Document:

Exhibit 10.59

Exhibit 10.59
    
ENERGIZER HOLDINGS, INC.
EXECUTIVE HEALTH PLAN
FOR RETIRED EMPLOYEES

(Restated Effective January 1, 2011)

Energizer Holdings, Inc. (the "Company") established the Energizer Holdings, Inc. Executive Health Plan (the "Prior Plan"), effective as of April 1, 2000, to provide medical, dental and vision benefits for eligible employees and their eligible dependents and eligible retirees.
The Energizer Plans Administrative Committee appointed by the Company ("EPAC") is authorized to amend the Plan as it may deem appropriate.
EPAC now wishes to amend and completely restate the Prior Plan document to, among other things, confirm that the plan for active eligible employees and their eligible dependents and for retire eligible employees are two separate and distinct plans, to provide for the adoption of separate plan document for the executive health care benefits for retired employees to be referred to as the Energizer Holdings, Inc. Executive Health Plan for Retired Employees (the "Plan") and to change the name of the plan for active employees to the Energizer Holdings, Inc. Executive Health Plan for Active Employees.
Effective as of January 1, 2011, unless specifically provided otherwise, the Prior Plan with respect to retired colleagues is hereby amended and restated to read in its entirety as follows:.
            
I. DEFINITIONS

1.1    "Affiliated Company" means those domestic corporations in which the Company owns directly or indirectly more than 50% of the voting stock, or any other entity so designated by the Committee.

1.2    "Committee" means the Energizer Plans Administrative Committee, its designee, or any successor to such Committee.

1.3    "Company" means Energizer Holdings, Inc. and any successor thereto.

1.4    "Covered Employee" means an individual who is:

		
	(a)
	employed by a Participating Employer;

		
	(b)
	one of a select group of management or highly-compensated employees; and 

		
	(c)
	designated by the Chief Executive Officer of the Company as eligible to participate in the Energizer Holdings, Inc. Executive Health Plan for Active Employees.

1.5    "Covered Expenses" are expenses incurred for medical, dental, vision care services and supplies.  This includes usual and customary charges in conjunction with diagnosis, cure, mitigation or treatment of a sickness, injury or preventive treatment associated with an illness.  (A usual and customary allowance is the fee most frequently charged for a similar service or supply in a geographic area.  The fees are updated on a regular basis to adjust for changes.)

1.6    "Covered Individual" is a Retired Employee and his/her Dependents and certain former spouse(s) of a divorced Retired Employee.
1.7    A "Dependent" of a Retired Employee is eligible for coverage under this Plan if such Dependent is an individual defined in the Energizer Health Care Program for Retired Colleagues as an Eligible Dependent.

1.8    "Employee" means an individual employed by a Participating Employer and who is one of a select group of management or highly-compensated employees. 

1.9    "Participating Employer" means the Company and any Affiliated Company that adopts the Plan with the consent of the Company.

1.10    "Plan" means the Energizer Holdings, Inc. Executive Health Plan for Retired Employees.

1.11    "Retired Employee" means:

		
	(a)
	an officer of Eveready Battery Company, Inc. or any predecessor company who retired between January 1, 1979 and July 31, 1980, and who at the time of retirement was not eligible for coverage under the Plan as a Retired Employee; or 

		
	(b)
	a former Covered Employee: 

		
	(1)
	who did not terminate from a Participating Employer by reason of a divestiture, spinoff or other disposition of a subsidiary, division or other business unit; and 

		
	(2)
	who:

		
	(A)
	prior to March 29, 2003, retired or terminated after age 55 with at least two years of continuous service;

		
	(B)
	prior to March 29, 2003, was terminated involuntarily after attaining a combination of age and years of service totaling at least 80; or

		
	(C)
	is designated by the Chief Executive Officer of the Company as eligible to participate in this Plan as a Retired Employee.

1.12    "Retiree Health Care Program" means Energizer Health Care Program for Retired Colleagues.

II. ELIGIBILITY

2.1    A Retired Employee who is a Covered Individual under the Plan on December 31, 2010 shall continue to be a Covered Individual under the Plan on December 31, 2010, subject to the termination of coverage provisions.  Any other Retired Employee shall be eligible for coverage under the Plan only after meeting the requirements of Section 1.11.

2.2    The Covered Individuals described in Section 2.1 above must participate in the Retiree Health Care Program as a prerequisite for Plan participation.  Retired Employees who are ineligible to participate in the Retiree Health Care Program must contribute the amount specified in Section 3.2 of the Plan.

III. CONTRIBUTIONS

3.1    Retired Employees who participate in the Retiree Health Care Program are not required to pay contributions for their Plan coverage.

3.2    Retired Employees who are ineligible to participate in the Retiree Health Care Program must contribute 

the rate being charged for high option retiree coverage under the Retiree Health Care Program (contact the Committee for the current rates).
IV. EFFECTIVE DATE OF COVERAGE

4.1    The effective date of coverage for Covered Individuals under the Plan on December 31, 2010 shall be the date such Covered Individual was first eligible to participate in the Plan.

4.2    On or after January 1, 2011, the effective date of coverage for a Retired Employee shall be the date the Retired Employee satisfies the eligibility requirements under the Plan.

V. BENEFITS PAYABLE

The benefits payable under this Plan are the Covered Expenses incurred for medical, dental and vision care expenses defined in Section 213(e) of the Internal Revenue Code of 1986, as amended, and in Treasury Regulations §1.213-1, as amended.
Examples of expenses which may be considered Covered Expenses are expenses incurred for the following medical, dental or vision care, services and supplies:
	
		
	Ambulance
Chiropodists
Crutches
Doctors
Laboratory services
	Artificial limbs
Chiropractors
Diagnostic services
Hospital Care - room and board
Prescription drugs

	Nurses - services rendered by a Registered Nurse, Licensed Practical Nurse, or a Practical Nurse if an RN or LPN is not available (including nurses' room and board paid by the Employee)
	Physicians
Psychiatrists
Podiatrists
Osteopaths
Psychologists

	Special medical equipment
Special food or beverages prescribed for the treatment of an illness
Eye care
Guide dogs for the blind and deaf
	Surgeons
Therapy
X-ray services
Dental care
Transportation expenses for medical care

Claims for expenses incurred in making a capital expenditure or improvement to real estate must be approved by the Committee in advance of such expenditure.
VI. MAXIMUM BENEFIT FOR A RETIRED EMPLOYEE'S FAMILY UNIT

6.1    The maximum calendar-year benefit payable to a Retired Employee and his/her surviving Dependents is $50,000 for the family unit as a whole.  This maximum calendar-year benefit is in addition to the $1,000,000 lifetime maximum from the underlying coverage for a Retired Employee under the Retiree Health Care Program.  Covered Employees who are eligible for coverage as a Retired Employee under the Retiree Health Care Program must participate in that plan in order to receive coverage as a Retired Employee under this Plan.  A Retired Employee must enroll in the high option retiree coverage.

6.2    A Retired Employee who is ineligible for the Retiree Health Care Program but who participates in this Plan, is eligible for a $1,000,000 lifetime benefit for all covered medical expenses.  However, such a Retired Employee is not eligible for the $50,000 calendar-year benefit after the $1,000,000 lifetime maximum has been exhausted.  A $25,000 maximum calendar-year benefit will be payable to his/her divorced spouse(s) or Dependent(s) other than a surviving spouse.

6.3    Individuals who retire from a foreign affiliate of a Participating Employer who are not U.S. citizens are not eligible for coverage under this Plan as a Retired Employee.
VII. EXCEPTIONS

Benefits will not be payable under this Plan for expenses incurred for or in connection with:
7.1    Medical care, services and supplies for which no charge is made or for which the Covered Individual is not, in the absence of this coverage, legally obligated to pay.

7.2    Medical care, services and supplies which are furnished by a hospital or facility operated by or at the direction of the U.S. Government or any authorized agency thereof, or furnished at the expense of such Government or Agency, or by a doctor employed by such a hospital or facility, unless (a) the treatment is of an emergency nature, and (b) the Covered Individual is not entitled to such treatment without charge by reason of status as a veteran or otherwise.

7.3    Medical care, services or supplies to the extent that they are paid for, payable or furnished (a) pursuant to any plan or program administered by a National Government or Agency thereof or with funds received from taxation or contributions collected pursuant to legislation by a National Government, or (b) pursuant to any State Cash Sickness law or laws of a similar character, including any group insurance policy approved under such a law.

7.4    Blood or blood plasma for which the hospital or other supplier makes a refund or allowance to or on behalf of the Covered Individual either as a result of the operation of a group blood bank or otherwise, but only to the extent of the refund or allowance.

7.5    Sickness covered by Workers' Compensation law, occupational disease law, or laws of similar character, or injury arising out of or in the course of any occupation or employment for compensation, profit or gain.
7.6    Charges resulting from an injury, sickness, or pregnancy for which a Covered Individual received any medical care or services within the three month period immediately before becoming a Covered Individual under this Plan until the earlier of:

		
	(a)
	the end of a period of 12 consecutive months during which the Covered Individual has not received in connection with such injury, sickness, or condition any medical, surgical, hospital or nursing services or treatment of any kind or any drugs or medicine lawfully obtainable only upon prescription of a doctor; or

		
	(b)
	the end of a period of 12 consecutive months during which the Covered Individual has been continuously covered under this Plan.

The following charges shall not be subject to this exception 7.6:
		
	(1)
	charges for professional services and supplies related to care and treatment of teeth or nerves connected to teeth, and

		
	(2)
	charges incurred by an individual who was covered under the Energizer Health Care Program for Active Colleagues on the date immediately preceding the day his/her Plan coverage became effective under this Plan, to the extent that the requirements of exception 7.6 have been satisfied under the Energizer Health Care Program for Active Colleagues.

7.7    Medical care, services and supplies to the extent that they are paid for or payable under the Retiree Health Care Program.

7.8    Use of a Christian Science Practitioner.

7.9    Insurance premiums for hospitalization, medical, dental or vision care; or for pre-paid medical, dental 

or vision care.  Included in this exclusion are premiums paid for participation in the Energizer Health Care Program for Active Colleagues or the Retiree Health Care Program.
VIII. TERMINATION OF COVERAGE

A Covered Individual's coverage under the Plan will terminate on the earlier of the following dates:
		
	(a)
	The date the Covered Individual ceases to be eligible for coverage;

		
	(b)
	The date of termination of this Plan; or

		
	(c)
	The date the Covered Individual is designated by the Chief Executive Officer of the Company as ineligible to participate in the Plan.

IX. TERMINATION OF DEPENDENT COVERAGE
The coverage of each Dependent of a Retired Employee terminates on the earliest of the following dates:
9.1    The date the Retired Employee's coverage terminates except as noted in Section 9.3 below for Dependents of a deceased Retired Employee.

9.2    The date a Dependent ceases to be eligible under the Plan; provided that a covered unmarried child who (a) before the date he ceases to be eligible due to attaining age 19, becomes incapable of self-sustaining employment by reason of mental or physical handicap, and (b) is dependent upon the Retired Employee for his principal support and maintenance, will not cease to qualify solely because of attained age while that Dependent remains incapacitated and dependent provided initial proof of incapacity and dependency status is submitted to the Committee not more than 31 days after such Dependent would cease to be eligible by reason of attained age.

9.3    With respect to the coverage of a former spouse of a Retired Employee, or a surviving spouse, and surviving children of a deceased Retired Employee who at the time of death had a minimum of two years of service, upon the earliest of the following:  (a) the date a former spouse or surviving spouse remarries or dies, or (b) the 65th birthday of a former spouse, or (3) the date a former spouse becomes eligible for government-sponsored medical benefits.  If a surviving spouse dies while a child is covered under the Plan, the child will remain eligible as long as he or she qualifies as a Dependent.

The coverage of a former spouse will not terminate upon termination of coverage of the Retired Employee if at the time the divorce decree became final the Retired Employee was age 55 or over and had 20 years or more of service.
9.4    With respect to a Dependent who is a full-time, unmarried student, the earlier of (a) the end of a ninety-day period immediately following the date the Dependent ceases to be enrolled as a student, or (b) the date the Dependent becomes eligible under any other group medical plan or program.

X. EXTENDED MEDICAL BENEFIT ON DISABILITY

If a Retired Employee becomes "disabled", benefits will be payable subject to the applicable maximum and other provisions and exceptions of the Plan for Covered Expenses incurred as a result of the injury or sickness causing such disability provided that:  
10.1    In no event shall benefits be payable for charges for Covered Expenses rendered or received more than 24 months after the date such disability occurs, or the termination of the Plan, whichever is earlier.

10.2    He/she remains continuously disabled from the same cause until the date the Covered Expenses are incurred.

10.3    He/she does not become covered under any other group policy or plan, including any group basis 

service or prepayment plan, which entitles him/her to receive benefits for the injury or sickness causing the disability.

For purposes of this Plan, a Retired Employee shall be deemed to be disabled if such individual is incapable of performing the material and substantial duties of his/her regular occupation due to physical or mental sickness or injury.
XI. PROTECTED HEALTH INFORMATION
11.1    General.  The Plan shall use and disclose Covered Individuals' protected health information, as defined in 45 CFR §160.103 ("PHI"), in accordance with the uses and disclosures required and permitted by the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") and the regulations thereunder, and the Energizer Holdings, Inc. HIPAA Privacy and Security Policy, as amended from time to time.  This includes, but is not limited to the following uses and disclosures by the Plan:
		
	(a)
	The Plan may use or disclose PHI for its own payment and health care operations, subject to the provisions of Section 11.3;

		
	(b)
	The Plan may disclose PHI of a Covered Individual for treatment activities of a health care provider;

		
	(c)
	The Plan may disclose PHI of a Covered Individual to another covered entity or a health care provider for the payment activities of that entity;

		
	(d)
	The Plan may disclose PHI of a Covered Individual to another covered entity for health care operations of that covered entity, if both the Plan and covered entity has or had a relationship with the Covered Individual, the PHI pertains to such relationship, and the disclosure is for a purpose listed in Section 11.2(b)(1), (2), or (3) or for the purpose of health care fraud and abuse detection or compliance;

		
	(e)
	The Plan may disclose PHI of a Covered Individual to another covered entity that participates in an organized health care arrangement with the Plan, for any health care operations activities of the organized health care arrangement; or

		
	(f)
	The Plan may use or disclose PHI of a Covered Individual in accordance with a specific authorization executed by such Covered Individual.

11.2    Definitions.  For purposes of this Article XI, the following terms shall have the following meanings: 
		
	(a)
	"Covered entity" means a health plan, a health care clearinghouse, or a health care provider who transmits any health information in electronic form.

		
	(b)
	"Health care operations" include, but are not limited to, the following activities of the Plan:

		
	(1)
	conducting quality assessment and improvement activities;

		
	(2)
	population-based activities relating to improving health or reducing health care costs, protocol development, case management and care coordination, disease management, contacting health care providers and Covered Individuals with information about treatment alternatives;

		
	(3)
	evaluating Plan performance;

		
	(4)
	determining required Covered Individual contributions for plan coverage and securing, placing or terminating a contract for reinsurance of risk relating to health care claims (including stop-loss insurance and excess of loss insurance);

		
	(5)
	conducting or arranging for medical review, legal services and auditing functions, including fraud and abuse detection and compliance programs;

		
	(6)
	business planning and development, such as conducting cost-management and planning-related analyses related to managing and operating the Plan, including formulary development and administration, development or improvement of payment methods or coverage policies;

		
	(7)
	business management and general administrative activities of the Plan, including, but not limited to:

		
	(A)
	management activities relating to the implementation of and compliance with HIPAA's administrative simplification requirements; 

		
	(B)
	customer service;

		
	(C)
	resolution of internal grievances; 

		
	(D)
	the merger or consolidation of all or part of the Plan with an entity that is a “covered entity” under HIPAA or that will become a “covered entity” following such activity, and due diligence related to such activity; and

		
	(E)
	creating de-identified health information or a limited data set.

		
	(c)
	"Payment" includes activities undertaken by the Plan to obtain contributions or determine or fulfill its responsibility for coverage and provision of benefits to a Covered Individual under the Plan.  These activities include, but are not limited to, the following:

		
	(1)
	determination of eligibility, coverage and cost sharing amounts;

		
	(2)
	coordination of benefits;

		
	(3)
	adjudication of claims and appeals under the Plan;

		
	(4)
	subrogation of health benefit claims;

		
	(5)
	billing, collection activities and related health care data processing;

		
	(6)
	claims management and related health care data processing, including auditing payments, investigating and resolving payment disputes and responding to Covered Individual inquiries about payments;

		
	(7)
	obtaining payment under a contract for reinsurance (including stop-loss and excess of loss insurance);

		
	(8)
	medical necessity reviews or reviews of appropriateness of care or justification of charges;

		
	(9)
	utilization review, including precertification, preauthorization, concurrent review and retrospective review; and

		
	(10)
	disclosure to consumer reporting agencies of any of the following PHI relating to the collection of contributions or reimbursement: name and address, date of birth, Social Security number, payment history, account number and name and address of the provider or health plan.

		
	(d)
	"Treatment" means the provision, coordination, or management of health care and related services by one or more health care providers, including the coordination or management of health care by a health care provider with a third party, consultation between health care providers relating to a patient, or the referral of a patient for health care from one health care provider to another.

11.3    Disclosure to Participating Employer.  The Plan may disclose PHI of a Covered Individual to the 

Participating Employer for the purposes set forth in Section 11.1, only if the Plan receives certification from the Company that the Plan has been amended to incorporate the provisions of Section 11.4.
11.4    Participating Employer Agreements With Respect to PHI.  Each Participating Employer agrees to:
		
	(a)
	Not use or further disclose PHI other than as permitted or required by the Plan document or as required by law;

		
	(b)
	Ensure that any agents, including a subcontractor, to whom a Participating Employer provides PHI received from the Plan, agree to the same restrictions and conditions that apply to a Participating Employer with respect to such PHI;

		
	(c)
	Not use or disclose PHI for employment-related actions and decisions unless authorized by the Covered Individual;

		
	(d)
	Not use or disclose PHI in connection with any other benefit or employee benefit plan of a Participating Employer, unless authorized by the Covered Individual, or unless in accordance with Section 11.1(e);

		
	(e)
	Report to the Plan's Privacy Officer any PHI use or disclosure that it becomes aware of which is inconsistent with the uses or disclosures provided for;

		
	(f)
	Make PHI available to a Covered Individual in accordance with HIPAA's access requirements;

		
	(g)
	Make PHI available to a Covered Individual for amendment and incorporate any amendments to PHI in accordance with HIPAA;

		
	(h)
	Make available to the Covered Individual the information required to provide an accounting of disclosures in accordance with HIPAA;

		
	(i)
	Make internal practices, books and records relating to the use and disclosure of PHI received from the Plan available to the Secretary of Health and Human Services for the purpose of determining the Plan's compliance with HIPAA; 

		
	(j)
	If feasible, return or destroy all PHI received from the Plan that a Participating Employer still maintains in any form, and retain no copies of such PHI when no longer needed for the purpose for which disclosure was made (or, if return or destruction is not feasible, limit further uses and disclosures to those purposes that make the return or destruction infeasible); and

		
	(k)
	Ensure that adequate separation as set forth in Section 11.5 is established.

		
	(l)
	Implement administrative, technical and physical safe-guards that reasonably and appropriately protect the confidentiality, integrity and availability of electronic PHI that it creates, receives, maintains, or transmits on behalf of the Plan;

		
	(m)
	Ensure that the adequate separation required by HIPAA and Section 11.5 of the Plan is supported by reasonable and appropriate security measures;

		
	(n)
	Ensure that any agents, including a subcontractor, to whom it provides electronic Plan PHI agrees to implement reasonable and appropriate security measures to protect the electronic Plan PHI; and

		
	(o)
	Report to the Plan's Security Officer any security incident, as defined in 45 CFR §164.304, of which it becomes aware.

11.5    Adequate Separation Between the Plan and each Participating Employer.
		
	(a)
	In accordance with HIPAA, only the individuals whose positions or functions are described in the 

Energizer Holdings, Inc. HIPAA Privacy and Security Policy shall be given access to PHI.  The provisions of such Policies and Procedures that set forth such individuals with access to PHI, are hereby incorporated by reference and the Privacy Officer is hereby authorized to make any necessary amendments to such provisions without further action on the part of the Company.
		
	(b)
	The individuals described in subsection (a) may only have access to and use PHI for Plan administration functions that the Participating Employer performs for the Plan.  Notwithstanding the foregoing, only the Privacy Officer may have access to PHI with respect to the Employee Assistance Program, and he or she may have access to such information only to carry out his or her management duties relating to implementation of and compliance with the requirements of the HIPAA privacy regulations.

		
	(c)
	If the individuals described in subsection (a) do not comply with this Article, sanctions will be imposed in accordance with the Participating Employer's discipline rules and procedures for violations of other policies of the Participating Employer.  Sanctions may range from a warning to termination of employment, depending on the circumstances of the violation.  Circumstances to consider include: 

		
	(1)
	the nature and severity of the violation;

		
	(2)
	whether the violation was intentional or unintentional;

		
	(3)
	whether the violation was an isolated occurrence or a pattern of unauthorized use and disclosure of PHI;

		
	(4)
	any history of past violations;

		
	(5)
	the sanctions imposed for similar violations;

		
	(6)
	whether the employee reported the violation on his or her own; and

		
	(7)
	the employee's willingness to cooperate with the investigation of the violation.

XII. FUNDING
Benefits provided under the Plan will provide through insurance policies.
XIII. TAX CONSEQUENCES
Benefits provided under this Plan are not taxable as ordinary income under current tax laws.
Please note that the tax laws change frequently.  A Covered Individual will be advised if a tax law change has any effect on the Covered Individual's Plan coverage.
XIV. MODIFICATION AND TERMINATION OF COVERAGE
The Company and the Committee are each empowered to amend, modify or terminate this Plan at any time.  The Company reserves the right to assign its rights and obligations under the Plan to a third party.
XV. FILING A CLAIM
Claim forms for the Plan should be submitted along with itemized bills to the Third Party Benefits Administrator, as identified in the Retiree Health Care Program Summary Plan Description.  The Third Party Benefits Administrator will honor an assignment to the treating physician, hospital, etc., of all benefits paid through the Retiree Health Care Program but all payments made through the Plan will be to the Retired Employee.

IN WITNESS WHEREOF, EPAC, on behalf of the Company, has caused this restated Plan to be executed by a duly authorized member of EPAC on this _____ day of December, 2010.

ENERGIZER PLANS ADMINISTRATIVE
COMMITTEE

By:                              

Name:                            

Title:ex10-01.htm

 

 

PURCHASE AND SALE AGREEMENT

FOR OIL & GAS PROPERTIES AND

RELATED ASSETS

 

This Agreement is effective as of November 14, 2011 by and between Paxton Energy, Inc., a Nevada corporation (“Buyer”), and Black Cat Exploration & Production, LLC, a Texas limited liability company (“Seller”).

 

Seller and Buyer are entering into this Purchase and Sale Agreement (the “Agreement”), as evidence of Seller’s agreement to sell and Buyer’s agreement to buy the properties described in and subject to this Agreement.

 

In consideration of the mutual covenants, conditions and considerations provided below, Buyer and Seller agree as follows:

 

1.      The Properties.  Seller shall assign and convey to Buyer all of Seller’s interest in and to the following, all of which are collectively referred to in this Agreement as the “Properties”:

 

a.      All right, title, and interests of Seller (of whatever kind or character, whether legal or equitable, and whether vested or contingent) in and to the oil, gas, and other minerals in and under and that may be produced from the lands described in Exhibits “A” and “B,” including, without limitation, interests in oil, gas, and/or mineral leases covering any part of the lands, overriding royalty interests, production payments, and net profits interests in any part of the lands or leases, fee royalty interests, fee mineral interests, and other interests in oil, gas, and other minerals in any
part of the lands, whether the lands are described in any of the descriptions set out in Exhibits “A” and “B”;

 

b.      All right, title, and interests of Seller in all presently existing and valid oil, gas and/or mineral unitization, pooling, and/or communitization agreements, declarations, and/or orders and the properties covered or included in the unit, including, without limitation, units formed under orders, rules, regulations, or other official acts of any federal, state, or other authority having jurisdiction, voluntary unitization agreements, designations, and/or declarations, and any “working interest unit” (created under operating agreements or otherwise) that relate to any of the Properties described in
subparagraph a above;

 

c.      All right, title, and interests of Seller in all presently existing and valid production sales (and sales related) contracts, operating agreements, and other agreements and contracts that relate to any of the Properties described in subparagraphs a and b above, or which relate to the exploration, development, operation, or maintenance of the Properties or the treatment, storage, transportation, or marketing of production from or allocated to the Properties; and,

 

d.      All rights, title and interests of Seller in and to all materials, supplies, machinery, equipment, improvements, and other personal property and fixtures relating to the Properties (including, without limitation, all wells, wellhead equipment, pumping units, flow lines, tanks, buildings, injection facilities, salt water disposal facilities, compression facilities, gathering systems, and other equipment), all easements, rights-of-way, surface leases, and other surface rights, all permits and licenses, and all other appurtenances, used
or held for use in connection with or related to the exploration, operation, development, or maintenance of the Properties and/or the leases, wells, and other interests being acquired.

  

1

  

 

e.      All right, title, and interests of Seller in and to any general intangibles, contract rights, books and records, files, computer software, documents, and other information arising from or related to the Properties and assets being acquired.

 

2.      Purchase Price. Buyer shall pay to Seller at the Closing the agreed sum of Five Million Seven Hundred Fifty Thousand Dollars ($5,750,000), as follows:

 

a.      To an account to be designated by Seller, in cash or immediately available funds, the sum of Two Hundred Fifty Thousand Dollars ($250,000); and

 

	
  

	
b.

	
A note in the amount of $1,000,000 dollars payable in monthly installments of  Two Hundred Fifty Thousand Dollars $250,000 every 30 days from the closing, interest of 8% per annum on the balance and payable monthly; and

 

b.      The balance of the Purchase Price shall be evidenced by and paid through the issuance at the Closing of a total of Forty-Five Million (45,000,000) shares of common stock of Buyer, par value $0.001 per share, without registration or rights thereto and therefore restricted from resale under applicable securities laws (the “Shares”).

 

Seller shall sign, as a condition to the issuance of the Shares, an investment representation letter in the standard form used and prepared Buyer’s securities counsel.  The Shares shall contain the standard restricted shares legend as required by securities counsel for Buyer.

 

3.      Closing.  The sale and purchase of the Properties (the “Closing”) shall be on or before December 15 , 2011, at 220 Montgomery Street #1094, San Francisco, CA 94104, or such other place as Buyer and Seller shall mutually agree.

 

At the Closing,   Seller shall deliver to Buyer:

 

a.      Assignments to Buyer, in recordable form, of each and all of the Properties referred to in Paragraph 1 above and all rights related thereto, including, without limitation, the leases and interests described in Exhibit “A” and Exhibit “B” attached hereto and the leases and interests commonly known as I-1 well in Block 818-L Gulf of Mexico and the producing assets of Seller in Michigan;

 

b.      Assignments to Buyer of each of the: (i) contract rights and agreements referred to in Paragraph 1; and (iii) the personal property, fixtures, general intangibles and other property referred to in Paragraph 1;

 

c.      Bills and Sale with Warranty of Title and Assignments to Buyer of all of the personal property, materials, supplies, machinery, and equipment referred to in Paragraph 1;

 

d.      Possession of all of the Properties and the assets and interests being sold and acquired hereunder;

 

e.      All of the policies of insurance of Seller covering the Properties and the assets and interests being sold and acquired hereunder;

  

2

  

 

f.      Notification to the buyers of Sellers’s gas and oil that Buyer acquired the interests of Seller and that all checks from the operations of the Properties, as provided in Paragraph 4 below, should be paid to Buyer at an address to be provided at the Closing;

 

g.      An investment representation letter in the standard form used by Buyer’s securities counsel, a copy of which shall be provided Seller prior to the Closing, properly executed by the party  or parties to be issued shares of common stock of Paxton, as described in Paragraph 2;

 

h.      Certified copies of the resolutions of Seller or other evidence authorizing and approving the execution and consummation of this Agreement by and on behalf of Seller;

 

i.      A copy of the Employment Agreement executed by Anthony Mason and acceptance of the appointment of Anthony Mason as a director of Buyer, as described in Paragraph 12 below; and

 

i.      Such other documents as counsel for Buyer may reasonably request to consummate this transaction in accordance with industry practices or as required under applicable securities and other laws.

 

At the Closing, Buyer shall deliver to Seller:

 

1.      Cash in the amount set forth in Paragraph 2 a, which shall be wired per instructions to be provided by Seller as soon as practical at or immediately following the Closing;

 

2.      Certificates for the shares of common stock of Buyer to be issued and delivered to Seller under Paragraph 2 b;

 

3.      An Employment Agreement between Buyer and Anthony Mason on the terms described in Paragraph 12 below;

 

4.      Certified copies of the resolutions of the board of directors of Buyer authorizing and approving the execution and consummation of this Agreement by and on behalf of Buyer and electing Anthony Mason as a member of the Board of Directors, as described in Paragraph 12 below;

 

5.      Such other documents as counsel for Seller may reasonably request to consummate this transaction in accordance with industry practices or as required under applicable securities and other laws.

 

4.      Conveyance Effective Date, Proration of Production Expenses.  The conveyance by Seller shall be effective as of 10:00 a.m. local time, where the Properties are located, on December 15. 2011 or such other time and date as may be agreed upon by the parties (the “Effective Date”).   All production from the Properties and all proceeds from the sale of production prior to the Effective Date shall be the property of Seller.  Seller shall be responsible for payment of all expenses
attributable to the Properties prior to the Effective Date.  Buyer shall be responsible for payment of all expenses attributable to the Properties after the Effective Date.

 

5.      Taxes.  Seller shall be responsible for all taxes relating to the Properties prior to the Effective Date.  Buyer shall be responsible for all taxes (exclusive of federal, state or local income taxes due by Seller) relating to the Property from and after the Effective Date.

  

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6.      Indemnity.

 

a.      Seller shall indemnify and hold Buyer, its directors, officers, employees, and agents harmless from and against any and all liability, liens, demands, judgments, suits, and claims of any kind or character arising out of, in connection with, or resulting from Seller’s ownership of the Properties, for all periods prior to the Effective Date.  Seller shall remain responsible for all claims relating to the drilling, operating, production, and sale of hydrocarbons from the Properties and the proper accounting and payment to parties for their interests and any retroactive payments, refunds, or
penalties to any party or entity, insofar as any claims relate to periods of time prior to the Effective Date.  Seller shall promptly notify Buyer of any claims, judgments, suits, demands or liens of any kind or character (hereafter “Prior Claims”) that relate to the Property and any activities thereon prior to the Effective Date and shall take immediate actions to discharge all Prior Claims.

 

b.      Buyer shall indemnify and hold Seller harmless from and against any and all liability, liens, demands, judgments, suits, and claims of any kind or character arising out of, in connection with, or resulting from Buyer’s ownership of the Properties for periods from and after the Effective Date. Buyer shall be responsible for all claims relating to the drilling, operating, production, and sale of hydrocarbons from the Properties and the proper accounting and payment to parties for their interests, and any retroactive payments, refunds, or penalties to any party or entity as such claims relate to periods
from and after the Effective Date.

 

c.      Buyer and Seller shall have the right to participate in the defense of any suit in which one of them may be a party without relieving the other party of the obligation to defend the suit.

 

7.      Representations and Warranties of Seller.  Seller represents and warrants to Buyer as follows:

 

a.  Seller is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Texas.  Seller is qualified to do business in and is in good standing under the laws of the State of Louisiana and the State of Michigan, and wherever any of the Properties are located.

 

b.      Seller has full power and authority to carry on its business as presently conducted, to enter into this Agreement, and to perform its obligations under this Agreement.  The execution and delivery of this Agreement by Seller does not, and the consummation of the transactions contemplated by this Agreement shall not:  (a) violate, conflict with, or require the consent of any person or entity under any provision of Seller’s Operating Agreement or other governing documents; (b) conflict with, result in a breach of, constitute a default (or an event that with the lapse of time or notice or
both would constitute a default) or require any consent, authorization, or approval under any agreement or instrument to which Seller is a party or to which any of the Properties or Seller is bound, except as disclosed in Exhibits “A” and “B”; (c) violate any provision of or require any consent, authorization, or approval under any judgment, decree, judicial or administrative order, award, writ, injunction, statute, rule, or regulation applicable to Seller; or, (d) result in the creation of any lien, charge, or encumbrance on any of the Properties.

  

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c.      The execution and delivery of this Agreement has been, and the performance of this Agreement and the transactions contemplated by this Agreement shall be at the time required to be performed, duly and validly authorized by all requisite action on the part of Seller.

 

d.  This Agreement has been duly executed and delivered on behalf of Seller and constitutes the legal and binding obligation of Seller enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, reorganization, or moratorium statues, equitable principles, or other similar laws affecting the rights of creditors generally (“Equitable Limitations”).  At Closing, all documents and instruments required to be executed and delivered by Seller shall be duly executed and delivered and shall constitute legal, valid, enforceable, and binding obligations of Seller, except as
enforceability may be limited by Equitable Limitations.

 

e.      Seller has Marketable Title to the Properties.  For the purposes of this Agreement, “Marketable Title” means such title will enable Buyer, as Seller’s successor in title, to receive from each of the Properties at least the “Net Revenue Interest” being 10.35% for the Well identified on Exhibit “A” and 2% overriding royalty interest in 14,400 acres described in Exhibit “A”  associated with each of the Properties, without reduction, suspension, or termination throughout the productive life of the Wells, except for any reduction, suspension,
or termination: (a) caused by Buyer, any of its affiliates successors in title or assigns; (b) caused by orders of the appropriate regulatory agency having jurisdiction over any of the Properties that are promulgated after the Effective Date and that concern pooling, unitization, communitization, or spacing matters affecting any of the Properties; or, (c) otherwise set out in Exhibit “A.”  “Marketable Title” also means title as will obligate Buyer, as Seller's successor in title, to bear no greater “Working Interest” than the Working Interest for each of the Wells identified on Exhibit "A" as being associated with each of the Properties, without increase throughout the productive life of the Wells, except for any increase: (a) caused by Buyer, any of its affiliates, successors in title or assigns; (b) that also results in the Net Revenue
Interest associated with the Well being proportionately increased; (c) caused by contribution requirements provided for under the pertinent provisions of or similar to those contained in the A.A.P.L. Form 610 Model Form Operating Agreement; (d) caused by orders of the appropriate regulatory agency having jurisdiction over any of the Properties that are promulgated after the Effective Date and that concern pooling, unitization, communitization, or spacing matters affecting a particular property with the Properties; or, (e) otherwise set forth in Exhibit A.”  “Marketable Title” also means the Properties are free and clear of all encumbrances, liens, claims, easements, rights, agreements, instruments, obligations, burdens, or defects (collectively the “Liens”), except for Permitted Encumbrances.

 

f.      For the purposes of this Agreement, “Permitted Encumbrances” means:  (a) liens for taxes not yet delinquent; (b) lessor’s royalties, overriding royalties,  reversionary interests, and similar burdens, if any, that do not operate to reduce the Net Revenue Interest of Seller in any of the Properties to less than the amount set forth on Exhibit “A”; (c) the consents and rights described in Exhibit “A” insofar as such contracts and agreements do not operate to increase the
Working Interest of Seller or decrease the Net Revenue Interest of Seller, as set forth on Exhibit “A,” for any of the Properties.  Seller has good and defensible title, subject to the Permitted Encumbrances, to all of the Properties.

  

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g.      Exhibits “A” and “B” contain a complete list of all contracts, agreements, undertakings (whether written or oral), and instruments that are not described in any other Exhibit to this Agreement that constitute a part of the Properties or by which the Properties are bound or subject.

 

h.      No claim, demand, filing, cause of action, administrative proceeding, lawsuit, or other litigation is pending, or to the best knowledge of Seller, threatened, that could now or later adversely affect the ownership or operation of any of the Properties, other than proceedings relating to the industry generally and to which Seller is not a named party.  No written or oral notice from any governmental agency or any other person has been received by Seller:  (a) claiming any violation or repudiation of all or any part of the Properties or any violation of any law or any environmental,
conservation or other ordinance, code, rule or regulation; or, (b) require or calling attention to the need for any work, repairs, construction, alterations, or installations on or in connection with the Properties, with which Seller has not complied.

 

i.      There are no known approvals required to be obtained by Seller for the assignment of the Properties to Buyer and all preferential purchase rights that affect the Properties.

 

j.      The Properties have been operated in compliance with the provision and requirements of the applicable oil and gas leases, and all laws, orders, regulations, rules, and ordinances issued or promulgated by all governmental authorities having jurisdiction with respect to the Properties.  All necessary governmental certificates, consents, permits, licenses, or other authorizations with regard to the ownership or operation of the Properties have been obtained and no violations exist or have been recorded in respect of such licenses, permits or authorizations.  None of the documents and materials
filed with or furnished to any governmental authority with respect to the Properties contains any untrue statement of a material fact or omits any statement of a material fact necessary to make the statement not misleading.

 

k.      Each of the contracts, agreements, and other obligations of Seller relating to the Properties is in full force and effect.  Neither Seller nor, to the knowledge of Seller, any other party to such contracts is in breach of or default, or with the lapse of time or the giving of notice, or both, would be in breach or default with respect to any of the obligations thereunder to the extent that any breaches or defaults have an adverse impact on any of the Properties.  Neither Seller nor, to the knowledge of Seller, any other party to such contracts has given or threatened to give notice of any
default under or inquiry into any possible default under or action to alter, terminate, rescind, or procure a judicial reformation of any contract or agreement.  Seller does not anticipate any other party to any such contract will be in breach of or default under or repudiate any of its obligations to the extent such breach or default will have an adverse impact on any of the Properties.

  

6

  

 

l.  All rentals, royalties, excess royalty, overriding royalty interests, and other payments due under or with respect to the Properties have been properly and timely paid.  All ad valorem, property, production, severance, and other taxes based on or measured by the ownership of the Properties or the production from the Properties have been properly and timely paid. All proceeds from the sale of production are being properly and timely paid to Seller by the purchasers of production, without suspense.

 

m.  The prices being received for production do not violate any contract, law or regulation.

 

n.      Where applicable, all of the wells and production from the wells have been properly classified under appropriate governmental regulations.

 

o.  No gas regulatory matters are in place regarding the Properties at this time due to the fact that they are not producing gas at this time.

 

p.      None of the purchasers under any production sales contracts are entitled to “makeup” or otherwise receive deliveries of oil or gas at any time after the Effective Date without paying, at such time, the full contract price for oil or gas.  No person is entitled to receive any portion of the interest of Seller in any oil or gas, or to receive cash or other payments to “balance” any disproportionate allocation of oil or gas under any operating agreement, gas balancing and storage agreement, gas processing or dehydration agreement, or other similar agreements.

 

q.      Since November 1, 2011,the Properties, viewed as a whole, have not experienced any material reduction in the rate of production, other than changes in the ordinary course of operations, changes that result from depletion in the ordinary course of operations, and changes that result from variances in markets for oil and gas production.  None of the Properties have suffered any material destruction, damage or loss.

 

r.      There are no wells located on the Properties that:  (a) Seller is currently obligated by law or contract to plug and abandon; (b) Seller will not be obligated by law or contract to plug or abandon with the lapse of time or notice or both because the well is not currently capable of producing in commercial quantities; (c) are subject to exceptions to a requirement to plug and abandon issued by a regulatory authority having jurisdiction over the Properties; or, (d) to the best knowledge of Seller, have been plugged and abandoned, but have not been plugged in accordance with all applicable requirements
of each regulatory authority having jurisdiction over the Properties.

 

s.      The equipment constituting a part of the Properties is sold in an “as is”  “where is” condition.

 

t.      No representation or warranty by Seller in this Agreement or any agreement or document delivered by Seller pursuant to this Agreement contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in any representation or warranty, in light of the circumstances under which it was made, not misleading.  There is no fact known to Seller that materially and adversely affects, or may materially and adversely affect the operation, prospects or condition of any portion
of the Properties that has not been identified in this Agreement.

  

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8.      Representations by Buyer.  Buyer represents to Seller that the following statements are true and correct:

 

a.      Buyer is a Nevada corporation duly organized, in good standing, and is now, or at the Closing will be, qualified to carry on its business in each state in which the Properties are located, and has the power and authority to carry on its business as presently conducted, to own and hold the Properties, and to perform all obligations required by this Agreement.

 

b.      Pursuant to its Bylaws and Certificate of Incorporation, Buyer has the power and authority to acquire, own, and hold the Properties and to perform the obligations required by this Agreement.

 

c.      The shares of common stock of Buyer issuable and deliverable to Seller pursuant to this Agreement, when issued and delivered to Seller as herein provided, will be validly issued and outstanding shares of common stock of Seller, fully-paid and non-assessable, and will be free of any liens or encumbrances caused or created by Seller; however the shares shall be subject to restrictions on transfer under state or federal securities laws and as set forth in this Agreement or otherwise required at the time a transfer is proposed.

 

d.       The execution and delivery of this Agreement has been, and the performance of this Agreement and the transactions contemplated by this Agreement shall be at the time required to be performed, duly and validly authorized by all requisite action on the part of Buyer.

 

e.  This Agreement has been duly executed and delivered on behalf of Buyer and constitutes the legal and binding obligation of Buyer enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, reorganization, or moratorium statues, equitable principles, or other similar laws affecting the rights of creditors generally (“Equitable Limitations”).  At Closing, all documents and instruments required to be executed and delivered by Buyer shall be duly executed and delivered and shall constitute legal, valid, enforceable, and binding obligations of Buyer, except as
enforceability may be limited by Equitable Limitations.

 

f.      The execution, delivery, and performance of this Agreement and compliance with this Agreement by Buyer does not conflict with, or result in a breach or violation of the terms, conditions, or provisions of, or constitute a default under Buyer’s Articles of Incorporation, as amended and restated, its Bylaws, as amended and restated, or any agreement by which Paxton is bound.

 

g.      No representation or warranty by Buyer in this Agreement or any agreement or document delivered by Buyer pursuant to this Agreement contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in any representation or warranty, in light of the circumstances under which it was made, not misleading.

 

9.      Title and Other Examinations and Curative.  Prior to and pending Closing, Buyer shall examine title to and an engineering analysis of the Properties at its own expense.  In the event either the status of title to or the engineering analysis of any of the Properties is not satisfactory, in Buyer’s sole judgment and discretion, or if the Properties are otherwise not
as represented to Buyer, Buyer may, at its option for any or for no reason, either terminate this Agreement at any time on or before Closing, or reduce the Purchase Price by an amount agreeable to both parties.

  

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10.         Conditions.  The consummation of the sale and purchase contemplated by this Agreement will be subject to the following conditions:

 

a.      The representations and warranties by Seller set forth in Section 7 shall be true and correct in all material respects as of the date when made and as of the Closing.

 

b.      There shall have been no material adverse change in the condition of the Properties except depletion through normal production within authorized allowables and rates of production, depreciation of equipment through ordinary wear and tear, and other transactions permitted under this Agreement or approved in writing by Buyer between the date of this Agreement and Closing.

 

c.      All requirements made by Buyer with regard to title to the Properties and the engineering analysis of the Properties shall have been fully satisfied or waived by Buyer.

 

d.      All consents, approvals and authorizations of assignments, and waivers of preferential rights to purchase required by Buyer shall have been submitted to and approved by Buyer.

 

e.      Seller and Buyer understand and agree that if: (1) title to any of the Properties is not satisfactory to Buyer; (2)  Seller's actual interests in any of the Properties is different from that as represented by Seller and the difference causes a diminution in Seller's net revenue interest of more than 5% of that which Seller represents to own; (3) contracts, claims or litigation to which Buyer takes exception are material; or, (4) Seller fails to comply with any of the conditions set forth in this Agreement; Buyer may, at its option, either terminate this Agreement at any time on or before Closing, or
reduce the Purchase Price by an amount agreeable to both parties.  However, any reduction in Seller's net revenue interests below that which is represented in Exhibit "A" shall result in an automatic reduction in the Purchase Price commensurate with the reduction in such net revenue interest.

 

f.      The parties shall have performed or complied with all agreements and covenants required by this Agreement of which performance or compliance is required prior to or at Closing.

 

g.      All legal matters in connection with and the consummation of the transactions contemplated by this Agreement shall be approved by counsel for Buyer and there shall have been furnished by Seller such records and information as Buyer’s counsel may reasonably request for that purpose.

 

11.       Transfer, Documentary Taxes, and Commission, Brokerage Fees.  Seller shall pay and bear all documentary or transfer taxes resulting from this transaction.  Buyer shall be responsible to pay its costs and expenses incurred by Buyer in connection with the transaction contemplated under this Agreement, including any commission or brokerage fees incurred by
Buyer and payable to National Securities Corporation.  Seller shall be responsible for and pay all of the costs and expenses incurred by Seller in connection with the transaction contemplated under this Agreement and shall indemnify and hold Buyer harmless from any claims of brokers or finders acting, or claiming to be have acted, on behalf of Seller.

  

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12.       Additional Requirements at the Closing.   Effective from and after the Closing, Buyer and Anthony Mason will enter into an Employment Agreement wherein Anthony Mason (“Employee”) will be employed on a full time basis as the President and Chief Executive Officer of Buyer.  The Employment Agreement shall be on the standard form used by Buyer for other members of management and shall contain the following terms:

 

a.      The term shall be three years with a right to terminate earlier upon the payment of a one-year break-up fee;

 

b.      The salary shall be $25,000 per month, escalating to $35,000 per month on achieving 2,000 BOEPD and $45,000 per month on achieving 4,000 BOEPD ;

 

c.      As soon as practical following Closing, Buyer will provide Employee medical and dental insurance available through the professional employer organization (“POE”) used by Buyer;

 

d.      Employee will be granted options to purchase up to 3,000,000 shares of common stock of Buyer under the terms of Buyer’s Amended and Restated 2010 Incentive Stock Option Plan with vesting under the standard employee basis at a price determined by the Compensation Committee of the Board or by the Board of Directors no earlier than ten days prior to the Closing;

 

e.      Employee shall be elected to serve on the Board of Directors for the term and in the manner set forth in the Bylaws of Buyer.

 

13.       Buyer Financing.  Seller acknowledges that Buyer will be financing a portion of the Purchase Price (the “Buyer Financing”) and as part of the collateral for the Buyer Financing, Buyer will be required to grant a security interest in and to the Properties to be conveyed pursuant to this Agreement.  Seller agrees to cooperate with Buyer’s Buyer Financing efforts and to
execute any documents required by Buyer’s lender to effect and grant the security interest in and to the Properties in favor of Buyer’s lender as security for the Buyer Financing.

 

14.       Further Assurances, Intent.  It is Seller’s intent to convey to Buyer all of Seller’s interests, legal, beneficial, or equitable in the Properties.  Seller agrees to execute and deliver to Buyer all instruments, conveyances, and other documents and to do such other acts not inconsistent with this Agreement as may be necessary or advisable to carry out Seller’s
intent.

 

15.       Disclosure.  Seller acknowledges that Buyer may be required by law to disclose the execution of this Agreement in a Form 8-K filing with the Securities and Exchange Commission and may make a public announcement concerning this Agreement, the transaction contemplated herein, or any other matters relating to the proposed acquisition.   Seller consents to Paxton’s making such
disclosures consistent with the terms of this Agreement.

\

16.       Notices.  All notices and other communications required or permitted by this Agreement or by law to be served on or given to a party hereto by the other party shall be deemed given: (i) when personally delivered; (ii) one (1) business day after timely delivery to Federal Express, United Parcel Service, or other nationally recognized courier for overnight delivery, charges prepaid; or (iii) if a
fax number or email address is set forth herein, upon written confirmation by the fax machine or the computer of the party sending the notice that the notice has been transmitted successfully to the receiving party’s fax machine or email account, in each case addressed, faxed , or emailed to the addressee at the address, fax number, or email address set forth hereafter.  Either party may change its addressee, address, fax number, or email address for notice purposes by a notice given in accordance with this Agreement.

 

  

10

  

 

	  	
Seller:

	
Black Cat Exploration & Production, LLC

	  	  	
Attn: Anthony J. Mason

	  	  	
2727 Revere Street Suite #2009

	  	  	
Houston, Texas, 77019

	  	  	  

	  	  	
email to: nymason@blackcatexp.com

	  
	  	  	  	  
	  	
Buyer:

	
Paxton Energy, Inc.

	  
	  	  	
For delivery:

	
295 Highway 50, Suite 2

	  
	  	  	  	
Lake Village Professional Building

	  
	  	  	  	
Stateline NV 89449

	  
	  	  	  	  
	  	  	
For U.S. mail:

	
P.O. Box 1148

	  
	  	  	 	
Zephyr Cove, NV89448-1148

	  
	  	  	  	  
	  	  	
With a copy to:  Paxton Energy, Inc.

	  
	  	  	 	
Attn: J Burden

	  
	  	  	 	
275 Battery St Ste 2600

	  
	  	  	 	
San Francisco CA 94111-3356

	  
	  	  	  	  
	  	  	
email to: chasv@paxenergyinc.com

	  
	  	  	  	  	  
	  	
 

	
with a copy to: jimb@paxenergyinc.com

	  

 

17.       Parties in Interest.  This Agreement shall inure to the benefit of and be binding upon Seller and Buyer and their respective successors and assigns.  However, no assignment by any party shall relieve any party of any duties or obligations under this Agreement.

 

18.       Complete Agreement.  This Agreement constitutes the complete agreement between the parties regarding the purchase and sale of the Properties.  Where applicable, all of the terms of this Agreement shall survive the Closing.

 

19.       Survival.  All representatives and warranties in this Agreement shall be deemed conditions to the Closing. The paragraphs of this agreement pertaining to the indemnification and hold harmless provisions contained in Section 6, shall survive the closing of this agreement.

 

20.       Termination.  Should either party terminate this Agreement pursuant to a right granted in this Agreement to do so, the termination shall be without liability to the other party, and the non-terminating party shall have no liability to the terminating party.

  

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21.       Governing Law.   This Agreement shall be governed and construed in accordance with the laws of the State of Nevada applicable to contracts made in such state without regard to conflicts of law doctrines; however to the extent applicable, matters with respect to the Properties and the leases, wells, and contract rights being acquired shall be governed and construed in accordance with laws
of the state in which such assets are located.

 

22.       Severability.  If any term, provision, covenant, or condition of this Agreement is held to be invalid, void, or unenforceable, the remaining provisions of this Agreement shall continue in full force and effect and shall in no way be affected, impaired, or invalidated thereby.

 

23.       Corporate Obligations.  The obligations of Buyer are acknowledged to be solely corporate obligations, and no officer, director, employee, agent, representative, or controlling person of any such entity shall be subject to any personal liability to any person or other party, nor will any such claim be asserted by or on behalf of either party or affiliates of such party.

 

24.       Dispute Resolution.  Any controversy or claim arising out of or relating to this Agreement, or breach hereof, including, without limitation, claims against either party, affiliates, employees, officers or directors shall be resolved and determined exclusively under the mandatory mediation and arbitration procedures described in this
paragraph.  The parties first shall be obligated to pursue good faith efforts to resolve the matter by mediation.  As a condition precedent to pursuing any remedy, a Notice of Claim shall be sent to the other party.  The Notice of Claim shall specify the nature of the dispute, controversy, and claim and shall include the name of a proposed independent third party mediator or organization of mediators located in Northern Nevada.  The party receiving the Notice of Claim shall within fifteen (15) calendar days thereafter either suggest an alternative mediator or organization of mediators similarly located or consent to mediate the matter in front of the mediator or organization of mediators so proposed.  The parties shall undertake good faith efforts for a period of thirty (30) calendar days thereafter to appoint a mediator and submit the
dispute, controversy and/or claims to mediation. If the mediation attempt is not successful, the matter shall be resolved by binding arbitration.  The parties by mutual consent may elect to have the mediator act as the neutral arbitrator to render a mandatory and binding decision.  If either party objects to having the mediator act as the binding arbitrator, the dispute shall be settled by binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association.  Pending the hearing, the parties shall be entitled to undertake discovery proceedings, including the taking of depositions, submittal of interrogatories, and requests for the production of documents.  In no event shall either party be liable to the other under any legal or equitable theory for special, consequential, exemplary, or punitive damages,
including lost of profit, even if the other party has been advised of the possibility of such damages in advance.  In addition to any other right or remedy for a breach, the arbitrator(s) may order an injunction or other equitable relief, and such order may be enforced by an appropriate court.  The parties to the arbitration shall each pay an equal share of the costs and expenses of the arbitration and mediation, and each party shall pay for its respective counsel fees and expenses; provided that the arbitrator(s) may award attorney’s fees and costs to the prevailing party, except as prohibited by law.  The parties hereby agree to waive their right to have any dispute between them resolved in a court of law by a judge or jury.  Notwithstanding the foregoing, this
paragraph will not prevent either party from seeking injunctive relief (or any other provisional remedy) from any court having jurisdiction relating to this Agreement and the agreements incorporated herein by reference.  Judgment upon any award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

  

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25.       Incorporation of Exhibits.  The exhibits referred to herein are hereby incorporated into this Agreement just as if these exhibits were set forth in full where the reference thereto is made.

 

26.       Counterparts, Facsimile or PDF Signatures. This Agreement may be executed in counterpart originals, each of which together shall constitute one binding agreement.  An executed signature page sent by fax or in PDF format shall be deemed executed by such party and may be relied upon by the receiving party and by third parties with the same effect as if a complete originally executed document were delivered and received.

 

	  	
Seller:

	  	  
	  	
Black Cat Exploration & Production, LLC

	  	
a Texas Limited Liability Company

	  	  
	  	  
	  	
By /s/ ANTHONY J. MASON

	  	
Anthony J. Mason, President

	  	  
	  	  
	  	
Buyer:

	  	  
	  	
Paxton Energy, Inc.

	  	
a Nevada Corporation

	  	  
	  	  
	  	
By /s/ CHARLES F. VOLK

	  	
Charles F. Volk, CEO

	  	
Exhibit A:

	
Mustang Island

	  	  	  
	  	
Exhibit B:

	
Options on Oceana and Song

  

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Exhibit A

 

Mustang Island

 

All the interest of Seller in the property and assets more particularly described in the Assignment and Bill of Sale dated effective on the 31st day of August 2011, between MUSTANG OIL & GAS, INC., formerly known as CORE OIL & GAS, INC., a Delaware corporation, as “Assignor,” and BLACK CAT EXPLORATION & PRODUCTION, LLC, a Texas limited liability company, as “Assignee,” a copy of which was filed for record on September 2, 2011, in File # 288177, in Volume 457, Pages 365-369, Public Records, County Court, Kleberg County, Texas, and a copy of which has been provided to Buyer,
including, without limitation, the interests transferred under such Assignment and Bill of Sale (collectively, the “Subject Interests”) in the following oil, gas and mineral leases and associated rights:

 

(a) One-half (1/2) of all of Assignor’s undivided sixteen and sixty-five hundredths percent (16.65%) carried working interest, or an undivided 8.325% carried working interest hereby conveyed in and to the Mustang Island 818 I-1 ST Well, API 4270230224, or any replacement well; and

 

(b) One-half (1/2) of Assignor’s overriding royalty interest in each of the Oil and Gas Leases described below (the “Leases”), being one-half of four percent (4.0%), or two percent (2%) of 8/8ths of all oil, gas, liquid hydrocarbons, sulphur and other minerals produced from or attributable to the lands described in each of the Leases and lands pooled or unitized therewith, free and clear of all drilling, producing and operating costs, subject to the following terms and provisions:

 

State of Texas Oil and Gas Lease No. 108873, covering the South One-Half of the Northwest One-Quarter (S/2 NW/4) of Tract 818-L, Gulf of Mexico, Kleberg County, Texas, containing approximately 720 acres as shown on the Official Map of the Gulf of Mexico now on file in the Texas General Land Office, Austin, Texas.  This Lease is recorded under Document 275297, Volume 391, page 811 of the Official Records of Kleberg County, Texas, and has an effective date of April 1, 2008; and

 

State of Texas Oil and Gas Lease No. 108874, covering the North One-Half of the Southwest One-Quarter (N/2 SW/4) of Tract 818-L, Gulf of Mexico, Kleberg County, Texas, containing approximately 720 acres as shown on the Official Map of the Gulf of Mexico now on file in the Texas General Land Office, Austin, Texas.  This Lease is recorded under Document 275296, Volume 391, page 804 of the Official Records of Kleberg County, Texas, and has an effective date of April 1, 2008; and

 

(c)  All of Assignor’s undivided right, title and interest in and to all tangible personal property, equipment, fixtures, improvements, wells, well heads, casing, tubing, pumps, motors, gauges, valves, heaters, treaters, gathering lines, flow lines, gas lines, water lines, vessels, tanks, boilers, separators, buildings, fixtures, platforms, machinery, tools, treating equipment, compressors, dehydrators, pipelines, powerlines, telephone and telegraph lines, transportation and communication facilities, and other appurtenances situated upon the lands covered by the Leases which relate to the Subject Interests.

 

The Assignment is made subject to the covenants, provisions, and terms of the Leases, subject to all assignments, conveyances, liens or agreements of record in the General Land Office of the State of Texas, or in the public records of Kleberg County, Texas, and subject to the other matters set forth in the Assignment and Bill of Sales referred to above.

 

 

 

Exhibit B

 

Options on Oceana and Song

 

The interest of Seller to acquire the assets and interests described in the Heads of Agreement for the development of a 9 well work over program in Oceana County and the Song of Morning shallow Antrim gas, both located in Michigan, all as more particularly described in the Heads of Agreement and Exclusivity Agreement made on the 27th of July 2011, a copy of which has been provided to Buyer.

 

 

14

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