Document:

10.1 - RPMG Corn Oil Agreement

Confidential Treatment Requested.  Confidential portions of this document have been redacted and have been separately filed with the Commission. 
*** Confidential material redacted and filed separately with the Commission.

CORN OIL MARKETING AGREEMENT
THIS CORN OIL MARKETING AGREEMENT (the “Agreement”) is made and entered into as of the 28th  day of July, 2011 (the “Effective Date”) by and between RPMG, INC., a Minnesota corporation (“RPMG”) and Homeland Energy Solutions, LLC, an Iowa limited liability company (“Producer”), collectively referred to hereinafter as “Parties” or individually as a “Party”.
RECITALS
		
	A.
	RPMG markets corn oil.

		
	B.
	Producer produces or shall produce corn oil at Producer's ethanol production facility located at Lawler, IA (the “Ethanol Facility”).

		
	C.
	The Parties do desire that RPMG shall market Corn oil produced at the Ethanol Facility.

NOW, THEREFORE, in consideration of the foregoing, the mutual promises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows.
AGREEMENT
1.    Marketing of Corn Oil.  Producer shall sell to RPMG, and RPMG shall purchase and market, all of Producer's production, of corn oil produced at the Ethanol Facility, including any expansion or increase in capacity at the Ethanol Facility.  RPMG shall be the exclusive marketer of corn oil and Producer shall not, either itself or through any affiliate or any third party, market any corn oil during the term of this Agreement.  Except as otherwise provided in this Agreement, RPMG shall provide management resources to market and sell corn oil, including the management of logistics and collection.
2.    Payments to Producer; Commissions; Audit Rights 
(a)    Payments to Producer.  Subject to the other terms of this Agreement, RPMG shall pay Producer for its corn oil in accordance with the terms set forth in Exhibit A.  RPMG shall use commercially reasonable efforts to make such payments to Producer on an average net ten (10) days.    
(b)    RPMG Commission.  Producer shall pay RPMG commissions as follows: $*** for each pound of corn oil sold to third party end purchasers (each, an “End Customer”).  Parties shall from time to time, or upon the reasonable request of RPMG, negotiate in good faith adjustments to the foregoing commissions.
(c)    Accessorial Charges.  As set forth on Exhibit A, RPMG shall be responsible for payment of Accessorial Charges (as defined in Exhibit A) to third parties; provided, however, that Producer agrees (i) to promptly reimburse RPMG for such Accessorial Charges upon submission to Producer of an invoice itemizing such Accessorial Charges, and (ii) that RPMG may deduct and setoff the Accessorial Charges from and against payments due to Producer by RPMG.   
(d)    Late Payments.  Overdue amounts not disputed in good faith payable to either Party shall be subject to late payment fees equal to interest accrued on such amounts at the maximum rate permitted by applicable law.
(e)    No Warranty as to Prices.  RPMG shall market Producer's corn oil using commercially reasonable efforts and the same standards it uses to market the corn oil production of third parties for whom RPMG provides corn oil marketing services.  RPMG shall endeavor to (i) 

maximize the corn oil price and minimize freight and other costs relevant to corn oil sales and (ii) achieve the best available return to Producer, subject to relevant market conditions.  Producer acknowledges that RPMG makes no representations, guarantees or warranties of any nature whatsoever as to the prices at which it SHALL be able to sell PRODUCER'S CORN OIL TO END CUSTOMERS.
(f)    Waiver of Certain Claims.  Producer acknowledges (i) that RPMG shall use its reasonable judgment in making decisions related to the quantity and price of corn oil marketed under this Agreement, in light of varying freight and other costs, and (ii) that RPMG may sell and market corn oil of third parties into the same markets where RPMG sells Producer's corn oil.  Producer waives any claim of conflict of interest against RPMG or for failure by RPMG to maximize the economic benefits of this Agreement for Producer in light of the foregoing. 
(g)    Audit Rights.  Within ninety (90) days following the end of RPMG's fiscal year end, Producer shall give written notice to RPMG of its desire to conduct an audit of its corn oil payments to Producer for the preceding fiscal year of RPMG and RPMG shall provide reasonable access to all financial information necessary to complete such audit. The audit shall be conducted by an accounting firm agreeable to both Parties and shall be completed within forty-five (45) days after the completion of RPMG's annual audit, but no later than one hundred and fifty (150) days following RPMG's fiscal year end.  The cost of the audit shall be the responsibility of Producer unless the auditor determines that RPMG underpaid Producer by more than $10,000 per one year audit period, in which case RPMG shall pay the cost of the audit.  If the auditor determines that RPMG underpaid Producer, RPMG shall promptly pay such underpayment to Producer and if the auditor determines that RPMG overpaid Producer, Producer shall promptly pay the overpayment to RPMG.  The determination of the auditor shall be final and binding on both Parties.  If Producer fails to exercise its right to audit as provided in this Section 2(g) for any year, it shall be deemed to have waived any rights to dispute payments made to Producer for that year.
3.    Scheduled Production 
(a)    Notice of First Delivery.  RPMG may begin to market Producer's corn oil upon the Effective Date.  If Producer is not producing corn oil as of the Effective Date, Producer shall, on the Effective Date, provide RPMG with the projected date on which Producer will first deliver corn oil produced at the Ethanol Facility to RPMG (the “Projected Date of First Delivery”).  Producer shall notify RPMG as soon as possible of any revisions to the Projected Date of First Delivery.  
(b)    Notices of Scheduled Production.  Beginning on the Effective Date, and on the 1st of each month thereafter, Producer shall provide to RPMG a rolling best estimate of production and inventory by corn oil product for that month and each of the following twelve (12) months.  Beginning on the Effective Date and each Wednesday thereafter, Producer shall provide to RPMG a best estimate of production and inventory by corn oil product for that day and the next seven days.  
(c)    Additional Production Notices.  Producer shall notify RPMG of anticipated production downtime or disruption in corn oil availability at least one (1) month in advance of such outage.  Producer shall timely inform RPMG of daily inventories, plant shutdowns, daily production projections, and any other information (i) to facilitate RPMG's performance of the Agreement or (ii) that may have a material adverse effect on RPMG's ability to perform the Agreement.
(d)    RPMG Entitled to Rely on Producer Estimates and Notices.  RPMG, in marketing and selling 

Producer's corn oil, is entitled to rely upon the production estimates and other notices provided by Producer, including without limitation those described in Sections 3(a), (b), and (c).  Producer's failure to provide accurate information to facilitate RPMG's performance of the Agreement may negatively impact RPMG's ability to market and sell corn oil at prevailing prices.  Producer's failure to provide accurate information to facilitate RPMG's performance of the Agreement may be deemed by RPMG, in its sole but reasonable discretion, a material breach of the Agreement by Producer.
(e)    Sale Commitments.  From time to time during the term of this Agreement, with prior written or e-mail confirmed agreement with Producer, RPMG may enter sales contracts or other agreements with End Customers and/or other third parties for delivery of corn oil beyond sixty (60) days. In the event Producer fails to produce corn oil in accordance with the information provided to RPMG under Sections 3(a), (b), or (c) above for reasons other than Force Majeure (as defined in Section 10 herein), and as a result RPMG is required to purchase corn oil from third parties to meet previous corn oil sale commitments that are based upon such information, RPMG may charge Producer the amount (if any) that the price of such replacement corn oil exceeded the price that RPMG would have paid to Producer for the applicable corn oil under this Agreement.
4.    Logistics and Transportation
(a)    No Liens, Title and Risk of Loss.  Producer warrants that corn oil delivered to RPMG at the time title transfer to RPMG shall be free and clear of all liens and encumbrances of any nature whatsoever other than liens in favor of RPMG.  Title to and risk of loss of each load of corn oil shall pass to RPMG at the time such load passes across the scale into rail cars or trucks at the Ethanol Facility (the “Title Transfer Point”).  Until such time, Producer shall be deemed to be in control of and in possession of the corn oil.  
(b)    Loading.  RPMG shall schedule the loading and shipping of all outbound corn oil purchased hereunder, but all labor and equipment necessary to load trucks and rail cars and other associated costs shall be supplied and borne by Producer without charge to RPMG.  Producer shall handle the corn oil in a good and workmanlike manner in accordance with RPMG's written requirements and normal industry practice.  Producer shall maintain the truck and rail loading facilities in safe operating condition in accordance with normal industry standards and shall visually inspect all trucks and rail cars to assure cleanliness so as to avoid contamination, and RPMG and RPMG's agents shall have adequate access to the Ethanol Facility to load Producer's corn oil on an industry standard basis that allows RPMG to economically market Producer's corn oil. RPMG's employees shall follow all reasonable safety rules and procedures promulgated by Producer and provided to RPMG reasonably in advance and in writing.  Producer shall supply product description tags, certificates of analysis, bills of lading and/or material safety data sheets that are applicable to all shipments.  In the event that Producer fails to provide the labor, equipment and facilities necessary to meet Mutually agreed upon loading schedule, Producer shall be responsible for all costs and expenses, including without limitation actual demurrage and wait time, incurred by RPMG resulting from or arising in connection with Producer's failure to do so.  
(c)    Transportation and Certain Transportation Costs.  RPMG shall perform certain logistics functions for Producer, including the arranging of rail and truck freight, inventory management, contract management, bills of lading, and scheduling pick-up appointments.  RPMG shall determine the method of transporting corn oil to End Customers.  Notwithstanding any provision to the contrary herein, Producer shall be solely responsible for any damage to 

*** Confidential material redacted and filed separately with the Commission.

any trucks, railcars, equipment, or vessels caused by acts or omissions of Producer and its consignees.  All truck freight charges and rail tariff rate charges shall be billed directly to RPMG and, as set forth in Exhibit A, be recouped by RPMG from the proceeds of RPMG's sales of corn oil to End Customers.  Notwithstanding the foregoing, rail cars required to transport the corn oil will be leased directly by Producer.  If requested in writing by Producer, RPMG will make lease payments for such rail cars on behalf of Producer, and in such event RPMG shall recoup lease payments from the proceeds of RPMG's sales of corn oil to End Customers. 
(d)    Weight.  The quantity of corn oil delivered to RPMG at the Ethanol Facility shall be established by weight certificates obtained from Producer's scales or from such other scales as the Parties shall mutually agree, which are certified as of the time of weighing and which comply with all applicable laws, rules and regulations. Producer shall provide RPMG with a fax/emailed copy of the outbound weight certificates on a daily basis and, except as otherwise expressly agreed upon, such outbound weight certificates shall be determinative of the quantity of corn oil for which RPMG is obligated to pay Producer pursuant to this Agreement. 
(e)    Corn oil Storage at Ethanol Facility.  The estimated storage capacity of the Ethanol Facility, is as follows: 
Corn Oil *** gallons
5.    Specifications; Quality.  
(a)    Corn oil Specifications.  Producer covenants that it shall produce corn oil that, upon delivery to RPMG at the Ethanol Facility, meets the respective specifications (“Specifications”) set forth in Exhibit B and such other specifications that may be, from time-to-time, promulgated by the industry for corn oil.   RPMG shall have the right to test each shipment of corn oil to ascertain that the Specifications are being met.  If the corn oil provided by Producer to RPMG is shown, by independent testing or analysis of a representative sample or samples taken consistent with industry standards, to not meet the Specifications through no fault of RPMG or any third party engaged by RPMG, then RPMG may, in its sole discretion, (i) reject such corn oil and require Producer to promptly replace such non-conforming corn oil with corn oil that complies with the Specifications, or (ii) accept such corn oil for marketing and, if necessary, adjust the price to reflect the inferior quality.  Payment and acceptance of delivery by RPMG shall not waive RPMG's rights if corn oil does not comply with the terms of this Agreement, including the Specifications.
(b)    Trade Rules.  This Agreement shall be governed by the then-current Feed Trade Rules of the National Grain and Feed Association (the “Trade Rules”), unless otherwise specified.  In the event the Trade Rules and the terms and conditions of this Agreement conflict, this Agreement shall control.
(c)    Compliance With FDA and Other Standards.  Producer warrants that, unless caused by the negligence or intentional misconduct of RPMG or a third party engaged by RPMG, corn oil provided by Producer to RPMG (i) shall not be “adulterated” or “misbranded” within the meaning of the Federal Food, Drug and Cosmetic Act (the “Act”), (ii) may lawfully be introduced into interstate commerce under the Act, and (iii) shall comply with all state and federal laws, rules and regulations (including without limitation the Trade Rules) including those governing quality, naming and labeling of bulk product.  If Producer knows or reasonably suspects that any corn oil produced at the Ethanol Facility is adulterated or misbranded, or otherwise not in compliance with the terms of the Agreement, Producer shall immediately so 

notify RPMG in writing.  
(d)    Regulatory Seizure.  Should any corn oil provided by Producer to RPMG hereunder be seized or condemned by any federal or state department or agency as a result of its failure to conform to any applicable law, rule or regulation prior to delivery to an End Customer, such seizure or condemnation shall operate as a rejection by RPMG of the goods seized or condemned and RPMG shall not be obligated to offer any defense in connection with such seizure or condemnation.  When such rejection occurs, RPMG shall deliver written notice to Producer within a reasonable time of the rejection and identify the deficiency that resulted in such rejection.  In addition to other obligations under this Agreement or at law, Producer shall reimburse RPMG for all out-of-pocket costs reasonably incurred by RPMG in storing, transporting, returning and disposing of the rejected goods in accordance with this Agreement. 
(e)    Sampling.  Producer shall take one representative origin sample (pint size) from each lot of the corn oil before it leaves the Ethanol Facility (each, a “Sample”).  RPMG shall be entitled to witness the taking of Sample.   Producer shall label Sample to indicate the applicable corn oil lot numbers, date of shipment, and the truck or railcar number.    Producer shall send half of Sample to RPMG promptly upon RPMG's request.  Producer may request that RPMG test results be provided to it at any time after the tests are completed.  Producer shall retain corn oil Sample for no less than three (3) months or any longer period required by law RPMG knows or reasonably suspects that any corn oil produced by Producer at the Ethanol Facility is not in compliance with the terms of this Agreement, then RPMG may obtain independent laboratory tests of such corn oil, and, if such corn oil is found not to be in compliance with the terms of this Agreement, Producer shall, in addition to its other obligations hereunder, pay all such testing costs.
6.    Term and Termination  
(a)    Term.  This Agreement shall have an initial term of 12 months, commencing on the Effective Date.  This Agreement shall be automatically extended for an additional one (1) year term following the end of the initial term and any renewal term unless either Party gives written notice to the other of non-extension not less than ninety (90) days before the termination of the initial term or the then-current renewal term.  
(b)    Producer Termination Right.  Producer may immediately terminate this Agreement upon written notice to RPMG if RPMG fails on three (3) separate occasions within any 12-month period to purchase corn oil or to market corn oil under circumstances where such breach or failure is not excused by this Agreement.    
(c)    RPMG Termination Right.  RPMG may immediately terminate this Agreement upon written notice to Producer, if, for reasons other than a Force Majeure (as defined in Section 10 herein) event, during any consecutive three (3) months, Producer's actual production or inventory of any corn oil product at the Ethanol Facility varies by twenty-five percent (25%) or more from the monthly production and inventory estimates provided by Producer to RPMG pursuant to Section 3(b) hereunder.
(d)    Termination for Insolvency.  Either Party may immediately terminate the Agreement upon written notice to the other Party if the other Party files a voluntary petition in bankruptcy, has filed against it an involuntary petition in bankruptcy, makes an assignment for the benefit of creditors, has a trustee or receiver appointed for any or all of its assets, is insolvent or fails or is generally unable to pay its debts when due, in each case where such petition, appointment or insolvency is not dismissed, discharged or remedied, as applicable, within thirty (30) days.

7.    Indemnification; Limitation on Liability
(a)    Producer's Indemnification Obligation.  Producer shall indemnify, defend and hold harmless RPMG and its shareholders, directors, officers, employees, agents and representatives, from and against any and all Damage (as defined in Section 7(c) herein) to the extent arising out of (i) any fraud, negligence or willful misconduct of Producer or any of its directors/governors, officers, employees, agents, representatives or contractors or (ii) any breach of this Agreement by Producer.  RPMG shall promptly notify Producer of any suit, proceeding, action or claim for which Producer may have liability pursuant to this Section 7(a).
(b)    RPMG's Indemnification Obligation.  RPMG shall indemnify, defend and hold harmless Producer and its shareholders/members, directors/governors, officers, employees, agents and representatives from and against any and all Damages to the extent arising out of (i) any fraud, negligence or willful misconduct of RPMG or any of its directors, officers, employees, agents, representatives or contractors or (ii) any breach of this Agreement by RPMG.  Producer shall promptly notify RPMG of any suit, proceeding, action or claim for which Producer may have liability pursuant to this Section 7(b).
(c)    Definition of Damages.  As used in this Agreement, the capitalized term “Damages” means any and all losses, costs, damages, expenses, obligations, injuries, liabilities, insurance deductibles and excesses, claims, proceedings, actions, causes of action, demands, deficiencies, lawsuits, judgments or awards, fines, penalties and interest, including reasonable attorneys' fees, but excluding any indirect, incidental, special, exemplary, consequential or punitive damages.
(d)    Limitation on Liability.  Neither Party makes any guarantee, warranty or representation, express or implied, with respect to any profit, or of any particular economic results from transactions hereunder.    EXCEPTING FOR A BREACH OF ITS NONDISCLOSURE OBLIGATIONS OR PERFORMANCE OF ITS INDEMNIFICATION OBLIGATIONS HEREUNDER, RPMG'S AGGREGATE LIABILITY TO PRODUCER SHALL IN NO EVENT EXCEED THE AMOUNT PAID BY PRODUCER TO RPMG UNDER THIS AGREEMENT.
8.    Insurance.  During the term of this Agreement, each party shall maintain insurance coverage that is standard for a company of its type and size that is engaged in the production and/or selling of corn oil.  At a minimum, each party's insurance coverage shall include:  (i) comprehensive general product and public liability insurance, with liability limits of at least $5 million in the aggregate; (ii) property and casualty insurance adequately insuring its facilities and its other assets against theft, damage and destruction on a replacement cost basis; and (iii) workers' compensation insurance to the extent required by law.  RPMG, or Producer, as the case may be, shall be added as a loss payee under the comprehensive general product and public liability insurance policy and the property and casualty insurance policy.  In relation to insurance requirements on the corn oil leased railcars, (a) the Producer will be responsible for the liability insurance on the corn oil leased railcars in the form and amount as required by the railcar lessor's contract, or at a minimum in the amounts required by this Article 8 and (b) RPMG will carry property/physical damage insurance for the corn oil railcars for loss or destruction, but will not be responsible for the insurance deductible, maintenances (scheduled or otherwise), including normal wear and tear related to such corn oil railcars.  The Producer will be listed as a Loss Payee on RPMG's Rolling Stock Policy in relation to the corn oil leased railcars.  A party shall not change its insurance coverage during the term of this Agreement, except to increase it or enhance it, without the prior written consent of the other Party which consent shall not be 

unreasonably withheld.
9.    Confidentiality
(a)    Confidential Information.  As used in this Agreement, the capitalized term “Confidential Information” means (i) the terms and conditions of this Agreement and (ii) any information disclosed by one Party to the other, including, without limitation, trade secrets, strategies, marketing and/or development plans, End Customer lists and other End Customer information, prospective End Customer lists and other prospective End Customer information, vendor lists and other vendor information, pricing information, financial information, production or inventory information, and/or other information with respect to the operation of its business and assets, in whatever form or medium provided.
(b)    Nondisclosure.  Each Party shall maintain all Confidential Information of the other in trust and confidence and shall not without the prior written consent of the other Party:
(i)      disclose, disseminate or publish Confidential Information to any person or entity without the prior written consent of the disclosing Party, except to employees of the receiving Party who have a need to know, who have been informed of the receiving Party's obligations hereunder, and who have agreed not to disclose Confidential Information or to use Confidential Information except as permitted herein, or 
(ii)      use Confidential Information for any purpose other than the performance of its obligations under the Agreement.
(c)    Standard of Care.  The receiving Party shall protect the Confidential Information of the disclosing Party from inadvertent disclosure with the same level of care (but in no event less than reasonable care) with which the receiving Party protects its own Confidential Information from inadvertent disclosure. 
(d)    Exceptions.  The receiving Party shall have no obligation under this Agreement to maintain in confidence any information which it can prove:
(i)      is in the public domain at the time of disclosure or subsequently becomes part of the public domain through no act or failure to act on the part of the receiving Party or persons or entities to whom the receiving Party has disclosed such information; 
(ii)     is in the possession of the receiving Party prior to the time of disclosure by the disclosing Party and is not subject to any duty of confidentiality; 
(iii)      the receiving Party obtains from any third party not under any obligation to keep such information confidential; or
(iv)      the receiving Party is compelled to disclose or deliver in response to a law, regulation, or governmental or court order (to the least extent necessary to comply with such order), provided that the receiving Party notifies the disclosing Party promptly after receiving such order to give the disclosing Party sufficient time to contest such order and/or to seek a protective order.
(e)    Ownership of Confidential Information.  All Confidential Information shall remain the exclusive property of the disclosing Party.
(f)     Injunctive Relief for Breach.  The receiving Party acknowledges that monetary damages may not be a sufficient remedy for unauthorized disclosure or use of Confidential Information, and that the disclosing Party may be entitled, in addition to all other rights or remedies in law and equity, to obtain injunctive or other equitable relief, without the necessity of posting bond 

in connection therewith.
10.    Force Majeure.  In the event either Party is unable by Force Majeure (as defined below) to carry out its obligations under this Agreement, it is agreed that on such Party's giving notice in writing, or by telephone and confirmed in writing, to the other Party as soon as possible after the commencement of such Force Majeure event, the obligations of the Party giving such notice, so far as and to the extent they are affected by such Force Majeure, shall be suspended from the commencement of such Force Majeure and during the remaining period of such Force Majeure, but for no longer period, and such Force Majeure shall so far as possible be remedied with all reasonable dispatch; provided, however, the obligation to make payments then accrued hereunder prior to the occurrence of such Force Majeure shall not be suspended and Producer shall remain obligated for any loss or expense to the extent otherwise provided in this Agreement.  The capitalized term “Force Majeure” as used in this Agreement shall mean events beyond the reasonable control and without the fault of the Party claiming Force Majeure, including acts of God, war, riots, insurrections, laws, proclamations, regulations, strikes of a regional or national nature, acts of terrorism, sabotage, and acts of any government body.
11.    Dispute Resolution.  In the event a dispute arises under this Agreement that cannot be resolved by those with direct responsibility for the matter in dispute, such dispute shall be resolved by way of the following process:
(a)    Senior management from Producer and from RPMG shall meet to discuss the basis for the dispute and shall use their best efforts to reach a reasonable resolution to the dispute.  
(b)    If negotiations pursuant to Section 11(a) are unsuccessful, the matter shall promptly be submitted by either Party to arbitration in accordance with NGFA® ARBITRATION OF DISPUTES: The parties to this contract agree that the sole remedy for resolution of any and all disagreements or disputes arising under or related to this contract shall be through arbitration proceedings before the National Grain and Feed Association (NGFA) pursuant to the NGFA® Arbitration Rules. The decision and award determined through such arbitration shall be final and binding upon the Buyer and Seller.  Judgment upon the arbitration award may be entered and enforced in any court having jurisdiction thereof. (Copies of the NGFA® Arbitration Rules are available from the National Grain and Feed Association, 1250 Eye Street, N.W., Suite 1003, Washington, D.C. 20005; Telephone: 202-289-0873; Website: http://www.ngfa.org). If the Parties reach agreement pertaining to any dispute pursuant to the procedures set forth in this Section 11, such agreement shall be reduced to writing, signed by authorized representatives of each Party, and shall be final and binding upon the Parties.
12.    Miscellaneous.  
(a)    Successors and Assigns; Assignment.  All of the terms, covenants, and conditions of this Agreement shall be binding upon, and inure to the benefit of and be enforceable by the Parties and their respective successors, heirs, executors and permitted assigns.  No Party may assign its rights, duties or obligations under this Agreement to any other person or entity without the prior written consent of the other Party, such consent not to be unreasonably withheld or delayed; notwithstanding the foregoing, a Party may, without the consent of the other Party, assign its rights and obligations under this Agreement to (i) its parent, a subsidiary, or affiliate under common control with the Party or (ii) a third party acquiring all or substantially all of the assets or business of such Party.  
(b)    Notices.  Any notice or other communication required or permitted hereunder shall be in writing and shall be considered delivered in all respects when delivered by hand, mailed by 

first class mail postage prepaid, or sent by facsimile with delivery confirmed, addressed as follows: 
To RPMG:    RPMG, Inc.
1157 Valley Park Drive, Suite 100
Shakopee, MN 55379
Fax: 952-465-3222

To Producer:    Homeland Energy Solutions, LLC
Attn:  President
2779 Hwy 24
Lawler, IA 52154
Fax: 563-238-5557

Either Party may, from time to time, furnish, in writing, to the other Party, notice of a change in the address and/or fax number(s) to which notices are to be given hereunder.
(c)    Applicable Law.  This Agreement shall be governed in all respects by the laws of the State of Minnesota, except with respect to its choice of law provisions.  
(d)    Severability.  In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, either in whole or in part, this Agreement shall continue in full force and effect without said provision.
(e)    No Third Party Beneficiaries.  No provision of this Agreement is intended, or shall be construed, to be for the benefit of any third party.
(f)    Entire Agreement; Amendment.  This Agreement constitutes the entire understanding and agreement between the Parties with respect to the subject matter hereof, and supersedes all prior and contemporaneous understandings and/or agreements, written or oral, regarding the subject matter of this Agreement.  No amendment or modification to this Agreement shall be binding unless in writing and signed by a duly authorized officer of both Parties.
(g)    Counterparts.  This Agreement may be executed in counterparts, including facsimile counterparts, each of which shall be deemed an original but together shall constitute but one and the same instrument.
(h)    Waiver.  The failure of either Party at any time to require performance of any provision of the Agreement or to exercise any right provided for in the Agreement shall not be deemed a waiver of such provision or right unless made in writing and executed by the Party waiving such performance or right. No waiver by either Party of any breach of any provision of the Agreement or of any right provided for in the Agreement shall be construed as a waiver of any continuing or succeeding breach of such provision or right or a waiver of the provision or right itself.
(i)    Independent Contractors.  The Parties to this Agreement are independent contractors. There is no relationship of partnership, joint venture, employment, franchise, or agency between the Parties, and no Party shall make any representation to the contrary.  
(j)    Additional Rules of Interpretation.
(i)    The words “include,” “includes” and “including” as used in this Agreement shall be deemed to be followed by the phrase “without limitation” and shall not be construed to mean that the examples given are an exclusive list of the topics covered.
(ii)    The headings as to contents of particular sections of this Agreement are inserted for 

convenience and shall not be construed as part of the Agreement or as a limitation on the scope of any terms or provisions of this Agreement.
(k)    Survival.  The following provisions of this Agreement shall survive its termination: (i) to the extent of outstanding payment obligations, Sections 2(a), 2(b), 2(c), and 2(d) and (ii) Sections 2(e), 2(f), 7, 9, 11, and 12. 
IN WITNESS THEREOF, each of the Parties hereto has caused this Agreement to be executed by its respective duly authorized representative as of the day and year first above written.  

RPMG:
RPMG, INC.

By:     /s/  Steve L. Dietz        
Name:        Steve Dietz                
Its (title):   COO                

PRODUCER:
HOMELAND ENERGY SOLUTIONS, LLC

By:     /s/  Walter Wendland            
Name:     Walter Wendland        
Its (title): President/CEO                

*** Confidential material redacted and filed separately with the Commission.

EXHIBIT  A
Terms Relating to Payment and Commission Calculation
RPMG shall pay Producer for all Standard-Grade and Non-Standard Grade non food grade corn oil loaded into railcars and trucks and weighed at the Ethanol Facility for shipment to End Customers an amount equal to *** percent (***%) of the estimated F.O.B. Ethanol Facility Price per pound, with RPMG being entitled to retain its commission, with settlement weights as described in Section 4(d) of the Agreement. After month-end is completed and any differences will be reconciled, RPMG will make the final payment to the Producer for corn oil shipped during the month.

“Accessorial Charges” shall mean charges imposed by third parties for the off-loading, movement and storage of Producer's corn oil, including without limitation taxes, tonnage taxes, hard-to-unload truck or railcar charges/transloading charges, railcar repair charges, fuel surcharges, storage charges, demurrage charges, product shrinkage, detention charges, switching, and weighing charges (but excluding Tariff Freight Costs).  Neither Party shall be responsible for demurrage charges caused solely by the negligence or willful misconduct of the other Party.
“Delivered Sale Price” shall mean sales dollars received by RPMG for Producer's corn oil, inclusive of tariff freight, as evidenced by RPMG's invoices to End Customers.
“F.O.B. Ethanol Facility Price” shall mean the F.O.B. sale price equivalent net of applicable deductions and costs as described in this Agreement, including without limitation Accessorial Charges and Tariff Freight Costs (or, if applicable, the Delivered Sales Price net of applicable deductions and costs as described in this Agreement, including without limitation Accessorial Charges and Tariff Freight Costs) that RPMG invoices End Customers.
“Tariff Freight Costs” shall mean freight and related costs incurred by RPMG to transport Producer's corn oil.
“Standard-Grade” shall mean corn oil that meet the Specifications set forth in this Agreement.
“Non-Standard-Grade” shall mean corn oil that fail to meet the Specifications set forth in this Agreement, but which RPMG nonetheless accepts for marketing under this Agreement.

*** Confidential material redacted and filed separately with the Commission.

EXHIBIT B
Corn Oil Specifications
Producer covenants that all corn oil shall, upon delivery to RPMG at the Ethanol Facility, conform to the following Specification:
	
			
	Component
	    Maximum %
	Minimum %

	Moisture; wt%
	***%
	 

	Impurities; wt%
	***%
	 

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	***ex-10_1.htm

Exhibit 10.1

 

PURCHASE AND SALE AGREEMENT

BETWEEN

GFX ENERGY, INC.

AS SELLER

AND

EAGLE FORD OIL & GAS, CORP.

AS BUYER

Dated Effective July 1, 2011

  

  

  

 

EXHIBITS AND SCHEDULES

 

	
 

	 A 	Lease Schedule
	  	
A-1

	
Allocation of Value

	  	
B

	
Assignment and Bill of Sale

	  	
C

	
Bayou Choctaw Participation Agreement

	  	
D

	
Joint Operating Agreement

	  	
Schedule 4.2

	Claims and Litigation

 

  

1

  

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT is dated the 1st day of July, 2011, by and between GFX Energy, Inc. with a mailing address of 1811 Bering Drive, Suite 400, Houston, Texas, 77057 (hereinafter referred to as "Seller") and Eagle Ford Oil & Gas, Corp., a Nevada corporation with a mailing address of 1110 Nasa Parkway, Suite 311, Houston, Texas, 77058 (hereinafter referred to as "Buyer"), and is based on the following premises:

 

WHEREAS, Seller desires to sell, assign, and convey to Buyer and Buyer desires to purchase and accept an undivided 1.5% interest in and to the leases set forth on Exhibit “A” attached hereto and made a part hereof, and

WHEREAS, the parties have reached agreement regarding such purchase and sale,

WHEREAS, the Properties (as hereinafter defined) are subject to the Bayou Choctaw Participation (the “Participation Agreement”) attached hereto and made a part hereof as Exhibit C and the Joint Operating Agreement (the “JOA”) attached hereto and made a part hereof as Exhibit D.

NOW, THEREFORE, for valuable consideration and the mutual covenants and agreements herein contained, Seller and Buyer agree as follows:

ARTICLE I

TRANSFER OF THE PROPERTIES

1.1       Sale and Purchase:  Upon the terms and conditions hereinafter set forth, Seller agrees to sell, assign, and convey to Buyer and Buyer agrees to buy and accept from Seller, all of Seller's right, title, and interest in and to the leases and lands, whether contractually owned and not yet conveyed pursuant to recorded and unrecorded agreements or actually conveyed, described on Exhibit A attached and made a part hereof and contracts and agreements to the extent related thereto, subject to any reservations, exclusions or limitations described on Exhibit A, said rights and interests being hereinafter referred to as the "Properties."

1.2       Purchase Price:  The total purchase price (hereinafter referred to as the "Purchase Price") to be paid to Seller for the Properties by Buyer shall be One Hundred Thousand Dollars ($100,000.00) plus seventy-five percent (75%) of all costs paid and incurred by Seller pursuant to the Participation Agreement and the JOA prior to the Effective Date except the Prospect Origination and Development Budget set forth in Article X of the Participation Agreement (the “Additional Costs”).

1.3       Post Closing Purchase Price Adjustments: Within ninety days following the Closing, Seller will notify Buyer of any Additional Costs not paid by Buyer at Closing.  Buyer will pay all such Additional Costs within fifteen days of notice.  Within ninety days following the Closing, Buyer will notify Seller of any adjustments due pursuant to Section 2.3 hereof.  If such Purchase Price adjustments are positive, Buyer will accompany its notice to Seller with payment therefor.  If such Purchase Price adjustments are negative, Seller shall make payment to Buyer for such Purchase Price adjustments within fifteen days of its receipt of Buyer’s notice.

 

  

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1.4       Closing:  On the Closing Date, which shall be on or before 5pm Houston, Texas Time, August 5, 2011 or such date and time as agreed to (the "Closing Date"), Buyer shall tender the Purchase Price by certified funds, cashier's check or by wire transfer to an account number to be designated by Seller at or prior to Closing.  The Closing will be held at the offices of Buyer or at any other mutually acceptable location.

1.5       Effective Time:  The effective time of this purchase and sale of the Properties will be at 12:01 a.m., July 1, 2011 Houston, Texas time (the "Effective Time").

1.6       Form of Assignment:  The assignment from Seller to Buyer or it’s nominee shall be in substantially the form and content shown in the Assignment of Oil and Gas Interests attached as Exhibit "B" and made a part hereof (the "Assignment") to be modified only to the extent necessary to comply with these terms and conditions.  If any Properties are erroneously described in the Assignment, the description will be corrected upon proof of the properties' description.

ARTICLE II

TITLE AND INSPECTION

2.1       Inspection of Files:  Seller, upon reasonable notice from Buyer, shall make available during Seller's regular business hours at Seller's offices, for examination and reproduction by Buyer's authorized representatives, at Buyer's expense, documents in Seller's possession relating or in any way pertaining to the Properties, except any docu­ments that are covered by non-disclosure obligations to third parties, interpretive data, and/or documents reflecting Seller's valuation of the Properties.  Buyer shall have the right to copy, at Buyer's sole expense, any of such information.  All such information shall be maintained confidential by Buyer until Closing.

2.2       Title Defects:  Title defects shall refer to those defects or irregularities that (a) would cause Buyer to receive less than the net revenue interest (NRI) set forth on Exhibit A-1; or (b) create a lien or encumbrance on any portion of the Properties.

Title defects shall not mean defects or irregularities in the title to the Properties that do not interfere with the operation, value or use of the Properties (or portion thereof) affected thereby and that would not be considered material in accordance with industry standards, including but not limited to the following "Permitted Encumbrances":

 lessors' royalties, overriding royalties, net profits interests, production payments, reversionary interests and similar burdens if the net cumulative effect of such burdens does not operate to reduce the NRI for the formation upon which an allocated value has been established as set forth in Exhibit A-1;

 any preferential rights to purchase and required third party consents to assignments of contracts or property and similar agreements;

 liens for taxes or assessments not yet due and delinquent or, if delinquent, that are being contested in good faith in the normal course of business;

 rights of reassignment upon the surrender or expiration of any lease;

 

  

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easements, rights-of-way, servitudes, permits, surface leases and other rights with respect to surface operations, on, over or in respect of any of the properties or any restriction on access thereto that do not materially interfere with the operation of the affected asset as has been conducted in the past;

such title defects which have been cured or Buyer has waived;

materialmen's, mechanics', repairmen's, employees', contractors', operators' or other similar liens or charges arising in the ordinary course of business incidental to construction, maintenance or operation of the Properties (i) if such liens and charges have not been filed pursuant to law and the time for filing such liens and charges has expired, (ii) if filed, such liens and charges have not yet become due and payable or payment is being withheld as provided by law, or (iii) if their validity is being contested in good faith by appropriate action;

rights reserved to or vested in any federal, state, local, tribal or foreign governmental body, authority or agency to control or regulate any of the Properties in any manner; and all applicable laws, rules, regulations and orders of general applicability in the area of the Properties;

liens arising under operating agreements, unitization and pooling agreements and production sales contracts securing amounts not yet delinquent or, if delinquent, being contested in good faith in the ordinary course of business;

all calls on or preferential rights to purchase production at a price (adjusted for quality, transportation and location) no less than average area spot prices with respect to gas;

the litigation and claims listed on Schedule 4.2;

all documents and matters of record as of the Effective Time, unless the document or matter has properly been identified as a title defect in a title defect notice pursuant to Section 2.4; and

 

As to any undeveloped properties, routine title curative matters expected to be encountered in a non-producing property in the area and that are customarily cured in the normal course of development of non-producing properties without material expense and not reasonably anticipated to cause a material impairment of Buyer’s ability to develop the interest in question.

2.3       Title Defects Notice and Adjustments:  Within the time set forth in Section 1.3, Buyer shall provide Seller with a notice of title defects stating its objections, if any, to the title.  Seller may undertake to satisfy some, all, or none of Buyer's title objec­tions, at Seller's sole cost and expense.  All title defects not made known to Seller by Buyer within the time provided shall be deemed to be waived by Buyer.  Buyer shall remain obligated to purchase any and all interests not affected by title defects.  If any portion of the Properties is the subject of a title defect notice from Buyer, and such Property has not been given an allocated value on Exhibit A-1 or has been given a value of zero, there shall be no adjustment to the Purchase Price.

 

  

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2.4       Additions to Seller's Interest:  If during the period set forth in Section 1.3, it is discovered by Buyer or Seller that Seller's actual net revenue interest is greater than that described on Exhibit A-1 or less than the net revenue interest on Exhibit A-1, then the value of any property subject to such interest addition or title defect shall be adjusted on a pro rata basis.  The sum of any interest additions shall be netted against the sum of all title defects.

2.5       Adjustments to Purchase Price:  All adjustments to the Purchase Price pursuant to this Article II shall be made by final negotiation between Seller and Buyer.

2.6       Files and Records:  Within two (2) weeks after Closing or as soon thereafter as practicable, and at Buyer's expense, Seller shall furnish to Buyer all records relating to the Properties and maintained by Seller, except those merely incidental thereto, interpretive data, any valuation of the Properties, and any information covered by non-disclosure obligations.  Seller may retain copies of such records and may review and copy records during business hours upon reasonable notice to Buyer.

ARTICLE III

LETTERS IN LIEU

3.1       Letters-in-Lieu:  At Closing, Seller shall have executed documents necessary to effect change of ownership such as letters-in-lieu of division orders or transfer orders to each purchaser of production for the Properties, instructing each to make payments for all purchases accruing after the end of the month in which Closing occurs directly to Buyer.

ARTICLE IV

ASSUMPTION OF OBLIGATIONS

4.1       Indemnities

(a)   Indemnification of Seller:  Buyer shall release Seller from and shall fully protect, indemnify, and defend Seller, its officers, directors, agents and/or employees and hold them harmless from any and all claims, losses, damages, demands, suits, causes of action, and liabilities (including attorneys' fees, costs of litigation and/or investigation and costs associated therewith) (collectively referred to hereafter as "Claims") relating to injury or death of any person or persons, and/or damage to or loss of any Properties or resources, except as specifically provided otherwise in Section 4.1(b), below, arising out of, or connected, directly or indirectly with the ownership or operation of the Properties, or any part thereof, pertaining to the period subsequent to the Closing Date; and/or Claims arising out of or connected with the presence of Buyer and/or its representatives on the Properties or at the offices of Seller or Seller's agents at any time in connection with this purchase and sale transaction.  The indemnity obligation provided herein shall apply regardless of cause or of any negligent acts or omissions of Seller, its officers, directors, agents and/or employees.

 

  

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(b)   Buyer's Assumption of Obligations:  Except as stated in Section 4.2, below, Buyer assumes and shall timely perform and discharge all duties and obligations of the owner of the Properties attributable to its acquired interest as set forth in the Participation Agreement and JOA except those duties and obligations set forth in Article X of the Participation Agreement before and after the Effective Time, including, but not limited to: restoration of the surface, environmental and pollution cleanup, plugging and abandonment of any and all existing and future wells; and Seller shall incur no liability for Buyer's failure to properly perform and discharge such duties and obligations.  Buyer shall fully protect, indemnify, defend and hold Seller, its officers, directors, agents and/or employees harmless against any and all Claims for pollution and/or environmental damage of any kind, any fines or penalties assessed on account of such damage, caused by, arising out of, or in any way incidental to ownership or operations conducted on the Properties, if such Claims are asserted subsequent to the Effective Time, regardless of when the act or omission giving rise thereto occurred and regardless of whether or not arising from, incidental to or the result of Seller’s negligence or fault, or whether or not any liability is imposed upon Seller as a result of any statute, rule or regulation or theory of strict liability of Seller, its officers, directors, agents or employees, including without limitation liability under the Comprehensive Environmental Recovery, Compensation and Liability Act, 42 U.S.C. §9601, et seq.

(c)   Buyer's Due Diligence:  SELLER DOES NOT WARRANT OR REPRESENT THE ACCURACY OR COMPLETENESS OF FILES, CONTRACTS OR ANY OTHER INFORMATION RELATING TO THE PROPERTIES, QUANTITY OR QUALITY OF RESERVES, IF ANY, OR ABILITY TO PRODUCE HYDROCARBONS FROM THE PROPERTIES, WHICH WERE FURNISHED TO BUYER IN CONNECTION WITH THIS ASSIGNMENT, AND BUYER RELIES THEREON AT BUYER'S SOLE RISK AND EXPENSE.  Seller makes this conveyance based upon the representation that Buyer has conducted due diligence and has made an independent evaluation of the condition of the Properties, production potential, and otherwise.  Buyer is charged with all knowledge obtainable from materials made available by Seller relating to the Properties prior to Closing and from county records and federal, state and regulatory agency records.

4.2       Non-Assumption of Liabilities:  Unless Buyer specifically elects to do so, Buyer shall not assume or become obligated for the following:

(a)      Costs associated with Article X of the Participation Agreement (Prospect Origination and Development Budget);

(b)       Any unrecorded obligation, commitment, debt, lien, or liability, not disclosed by Seller as required by Sections 2.1 and 2.2, above, on or before the Closing Date; or

(c)       Any pending or threatened litigation, as set forth on Schedule 4.2.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

5.1       Representations and Warranties of Seller:  Seller hereby covenants, represents and warrants to Buyer as follows:

(a)       Seller has full power, authority, and legal right to convey the Properties.

 

(b)       The Properties are free and clear of all debts, duly perfected liens, liabilities, mortgages, adverse claims and interests burdens, and encumbrances of record, except those which Seller has disclosed to Buyer either in accordance with Section 2.1 or otherwise, and those which Seller shall cause to be released and discharged before the Closing Date;

 

  

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(c)       Seller has filed all federal, state, and other reports or returns, if any, required to be filed by Seller in connection with the Properties and has either discharged or caused to be discharged as the same have become due, all taxes, costs, expenses, charges, and debts of every kind and character including, without limitation, severance taxes, attributable or relating to the Properties or to the operation thereof or revenues or income therefrom;

(d)       No legal action, suit, or proceeding, judicial or administrative, or governmental investigation is pending or threatened which involves or may involve the Properties or the production of oil and/or gas therefrom, the operations being conducted thereon or the purchase, sale, transportation, or processing of production of products therefrom, which would have a material adverse effect on the Properties, except those which have been disclosed to Buyer either in accordance with Section 2.1 or otherwise.

 

5.2       Representations and Warranties of Buyer.  Buyer hereby covenants, represents and warrants to Seller as follows:

(a)       Buyer has full power and authority to make and perform this Agreement according to the terms hereof and is a corporation duly organized under the laws of the state of Nevada and validly existing and in good standing under the laws of the State of Texas;

(b)       Buyer's execution, delivery, and performance of this Agreement has been duly authorized by all necessary corporate action;

 

(c)       Buyer has prior to Closing conducted due diligence and investigated the condition and value of the Properties;

(d)       Buyer has, or will have prior to Closing, sufficient cash, available lines of credit or other sources of immediately available funds to enable it to pay the Purchase Price.

(e)       Buyer is experienced and knowledgeable in the oil and gas business and is aware of its risks.  Buyer has been afforded the opportunity to examine the relevant records.  Buyer acknowledges and agrees that Seller, its representatives, agents and employees have made no representations or warranties, express or implied, written or oral, as to the accuracy or completeness of the records of any other information furnished by or on behalf of Seller, except as expressly set forth in this Agreement.  In entering into this Agreement, Buyer acknowledges and affirms that it has relied and will rely solely upon its independent analysis, evaluation, investigation and judgment with respect to the business, economic, legal, tax or other consequences of the transactions contemplated by this Agreement.

(f)       There is no action, suit, proceeding, claim or investigation by any person, entity, administrative agency or government body pending or threatened against Buyer that impedes or is likely to impede its ability to consummate the transactions contemplated by this Agreement.

 

  

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5.3       Representations and Warranties at Closing:  The representations and warranties of Buyer and Seller contained in this Agreement shall be true and accurate on the Closing Date as though such representations and warranties were made at and as of that time.

ARTICLE VI

ADDITIONAL AGREEMENTS AND COVENANTS

(this section intentionally left blank)

ARTICLE VII

CLOSING

7.1       Conditions Precedent to Seller's Obligation to Close:  Seller shall be obligated to consummate the sale of the Properties as contemplated hereby on the Closing Date, provided the following conditions precedent exist or have been waived by Seller:

(a)       All representations and warranties of Buyer contained in this Agreement or in connection with any of the transactions contemplated hereby shall be true and correct in all material respects at and as of Closing as though such representations and warran­ties were made at and as of such time;

(b)       Buyer shall have complied in all material respects with all agreements and conditions of this Agreement to be performed or complied with by Buyer on or prior to the Closing Date;

(c)       All Preferential Rights to the Properties shall have been waived prior to the time of Closing.  If Preferential Rights applicable to part of the Properties are exercised, Buyer shall remain obligated to purchase the Properties for which Preferential Rights have been waived.

7.2       Conditions Precedent to Buyer's Obligation to Close:   Buyer shall be obligated to consummate the sale of the Properties as contemplated by this Agreement on the Closing Date, provided that the following conditions precedent have been satisfied or have been waived by Buyer:

(a)       All representations and warranties of Seller contained in this Agreement or in connection with any of the transactions contemplated hereby shall be true and correct in all material respects at and as of Closing as though such representations and warran­ties were made at and as of such time;

(b)       Seller shall have complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by Seller on or prior to the Closing Date, necessary for the conveyance of the Properties.

7.3       Conditions Precedent to Obligations of Each Party:

(a)       The obligations of each party under this Agreement are contingent upon the satisfaction prior to Closing Date of the condition precedent that at Closing, no suit, action, order or other proceedings shall be pending or threatened before any court or governmental commission, board or agency in which it is sought by a person or entity other than the parties hereto or any of their affiliates, officers or directors, to restrain, enjoin or otherwise prohibit the consummation of the transactions contemplated by this Agreement, or to obtain substantial damages in connection with this Agreement or the transactions contemplated thereby, nor shall there be any investigation by any governmental agency pending or threatened which might result in any such suit, action, order or other proceedings seeking to restrain or prohibit consummation of the Agreement or the transaction contemplated thereby;

 

  

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(b)       All consents and approvals, if any, of third parties or any regulatory body or authority, whether required contractually or by appli­cable federal, state, or local law, or otherwise necessary for the execu­tion, delivery, and performance of this Agreement by Seller (except for approvals of governmental agencies customarily obtained subsequent to transfer of title) and which have not been waived by Buyer shall have been obtained and delivered to Buyer by the Closing Date and shall not have been withdrawn or revoked;

(c)       Consummation of this purchase and sale transaction shall not have been prevented from occurring by (and the required waiting period, if any, shall have expired under) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and rules and regulations of the Federal Trade Commission and Department of Justice.

7.4       No Waiver:  Consummation of Closing on the Properties shall not be deemed to be a waiver by either party of any of its rights or remedies hereunder for breach of warranty, covenant, or agreement herein by the other party.  However, the sole remedy of Buyer for a material breach by Seller of any warranty or the non-satisfaction of a condition precedent to Buyer's obligation to Close, which said breach or non-satisfaction has a material adverse effect on the Properties to Buyer, and which Seller has not elected to remedy to the satisfaction of Buyer, shall be as follows:

(a)       Prior to Closing:  Buyer may terminate this Agreement;

 

(b)       Subsequent to Closing:  Buyer does not waive the right to assert any claims against Seller for any breach of representations and warranties or non-satisfaction of conditions precedent;

 

(c)       In no event shall fluctuations in the price of crude oil, gas, or other hydrocarbons or changes in the productive capacity of the wells located on the leases be a basis for a termination of this Agreement or a re-conveyance of the Properties to Seller.

7.5       Obligations of Seller at Closing:  Seller shall deliver the following to Buyer at the Closing, unless waived by Buyer:

(a)       A conveyance of an undivided 1.5% interest in the right, title and interests in the Property substantially in the form and content of the Assignment.  Such instrument shall be acknowledged and executed in multiple originals, and the same shall be subject to any and all existing farmout agreements, unit agreements, gas purchase or sale contracts, as well as all other agreements affecting the Properties;

(b)       Evidence that all consents, approvals, and authorizations prerequisite to the sale and conveyance of the Properties, as well as evidence of waiver of any preferential purchase rights applicable to the Properties, have been obtained;

(c)       Letters-in-lieu of division orders or transfer orders required under Article 3.1.

 

  

9

  

 

7.6       Obligations of Buyer at Closing:  Buyer shall deliver the following to Seller at the Closing, unless waived by Seller:

(a)       The Assignment and Bill of Sale, executed and properly notarized, referred to in Section 7.5(a) hereof;

(b)       By wire transfer the total Purchase Price.

ARTICLE VIII

MISCELLANEOUS

8.1       Notices:  All notices and other communications required, permitted, or desired to be given hereunder must be in writing and sent by registered or certified U.S. mail (return receipt requested), properly addressed as shown herein below, and with all postage or charges fully prepaid or by hand delivery or by facsimile transmission.  Date of service by mail or hand delivery is the date on which such notice or other communication is received by the addressee, by facsimile is the date sent, or if such date is on a weekend or federal or state holiday, then on the next date which is not Saturday, Sunday or such holiday.  Each party may change its address by notifying the other party in writing.

 

	 	If to Seller	
If to Buyer

	  	
by mail:

	

by mail:

	  	  	  
	  	
GFX Energy, Inc.

	
Eagle Ford Oil & Gas Corp

	  	
1811 Bering Drive, Suite 400

	1110 Nasa Parkway, Suite 311
	
 

	
Houston, TX 77057

	
Houston, TX 77058

	  	
Attn:

	Attn:
	  	
T – (713) 960-9086

	
T – (281) 383-9648

	  	
F – (713) 960-9531

	
 

	  	  	  
	  	
If to Seller by

	If to Buyer by
	  	
hand delivery:

	
hand delivery:

	  	  	  
	  	
(same as above)

	
(same as above)

 

8.2       Conveyance Costs:  Buyer shall be solely responsible for all filing and recording of documents related to the transfer of the Properties from Seller to Buyer and for all fees connected therewith.

8.3       Broker's Fees:  Each party agrees to indemnify and hold the other harmless from and against any claims or causes of action with respect to any commissions, finders' fees, or other remuneration, if any, due to any broker, agent, or finder claiming by, through, or under such party.

8.4       Further Assurances:  From and after the Closing, at the request of Seller but without further consideration, Buyer will execute and deliver or use reasonable efforts to cause to be executed and delivered such other instruments of conveyance and transfer and take such other action as Seller reasonably may be required to more effectively vest in or put Seller in possession of, any Properties, document, or information of any kind which was not intended by the parties to be conveyed to Buyer.  From and after the Closing, at the request of Buyer but without further consideration, Seller shall execute and deliver or use reasonable efforts to cause to be executed and delivered such other instruments of conveyance and transfer and take such other actions as Buyer reasonably may require more effectively to vest in Buyer, or to put Buyer in possession of, any of the Properties.  If any of the Properties are incorrectly described, the description shall be corrected upon proof of the proper description. Buyer agrees that upon receipt of recordable assignments, it will enter into a replacement JOA with the Operator having terms and conditions consistent with industry standards.

 

  

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8.5       Survival of Representations and Warranties:  All representations, warranties, covenants, and agreements contained in this Agreement shall terminate at Closing except the provisions of Articles III, IV and 8.17, which are not limited but which are and shall be covenants running with the land and every assignment or transfer thereof and shall be incorporated by reference in the Assignment.  The parties hereto have made no representations or warranties except those expressly set forth in this Agreement.

8.6       Amendments and Severability:  No alterations, modifica­tions, amendments, or changes in this Agreement shall be effective or binding unless the same shall be in writing and signed by Seller and Buyer.  The invalidity of any one or more covenants or provisions of this Agreement shall not affect the validity of the Agreement as a whole, and in case of any such invalidity, this Agreement shall be construed as if such invalid provision had not been included herein.

8.7       Successor and Assigns:  The terms, covenants and conditions hereof shall be binding upon and shall inure to the benefit of Seller and Buyer and their respective successors and assigns; and such terms, covenants and condi­tions shall be covenants running with the land and with each subsequent transfer or assignment of the Properties.

8.8       Headings:  The titles and headings in this Agreement have been in­cluded solely for ease of reference and shall not be considered in the inter­pretation or construction of this Agreement.

8.9       Notices After Closing:  Seller shall notify Buyer of its receipt after the Closing Date of any instrument, notification, or other document significantly affecting the Properties.

8.10     Securities Laws:  Buyer shall notify Seller promptly of any federal and/or state securities law(s) or Federal Trade Commission filing requirements and/or any other disclosure requirements to which it believes it may be subject.

8.11     Media Releases:  Neither party, unless required to do so by law, shall release any information to the press or other media regarding this purchase and sale.  If required by law to release information, a party may do so after having obtained the other party's approval of the content of the information and timing of the release.

8.12     Governing Law:  THIS CONTRACT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICT OF LAW RULES WHICH MAY REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION; AND THE VENUE OF ANY ACTION BROUGHT BY EITHER PARTY IN REGARD HERETO OR ARISING OUT OF THE TERMS OR CONDITIONS HEREOF SHALL BE EXCLUSIVELY IN STATE OR FEDERAL COURT IN HOUSTON, TEXAS AND BOTH PARTIES HEREBY CONSENT TO THE JURISDICTION OF THE COURTS OF TEXAS.

 

 

  

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8.13      No Partnership Created:  It is not the purpose or intention of this Agreement to create (and it shall not be construed as creating) a joint venture, partnership, or any type of association, and the parties hereto are not author­ized to act as agent or principal for each other with respect to any matter related hereto.

8.14     Dispute Resolution:  With respect to any dispute that arises prior to Closing, either party may deliver a notice by facsimile or hand delivery to the other party describing the dispute and the nature of the disagreement.  If such notice is delivered, then one or two designated executives of each party shall meet regularly as necessary but at least once each day following receipt of such notice and use reasonable efforts to reach an agreement on the disputed issues or amounts.  With respect to any dispute that arises after Closing, either party may pursue any remedies available in law or equity.

8.16     Confidentiality:  Buyer and Seller shall hold as strictly confidential the terms and conditions of this Agreement , and also Buyer and Seller shall not disclose any information regarding this Agreement except, on a need-to-know basis, to its employees, directors, shareholders, affiliates, attorneys, agents, consultants, financial institutions or as required by court order, applicable law or regulations, or for purposes of the preparation of Buyer's and Seller’s tax returns, without the prior written consent of the other party, which consent shall not be unreasonably withheld.

8.17     Ad Valorem, Production or Severance Taxes:  It is understood that ad valorem taxes are paid in arrears on production. It is agreed at such a time as the 2011 taxes are fully paid Seller will be responsible for the taxes attributable to the production for which Seller was paid and Buyer will be responsible for the taxes attributable to the production for which Buyer was paid.  The Parties agree that a one-time accounting for these expenses will be made and reimbursement by the owing Party will be tendered immediately to the other Party.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written, but effective as of the Effective Time.

 

	
SELLER:

	 	
BUYER:

	 
	  	 	  	 
	  	 	  	 
	
GFX Energy, Inc

	 	
Eagle Ford Oil & Gas Corp

	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

 

 

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