conditions of the 2D&3D Onshore/Offshore Master Seismic Data Licensing Agreement to which this supplemental agreement is attached and made a part thereof.

 

	Area	 	
Committed 

Mileage

	 	 
	 	 	 	 	 

 

 

	
Billing Address: 

	______________________________________	 
	 	______________________________________	 
	 	______________________________________	 
	 	Attention: ______________________________	 

 

 

Delivery Address:   SAME

 

ACCEPTED AND AGREED TO THIS ___________ DAY OF ___________________, 2012.

 

	LICENSOR	 	 	LICENSEE	 
	 	 	 	 	 
	ESENJAY OIL & GAS, LTD,	 	 	CONDOR ENERGY TECHNOLOGY LLC 	 
	By Esenjay Petroleum Corporation, 	 	 	 
	Its general partner	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By: 	
 

	 	By: 	 	 
	 	
 

	 	 	
 

	 

 

  

  

  

 

APPENDIX 5

 

(Attached to and made a part of Purchase and Sale Agreement between Esenjay Oil & Gas, Ltd., et al, and Condor Energy Technology LLC)

 

FORM OF CERTIFICATE OF NON-FOREIGN STATUS

 

 

 

 

 

 

 

  

  

  

 

CERTIFICATION AS TO NON-FOREIGN STATUS

Under penalties of perjury, ____________________ (“Affiant”) hereby certifies the following on behalf of [Seller]:

That [Seller] and Condor Energy Technology LLC (“CONDOR”) entered into a Purchase and Sale Agreement dated July ___, 2012 (the “Contract”), whereby [Seller] agreed to convey certain oil and gas assets described therein (the “Assets”) to CONDOR.

That [Seller] represents and warrants under penalties of perjury, pursuant to the requirements of Section 1445 of the Internal Revenue Code of 1954, as amended, (the “IRC”) and the regulations promulgated thereunder, that [Seller] is not a foreign corporation, foreign partnership, foreign trust or foreign estate as those terms are defined in the IRC and the regulations promulgated thereunder.

That [Seller] does accordingly make and deliver this Certification for the express purpose of inducing CONDOR to purchase the Assets in accordance with the terms and conditions of the Contract, and [Seller] hereby represents that [Seller] has read and understands Sections 1445 and 7701 of the IRC and the regulations promulgated under these sections and declares that [Seller] is not a foreign corporation, foreign partnership, foreign trust or foreign estate as those terms are defined in the IRC and the regulations promulgated thereunder, and CONDOR is not required to withhold any tax as a result of the sale by [Seller] of the Assets to CONDOR.

That [Seller] understands and acknowledges that CONDOR is relying upon this Certification in refraining from withholding ten percent (10%) of any amount to be realized by [Seller].

[Seller]’s seven-digit United States Taxpayer Identification Number is ________________.

[Seller]’s address is:             _______________________________________

                                                 _______________________________________

                                                 _______________________________________

Attn.:  __________________________________

That [Seller] understands and acknowledges that the aforesaid representations and warranties are made under penalties of perjury, and that, for good and valuable consideration, the receipt of which is hereby acknowledged, [Seller] hereby agrees to indemnify, defend and hold harmless CONDOR of, from and against any and all loss, liability, costs, damages, claims or causes of action which may hereafter arise or be incurred by CONDOR by reason of any failure of any representation or warranty made herein to be true and correct in all respects, including but not limited to any liability for failure to withhold any amount required under Section 1445 of the IRC.

That [Seller] understands and acknowledges that this Certification may be disclosed to the Internal Revenue Service by CONDOR and that any false statement contained herein could be punished by fine, imprisonment, or both.

That Affiant hereby acknowledges that Affiant has examined this Certification and, under penalties of perjury, declares that to the best of Affiant’s knowledge and belief, it is true, correct and complete, and Affiant further represents and declares that Affiant has the authority to sign this Certification on behalf of [Seller].

[Signature page follows.]

 

  

  

  

 

IN WITNESS WHEREOF, the Affiant has executed and made this Certification as to Non-Foreign Status on behalf of [Seller] on this ______ day of _________, 2012.

 

	 	[SELLER]	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name: 	 	 
	 	Title: 	 	 

 

Acknowledgment

 

	STATE OF 	§	 
	 	§	 
	COUNTY OF 	§	 

 

This instrument was acknowledged before me on ____________, 2011, by ______________, ________________ of [Seller], a ________________, on behalf of said ________________.

 

	 	[Seal]	 	 
	 	 	Notary Public	 
	 	 	My commission expires: 	 	 

 

  

  

  

 

APPENDIX 6

(Attached to and made a part of Purchase and Sale Agreement between Esenjay Oil & Gas, Ltd., et al, and Condor Energy Technology LLC)

PROPRIETARY DATA

 

Township 7 North, Range 59 West;    Sections 29 & 30

Township 7 North, Range 60 West;    East Half of Section 36

Total is 2.5 square miles

 

 

 

 

  

  

  

 

APPENDIX 7

 

(Attached to and made a part of Purchase and Sale Agreement between Esenjay Oil & Gas, Ltd., et al, and Condor Energy Technology LLC)

 

DESCRIPTION OF CONTRACTS OR AGREEMENTS

 

None.

 

 

 

 

 

 

 

  

  

  

APPENDIX 8

 

(Attached to and made a part of Purchase and Sale Agreement between Esenjay Oil & Gas, Ltd., et al, and Condor Energy Technology LLC)

 

ACREAGE PLAT

 

 

 

 

 

 

 

 

 

 

 

  

  

  

APPENDIX 9

 

(Attached to and made a part of Purchase and Sale Agreement between Esenjay Oil & Gas, Ltd., et al, and Condor Energy Technology LLC)

 

SCHEDULE OF LEASES REQUIRING CONSENT TO ASSIGNMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

APPENDIX 10

 

(Attached to and made a part of Purchase and Sale Agreement between Esenjay Oil & Gas, Ltd., et al, and Condor Energy Technology LLC)

 

SETTLEMENT AND RELEASE AGREEMENT

The Parties Agree To Enter Into A Mutually Acceptable Settlement And Release Agreementpedo_ex1049.htm

EXHIBIT 10.49

September 21, 2012

Via Electronic Mail (Schibi@epc-cc.com)

Esenjay Oil & Gas, Ltd.

500 N. Water Street, Suite 1100 South

Corpus Christi, Texas 78401

Attn:    Ms. Linda D. Schibi

             Vice President, Land

Email:   Schibi@epc-cc.com

 

	
Re:    

	
Amendatory Letter Agreement No. 1 

Purchase and Sale Agreement, dated July 26, 2012

Condor Niobrara Prospect

Morgan and Weld Counties, Colorado

Ladies and Gentlemen:

 

Reference is hereby made to that certain Purchase and Sale Agreement (the “Purchase Agreement”), dated July 26, 2012, by and among Esenjay Oil & Gas, Ltd. (“Esenjay”), Winn Exploration Co., Inc. (“Winn”), Lacy Properties, Ltd. (“Lacy”), Crain Energy, Ltd. (“Crain”), Ravco, Inc. (“Ravco”), Arentee Investments (“Arentee”), and Schibi Oil & Gas, Ltd. (“Schibi”), as Sellers, and Condor Energy Technology LLC (“CONDOR”), as Buyer. Esenjay, Winn, Lacy, Crain, Ravco, Arentee, Schibi and CONDOR are sometimes referred to herein collectively, as the “Parties” or individually, as a “Party.” This Amendatory Letter Agreement No. 1 (this “Amendment”) sets forth the terms and conditions of the agreement among the Parties with regard to the above-referenced matter. All capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Purchase Agreement.

 

The Parties desire to set the time at which Closing is to occur at 10:00 a.m. local time in Corpus Christi, Texas, on Monday, September 24, 2012, provided that each Party executes and delivers to Esenjay or CONDOR, as appropriate, a written certificate stating that all pre-Closing covenants and conditions precedent to Closing have been satisfied by such Party (electronic mail sufficient).

 

Due to Sellers Schibi, Ravco and Arentee being unable to make all of the necessary representations set out in the Purchase Agreement, their collective 1.25000% interest is being delivered to CONDOR by Esenjay, and the Parties desire to remove all references to Sellers Schibi, Ravco and Arentee from the Purchase Agreement.

 

The Parties further desire to amend and restate Appendix 2A, Appendix 2B, and Appendix 2C to reflect the final “Appendix 2A Leases,” “Appendix 2B Leases,” and “Appendix 2C Leases,” respectively, and corresponding Approved Net Leasehold Acres attributable to each.

 

  

  

  

 

The Parties desire to revise the Recitals, Section 1.2, and Section 1.3, based on the Approved Net Leasehold Acres.

 

The Parties further desire to amend the Purchase Agreement to revise Section 5.3 to provide that the “Sellers’ Retained Leases” referenced therein are to be scheduled on Appendix 2D, and to add Appendix 2D to the Purchase Agreement.

 

The Parties further desire to amend the definition of “Proportionate Share” included in Appendix 1 to the Purchase Agreement to correct an inadvertent scrivener’s error in such definition. The Parties desire to amend this definition to correct this error.

 

In consideration of the mutual premises and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

1. The Parties hereby agree that the Closing shall occur on Monday, September 24, 2012, provided that each Party executes and delivers to Esenjay or CONDOR, as appropriate, a written certificate stating that all pre-Closing covenants and conditions precedent to Closing have been satisfied by such Party (electronic mail sufficient).

 

2. The Parties hereby agree to revise the Purchase Agreement to remove all references to Sellers Schibi, Ravco and Arentee and acknowledge that Schibi, Ravco and Arentee’s collective 1.25000% interest will be delivered to CONDOR by Esenjay.

 

3. The Parties hereby agree to amend and restate each of Appendix 2A, Appendix 2B, and Appendix 2C as set forth on the new Appendix 2A, Appendix 2B, and Appendix 2C attached hereto, and agree and acknowledge that the “Approved Net Leasehold Acres” attributable to such appendices are as follows:

 

	
Appendix 2A

	 	 	1,818.45	 
	
Appendix 2B

	 	 	1,123.31	 
	
Appendix 2C

	 	 	640.00	 
	
TOTAL

	 	 	3,581.76	 

 

4. The Parties hereby amend Section 5.3 of the Purchase Agreement to provide that the “Sellers’ Retained Leases” referenced therein are scheduled on Appendix 2D as attached hereto.

 

5. The Parties hereby amend the definition of “Proportionate Share” set forth in Appendix 1 to the Purchase Agreement to read in its entirety as follows:

 

“Proportionate Share means the following shares attributable to each respective Seller: Esenjay, Sixty Percent (60.00%); Winn, Twenty-Five Percent (25%); Crain, Eleven and Twenty-Five Hundredths Percent (11.25%); and Lacy, Three and Seventy-Five Hundredths Percent (3.75%).”

6. The Parties hereby revise the Recitals to reflect the revised Appendix 2A and Appendix 2B acres as stated in Section 3 of this Amendment.  Specifically, the Recitals are amended by replacing “1823.51” with “1818.45” for the Appendix 2A acres, and by replacing “1031.00” with “1123.31” for the Appendix 2B acres.

 

7. The Parties hereby revise Section 1.2, the Purchase Price, to reflect the revised Appendix 2A and Appendix 2B acres as stated in Section 3 of this Amendment.  Specifically, Section 1.2 is amended by replacing “1,823.51” with “1,818.45” for the Appendix 2A acres, and by replacing “1,031.00” with “1,123.31” for the Appendix 2B acres.

 

  

2

  

 

8. The Parties hereby revise Section 1.3, the Closing, to reflect the revised Appendix 2A and Appendix 2B acres as stated in Section 3 of this Amendment.  Specifically, Section 1.3 is amended by replacing “1,823.51” with “1,818.45” for the Appendix 2A acres, and by replacing “1,031.00” with “1,123.31” for the Appendix 2B acres at all locations within the Section.

 

9. The Parties hereby revise Section 1.3(a)(2), the Equity at Closing, to reflect that the Stock Certificates will be delivered within ten (10) business days post-closing.

 

10. As amended hereby, the Purchase Agreement, as amended by Amendment No. 1, is in full force and effect, and valid and binding upon the Parties. In the event of a conflict between this Amendment and the Purchase Agreement, as amended, the terms and conditions of this Amendment shall control and govern the point in conflict. Notwithstanding anything to the contrary, failure of this Amendment to address a point in the Purchase Agreement, as amended, shall not be deemed to be a conflict.

 

11. Each Party hereby agrees that such Party shall execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such instruments and take such other action as may be reasonably necessary or advisable to carry out such Party’s obligations under this Amendment. All of the exhibits referred to in this Amendment are hereby incorporated by reference as if set forth in their entirety herein. This Amendment shall be binding upon and inure to the benefit of the Parties, and their respective successors and assigns. This Amendment may not be altered, or amended, nor any rights hereunder waived, except by an instrument in writing executed by the Party or Parties to be charged with such amendment or waiver. This Amendment may be executed in counterparts, and each counterpart shall be deemed to be an original, but all of which shall be deemed to be one amendment. This Amendment may be executed by telefax or electronic signatures, and telefax and electronic signatures shall be valid and binding upon the Parties.

 

Please execute this letter in the space provided below indicating your agreement with the above amendments to the Purchase Agreement and return the executed letter to the undersigned by fax or email at your earliest convenience.

 

  

3

  

 

Should you have any questions, please do not hesitate to contact me. Thank you for your prompt attention to this matter.

 

	 	
Sincerely,

	 
	 	 	 
	 	
Condor Energy Technology LLC

	 
	 	 	 	 
	 	
By: 

	
/s/ Clark R. Moore                                                      

	 
	 	 	Clark R. Moore	 
	 	 	
EVP and General Counsel

	 
	 	 	 	 

 

	 	
ACCEPTED AND AGREED

	 
	 	
this 23rd day of September, 2012

	 
	 	 	 
	 	
Esenjay Oil & Gas, Ltd.

	 
	 	 	 
	
 

	
By: 

	Esenjay Petroleum Corporation,	 
	 	 	
Its General Partner

	 
	 	 	 	 
	 	By:	
/s/ Linda D. Schibi                                                          

	 
	 	 	
Linda D. Schibi

	 
	 	 	
Vice President Land

	 

 

  

4

  

 

	
Winn Exploration Co., Inc.

	 	RAvco, Inc.	 
	 	 	 	 	 
	By:	

/s/ Michael W. Calley

	 	By:	

/s/ Richard Voss                                                      

	 
	Name:	

Michael W. Calley

	 	Name: 	

Richard Voss

	 
	Title:	

Vice President

	 	Title:	

President

	 
	 	 	 	 	 	 
	
Lacy Properties, Ltd.

	 	
Crain Energy, Ltd.

	 
	 	 	 	 	 	 
	By:	
Lacy Property Management, Inc.

	 	By:	Crain Oil & Gas, LLC	 
	 	
Its General Partner

	 	 	
Its General Partner

	 
	 	 	 	 	 	 
	By:	
/s/ Darren T. Groce

	 	By:	
/s/ Darren T. Groce

	 
	Name:	
Darren T. Groce

	 	Name:	
Darren T. Groce

	 
	Title:	
Interim President

	 	Title:	Interim President	 
	 	 	 	 	 	 
	
Schibi Oil & Gas, Ltd.

	 	
Arentee Investments

	 
	 	 	 	 	 	 
	By:	
/s/ Linda D. Schibi

	 	By:	
/s/ Ronald Johnson

	 
	Name:	
Linda D. Schibi

	 	Name:	
Ronald Johnson                                

	 
	Title: 	President	 	 	 	 
	 	 	 	By: 	
/s/ Tommy Champlin

	 
	 	 	 	Title:	
Tommy Champlin     

	 

Exhibits:

Appendix 2A

Appendix 2B

Appendix 2C

Appendix 2D

 

 5

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