Document:

ex101.htm

FULUCAI PRODUCTIONS LTD.

 

- and -

 

CANYON E&P INC.

	 
	 
	 SHARE PURCHASE AGREEMENT
	 

 

September 28, 2013

  

  

  

TABLE OF CONTENTS

	 	 Page
	
ARTICLE I INTERPRETATION

	
3

	
1.1

	
DEFINED TERMS

	
7

	
1.2

	
BEST OF KNOWLEDGE

	
7

	
1.3

	
SCHEDULES AND EXHIBITS

	
7

	
1.4

	
CURRENCY

	
7

	
1.5

	
CHOICE OF LAW

	
7

	
1.6

	
HEADINGS, CROSS REFERENCES, ETC.

	
7

	
1.7

	
INCLUSIVE TERMINOLOGY

	
8

	
1.8

	
NUMBER AND GENDER

	
8

	
1.9

	
TIME OF ESSENCE

	
8

	
1.10

	
STATUTES

	
8

	
ARTICLE II PURCHASE AND SALE

	
8

	
2.1

	
PURCHASE AND SALE

	
8

	
2.2

	
CONSIDERATION

	
9

	
2.3

	
ADJUSTMENTS

	
9

	
ARTICLE III REPRESENTATIONS AND WARRANTIES

	
10

	
3.1

	
REPRESENTATIONS AND WARRANTIES OF THE VENDOR

	
10

	
3.2

	
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

	
18

	
ARTICLE IV SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND LIMITATION OF LIABILITY

	
20

	
4.1

	
SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE VENDOR

	
20

	
4.2

	
SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF PURCHASER

	
21

	
4.3

	
LIMITATION PERIODS

	
21

	
4.4

	
LIABILITY FOR BREACH OF REPRESENTATIONS AND WARRANTIES

	
21

	
ARTICLE V COVENANTS

	
22

	
5.1

	
COVENANTS OF THE VENDOR

	
22

	
5.2

	
COVENANTS OF THE PURCHASER

	
23

	ARTICLE VI CLOSING 22	23
	
6.1

	
CLOSING ARRANGEMENTS

	
23

	
6.2

	
DOCUMENTS TO BE DELIVERED

	
23

	
ARTICLE VII GENERAL PROVISIONS

	
24

	
7.1

	
PUBLIC DISCLOSURE

	
24

	
7.2

	
FURTHER ASSURANCES

	
24

	
7.3

	
REMEDIES CUMULATIVE

	
24

	
7.4

	
COUNTERPARTS

	
25

	
7.5

	
LEGAL AND OTHER PROFESSIONAL FEES

	
25

	
7.6

	
ASSIGNMENT

	
25

	
7.7

	
SUCCESSORS AND ASSIGNS

	
25

	
7.8

	
ENTIRE AGREEMENT

	
25

	
7.9

	
AMENDMENTS

	
25

	
7.10

	
SURVIVAL

	
25

  

2

  

SHARE PURCHASE AGREEMENT

 

THIS AGREEMENT is made this 28th day of September, 2013;

 

BETWEEN:

 

FULUCAI PRODUCTIONS LTD., a body corporate formed under the laws of the State of Nevada and extra-provincially registered under the laws of the Province of Alberta and having its registered office in the City of Calgary, Alberta

 

(hereafter referred to as the "Purchaser")

AND:

 

CANYON E&P INC. , body corporate formed under the laws of the State of Texas and having offices in the City of Roswell, New Mexico

 

(hereafter referred to as the "Vendor")

 

WHEREAS:

 

	
A.

	
the Vendor is the registered and beneficial owner of all of the issued and outstanding common shares and preferred shares (collectively, the "Target Shares") in the capital of Blue Sky NM Inc  (“Blue Sky”) a body corporate formed under the laws of the State of New Mexico  and having an office in the City of Roswell, New Mexico; and

 

	
B.

	
the Purchaser wishes to purchase the Target Shares from the Vendor and the Vendor wishes to sell the Target Shares to the Purchaser on the terms and subject to the conditions set out in this Agreement;

 

NOW THEREFORE, in consideration of the respective covenants, agreements, representations and warranties set out herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows.

 

 

ARTICLE I

 

INTERPRETATION

 

1.1           Defined Terms

 

Whenever used in this Agreement or in any of the Schedules hereto, unless there is something in the subject matter or context inconsistent therewith, the following words and terms will have the indicated meanings and grammatical variations of such words and terms will have corresponding meanings:

 

	
  

	
(a)

	
"Act" means the Business Corporations Act (Alberta), as in effect on the date hereof;

 

	
  

	
(b)

	"Affiliate" has the meaning ascribed thereto in the Act;

  

3

 

 

	
  

	
(c)

	
"Agreement" means this Share Purchase Agreement, including the Schedules attached hereto, as it may be amended, restated or replaced from time to time;

 

	
  

	
(d)

	
"Annual Financial Statements" means the annual financial statements of Blue Sky. "arm's length" has the meaning ascribed thereto in the Tax Act;

 

	
  

	
(e)

	
"Associate" has the meaning ascribed thereto in the Act;

 

	
  

	
(f)

	
"Authorization" means, with respect to any Person, any order, permit, approval, consent, waiver, certification, license, registration, clearance or similar authorization of any Governmental Authority having jurisdiction over that Person;

 

	
  

	
(g)

	
"Business" means the oil and natural gas exploration and development business conducted by Blue Sky as at the date hereof;

 

	
  

	
(h)

	
"Closing" has the meaning ascribed thereto in Section 6.1;

 

	
  

	
(i)

	
"Closing Date" means October 30th, 2013, or such other date as the Parties may agree upon in writing;

 

	
  

	
(j)

	
"Closing Time" means the time on the Closing Date that the Parties actually close the purchase and sale of the Target Shares as contemplated herein;

 

	
  

	
(k)

	
"Consideration Shares" has the meaning ascribed thereto in Section 2.2;

 

	
  

	
(l)

	
"Contract" means any agreement, indenture, understanding, contract, lease, deed of trust, license, option, instrument or other commitment, whether in writing or otherwise;

 

	
  

	
(m)

	
"Effective Date" means August 1st, 2013;

 

	
  

	
(n)

	
"Encumbrances" means mortgages, charges, pledges, security interests, liens, encumbrances, claims, adverse interests and acquisition rights of third parties of any nature whatsoever or howsoever arising, and any rights or privileges capable of becoming any of the foregoing;

 

	
  

	
(o)

	
"Environmental Laws" means all applicable statutes, regulations, ordinances, by-laws, guidelines, standards and codes, now or hereafter in force or existence in Canada and elsewhere (whether federal, provincial, or municipal) relating to the protection and preservation of the environment, occupational health and safety or Hazardous Substances;

 

	
  

	
(p)

	
"Governmental Authority" means any: (i) federal, provincial, state, municipal, local or other government, governmental or public department, central bank, court, commission, board, bureau, agency or instrumentality, domestic or foreign; (ii) subdivision or authority of any of the foregoing; or (iii) quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under, on behalf of or for the account of any of the foregoing;

  

4

  

 

 

	
  

	
(q)

	
"Hazardous Substance" means any contaminant, waste, hazardous substance, toxic substance, hazardous waste or dangerous goods as defined under any Environmental Laws or any pollutant or other substance that, when released to the environment or into the workplace, is likely to cause, immediately or at a future time, material harm or degradation to the environment or such workplace or material risk to human health;

 

	
  

	
(r)

	
"IFRS" means International Financial Reporting Standards as issued by the International Accounting Standards Board;

 

	
  

	
(s)

	
"Laws" means any and all laws, including all statutes, codes, ordinances, decrees, rules, regulations, municipal by-laws, judicial or arbitral or administrative or ministerial or departmental or regulatory judgments, orders, decisions, rulings or awards, policies, guidelines, and the common law, the civil law and equity;

 

	
  

	
(t)

	
"Leases" means the Real Property Leases;

 

	
  

	
(u)

	
"Licenses" means all licenses, permits, approvals, registrations and qualifications to do business held by Blue Sky;

 

	
  

	
(v)

	
"Material Adverse Change" means, with respect to Blue Sky, any change in the business, operations, earnings, results of operations, assets, capitalization, financial condition, Licenses, Leases, rights, liabilities, prospects or privileges, whether contractual or otherwise, of Blue Sky (other than any such change resulting from conditions generally affecting the oil and natural gas exploration and development industry in the geographic region in which Blue Sky operates) that is materially adverse to Blue Sky, and, without limiting the generality of the foregoing, any such change resulting in an impairment in the value of Blue Sky of at least $100,000 will be deemed to constitute a Material Adverse Change;

 

	
  

	
(w)

	
"Parties" means the parties to this Agreement and "Party" means any one of them;

 

	
  

	
(x)

	
"Person" includes any individual, corporation, limited liability company, unlimited liability company, body corporate, partnership, limited liability partnership, firm, joint venture, syndicate, association, capital venture fund, private equity fund, trust, trustee, executor, administrator, legal personal representative, estate, Governmental Authority and any other form of entity or organization, whether or not having legal status;

 

	
  

	
(y)

	
"Personal Information" means information about an identifiable individual, but does not include business contact information provided the collection, use or disclosure, as the case may be, of such business contact information is for the purposes of contacting an individual in that individual's capacity as an employee or an official of an organization and for no other purpose;

  

5

  

 

	
  

	
(z)

	
"Purchaser's Counsel" means TingleMerrett LLP;

 

	
  

	
(aa)

	
"Real Property Leases" means the leases listed in Exhibits B1 through B5 attached to this Agreement;

 

	
  

	
(bb)

	
"Release" means any release, spill, leak, emission, discharge, leach, dumping, escape or disposal that is or has been made in contravention of any Environmental Laws;

 

	
  

	
(cc)

	
"Regulatory Approval" means any approval, consent, ruling, authorization, registration, notice, permit or acknowledgement that may be required from a Person pursuant to any applicable Law, or under the terms of any License, in connection with the sale of the Target Shares to the Purchaser and the issuance of the Consideration Shares to the Vendor in accordance with the terms of this Agreement;

 

	
  

	
(dd)

	
"Returns" means all reports, estimates, elections, designations, forms, declarations of estimated tax, information statements and returns relating to, or required to be filed in connection with, any Taxes;

 

	
  

	
(ee)

	
"Schedules" means, collectively, the schedules attached to this Agreement;

 

	
  

	
(ff)

	
"Tax" or "Taxes" means all taxes, duties, fees, premiums, assessments, imposts, levies and other charges of any kind whatsoever imposed by any Governmental Authority, together with all interest, penalties, fines, additions to tax or other additional amounts imposed in respect thereof, including those levied on, or measured by, or referred to as, income, gross receipts, profits, capital, large corporation, capital gain, alternative minimum, transfer, land transfer, sales, goods and services, harmonized sales, use, value-added, excise, stamp, withholding, business, franchising, property, employer health, payroll, employment, health, social services, education and social security taxes, all surtaxes, all customs duties and import and export taxes, all employment insurance, health insurance and the Canada Pension Plan, any other pension plan established or operated by any Governmental Authority and workers compensation premiums or contributions, including any interest, fines or penalties for failure to withhold, collect or remit any tax and any liability for such taxes imposed by Law with respect to any other Person arising pursuant to any tax sharing, indemnification or other agreements or any liability for taxes of any predecessor or transferor entity whether disputed or not;

 

	
  

	
(gg)

	
"Tax Act" means the Income Tax Act (Canada), as in effect on the date hereof; and

 

	
  

	
(hh)

	
"Transferred Information" means the Personal Information disclosed or transferred to the Purchaser or any of its representatives or agents by or on behalf of the Vendor or Blue Sky as a result of or in conjunction with the transactions contemplated herein, and includes all such Personal Information disclosed to the Purchaser during the period leading up to and including the completion of the transactions contemplated herein.

  

6

  

1.2           Best of Knowledge

 

Except as otherwise expressly set out in this Agreement, any reference herein to "the best of the knowledge" or "the knowledge" of the Vendor or words to like effect will be deemed to mean the actual knowledge of the senior officers and directors of the Vendor and the knowledge that such individuals would have had if they had conducted a reasonably diligent inquiry into the relevant subject matter.

 

1.3           Schedules and Exhibits

 

The Schedules, as listed below, are incorporated into this Agreement by reference and are deemed to be part hereof:

 

	
Schedule

	  	
Description

	
Schedule 3.1(b)

	  	
Vendor's Contractual and Regulatory Approvals

	
Schedule 3.1(n)

	  	
Compliance with Constating Documents, Agreements and Laws

	
Schedule 3.2(q)

	  	
Commitments for Capital Expenditures

	
Exhibit A

	  	
Well List

	
Exhibits B1-B5

	  	
Lease Maps

	
Exhibit C

	  	
Field Locations Map

	
Exhibit D

	  	
Dead Aim Investments – Agreement to Assign Interests

	
Exhibit E

	  	
Dead Aim Investments – Escrow Agreement

 

1.4           Currency

 

Unless otherwise indicated, all dollar amounts referred to in this Agreement are stated in Canadian currency.

 

1.5           Choice of Law

 

This Agreement, and each of the documents contemplated by or delivered under or in connection with this Agreement (to the extent no choice of law is specified therein) shall be governed by and construed in accordance with the laws of the Province of Alberta and the federal laws of Canada applicable therein (without reference to conflicts of laws principles that might result in the application of the laws of another jurisdiction).

 

1.6           Headings, Cross References, Etc.

 

The division of this Agreement into articles, sections, paragraphs, subsections and clauses and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.  The terms "this Agreement", "hereof", "herein", "hereunder" and similar expressions refer to this Agreement and the Schedules hereto and not to any particular article, section, paragraph, clause or other portion hereof and include any agreement or instrument supplementary or ancillary hereto.  Unless otherwise indicated, any reference in this Agreement to an Article, Section, recital, paragraph, subsection, clause or Schedule refers to the specified Article, Section, recital, paragraph, subsection, clause or Schedule of this Agreement. The Parties acknowledge that their respective legal counsel have reviewed and participated in settling the terms of this Agreement, and the Parties agree that any rule of construction to the effect that any ambiguity is to be resolved against the drafting party shall not be applicable in the interpretation of this Agreement.

  

7

 

1.7           Inclusive Terminology

 

Whenever used in this Agreement, unless there is something in the subject matter or context inconsistent therewith, the words "includes" and "including" and similar words will not, unless expressly modified by the words "only" or "solely", be construed as terms of limitation, but rather will mean "includes but is not limited to" and "including but not limited to", so that references to included matters will be regarded as illustrative without being either characterizing or exhaustive.

 

1.8           Number and Gender

 

In this Agreement, unless there is something in the subject matter or context inconsistent therewith: (i) words importing the singular number include the plural and vice versa; and (ii) words importing the use of any gender include all genders including the neutral gender "it".

 

1.9           Time of Essence

 

Time shall be of the essence hereof.

 

1.10           Statutes

 

Unless otherwise provided herein, any reference to a statute or regulation in this Agreement shall refer to such statute or regulation as in effect at the date of this Agreement.

 

ARTICLE II

 

PURCHASE AND SALE

 

2.1           Purchase and Sale

 

On the terms and subject to the fulfillment or waiver of the conditions set out herein, the Vendor will, on the Closing Date, sell, assign and transfer the Target Shares to the Purchaser, and the Purchaser will, on the Closing Date, purchase and accept the Target Shares from the Vendor, free and clear of all Encumbrances and with all rights and benefits attaching thereto.

  

8

  

2.2          Consideration

 

The total aggregate consideration payable by the Purchaser to the Vendor hereunder for the Target Shares and the performance by the Vendor of its obligations under this Agreement will be paid to the Vendor at Closing through the issuance to the Vendor of 65,000,000 Class "A" Shares (the "Consideration Shares") in the capital stock of the Purchaser. The full issuance of the Consideration Shares to be issued by the Purchaser to the Vendor are dependent on the independent reserve report (currently being completed by American Energy Advisors 1 Technology Drive, Suite 217 Irvine CA 92618) stating that Blue Sky’s assets are valued at a minimum of $40 million based on the value of proven and 1⁄2 probable reserves of Blue Sky at a 10% net present value discount.  Should the value be less than $40 million, the number of Consideration Shares to be issued by the Purchaser to the Vendor shall be reduced by one million (1,000,000) shares of every $1 million of value below $40 million for the Blue Sky assets.  In any event, the minimum number of Consideration Shares to be issued by the Purchaser to the Vendor, in any event, shall not be less than 40 million shares.  The Vendor hereby acknowledges that the Consideration Shares will be issued to the Vendor pursuant to exemptions from prospectus and registration requirements set out in applicable securities laws and, as a result, the Consideration Shares will be subject to restrictions on resale under applicable securities laws.  The Vendor further acknowledges that the Vendor will have no right to require the Purchaser to register the Consideration Shares under securities laws in force in any jurisdiction, to qualify the Consideration Shares for distribution under securities laws in force in any jurisdiction or to otherwise take steps to cause the Consideration Shares to be freely tradable under the securities laws in force in any jurisdiction. The Vendor and the Purchaser shall file their respective tax returns based upon and in accordance with such allocation and will not make any inconsistent statements or take any inconsistent positions on any tax returns or in any refund claims or during the course of any audits by any taxing authorities. In addition on the Closing Date, Vendor shall provide a "statement of accounts" of Blue Sky and amounts advanced by the Vendor to Blue Sky,  less any income, shall be reimbursed as of the Effective Date.  The Purchaser will have the right to audit such expenses to its satisfaction and if any discrepancy is noted and confirmed by the Purchaser and Vendor, then such amount shall be returned by the Vendor or, as the case may be, paid by the Purchaser.

 

2.3           Adjustments

 

At Closing, the Purchaser will deposit 15% of the Consideration Shares payable to the Vendor in accordance with Section 2.2 above, in escrow, to be released by the Purchaser to the Vendor when all title deficiencies and cash adjustments have been satisfied in accordance with the terms of this Agreement.

  

9

  

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Vendor

 

The Vendor hereby represents and warrants to the Purchaser as follows and acknowledges that, notwithstanding any independent searches or investigations that may be undertaken by or on behalf of the Purchaser and notwithstanding any information or document provided to the Purchaser (unless this Agreement is specifically qualified by reference to such information) or any knowledge of the Purchaser, the Purchaser is relying upon the accuracy of each of such representations and warranties in connection with its purchase of the Target Shares.

 

	
  

	
(a)

	
Right and Authority. The Vendor has the legal capacity and good and sufficient right and authority to enter into this Agreement and to transfer the legal and beneficial title to and ownership of the Target Shares to the Purchaser, free and clear of all Encumbrances and to perform all of its other obligations hereunder.

 

	
  

	
(b)

	
Contractual and Regulatory Approvals.  Except as set out in Schedule 3.1(b), neither the Vendor nor Blue Sky is subject to any obligation, contractual or otherwise, to request or obtain the consent of any Person, and no Authorizations of, or notifications to, any Governmental Authority are required to be obtained or given by Blue Sky or the Vendor:

 

	
  

	
(i)

	
in connection with the execution, delivery or performance by the Vendor of this Agreement or the completion of the transactions contemplated hereby;

 

	
  

	
(ii)

	
to avoid the loss or termination of any Contract to which Blue Sky are a party or any License held by Blue Sky;

 

	
  

	
(iii)

	
in order that the authority, right and qualification of Blue Sky to carry on the Business in the ordinary course and in the same manner as conducted prior to the date hereof remains in good standing and in full force and effect as of and following the Closing Date; or

 

	
  

	
(iv)

	
in order that all rights, benefits, Contracts and other assets of Blue Sky required to carry on the Business in the ordinary course and in the same manner as conducted prior to the date hereof remain in effect for the benefit of Blue Sky on the same terms as of and following the Closing Date.

 

True and complete copies of any Contracts and Licenses under which Blue Sky or the Vendor is obligated to request or obtain any such consent have been provided to the Purchaser prior to the date hereof.

 

	
  

	
(c)

	
Corporate Authority, Execution and Binding Obligation.  Each of Blue Sky and the Vendor has taken all necessary actions and steps (such as corporate proceedings) to approve and authorize the sale and transfer of the Target Shares to the Purchaser and all necessary consents and approvals of the stockholders of the Vendor have been obtained to permit the Vendor to sell the Target Shares to the Purchaser as provided for herein.  This Agreement has been duly executed and delivered by the Vendor and this Agreement constitutes a legal, valid and binding obligation of the Vendor enforceable against the Vendor in accordance with its terms, subject only to: (i) bankruptcy, winding-up, insolvency, arrangement and other laws of general application affecting the enforcement of creditors' rights; and (ii) the general principles of equity, including the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunctive relief.

 

  

10

  

	
  

	
(d)

	
Title to Target Shares. The Target Shares are validly issued and outstanding as fully paid and non-assessable shares in the share capital of Blue Sky. The Target Shares are owned by the Vendor as the registered and beneficial owner thereof with good and marketable title, free and clear of all Encumbrances. Following Closing, the Purchaser will have good and valid title to the Target Shares, free and clear of all Encumbrances (except Encumbrances created by or on behalf of the Purchaser).

 

	
  

	
(e)

	
No Other Purchase Agreement or Commitments.  Except for the Purchaser's rights under this Agreement, no Person has any agreement, option, understanding or commitment (written or verbal) or any right or privilege (whether by Law, pre-emptive or contractual) capable of becoming an agreement, option, understanding or commitment, including convertible securities, warrants or convertible obligations of any nature, for:

 

	
  

	
(i)

	
the purchase or acquisition of any of the Target Shares;

 

	
  

	
(ii)

	
the purchase, subscription, allotment or issuance of, or conversion into, any of the unissued shares in the capital of Blue Sky or any other securities of Blue Sky; or

 

	
  

	
(iii)

	
the purchase or other acquisition from Blue Sky of any of its undertaking, property or assets (except sales of petroleum products produced by Blue Sky in the ordinary course of the Business).

 

	
  

	
(f)

	
Corporate Records.  The corporate records and minute books of Blue Sky as made available to the Purchaser are complete and up-to-date in all material respects and contain, without limitation (i) accurate minutes of all meetings of the directors and shareholders of Blue Sky and each committee of the board of directors of Blue Sky, (ii) all written resolutions adopted by the directors and shareholders of Blue Sky and each committee of the board of directors of Blue Sky, (iii) all articles and by-laws, and (iv) accurate registers of the shareholders of Blue Sky and transactions involving the shares of Blue Sky.  All such meetings of the directors and shareholders of Blue Sky and any committee of the board of directors of Blue Sky were duly called and held and all resolutions reflected in the foregoing minutes and all of the foregoing written resolutions were duly passed and approved.

 

	
  

	
(g)

	
Authorized and Issued Capital.  The authorized share capital of Blue Sky is 100,000 common shares and the issued share capital is 100 common shares.  No shares or other securities of Blue Sky have been issued in violation of any Laws, the articles, by-laws or other constating documents of Blue Sky or the terms of any Contract to which Blue Sky is a party or by which Blue Sky is bound.

 

	
  

	
(h)

	
Financial Statements.  The Annual Financial Statements have been prepared in accordance with IFRS applied on a basis consistent with previous fiscal years, are true, correct and complete in all material respects and present fairly the assets, liabilities and financial condition of Blue Sky as at the dates thereof and the results of operations and cash flows for the periods to which such financial statements relate.  There has been no Material Adverse Change in Blue Sky since the date of the Annual Financial Statements.

  

11

 

 

	
  

	
(i)

	

Title to Petroleum, Natural Gas and Related Hydrocarbon Assets. Although it does not warrant title, the Vendor has no reason to believe that Blue Sky does not have title to its oil and natural gas properties and an irrevocable right to produce and sell petroleum, natural gas and related hydrocarbons attributable thereto (for the purposes of this paragraph, the foregoing are collectively referred to as the "Blue Sky Interests"), excepting the mortgages and security interest held by Dead Aim Investments as per the Agreement to Assign Interests and Escrow Agrement from Dead Aim Investments to Canyon E&P, attached hereto as Exhibit D. Vendor represents and warrants that, to the best of the Vendor's knowledge, the Blue Sky Interests are free and clear of adverse claims created by, through or under Blue Sky, and, to the best of its knowledge, Blue Sky holds the Blue Sky Interests under valid and subsisting leases, licenses, permits, concessions, concession agreements, contracts, subleases, reservations or other agreements, except where the failure to so hold the Blue Sky Interests would not reasonably be expected to have a material adverse effect upon Blue Sky.

 

	
  

	
(j)

	
No Defects. The Vendor is not aware of any defects, failures or impairments in the title of Blue Sky to its oil and natural gas properties, whether or not an action, suit, proceeding or inquiry is pending or threatened and whether or not discovered by any third party.  If there are any defects, failures or impairments in the title of Blue Sky’s oil and natural gas properties, or if Blue Sky has lost title to any of its oil and natural gas properties, or if the leases for any of the properties have expired with the State or Federal body, then the Vendor shall pay, at its sole cost and expense, the monies required to get title to those properties back and for the credit of the Purchaser.  In the event that the defects, failures, impairments of title or return of title of any of the properties cannot be established, then an adjustment to the number of Consideration Shares issued to the Vendor shall be made on a basis which is proportionate to the value of such properties, as agreed to between the Vendor and the Purchaser.  Once agreed, the Vendor will then return the agreed to number of shares to the Purchaser.

 

	
  

	
(k)

	
Good Standing.  To the knowledge of the Vendor:

 

	
  

	
(i)

	
Blue Sky is in good standing under all, and is not in default under any; and

 

	
  

	
(ii)

	
there is no existing condition, circumstance or other matter that constitutes a default under, or which, with the passage of time or the giving of notice, would constitute a default under, any, leases or other title or operating documents, joint venture agreements, or any other Contracts or instruments pertaining to Blue Sky's oil and natural gas assets or properties and, to the knowledge of the Vendor, all such leases, title and operating documents, joint venture agreements and other agreements and instruments are in good standing and in full force and effect and none of the counterparties to any such lease, title or operating document, joint venture agreement or other Contract or instrument is in default thereunder except to the extent that such default would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on Blue Sky.

 

  

12

 

 

	
  

	
(l)

	
Abandonment.  All wells abandoned by Blue Sky prior to the date hereof and all wells located on any lands in which Blue Sky has an interest, or lands with which such lands have been pooled or unitized, which have been abandoned, have been abandoned in accordance, in all material respects, with applicable Laws regarding the abandonment of wells and good oilfield practice.

 

	
  

	
(m)

	
Notices, Orders and Directives from Governmental Authorities.  Blue Sky:

 

	
  

	
(i)

	
has not received any notices, orders or directives from any Governmental Authority, including the Oil Conservation Department (the "OCD"), with respect to any of its oil and natural gas properties or with respect to the conduct of its oil and natural gas operations on such properties, which remain outstanding or have not been satisfied or remedied as at the date hereof; and

 

	
  

	
(ii)

	
to the best of the knowledge of the Vendor, is in compliance with all OCD regulations with respect to its oil and natural gas operations,

 

except where the failure to satisfy or remedy such notices, orders or directives, or such noncompliance with OCD regulations would not reasonably be expected to have a material adverse effect on Blue Sky.

 

	
  

	
(n)

	
Compliance with Constating Documents, Agreements and Laws.  The execution, delivery and performance of this Agreement by the Vendor and the sale of the Target Shares as contemplated hereby, will not constitute or result in a violation or breach of or default under, or give rise to termination rights, or, except as set out in Schedule 3.1(n), cause the acceleration of any obligations of the Vendor or Blue Sky, under:

 

	
  

	
(i)

	
the terms of any Contract or other obligation or restriction to which Blue Sky or the Vendor is a party or by which either of them is bound; or

 

	
  

	
(ii)

	
any term or provision of any of the Licenses or any Authorization or any Laws.

 

	
  

	
(o)

	
Financial Records.  All material financial transactions of Blue Sky have been recorded in its financial books and records in accordance with good business practice and IFRS, and such financial books and records accurately reflect the basis for the assets, liabilities and financial condition of Blue Sky as shown in the Annual Financial Statements.

 

	
  

	
(p)

	
Liabilities.  As of the date hereof, there are no liabilities (whether accrued, absolute, contingent or otherwise) of Blue Sky of any kind whatsoever, and there is no basis for assertion against Blue Sky of any liabilities of any kind, other than:

  

13

  

	 	
(i)

	liabilities disclosed or reflected in the Annual Financial Statements as of the Effective Date;

 

	
  

	
(ii)

	
current liabilities incurred since the date of the Annual Financial Statements that were incurred in the ordinary course of business and which do not in the aggregate exceed $700,000; or

 

	
  

	
(iii)

	
other liabilities expressly disclosed in this Agreement or in the Schedules.

 

	
  

	
(q)

	
Commitments for Capital Expenditures.  Except as disclosed in Schedule 3.1(q), Blue Sky has not committed to make any capital expenditures or authorized any capital expenditures (in either case in excess of $10,000 in the aggregate) that have not been fulfilled or paid prior to the date hereof.

 

	
  

	
(r)

	
Taxes.

 

	
  

	
(i)

	
All ad valorem, property, production, severance and similar taxes and assessments based on or measured by the ownership of property or the production of hydrocarbon substances, or the receipt of proceeds therefrom, payable in respect of the oil and natural gas assets and properties of Blue Sky prior to the date hereof have been properly and fully paid and discharged, and there are no unpaid Taxes or assessments that could result in a lien or charge on any of the oil and natural gas assets and properties of Blue Sky, except for unpaid Taxes or assessments, liens or charges (A) that are not yet due and owing or (B) that do not and would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on Blue Sky.

 

	
  

	
(ii)

	
All Returns required to be filed by Blue Sky prior to the date hereof have been duly filed on a timely basis, are true, complete and correct in all material respects, all Taxes shown to be payable on such Returns or on subsequent assessments and reassessments with respect thereto have been paid in full on a timely basis, and no other Taxes are payable by Blue Sky with respect to items or periods covered by such Returns.

 

	
  

	
(iii)

	
Blue Sky has paid or provided adequate accruals for all Taxes reflected in the Annual Financial Statements.

 

	
  

	
(iv)

	
No material deficiencies exist or have been asserted in respect of Blue Sky with respect to Taxes.  Blue Sky is not a party to any action or proceeding for assessment, reassessment or collection of Taxes, nor, to the knowledge of the Vendor, is there any basis for the assertion of any such action or proceeding. No waiver or extension of any statute of limitations is in effect with respect to Taxes or Returns. Except as disclosed by Blue Sky to the Purchaser in writing prior to the date hereof, the Returns have never been audited by a Governmental Authority, nor is any audit, assessment, reassessment, claim, action, suit, investigation or proceeding in process or, to the knowledge of the Vendor, pending or threatened, which resulted in

  

14

  

or could result in a claim for Taxes owing by Blue Sky.  Blue Sky has withheld all Taxes required to be withheld under applicable Laws and has paid or remitted on a timely basis, the full amount of any Taxes that have been withheld to the applicable Governmental Authority.

 

	
  

	
(s)

	
Litigation.  There are no actions, suits or proceedings, judicial or administrative (whether or not purportedly on behalf of the Vendor or Blue Sky), pending or, to the best of the knowledge of the Vendor, threatened, by or against or affecting the Vendor or Blue Sky, at law or in equity, or before or by any Governmental Authority and there are, to the knowledge of the Vendor, no grounds on which any such action, suit or proceeding might be commenced with any reasonable likelihood of success.

 

	
  

	
(t)

	
Environmental Matters.

 

	
  

	
(i)

	
Except to the extent that any violation or other matter referred to below in this paragraph would not reasonably be expected to have a material adverse effect on Blue Sky:

 

	
  

	
(A)

	
to the best of the knowledge of the Vendor, Blue Sky is not in violation of any Environmental Laws;

 

	
  

	
(B)

	
to the best of the knowledge of the Vendor, Blue Sky has, at all times, operated the Business and has received, handled, used, stored, treated, shipped and disposed of all Hazardous Substances in compliance with all Environmental Laws;

 

	
  

	
(C)

	
to the best of the knowledge of the Vendor, there have been no spills, releases, deposits or discharges of Hazardous Substances into the earth, air or into any body of water or any municipal or other sewer or drain water systems by Blue Sky or onto any property owned or occupied by Blue Sky that violate any Environmental Law and that have not been remedied to the full extent required by applicable Environmental Laws;

 

	
  

	
(D)

	
no orders, directions or notices have been issued and remain outstanding pursuant to any Environmental Laws relating to the Business or the assets of Blue Sky;

 

	
  

	
(E)

	
Blue Sky has not failed to report to the proper Governmental Authority the occurrence of any event that was required to be reported under any Environmental Law; and

 

	
  

	
(F)

	
with respect to those oil and natural gas properties that Blue Sky operates, Blue Sky holds all licenses, permits and approvals required under any Environmental Laws in connection with the operation of the Business and the ownership and use of its assets, all such licenses, permits and approvals are in full force and effect, and except for notifications and conditions of general application to assets of reclamation obligations under legislation in any jurisdiction in which it conducts the Business, Blue Sky has not received any notification pursuant to any Environmental Laws that any work, repairs, constructions or capital expenditures are required to be made by it as a condition of continued compliance with any Environmental Laws, or any Authorization issued pursuant thereto, or that any Authorization referred to above is about to be reviewed, made subject to any limitation or conditions, revoked, withdrawn or terminated.

  

15

  

	
  

	
(u)

	
Leases. Complete and correct copies of the Leases have been provided to the Purchaser prior to the date hereof.  Blue Sky is entitled to the rights and benefits as lessee under each of the Leases commensurate with its interest therein and Blue Sky has not sublet, assigned, licensed or otherwise conveyed any rights in the Leased Premises or in the Leases to any Person.  All rental and other payments and other obligations required to be paid and performed by Blue Sky pursuant to each of the Leases have been duly paid and performed and each of the Leases is in good standing and force and effect.

 

	
  

	
(v)

	
Restrictions on Doing Business.  Blue Sky is not a party to or bound by any agreement that would restrict or limit its right to carry on any business or activity or to solicit business from any Person or otherwise to conduct the Business as Blue Sky may determine or desire.  Blue Sky is not subject to any legislation or any judgment, order or requirement of any Governmental Authority that is not of general application to Persons carrying on a business similar to the Business. There are no facts or circumstances that could materially adversely affect the ability of Blue Sky to continue to operate the Business, as presently conducted, following the completion of the transactions contemplated by this Agreement.

 

	
  

	
(w)

	
Employees.  As of the date hereof, there are no employees of Blue Sky.

 

	
  

	
(x)

	
Employment Agreements.  Blue Sky is not a party to any written or oral employment, service or consulting agreement relating to any one or more Persons, except for oral employment agreements that are of indefinite term and without any special arrangements or commitments with respect to continuation of employment or payment of any particular amount upon termination of employment (whether actual, constructive or otherwise).  Blue Sky does not have any employee who cannot be dismissed upon such period of notice as is required by law (statutory and common law) in respect of a contract of hire for an indefinite term.

 

	
  

	
(y)

	
Transferred Information.  The Transferred Information does not contain any Personal Information that does not solely and directly relate to the operation of the Business by Blue Sky or the completion of the transactions as contemplated herein.

  

16

  

	
  

	
(z)

	Collection, Use and Disclosure of Personal Information. All Personal Information collected by Blue Sky was collected from employees of Blue Sky and used and disclosed solely for the purposes of establishing, managing or terminating the applicable employment relationship (including, determining eligibility for initial employment, verifying references and qualifications, administering pay and benefits, processing employee work-related claims (such as workers' compensation or insurance claims), establishing training and development requirements, conducting performance reviews, determining performance requirements, assessing qualifications for a particular job or task, establishing a contact point in the event of an emergency (such as next of kin), and, complying with applicable labour or employment statutes). Personal Information has not been collected, used, disclosed, stored or retained by Blue Sky from any other individuals or for any purposes other than those set out above in this Paragraph 3.1(z), except such purposes that are required or authorized by applicable Laws.

 

	
  

	
(aa)

	
Compliance with Privacy Laws.  Blue Sky has operated the Business in accordance with applicable privacy Laws.

 

	
  

	
(bb)

	
Non-Arm's Length Matters.  Blue Sky is not a party to or bound by any Contract with, is not indebted to, and no amount is owing by Blue Sky to, the Vendor or any Affiliates of the Vendor or any officers, former officers, directors, former directors, shareholders, former shareholders, employees (except for oral employment agreements with employees) or former employees of the Vendor or Blue Sky or any of their respective Associates or any other Person not dealing at arm's length with any of the foregoing.

 

	
  

	
(cc)

	
Disclosure.  No representation or warranty contained in Section 3.1 and no statement contained in any Schedule, certificate, list, summary or other document provided, or to be provided, to the Purchaser pursuant hereto, or in connection with the purchase and sale of the Target Shares as contemplated hereby, contains or will contain any untrue statement of a material fact, or omits or will omit to state any material fact that is necessary in order to make the statements contained therein not misleading.  All facts and documents in the possession or under the control of the Vendor or Blue Sky and which are material to Blue Sky and the Business have been disclosed to the Purchaser in this Agreement or made available to the Purchaser through the data room established by the Vendor in connection with the sale of the Target Shares to the Purchaser or have otherwise been disclosed in writing by the Vendor to the Purchaser.  Without limiting the generality of the foregoing, the Vendor has not failed to disclose to the Purchaser any fact or information concerning the Vendor or Blue Sky that would reasonably be considered material to a purchaser of the Target Shares.

 

	
  

	
(dd)

	
Investment Intent.  The Consideration Shares are being purchased for the Vendor's own investment portfolio and account (and not on behalf of, and without the participation of, any other Person) with the intent of holding such Consideration Shares for investment and without the intent of participating, directly or indirectly, in a distribution of the Consideration Shares and not with a view to, or for resale in connection with, a distribution of the Consideration Shares.

  

17

  

 

	
  

	
(ee)

	
No Advertising.  The Vendor acknowledges that the Consideration Shares were not offered to the Vendor by means of publicly disseminated advertisements or sales literature, nor is the Vendor aware of any offers made to other Persons by such means.

 

	
  

	
(ff)

	
Investment Experience.  The Vendor is an "accredited investor" (as defined in Rule 501 promulgated under the Securities Act of 1933, as amended (the "Securities Act")) and is knowledgeable and experienced in finance, securities and investments and has had sufficient experience analyzing and investing in securities similar to the Consideration Shares so as to be capable of evaluating the merits and risks of an investment in the Consideration Shares.  The Vendor is able to bear the economic risk of an investment in the Consideration Shares.

 

	
  

	
(gg)

	
Restricted Securities.  The Vendor understands that the Consideration Shares will not have been registered pursuant to the Securities Act or any applicable state securities laws, that the Consideration Shares will be characterized as "restricted securities" under federal securities laws, and that under such laws and applicable regulations the Consideration Shares cannot be sold or otherwise disposed of without registration under the Securities Act or an exemption therefrom.  In this connection, the Vendor represents that it is familiar with Rule 144 promulgated under the Securities Act, as currently in effect, and understands the resale limitations imposed thereby and by the Securities Act.  Stop transfer instructions may be issued to any transfer agent for securities of the Purchaser (or a notation may be made in the appropriate records of the Purchaser) in connection with the Consideration Shares.

 

	
  

	
(hh)

	
No Public Market.  The Vendor understands that no public market now exists for the Consideration Shares, and that the Purchaser has made no assurances that a public market will ever exist for the Consideration Shares.

 

	
  

	
(ii)

	
Legend.  A legend indicating that the Consideration Shares have not been registered under applicable federal and state securities laws and referring to the restrictions on transferability and sale of the Consideration Shares pursuant to this Agreement or otherwise may be placed on any certificate(s) or other document delivered to the Vendor or any substitute therefor and any transfer agent of the Purchaser may be instructed to require compliance therewith.

 

3.2           Representations and Warranties of the Purchaser

 

The Purchaser hereby represents and warrants to the Vendor as follows, and acknowledges that, notwithstanding any independent searches or investigations that may be undertaken by or on behalf of the Vendor and notwithstanding any information or document provided to the Vendor (unless this Agreement is specifically qualified by reference to such document in this Agreement), the Vendor is relying upon the accuracy of each of such representations and warranties in connection with the sale of the Target Shares to the Purchaser.

  

18

 

 

	
  

	
(a)

	
Corporate Authority and Binding Obligation.  The Purchaser has the legal capacity and good and sufficient right and authority to enter into this Agreement and to purchase the Target Shares from the Vendor in the manner contemplated herein and to perform all of the Purchaser's obligations under this Agreement.  The Purchaser and its board of directors have taken all necessary or desirable actions, steps and corporate and other proceedings to approve or authorize, validly and effectively, the entering into and the execution and delivery of this Agreement and the performance by the Purchaser of its obligations hereunder.  This Agreement constitutes a legal, valid and binding obligation of the Purchaser, enforceable against it in accordance with its terms, subject to:

 

	
  

	
(i)

	
bankruptcy, insolvency, moratorium, reorganization and other laws relating to or affecting the enforcement of creditors'  rights generally; and

 

	
  

	
(ii)

	
the general principles of equity, including that equitable remedies, such as the remedies of specific performance and injunctive relief, may only be granted in the discretion of a court of competent jurisdiction.

 

	
  

	
(b)

	
Purchaser's Contractual and Regulatory Approvals.  The Purchaser is not under any obligation, contractual or otherwise, to request or obtain the consent of any Person, and no Authorizations of, or notifications to, any Governmental Authority are required to be obtained or given by the Purchaser in connection with the execution, delivery or performance by the Purchaser of this Agreement, the issuance of the Consideration Shares or the completion of any of the transactions contemplated herein.  The representation and warranty of the Purchaser contained in this Section 3.2(b) insofar as such representation and warranty pertains to compliance by the Purchaser with the requirements of applicable U.S. state or federal securities laws with respect to the offer and sale of the Consideration Shares, is based on the representations and warranties of the Vendor contained in Sections 3.1(dd), 3.1(ee), 3.1(ff), 3.1(gg), 3.1(hh) and 3.1(ii).

 

	
  

	
(c)

	
Compliance with Constating Documents, Agreements and Laws.  The execution, delivery and performance of this Agreement and the completion of the purchase of the Target Shares as contemplated hereby, including the issuance of the Consideration Shares, will not constitute or result in a violation or breach of or default under:

 

	
  

	
(i)

	
any term or provision of any of the articles, by-laws or other constating documents of the Purchaser;

 

	
  

	
(ii)

	
the terms of any Contract to which the Purchaser is a party or by which it is bound; or

 

	
  

	
(iii)

	any term or provision of any Authorization of the Purchaser or any applicable Law.

  

19

  

 

	
  

	
(d)

	
Authorized and Issued Capital.  The authorized capital of the Purchaser consists of an unlimited number of common shares, an unlimited number of Class "A" Shares and an unlimited number of preferred shares, issuable in series, of which, as at the date hereof and prior to the issuance of the Consideration Shares, 90,000,000 common shares are issued and outstanding as fully paid and non-assessable shares of the Purchaser.

 

	
  

	
(e)

	
Corporate Records.  The corporate records and minute books of the Purchaser as made available to the Vendor are complete and up-to-date in all material respects and contain, without limitation (i) accurate minutes of all meetings of the directors and shareholders of the Purchaser, (ii) all written resolutions adopted by the directors and shareholders of the Purchaser, (iii) all articles and by-laws, and (iv) accurate registers of the shareholders of the Purchaser and transactions involving the shares of the Purchaser.  All such meetings of the directors and shareholders of the Purchaser were duly called and held and all resolutions reflected in the foregoing minutes and all of the foregoing written resolutions were duly passed and approved.

 

	
  

	
(f)

	
No Material Business Operations.  As at the date hereof, the Purchaser is not engaged in any material business operations or activities, other than in respect of: (i) this Agreement and the matters and transactions contemplated hereby; (ii) the private placement of up to $1.5 million of common shares in the capital of the Purchaser at a sale price of $.25 per share; (iii) the ongoing evaluation by the Purchaser of oil and natural gas assets for potential acquisition (in relation to which, the Purchaser has entered into confidentiality agreements with third parties).

 

	
  

	
(g)

	
No Actions, Suits, Proceedings.  There are no actions, suits or other proceedings, investigations or claims in progress or pending against the Purchaser and, to the best of the Purchaser's knowledge, there are no actions, suits or other proceedings, investigations or claims threatened against the Purchaser.

 

ARTICLE IV

 

SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND LIMITATION OF LIABILITY

 

4.1           Survival of Representations and Warranties of the Vendor

 

The representations and warranties made by the Vendor in this Agreement, or contained in any document or certificate given in order to carry out the transactions contemplated hereby, will survive Closing and, notwithstanding Closing or any investigation made by or on behalf of the Purchaser or any knowledge of the Purchaser, shall continue in full force and effect for the benefit of the Purchaser subject to the following provisions:

 

  

20

  

 

	
  

	
(a)

	except as provided in (b) and (c) of this Section 4.1, no claim may be made or brought by the Purchaser in respect of the breach of any representation or warranty of the Vendor after the date that is two years following the Closing Date;

 

	
  

	
(b)

	
any claim that is based upon or relates to a breach of any representation and warranty made in Section 3.1(r) must be made or brought prior to the expiration of the period (if any) during which an assessment, reassessment or other form of recognized document assessing liability for tax, interest or penalties in respect of such taxation year under applicable tax legislation could be issued (or, in the case of any such assessment or reassessment, until the issues in dispute have been fully resolved), assuming that Blue Sky does not file any waiver or similar document in respect of such taxes after the Closing Date extending such period as otherwise determined; and

 

	
  

	
(c)

	
any claim that is based upon or relates to the representations and warranties made in Sections 3.1(a), 3.1(b), 3.1(c), 3.1(d) and 3.1(e), or that is based upon intentional misrepresentation or fraud by the Vendor may be made or brought by the Purchaser at any time for the maximum period permitted by Law. [NTD: confirm cross references as agreement is finalized]]

 

4.2           Survival of Representations and Warranties of Purchaser

 

The representations and warranties made by the Purchaser in this Agreement, or contained in any document or certificate given in order to carry out the transactions contemplated hereby, will survive Closing and, notwithstanding Closing or any investigation made by or on behalf of the Vendor or any knowledge of the Vendor, shall continue in full force and effect for the benefit of the Vendor until the date that is two years after the Closing Date and no claim may be made or brought by the Vendor in respect of the breach of any representation or warranty of the Purchaser after the date that is two years following the Closing Date.

 

4.3           Limitation Periods

 

The Parties agree that applicable statutory limitation periods will be extended to correspond with the survival periods set out in Section 4.1(a) and 4.2 above.

 

4.4           Liability for Breach of Representations and Warranties

 

The maximum liability of the Vendor in respect of claims for breach of any of the representations and warranties of the Vendor set out in this Agreement shall not exceed the total consideration paid to the Vendor in accordance with Section 2.2 and, all monies actually spent by the Purchaser for expenses, less any income received by the Purchaser, relating to the operation of the oil and natural gas assets held by Blue Sky as per the Commitments for Capital Expenditures outlined in Schedule 3.1(q) hereof and the recourse of the Purchaser under any such claims shall be to the Consideration Shares, any dividends or other distributions that may be derived therefrom and, all monies actually spent by the Purchaser for expenses, less any income received by the Purchaser, relating to the operation of the oil and natural gas assets held by Blue Sky as per the Commitments for Capital Expenditures outlined in Schedule 3.1(q).

  

21

  

ARTICLE V

 

COVENANTS

 

5.1           Covenants of the Vendor

 

The Vendor covenants with the Purchaser that it will do, or will cause Blue Sky to do, the following:

 

	
  

	
(a)

	
Transfer of Target Shares.  At Closing, the Vendor shall cause the Target Shares to be duly and regularly sold, assigned and transferred to the Purchaser in accordance with the terms of this Agreement.

 

	
  

	
(b)

	
Consents.  The Vendor shall use commercially reasonable efforts to obtain, prior to the Closing Date, all of the consents referred to in Schedule 3.1(b), in a form reasonably acceptable to the Purchaser.

 

	
  

	
(c)

	
Regulatory Approvals.  The Vendor shall use commercially reasonable efforts to obtain, or cause Blue Sky to obtain, the Regulatory Approvals described in Section 3.1(b), including assisting with the preparation of, providing information, documentation and materials required in connection with, and executing all documents reasonably required for, any such Regulatory Approvals and shall use commercially reasonable efforts to effect, or to cause Blue Sky to effect, any necessary registrations, filings and submissions of information required to obtain the Regulatory Approvals.

 

	
  

	
(d)

	
Filings with Governmental Authorities.  The Vendor will provide all cooperation reasonably requested by the Purchaser, and will use reasonable commercial efforts to cause Blue Sky to provide all cooperation reasonably requested by the Purchaser, in connection with the preparation of any filings required by any Governmental Authority, including tax Returns, and, without limitation, will promptly make available to the Purchaser all such information and documents concerning the Business as the Purchaser may reasonably request and will make senior management personnel of the Vendor available on a reasonable basis, and will use reasonable commercial efforts to cause Blue Sky to make senior management of Blue Sky available on a reasonable basis, in a timely manner, to meet with representatives of the Purchaser to respond to any inquiries that the Purchaser may wish to make in connection with the preparation of any such filings.

 

	
  

	
(e)

	
Representations.  The Vendor shall use commercially reasonable efforts to ensure that all of the representations contained in Section 3.1 are true and correct at the Closing Time.

 

	
  

	
(f)

	
Compliance with Applicable Securities Laws.  During the period of 60 days following the Closing Time the Vendor shall permit the Purchaser to audit the books, records and accounts of the Vendor and/or Blue Sky respecting the Assets, to enable the Purchaser to prepare such reports and statements, and make such filings, as may be required for the Purchaser to comply with applicable securities laws. The audit shall be conducted upon reasonable notice to Vendor at Vendor’s offices during normal business hours and shall be conducted with full cooperation of the Vendor and at the sole expense of the Purchaser.

  

22

 

5.2           Covenants of the Purchaser

 

The Purchaser covenants to and with the Vendor that it shall do or cause to be done the following:

 

	
  

	
(a)

	
Issuance of Consideration Shares.  The Purchaser will take all necessary corporate action to authorize the issuance of the Consideration Shares at Closing as validly issued, fully paid and non-assessable common shares in the capital of the Purchaser.

 

	
  

	
(b)

	
Representations.  The Purchaser shall use commercially reasonable efforts to ensure that all of the representations contained in Section 3.2 are true and correct at the Closing Time.

 

	
  

	
(c)

	
Directorship. Following Closing or earlier as may be agreed to between the Vendor and Purchaser, the Purchaser shall appoint two (2) nominees of the Vendor to the Board of Directors of the Purchaser whereafter the Board of Directors shall consist of three (3) nominees of the Purchaser and two (2) nominees of the Vendor.

 

	
  

	
(d)

	
Name Change.  As soon as practicable following Closing, the Purchaser shall change its name to “Blue Sky Oil & Gas Inc.” or any other name agreed to between the Vendor and Purchaser.

 

ARTICLE V

 

CLOSING

 

6.1           Closing Arrangements

 

Subject to waiver or satisfaction of the conditions set out herein, the purchase and sale of the Target Shares shall be completed at 2:00 p.m. (Calgary time) on the Closing Date at the offices of the Purchaser's Counsel in Calgary Alberta, or at such other time or place or in such other manner as the Parties may agree in writing (the "Closing").  Closing shall be conditional upon the Closing Date occurring on or before October 30, 2013, unless extended by mutual consent of the parties hereto.

 

6.2           Documents to be Delivered

 

At or before the Closing Time, the Vendor shall execute, or cause to be executed, and shall deliver, or cause to be delivered, to the Purchaser, all agreements, instruments, notices, releases, confirmations, receipts, certificates and other documents that the Purchaser may reasonably request to complete the purchase and sale of the Target Shares as contemplated by this Agreement, in form and substance reasonably satisfactory to the Purchaser and the Purchaser shall execute, or cause to be executed, and shall deliver, or cause to be delivered, to the Vendor, in form and substance reasonably satisfactory to the Vendor, all agreements, instruments, notices, certificates and other documents that the Vendor may reasonably request to complete the purchase and sale of the Target Shares as contemplated by this Agreement, including the following:

  

23

  

 

	
  

	
(a)

	
Vendor's Documents:

 

	
  

	
(i)

	
all share certificates representing the Target Shares duly endorsed for transfer to the Purchaser; and

 

	
  

	
(ii)

	
duly executed resignations and releases of claims of Ilyas Chaudhary as the sole officer and director of Blue Sky.

 

	
  

	
(b)

	
Purchaser's Documents:

 

	
  

	
(i)

	
a share certificate representing the Consideration Shares registered in the name of the Vendor.

 

ARTICLE VI

 

GENERAL PROVISIONS

 

7.1           Public Disclosure

 

Except as may be required by Law or stock exchange rules, no public disclosure of this Agreement or the transactions contemplated hereby will be made by either Party without the prior consent of the other Party, such consent not to be unreasonably withheld, conditioned or delayed.

 

7.2           Further Assurances

 

Each of the Parties hereby covenants and agrees that from time to time after the Closing Date it will, at its expense and upon the request of any other Party, do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, deeds, assignments, transfers, conveyances and assurances as the other Party may reasonably request for the better carrying out and performance of all the terms of this Agreement.

 

7.3           Remedies Cumulative

 

The rights and remedies of the Parties under this Agreement are cumulative and in addition and without prejudice to and not in substitution for any rights or remedies provided by law.  Any single or partial exercise by either Party of any right or remedy for default or breach of any term, representation, warranty, covenant or condition of this Agreement does not waive, alter, affect or prejudice any other right or remedy to which such Party may be lawfully entitled for the same default or breach.

  

24

 

7.4          Counterparts

 

This Agreement may be executed in any number of counterparts and by different Parties on separate counterparts, each of which, when executed and delivered, shall constitute an original and all of which, when taken together, shall constitute one and the same agreement. Delivery of an executed counterpart of this Agreement by facsimile transmission or in portable document format shall constitute delivery of an executed counterpart of this Agreement.

 

7.5          Legal and Other Professional Fees

 

Each of the Parties shall be responsible for its respective legal, accounting, broker and other professional fees in connection with this Agreement and the transactions contemplated hereby.

 

7.6           Assignment

 

Neither Party may assign this Agreement or any of its rights hereunder to any other Person without the prior written consent of the other Party, which consent will not be unreasonably withheld, conditioned or delayed.

 

7.7           Successors and Assigns

 

This Agreement shall be binding upon and enure to the benefit of the Parties and their respective successors and permitted assigns.  Nothing herein, express or implied, is intended to confer upon any Person, other than the Parties and their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

 

7.8           Entire Agreement

 

This Agreement constitutes the entire agreement between the Parties with respect to the purchase and sale of the Target Shares and supersedes all prior agreements, representations, warranties, statements, promises, information, arrangements and understandings, whether oral or written, express or implied, with respect to the purchase and sale of the Target Shares.

 

7.9           Amendments

 

No modification or amendment to this Agreement may be made unless agreed to by the Parties in writing.

 

7.10      Survival

 

Except as otherwise specified in this Agreement, each Party hereby agrees that all provisions of this Agreement shall not merge on, and shall survive, the completion of the transactions contemplated hereby.

  

25

  

IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first written above.

 

	
FULUCAI PRODUCTIONS LTD.

	  	
CANYON E&P INC.

	  	  	  	  	  
	
Per:

	
/s/ Mohammad Fazil

	  	
Per:

	
/s/ Ilyas Chaudhary

	  	
Mo Fazil

President and Chief Executive Officer

	  	  	
Ilyas Chaudhary - President

	  	  	  	  	  

 

  

26

  

SCHEDULE 3.1(b)

 

VENDOR'S CONTRACTUAL AND REGULATORY APPROVALS

 

	
  

	
1.

	
Approval of Vendor's stockholders in respect of the "sale of all or substantially all of its assets or undertaking".

  

27

  

SCHEDULE 3.1(n)

 

COMPLIANCE WITH CONSTATING DOCUMENTS, AGREEMENTS AND LAWS

 

	
YES

	  	
Yes

	  	  	  
	
Initialed By:

	  	
Initialed By:

	
MF

	  	
IC

	  	  	  

 

  

28

  

 

SCHEDULE 3.1(q)

 

COMMITMENTS FOR CAPITAL EXPENDITURES

	  	  	  	  	  	  	  	  	  	  
	
Canyon Liabilaties

	
2013 Expenditure.

	  	  	  	  	  	  	  
	
allocation estimated.

	
Aug

	
Sep

	
Oct

	
Nov

	
Dec

	
Total 2013

	
Total 2014

	
Total 2015

	
Total liabilaties

	
60% buyout/premium

	
$135,000

	  	  	
$100,000

	
$235,000

	
$750,000

	
$400,000

	
$1,385,000

	
Additional bonds

	
$260,000

	
$125,000

	  	  	  	
$385,000

	  	  	
$385,000

	
60% LOC replacement

	
$20,000

	  	
$1,030,000

	  	
$1,050,000

	  	  	
$1,050,000

	
Note ( Ist security)

	
$62,500

	
$287,500

	
$25,000

	
$25,000

	
$25,000

	
$425,000

	
$200,000

	  	
$625,000

	
Misc AP liabilaites

	  	
$250,000

	  	  	
$250,000

	  	  	
$250,000

	
Total

	
$322,500

	
$567,500

	
$275,000

	
$1,055,000

	
$125,000

	
$2,345,000

	
$950,000

	
$400,000

	
$3,695,000

	
 Blue Sky NM share 65%

	
$209,625

	
$368,875

	
$178,750

	
$685,750

	
$81,250

	
$1,524,250

	
$617,500

	
$260,000

	
$2,401,750

  

29

  

EXHIBIT A

 

WELL LIST

	
Exhibit A

	
Well List

	  	  	  	  	  	  	  	  	  	  	  
	  	
Well

	  	  	  	  	  	  	  	  	  
	
Lease Name

	
No.

	
API

	
Lease #

	
Field

	
Field #

	
Dist #

	
County

	
Reservoir

	
Longitude

	
Latitude

	
ARNOTT RAMSEY

	
1

	
30-025-09721

	
029507

	
JALMAT

	
79240

	
1

	
LEA

	
TAN-YATES-7 RVRS (GAS)

	
-103.22949

	
32.15386

	
ARTESIA METEX UNIT

	
1

	
30-015-00940

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.23111

	
32.73729

	
ARTESIA METEX UNIT

	
2

	
30-015-00939

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.23109

	
32.73366

	
ARTESIA METEX UNIT

	
3

	
30-015-00938

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.22678

	
32.73362

	
ARTESIA METEX UNIT

	
4

	
30-015-01944

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.22246

	
32.73359

	
ARTESIA METEX UNIT

	
5

	
30-015-00945

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.2374

	
32.73013

	
ARTESIA METEX UNIT

	
6

	
30-015-00941

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.23309

	
32.73008

	
ARTESIA METEX UNIT

	
7

	
30-015-01197

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.22892

	
32.73004

	
ARTESIA METEX UNIT

	
10

	
30-015-01943

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.22245

	
32.7318

	
ARTESIA METEX UNIT

	
11

	
30-015-01940

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.22029

	
32.73

	
ARTESIA METEX UNIT

	
12

	
30-015-01964

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.21598

	
32.73003

	
ARTESIA METEX UNIT

	
13

	
30-015-01951

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.21373

	
32.73186

	
ARTESIA METEX UNIT

	
14

	
30-015-01947

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.21266

	
32.73006

	
ARTESIA METEX UNIT

	
15

	
30-015-01954

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.20942

	
32.73011

	
ARTESIA METEX UNIT

	
16

	
30-015-00942

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.2374

	
32.7265

	
ARTESIA METEX UNIT

	
17

	
30-015-00947

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.23525

	
32.72648

	
ARTESIA METEX UNIT

	
18

	
30-015-00946

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.23309

	
32.72645

	
ARTESIA METEX UNIT

	
19

	
30-015-01195

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.2289

	
32.72641

	
ARTESIA METEX UNIT

	
20

	
30-015-01196

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.22459

	
32.72636

	
ARTESIA METEX UNIT

	
21

	
30-015-01942

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.22021

	
32.72637

	
ARTESIA METEX UNIT

	
22

	
30-015-01965

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.2169

	
32.72821

	
ARTESIA METEX UNIT

	
23

	
30-015-01941

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.21563

	
32.7264

	
ARTESIA METEX UNIT

	
24

	
30-015-01949

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.21375

	
32.72733

	
ARTESIA METEX UNIT

	
25

	
30-015-01946

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.21159

	
32.72736

	
ARTESIA METEX UNIT

	
26

	
30-015-00962

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.24174

	
32.72474

	
ARTESIA METEX UNIT

	
27

	
30-015-00951

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.23748

	
32.72288

	
ARTESIA METEX UNIT

	
29

	
30-015-01194

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.22888

	
32.72278

	
ARTESIA METEX UNIT

	
30

	
30-015-01193

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.22457

	
32.72273

	
ARTESIA METEX UNIT

	
31

	
30-015-02139

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.22026

	
32.72455

	
ARTESIA METEX UNIT

	
33

	
30-015-02132

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.21375

	
32.72461

	
ARTESIA METEX UNIT

	
34

	
30-015-06127

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.21159

	
32.72464

	
ARTESIA METEX UNIT

	
36

	
30-015-00952

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.23757

	
32.71925

	
ARTESIA METEX UNIT

	
38

	
30-015-00950

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.23326

	
32.7192

	
ARTESIA METEX UNIT

	
39

	
30-015-00948

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.23102

	
32.71917

 

  

30

  

	 	 	 	 	 	 	 	 	 	 	 
	
ARTESIA METEX UNIT

	
40

	  	
300907

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	  	  
	
ARTESIA METEX UNIT

	
41

	
30-015-02136

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.2224

	
32.72091

	
ARTESIA METEX UNIT

	
42

	
30-015-02138

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.21594

	
32.72096

	
ARTESIA METEX UNIT

	
43

	
30-015-02142

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.21373

	
32.72098

	
ARTESIA METEX UNIT

	
44

	
30-015-01190

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.24198

	
32.71571

	
ARTESIA METEX UNIT

	
45

	
30-015-00959

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.23872

	
32.71658

	
ARTESIA METEX UNIT

	
46

	
30-015-00953

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.23551

	
32.71563

	
ARTESIA METEX UNIT

	
47

	
30-015-00955

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.22993

	
32.71738

	
ARTESIA METEX UNIT

	
48

	
30-015-00958

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.22562

	
32.71641

	
ARTESIA METEX UNIT

	
50

	
30-015-01191

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.24604

	
32.71414

	
ARTESIA METEX UNIT

	
51

	
30-015-00966

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.24207

	
32.71209

	
ARTESIA METEX UNIT

	
52

	
30-015-00960

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.23882

	
32.71295

	
ARTESIA METEX UNIT

	
53

	
30-015-00957

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.2345

	
32.7129

	
ARTESIA METEX UNIT

	
55

	
30-015-00986

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.24638

	
32.71032

	
ARTESIA METEX UNIT

	
56

	
30-015-00987

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.24207

	
32.71027

	
ARTESIA METEX UNIT

	
57

	
30-015-00990

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.23775

	
32.71022

	
ARTESIA METEX UNIT

	
59

	
30-015-00949

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.23431

	
32.71652

	
ARTESIA METEX UNIT

	
60

	
30-015-21866

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.21051

	
32.7222

	
ARTESIA METEX UNIT

	
61

	
30-015-21874

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.22693

	
32.72474

	
ARTESIA METEX UNIT

	
62

	
30-015-27157

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.22024

	
32.71911

	
ARTESIA METEX UNIT

	
63

	
30-015-27158

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.23165

	
32.72108

	
ARTESIA METEX UNIT

	
64

	
30-015-27192

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.22672

	
32.72121

	
ARTESIA METEX UNIT

	
65

	
30-015-27193

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.23537

	
32.72104

	
ARTESIA METEX UNIT

	
66

	
30-015-27194

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.23546

	
32.71745

	
ARTESIA METEX UNIT

	
67

	
30-015-27195

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.22455

	
32.7191

	
ARTESIA METEX UNIT

	
68

	
30-015-27196

	
300906

	
ARTESIA

	
03230

	
2

	
EDDY

	
QUEEN-GRAYBURG-SAN ANDRES

	
-104.22242

	
32.72415

	
B I HANSON FEDERAL

	
2

	
30-015-05724

	
301073

	
SHUGART

	
56439

	
2

	
EDDY

	
YATES-7RS-QU-GRAYBURG

	
-103.85516

	
32.68862

	
BARKNEHT

	
1

	
30-005-60817

	
301609

	
BULL'S EYE

	
08190

	
2

	
CHAVES

	
SAN ANDRES

	
-104.03381

	
33.63367

	
BAUM STATE

	
2

	
30-025-28139

	
302072

	
BAUM

	
04940

	
1

	
LEA

	
UPPER PENN

	
-103.64322

	
33.11731

	
DOUBLE L QUEEN UNIT

	
1

	
30-005-60079

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97519

	
33.0578

	
DOUBLE L QUEEN UNIT

	
2

	
30-005-60146

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97421

	
33.03509

	
DOUBLE L QUEEN UNIT

	
3

	
30-005-20338

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.96562

	
33.05143

	
DOUBLE L QUEEN UNIT

	
4

	
30-005-20329

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.96655

	
33.05325

	
DOUBLE L QUEEN UNIT

	
5

	
30-005-20320

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97093

	
33.04325

	
DOUBLE L QUEEN UNIT

	
6

	
30-005-20340

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97204

	
33.03237

	
DOUBLE L QUEEN UNIT

	
7

	
30-005-20395

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.96783

	
33.01785

	
DOUBLE L QUEEN UNIT

	
8

	
30-005-20346

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.95919

	
33.05142

 

  

31

  

	 	 	 	 	 	 	 	 	 	 	 
	
DOUBLE L QUEEN UNIT

	
10

	
30-005-20355

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97205

	
33.02964

	
DOUBLE L QUEEN UNIT

	
11

	
30-005-20348

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.96352

	
33.05687

	
DOUBLE L QUEEN UNIT

	
12

	
30-005-20208

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97085

	
33.06141

	
DOUBLE L QUEEN UNIT

	
22

	
30-005-20984

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.96746

	
33.04868

	
DOUBLE L QUEEN UNIT

	
1A

	
30-005-60138

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.9795

	
33.06775

	
DOUBLE L QUEEN UNIT

	
1D

	
30-005-60117

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97421

	
33.03237

	
DOUBLE L QUEEN UNIT

	
1G

	
30-005-60108

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97412

	
33.05326

	
DOUBLE L QUEEN UNIT

	
1H

	
30-005-60099

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97518

	
33.06413

	
DOUBLE L QUEEN UNIT

	
1I

	
30-005-60097

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97843

	
33.06412

	
DOUBLE L QUEEN UNIT

	
1I

	
30-005-60084

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97524

	
33.04637

	
DOUBLE L QUEEN UNIT

	
1J

	
30-005-60078

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97413

	
33.05145

	
DOUBLE L QUEEN UNIT

	
1K

	
30-005-60080

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97951

	
33.0614

	
DOUBLE L QUEEN UNIT

	
1P

	
30-005-60093

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97526

	
33.04326

	
DOUBLE L QUEEN UNIT

	
1Q

	
30-005-60151

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97421

	
33.02965

	
DOUBLE L QUEEN UNIT

	
1R

	
30-005-60153

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97419

	
33.04054

	
DOUBLE L QUEEN UNIT

	
1Y

	
30-005-60127

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.98258

	
33.06774

	
DOUBLE L QUEEN UNIT

	
2B

	
30-005-60197

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.98903

	
33.08588

	
DOUBLE L QUEEN UNIT

	
2G

	
30-005-60183

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.98056

	
33.07137

	
DOUBLE L QUEEN UNIT

	
2H

	
30-005-60178

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.98257

	
33.07318

	
DOUBLE L QUEEN UNIT

	
2I

	
30-005-60174

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.98472

	
33.07591

	
DOUBLE L QUEEN UNIT

	
2J

	
30-005-60161

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.98471

	
33.07863

	
DOUBLE L QUEEN UNIT

	
2M

	
30-005-60164

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.98688

	
33.07682

	
DOUBLE L QUEEN UNIT

	
2P

	
30-005-60159

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.98687

	
33.08044

	
DOUBLE L QUEEN UNIT

	
2Q

	
30-005-60154

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.98795

	
33.08316

	
DOUBLE L QUEEN UNIT

	
2X

	
30-005-60069

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97518

	
33.06141

	
DOUBLE L QUEEN UNIT

	
2Z

	
30-005-20307

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97086

	
33.05779

	
DOUBLE L QUEEN UNIT

	
3G

	
30-005-20337

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.96353

	
33.04777

	
DOUBLE L QUEEN UNIT

	
3J

	
30-005-20334

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.96994

	
33.04689

	
DOUBLE L QUEEN UNIT

	
3L

	
30-005-20332

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.96352

	
33.05143

	
DOUBLE L QUEEN UNIT

	
3Q

	
30-005-20331

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.96762

	
33.05688

	
DOUBLE L QUEEN UNIT

	
3Y

	
30-005-20330

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.96768

	
33.04415

	
DOUBLE L QUEEN UNIT

	
4A

	
30-005-20327

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.96994

	
33.05053

	
DOUBLE L QUEEN UNIT

	
4G

	
30-005-20325

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.96352

	
33.05324

	
DOUBLE L QUEEN UNIT

	
4Q

	
30-005-20323

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97196

	
33.05325

	
DOUBLE L QUEEN UNIT

	
5A

	
30-005-20308

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97085

	
33.06141

	
DOUBLE L QUEEN UNIT

	
5Q

	
30-005-20339

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.96565

	
33.04599

	
DOUBLE L QUEEN UNIT

	
6Q

	
30-005-20389

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.96777

	
33.02057

	
DOUBLE L QUEEN UNIT

	
8Q

	
30-005-20379

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97207

	
33.02239

	
DOUBLE L QUEEN UNIT

	
9Q

	
30-005-20369

	
029626

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97205

	
33.02602

 

  

32

  

	 	 	 	 	 	 	 	 	 	 	 
	
ELIZABETH

	
1

	
30-005-60610

	
301610

	
BULL'S EYE

	
08190

	
2

	
CHAVES

	
SAN ANDRES

	
-104.0316

	
33.64092

	
ELIZABETH

	
2

	
30-005-60747

	
301610

	
BULL'S EYE

	
08190

	
2

	
CHAVES

	
SAN ANDRES

	
-104.02726

	
33.63729

	
ELIZABETH

	
3

	
30-005-60744

	
301610

	
BULL'S EYE

	
08190

	
2

	
CHAVES

	
SAN ANDRES

	
-104.02724

	
33.64091

	
ELIZABETH

	
4

	
30-005-60705

	
301610

	
BULL'S EYE

	
08190

	
2

	
CHAVES

	
SAN ANDRES

	
-104.03161

	
33.63729

	
ELIZABETH C

	
5

	
30-005-62861

	
301611

	
BULL'S EYE

	
08190

	
2

	
CHAVES

	
SAN ANDRES

	
-104.03161

	
33.63911

	
GRAVES

	
1

	
30-005-60327

	
301604

	
RAILROAD MOUNTAIN

	
50680

	
2

	
CHAVES

	
SAN ANDRES

	
-104.06102

	
33.63719

	
JAMESON

	
1

	
30-025-27825

	
029511

	
JALMAT

	
33820

	
1

	
LEA

	
TAN-YATES-7 RVRS (OIL)

	
-103.25398

	
32.22369

	
JAMESON

	
2

	
30-025-28258

	
029511

	
JALMAT

	
33820

	
1

	
LEA

	
TAN-YATES-7 RVRS (OIL)

	
-103.25397

	
32.22006

	
KUCHEMANN

	
1

	
30-005-60567

	
301605

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02973

	
33.5956

	
KUCHEMANN

	
2

	
30-005-60580

	
301605

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.03071

	
33.59197

	
KUCHEMANN

	
3

	
30-005-60906

	
301605

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02332

	
33.59197

	
KUCHEMANN

	
4

	
30-005-60693

	
301605

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02743

	
33.59705

	
KUCHEMANN

	
5

	
30-005-60805

	
301605

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02756

	
33.59378

	
MARLISUE QUEEN UNIT

	
1

	
30-005-62102

	
300273

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.97981

	
33.08868

	
MARLISUE QUEEN UNIT

	
2

	
30-005-60526

	
300273

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.9847

	
33.08952

	
MARLISUE QUEEN UNIT

	
3

	
30-005-62101

	
300273

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.984

	
33.0915

	
MARLISUE QUEEN UNIT

	
4

	
30-005-60510

	
300273

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.9847

	
33.08589

	
MARLISUE QUEEN UNIT

	
6

	
30-005-60646

	
300273

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.98203

	
33.0927

	
MARLISUE QUEEN UNIT

	
7

	
30-005-62324

	
300273

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.98261

	
33.08818

	
MARLISUE QUEEN UNIT

	
8

	
30-005-60585

	
300273

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.98056

	
33.09044

	
MARLISUE QUEEN UNIT

	
1Z

	
30-005-62531

	
300273

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.982

	
33.09

	
MARLISUE QUEEN UNIT

	
3Z

	
30-005-62099

	
300273

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.98503

	
33.08731

	
MARLISUE QUEEN UNIT

	
4Z

	
30-005-62100

	
300273

	
DOUBLE L

	
19100

	
2

	
CHAVES

	
QUEEN (ASSOC)

	
-103.98191

	
33.08565

	
MCDERMOTT

	
1

	
30-005-60921

	
301606

	
BULL'S EYE

	
08190

	
2

	
CHAVES

	
SAN ANDRES

	
-104.04253

	
33.63273

	
NANCY

	
1

	
30-005-61267

	
301612

	
BULL'S EYE

	
08190

	
2

	
CHAVES

	
SAN ANDRES

	
-104.03377

	
33.64273

	
NE SQUARE LAKE UNIT

	
2

	
30-015-04846

	
301075

	
SQUARE LAKE

	
57650

	
2

	
EDDY

	
QU-GB-SA  NORTH

	
-103.8468

	
32.94182

	
NE SQUARE LAKE UNIT

	
3

	
30-015-04842

	
301075

	
SQUARE LAKE

	
57650

	
2

	
EDDY

	
QU-GB-SA  NORTH

	
-103.85545

	
32.9354

	
NE SQUARE LAKE UNIT

	
5

	
30-015-04839

	
301075

	
SQUARE LAKE

	
57650

	
2

	
EDDY

	
QU-GB-SA  NORTH

	
-103.86403

	
32.94269

	
NE SQUARE LAKE UNIT

	
6

	
30-015-25943

	
301075

	
SQUARE LAKE

	
57650

	
2

	
EDDY

	
QU-GB-SA  NORTH

	
-103.87159

	
32.94449

	
NE SQUARE LAKE UNIT

	
7

	
30-015-04794

	
301075

	
SQUARE LAKE

	
57650

	
2

	
EDDY

	
QU-GB-SA  NORTH

	
-103.85861

	
32.94814

	
NE SQUARE LAKE UNIT

	
8

	
30-015-27560

	
301075

	
SQUARE LAKE

	
57650

	
2

	
EDDY

	
QU-GB-SA  NORTH

	
-103.85914

	
32.94597

	
NE SQUARE LAKE UNIT

	
9

	
30-015-04845

	
301075

	
SQUARE LAKE

	
57650

	
2

	
EDDY

	
QU-GB-SA  NORTH

	
-103.85221

	
32.93541

	
NE SQUARE LAKE UNIT

	
11

	
30-015-04844

	
301075

	
SQUARE LAKE

	
57650

	
2

	
EDDY

	
QU-GB-SA  NORTH

	
-103.85221

	
32.93818

	
NE SQUARE LAKE UNIT

	
12

	
30-015-04837

	
301075

	
SQUARE LAKE

	
57650

	
2

	
EDDY

	
QU-GB-SA  NORTH

	
-103.85545

	
32.93817

 

  

33

  

	 	 	 	 	 	 	 	 	 	 	 
	
NE SQUARE LAKE UNIT

	
13

	
30-015-04832

	
301075

	
SQUARE LAKE

	
57650

	
2

	
EDDY

	
QU-GB-SA  NORTH

	
-103.86836

	
32.93815

	
NE SQUARE LAKE UNIT

	
18

	
30-015-04831

	
301075

	
SQUARE LAKE

	
57650

	
2

	
EDDY

	
QU-GB-SA  NORTH

	
-103.86835

	
32.94178

	
NE SQUARE LAKE UNIT

	
21

	
30-015-04793

	
301075

	
SQUARE LAKE

	
57650

	
2

	
EDDY

	
QU-GB-SA  NORTH

	
-103.85435

	
32.94815

	
NE SQUARE LAKE UNIT

	
22

	
30-015-04792

	
301075

	
SQUARE LAKE

	
57650

	
2

	
EDDY

	
QU-GB-SA  NORTH

	
-103.85544

	
32.94515

	
NE SQUARE LAKE UNIT

	
25

	
30-015-04788

	
301075

	
SQUARE LAKE

	
57650

	
2

	
EDDY

	
QU-GB-SA  NORTH

	
-103.8651

	
32.94451

	
NE SQUARE LAKE UNIT

	
26

	
30-015-04787

	
301075

	
SQUARE LAKE

	
57650

	
2

	
EDDY

	
QU-GB-SA  NORTH

	
-103.85111

	
32.94544

	
NE SQUARE LAKE UNIT

	
30

	
30-015-04785

	
301075

	
SQUARE LAKE

	
57650

	
2

	
EDDY

	
QU-GB-SA  NORTH

	
-103.84679

	
32.94544

	
NE SQUARE LAKE UNIT

	
31

	
30-015-04827

	
301075

	
SQUARE LAKE

	
57650

	
2

	
EDDY

	
QU-GB-SA  NORTH

	
-103.87267

	
32.94177

	
O'BRIEN DEMING 13

	
1

	
30-005-60922

	
301613

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.03389

	
33.61373

	
O'BRIEN DEMING 6

	
1

	
30-005-60730

	
035037

	
BULL'S EYE

	
08190

	
2

	
CHAVES

	
SAN ANDRES

	
-104.02723

	
33.64273

	
O'BRIEN DEMING 6

	
2

	
30-005-60634

	
035037

	
BULL'S EYE

	
08190

	
2

	
CHAVES

	
SAN ANDRES

	
-104.03159

	
33.64274

	
O'BRIEN FEE 18

	
1

	
30-005-60902

	
035038

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02963

	
33.61736

	
O'BRIEN FEE 18

	
2

	
30-005-60619

	
035038

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02966

	
33.61373

	
O'BRIEN FEE 18

	
3

	
30-005-61246

	
035038

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02317

	
33.61735

	
O'BRIEN FEE 18

	
4

	
30-005-61020

	
035038

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02631

	
33.61736

	
O'BRIEN FEE 18

	
5

	
30-005-60640

	
035038

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02319

	
33.61373

	
O'BRIEN FEE 18

	
6

	
30-005-60725

	
035038

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02632

	
33.61373

	
O'BRIEN FEE 19

	
1

	
30-005-60528

	
035039

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02632

	
33.60013

	
O'BRIEN FEE 19

	
2

	
30-005-60905

	
035039

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.01889

	
33.60466

	
O'BRIEN FEE 19

	
3

	
30-005-60716

	
035039

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02631

	
33.60376

	
O'BRIEN FEE 19

	
4

	
30-005-60654

	
035039

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.03067

	
33.60286

	
O'BRIEN FEE 19

	
5

	
30-005-60565

	
035039

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02328

	
33.59922

	
O'BRIEN FEE 19

	
6

	
30-005-60804

	
035039

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02324

	
33.60466

	
O'BRIEN FEE 19

	
7

	
30-005-61021

	
035039

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.01892

	
33.59922

	
O'BRIEN FEE 19

	
8

	
30-005-60566

	
035039

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.03068

	
33.59923

	
O'BRIEN FEE 24

	
1

	
30-005-60803

	
035040

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.03393

	
33.60467

	
O'BRIEN FEE 24

	
2

	
30-005-60923

	
035040

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.0339

	
33.61101

	
O'BRIEN FEE 25

	
5

	
30-005-60655

	
035041

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.03398

	
33.59197

	
O'BRIEN LIGHTCAP 7

	
1

	
30-005-60816

	
035042

	
BULL'S EYE

	
08190

	
2

	
CHAVES

	
SAN ANDRES

	
-104.02727

	
33.63367

	
O'BRIEN LIGHTCAP 7

	
2

	
30-005-60815

	
035042

	
BULL'S EYE

	
08190

	
2

	
CHAVES

	
SAN ANDRES

	
-104.03163

	
33.63368

	
O'BRIEN LLL

	
1

	
30-005-62194

	
035043

	
RED LAKE RIDGE

	
51130

	
2

	
CHAVES

	
SAN ANDRES

	
-103.99183

	
33.60006

	
O'BRIEN P

	
1

	
30-005-62267

	
035044

	
RED LAKE RIDGE

	
51130

	
2

	
CHAVES

	
SAN ANDRES

	
-103.99624

	
33.59372

	
O'BRIEN P

	
2

	
30-005-62247

	
035044

	
RED LAKE RIDGE

	
51130

	
2

	
CHAVES

	
SAN ANDRES

	
-103.99621

	
33.59645

	
O'BRIEN P

	
3

	
30-005-62192

	
035044

	
SWD

	
96121

	
2

	
CHAVES

	
SAN ANDRES

	
-103.99186

	
33.59643

	
O'BRIEN R

	
1

	
30-005-62190

	
035045

	
RED LAKE RIDGE

	
51130

	
2

	
CHAVES

	
SAN ANDRES

	
-103.98758

	
33.60005

 

  

34

  

	 	 	 	 	 	 	 	 	 	 	 
	
QUARRY

	
1

	
30-025-32297

	
029512

	
BYERS

	
73610

	
1

	
LEA

	
YATES (GAS)

	
-103.19328

	
32.73112

	
ROCKET

	
1

	
30-025-28256

	
029513

	
JALMAT

	
33820

	
1

	
LEA

	
TAN-YATES-7 RVRS (OIL)

	
-103.25399

	
32.23094

	
ROCKET

	
3

	
30-025-09534

	
029513

	
JALMAT

	
33820

	
1

	
LEA

	
TAN-YATES-7 RVRS (OIL)

	
-103.25505

	
32.22641

	
SEANNA

	
1

	
30-005-60604

	
035046

	
BULL'S EYE

	
08190

	
2

	
CHAVES

	
SAN ANDRES

	
-104.03596

	
33.64091

	
SEANNA

	
2

	
30-005-60735

	
035046

	
BULL'S EYE

	
08190

	
2

	
CHAVES

	
SAN ANDRES

	
-104.03378

	
33.64092

	
SEANNA

	
3

	
30-005-60623

	
035046

	
BULL'S EYE

	
08190

	
2

	
CHAVES

	
SAN ANDRES

	
-104.03379

	
33.63729

	
SHUG A

	
1

	
30-015-22221

	
301077

	
SHUGART

	
56439

	
2

	
EDDY

	
YATES-7RS-QU-GRAYBURG

	
-103.86699

	
32.70582

	
SHUG A

	
2

	
30-015-22209

	
301077

	
SHUGART

	
56439

	
2

	
EDDY

	
YATES-7RS-QU-GRAYBURG

	
-103.86699

	
32.70945

	
TWIN LAKES SA UNIT

	
1

	
30-005-63188

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02971

	
33.57236

	
TWIN LAKES SA UNIT

	
2

	
30-005-61736

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02371

	
33.53941

	
TWIN LAKES SA UNIT

	
3

	
30-005-62212

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.0214

	
33.56669

	
TWIN LAKES SA UNIT

	
4

	
30-005-61332

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.03208

	
33.54667

	
TWIN LAKES SA UNIT

	
5

	
30-005-61334

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02366

	
33.54666

	
TWIN LAKES SA UNIT

	
6

	
30-005-61452

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02986

	
33.55209

	
TWIN LAKES SA UNIT

	
8

	
30-005-61453

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.03211

	
33.54304

	
TWIN LAKES SA UNIT

	
9

	
30-005-61556

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.03427

	
33.54485

	
TWIN LAKES SA UNIT

	
10

	
30-005-61604

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02368

	
33.54303

	
TWIN LAKES SA UNIT

	
11

	
30-005-61623

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02782

	
33.53578

	
TWIN LAKES SA UNIT

	
12

	
30-005-61633

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.03839

	
33.57927

	
TWIN LAKES SA UNIT

	
13

	
30-005-61655

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.0343

	
33.54122

	
TWIN LAKES SA UNIT

	
14

	
30-005-61772

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.03863

	
33.54484

	
TWIN LAKES SA UNIT

	
15

	
30-005-62068

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.03424

	
33.54847

	
TWIN LAKES SA UNIT

	
16

	
30-005-62069

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.04647

	
33.56473

	
TWIN LAKES SA UNIT

	
17

	
30-005-62070

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.04267

	
33.59193

	
TWIN LAKES SA UNIT

	
18

	
30-005-61261

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.0364

	
33.55027

	
TWIN LAKES SA UNIT

	
19

	
30-005-61135

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.03626

	
33.5684

	
TWIN LAKES SA UNIT

	
21

	
30-005-61107

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.01925

	
33.55389

	
TWIN LAKES SA UNIT

	
23

	
30-005-63189

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02503

	
33.56961

	
TWIN LAKES SA UNIT

	
25

	
30-005-63190

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02539

	
33.56617

	
TWIN LAKES SA UNIT

	
26

	
30-005-63191

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.04054

	
33.5864

	
TWIN LAKES SA UNIT

	
27

	
30-005-60982

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.02354

	
33.56115

	
TWIN LAKES SA UNIT

	
28

	
30-005-60973

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.0384

	
33.57564

	
TWIN LAKES SA UNIT

	
29

	
30-005-60961

	
301607

	
TWIN LAKE

	
61570

	
2

	
CHAVES

	
SAN ANDRES (ASSOC)

	
-104.01426

	
33.57077

	
TWIN LAKES SA UNIT

	
30

	
30-005-60920

	
301607

	
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EXHIBITS B1-B5

 

LEASE MAPS

 

  

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EXHIBIT C

 

FIELD LOCATIONS MAP

 

  

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EXHIBIT D

 

DEAD AIM INVESTMENTS

 

AGREEMENT TO ASSIGN

 

  

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45

  

 

 

  

46

  

 

 

47DIRECTOR AGREEMENT

 

EXHIBIT 10.1

DIRECTOR AGREEMENT

THIS AGREEMENT made as of October 2, 2013, by and between Lightwave Logic, Inc., located at 111 Ruthar Drive, Newark, DE 19711 (the “Company”); and Siraj Nour El-Ahmadi (“Director”).

WHEREAS, the Company and the Director desire to enter into an agreement which will set forth the terms and conditions upon which the Director shall serve as a director on the Company’s Board of Directors commencing on November 1, 2013.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties have agreed, and do hereby agree, as follows:

Section 1: Appointment.

The Company’s Board of Directors appoints the Director as a member of the Company’s Board of Directors effective November 1, 2013, and the Director accepts such appointment upon the terms and conditions set forth. The Director shall serve as a member of the Company’s Board of Directors commencing on November 1, 2013 until his successor is appointed or elected and shall qualify. However, neither the Company, nor any other person, shall be required to cause the continuation, election, or re-appointment of the Director as a member of the Company’s Board of Directors.

Section 2: Indemnification

The Director shall receive the full benefits, protection, and rights of full and complete indemnification from the Company in connection with his position with the Company as a member of the Company’s Board of Directors to the fullest extent permitted by law. Further, the Director shall be named as an insured on the Company’s underwritten officer and director liability insurance policy. The Director shall execute the Indemnification Agreement attached hereto as Appendix A, which is incorporated into this Agreement.

Section 3: Compensation.

Pursuant to the Company’s 2007 Employee Stock Plan, the Director will receive an option to purchase up to Two Hundred Thousand (200,000) shares of common stock of the Company at the strike price of $.93 per share (which is equal to the fair market value of the common stock on the date of grant). The options shall vest as follows: (i) fifty thousand (50,000) options shall vest on November 1, 2013; and (ii) the remaining options shall vest in three (3) equal annual installments of fifty thousand (50,000) options per year commencing on the 1st day of each one year anniversary of execution of this Agreement. All of the options shall expire on October 1, 2023. The shares issuable upon exercise of the option have been registered on a Form S-8 filed with the SEC. The option agreement shall provide for full vesting acceleration upon a ”Change in Control,” as defined in the Company’s standard Non-Statutory Stock Option Agreement.

1

 

Section 4: Duties/ Extent of Services.

The Director shall serve as a member of the Board of Directors of the Company, and shall assume the duties that the Chairman of the Board may reasonably assign. Subject to Section 6 contained herein, nothing in this Agreement shall be con­strued to limit the Director's freedom to engage in other businesses (including serving on the Board and as CEO of Menara Networks). It is agreed, however, that the Director will devote his best efforts to the needs of the Company.

Section 5: Expenses.

Subject to prior approval of the Chairman of the Board of Directors, the Director is authorized to incur reasona­ble expenses on behalf of the Company in performing his duties, including expenses for travel, transportation, entertainment, and similar items, which expenses shall be paid by the Company.

Section 6: Director’s Non-Disclosure.

The Director shall execute the Director’s Non-disclosure Agreement attached hereto as Appendix B, which is incorporated into this Agreement.

Section 7: Waiver of Breach.

The waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.

Section 8: Entire Agreement

This Agreement contains the entire agreement of the parties pertaining to the appointment of the Director to the Company’s Board of Directors.

Section 9: Amendment of Agreement

No change or modification of this Agreement shall be valid unless it is in writing and signed by the party against whom the change or modification is sought to be enforced. No change or modification by the Company shall be effective unless it is approved by the Company’s Board of Directors and signed by an officer specifically authorized to sign such documents.

Section 10: Severability of Provisions

If any provision of this Agreement, the Indemnification Agreement or the Director’s Non-disclosure Agreement is invalidated or held unenforceable, the invalidity or unenforceability of that provision or provisions shall not affect the validity or enforceability of any other provision of this Agreement, the Indemnification Agreement or the Director’s Non-disclosure Agreement.

2

 

Section 11: Governing Law and Venue

All questions regarding the validity and interpretation of this Agreement shall be governed by and construed and enforced in all respects in accordance with the laws of the State of Delaware. The sole and proper venue shall be New Castle County, Delaware.

Section 12: Arbitration of Disputes

If a dispute arises out of or relates to this Agreement, or the breach thereof, and if the dispute cannot be settled through negotiation, the parties agree first to try in good faith to settle the dispute by mediation administered by the American Arbitration Association under its Employment Mediation Rules before resorting to arbitration, litigation or some other dispute resolution procedure.

IN WITNESS, the parties have executed this Agreement in duplicate on the date and year first above written.

				
	 
	 
	Director,

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	/s/ Siraj Nour El-Ahmadi

	Witness 

	 
	Siraj Nour El-Ahmadi

	 
	 
	 
	 

	 
	 
	Lightwave Logic, Inc.,

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	By: 

	/s/ Thomas E. Zelibor

	Witness

	 
	 
	Thomas E. Zelibor, CEO

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APPENDIX A

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is made and entered into as of November 1, 2013 between LIGHTWAVE LOGIC, INC., a Nevada corporation (the “Company”), and [Siraj Nour El-Ahmadi (“Indemnitee”). Capitalized terms not defined elsewhere in this Agreement are used as defined in Section 14.

WHEREAS, highly competent persons have become more reluctant to serve corporations as directors or officers or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its affiliates from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The Articles of Incorporation of the Company (the “Charter”) and the Bylaws of the Company (the “Bylaws”) require indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to the laws of the State of Nevada (“NRS”). The Charter, the Bylaws and the NRS expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification;

WHEREAS, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified; and

WHEREAS, this Agreement is a supplement to and in furtherance of the Charter and the Bylaws and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

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NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as a director or officer of the Company from and after the date hereof, the parties hereto agree as follows:

1. Indemnity of Indemnitee. The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law, as such may be amended from time to time. In furtherance of the foregoing indemnification, and without limiting the generality thereof:

(a) Proceedings Other Than Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section l(a) if, by reason of his Corporate Status, Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding other than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a), Indemnitee shall be indemnified against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him, or on his behalf, in connection with such Proceeding or any claim, issue or matter therein; provided, however no indemnification against such Expenses shall be made if the liability was incurred because Indemnitee breached or failed to perform a duty he owes to the Company and the breach or failure to perform constitutes any of the following: (i) a willful failure to deal fairly with the Company or its stockholders in connection with a matter in which Indemnitee has a material conflict of interest; (ii) a violation of criminal law, unless Indemnitee had reasonable cause to believe his conduct was lawful or no reasonable cause to believe his conduct was unlawful; (iii) a transaction from which Indemnitee derived an improper personal profit; or (iv) willful misconduct.

(b) Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of his Corporate Status, Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b), Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee, or on Indemnitee’s behalf, in connection with such Proceeding; provided, however no indemnification against such Expenses shall be made if the liability was incurred because Indemnitee breached or failed to perform a duty he owes to the Company and the breach or failure to perform constitutes any of the following: (i) a willful failure to deal fairly with the Company or its stockholders in connection with a matter in which Indemnitee has a material conflict of interest; (ii) a violation of criminal law, unless Indemnitee had reasonable cause to believe his conduct was lawful or no reasonable cause to believe his conduct was unlawful; (iii) a transaction from which Indemnitee derived an improper personal profit; or (iv) willful misconduct. The termination of a proceeding by judgment, order, settlement or conviction, or upon a plea of no contest or an equivalent plea, does not, by itself, create a presumption that indemnification of Indemnitee is not required under this subsection.

(c) Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section 1(c) and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

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2. Additional Indemnity. In addition to, and without regard to any limitations on, the indemnification provided for in Section 1 of this Agreement, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status, he is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful.

3. Contribution.

(a) Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending or completed Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee. The Company shall not, without Indemnitee’s prior written consent, enter into any such settlement of any Proceeding (in whole or in part) unless such settlement (i) provides for a full and final release of all claims asserted against Indemnitee and (ii) does not impose any Expense, judgment, fine, penalty or limitation on Indemnitee.

(b) Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such Proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the law may require to be considered. The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

(c) The Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.

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(d) To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

4. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness, or is made (or asked to) respond to discovery requests, in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

5. Advancement of Expenses. Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within thirty (30) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses. Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free.

6. Procedures and Presumptions for Determination of Entitlement to Indemnification. It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the NRS and public policy of the State of Nevada. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:

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(a) To obtain indemnification under this Agreement, Indemnitee shall make a written request to the Company for indemnification, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification, which request shall designate one of the following means for determining his right to indemnification: (i) by a majority vote of a quorum of the Board or a committee of directors, consisting of directors not at the time parties to the same or related Proceedings; (ii) by Independent Counsel selected by a quorum of the Board or its committee in the manner prescribed in subsection (i) or, if unable to obtain such a quorum or committee, by a majority vote of the full Board, including directors who are parties to the same or related Proceedings; (iii) by a panel of three arbitrators consisting of one arbitrator selected by those directors entitled under (ii) to select Independent Counsel, one arbitrator selected by Indemnitee and one arbitrator selected by the two arbitrators previously selected or (iv) by the stockholders of the Company; provided, however, that if a Change in Control has occurred, the determination with respect to Indemnitee’s entitlement to indemnification shall be made by Independent Counsel. Indemnitee may apply to a court of competent jurisdiction for review of an adverse determination under this section. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification. Notwithstanding the foregoing, any failure of Indemnitee to provide such a request to the Company, or to provide such a request in a timely fashion, shall not relieve the Company of any liability that it may have to Indemnitee unless, and to the extent that, such failure actually and materially prejudices the interests of the Company.

(b) In the event the determination of entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel shall be selected as provided in this Section 6(b). If a Change in Control has not occurred the Independent Counsel shall be selected by the Board (including a vote of a majority of Disinterested Directors if obtainable), and the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected. Indemnitee may, within ten (10) days after such written notice of selection shall have been given, deliver to the Company a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 14 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If a Change in Control has occurred, the Independent Counsel shall be selected by the Indemnitee (unless the Indemnitee shall request that such selection be made by the Board of Directors, in which event the preceding sentence shall apply), and approved by the Board of Directors (which approval shall not be unreasonably withheld). If (i) an Independent Counsel is to make the determination of entitlement pursuant to this Section 6, and (ii) within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the court conducting the Proceeding or another court of competent jurisdiction in the State of Nevada for resolution of any objection which shall have been made by Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 6(a) hereof. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(a) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(b), regardless of the manner in which such Independent Counsel was selected or appointed.

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(c) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. Neither the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

(d) Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section 6(d) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(e) If the person, persons or entity empowered or selected under this Section 6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 6(e) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 6(a) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination, the Board or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat.

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(f) Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Independent Counsel, member of the Board or stockholder of the Company shall act reasonably and in good faith in making a determination regarding Indemnitee’s entitlement to indemnification under this Agreement. Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

(g) The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any action, claim or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(h) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.

7. Remedies of Indemnitee.

(a) In the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no determination of entitlement to indemnification is made pursuant to Section 6(b) of this Agreement within ninety (90) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within thirty (30) days after receipt by the Company of a written request therefor or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Nevada, or in any other court of competent jurisdiction, of Indemnitee’s entitlement to such indemnification, contribution or advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Except as set forth herein, the provisions of Nevada law (without regard to its conflict of law rules) shall apply to any such arbitration. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

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(b) In the event that a determination shall have been made pursuant to Section 6(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial, or arbitration, on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 6(a). In any judicial proceeding or arbitration commenced pursuant to this Section 7, Indemnitee shall be presumed to be entitled to indemnification under this Agreement and the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be, and the Company may not refer to or introduce into evidence any determination pursuant to Section 6(a) of this Agreement adverse to Indemnitee for any purpose. If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 7, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 5 until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).

(c) If a determination shall have been made pursuant to Section 6(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s misstatement not materially misleading in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law.

(d) In the event that Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of his rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall pay on his behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 14 of this Agreement) actually and reasonably incurred by him in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery.

(e) The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement. The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within thirty (30) days after receipt by the Company of a written request therefore) advance, to the extent not prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

(f) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

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8. Non-Exclusivity; Survival of Rights; Subrogation.

(a) The rights of indemnification and to receive advancement of expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Charter, the Bylaws, any agreement, a vote of stockholders, a resolution of directors or otherwise, of the Company. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in the NRS, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Charter, Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

(c) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

(d) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.

9. Exception to Right of Indemnification. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision;

(b) for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act, or similar provisions of state statutory law or common law or (ii) reimbursement to the Company of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company in each case as required under the Exchange Act; or

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(c) in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Company has joined in or the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation, (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law, or (iii) the Proceeding is one to enforce Indemnitee’s rights under this Agreement.

10. Non−Disclosure of Payments. Except as expressly required by the securities laws of the United States of America, neither party shall disclose any payments under this Agreement unless prior approval of the other party is obtained. If any payment information must be disclosed, the Company shall afford Indemnitee an opportunity to review all such disclosures and, if requested, to explain in such statement any mitigating circumstances regarding the events to be reported.

11. Duration of Agreement. All agreements and obligations of the Company contained herein shall continue upon the later of (a) ten (10) years after the date that Indemnitee shall have ceased to serve as a director or officer of the Company or a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other Enterprise which Indemnitee served at the request of the Company; or (b) one (1) year after the final termination of any Proceeding (including any rights of appeal thereto) in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any Proceeding commenced by Indemnitee pursuant to Section 7 of this Agreement relating thereto (including any rights of appeal of any Section 7 Proceeding). This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives.

12. Security. To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of Indemnitee.

13. Enforcement.

(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby in order to induce Indemnitee to serve as an officer, director or key employee of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as an officer, director or key employee of the Company.

(b) Without limiting any of the rights of Indemnitee under the Charter of Bylaws of the Company as they may be amended from time to time, this Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

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14. Definitions. For purposes of this Agreement:

(a) “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

(b) “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

(i) Acquisition of Stock by Third Party. Any Person (as defined below), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company is or becomes the Beneficial Owner (as defined above), directly or indirectly, of securities of the Company representing fifty (50%) or more of the combined voting power of the Company’s then outstanding securities;

(ii) Change in Board of Directors. During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement and except for any recomposition of the Board in connection with an initial public offering of the securities of the Company), individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Section 14(b)(i), 14(b)(iii) or 14(b)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a least a majority of the members of the Board;

(iii) Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 51% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity; and

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(iv) Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement or series of agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, or, if such approval is not required, the decision by the Board to proceed with such a liquidation, sale, or disposition in one transaction or a series of related transactions.

(c) “Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company, any direct or indirect subsidiary of the Company, or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at the request of the Company.

(d) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(e) “Enterprise” shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary.

(f) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(g) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding and any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

(h) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

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(i) “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(j) “Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of the fact that Indemnitee is or was an officer or director of the Company, by reason of any action taken by him or of any inaction on his part while acting as an officer or director of the Company, or by reason of the fact that he is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other Enterprise; in each case whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant to Section 7 of this Agreement to enforce his rights under this Agreement.

15. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality, and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the fullest extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby. Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification rights to the fullest extent permitted by applicable laws.

16. Enforcement and Binding Effect.

(a) The indemnification and advancement of expenses provided by, or granted pursuant to this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or of any other Enterprise at the Company’s request, and shall inure to the benefit of Indemnitee and his or her spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

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

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(c) The Company and Indemnitee agree herein that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that such breach may cause Indemnitee irreparable harm. Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement by seeking injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee shall not he precluded from seeking or obtaining any other relief to which he may be entitled. The Company and Indemnitee further agree that Indemnitee shall be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertaking in connection therewith. The Company acknowledges that in the absence of a waiver, a bond or undertaking may be required of Indemnitee by the Court, and the Company hereby waives any such requirement of such a bond or undertaking.

17. Modification and Waiver. No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

18. Notice By Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise.

19. Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent:

(a) To Indemnitee at the address set forth below Indemnitee signature hereto.

(b) To the Company at:

Lightwave Logic, Inc.

Attention: James Marcelli, CEO

111 Ruthar Drive

Newark, DE 19711

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

20. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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21. Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

22. Usage of Pronouns. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.

23. Governing Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Nevada, without regard to its conflict of laws rules. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the state and federal courts in and for the State of Nevada (the “Nevada Courts”), (ii) generally and unconditionally consent to submit to the exclusive jurisdiction of the Nevada Courts for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Nevada Courts, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Nevada Courts has been brought in an improper or inconvenient forum. The foregoing consent to jurisdiction shall not constitute general consent to service of process in the state for any purpose except as provided above, and shall not be deemed to confer rights on any person other than the parties to this Agreement.

[SIGNATURE PAGE TO FOLLOW]

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

			
	 
	COMPANY

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	By: 

	/s/Thomas E. Zelibor

	 
	Name: 

	T. E. Zelibor

	 
	Title: 

	Chairman and CEO

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	INDEMNITEE

	 
	 
	 

	 
	/s/Siraj Nour El-Ahmadi

	 
	Name: Siraj Nour El-Ahmadi

	 
	Address:

	 
	3400 Carlisle Street, Suite 210

	 
	Dallas, TX 75204

[Signature Page to the Indemnification Agreement]

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APPENDIX B

DIRECTOR’S NON-DISCLOSURE AGREEMENT

THIS AGREEMENT made as of November 1, 2013, by and between Lightwave Logic, Inc., located at 111 Ruthar Drive, Newark, DE 19711 (“Company”); and Siraj Nour El-Ahmadi (“Director”), whose address is 3400 Carlisle Street, Suite 210, Dallas, TX 75204.

WHEREAS, Company is a technology company focused on the development of a Next Generation Non-linear Optical Polymer Materials Platform for applications in high speed fiber-optic data communications and optical computing, which involves the development and utilization of information not generally known in the industry or industries in which the Company is or may become engaged.

WHEREAS, the Company desires to appoint the Director as a member of the Company’s Board of Directors and the Director accepts such appointment;

WHEREAS, in performing his services as a director for Company, Director will necessarily be given access to “secret information” (defined below), which will be identified by Company as such; and

WHEREAS, the use of the secret information by, or its disclosure to, any person or organization other than Company and its employees or Director would be highly detrimental and damaging to Company.

NOW THEREFORE, with the foregoing recitals being incorporated herein by reference and deemed an essential part hereof and in consideration of the mutual promises, covenants and conditions contained herein, the parties agree as follows:

Section 1. Secret Information

For the purposes of this Agreement, “secret information” shall mean information relating to the Company’s methods, concepts, ideas, products, and services which is of a proprietary or confidential nature, whether communicated orally or in writing, data or sample form, including, without limitation, concepts, techniques, processes, designs, cost data, computer programs, and other know-how, that is disclosed by the Company.

Section 2. Nondisclosure of Secret Information

2.1 Non-disclosure. Director shall not, without the prior written consent of the Company, disclose such secret information to any third party, including any third party consultant(s). Further, Director shall only use the secret information pursuant to and for the purpose of performing his services as a director for Company. The parties acknowledge that irreparable injury and damage will result from disclosure of the secret information to unauthorized third parties or from utilization of the secret information for any purpose other than the purposes described herein. Also, Director shall take all reasonable steps to ensure that the secret information in the Director’s possession remains confidential.

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The foregoing restrictions shall not be applicable to any information which:

			
	 
	(a)

	the Director can show was previously known to him prior to receipt from the Company, without breach of an obligation of confidence to any third party;

			
	 
	(b)

	is now, or hereafter, comes into the public domain as, for example, by publications, including issued United States and foreign patents, or is otherwise legally known or available to the public through sources other than the Director;

			
	 
	(c)

	is subsequently legally disclosed to the Director by a third party not owing obligations of confidence to the Company, or

			
	 
	(d)

	is, or will be, developed independently by the Director solely through his affiliates which have not been exposed directly or indirectly to the secret information, or

			
	 
	(e)

	the Director is obligated to produce as a result of a court order or other valid and legally enforceable mandate, provided that the Company has been given notice thereof and an opportunity to waive its rights or to seek a protective order or other appropriate remedy.

For the purposes of this Section 2, disclosures, which provide specific detailed information, shall not be deemed to be within the foregoing exceptions merely because they are embraced by more general disclosures in the public domain or in the Director’s possession. In addition, any combination of features shall not be deemed to be within the foregoing exceptions merely because information about individual components are separately in the public domain or in the Director’s possession, but only if the combination itself and its principle of operation are in the public domain or in the lawful possession of the Director without restriction on disclosure.

2.2 Return of documents. Upon termination of Director’s position as a member of the Company’s Board Of Directors, Director agrees that all documents, records, notebooks and similar repositories of or containing secret information, including copies of such materials, then in its possession, whether prepared by it or others, will be returned to the Company.

2.3 Director acknowledges that the secret information belongs to Company, that Company claims the secret information comprises trade secrets, claims that the secret information is confidential to Company and that each of the obligations assumed by Director in this, and the other paragraphs contained herein, is a material inducement to disclose the secret information to Director.

Section 3. No License Granted

Nothing herein shall be deemed to confer on the Director a license or other right to use the secret information disclosed hereunder for any purpose other than the purposes expressly stated in this Agreement. Specifically and without limitation, Director shall have no license or right to use any secret information in developing any invention, discovery, know-how, trade secret, patent, trademark, or copyright.

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Section 4. Enforcement

In the event that the Director shall breach this Agreement, or in the event that such breach appears to be an imminent possibility, Company shall be entitled to all legal and equitable remedies afforded it by law as a result of the breach (including an injunction restraining the party or parties about to commit any breach of this Agreement, or who have committed a breach of it, without showing or proving any actual damage sustained by Company), and may, in addition to any and all other forms of relief, recover from Director all reasonable costs and attorneys' fees encountered by it in seeking any such remedy.

Section 5. Binding Effect

This Agreement shall be binding upon the parties to this Agreement and upon their respective executors, administrators, legal representatives, successors and assigns.

Section 6. Applicable Law

This Agreement shall be governed for all purposes by the laws of the State of Delaware, with New Castle County as the agreed upon proper venue. The Company shall retain all rights and remedies afforded it under the patent, trademark, copyright and other laws of the United States and the States thereof, and of other countries, including without limitation any laws designed to protect proprietary or secret information.

In witness, the parties executed this Agreement on the date first shown above.

					
	Witness 

	 
	 
	Director

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	/s/ Siraj Nour El-Ahmadi

	Name:

	 
	 
	Name: Siraj Nour El-Ahmadi

	 
	 
	 
	 
	 

	Witness

	 
	 
	Company

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	By: 

	/s/ Thomas E. Zelibor

	Name:

	 
	 
	 
	Thomas E. Zelibor, CEO

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