Document:

ROVI 6.30.12 10Q EX 10.01

Exhibit 10.01
ROVI CORPORATION
EXECUTIVE SEVERANCE AND ARBITRATION AGREEMENT

        
THIS EXECUTIVE SEVERANCE AND ARBITRATION AGREEMENT (the “Agreement”) is made and entered into as of June  4, 2012 by and between Rovi Corporation, a Delaware corporation (the “Company”) and Peter C. Halt (“Executive”).

WHEREAS, the Board of Directors (the “Board”) of the Company has recommended and authorized the Company to enter into a severance agreement in the form hereof with Executive; and

WHEREAS, the Board has determined that, in the event of a possible threatened or pending sale or other change in control of the Company, it is imperative that the Company and the Board be able to rely upon Executive to continue in Executive’s position, and that the Company be able to receive and rely upon Executive’s advice, if requested, as to the best interests of the Company and its stockholders without concern that Executive might be distracted by the personal uncertainties and risks created by any such possible transactions; and

WHEREAS, in connection with the foregoing, Executive may, in addition to Executive’s regular duties, be called upon to assist in the assessment of any such possible transactions, advise management and the Board as to whether such proposals would be in the best interests of the Company and its stockholders, and to take such other actions as the Board might determine to be appropriate;

NOW, THEREFORE, to assure the Company that it will have the continued dedication of Executive and the availability of Executive’s advice and counsel through the occurrence of any Change in Control (as defined in Section 1(b) below) of the Company, and to induce Executive to enter into and remain in the employ of the Company, and for other good and valuable consideration, the Company and Executive agree as follows:

		
	1.
	Payment of Severance Benefit.

(a)    In the event that a Change in Control (as hereinafter defined) occurs and, within the period beginning ninety (90) days before the date of the Change in Control and ending twelve (12) months thereafter, (a) Executive’s employment is terminated by the Company or a Subsidiary (as hereinafter defined) without Cause (as hereinafter defined) or (b) Executive voluntarily terminates his/her employment with Company and its Subsidiaries with Good Reason (as hereinafter defined), then the Company shall pay to Executive severance pay under this Agreement.  Transfer of Executive’s employment from the Company to a Subsidiary (or to an entity of which the Company is a Subsidiary) or from a Subsidiary to the Company or to another Subsidiary (or to an entity of which the Company is a Subsidiary), by itself shall not be considered a termination of Executive’s employment.  Such severance pay shall be in the form of salary continuation of Executive’s regular base pay in effect ninety (90) days before the time of the Change in Control or at the time of the termination of his employment, whichever is greater.  The Company shall pay such severance pay during the twelve (12) month period immediately following the date on which Executive’s employment with the Company terminates; provided, however, that, if Executive commences new employment within such twelve (12) month period, such severance pay shall cease on the later of (i) the date six (6) months after Executive’s employment with the Company terminates or (ii) the date Executive commences new employment.

(b)    “Change in Control” means any of the following events: (i) any “person” or “group” (as defined in or pursuant to Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) other than the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly (including by holding securities which are exercisable 

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for or convertible into shares of capital stock of the Company), of securities of the Company representing 50% or more of the voting power of the outstanding shares of capital stock of the Company entitled to vote generally in the election of directors; (ii) the Company sells or exchanges, through merger, assignment or otherwise, in one or more transactions, other than in the ordinary course of business, assets which provided at least seventy percent (70%) of the revenues or pre-tax net income of the Company and its Subsidiaries on a consolidated basis during the most recently completed fiscal year; or (iii) Continuing Directors cease to constitute at least a majority of the Board.  “Continuing Directors” are (A) each director serving on the Board on May 1, 2012, and (B) any successor to any such director whose nomination or selection was approved by a majority of the directors in office at the time of the director’s nomination or selection.  Notwithstanding the foregoing, the following events shall not constitute a Change in Control: any acquisition of beneficial ownership pursuant to (i) a reclassification, however effected, of the Company’s authorized common stock, or (ii) a corporate reorganization involving the Company or a Subsidiary which does not result in a material change in the ultimate ownership by the stockholders of the Company (through their ownership of the Company or its successor resulting from the reorganization) of the assets of the Company and its Subsidiaries, but only if such reclassification or reorganization has been approved by the Board.

(c)    “Cause” means the occurrence of any one or more of the following: (i) conviction of any felony or any act of fraud, misappropriation or embezzlement which has an immediate and materially adverse effect on the Company or a Subsidiary; (ii) engaging in a fraudulent act to the material damage or prejudice of the Company or a Subsidiary or engaging in conduct or activities materially damaging to the property, business or reputation of the Company or a Subsidiary; (iii) failure to comply in any material respect with the terms of any applicable employment agreement or any written policies or directives of the Board which have an immediate and materially adverse effect on the Company or a Subsidiary and which has not been corrected within 30 days after written notice from the Company of such failure; (iv) any material act or omission involving malfeasance or negligence in the performance of employment duties which has an immediate and materially adverse effect on the Company or a Subsidiary and which has not been corrected within 30 days after written notice from the Company; or (v) material breach of any other agreement with the Company, which has an immediate and materially adverse effect on the Company or a Subsidiary and which has not been cured within 30 days after written notice from the Company of such breach.

(d)    “Good Reason” means the occurrence of any of the following without the Executive’s consent: (i) a material diminution in the Executive’s authority, duties or responsibilities, or the assignment to the Executive of any duties or responsibilities that are inconsistent with the Executive’s authority, duties or responsibilities; (ii) a material diminution in the Executive’s base salary; or (iii) a relocation of the Executive’s principal place of employment to a new work site requiring an increase in one-way commute from Executive’s residence of more than thirty-five (35) miles.    Within 90 days of the initial occurrence of any of the events listed in this section, Executive must provide written notice to the Company of the occurrence of the event, and the Company shall have 30 days following receipt of such notice during which it may remedy the condition.  If Executive fails to give such notice within the 90 day period or the Company remedies the condition within the 30 day period, the occurrence of such event shall not constitute “Good Reason.”

(e)    “Subsidiary” means (i) any corporation, foreign or domestic, in which the Company directly or indirectly owns 50% or more of the issued and outstanding voting stock on an “as converted basis” or (ii) any partnership, foreign or domestic, in which the Company owns a direct or indirect interest equal to 50% or more of the outstanding equity interests.

(f)    Notwithstanding the foregoing, if any payment hereunder, or any portion thereof, is considered “nonqualified deferred compensation” that is to be paid to Executive at a time that he is considered to be a “specified employee,” in each case as defined and determined for purposes of Section 409A of the Internal Revenue Code of 1986 as amended ("Section 409A"), and is to be paid within six months following Executive’s termination of employment, then to the extent that such payment is not otherwise exempt from the application of the 20% excise tax under Section 409A, such payment shall be delayed and paid on the 

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first day of the seventh calendar month following the month in which Executive’s termination of employment occurs.

		
	2.
	Welfare Benefits.

(a)    During the period that Company is obligated to pay Executive severance pay pursuant to Section 1(a) above, or, if sooner, until Executive is entitled to Welfare Benefits (as defined below) under any plan maintained by any entity employing Executive after Executive’s employment with the Company terminates, Company shall provide to Executive (and his/her spouse and other qualified dependents) all Welfare Benefits that Company provided to Executive (and his/her spouse and qualified dependents) immediately prior to the Change in Control.  For purposes of this Agreement, the term “Welfare Benefits” shall include, without limitation, all life, dental, health, accident and disability benefit plans, other similar welfare plans, and any equivalent successor policy, plan, program or arrangement that may now exist or be adopted hereafter by the Company or a Subsidiary.  Notwithstanding the foregoing, with respect to any Welfare Benefits provided through an insurance policy, the Company’s obligation to provide such Welfare Benefits following a Change in Control shall be limited by the terms of such policy; provided, however, that (i) the company shall make reasonable efforts to amend such policy to provide the continued coverage described in this Section 2(a) and (ii) if such policy is not amended to provide the continued benefits described in this Section 2(a), the Company shall pay Executive’s cost of comparable replacement coverage.

(b)    If prior to the Change in Control Executive was required to contribute towards the cost of a Welfare Benefit as a condition of receiving such Welfare Benefit, the Executive may be required to continue contributing towards the cost of such Welfare Benefit under the same terms and conditions as applied to the Executive immediately prior to the Change in Control in order to receive such Welfare Benefit.

3.Equity Compensation.  The Company has granted Executive options to purchase Company common stock that are currently outstanding, but not yet exercisable in whole or in part.  Additionally, the Company has granted Executive restricted shares of Company common stock that have not yet vested and become nonforfeitable.  The Company may grant Executive additional stock options, restricted stock or other forms of equity compensation in the future.  The currently outstanding stock options and restricted stock and any future equity compensation Company grants to Executive are hereinafter referred to as the “Stock Awards.”   Notwithstanding the provisions of any agreement(s) pursuant to which the Stock Awards are granted, in the event that a Change in Control occurs and, within the period beginning ninety (90) days before the date of the Change in Control and ending twelve (12) months thereafter, (a) Executive’s employment is terminated by the Company or a Subsidiary without Cause or (b) Executive voluntarily terminates his employment with Company and its Subsidiaries with Good Reason, then on the last day of Executive’s employment with the Company and its Subsidiaries, all of the Stock Awards held by Executive shall become fully vested and exercisable.
 
4.    Other Employee Benefits.  The benefits provided to Executive hereunder shall not be affected by or reduced because of any other benefits (including, but not limited to, salary, bonus, pension, stock option or stock purchase plan) to which Executive may be entitled by reason of his employment with the Company or any Subsidiary thereof or the termination of his employment with the Company, and no other such benefit by reason of such employment shall be so affected or reduced because of the benefits bestowed by this Agreement.  Notwithstanding the foregoing, if Executive qualifies for severance pay under Section 1(a) of this Agreement, such severance pay will be in lieu of, and not in addition to, any severance to other termination payments to which Executive may be entitled under any employment agreement with, or other plan or arrangement of, the Company.

5.    Withholding.  All amounts payable by the Company hereunder shall be subject to all federal, state, local and other withholdings and employment taxes as required by applicable law.

6.    Subsequent Employment with Competitor.  Executive’s right to receive benefits under 

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this Agreement, including Executive’s right to exercise any Stock Awards that have accelerated under this Agreement, shall cease immediately upon Executive’s employment by any company that the Company reasonably determines to be a competitor of the Company and its Subsidiaries.

7.    No Solicitation of Employees.  Executive hereby agrees that for a period of one year following the termination of Executive’s employment by or contractual relationship with the Company, for whatever reason, Executive will not directly or indirectly solicit, induce or influence any person who is engaged as an employee or otherwise by the Company or its Subsidiaries to seek employment with any other business, nor will Executive provide any information regarding employees of the Company or its Subsidiaries for the purpose of directly or indirectly soliciting, inducing or influencing an employee of the Company or its Subsidiaries to seek employment with any other business, including without limitation name, e-mail address, telephone or fax numbers, job titles or compensation information, to any third party without the prior written consent of the Company.  Executive acknowledges that such information is proprietary to the Company and that providing such information for any unauthorized purpose, including without limitation the direct or indirect solicitation of such employees for employment, is strictly prohibited, and Executive further acknowledges that violation of this provision would result in damage to the Company for which Executive may be held personally liable, and Executive agrees that should Executive violate this provision, the Company may obtain injunctive relief as well as actual, incidental, or punitive damages, if appropriate. 
    
8.    Arbitration of Claims.  The following arbitration provisions shall apply to any claim brought by Executive or the Company after the date of this Agreement even if the facts upon which the claim is based arose prior to the execution of this Agreement.

(a)    Claims Covered by this Agreement.  To the maximum extent permitted by law, the Company and Executive mutually consent to the resolution by arbitration of all claims or causes of action that the Company may have against Executive or that Executive may have against the Company or against its officers, directors, employees, or agents in the capacity as such or otherwise (collectively “claims”).  The claims covered by this Agreement include, but are not limited to, claims for breach of any contract or covenant (express or implied); tort claims; claims for discrimination (including, but not limited to, race, sex, sexual harassment, or any type of unlawful harassment, religion, national origin, age, marital status, medical condition, disability or sexual orientation); claims for wrongful termination in violation of public policy; and claims for violation of any federal, state, or other governmental law, statute, regulation or ordinance, including, but not limited to, all claims arising under Title VII of the Civil Rights Act of 1969, as amended, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act, the California Fair Employment & Housing Act, the California Labor Code, the Consolidated Omnibus Budget Reconciliation Act of 1985, the Fair Labor Standards Act or Employee Retirement Income Security Act.

(b)    Claims Not Covered by the Agreement.  Claims Executive may have for workers’ compensation, unemployment compensation benefits or wage and hour claims within the jurisdiction of the California Labor Commissioner are not covered by this Agreement.  Notwithstanding the fact that Executive is not required to arbitrate such claims, he/she may, if he/she so chooses, submit wage and hour claims to binding arbitration pursuant to this Agreement.  Also not covered are claims by either party for injunctive and/or other equitable relief, as to which the parties understand and agree that either party may seek and obtain relief from a court of competent jurisdiction.

(c)     Required Notice of All Claims.  The Company and Executive agree that the aggrieved party must give written notice of any claim to the other party.  Written notice to the Company, or its officers, employees or agents shall be sent to the Company’s Chief Executive Officer.  Executive will be given notice at the last address recorded in his/her personnel file or such other address as Executive may provide to the Company from time to time following the date of this Agreement by a writing specifying that it is the address for notice under this Agreement.  The written notice shall identify and describe the nature of all claims asserted and 

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detail the facts upon which such claims are based.  The notice shall be sent to the other party by certified or registered mail, return receipt requested.

(d)    Arbitration Procedures.  The Company and Executive agree that, except as provided in this Agreement, any arbitration shall be in accordance with and under the auspices and rules of the American Arbitration Association (hereinafter the “Arbitration Service”).  The arbitration shall take place in Santa Clara County, California, unless the parties mutually agree to conduct the arbitration in a different location.  The arbitrator shall be selected by the mutual agreement of the parties.  If the parties cannot agree on a neutral arbitrator, Executive first, and then the Company, will alternately strike names from a list provided by the Arbitration Service until only one name remains.  The arbitrator shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement, including but not limited to any claim that all or any part of this Agreement is void or voidable.  The arbitrator shall apply the applicable statue of limitations to any claim, taking into account compliance with subparagraph paragraph 8(c) of this Agreement.  The arbitrator shall issue a written opinion and award, which shall be signed and dated.  The arbitrator shall be permitted to award those remedies that are available under applicable law.  The arbitrator’s decision regarding the claims shall be final and binding upon the parties.  The arbitrator’s award shall be enforceable in any court having jurisdiction thereof.

(e)    Acknowledgment of Jury Trail Waiver.  Executive understands that, by this Agreement, he/she is waiving his right to have a claim adjudicated by a court or jury.  Any party may be represented by an attorney or other representative selected by the party.

(f)    Arbitration Fees and Costs; Attorneys’ Fees.  Executive will be required to pay an arbitration fee to initiate the arbitration equal to what he/she would be charged as a first appearance fee in court.  The Company shall advance the remaining fees and costs of the arbitrator.  However, to the extent permissible under the law, and following the arbitrator’s ruling on the matter, the arbitrator may rule that the arbitrator’s fees and costs be distributed in an alternative manner.  The arbitrator’s award in any arbitration brought pursuant to the provisions of this Agreement shall provide for the prevailing party to recover from the other party the prevailing party’s reasonable attorneys’ fees relating to such action.

(g)    Requirements for Modification or Revocation.  This agreement to arbitrate shall survive the termination of Executive’s employment with the Company.  It can only be revoked or modified by a writing signed by the parties that specifically states an intent to revoke or modify this Agreement.

(h)    Consideration.  Executive understands that the provisions for severance pay as set forth herein and his continued employment with the Company are consideration for his/her acceptance of these arbitration provisions.  In addition, the promises by the Company and by Executive to arbitrate claims, rather than litigate them before courts or other bodies, provide consideration for each other.

(i)    Violation of this Agreement.  Should any party to this Agreement hereafter institute any legal action or administrative proceeding against the other with respect to any claim required to be arbitrated under this Agreement or pursue any arbitral dispute by any method other than arbitration, the responding party shall recover from the initiating party all damages, costs, expenses and attorneys’ fees incurred as a result of such action.

9.    Entire Agreement; Effect of Prior Agreements.  This is the complete agreement of the parties on the subjects set forth herein, including severance pay upon a Change in Control and arbitration of disputes.  This Agreement supersedes any prior or contemporaneous oral or written understanding on such subjects.  No party is relying on any representations, oral or written, on the subject of the effect, enforceability, or meaning of this Agreement, except as specifically set forth in this Agreement.  In the event of a conflict between any of the terms of this Agreement and any of the terms of (i) any of the agreements related to the Stock Awards, or (ii) that certain accepted original offer of employment between Executive and the Company, the terms of this Agreement shall 

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prevail.  Without limiting the generality of the foregoing, the arbitration provisions of the arbitration policy accompanying the original offer of employment shall be superseded by the arbitration provisions set forth in this Agreement.

10.    Amendment.  This Agreement may not be amended without the prior written consent of both Executive and the Company.

11.    No Right to Continued Employment.  This Agreement does not constitute a contract of employment, does not change the status of the Executive’s employment and does not change the Company’s policies regarding termination of employment.  Nothing in this Agreement shall be deemed to give Executive the right to be retained in the service of the Company or to deny the Company any right it may have to discharge or demote Executive at any time; provided, however, that any termination of employment of Executive, or any removal of Executive as an executive officer of the Company primarily in contemplation of a Change in Control shall not be effective to deny Executive the benefits of this Agreement, including without limitation Sections 1, 2 and 3 hereof.  No provision of this Agreement shall in any way limit, restrict or prohibit Executive’s right to terminate employment with the Company or leave his/her position as a senior executive.

12.    Severability.  If a court or other body of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, that provision will be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, or, if it is not possible to so adjust such provision, this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted.  The invalidity and unenforceability of any particular provision of this Agreement shall not affect any other provision hereof, and all other provisions of the Agreement shall be valid and enforceable to the fullest extent possible.

		
	13.
	Successors.

(a)The Company will require any successor, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

(b)    This Agreement shall inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributes, devisees and legatees.

14.    Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard or reference to the rules of conflicts of law that would require the application of the laws of any other jurisdiction.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, effective as of the date set forth in the first paragraph hereof.

	
			
	ROVI CORPORATION
	 
	EXECUTIVE

	By /s/ Thomas Carson                                          
	 
	/s/ Peter C. Halt                                                    

	Name:  Thomas Carson, CEO         
	 
	Name:     Peter C. Halt                   

    6ex10-1.htm

Exhibit 10.1

 

CONTRACT FOR SALE

State: New Mexico

County: Colfax

Seller: Sun River Energy, Inc., 5646 Milton Street, Suite 130, Dallas, Texas 75206

Buyer: Mericol, Inc. (“Buyer”)

This Contract for Sale is made as of the 27th day of July, 2012 by and between Sun River Energy, Inc. (“Seller”) and Mericol, Inc. (“Buyer”).

WHEREAS, Seller owns mineral interests in Colfax County, New Mexico, including but not limited to oil, gas, gold, silver, iron ore, copper, coal, timber, coal bed methane and other types of mineral interests or mineral extracts, including but not limited to, rare-earth elements, caliche, crushed stone, gravel, surface aggregate, uranium, mica, limestone, and thorium (the “Mineral Interests”), all as described in that certain Second Correction Quitclaim Deed executed January 10, 2011 from Robert A. Doak, Jr. and Frances L. Doak to Sun River Energy, Inc. document # 201100123  filed in the records of Colfax County, New Mexico on January 12, 2011 (the “Second Correction Quitclaim Deed”);

WHEREAS, Seller is willing to sell, transfer, and assign to Buyer, and Buyer is willing to purchase and acquire that portion of the Mineral Interests which includes the gold, silver, iron ore, copper, and coal (but excluding any other Mineral Interests as set forth in Section 1 below), (the “Acquired Interests”);

WHEREAS, Seller agrees to grant Buyer a three (3) year option to acquire a working interest in any oil and/or gas (including coalbed methane) wells drilled on the lands described in the Second Correction Quitclaim Deed as further described in Section 1 hereof;

WHEREAS, as consideration for the sale, transfer, and assignment of the Acquired Interest and the grant of the Participation Interests, Buyer agrees to: (1) pay Seller the sum of $500,000; and (2) transfer, assign, and convey to Seller 2,564,103 shares of Buyer’s common stock (the “Shares”), which shall be subject to a lock-up period of twelve (12) months pursuant to the terms hereof; and

WHEREAS, the Seller and Buyer have agreed that Seller shall the vote the Shares in favor of certain corporate actions, including a forward split of Buyer’s issued and outstanding shares of common stock, certain director nominees, and name change for Buyer, pursuant to the terms hereof.

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

  

  

  

1.           Acquired Interests and Participation Interests.

A.           Buyer agrees to purchase and Seller agrees to sell all of Seller's right, title, and interest in  that portion of the Mineral Interests which includes the gold, silver, iron ore, copper, and coal, but excluding Seller’s right, title, and interest in any other Mineral Interests, such as timber, coal bed methane and other types of mineral interests or mineral extracts, including but not limited to, rare-earth elements, caliche, crushed stone, gravel, surface aggregate, uranium, mica, limestone, and thorium.  The aforementioned portion of Mineral Interests being conveyed to Buyer by Seller are referred to herein as the “Acquired Interests” and include the right to egress and regress and other rights and interests appurtenant or incident to such Acquired Interests, which are described in detail on Exhibit “A” to this Contract (the “Acquired Interests”). For the avoidance of doubt, the Acquired Interests are limited to gold, silver, iron ore, copper and coal and do not include Seller’s other Mineral Interests, mineral extracts and/or rights, such as oil, gas, coalbed methane, timber or any other type of mineral interests or mineral extracts (including but not limited to, rare-earth elements, caliche, crushed stone, gravel, surface aggregate, uranium, mica, limestone, and thorium).  Buyer shall have the same right as Seller to use any and all access roads to the Acquired Interests, which are necessary for Buyer to obtain access to the Acquired Interests.  Upon Seller’s receipt of the full purchase price, Seller shall deliver to Buyer a quitclaim deed, the form of which is attached hereto as Exhibit “B” (the “Quitclaim Deed”), documenting the sale, transfer, and assignment to Buyer of the Acquired Interests.

B.           Seller hereby grants to Buyer an option to acquire up to a 5% working interest in any oil and/or gas (including coalbed methane) wells drilled on the lands described in the Second Correction Quitclaim Deed (referred to herein as the “Participation Interests”).  Such option shall be exercisable, at the discretion of the Buyer, for a period of three (3) years from the Effective date of this Agreement.  Upon Seller’s determination, directly or indirectly, including by leasing, assigning or farming out any of the Participation Interests, or to drill any oil or gas well on any of Seller’s properties in New Mexico (whether now owned or hereafter acquired), including those described in the Second Correction Quitclaim Deed, Seller shall notify Buyer in writing of its intent to drill (the “Notice”).  The Notice shall include the location of the proposed well, the anticipated depth of the well, any pertinent geological information regarding the location of the well, the operator or drilling contractor and the terms of such contract, the other participants or potential participants and the terms of their anticipated participation, a good faith basis of the costs and expenses to drill such well and a copy of all contracts affecting the Participation Interest. The above information shall be in addition to the information and copies of instruments provided for above in connection with the usual notices of participation.

Buyer has thirty (30) days from the date of receipt of the Notice and all accompanying documents to notify Seller of its election to participate.  If the Seller shall not have received actual written notice of the election of Buyer to acquire the Participation Interests within the thirtieth (30th) day, such failure shall constitute an election by Buyer not to participate in that well described in the Notice.  Upon Buyer’s exercise of the option to acquire the Participation Interests, Seller shall promptly invoice Buyer its proportionate part of the estimated drilling costs (such drilling costs shall be the same proportionally for all participants).  Buyer shall promptly, but in no event later than thirty (30) days, reimburse the Seller for its share of the estimated costs, as reflected by the invoice. Upon receipt of such reimbursement, the Seller shall promptly execute and deliver the appropriate documents documenting the assignment of the Participation Interests to Buyer.  Additionally, Buyer and Seller further agree to enter into a standard form joint operating agreement.  If the Seller does not receive the amount due from Buyer within thirty (30) days after the receipt of the invoice for its proportionate share of the costs, such failure shall constitute an election by Buyer not to participate in the well described in the Notice and/or a withdrawal by Buyer of its former election to acquire the Participation Interests, and Buyer shall no longer have the right to acquire the Participation Interests set forth in the Notice.  Should the terms in the Notice materially change from the notice sent to Buyer, Buyer shall be provided a new notice which provides all new terms and documentation and shall be entitled to additional 30 days to elect to participate.

  

  

  

 In the event Buyer elects to participate, Buyer’s rights, duties and obligations associated with any such well will be governed by the same agreement(s) by which Seller’s rights, duties and obligations are governed.

2.           Effective Date.  The Effective Date of this Agreement shall be July 27, 2012.  Seller will be entitled to all revenues and responsible for all expenses relating to the Acquired Interests accruing or arising prior to the Effective Date.  Buyer will be entitled to all revenues and responsible for all expenses relating to the Acquired Interests accruing or arising from and after the Effective Date.

3.           Purchase Price.  On the Effective Date, Buyer shall pay to Seller, or Seller's designated agent, the sum of $500,000 (in U.S. Funds by wire transfer, as directed by Seller).  After the Effective Date, Buyer shall cause to be issued to Seller certificates representing the Shares.

4.           Representations and Warranties.

A.           Seller's Representations and Warranties.  Seller represents and warrants to Buyer that as of the Effective Date:

(1)           Seller is a duly organized and validly existing corporation under the laws of the State of Colorado. Seller has the right, power and authority to enter into this Contract and to convey the Acquired Interests in accordance with the terms and conditions of this Contract, to engage in the transactions contemplated in this Contract and to perform and observe the terms and provisions hereof.  The execution and delivery of this Contract does not, and the fulfillment of and compliance with the terms and conditions hereof will not, as of the Effective Date, violate, or be in conflict with, any material provision of Seller’s governing documents, or any material provision of any agreement or instrument to which Seller is a party or by which it is bound, or any judgment, decree, order, statute, rule or regulation applicable to Seller.

(2)           Seller has taken all necessary action to authorize the execution, delivery and performance of this Contract, and upon the execution and delivery of any document to be delivered by Seller on or prior to the Closing, this Contract and such document shall constitute the valid and binding obligation and agreement of Seller, enforceable against Seller in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors.

  

  

  

(3)           Seller has not incurred any liability, contingent or otherwise, for brokers’ or finders’ fees relating to the transactions contemplated by this Contract for which Buyer shall have any responsibility whatsoever.

(4)           Seller owns all right, title and interest to the Acquired Interests that is evidenced by an instrument or instruments filed of record in accordance with the conveyance and recording laws of the applicable jurisdiction to the extent necessary to prevail against competing claims of bona fide purchasers for value without notice.

(5)           There are no material liens, claims, infringements, burdens and other defects or encumbrances on the Acquired Interests, except as set forth in Exhibit “C”.  For the purposes of Seller’s Representations and Warranties, rights of way, easements, and any surface use agreements which affect or cross the Acquired Interests, granted or entered into by Seller or Seller's predecessors in title prior to the Effective Date shall not be considered material claims, liens, or encumbrances.  Except as set forth in Exhibit “C”, there are no lawsuits, claims, proceedings or investigations pending or, to the knowledge of Seller, threatened against or affecting Seller regarding the Acquired Interests, or the legality or propriety of the transactions contemplated by this Contract.

                        (6)           The Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) or any state securities laws, and may not be transferred or resold without (i) registration under the Securities Act and any applicable state securities laws or (ii) an exemption from the registration and qualification requirements of the Securities Act and applicable state securities laws.  It is understood that, except as provided below, certificates evidencing the Purchased Shares may bear the following or any similar legend: “The securities represented hereby may not be transferred unless (i) such securities have been registered for sale pursuant to the Securities Act (ii) such securities may be sold pursuant to Rule 144 or (iii) Buyer has received an opinion of counsel reasonably satisfactory to it that such transfer may lawfully be made without registration under the Securities Act of 1933, as amended, or qualification under applicable state securities laws.  Notwithstanding the foregoing, the securities may be pledged in connection with a bona fide margin account secured by the securities.”

(7)           The Shares have been acquired for Seller’s own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the Securities Act. Seller can bear the economic risk and complete loss of its investment in the Shares and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby.

(8)           The Buyer has been furnished with or has had full access to all of the Buyer’s reports, schedules, forms, statements and other documents required to be filed by the Company with the Securities and Exchange Commission as of the Effective Date (the “SEC Documents”) pursuant to the reporting requirements of the Exchange Act of 1934, as amended (the “Exchange Act”), and in making its decision to acquire the Shares, Seller has relied solely on the information set forth in the SEC Documents and the representations and warranties of the Buyer contained in this Contract. At the time the Buyer was first offered the Shares, it was, and as of the date hereof it is an “accredited investor” as defined in Rule 501 of the Securities Act.  Buyer is not in the possession of, and has not made any investment decision to purchase the Shares, any material non-public information regarding the Company.

  

  

  

(9)           To date, Seller has not drilled any wells on the lands described in the Second Correction Quitclaim Deed.

(10)           Seller has received no written notification that any governmental or quasi-governmental authority has determined that there are any violations of any Environmental Law (as hereinafter defined) with respect to the Acquired Interests, nor to Seller's knowledge has Seller received any written notice that any governmental or quasi-governmental authority is contemplating an investigation of the Acquired Interests, with respect to a violation or suspected violation of any Environmental Law.  For purposes hereof, “Environmental Law” shall mean any federal or state law, ordinance, rule, regulation, order, judgment, injunction or decree relating to pollution or substances or materials which are considered to be hazardous or toxic, and all federal and state regulations and publications promulgated or issued pursuant thereto.

B.           Buyer's Representations and Warranties.

(1)          Buyer represents and warrants to Seller that it has the full right and authority and has obtained all necessary consents and approvals to enter into this Contract and close the transactions it contemplates.  The execution and delivery of this Contract does not, and the fulfillment of and compliance with the terms and conditions hereof will not, as of the Effective Date, violate, or be in conflict with, any material provision of Buyer’s governing documents, or any material provision of any agreement or instrument to which Buyer is a party or by which it is bound, or any judgment, decree, order, statute, rule or regulation applicable to Buyer.

(2)          Buyer is a reporting company and its common stock is currently listed for quotation on the Over-the-Counter Bulletin Board (“OTCBB”).  During the two year period preceding the Effective Date, the Company has filed with the Securities and Exchange Commission (the “SEC”) all SEC Documents.

(3)          The Shares are duly authorized and reserved for issuance and, upon issuance to Seller, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof, except those under applicable securities laws and the terms of this Contract and shall not be subject to preemptive rights or other similar rights of stockholders of Buyer and will not impose personal liability upon the holder thereof.  As of the Effective Date, the Shares represent at least 50 percent (50%) of the issued and outstanding stock of Buyer (on a pre-forward split basis).

  

  

  

5.           Additional Covenants and Contracts of the Parties.

A.           For a period of three (3) years from the Effective Date, the Seller shall have the right to nominate one (1) director to the Board, and to the extent permitted by applicable law, the Company shall use its reasonable best efforts to cause the election of Seller’s nominee to the Company’s Board.  The Seller may nominate its designee at every annual meeting of the stockholders of the Company in which directors are elected, including at every adjournment or postponement thereof, and on any action or approval by written consent of the stockholders of the Company relating to the election of directors generally, provided that except as set forth in Section 5.C. below, the Seller may not have any more than one designee on the Board at any time, and the provisions of this Section 5.A. shall be at all times subject to the provisions of the Company Articles of Incorporation and Bylaws.    In the event Seller’s director designee fails to be elected to the Board  following any annual or special general meeting of the shareholders at which the designee stood for election but was nevertheless not elected, the Company will promptly, and in any event not later than three (3) days following such meeting of the shareholders, appoint a replacement director designated in writing by the Seller to the Board either by expanding the size of the Board or, to the extent permitted by applicable law, causing a non-Seller designee to resign.

B.           For a period of three (3) years following the Effective Date, Buyer agrees to file with the SEC all periodic reports (including Forms 10-K and 10-Q) required by the Exchange Act.

C.           On or before the expiration of three (3) years from the Effective Date, Buyer shall spend at least One Million Dollars ($1,000,000) towards obtaining a National Instrument 43-101 report, or other comparable report regarding the Acquired Interests.  In the event Buyer does not spend at least $1,000,000 towards obtaining an National Instrument 43-101 report on or before the expiration of three (3) years from the Effective Date, then Buyer agrees, upon written demand by Seller and to the extent permitted by applicable law, to cause Buyer’s then existing directors (other than any director appointed by Seller) to immediately resign, and Seller shall have the right to appoint an additional number of directors to Buyer’s Board such that Seller will have a majority representation on Buyer’s board of directors.  If any director who is to resign from the Board pursuant to the preceding refuses or otherwise fails to tender his or her resignation in accordance with the foregoing within ten (10) calendar days of the date of the event giving rise to the resignation event, then the Company shall call and hold a special meeting of stockholders of the Company as promptly as practicable for the purpose of removing such director.

D.           The Buyer will use commercially reasonable efforts to maintain the listing or quotation (as applicable) of its common stock on the OTCBB or the OTCQB (or any successors to any of the foregoing), and will use commercially reasonable efforts to comply in all material respects with Buyer’s obligations under the rules of such markets.

E.           Upon Seller’s receipt of the full purchase price, Seller shall deliver to Buyer a quitclaim deed, the form of which is attached hereto as Exhibit “B” (the “Quitclaim Deed”), documenting the sale, transfer, and assignment to Buyer of the Acquired Interests.

  

  

  

F.           Upon request of Buyer, for a period of six (6) months following the Effective Date, Seller shall cause all of its shares of Buyer common stock beneficially owned by the Seller as to which it is entitled to vote at any meeting of stockholders to be voted in favor of the following corporate actions:

(1)           The name change of Buyer;

(2)           A forward split of Buyer’s common stock, to be effected at a range between 10-for-1 or 20-for-1, to be effected at the discretion of the Buyer’s Board;

(3)           The creation of a new series of preferred stock, which may have up to fifteen (15) times the voting rights of Buyer’s common stock; however, such the conversion ratio of such preferred stock shall not exceed a ratio of one (1) share of common stock for each share of preferred stock; and

(4)           Electing or re-electing (as applicable) each member of any slate of directors recommended by the Buyer’s Board.

G.           For a period of one (1) year following the Effective Date, Seller shall not, without the prior written consent of Buyer, offer, pledge, sell, contract to sell, sell any option or contract to purchase, lend, transfer or otherwise dispose of any Shares.  Seller further agrees that the Buyer is authorized to place “stop orders” on its books to prevent any transfer of the Shares in violation of this Section.

H.           For a period of eighteen (18) months following the Effective Date, Buyer agrees not to sell or transfer the Acquired Interests without first obtaining Seller’s written consent, which shall not be unreasonably withheld, except (i) in the event of a merger or consolidation or sale of all or substantially all of the Buyer’s assets, where the surviving or successor entity in such transaction (a) assumes the Company’s obligations hereunder and (b) is a publicly traded corporation whose common stock is listed or quoted on the OTC Bulletin Board, OTCQB, Nasdaq, NYSE or AMEX or (ii) where such sale or transfer is to (y) a wholly owned subsidiary of the Buyer or (z) any joint venture, mining partnership, commercial partnership, or other partnership relationship entered into by Buyer for purposes of exploring, developing, exploiting, extracting, or mining the minerals comprising the Acquired Assets.

I.           Within seven (7) business days following the Effective Date, Seller shall deliver to Buyer any such deed, termination statement, release, authorization, or other document as Buyer may reasonably deem necessary or required to terminate and release any and all liens, security interests, charges or encumbrances upon the Acquired Interests as described in that certain Mortgage, Security Agreement, Financing Statement and Assignment of Production and Revenue by and between Sun River Energy, Inc., as Mortgagor/Debtor and Sierra Foxtrot, LP, Thimothy S. Wafford and James E. Pennington, as Mortgagees/Secured Parties, Dated June 4, 2012, filed in the Official Records of Colfax County, New Mexico, Document No. 201201705.

  

  

  

6.           Indemnification.

A.           Indemnification by Seller. Following the Closing, Seller shall indemnify and hold Buyer, its affiliates, shareholders, members, officers, directors, employees, representatives and agents of each of the foregoing harmless from and against any and all costs, fees, expenses, damages, deficiencies, interest and penalties (including, without limitation, reasonable attorneys' fees and disbursements) suffered or incurred by any such indemnified party in connection with any and all losses, liabilities, claims, damages and expenses ("Losses"), arising out of, or in any way relating to, (i) any breach of any representation or warranty of Seller contained in this Contract, and (ii) any breach of any covenant of Seller contained in this Contract which survives the Closing.

B.           Indemnification by Buyer. Following the Closing, Buyer shall indemnify and hold Seller, its affiliates, shareholders, members, officers, directors, employees, representatives and agents of each of the foregoing harmless from any and all Losses arising out of, or in any way relating to, (a) any breach of any representation or warranty by Buyer contained in this Contract, and (b) any breach of any covenant of Buyer contained in this Contract which survives the Closing.

C.           Survival.  The provisions of this Section shall survive until the date which is one five (5) years after the Effective Date, unless a longer or shorter survival period is expressly provided for in this Contract.

7.           Taxes.  All ad valorem taxes assessed against the Acquired Interests for all time periods prior to the Effective Date shall be the responsibility of the Seller, and all ad valorem taxes assessed against the Acquired Interests for all time periods subsequent to the Effective Date shall be the responsibility of the Buyer.  If the sale of the Acquired Interests by Seller to Buyer causes any taxing jurisdiction to reclassify or reassess the Acquired Interests and impose additional taxes for any time period prior to the Effective Date, such taxes shall be the responsibility of the Buyer.  If Buyer pays any taxes which are the responsibility of Seller, Seller shall promptly reimburse Buyer the amounts paid by Buyer upon receipt of written evidence of such payment.

8.           Counterparts.  This Contract may be executed in counterparts, each of which shall be deemed an original and both considered one and the same Contract.  To facilitate the execution and delivery of this Contract, the parties may execute and exchange counterparts of the signature pages by electronic means, including facsimile or pdf, and the signature page of either party to any counterpart may be appended to any other counterpart. This Contract shall only be binding on Seller and Buyer when executed by both of the parties.

  

  

  

9.           Notices.  Wherever any notice or other communication is required or permitted hereunder, such notice or other communication shall be in writing and shall be delivered by overnight courier, hand, facsimile transmission or other electronic transmission (including email transmission of a PDF), or sent by U.S. registered or certified mail, return receipt requested, postage prepaid, to the addresses or facsimile numbers set out below or at such other addresses as are specified by written notice delivered in accordance herewith:

Buyer:   Mericol, Inc.

5795 Ave. Decelles, Ste. 511

Montreal, QC H3S2C4

Canada

Attn: ___________________

Facsimile: _______________

Email: _______________

SELLER:  Sun River Energy, Inc.

5646 Milton Street, Suite 130

Dallas, Texas 75206

Attn: Donal R. Schmidt, Jr.

Facsimile: 214-369-7300

Email: drschmidt@snrv.com

Any notice or other communication (i) mailed as hereinabove provided shall be deemed effectively given or received on the third (3rd) Business Day following the postmark date of such notice or other communication, (ii) sent by overnight courier or by hand shall be deemed effectively given or received upon receipt, and (iii) sent by facsimile or other electronic transmission (including email) shall be deemed effectively given or received on the day of such electronic transmission of such notice or other communication and confirmation of such transmission, if transmitted and confirmed prior to 7:00 p.m. local Houston, Texas time on a Business Day and otherwise shall be deemed effectively given or received on the first Business Day after the day of transmission of such notice and confirmation of such transmission. Refusal to accept delivery shall be deemed delivered. Any notice may be given by a party's attorney.

10.           Governing Law.  THIS CONTRACT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.

11.           Severability.  This Contract is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations. If any provision of this Contract, or the application thereof to any person or circumstance, shall, for any reason and to any extent be invalid or unenforceable, the remainder of this Contract and the application of such provision to other persons or circumstances shall not be affected thereby but rather shall be enforced to the greatest extent permitted by law.

12.           Entire Contract.  This Contract constitutes the entire agreement between the parties with respect to the sale of the Acquired Interests by Seller to Buyer and supersedes all prior proposals, offers, and agreements with respect to the Acquired Interests.  Neither party has made any representations or statements to the other party which are not contained in this Contract, nor has any party relied upon any representation or statement of the other party which are not set forth in this Contract.

13.           Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Contract and the consummation of the transactions contemplated hereby.

  

  

  

14.           Survival of Representations and Warranties.  The representations and warranties of this Contract shall survive the close of the sale of the Acquired Interests by Seller to Buyer and shall be deemed covenants running with the Acquired Interests, binding on Seller and Buyer and their respective heirs, successors and assigns.

[Signature page follows]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

This Contract is executed by Buyer and Seller as of the date of acknowledgment of the respective signatures, but shall be deemed effective as of the Effective Date provided in paragraph 2.

	
SELLER

	
BUYER

	  	  
	
SUN RIVER ENERGY, INC.

 

 

By:___________________________________

 

Printed Name: Donal R. Schmidt, Jr.

 

Its: President & CEO

 

Date:_________________________________

 

	
MERICOL, INC.

 

 

By:__________________________________

 

Printed Name:________________________

 

Its:__________________________________

 

Date:________________________________

 

 

 

 

 

  

  

  

Exhibit “A”

Description of Lands

Sun River Energy, Inc’s right, title and interest only in and to the coal, gold, silver, copper, and iron ore, which may be owned by Grantor, in and to the lands located in Colfax County, New Mexico described or identified in that certain Second Correction Quitclaim Deed executed January 10, 2011 from Robert A. Doak, Jr. and Frances L. Doak to Sun River Energy, Inc. document # 201100123 filed in the records of Colfax County, New Mexico on January 12, 2011.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

Exhibit “B”

QUITCLAIM DEED

SUN RIVER ENERGY, INC., a Colorado corporation, with an address of 5646 Milton Street, Suite 130, Dallas, Texas 75206 (“Grantor”) for and in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt of which is hereby acknowledged, hereby quitclaims to Mericol, Inc. with an address of 5795 Ave. Decelles, Ste. 511, Montreal, QC H3S2C4, Canada (“Grantee”), their successors and assigns forever, Grantor’s right, title and interest only in and to the coal, gold, silver, copper, and iron ore, which may be owned by Grantor, in and to the lands located in Colfax County, New Mexico described or identified in that certain Second Correction Quitclaim Deed executed January 10, 2011 from Robert A. Doak, Jr. and Frances L. Doak to Sun River Energy, Inc. document # 201100123 filed in the records of Colfax County, New Mexico on January 12, 2011.

RESERVING, HOWEVER, unto Grantor, all timber, oil and gas, including coalbed methane gas, and all other minerals and mineral substances except the coal, gold, silver, copper and iron ore herein conveyed.

This Quitclaim Deed is made expressly subject to that certain Contract for Sale between Grantor and Grantee dated July 27, 2012.

Witness the hand and seal of the Grantor as of the ________ of ____________, 2012.

	  	
SUN RIVER ENERGY, INC.

	  	  
	  	
By: _________________________________

	  	
Donal R. Schmidt, Jr., President & CEO

 

	
STATE OF TEXAS

	
§

	  	
§

	
COUNTY OF DALLAS

	
§

This instrument was acknowledged before me on ___ day of ______________, 2012 by Donal R. Schmidt, Jr. as President and CEO of Sun River Energy, Inc., a Colorado Corporation, on behalf of said corporation, who personally appeared, is known to me to be the identical person who executed the within and foregoing instrument as President and CEO and on behalf of Sun River Energy, Inc., and he acknowledged that he executed same as his free and voluntary act and deed as the free and voluntary act and deed of the corporation for the purposes therein set forth.

 

	
________________________

	
_____________________________

	
Commission Expires

	
Notary Public for the State of Texas

  

  

  

Exhibit “C”

Material Liens or Encumbrances

	
  

	
1)

	
Mortgage, Security Agreement, Financing Statement and Assignment of Production and Revenue by and between Sun River Energy, Inc., as Mortgagor/Debtor and Sierra Foxtrot, LP, Thimothy S. Wafford and James E. Pennington, as Mortgagees/Secured Parties, Dated June 4, 2012.  Filed in the Official Records of Colfax County, New Mexico, Document No. 201201705.

 

	
  

	
2)

	
Ancillary Writ of Attachment the State of New Mexico filed in Cause No. D-509-CV-201200007; BW Raton, LLC v. Sun River Energy, Inc., CPR Interests, LLC, Robert Wilkinson, Tom Pollman and Matthew Parker, in the 8th Judicial District Court State of New Mexico, County of Colfax.

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