Document:

exv10w21

 

Exhibit 10.21

September 21, 2007

Mr. N. Malone Mitchell, 3rd

Longfellow Energy, LP

Dalea Partners, LP

4801 Gaillardia Parkway, Suite 225

Oklahoma City, Oklahoma 73142

			
	Re:     	 	Agreement for the Purchase of Interests in the

Pinon Field Area, Pecos County Texas; in the

Piceance Basin in Rio Blanco County, Colorado;

and in other lands as shown on the attached exhibits (the “Agreement”)

Dear Malone:

Subject to the terms and conditions hereinafter set forth, SandRidge Energy, Inc. (“SandRidge”)
hereby agrees to purchase from Longfellow Energy, LP (“Longfellow”), Dalea Partners, LP (“Dalea”),
all affiliates and/or subsidiaries of Longfellow, and N. Malone Mitchell 3rd,
collectively (“Sellers”) all of Sellers’ right, title and interest in and to the following oil and
gas properties:

	 	•	 	The Interests (as that term is defined therein) acquired under the Purchase and Sale
Agreement dated August 22, 2007 between Clayton Williams Energy, Inc. (“CWEI”) and
Longfellow Energy, LP, which is attached as Exhibit A (“CWEI Agreement”). These Interests
shall be referred to as the “CWEI Interests.”
	 
	 	•	 	The oil and gas leases, together with all rights incident thereto, acquired under the
Purchase and Sale Agreement dated August 22, 2007 between Clayton Williams Ranch Co., et
at., (“Williams”) and Longfellow Ranch Partners, LP and Longfellow Energy, LP, which is
attached as Exhibit A-1 (“Williams Agreement”). These oil and gas leases, together with all
incidental rights, shall be referred to as the “Williams O&G Leasehold” and are described
in Section 1(a) (iii) (c) of the Williams Agreement.
	 
	 	 	 	(For convenience the parties have attached Exhibit B which is intended to reflect a more
complete legal description of the combined CWEI Interests and Williams O&G Leasehold, it
being the intent of the parties to include all such interests regardless of whether a
particular oil and gas lease or well is inadvertently omitted or incorrectly described in
the CWEI Agreement, Williams Agreement or Exhibit B.)

Discovering Beneath | Exploring BeyondTM

1601 N.W. Expressway. Suite 1600, Oklahoma City, OK 73118 • Phone 405.753.5500, Fax 405.753.5975
• sandridgeenergy.com

 

 

Letter Agreement for Acquisition of Properties

Longfellow Energy, LP

Dalea Partners, LP

Page 2

	 	•	 	Working interests in SandRidge or affiliate, operated wells and leasehold,
including all interests acquired by Sellers or any designee of Sellers under the Well
Participation Program, whether operated by SandRidge or an affiliate; and various
overriding royalty interests in SandRidge’s Piceance Basin Properties. These interests are
described on Exhibit C and shall be referred to as the “Longfellow Interests.” It is the
intent of the parties to include all oil and gas leasehold interests, including working
interests and overriding royalty interests, in and to the oil and gas properties operated
by SandRidge or any affiliate regardless of whether a particular oil and gas lease or well
is inadvertently omitted or incorrectly described on Exhibit C. Specifically excluded
from the Longfellow Interests are any mineral, royalty, or surface interests of Sellers.
Specifically included in the Longfellow Interests is one non-operated oil and gas property
referred to as the Thompson 2-15 well located in Beckham County, Oklahoma, together with
all associated oil and gas leasehold interest.
	 
	 	•	 	Collectively the CWEI Interests, the Williams O&G Leasehold, and Longfellow Interests
shall be referred to as “the Subject Interests.”

Purchase Price

The purchase price for the Subject Interests shall be Thirty Two Million Dollars ($32,000,000).

Effective Date

Sellers shall be liable for all costs and expenses relating or attributable to the Subject
Interests (including but not limited to production, severance or excise taxes and royalties) and
entitled to all revenues and production, including oil in tanks, relating or attributable to the
Subject Interests prior to August 1, 2007 (the “Effective Date”). SandRidge shall be responsible
for such costs and expenses and entitled to such revenues and production from and after the
Effective Date. Any ad valorem taxes associated with the Subject Interests shall be prorated
between the Sellers and SandRidge at Closing based on the Effective Date. Any adjustments pursuant
to this section will be made at Closing, if possible. If adjustment amounts are undetermined or
estimated as of Closing, an adjustment will be made within ninety (90) days of Closing.

Closing

Closing shall occur no later than twenty (20) days after the consummation of the initial public
offering of the common stock of SandRidge (the “IPO”) or August 27, 2008, whichever shall first
occur; provided however, that SandRidge shall have no obligation to close until five (5) business
days after Sellers’ complete and close on their acquisition of both the CWEI Interests and the
Williams O&G Leasehold.

 

 

Letter Agreement for Acquisition of Properties

Longfellow Energy, LP

Dalea Partners, LP

Page 3

Adjustment to Purchase Price for Delayed Closing

     If Closing does not occur before January 1, 2008, the Purchase Price shall be increased according
to the following:

	 	•	 	If Closing occurs during January 2008, the Purchase Price shall be $32,160,000
	 
	 	•	 	If Closing occurs during February 2008, the Purchase Price shall be $32,320,000
	 
	 	•	 	If Closing occurs during March 2008, the Purchase Price shall be $32,480,000
	 
	 	•	 	If Closing occurs during April 2008, the Purchase Price shall be $32,640,000
	 
	 	•	 	If Closing occurs during May 2008, the Purchase Price shall be $32,800,000
	 
	 	•	 	If Closing occurs during June 2008, the Purchase Price shall be $32,960,000
	 
	 	•	 	If Closing occurs during July 2008, the Purchase Price shall be $33,120,000
	 
	 	•	 	If Closing occurs during August 2008, the Purchase Price shall be $33,280,000

If Closing does not occur on or before August 27, 2008, the Purchase Price shall be $33,440,000 and
Sellers may bring an action seeking specific performance under this Agreement. The above
adjustments to the Purchase Price shall not be applicable to the extent Closing is delayed because
Sellers have not closed on the acquisition of the CWEI Interests or Williams O&G Leasehold on or
before November 15, 2007, or Sellers otherwise refuse to close. If Sellers close on the CWEI
Interests or Williams O&G Leasehold subsequent to November 15, 2007, then the above adjustments to
the Purchase Price will be revised accordingly to take into account the date Sellers actually close
on both the CWEI Interests and Williams O&G Leasehold. Further, if Sellers refuse or fail to close
under this Agreement, then SandRidge may bring an action seeking specific performance under this
Agreement in addition to any other remedies available to SandRidge.

Payment Obligations for Capital Expenditures and Revenue Distribution

To the extent that SandRidge is the operator of the Subject Interests, and to the extent Sellers
pay capital costs incurred for time periods following after the Effective Date that are
attributable to Sellers’ interest in the Subject Interests, such amounts paid by Sellers would
only serve to increase the purchase price adjustments, if any, under this Agreement at Closing.
Therefore, the parties agree that Sellers shall not be obligated to pay any capital costs incurred
for time periods after the Effective Date with respect to the Subject Interests operated by
SandRidge or its NEG affiliates. Notwithstanding, to the extent Sellers are entitled to receive
revenue attributable to Sellers’ interest in the Subject Interests, such revenues will be
distributed in the ordinary course of business until Closing. Should Sellers receive revenues for
production periods after the Effective Date, those amounts shall be credited to SandRidge as a
downward adjustment to the Purchase Price. Provided, if SandRidge’s acquisition of the Subject
Interests from Sellers does not close, then Sellers remain obligated for all capital costs
attributable to Sellers’ interests in the Subject Interests operated by SandRidge or its NEG
affiliates.

 

 

Letter Agreement for Acquisition of Properties

Longfellow Energy, LP

Dalea Partners, LP

Page 4

Purchaser and Section 1031 Exchanges

SandRidge reserves the right to substitute as purchaser hereunder any of its affiliates, without
otherwise altering the terms and conditions of this Agreement.

SandRidge and Sellers hereby agree that SandRidge shall have the right at any time prior to Closing
to assign all or a portion of its rights under this Agreement to a Qualified Intermediary (as that
term is defined in Section 1.1031(k)-1(g)(4)(v) of the Treasury Regulations) in order to accomplish
the transaction in a manner that will comply, either in whole or in part, with the requirements of
a like-kind exchange pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended,
(“Code”). Likewise, each of the Sellers shall have the right at any time prior to Closing to assign
all or a portion of its rights under this Agreement to a Qualified Intermediary for the same
purpose. In the event any of the parties assigns their rights under this Agreement pursuant to this
paragraph, such party agrees to notify the other party in writing of such assignment at or before
Closing. If Seller(s) assigns its rights under this Agreement for this purpose, SandRidge agrees to
(i) consent to such assignment of its rights in this Agreement, and (ii) pay the Purchase Price
into a qualified escrow or qualified trust account at Closing as directed in writing. If SandRidge
assigns its rights under this Agreement for this purpose, Sellers agree to (i) consent to the
assignment by SandRidge of its rights in this Agreement in (ii) accept the Purchase Price from the
qualified escrow or qualified trust account at Closing, and (iii) at Closing, convey and assign
directly to SandRidge or to the Qualified Intermediary, at the option of SandRidge, the which are
the subject of this Agreement upon satisfaction of the other conditions to Closing and other terms
and conditions hereof. Sellers and SandRidge acknowledge and agree that any assignment of this
Agreement to a Qualified Intermediary shall not release either party from any of their respective
liabilities and obligations to each other under this Agreement, and that none of the parties
represents to the other that any particular tax treatment will be given to either Party as a result
thereof.

No Gas Imbalance

To the knowledge of Sellers and SandRidge, the Subject Interests are in balance as of the
Effective Date. Provided, however, if an aggregate net gas imbalance relative to the Subject
Interests exists as of the Effective Date (a “Gas Imbalance”), the Purchase Price shall be
increased if the Subject Interests are underproduced, or decreased if the Subject Interests are
overproduced, by the product of (i) the amount (measured in MMBtu) of such Gas Imbalance, and (ii)
$1.50 per MMBtu. The parties agree to use their best efforts to avoid creating a Gas Imbalance
with respect to the Subject Interests for the period of time after the Effective Date and prior to
Closing.

 

 

Letter Agreement for Acquisition of Properties

Longfellow Energy, LP

Dalea Partners, LP

Page 5

No Encumbrances

The Interests are, or will be delivered at Closing, free and clear of any mortgages, liens or
other encumbrances (including without limitation preferential purchase rights, carried interests,
reversionary “back-in” working interests, or similar interests that might adversely affect the
quantum or quality of the Subject Interests), other than leasehold royalty and overriding
royalties in existence and of record as of the Effective Date, CWEI’s right to participate for a
12.5% working interest in the Dimple Hills Prospect in accordance with the Exploration and
Development Agreement attached to this Agreement as Exhibit D, and encumbrances known to SandRidge
as of the Effective Date.

Title and Form of Assignment of the Interests

Dalea has provided CWEI and Williams Ranch with notice that it will be the purchaser of the CWEI
Interests and William O&G Leasehold. The notice is attached as Exhibit E.

	 	•	 	With respect to the CWEI Interests, Dalea will convey the CWEI Interests to SandRidge
on an assignment in the form of Exhibit C (form of assignment) attached to the CWEI
Agreement (Exhibit A).
	 
	 	•	 	With respect to the Williams O&G Leasehold, Dalea will convey the Williams O&G
Leasehold to SandRidge on an assignment in the form of Exhibit D (form of Assignment)
attached to the Williams Agreement (Exhibit B).
	 
	 	•	 	With respect to the Longfellow Interests, Longfellow will convey the Longfellow
Interests to SandRidge on the form of assignment attached to this Agreement as Exhibit F.

Sellers are conveying the Subject Interests to SandRidge with warranty of title being limited to
“by, through or under Sellers, but not otherwise.” Because Sellers will hold title to the CWEI
Interests and Williams O&G Leasehold for the time period between Sellers’ acquisition from CWEI
and Williams and Closing with SandRidge, Sellers will assign to SandRidge, to the extent
permitted, any rights or remedies they have with respect to the CWEI Interests and Williams O&G
Leasehold.

Loss of Subject Interests

SandRidge’s agreement to pay the Purchase Price for the Subject Interests is based in part on the
gross working interests and net revenue interests, if shown, on the attached exhibits, as well
Sellers representations of the oil and gas interests to be acquired under the CWEI Agreement and
Williams Agreement. To the extent the Subject Interests differ from that shown on the exhibits or
as represented by Sellers, the Purchase Price will be adjusted accordingly. Sellers agree not to
take any action or enter into any

 

 

Letter Agreement for Acquisition of Properties

Longfellow Energy, LP

Dalea Partners, LP

Page 6

agreement of any nature (including without limitation a mortgage or deed of trust, or an
assignment or conveyance of any kind) which could in any way burden, encumber or otherwise
diminish Sellers interest in the Subject Interests.

If, after the Effective Date but prior to Closing, all or any portion of the Subject Interests are
destroyed or damaged, whether by fire, flood, earthquake, storm, theft, vandalism, riot, sabotage,
accident or other casualty of a similar nature, or shall be taken by condemnation or under the
right of eminent domain , Sellers and SandRidge may agree: (i) to exclude the affected property and
adjust the Purchase Price by a mutually agreed upon amount; or (ii) to sell and transfer the
affected property under the terms of this Agreement notwithstanding any such destruction or taking
(without reduction of the Purchase Price) in which case Sellers shall, at Closing, pay to SandRidge
all sums paid to Sellers by third parties by reason of the destruction, damage or taking of the
affected property and shall assign, transfer and set over unto SandRidge all of the right, title
and interest of Sellers in and to any claims against or unpaid proceeds or other payments from
third parties arising out of such destruction or taking, including, but not limited to, insurance
proceeds. Prior to Closing, Sellers shall not voluntarily compromise, settle or adjust any amounts
payable by reason of any damage, destruction or taking of the Subject Interests during the
aforementioned period without first obtaining the written consent of SandRidge.

Attorney’s Fees and Expenses

 If any party institutes an action or proceeding against the other relating to the provisions
of this Agreement or any default hereunder, the unsuccessful party to such action or proceeding
will reimburse the successful party for the reasonable expenses for attorney’s fees and other
disbursements incurred by the successful party.

Consents and Approvals

SandRidge’s obligation to close on the Subject Interests is subject to the receipt of all
necessary approvals and consents, whether corporate, third-party, or otherwise, and all necessary
filings, approvals, or consents for the sale/purchase of the interests that may be required under
any agreement or any governmental law or regulation. To the knowledge of SandRidge there are no
necessary approvals or consents as of the Effective Date.

Confidentiality and Announcements

This Agreement is confidential and the parties agree to not disclose its terms, or the fact that
discussions or negotiations are taking place, except to necessary consultants, business partners,
financial advisors and attorneys who need to know such information in order to assist the parties
in the transactions contemplated by this Agreement, and who agree to be bound by the obligations
of confidentiality set out herein, and as

 

 

Letter Agreement for Acquisition of Properties

Longfellow Energy, LP

Dalea Partners, LP

Page 7

required by law. Additionally no press release concerning this Agreement, or any discussions or
negotiations related thereto, shall be released without first consulting the other party.

Notices

     Any notices required under this Agreement should be provided as follows:

	 	 	 
	If to SandRidge:

	 	If to Sellers:
	 
	 	 
	V. Bruce Thompson

	 	Matthew McCann
	1601 N.W. Expressway

	 	4801 Gaillardia Parkway
	Suite 1600

	 	Suite 225
	Oklahoma City, Oklahoma 73118

	 	Oklahoma City, Oklahoma 73142

Multiple Counterparts

This Agreement may be executed in one or more counterparts, each of which will be deemed to be an
original copy of this Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement.

Representations and Covenants of Sellers and SandRidge

To the knowledge of Sellers, all material royalties, rentals, and other payments due under or in
respect of the Subject Interests have been properly and timely paid, all conditions necessary to
keep the Subject Interests in full force have been fully performed. No notices have been received
by Sellers or, to the knowledge of Sellers, by CWEI or Williams of any claims to the contrary and
to the knowledge of Sellers, all of the Subject Interests are in full force and effect.

To the knowledge of Sellers, all material, valid laws, regulations, and orders of all governmental
agencies having jurisdiction over the Subject Interests have been and shall continue to be
complied with until Closing.

On the date hereof no claim, suit, action or other proceeding is pending before any court or
governmental agency to which Sellers, CWEI, or Williams are a party and which might result in
impairment or loss of Sellers’, CWEI’s, or Williams’ title to any part of the Subject Interests or
that might hinder or impede operation of any of the Subject Interests or that might otherwise
materially and adversely affect the value of the any of the Subject Interests, and to the
knowledge of Sellers, no such claim, suit, action or other proceeding is threatened. Sellers shall
promptly notify SandRidge of any such proceeding arising prior to Closing.

 

 

Letter Agreement for Acquisition of Properties

Longfellow Energy, LP

Dalea Partners, LP

Page 8

On the date hereof, Sellers are not aware of any material contract; commitment to make an
expenditure in connection with the ownership or operation of the Subject Interests (other than
routine expenses incurred in the normal operation of the Subject Interests; loss or reduction of
gross working interest or net revenue interest from that shown on the attached exhibits or as
represented by Sellers; or any other outstanding obligation the might result in impairment or loss
of Sellers’ interest in the Subject Interests.

On the date hereof and at closing, the consummation of the transactions contemplated by this
Agreement will not violate, or be in conflict with, the articles of incorporation, bylaws or
governing documents of Sellers or any material provision of any agreement or instrument to which
Sellers are a party, or will not violate or be in conflict with any material provision of any
judgment, decree, order, statute, rule or regulation applicable to Sellers or any of the Subject
Interests, or result in the creation or imposition of any lien on any of the Subject Interests.

On the date hereof and at closing, Sellers are duly organized, validly existing and in good
standing under the laws of the state of their respective organization, have full legal power to
carry on their business as now conducted, are authorized to hold title to the Subject Interests,
and are in good standing and duly qualified to conduct its business in the jurisdiction where the
Subject Interests are located. Further, the execution, delivery and performance of this Agreement
by Sellers and the consummation of the transactions contemplated hereby have been duly and validly
authorized pursuant to the governing documents of Sellers.

On the date hereof and at closing, SandRidge is duly organized, validly existing and in good
standing under the laws of the state of its organization, has full legal power to carry on its
business as now conducted, is authorized to hold title to the Subject Interests, and is in good
standing and duly qualified to conduct its business in the jurisdiction where the Subject
Interests are located. Further, the execution, delivery and performance of this Agreement by
SandRidge and the consummation of the transactions contemplated hereby have been duly and validly
authorized pursuant to the governing documents of SandRidge.

Further Assurances

At and after Closing, the parties agree to execute all documents necessary or appropriate to
consummate the transactions contemplated by this Agreement.

Conditions

The obligations of SandRidge under this Agreement are subject to and conditioned upon the
following:

 

 

Letter Agreement for Acquisition of Properties

Longfellow Energy, LP

Dalea Partners, LP

Page 9

	 	•	 	Execution and delivery of the Amended Surface Use and Damages Agreement between
Longfellow Ranch Partners, LP and SandRidge covering the properties of Longfellow Ranch
Partners, LP in Pecos, Terrell and Brewster Counties, Texas commonly known as the
Longfellow Ranch, the Longfellow-Schneeman Ranch, and the West Ranch, together with
related outstanding pipeline easements and rights-of-way. The West Ranch is being
acquired by Longfellow Ranch Partners, LP under the Williams Agreement.
	 
	 	•	 	Approval of the Board of Directors of SandRidge and receipt of the applicable
Fairness Opinion.
	 
	 	•	 	Execution and delivery by N. Malone Mitchell, 3rd of the Lock-Up
Letter Agreement.
	 
	 	•	 	Settlement of all undisputed amounts owing by Sellers to SandRidge.
	 
	 	•	 	Sellers’ closing under the CWEI Agreement and Williams Agreement.

          Upon execution by Sellers the terms of this Agreement shall become binding on the parties and
enforceable by the parties. Time is of the essence. If the terms of this agreement are acceptable,
please so indicate by signing the appropriate space below and returning one (1) original to the
attention of the undersigned.

Should you have any questions regarding this offer, please do not hesitate to contact the
undersigned.

Sincerely,

SANDRIDGE ENERGY, INC.

Tom L. Ward

Chairman and

Chief Executive Officer

(Agreement and acceptance signatures on following page)

 

 

Letter Agreement for Acquisition of Properties

Longfellow Energy, LP

Dalea Partners, LP

Page 10

AGREED TO AND ACCEPTED this 21st day of September, 2007.

LONGFELLOW ENERGY, LP

By: Deut 8, LLC

	 	 	 	 	 
	By:

	 	/s/ N. Malone Mitchell	 	 
	 

	 	 	 	 
	 

	 	N. MalOne Mitchell, 3rd, Manager	 	 
	 
	 	 	 	 
	DALEA PARTNERS, LP	 	 
	 
	 	 	 	 
	By: Dalea Management, LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/ N. Malone Mitchell	 	 
	 

	 	 	 	 
	 

	 	N. Malone Mitchell 3rd, Manager	 	 
	 
	 	 	 	 
	N. MALONE MITCHELL, 3RD	 	 
	 
	 	 	 	 
	By:

	 	/s/ N. Malone Mitchell	 	 
	 

	 	 	 	 
	 

	 	N. Malone Mitchell, 3rd, individually
	 	 

 

 

Letter Agreement for Acquisition of Properties

Longfellow Energy, LP

Dalea Partners, LP

Page 11

EXHIBIT “A”

Attached to and made a part of that certain Purchase Agreement dated August 31, 2007, by and
between SandRidge Energy, Inc., as Buyer and Longfellow Energy, L.P, and Dalea Partners, LP, as
Sellers covering interests in Pecos County, Texas and Rio Blanco County, Colorado, effective date
of August 1, 2007.

CWEI Agreement

END OF EXHIBIT “A”

EXHIBIT “B”

Attached to and made a part of that certain Purchase Agreement dated August 31, 2007, by and
between SandRidge Energy, Inc., as Buyer and Longfellow Energy, L.P. and Dalea Partners, LP, as
Sellers covering interests in Pecos County, Texas and Rio Blanco County, Colorado, effective date
of August 1, 2007.

Williams Agreement

END OF EXHIBIT “B”

 

 

Letter Agreement for Acquisition of
Properties

Longfellow Energy, LP

Dalea Partners, LP

Page 12

EXHIBIT “C”

Attached to and made a part of that certain Purchase Agreement dated August 31, 2007,
by and between SandRidge Energy, Inc., as Buyer and Longfellow Energy, LP and Dalea
Partners, LP, as Sellers covering interests in Pecos County, Texas and Rio Blanco,
Colorado, effective date of August 1, 2007.

PROPERTIES: Longfellow Interests: Will list the wells and their Wl and NRI
being sold by Longfellow, together with a description of the applicable oil and gas
leases

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	               	 
	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

NOTE:

It is the Sellers’ intent to convey to SandRidge all of the Sellers’ right, title and
interest in and to any oil and gas leases covering lands located in Pecos County,
Texas and Rio Blanco County, Colorado, regardless of the omission of any particular
well(s), leases or errors in description and interest amounts. The descriptions above
are deemed to include all of Sellers’ interest in the wellhead equipment, personal
property, facilities, and other improvements appurtenant to, or used or obtained, in
connection with such leases.

 

 

Letter Agreement for Acquisition of Properties

Longfellow Energy, LP

Dalea Partners, LP

Page 13

END OF EXHIBIT “C”

EXHIBIT “D”

Attached to and made a part of that certain Purchase Agreement dated August 31, 2007, by and
between SandRidge Energy, Inc., as Buyer and Longfellow Energy, L.P. and Dalea Partners, LP, as
Sellers covering interests in Pecos County, Texas and Rio Blanco County, Colorado, effective date
of August 1, 2007.

  Exploration and Development Agreement Covering the Dimple Hills Prospect

END OF EXHIBIT “D”

 EXHIBIT “E”

Attached to and made a part of that certain Purchase Agreement dated August 31, 2007, by and
between SandRidge Energy, Inc., as Buyer and Longfellow Energy, L.P. and Dalea Partners, LP, as
Sellers covering interests in Pecos County, Texas and Rio Blanco County, Colorado, effective date
of August 1, 2007.

Notice of Dalea Partners, LP

END OF EXHIBIT “E”

EXHIBIT “F”

Attached to and made a part of that certain Purchase Agreement dated August 31, 2007, by and
between SandRidge Energy, Inc., as Buyer and Longfellow Energy, L.P. and Dalea Partners, LP, as
Sellers covering interests in Pecos County, Texas and Rio Blanco County, Colorado, effective date
of August 1, 2007.

Form of Assignment Covering Longfellow Interests

 

 

Letter Agreement for Acquisition of Properties

Longfellow Energy, LP

Dalea Partners, LP

Page 14

END OF EXHIBIT “F”exv10w1

 

Exhibit 10.1

SETTLEMENT AGREEMENT AND MUTUAL RELEASE

          This Settlement Agreement and Mutual Release (the “Settlement Agreement”) is entered into as
of this 24th day of January, 2008 (the “Settlement Date”), by and between HUDSON
LOGISTICS, INC., a Delaware corporation, having an address at 177 Madison Avenue, Morristown, NJ
07960 (hereinafter “HLI”), HUDSON LOGISTICS LOADING, INC., a Delaware corporation, having an
address at 177 Madison Avenue, Morristown, NJ 07960 (hereinafter “HLL”) (HLI and I-ILL are
hereinafter collectively referred to as “Assignors”), CHARTWELL INTERNATIONAL, INC., a Nevada
corporation and the parent of HLI and HLL, having an address at 177 Madison Avenue, Morristown, NJ
07960 (hereinafter “Chartwell”), IMRE ESZENYI, an individual, having an address at 177 Madison
Avenue, Morristown, NJ 07960 (“Eszenyi”), RAYMOND KALAFSKY, an individual, having an address at 115
Arnot Place, Wood-Ridge, NJ 07075 (“Kalafsky”), NEW YORK & GREENWOOD LAKE RAILWAY, a New Jersey
corporation, having an address at Erie Railroad Station, 46 High Street, P.O. Box 106, Glen Ridge,
NJ 07028 (“NYGL”), and NORTHERN & BERGEN RAILROAD, LLC, a New Jersey limited liability company,
having an address at 411 Hackensack Avenue, Hackensack, NJ 07601 (“NBR”). HLI, FILL, Chartwell,
Eszenyi, Kalafsky, NYGL and NBR are hereinafter collectively referred to as the “Parties.”

WITNESSETH

          WHEREAS, NYGL is an interstate rail carrier with a truck-to-rail transloading facility
(“Facility”) located on its railroad property in the City of Passaic, Passaic County, New
Jersey. The Facility receives dry non-hazardous construction and demolition debris from local
businesses that is shipped from the Facility exclusively by rail to disposal facilities outside
the State of New Jersey; and

          WHEREAS, HLI and HLL are wholly-owned subsidiaries of Chartwell; and

          WHEREAS, in August 2006, Chartwell purchased two contracts with respect to the Facility out of
the Chapter 11 bankruptcies of Steel Wheels Transport, LLC (“Steel Wheels”) and Team G Loading, LLC
(“Team G”) pending before the Honorable Donald H. Steckroth of the United States Bankruptcy Court
for the District of New Jersey (“Bankruptcy Court”). In re Steel Wheels Transport, LLC, U.S. Bank.
Ct., D.N.J., Case No. 06-15377; and In re Team G Loading, LLC, U.S. Bank. Ct., D.N.J., Case No.
06-15378. The contracts included a Facility Capacity Agreement (“FCA”), dated January 7, 2005,
between Steel Wheels and NYGL (a true and correct copy of which is attached as Exhibit A), and a
Rail Car Loading Agreement (“RCLA”), also dated January 7, 2005, between Team G and NYGL (a true
and correct copy of which is attached as Exhibit B); and

          WHEREAS, pursuant to an Order of the Bankruptcy Court dated August 17, 2006 (a true and
correct copy of which is attached as Exhibit C), on August 24, 2006 an Assignment, Assumption, and
Novation Agreement was entered into by and among Steel Wheels and Team G, as assignors, HLI and
HLL, as assignees, and NYGL, with respect to
the FCA and the RCLA (“Assignment”) (a true and correct copy of which is attached as Exhibit
D). The Assignment

1

 

provided that the transaction documented thereby “closed” on August 24, 2006 and became effective
on the date the above-referenced Order (Ex. C) became binding, final and non-appealable by all
parties to the Bankruptcy Proceedings pursuant to Fed. R. Bankr. P. 9006(a), or by approximately
late August 2006; and

          WHEREAS, on or about May 23, 2007, HLI and HLL commenced an action in the Superior Court of
New Jersey, Chancery Division – General Equity Part, Morris County, entitled Hudson Logistics,
Inc. and Hudson Logistics Loading, Inc. v. New York & Greenwood Lake Railway and Northern & Bergen
Railroad, LLC, Docket No. C-76-07, which was subsequently transferred to the Law Division of the
same Court, Docket No. L-001745-07 (the “Action”), raising certain claims against NYGL and
NBR, and in which NYGL filed counterclaims against HLI and HLL and a third party complaint against
Chartwell, Eszenyi and Kalafsky; and

          WHEREAS, on or about July 31, 2007, NYGL served and subsequently filed an application for an
order to show cause with temporary restraints enjoining HLI, HLL, Chartwell, Eszenyi and Kalafsky
from assigning or transferring any rights of HLI and JILL, including but not limited to changing
control of HLI and HLL, with respect to the FCA and RCLA to any third party; and

          WHEREAS, on August 1, 2007, the Honorable Rosemary Ramsay granted NYGL’s application and
entered an Order to Show Cause with Temporary Restraints, enjoining HLI, HLL, Chartwell, Eszenyi
and Kalafsky from assigning or transferring any rights of HLI and HLL, including but not limited
to changing control of HLI and HLL, with respect to the FCA and RCLA to any third party, pending
further order of the Court (the “OTSC”); and

          WHEREAS, on August 27, 2007, at a hearing before Judge Ramsay, for the reasons placed on
the record, the Court ordered that the restraints in the OTSC would remain in effect pending a
further hearing in the Action scheduled to be held on September 10, 2007; and

          WHEREAS, HLI and HLL have informed NYGL that (i) HLI desires to assign to Perry New Jersey
I, LLC, a Delaware limited liability company (“Perry”), and Perry desires to assume from HLI, the
FCA; and (ii) HLL desires to assign to Perry, and Perry desires to assume from HLL, the RCLA (the
“Assignments/Assumptions”); and

          WHEREAS, HLI, HLL, Chartwell, Eszenyi and Kalafsky, on the one hand, and NYGL and NBR, on
the other hand, have agreed to resolve fully and finally all claims alleged in the Action
subject to the terms and conditions in this Settlement Agreement; and

          WHEREAS, subject to the terms and conditions in this Settlement Agreement and
in an Assignment and Assumption Agreement, a true and correct copy of which is attached
hereto as Exhibit E (“Assignment and Assumption Agreement”), which is incorporated herein by
reference, NYGL has agreed to give its consent to the Assignments/Assumptions of the FCA and the
RCLA to Perry; and

2

 

          NOW, THEREFORE, intending to be legally bound and in consideration of the promises and of the
releases, representations, covenants, and obligations herein contained, the Parties agree as
follows:

AGREEMENT

	 	1.	 	The “Closing” of this Settlement Agreement shall occur on or before 12:00
noon on January 24, 2008, such date and time being of the essence.
	 
	 	2.	 	Prior to the Closing of this Settlement Agreement, HLI and HLL shall
repair the building of the Facility and return it to the condition it was in when
they began operations there, including, but not limited to, repairing the damaged
wall which is currently bulging and protruding near the railroad track.
	 
	 	3.	 	At the Closing of this Settlement Agreement, HLI, HLL and Chartwell shall
have paid all outstanding host community benefit payments and any and all applicable
penalties and late fees that are due and owing to the City of Passaic, New Jersey
under the Host Community Benefit Agreement (a true and correct copy of which is
attached as Exhibit F) through and including the date of the Closing of this
Settlement Agreement, and shall have submitted all associated tonnage records and
certified statements required by the City of Passaic under the Host Community Benefit
Agreement (Ex. F), and shall provide to NYGL a receipt from the City of Passaic signed
by an authorized representative of the City of Passaic specifically stating that “all
monthly host community benefit payments and any and all applicable penalties or late
fees that are due through and including the date of the Closing of the Settlement
Agreement, and all associated tonnage records and certified statements, have been paid
in full and submitted to the City of Passaic in accordance with the Host Community
Benefit Agreement, a true and correct copy of which is attached hereto.” As confirmed
by the letter from Sheri K. Siegelbaum, Esquire, counsel for the City of Passaic, to
HLI, dated January 22, 2008, a copy of which has been provided to the Parties by the
undersigned counsel for HLI, HLL, Chartwell and Eszenyi (and a true and correct copy
of which is attached as Exhibit G), the total sum due to the City of Passaic
through January 21, 2008 is $109,593.65.
	 
	 	4.	 	At the Closing of this Settlement Agreement, HLI, HLL and Chartwell, on
behalf of themselves, Eszenyi and Kalafsy, shall pay to NYGL a total sum of one
hundred and forty-four thousand dollars ($144,000), which amount shall be wire
transferred to the following account of NYGL’s counsel:

	 	 	 	Citizens Bank, 512 Pennsylvania Avenue, Fort Washington, PA 19034 Account
Holder: Robert A. Klein, Esquire, Partner, Berkowitz Klein, LLP

Routing No.: 036076150

Account No.: 6208026990

3

 

	5.	 	Subject to the full and complete satisfaction of the terms and conditions under paragraphs
2, 3 and 4 above, the Parties shall individually and collectively dismiss the Action and all
claims therein with prejudice by causing their respective attorneys and Kalafsky (the only
party not represented by counsel herein), individually, to execute and deliver to NYGL’s
attorney for filing in the Action in the Superior Court of New Jersey, Law Division, Morris
County, a stipulation of dismissal in the form and substance as attached hereto as
Exhibit H (the “Stipulation of Dismissal”).
	 
	6.	 	(a) Subject to and without waiver of any of the terms and conditions herein and in the
Assignment and Assumption Agreement (Ex. E), HLI, HLL, Chartwell, Eszenyi and Kalafsky, on
behalf of themselves and all parties claiming by, through or under them, (to the extent
applicable) their directors, officers, shareholders, principals, partners, employees, agents,
affiliates, attorneys, subsidiaries, parent entities, sister entities, successors,
predecessors, executors, administrators, insurers and assigns, hereby irrevocably and
unconditionally release NYGL and NBR, and their respective directors, officers, shareholders,
principals, partners, employees, agents, affiliates, attorneys, subsidiaries, parent entities,
sister entities, successors, predecessors, executors, administrators, insurers and assigns
from any and all liabilities, obligations, promises, agreements, causes of action, and rights
of any nature whatsoever, known or unknown, which are the subject or arise out of the Action
or which otherwise arise out of or relate to the FCA and the RCLA (which agreements the
Parties acknowledge are currently valid, enforceable and in effect) through the date hereof.

(b) Subject to and without waiver of any of the terms and conditions herein and in the
Assignment and Assumption Agreement (Ex. E), NYGL and NBR, on behalf of themselves and all
parties claiming by, through or under them, their directors, officers, shareholders,
principals, partners, employees, agents, affiliates, attorneys, subsidiaries, parent
entities, sister entities, successors, predecessors, executors, administrators, insurers
and assigns, hereby irrevocably and unconditionally release, HLI, IILL, Chartwell, Eszenyi
and Kalafsky, on behalf of themselves and all parties claiming by, through or under them,
(to the extent applicable) their directors, officers, shareholders, principals, partners,
employees, agents, affiliates, attorneys, subsidiaries, parent entities, sister entities,
successors,
predecessors, executors, administrators, insurers and assigns, from any and all
liabilities, obligations, promises, agreements, causes of action, and rights of any nature
whatsoever, known or unknown, which are the subject or arise out of the Action or which
otherwise arise out of or relate to the FCA and the RCLA (which agreements the Parties
acknowledge are currently valid, enforceable and in effect) through the date hereof.

(c) The Parties each represent and warrant to the other that they have not assigned,
pledged, hypothecated and/or otherwise divested themselves and/or encumbered all or
any part of the claims being released hereby and that they hereby agree to indemnify
and hold harmless any party against whom any such claim so assigned, pledged,
hypothecated, divested and/or encumbered is asserted.

4

 

	7.	 	This Settlement Agreement sets forth the entire agreement between the Parties hereto with
respect to the Action and supersedes any prior and contemporaneous agreements whether oral or
written between the Parties concerning the subject matter of this Settlement Agreement. This
Settlement Agreement (including the provisions of this sentence) may not be changed orally but
may be changed only in a writing signed by all Parties.
	 
	8.	 	This Settlement Agreement shall be governed by and construed in accordance with the internal
laws of the State of New Jersey without giving effect to any choice or conflict of law
provision or rule of any jurisdiction that would cause the application of the laws of any
jurisdiction other than the State of New Jersey. For all disputes arising out of this
Settlement Agreement, the Parties consent to the exclusive jurisdiction and venue of the
Morris County, New Jersey Superior Court.
	 
	9.	 	This Settlement Agreement shall be construed without regard to the Party or Parties
responsible for its preparation and shall be deemed to have been prepared jointly by the
Parties. If any provision of this Settlement Agreement is determined by a court to be
unenforceable as drafted, that provision shall be construed in a manner designed to effectuate
its purpose to the greatest extent possible under applicable law, and the enforceability of
other provisions shall not be affected.
	 
	10.	 	The waiver of one breach or default or any delay in exercising any rights will not constitute
a waiver of any subsequent breach or default. No term of this Settlement Agreement shall be
considered waived and no breach excused by either Party unless made in writing. No consent,
waiver, or excuse by the Parties, express or implied, unless in writing, shall constitute a
subsequent consent, waiver or excuse.
	 
	11.	 	All representations, warranties, covenants, terms, conditions, stipulations, and
provisions of this Settlement Agreement shall survive the Closing of the Settlement
Agreement, and thereafter shall be binding upon and inure to the
benefit of, and be enforceable by, the Parties, and their successors, and assigns.
	 
	12.	 	Except as specifically otherwise provided herein, this Settlement Agreement is intended for
the sole benefit of the Parties hereto. Nothing in this Settlement Agreement is intended to
or may be construed to give any person, firm, corporation, or other entity, other than the
Parties hereto (and, with respect to the assignment/assumption of the FCA and the RCLA, to
Perry), any rights pursuant to any provision or term hereof, and all provisions and terms of
this Settlement Agreement are and shall be for the sole and exclusive benefit of the Parties
to this Settlement Agreement.

	13.	 	This Settlement Agreement may be executed in counterparts and when taken
together shall constitute one and the same Settlement Agreement. Signatures to this
Settlement Agreement received by facsimile or other electronic means may and shall
be received and relied upon in the same manner as set forth in the Settlement
Agreement.

5

 

	 	14.	 	The Superior Court of New Jersey, Law Division, Morris County, will retain
continuing jurisdiction over any disputes arising under or any proceeding to enforce
the terms of this Settlement Agreement. The Parties consent to personal jurisdiction
of the Superior Court of New Jersey, Law Division, Morris County, which shall be the
exclusive jurisdiction for purposes of litigating any disputes arising under or any
proceeding to enforce the terms of this Settlement Agreement.
	 
	 	15.	 	The Parties acknowledge that they have been advised of their right to consult
with an attorney prior to executing this Settlement Agreement, that they have consulted
with an attorney prior to executing this Settlement Agreement, that they have carefully
read and fully understand all of the provisions of this Settlement Agreement, and that
they are entering into this Settlement Agreement, including the releases and covenants
set forth in paragraph 6 above, knowingly, freely, and voluntarily in exchange for good
and valuable consideration. The Parties represent that, in executing this Settlement
Agreement, they have not relied and do not rely upon any representation or statement
made by any other party, other than those set forth herein.
	 
	 	16.	 	The Parties each represent and warrant to each other (with such other Party
reasonably relying upon said representations and warranties in entering into this
Settlement Agreement) that the execution, delivery and performance of this Settlement
Agreement and each instrument executed and to be executed in connection herewith, and
the consummation of the transactions provided for herein and therein, are and will be
within each Party’s power; have been duly authorized by all necessary action on each
Party’s behalf; and do not and will not contravene any law, regulation, judgment,
decree, order or award relating to each party or conflict with or result in any breach
of
the terms, conditions or provisions of, or constitute a default under each Party’s
charter, by-laws or other agreement to which either is a Party or by which either is
bound. This Settlement Agreement and each instrument executed and to be executed by
the Parties in connection herewith are and will be the legal, valid and binding
obligations of each enforceable against them in accordance with their respective
terms.

          IN WITNESS WHEREOF, the Parties and their counsel have executed this Settlement
Agreement as of the date first written above.

6

 

	 	 	 	 	 	 	 
	ATTEST:	 	HUDSON LOGISTICS INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

Secretary

	 	 
	 	 

	 	 
	 
	 	 	 	 	 	 
	ATTEST:	 	HUDSON LOGISTICS LOADING INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

Secretary

	 	 
	 	 

	 	 
	 
	 	 	 	 	 	 
	ATTEST:	 	CHARTWELL INTERNATIONAL, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

Secretary

	 	 
	 	 

	 	 
	 
	 	 	 	 	 	 
	WITNESS:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	IMRE ESZENYI	 	 
	 
	 	 	 	 	 	 
	WITNESS:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	   	 	 
	 	 	RAYMOND KALAFSKY	 	 
	 
	 	 	 	 	 	 
	ATTEST:	 	NEW YORK & GREENWOOD
LAKE RAILWAY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

Secretary

	 	 
	 	 

	 	 
	 
	 	 	 	 	 	 
	ATTEST:	 	NORTHERN & BERGEN RAILROAD, LLC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

Secretary

	 	 
	 	 

	 	 

7

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