Document:

exhibit10_98.htm

    

      

      Exhibit
10.98

      

      CLOSING
DOCUMENTS

      

      EARTH
BIOFUELS, INC.

      (“Maker”)

      

      APOLLO
RESOURCES INTERNATIONAL, INC.

      (“Pledgor”)

      

      And

      

      Harborview
Master Fund, LP

      (“Payee”
and “Pledgee”)

      

      December
13, 2007

      Funding
Date December 18, 2007

      

      
        	 
      	
                Document
      Description

              
	
                1

              	
                Loan
      Agreement—Earth Biofuels and Harborview Master Fund

              
	
                2

              	
                Promissory
      Note Due March 15, 2007 / $550,000.00 / 10% Interest

              
	
                3

              	
                Joint
      Escrow Instructions – Krieger and Prager, LLP.  No Due Diligence
      Fee

              
	
                4

              	
                Transaction
      Opinion Letter—Jared Febroriello

              
	
                5

              	
                Pledgor
      Guaranty—Apollo Resources International, Inc.

              
	
                6

              	
                Personal
      Guaranty—Dennis G. McLaughlin

              
	
                7

              	
                Pledge
      Agreement—Apollo Resources International, Inc.

              
	
                8

              	
                Company
      Disclosure—Earth Biofuels, Inc.

              
	
                9

              	
                Stock
      Certificates Pledged 20,285,064 EBOF Shares—0739, 0878, 1295, 1389, 1403,
      and 1615

              
	
                10

              	
                Blank
      Medallion Guaranteed Stock Powers 20,285,064 EBOF Shares—0739, 0878, 1295,
      1389, 1403, and 1615

              
	
                11

              	
                Transfer
      Agent Letter—Nevada Agency and Trust

              
	
                12

              	
                Loan
      Transaction Analysis—No Due Diligence Fee

              
	 
      	 
      

      

      

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      ANNEX
I

      TO

      LOAN
AGREEMENT

      

      FORM
OF NOTE

      

      THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE MAKER THAT SUCH
REGISTRATION IS NOT REQUIRED.

      

      No.           07-DEC-1                                                                                                           US
$550,000.00

      

      

      EARTH
BIOFUELS, INC.

      PROMISSORY
NOTE DUE MARCH 15, 2008

      

      FOR VALUE
RECEIVED, EARTH BIOFUELS, INC. (the "Maker") promises to pay to HARBORVIEW
MASTER FUND, L.P., the registered holder hereof (the "Holder"), the principal
sum of Five Hundred Fifty Thousand and 00/100 Dollars (US $550,000.00) on the
Maturity Date (as defined below).

      

      This Note
is being issued pursuant to the terms of the Loan Agreement, dated as of
December 13, 2007 (the "Loan Agreement"), to which the Maker and the Holder (or
the Holder's predecessor in interest) are parties. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the Loan
Agreement.

      

      TIME IS OF THE ESSENCE WITH
RESPECT TO THE MAKER'S FULFILLMENT OF ALL OF ITS PAYMENT OBLIGATIONS
HEREUNDER. The Holder shall not be required to give the Maker any notice
of default of payment if any such payment is not timely paid or otherwise
satisfied. All provisions of this Note which apply in the event of the Maker's
not timely fulfilling any of its payment obligations hereunder shall apply
whether or not such notice of default is given. The Holder's giving of any
notice to the Maker shall not be deemed a waiver, modification or amendment of
this provision with respect to the failure referred to in that notice or to any
other failure by the Maker timely to make any other payment due
hereunder.

      

      This Note
is subject to the following additional provisions:

      

      1. The
Note will initially be issued in denominations determined by the Maker, but are
exchangeable for an equal aggregate principal amount of Note of different
denominations, as requested by the Holder surrendering the same. No service
charge will be made for such registration or transfer or
exchange.

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      2.  (a)
Interest will accrue on this Note at the rate of ten percent (10%) per annum
until the Maturity Date and shall be payable on the Maturity Date.

      

           (b)
The provisions of Section 2(a) hereof or of any other provision hereof to the
contrary notwithstanding, on the Closing Date the Maker shall prepay the
interest on the principal on this Note in an amount equal to (i) such principal,
multiplied by (ii) 92/365-of the stated annual interest rate (and such payment
shall constitute the payment of all interest on this Note through the Maturity
Date hereof, but not beyond the Stated Maturity Date [as defined below]
originally specified in this Note when issued on the Issue Date).

      

           (c)
If any portion of this Note is outstanding on the Maturity Date, interest at the
rate of twenty percent (20%) per annum or the highest rate allowed by law,
whichever is lower, shall accrue on the outstanding principal of this Note from
the Maturity Date to and including the date of payment by the Maker. Such
interest shall accrue on a daily basis and shall be payable in cash. The Holder
may demand payment of all or any part of this Note, together with accrued
interest, if any, and any other amounts due hereunder, as of the Maturity Date
or any date thereafter. This Note may be prepaid in whole or in part, prior to
the Maturity Date.

      

      3.           The
Maker shall be entitled to withhold from all payments of principal of, and, if
applicable,
interest on, this Note any amounts required to be withheld under the applicable
provisions of the United States income tax laws or other applicable laws at the
time of such payments, and Holder shall execute and deliver all required
documentation in connection therewith.

      

      4.           This
Note has been issued subject to investment representations of the original
purchaser hereof and may be transferred or exchanged only in compliance with the
Securities Act of 1933, as amended (the "Act"), and other applicable state and
foreign securities laws. In the event of any proposed transfer of this Note, the
Maker may require, prior to issuance of a new Note in the name of such other
person, that it receive reasonable transfer documentation that is sufficient to
evidence that such proposed transfer complies with the Act and other applicable
state and foreign securities laws. Prior to due presentment for transfer of this
Note, the Maker and any agent of the Maker may treat the person in whose name
this Note is duly registered on the Maker's Note Register as the owner hereof
for the purpose of receiving payment as herein provided and for all other
purposes, whether or not this Note be overdue, and neither the Maker nor any
such agent shall be affected by notice to the contrary.

      

      5.           The
term "Maturity Date" means the earlier of (a) March 15, 2008 (the "Specified
Maturity Date") or (b) the earliest Default Maturity Date (as defined below), if
any.

      

      6.           Any
payment made on account of this Note shall be applied in the following order of
priority: (i) first, to any amounts due hereunder or any of the other
Transaction Agreements, other than principal and accrued interest, (ii) then, to
accrued but unpaid interest, if any, through and including the date of payment,
and (iii) then, to principal of this Note.

      

             
7.           All payments
contemplated hereby are to be made "in cash" and shall be made in immediately
available good funds of United States of America currency by wire transfer to an
account designated in writing by the 

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      Holder to
the Maker (which account may be changed by notice similarly given). For purposes
of this Note, the phrase "date of payment" means the date good funds are
received in the account designated by the notice which is then currently
effective.

      

      8.           No
provision of this Note shall alter or impair the obligation of the Maker, which
is absolute and unconditional, to pay the principal of, and, if applicable,
interest on, this Note at the time, place, and rate, and in the coin or
currency, as herein prescribed. This Note is a direct obligation of the
Maker.

      

      9.           The
Holder of this Note, by acceptance hereof, agrees that this Note is being
acquired for investment and that such Holder will not offer, sell or otherwise
dispose of this Note except under circumstances which will not result in a
violation of the Act or any applicable state Blue Sky or foreign laws or similar
laws relating to the sale of securities.

      

      10.           Any
notice or other communication required or permitted hereunder shall be in
writing and shall be delivered personally, sent by facsimile transmission or
sent by certified, registered or express mail, return receipt requested, postage
pre-paid. Any such notice shall be deemed
given when so delivered personally, or sent by confirmed and acknowledged
facsimile transmission, or, if so mailed, two days after the date of deposit in
the United States mails, as follows:

      

      
        	
                (i)  

              	
                if
      to the Maker, to:

              

      

      Earth
Biofuels, Inc.

      Attn:
Dennis G. McLaughlin, III

      3001 Knox
Street, Suite 403

      Dallas,
Texas 75205

      Telephone
No.: 214-389-9800

      Telecopier
No.: 214-389-9805

      

      with a
copy to:

      

      

      

      Telephone
No.:

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      

      
        	
                (ii)  

              	
                if
      to the Holder, to:

              

      

      Harborview
Master Fund L.P.

      c/o
Harborview Advisors, Inc.

      Suite
1801

      850 Third
Avenue

      New York,
New York 10022

      Attn:
_______________

      Telephone
No. (646) 218-1400

      Telecopier
No.: (646) 218-1401

      

      with a copy to:

      Krieger
& Prager LLP

      39
Broadway

      Suite
920

      New York,
NY 10006

      Attn: Ronald J. Nussbaum,
Esq.

      Telephone
No.: (212) 363-2900

      Telecopier
No. (212) 363-2999

      

      Any party
may, by notice given in accordance with this Section to the other parties,
designate another address or person for receipt of notices
hereunder.

      

      11.
(a)                      This
Note shall be governed by and interpreted in accordance with the laws of the
State of New York for contracts to be wholly performed in such state and without
giving effect to the principles thereof regarding the conflict of laws. Each of
the parties consents to the exclusive jurisdiction of the federal courts whose
districts encompass any part of the City of New York or the state courts of the
State of New York sitting in the City of New York in connection with any dispute
arising under this Note and hereby waives, to the maximum extent permitted by
law, any objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions. To the extent determined
by such court, the Maker shall reimburse the Holder for any reasonable legal
fees and disbursements incurred by the Holder in enforcement of or protection of
any of its rights under this Note.

      

           (b)                      JURY TRIAL WAIVER. The Maker
and the Holder hereby waive a trial by jury in any action, proceeding or
counterclaim brought by either of the Parties hereto against the other in
respect of any matter arising out of or in connection with this
Note.

      

      12. (a)
Subject to the terms of the Loan Agreement, no provision of this Note shall
alter or impair the obligation of the Maker, which is absolute and
unconditional, to pay the principal of, and interest on, this Note at the time,
place, and rate, and in the coin or currency, as herein prescribed. This Note
represents direct obligations of the Maker.

      

            (b)                      (i)
Apollo Resources International, Inc.(the "Pledgor") is personally guarantying to
the Holder the timely and full fulfillment of all of the obligations of the
Maker under this Note, as provided in the 

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      Pledgor
Guaranty, which has been executed by the Pledgor in favor of, and delivered to,
the Holder.

      

      (ii) The
obligations of the Maker under this Note and of the Pledgor under the Pledgor
Guaranty are secured under the terms of the Pledge Agreement, to which the
Holder (or the Holder's predecessor in interest) and the Pledgor are parties,
the terms of which are incorporated herein by reference, by a pledge from the
Pledgor of the Pledged Shares, of which the Pledgor is the record and beneficial
owner. If the Holder forecloses on any of the Pledged Shares, the obligations of
the Company will be reduced only to the extent of the proceeds actually realized
from such foreclosure, in the priority specified elsewhere herein.

      

           (c)                      Dennis
G. McLaughlin III  (the "Personal Guarantor") is personally
guarantying to the Holder the timely and full fulfillment of all of the
obligations of the Maker under this Note, as provided in the Personal Guaranty,
which has been executed by the Personal Guarantor in favor of, and delivered to,
the Holder.

      

      13.
(a)                      The
following shall constitute an "Event of Default":

      

      
        	
                 
      

              	
                i.

              	
                The
      Maker shall default in the timely payment of principal on this Note or any
      other amount due hereunder (without the requirement of any further notice
      with respect thereto from the Holder);
or

              

      

      

      
        	
                 
      

              	
                ii.

              	
                Any
      of the representations or warranties made by the Maker herein shall be
      false or misleading in any material respect at the time made;
      or

              

      

      

      
        	
                 
      

              	
                iii.

              	
                The
      Maker shall fail to perform or observe, in any material respect, an other
      covenant, term, provision, condition, agreement or obligation of this Note
      or the Pledge Agreement and such failure shall continue uncured for a
      period of ten (10) days after the Maker's receipt of written notice
      thereof from the Holder; or

              

      

      

      iv.           The
Maker's status as an issuer required to file reports under the 1934Act
shall be terminated for any reason, without regard to any cure period;
or

      

      
        	
                 
      

              	
                v.

              	
                The
      Maker shall (1) admit in writing its inability to pay its debts generally
      as they mature; (2) make an assignment for the benefit of creditors or
      commence proceedings for its dissolution; or (3) apply for or consent to
      the appointment of a trustee, liquidator or receiver for its or for a
      substantial part of its property or business;
or

              

      

      

      
        	
                                     
      vi.

              	
                A
      trustee, liquidator or receiver shall be appointed for the Maker
      or

              

      

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      
        	
                                  
        vii.

              	
                for
      a substantial part of its property or business without its consent and
      shall notbe discharged within sixty (60) days after such appointment;
      or

              

      

      
 

      
        	
                 
      

              	
                viii.

              	
                Any
      governmental agency or any court of competent jurisdiction at the instance
      of any governmental agency shall assume custody or control of the whole or
      any substantial portion of the properties or assets of the Maker and shall
      not be dismissed within sixty (60) days thereafter;
  or

              

      

      

      
        	
                 
      

              	
                
                  ix.

                

              	
                Any
      money judgment, writ or warrant of attachment, or similar process in
      excess of Five Hundred Thousand ($500,000) Dollars in the aggregate shall
      be entered or filed against the Maker or any of its properties or other
      assets and shall remain unpaid, unvacated, unbonded or unstayed for a
      period of sixty (60) days or in any event later than five (5) days prior
      to the date of any proposed sale thereunder;
or

              

      

      

      
        	
                 
      

              	
                x.

              	
                Bankruptcy,
      reorganization, insolvency or liquidation proceedings or other proceedings
      for relief under any bankruptcy law or any law for the relief of debtors
      shall be instituted by or against the Maker and, if instituted against the
      Maker, shall not be dismissed within sixty (60) days after such
      institution or the Maker shall by any action or answer approve of, consent
      to, or acquiesce in any such proceedings or admit the material allegations
      of, or default in answering a petition filed in any such
      proceeding.

              

      

      

           (b)                      If
an Event of Default shall have occurred and is continuing, then, or at any time
thereafter, and in each and every such case, unless such Event of Default shall
have been cured or waived in writing by the Holder (which waiver shall not be
deemed to be a waiver of any subsequent default), at the option of the Holder
and in the Holder's sole discretion, the Holder may consider this Note
immediately due and payable (and the Maturity Date shall be accelerated
accordingly; the "Default Maturity Date"), without presentment, demand, protest
or notice of any kinds, all of which are hereby expressly waived, anything
herein or in any note or other instruments contained to the contrary
notwithstanding, and the Holder may immediately enforce any and all of the
Holder's rights and remedies provided herein or any other rights or remedies
afforded by law, including, but not necessarily limited to, the equitable remedy
of specific performance and injunctive relief.

      

      

      

      [Balance
of page intentionally left blank]

      

      
        
           

        

        
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      14.           In
the event for any reason, any payment by or act of the Maker or the Holder shall
result in payment of interest which would exceed the limit authorized by or be
in violation  of the law of the jurisdiction applicable to this Note,
then ipso facto the obligation of the Maker to pay interest or perform such act
or requirement shall be reduced to the limit authorized under such law, so that
in no event shall the Maker be obligated to pay any such interest, perform any
such act or be bound by any requirement which would result in the payment of
interest in excess of the limit so authorized. In the event any payment by or
act of the Maker shall result in the extraction of a rate of interest in excess
of a sum which is lawfully collectible as interest, then such amount (to the
extent of such excess not returned to the Maker) shall, without further
agreement or notice between or by the Maker or the Holder, be deemed applied to
the payment of principal, if any, hereunder immediately upon receipt of such
excess funds by the Holder, with the same force and effect as though the Maker
had specifically designated such sums to be so applied to principal and the
Holder had agreed to accept such stuns as an interest-free prepayment of this
Note. If any part of such excess remains after the principal has been paid in
full, whether by the provisions of the preceding sentences of this Section or
otherwise, such excess shall be deemed to be an interest-free loan from the
Maker to the Holder, which loan shall be payable immediately upon demand by the
Maker. The provisions of this Section shall control every other provision of
this Note.

      

      IN
WITNESS WHEREOF, the Company has caused this instrument to be duly executed by
an officer thereunto duly authorized this 12th day of December,
2007.

      

      EARTH BIOFUELS, INC.

      

      By:  /s/ Dennis G. McLaughlin,
III

      

      DENNIS G.
MCLAUGHLIN

      (Print Name)

      

      CHIEF FINANCIAL
OFFICER

      (Title)

      

      

      

      
        
           

        

        
          8ASSET PURCHASE AND SALE AGREEMENT

MINING PROPERTIES PURCHASE AND SALE AGREEMENT

 By and Among

Micron Enviro Systems, Inc.

and

Giddy Up Capital, LLC

THIS MINING PROPERTIES PURCHASE AND SALE AGREEMENT (“Agreement”) is made and entered into in duplicate and shall be effective as of the 27th day of November, 2007, by and among Micron Enviro Systems, Inc., (the “Seller”), and Giddy Up Capital, LLC, (the “Purchaser”), and provides for the Purchaser to acquire certain mining properties of the Seller (the “Properties”), on the terms and subject to the conditions specified in this Agreement. 

RECITALS

A.  The Purchaser desires to acquire, on the terms and subject to the conditions specified in this Agreement, the Properties (which are described more particularly on that schedule attached hereto marked Exhibit A).

B.  The Seller believes that it is in the best interests of the Seller, and, therefore, it desires, to sell the Properties to the Purchaser, on the terms and subject to the conditions specified in this Agreement.

NOW, THEREFORE, IN CONSIDERATION OF THE RECITALS SPECIFIED ABOVE, WHICH SHALL BE DEEMED TO BE A SUBSTANTIVE PART OF THIS AGREE­MENT, AND THE MUTUAL COVENANTS, PROMISES, UNDERTAKINGS, AGREEMENTS, REPRESENTATIONS, AND WARRANTIES SPECIFIED IN THIS AGREEMENT AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED LEGALLY AND EQUITABLY, THE PARTIES DO HEREBY COVENANT, PROMISE, AGREE, REPRESENT, AND WARRANT AS FOLLOWS:

1

ARTICLE I

DEFINITIONS

As used in this Agreement, the capitalized terms specified in this Agreement shall have the meanings and definitions specified and indicated by the provisions of this Article I, unless a different and common meaning of such a term is clearly indicated by the context, and variants and derivatives of those terms shall have correlative meanings. To the extent that certain of the definitions specified in this Article I suggest, indicate, or express agreements between or among parties to this Agreement, or contain representations or warranties or covenants of a party, the parties agree to the same, by execution of this Agreement. Agreements, representations, warranties and covenants specified in any part or provision of this Agreement shall, for all purposes of this Agreement, be treated in the same manner as other such agreements, representations, warranties and covenants specified elsewhere in this Agreement; and the article, section or paragraph of this Agreement within which such an agreement, representation, warranty, or covenant appears shall have no separate meaning or effect regarding the same.

1.1  “Agreement”. This Mining Properties Purchase and Sale Agreement, including all of its schedules and exhibits and all other documents specifically referred to in this Agreement that have been or are to be delivered by a party to this Agreement to the other party to this Agreement in connection with the Transaction or this Agreement, and including all duly adopted amendments, modifications, and supplements to or of this Agreement and such schedules, exhibits and other documents.

1.2  “Business Day”. Any day that is not a Saturday, Sunday or day on which banks in Carson City, Nevada are authorized to close.  

1.3  “Encumbrance”. Any lien, pledge, option, adverse claim, charge, easement security interest, right-of-way or encumbrance.

1.4  “Knowledge”.  A person will be deemed to have "Knowledge" of a particular fact or other matter if such person is actually aware of such fact or other matter, but such person shall not and does not have an obligation to conduct an inquiry or investigation to become aware of any such fact or matter.  

1.5  “Person”. Any individual, company, sole proprietorship, corporation, joint venture, association, joint stock company, fraternal order, cooperative, league, club, society, organization, trust, estate, governmental agency, political subdivision or authority, firm, municipality, congregation, partnership, or other form of entity.

1.6  “Promissory Note”.  That certain written Promissory Note evidencing the payment by the Purchaser to the Seller of the Purchase Price, which Promissory Note is dated the same date as this Agreement.

1.7  “Properties”.  Those certain non-oil sands prospects of the Seller, which are described more particularly on that schedule attached to this Agreement marked Exhibit A.

1.8  “Purchase Price”. Two Hundred Fifty Thousand Dollars ($250,000.00), which is payable pursuant to the provisions of the Promissory Note.

1.9  “Purchaser”. Giddy Up Capital, LLC, which, pursuant to the provisions of this Agreement, is purchasing the Properties. 

1.10  “Seller”. Micron Enviro Systems, Inc., which, pursuant to the provisions of this Agreement, is selling the Properties.

1.11  “Transaction”. The sale of the Properties, for the Purchase Price, and on the terms and subject to the conditions of this Agreement.

ARTICLE II

THE TRANSACTION

2.1 Sale of the Properties.  On the terms and subject to the terms and conditions of this Agreement, and in consideration of the payment by the Purchaser of the Purchase Price, the Seller hereby sells, grants, assigns, transfers, conveys, sets over, and delivers unto the Purchaser all of the right, title, and interest of the Seller in and to the Properties; all said right, title, and interest to be held and enjoyed by the Purchaser for the Purchaser’s use and behoof and for the use and behoof of the Purchaser’s successors and assigns, as fully, completely and entirely as the same would have been held and enjoyed by the Seller if the Transaction had not occurred.

2.2 Payment of Purchase Price.  The obligation of the Purchaser to pay the Purchase Price to the Seller is, and the terms and conditions of the payment of the Purchase Price are, specified by the provisions of the Promissory Note.

2.3 Title to the Properties.  To secure the prompt and complete payment of the Purchase Price and the prompt and complete performance of all of the obligations of the Purchaser pursuant to the provisions of this Agreement and the Promissory Note, the Seller shall retain title to the Properties, until the Purchase Price and any and all interest accrued thereon, pursuant to the provisions of the Promissory Note, is paid completely.  At such time as the Purchase Price and any and all such interest is paid completely, the Seller shall execute and deliver to the Purchaser, for recordation or otherwise, any and all documents and instruments necessary or appropriate to vest title of the Properties in the Purchaser.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser represents and warrants to the Seller as follows:

3.1 Organization and Qualification.  The Purchaser is limited liability company duly organized, validly existing and in good standing pursuant to the laws of its jurisdiction of formation and has the requisite power and authority to conduct its business as that business is now being conducted.  The Purchaser is duly qualified to do business, and is in good standing, in each jurisdiction where the character of the properties owned or leased by it, or the nature of its activities, is such that qualification in that jurisdiction is required by law.

3.2 Authority Relative to This Agreement.   The Purchaser has the requisite power and authority to perform its obligations specified by the provisions of this Agreement, including, but not limited to, the execution and delivery of the Promissory Note.  The execution and delivery of this Agreement and the consummation of the Transaction, including, but not limited to, the execution and delivery of the Promissory Note, have been duly authorized and approved by the requisite authority of the Purchaser, and no other actions by the Purchaser are necessary to approve and adopt this Agreement or to approve the consummation of the Transaction, including the execution and delivery of the Promissory Note.  The Purchaser has, and representative executing this Agreement and the Promissory Note for and on behalf of the Purchaser has, the legal capacity and authority to execute and deliver this Agreement and the Promissory Note. This Agreement and the Promissory Note are valid and legally binding obligations of the Purchaser and are enforceable completely against the Purchaser in accordance with their terms.  

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller represents and warrants to the Purchaser as follows:

4.1 Organization and Qualification. The Seller is a corporation duly organized, validly existing and in good standing pursuant to the laws of its jurisdiction of incorporation and has the requisite corporate power and authority to conduct its business as that business is now being conducted.  The Seller is duly qualified as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned or leased by it, or the nature of its activities, is such that qualification as a foreign corporation in that jurisdiction is required by law.

4.2 Authority Relative to This Agreement.  The Seller has the requisite corporate power and authority to perform its obligations specified by the provisions of this Agreement.  The execution and delivery of this Agreement and the consummation of the Transaction have been duly authorized and approved by the requisite corporate authority of the Seller and no other corporate action on the part of the Seller is neces­sary to approve and adopt this Agreement or to approve the consum­mation of the Transaction, except for shareholder approval specified elsewhere in this Agreement.  The Seller has, and any officer, director or representative executing this Agreement for and on behalf of the Seller has, the legal capacity and authority to enter into and deliver this Agreement. This Agreement is a valid and legally binding obligation of the Seller and is enforceable completely against the Seller in accordance with its terms.  

4.3 Ownership of Properties. The Seller has good and marketable title, or valid, effective and continuing leasehold rights in the event of leased property, to the Properties; such title is free and clear of all Encumbrances, except liens for taxes not yet due and minor imperfections of title and Encumbrances, if any, which, singularly and in the aggregate, are not substantial in amount and do not materially detract from the value of the property subject thereto or materially impair the use thereof; no other person has any ownership or similar right in, or contractual or other right to acquire any such right in, any of the Properties.  The Seller does not know of any potential action by any Person, and no proceedings with respect thereto have been instituted of which the Seller has knowledge, that would materially affect the Purchaser’s ability to use the Properties. 

ARTICLE V

COVENANTS OF THE PURCHASER

5.1 Affirmative Covenants. The Purchaser will take every action reasonably re­quired of it in order to satisfy the conditions specified in this Agreement and otherwise to ensure the prompt and expedient consummation of the Transaction substantially as contemplated by this Agreement, and will exert all reasonable efforts to cause the Transaction to be consummated; provided, however, in all instances that the representations and warranties of the Seller in this Agreement are and remain true and accurate and the covenants and agree­ments of the Seller in this Agreement are performed and that the con­ditions to the obligations of the Purchaser set forth in this Agreement are capable of being performed.

5.2 Expenses. All costs and expenses incurred by the Purchaser in connection with this Agreement and the Transaction shall be paid by the Purchaser.

5.3 Maintenance and Repair.  The Purchaser shall keep the Properties in good condition and repair and shall pay, when due and payable any and all claims for labor performed and materials furnished to the Properties; to comply with any and all laws affecting the Properties or requiring any alterations or improvements to be made on the Properties; not to commit or permit waste of the Properties; not to commit, suffer, or permit any act upon the Properties in violation of applicable law.

5.4  Payment of Liens and Taxes.  The Purchaser shall pay, at least ten (10) days before delinquency, any and all taxes and assessments affecting the Properties and any and all encumbrances on the Properties or any of them.  In the event the Purchaser fails to make any payment or do any act as specified by the provisions of this Agreement, then the Seller may, but is not obligated to, make the payment or do the act in the required manner and to the extent deemed necessary by the Seller to protect the interest of the Seller in and to the Properties.  The performance by the Seller of any such act shall not require notice to or demand upon the Purchaser and shall not release the Purchaser from any obligation pursuant to the provisions of this Agreement or the Promissory Note.  The Seller, or any of its designated agents, shall have the right and power to enter upon the Properties for the foregoing purposes; to appear in and defend any action or proceeding purporting to affect the interest of the Seller in and to the Properties, or any of them.

5.5  Condemnation Award.  Any award of damages in connection with any taking or condemnation, or for injury to the Properties, or any of them, because of public use, or for damages for private trespass or injury to the Properties, or any of them, is hereby assigned and shall be paid to the Seller as additional security for the obligations of the Purchaser pursuant to the provisions of the Promissory Note.

5.6 Delivery of the Promissory Note.  On the date even herewith, the Purchaser shall deliver to the Seller the Promissory Note.  

5.7 Payment regarding Promissory Note.  The indebtedness evidenced by the provisions of the Promissory Note shall be paid from the revenues of the operation of the Properties.  In that regard, the Purchaser hereby assigns, grants, transfers, conveys, and sets over to the Seller all right, title, and interest which the Purchaser may have from any and all such revenue, which shall be used to pay that indebtedness.  In that regard, the Purchasers shall execute and deliver any and all documents and instruments necessary or appropriate to cause the assignment, conveyance, transfer, and setting over of that revenue, including, but not limited to, appropriate division orders.  

ARTICLE VI

COVENANTS OF THE SELLER

6.1 Affirmative Covenants.  The Seller will take every action reasonably required of it to satisfy the conditions specified in this Agreement and otherwise to ensure the prompt and expedient consummation of the Transaction substantially as contemplated hereby, and will exert all reasonable efforts to cause the Transaction to be consum­mated; provided, however, in all instances that the representations and warran­ties of the Purchaser in this Agreement are and remain true and accurate and that the covenants and agreements of the Purchaser in this Agreement are correct and that the conditions to the obliga­tions of the Seller set forth in this Agreement are capable of satisfaction.

6.2 Expenses. All costs and expenses incurred by the Seller in connection with this Agreement and the Transaction shall be paid by the Seller.

ARTICLE VII

GENERAL PROVISIONS

7.1  Notices.  Any notice, direction or instrument required or permitted to be given pursuant to this Agreement shall be given in writing by (a) telegram, facsimile transmission, electronic transmission (e-mail), or similar method, if confirmed by mail as herein provided; (b) by mail, if mailed postage prepaid, by certified mail, return receipt requested; or (iii) hand delivery to any party. If given by telegram, facsimile transmission, electronic transmission (e-mail) or similar method or by hand delivery, such notice, direction or instrument shall be deemed to have been given or made on the day on which it was given, and if mailed, shall be deemed to have been given or made on the second (2nd) business day following the day after which it was mailed.  Any party may, from time to time by similar notice, give notice of any change of address, and in such event, the address of such party shall be deemed to be changed accordingly.  

7.2 Attorneys' Fees.  In the event either party incurs any expense, including attorneys' fees, by reason of any default or alleged default by the other party, the party prevailing in any action or proceeding brought to resolve the issue of any such default or alleged default shall be entitled to recover such prevailing party's expenses incurred to prosecute or defend such action or proceeding, including, without limiting the generality of the foregoing, reasonable attorneys' fees.

7.3  Entire Agreement.  This Agreement and the Promissory Note are the final written expression and the complete and exclusive statement of all the agreements, conditions, promises, representations, warranties and covenants among the parties with respect to the subject matter of this Agreement, and this Agreement and the Promissory Note supersede all prior or contemporaneous agreements, negotiations, representations, warranties, covenants, understandings and discussions by and among and among the parties, their respective representatives, and any other Person, with respect to the subject matter specified in this Agreement.  

7.4 Choice of Law and Consent to Jurisdiction.  This Agreement shall be deemed to have been entered into in the State of Nevada. All questions concerning the validity, interpretation, or performance of any of the terms, conditions and provisions of this Agreement or of any of the rights or obligations of the parties shall be governed by, and resolved in accordance with, the laws of the State of Nevada without regard to conflicts of law principles. 

 

7.5 Number and Gender.  Whenever the singular number is used in this Agreement and, when required by the context, the same shall include the plural, and vice versa; the masculine gender shall include the feminine and the neuter genders, and vice versa. 

7.6  Severability.  In the event any part of this Agreement, for any reason, is determined by a court of competent jurisdiction to be invalid, such determination shall not affect the validity of any remaining portion of this Agreement, which remaining portion shall remain in full force and effect as if this Agreement had been executed with the invalid portion hereof eliminated.  It is hereby declared the intention of the parties that they would have executed the remaining portion of this Agreement without including any such part, parts, or portion which, for any reason, may be hereafter determined to be invalid.

7.7 Execution in Counterparts.  This Agreement may be prepared in multiple copies and forwarded to each of the parties for execution.  All of the signatures of the parties may be affixed to one copy or to separate copies of this Agreement and when all such copies are received and signed by all the parties, those copies shall constitute one agreement which is not otherwise separable or divisible.  

7.8 Survival of Covenants, Representations and Warranties.  All covenants, representations, and warranties made by each party to this Agreement shall be deemed made for the purpose of inducing the other party to enter into and execute this Agreement. The representations, warranties, and covenants specified in this Agreement shall survive the Closing and shall survive any investigation by either party whether before or after the execution of this Agreement.  The covenants, representations, and warranties of the Seller and the Purchaser are made only to and for the benefit of the other and shall not create or vest rights in other persons.

7.9 Consent to Agreement.  By executing this Agreement, each party, for itself, represents such party has read or caused to be read this Agreement in all particulars, and consents to the rights, conditions, duties and responsibilities imposed upon such party as specified in this Agreement.  Each party represents, warrants and covenants that such party executes and delivers this Agreement of its own free will and with no threat, undue influence, menace, coercion or duress, whether economic or physical.  Moreover, each party represents, warrants, and covenants that such party executes this Agreement acting on such party's own independent judgment.

7.10  Waiver and Modification.  No modification, supplement or amendment of this Agreement or of any covenant, representation, warranty, condition, or limitation specified in this Agreement shall be valid unless the same is made in writing and duly executed by both parties.  No waiver of any covenant, representation, warranty, condition, or limitation specified in this Agreement shall be valid unless the same is made in writing and duly executed by the party making the waiver.  No waiver of any provision of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver.

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed in duplicate by their respective officers thereunto duly authorized to be effective on the date specified in the preamble of this Agreement.  

Micron Enviro Systems, Inc.

Giddy Up Capital, LLC

By:

/s/ Stephen Amdahl

By:

/s/ Bradley Rudman

Its:

Director

Its:

Manager

MICRON ENVIRO SYSTEMS, INC.

SCHEDULE A

MINERAL PROPERTIES SOLD

1.

Stephens County, Texas – the Green Ranch Prospect ,  the Company sold a 5% working interest and a 3.9%  net revenue interest in an oil and gas project in Stephens County, Texas

2.

Jack and Palo Pinto County, Texas – the  Martex Prospect,  the Company entered into a participation agreement with The Cumming Company, Inc. (“Cumming”), whereby the Company paid $425 for a 1% working interest and a 0.8% net revenue interest in the Marble Falls Rework Project. 

   

We entered into an additional participation agreement with The Cumming Company, Inc., 

whereby we paid $750 for a 1% working interest and 0.8% net revenue interest in five additional   wells on the Martex Prospect

The Company entered into a third participation agreement with The Cumming Company, 

Inc., whereby we received a 1% working interest and a 0.75% net revenue interest in the Stuart   60 #8 Well re-entry project.  We have paid $2,610 to date for our share of costs attributed to   this well.  

The Company was informed by Cumming that they were not proceeding to drill the Stuart 61 

#1 and the Stuart 61 #6 Wells and were canceling the exchange of the Kinder #1 Well and the   Boley #3 Well.  Cumming refunded $2,979 to us for the Kinder Well and informed us that the   Boley #3 Well would be exchanged for the Stuart 61 #11 Well, which had not yet been drilled.

The Company was informed by Cumming that they were not proceeding to drill the Stuart 

61#11 and they refunded $3,370 to us.

The Wimberly #3 Well was sold and we received $742 in proceeds from this well.

The Stuart 60 #8 became uneconomical in the Big Saline zone and required a re-completion and 

deepening into the Marble Falls, our interest became in default at this point and we have no   further interest in this well. 

3.

Saskatchewan, Canada – the Kerrobert Prospect , the Company entered into a participation agreement with Patch Energy Inc., to incur 5% of the costs associated with a drill program and earn  3.5% net revenue interest in an oil and gas property located in Saskatchewan, Canada.

2

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