Document:

Filed by OTC Filings Inc. - www.otcedgar.com - 1-866-832-FILE (3453) - Cannabis Science, Inc. - Exhibit 4.1

  CANNABIS SCIENCE, INC.
 

 2011 STOCK COMPENSATION PLAN B
 

 

 SECTION 1
 INTRODUCTION
 

 1.1
 Establishment.  Cannabis Science, Inc. (the “Company”), a Nevada corporation, hereby establishes the Cannabis Science, Inc. 2011 Non-qualified Stock Plan B (the “Plan”) for employees, consultants, directors, and other persons associated with the Company and any of the Company’s subsidiaries, whom the Board wishes to incite.
 

 1.2
 Purposes.  The purposes of this Plan are to (i) attract and retain the best available personnel for positions of responsibility within the Company (ii) provide incentives to employees, officers, and management of the Company, (iii) provide Directors, Consultants and Advisors of the Company with an opportunity to acquire a proprietary interest in the Company to encourage their continued provision of services to the Company, and to provide such persons with incentives and rewards for superior performance more directly linked to the profitability of the Company's business and increases in shareholder value, and (iv) generally to promote the success of the Company's business and the interests of the Company and all of its stockholders, through the issuance of shares of the Company's Common Stock. 
 

 Incentive benefits granted hereunder may be shares.  The amount of shares issued shall be determined by the board or the Compensation Committee and reflected in the terms of written agreements.
 

 SECTION 2
 DEFINITIONS
 

 2.1
 Definitions.  The following terms will have the meanings set forth below:
 

 “Affiliated Corporation” means any corporation or other entity (including, but not limited to, a partnership) which exercises control over the Company through stock ownership or otherwise, and includes subsidiaries of the Company.
 

 “Board” means the Board of Directors of the Company.
 

 “Code” means the Internal Revenue Code of the USA or the Income Tax Act of Canada, as it may be amended form time to time, and as appropriate to the context and as applies to the Eligible Participant.
 

 “Effective Date” means the effective date of the Plan, which will be upon approval of the Board of Directors of the Company.
 

 

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 “Eligible Participants” means any employees (including, without limitation, all officers), directors, consultants and any other persons whom the Board wishes to incite to contribute to the fortunes of the Company and permitted by law or policy to receive Shares.
 

 “Non-Statutory Share” means a Share issued under this Plan in accordance with the requirements of the Code, as amended from time to time.
 

 “Plan Limit” shall have the meaning set forth in section 4.1.
 

 “Share” or “Shares” shall mean the Company's Common Shares, $.001 par value per share, or, in the event that the outstanding Common Shares are hereafter changed into or exchanged for different shares of securities of the Company, such other shares or securities.
 

 “Share Agreement” shall mean an agreement that will be entered into by the Company and the Eligible Participant to whom the Shares are issued and will contain terms and conditions governing the issuance of Shares
 

 “Stockholder” means an Eligible Participant designated by the Share Issuance Committee from time to time during the term of the Plan to receive one or more Shares under the Plan.
 

  “Share Issuance Committee” means the Compensation Committee of the Company, unless the Board strikes a separate committee, and in the absence of an empowered committee shall mean the Board.
 

 “Stock” means the common stock of the Company.
 

 2.2
 Gender and Number.  Except where otherwise indicated by the context, the masculine gender also will include the feminine gender, and the definition of any term herein in the singular also will include the plural.
 

 SECTION 3
 PLAN ADMINISTRATION
 

 3.1
 The Plan shall be administered by the Board.  Subject to the express limitations of the Plan, the Board shall have authority in its discretion to determine the Eligible Persons to whom, and the time or times at which, Awards may be granted, the number of shares subject to each Award, the time or times at which an Award will become vested, the performance criteria, business or performance goals or other conditions of an Award, and all other terms of the Award.  The Board shall also have discretionary authority to interpret the Plan, to make all factual determinations under the Plan, and to make all other determinations necessary or advisable for Plan administration.  The Board may prescribe, amend, and rescind rules and regulations relating to the Plan.  All interpretations, determinations, and actions by the Board shall be final, conclusive, and binding upon all parties.
 

 

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 SECTION 4
 STOCK SUBJECT TO THE PLAN AND EXCEPTIONS
 

 4.1
 Plan limit.  A maximum of 20,000,000 Shares (“Plan Limit”) are authorized for issuance under the Plan in accordance with the provisions of the Plan.  Shares that are issued will be deducted from the Plan Limit and such Plan Limit shall not be increased without approval of the board or, if shareholders of the Company have so required, without approval of the shareholders of the Company.  While any Shares are outstanding, the Company will retain as authorized and unissued Stock at least the number of Shares from time to time required under the provisions of the Plan or otherwise assure itself of its ability to perform its obligations hereunder.
 

 4.2
 Unused and Forfeited Stock.  Any Shares that are subject to this Plan that are not used because the terms and conditions of the Share Agreement are not met or any Shares that are used for full or partial payment of the purchase price of Shares or any Shares retained by the Company for any purpose of this Plan automatically will be returned to the Plan Limit and become available for again for use under the Plan.
 

 4.3
 Adjustments for Stock Split, Stock Dividend, Etc.  If the Company \at any time increases or decreases the number of its outstanding Shares of Stock, or changes in any way the rights and privileges of such Shares by means of the Payment of a Stock dividend or any other distribution upon such Shares payable in Stock, or through a stock split, subdivision, consolidation, combination, reclassification or recapitalization involving the Stock, then, in relation to the Stock that is affected by the above events, the provisions of this Section 4.3 will apply.  In such event, the numbers, rights and privileges of the following will be increased, decreased or changed in like manner as if such shares had been issued and outstanding, fully paid and non-assessable at the time of such event.
 

 4.4
 General Adjustment Rules.  If any adjustment or substitution provided for in this Section 4 will result in the creation of a fractional Share, the number of Shares will be rounded to the next higher Share.
 

 4.5
 Determination by Share Issuance Committee, Etc.  Adjustments under this Section 4 will be made by the Share Issuance Committee, whose determinations with regard thereto will be final and binding upon all parties.
 

 4.6
 Shares Exceptional to Plan.  With the concurrence of the Board, the Share Issuance Committee may issue Shares outside the Plan or within the Plan but in excess of the Plan Limit, such that the available Plan Limit is not diminished, for exceptional circumstances or to acquire or retain personnel or achieve important goals or strategic targets considered important to the Company but which cannot reasonably be fit into the Plan Limit or the Plan due to insufficiency of available Plan Shares, legal impediments whereby the recipient cannot or is best not included in the Plan, or other purposes or reasons considered appropriate to the Board.
 

 4.7
 Limitations on Issuance.  The Share Issuance Committee shall not, nor does it have the authority to, issue any stock compensation under this Plan for service related to investor relations or capital raising activities.
 

 

 

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 SECTION 5
 REORGANIZATION OR LIQUIDATION
 

 5.1
 Reorganization and Shares.  In the event that the Company is merged or consolidated with another corporation (other than a merger or consolidation in which the Company is the continuing corporation and that does not result in any reclassification or change of outstanding Shares), or if all or substantially all of the assets or control of the outstanding voting stock of the Company is acquired by any other corporation, business entity or person (other than by a sale or conveyance in which the Company continues as a holding company of an entity or entities that conduct the business of businesses formerly conducted by the Company), or in case of a reorganization (other than a reorganization under the United States Bankruptcy Code) or liquidation of the Company, the Share Issuance Committee will have the power and discretion to prescribe the terms and conditions for the modification of any outstanding Shares issued hereunder.  By way of illustration, and not by way of limitation, the Share Issuance Committee may provide that such Shares will be exchanged or converted into Shares of the surviving or acquiring corporation, or may provide for a payment or distribution in respect of outstanding Shares in cancellation thereof.  Any such determinations by the Share Issuance Committee may be made generally with respect to all Stockholders, or may be made on a case-by-case base with respect to particular Stockholders.  The provisions of this Section 5 will not apply to any transaction undertaken for the purpose of reincorporating the Company under the laws of another jurisdiction, if such transaction does not materially affect the beneficial ownership of the Company’s capital stock.  Any determination by the Share Issuance Committee hereunder shall not amend the terms of any Share without the consent of the Stockholder unless, in the opinion of the Committee acting reasonably, such amendment is necessary to permit the alterations to the Company to be effected and such is in the interest of shareholders generally.
 

 SECTION 6
 STOCK SHARES
 

 6.1
 Issuance of Shares.  An Eligible Participant may be issued one or more Shares.  
 

 6.2
 Share Agreements.  Each Share issued under the Plan will be evidenced by a written Share Agreement that will be entered into by the Company and the Eligible Participant to whom the Share is issued (the “Stockholder”), and will be deemed to contain the following terms and conditions, unless other terms and conditions inconsistent therewith have been entered into the Share Agreement.  In the event of inconsistency between the provisions of the Plan and any Share Agreement entered into, the provisions of the Share Agreement will be considered to have been determined to be exceptional from the below and such Share Agreement shall govern where not inconsistent with law.  However, the provisions of the Plan will govern where the Share Agreement omits to provide for a matter governed by the Plan and the Share Agreement will not be incomplete nor unenforceable if it fails to provide for a matter provided by the terms of this Plan as such shall be incorporated by reference:
 

 (a) Number of Shares.  Each Share Agreement will state that it covers a specified number of Shares, as determined by the Share Issuance Committee and the Share Agreement.  If the Share Agreement fails to state the number then it shall be the number set forth in the minutes of the Share Issuance Committee.
 

 (b) Issuance.  Each share agreement will state the amount of Shares which shall be issued.  
 

 

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 (c) Date of Issuance.  Shares will be considered as having been issued on the date specified in the issuance resolution of the Share Issuance Committee.
 

 6.3
 Stockholder Privileges.  Prior to the issuance of the Shares to the Stockholder, the Stockholder will have no rights as a stockholder with respect to any Shares issued to such person under this Plan and, until the Stockholder becomes the holder of the record of such Stock, no adjustments, other than those described in Section 4, will be made for dividends or other distributions or other rights to which there is a record date preceding the date such Stockholder becomes the holder of record of such Stock.
 

 

 SECTION 7
 RIGHTS OF EMPLOYEES AND STOCKHOLDERS
 

 7.1
 Employment.  Nothing contained in the Plan or in any Share Agreement will confer upon any Eligible Participant any right with respect to the continuation of employment by the Company, or interfere in any way with the right of the Company, subject to the terms of any separate employment agreement to the contrary, at any time to terminate such employment or to increase or decrease the compensation of such Eligible Participant form the rate in existence at the time of the issuance of Shares.   
 

  
 SECTION 8
 GENERAL RESTRICTIONS
 

 8.1
 Investment representations.  The Company may require any person to whom Shares are issued to give written assurances, in substance and form satisfactory to the Company and its counsel, to the effect that such person is acquiring the Stock subject to the Share Agreement for his own account for investment and not with any present intention of selling and to such other effects as the Company deems necessary or appropriate in order to comply with federal and applicable state and provincial securities laws.  Legends evidencing such restrictions may be placed on the certificates evidencing the Stock.
 

 8.2
 Compliance with Securities Laws.  Each Share Agreement will be subject to the requirement that if at any time counsel to the Company determines that the listing, registration or qualification of the Shares upon any securities exchange or under any state, provincial or federal law, or the consent or approval of any governmental or regulatory body, is necessary as a condition of, or in connection with, the issuance of Shares thereunder, such Shares may not be issued in whole or in part unless such listing, registration, qualification, consent or approval will have been effected or obtained on conditions acceptable to the Share Issuance Committee.  Nothing herein will be deemed to require the Company to apply for or to obtain such listing, registration or qualification.  However, where available to the circumstances of an Stockholder the Company will include the Share with any other filings that the Company elects, at its sole discretion, to file under S-8 or any other filings with the SEC but the Company shall not be obliged to make an individual filing for a particular Share, unless such shall have been required pursuant to the specific Share Agreement.
 

 

 

 

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 SECTION 9
 OTHER EMPLOYEE BENEFITS
 

 9.1
 Benefits and Taxes.  The amount of any compensation deemed to be received by a Stockholder as a result of a Share issuance will not constitute “earnings” with respect to which any other employee benefits of such Stockholder are determined, including, without limitation, benefits under any pension, profit sharing, life insurance or salary continuation plan.  Any taxable consequences of any Share issuance are entirely the responsibility of the Stockholder and no contribution shall be required of the Company and, further, if the Company should suffer liability for unpaid taxes of a Stockholder then the full amount of such shall be a debt of the Stockholder to the Company payable immediately and for which the Company may seek judgment and, before judgment or process, may set-off against any amounts due to the Stockholder or may recover, again before judgment or process, by exercise of voiding the Share Issuance at the discretion of the Share Issuance Committee. 
 

 

 SECTION 10
 PLAN AMENDMENT, MODIFICATION AND TERMINATION
 

 10.1
 Amendment.  The Board may at any time terminate and, from time to time, may amend or modify the Plan provided, however, that no amendment or modification may become effective without approval of the amendment or modification by the stockholders where stockholder approval is required to enable the Plan to satisfy any applicable statutory requirements, or if the Company, on the advice of counsel, determines that stockholder approval otherwise is necessary or desirable.
 

 No amendment, modification or termination of the Plan will in any manner adversely affect any Shares theretofore issued under the Plan, without the consent of the Stockholders holding such Shares.
 

 SECTION 11
 WITHHOLDING
 

 11.1
 Withholding Requirement.  The Company’s obligations to issue Shares will be subject to the Stockholder’s satisfaction of all applicable federal, state and local income and other tax withholding requirements and applicable securities requirements.
 

 11.2
 Withholding With Stock.  At the time Shares are issued the Share Issuance Committee, in its sole discretion, may permit the Stockholder to pay all such amounts of tax withholding, or any part thereof, that is due upon exercise of the Share by such adjustments as the Share Issuance Committee determines.  
 

 

 SECTION 12
 BROKERAGE ARRANGEMENTS
 

 12.1
 Brokerage.  The Share Issuance Committee, in its discretion, may enter into arrangements with one or more banks, brokers or other financial institutions to facilitate the disposition of shares acquired upon, including, without limitation, sale of acquired Shares
  
 

 

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 SECTION 13
 NONEXCLUSIVITY OF THE PLAN
 

 13.1
 Other Plans.  The adoption of this Plan by the Board will not be construed as creating any limitations on the power or authority of the Board to adopt such other or additional incentive or other compensation arrangements of whatever nature as the Board may deem necessary or desirable or preclude or limit the continuation of any other plan, practice or arrangement for the payment of compensation or fringe benefits to employees generally, or to any class or group of employees, or any other persons that the Company or any Affiliated Corporation now has lawfully put into effect, including, without limitation, any retirement, pension, savings and stock purchase plan, insurance, death and disability benefits and executive short-term incentive plans.
 

 

 SECTION 14
 REQUIREMENTS OF LAW
 

 14.1
 Requirements of Law.  The issuance of Stock and the payment of cash pursuant to the Plan will be subject to all applicable laws, rules and regulations.
 

 14.2
 Governing Law.  The Plan and all agreements hereunder will be construed in accordance with and governed by the laws of the State of Nevada.
 

 

 SECTION 15
 DURATION OF THE PLAN
 

 15.1
 Termination.  The Plan will terminate at such time as may be determined by the Board, and no Shares will be issued after such termination.  If not sooner terminated under the preceding sentence, the Plan will fully cease and expire on the date that the Plan Limit has been exhausted and all Shares issued.  
 

 

 

 

 7ex10-3.htm

EXHIBIT 10.3

 

PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT, dated as of the 20th day of September, 2011 ("Agreement"), by and between Barclay Road, Inc., a Wyoming corporation  (“Barclay” and/or “Buyer”), and Mission Energy, LLC, a Kentucky limited liability company (“Mission” and/or "Seller"). Buyer and Seller are called herein individually the “Party” or collectively the “Parties”.

 

For and in consideration of the mutual covenants, obligations and benefits made and obtained herein, the Parties agree as follows:

 

1.           Purchase and Sale.  Subject to the terms and conditions set forth below, Seller shall sell, and Buyer shall purchase, all of Seller’s right, title, and interest in and to the following land and property interests within Knox County, Kentucky, as listed in Exhibit “A”. The interest conveyed includes Sellers rights in and to oil, gas and other mineral interests, including equipment located on the leases.  The oil and gas leases, and interests conveyed by this agreement are specifically enumerated in Exhibit A attached hereto, and will be conveyed by assignments for each property to be filed in the
appropriate County of Record., the (“Assignment”)   The Property shall be free of all liens, claims, mortgages, security interests, judgments or encumbrances or any other adverse claims, causes of action, suits and legal actions created by or under Seller. The oil and gas leasehold interests and working interests and the resulting net revenue interests are to be conveyed in or related to the Property as described in Exhibit “A”.  The term “Land” herein after shall refer to the oil and gas and hydrocarbon leasehold estate in and unto the lands covered by such interests together with any fee ownership interest in the oil and gas and hydrocarbons in and unto said lands.  The term “Leases” shall refer to the oil, gas, injection wells and other mineral leases on such Land, and the term “Wells”
shall refer to all oil and gas wells, whether actively producing or otherwise located on such Leases, as all are described in Exhibit “A”. All facilities and equipment located on, in or under the interests described in this  Section 1 and which are used for or in connection with producing, processing, separating, treating, compressing, dehydrating and transporting oil, gas or other hydrocarbons produced therefrom, such as wells, pumps, casing, tubing, tanks, surface and downhole equipment, pipelines, gathering systems, injection systems, and other similar property are included with exception of the Testers referred to specifically herein.

 

(a)           Contracts and contractual rights and interests to the extent that they are related to the ownership, operation, use or maintenance of the land and property interests described in this Section 1, including but not limited to rights and obligations related to the sale of product pursuant to current agreements with Oil and Gas purchasers, and all other rights in or derived from farmin or farmout agreements, seismic permits or similar agreements including rights therein to certain seismic information related to the Property, communization agreements, unit agreements, orders and decisions of regulatory agencies establishing or related to units,
unit operating agreements, joint operating agreements, enhanced recovery and injection agreements, pooling agreements, gas balancing agreements, sales and processing agreements, boundary and line well agreements, salt water disposal agreements, compression agreements, processing agreements, treating agreements, surface and sub-surface use agreements, water supply contracts, rights-of-way; easements and servitudes (collectively "Contracts"). Exhibit “C” includes Contracts and other Agreements in Sellers possession that transfer to Buyer.

 

(b)           Permits, licenses, approvals, authorizations and applications issued by or filed with federal, state or local governments and agencies; authorizations to construct and permits to operate; underground injection rights; and all other similar rights and interests, to the extent they apply to or are used in connection with the ownership, operation, use or maintenance of the land and property interests described in this Section 1 to the extent they are assignable (the “Permits”).

 

  

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(c)           All facilities and equipment, as shown in Exhibits “A”, and “B”. located on, in or under the interests described in this Section 1, in the same proportion as the proportionate ownership of Seller's interests described in this Section 1 and are used for or in connection with producing, processing, separating, treating, compressing, dehydrating and transporting oil, gas or other minerals produced therefrom, such as wells, pumps, casing, tubing, tanks, surface and downhole equipment, pipelines, gathering systems, injection systems, and other similar property.

 

(d)           To the extent in Seller’s possession, all original files and all data, including, but not limited to, lease, title information and records, land records, contract files, well logs, workover and drilling history, geologic and geophysical data, and maps and plats relating to the land and property interests described in this Section 1 (“Data”). Seller has the right to retain copies of said data as required.

 

(e)           All oil, gas, casinghead gas, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons, and all other products refined or extracted therefrom, together with all hydrocarbons produced in association with these substances, in and under and which may be produced and saved from or attributable to the Property (the “Hydrocarbons”), from and after the Effective Date and all rents, issues, profits, proceeds, products, revenues and other income from or attributable thereto; and

 

(h)           All other rights, titles and interests in, to or under or derived from the Property, as shown on Exhibit “A” limited to the leasehold estates only.

 

2.           Purchase Price.  In exchange for conveyance of the Property, Buyer shall deliver to Seller for the Property, certificates (the “Certificates”) representing a total of Two Hundred Million (200,000,000) shares of Buyer’s common stock, the Certificates to be in the names and denominations set forth on Exhibit B hereto ("Purchase Price").

 

3.           Effective Date.  The transfer of title to the Property from Seller to Buyer shall be effective as of September   , 2011 ("Effective Date").

 

  

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4.           Closing.  Closing (the “Closing”) shall take place on September , 2011, ("Closing Date"), at Seller’s Office, or in a manner agreed to by the parties. Closing may occur earlier with agreement of the parties.  The Parties hereto agree to use their good faith efforts to close the transaction contemplated hereby by the Closing Date.  In the event of the failure to close the transaction contemplated hereby on or prior to the Closing Date, due in no part to either Party having breached this Agreement, the Parties shall use best efforts to agree in writing upon a date by which the transaction
contemplated hereby shall close.  In the event the Parties are unable to reach agreement as to such an extension of the Closing Date prior to 5:00 PM central time on the Closing Date, the Agreement shall be deemed to have been terminated by mutual consent of the Parties. As part of Closing, the following shall occur:

 

(a)           Execution and Delivery of Documents and Instruments.  The Parties shall execute, acknowledge and deliver the following:

 

(i)           Assignments.  Seller shall execute, acknowledge and deliver to Buyer an Assignment and Conveyance and a Bill of Sale in the forms attached hereto as Exhibits "A” respectively (the "Assignments”).

 

(ii)           Other Instruments.  All other instruments as may be reasonably required to consummate the agreements of the Parties hereunder

 

(b)    Payment of Purchase Price.  Buyer shall issue the Certificates representing the Purchase Price, to Seller by wire transfer.  Seller asserts that properties are sold free and clear of liens or encumbrances.

 

(c)      Release of Liens.  To the extent not already provided by Seller to Buyer prior to Closing, Seller shall cause, at Seller's sole cost and expense, the delivery to Buyer of full releases in recordable form of all mortgages, deeds of trust, liens and security interests, created by Seller, if any, against the Property.

 

(d)           Resignation and Election of Officers. At the Closing, the Board of Directors of the Company shall, by written consent, elect (i) Andrew Kacic as the Chief Executive Officer and Secretary of the Company, and (ii) Walter Powell as the President and Treasurer of the Company.  Following completion of the transactions at the Closing, Eduardo Valero Erana shall resign as President and Chief Executive Officer of the Company.

 

(e)           Election of New Directors. Following the Closing, the Board of Directors of the Company shall promptly authorize and mail to stockholders of the Company an Information Statement on Schedule 14C noticing a Special Meeting of Stockholders for the election of Andrew Kacic and Walter Powell as additional directors of the Company.

 

(f)           Recording.  Following Closing, Buyer shall record and file the Assignments and other instruments at Buyer's cost.

 

5.           Conditions to Closing.

 

(a)           Due Diligence. Buyer has conducted due diligence and is satisfied, as determined in Buyer's sole discretion, as a result of their inspection of the Property and information related thereto that the Property is acceptable.

 

 

  

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(b)           Approval and Consents from Third Parties.  To the extent any lessor or other interested party to any right or interest to be conveyed to Buyer as part of the Property, or interested party in any Contract, holds the right to consent to or approve the assignment by the Seller of all of its right, title or interest in such instrument, the Seller and Buyer shall use commercially reasonable efforts to obtain the consent from such interested party prior to Closing.  While the Buyer shall be primarily responsible therefore, each party shall cooperate with the other parties in obtaining, as promptly as possible, all approvals,
authorizations and clearances of governmental and regulatory bodies and officials required to consummate the transactions contemplated hereby, including, without limitation, providing such other information and communications to governmental and regulatory authorities as such governmental and regulatory authorities or the other parties may reasonably request.  In the event, after such efforts, of the inability of the Buyer to obtain any consent or approval of the assignment related to any transfer required pursuant to this Agreement prior to Closing which is considered by the Buyer, in their sole discretion, to be material to the transaction, Buyer shall have the right as determined in their sole discretion to either: (i) waive such requirement as a condition to closing; (ii) adjust the purchase price as agreed to, or (iii) terminate this Agreement with no further obligation
to Seller

 

(c)           Representations and Warranties.  The representations and warranties of Seller contained in this Agreement in or in any certificate or document executed and delivered by Seller to Buyer pursuant to this Agreement in Sellers best judgment shall have been true and correct on the date made and shall be true and correct in all respects, on and as of the Closing Date as though such representations and warranties were made at and as of such date, and shall survive the Closing. Title to properties are conveyed by Exhibit “A” (Assignment and Bill of Sale), and as such are not warranted by Seller. Operating costs of the lease in
which Seller has separated normal costs from actual monies spent is the belief of the Seller. Buyer agrees with this based on due diligence that has been done by itself. Seller makes no warranty as to any operating costs that have been furnished to Buyer and Buyer has done its own due diligence concerning operating costs.

 

(d)           Compliance with Agreement.  On and as of the Closing Date, Seller shall have performed and complied in all respects with the covenants and agreements required by this Agreement to be performed and complied with by Seller on or before the Closing Date.

 

(e)           No Action or Proceeding.  On the Closing Date, no action or proceeding in which Seller is a named party by any public authority or any other person shall be pending before any court or administrative body or overtly threatened to restrain, enjoin or otherwise prevent the consummation of this Agreement or the transactions contemplated hereby, and no action or proceeding in which Seller is a named party by any public authority or private person shall be pending before any court or administrative body or overtly threatened to recover any damages or obtain other relief as a result of this Agreement or the transactions contemplated
herein or as a result of any agreement entered into in connection with or as a condition precedent to the consummation thereof, which action or proceeding could result in a decision, ruling or finding which will materially and adversely affect Buyer's ability to conduct normal operations with the Property after the Closing, then  the agreement may be terminated.

 

 

  

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6.           Taxes and Fees.

 

(a)           All severance, production, excise, windfall profit and other taxes, except income taxes, assessed or arising as a result of the production or removal of oil, gas and other hydrocarbons included in the Property, or the proceeds from the sale of such production, shall be prorated as of the Effective Date.

 

(b)           Buyer shall pay all sales, use and transfer taxes relating to the sale and transfer of the Property under this Agreement.

 

(c)           Buyer shall pay all recording fees and all documentary transfer taxes assessed as a result of recording or filing documents effecting or evidencing the transfer of the Property from Seller to Buyer.

 

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

 

(a)           Seller has all authority necessary to enter into this Agreement and to sell the Property on the terms provided herein and to perform all obligations hereunder.

 

(b)           This transaction will not: (1) result in the breach of any term or condition of, or constitute a default or cause the acceleration of any obligation under, any agreement or instrument to which it is a party or is otherwise bound; (2) violate or conflict with any applicable judgment, decree, order, permit, law, rule or regulation; or (3) result in any material liability to Buyer under the terms of any contracts or agreements.

 

(c)           This Agreement is duly executed and delivered on Seller’s behalf and at Closing all documents and instruments required hereunder will be duly executed and delivered.  This Agreement does, and such documents and instruments shall, constitute legal, valid and binding obligations enforceable in accordance with their terms, except to the extent enforceability may be affected by bankruptcy, reorganization, insolvency or similar laws affecting creditors' rights generally.

 

(d)       At Closing Seller shall transfer all right, title and interest in the Property, free and clear from any and all mortgages, liens, encumbrances, claims or lawsuits which affect the Property by Seller. Seller is unaware of any mortgages, liens, encumbrances, security interests, judgments, claims or lawsuits which may affect Seller’s interest in the Property.

 

(e)           Seller has filed all required returns and paid all required taxes relating to production from or related to the Property as listed in Exhibit “A”, or Exhibit “C” of any nature to which the Property are or may be subject, including severance, franchise and sales taxes and all taxes shown to be due and payable on such returns or on any assessments received by the Seller and due and payable by the Seller with regard to, or to which the Property may be subject, on or before the date hereof have been paid.  There are no agreements, waivers or other arrangements providing for an extension of time with respect to
the assessment of any such tax or deficiency against the Seller nor suits, nor any other actions, proceedings, investigations or claims now pending or threatened against the Seller, in respect to any such tax or assessment, or any matters under discussion with any authority relating to any such taxes or assessments, or any claims for additional taxes or assessments asserted by any such authority.

 

  

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(f)     Seller will convey at closing all of Seller’s interest in easements and rights of ingress and egress for utilities and services necessary for all operations conducted by Seller on the Property.

 

(g)   All contracts and other leases, licenses and commitments being conveyed pursuant hereto are valid, binding and in effect in accordance with their terms and conditions and there are no existing defaults thereunder or conditions which with the passage of time or notice or both might constitute such a default by any party thereto. However, some leases are inactive, as previously described herein.

 

(h)   There are no suits, actions, claims, and inquiries, legal, administrative or arbitration proceedings pending, investigations by any private or governmental body, or claims threatened against or affecting the Seller or Seller’s interest in the Property, or which question the validity or legality of the transactions contemplated hereby or with regard to this Agreement or the ownership of the Seller.  Seller does not know of any basis or grounds for any such suit, action, claim, inquiry, investigation or proceedings.  There is no known outstanding order, writ, injunction or decree of any court, governmental agency or arbitration tribunal against or affecting Seller
or Seller’s interest in the Property.

 

(i)   The Property and all operations thereon are and have been operated by Seller in compliance with all applicable federal, state or local laws as far as Seller reasonably knows or believes..

 

(j)       All  royalties, rentals and other payments due with respect to the Properties have been properly and timely paid as prescribed by the Mineral Interests governing them except as listed in exhibit “C”. To the best of Sellers knowledge, all conditions necessary to keep the oil and gas leases in force have been fully performed, or curative work is in progress, and no notices have been received by Seller of any claim to the contrary and all of the oil and gas leases are in effect except as listed in Exhibit “D”.

 

(k)     All laws, regulations and orders of all governmental agencies having jurisdiction over the Property or operations conducted thereon have been and will continue to be complied with in all material respects until the Closing Date.  Seller has obtained all material necessary permits from governmental agencies having jurisdiction in connection with the Property, including, without limitation, the injection and disposal of salt water, or operations conducted thereon and have timely, properly and accurately made and will continue to timely, properly and accurately make all filings required by all governmental agencies with respect to the Property or operations conducted
thereon

 

(l)           Exhibit "A" contains a list of all Leases, Mineral Interests and other mineral estates and interests within the Lands owned by Seller and is true and correct; and title to the Leases shall be assigned to Buyer  by instruments containing special warranty by and through Seller only and not others.

 

  

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(m)       The Mineral Interests entitles Buyer to receive not less than the undivided interest set forth in Exhibit "A" as “net revenue interest” or “NRI” of all indicated hydrocarbons produced, saved and marketed from or attributable to the Wells, including any non-producing, behind the pipe, or proved or unproved undeveloped reserves owned by Seller, including through plugging, abandonment and salvage of such Wells.

 

(n)           Seller to the best of its knowledge has provided Buyer with complete and accurate information relating to the Leases, the Wells, the working interests and Property, including without limitation, all applicable agreements relating, appertaining or incidental to the Leases and Wells, production history and characteristics possessed by Seller..

 

(o)           Seller has made available to Buyer for examination, all title and other information relating to the Property insofar as the same is in Seller’s possession and after Closing will cooperate with Buyer in Buyer's efforts to obtain such additional information relating to the Property that Seller has in its possession,  as Buyer may reasonably require.

 

(p)           Seller has caused the Property to be produced, operated and maintained in a good and workmanlike manner consistent with good oilfield practices, and has kept the Leases in effect except for leases undergoing curative work which may have been inactive and on which there is work being performed to bring said leases into an active status.

 

(q)    During the period between the Effective Date and the Closing, Seller has not entered into any agreements or commitments with respect to the Property, has not modified nor terminated any of the agreements relating to the Property, including, without limitation, the Basic Documents and the Product Contracts, has not encumbered, sold or otherwise disposed of any of the Property other than personal property which has been replaced by equivalent property or consumed in the operation of the Property, and has not voluntarily compromised any amounts payable to Seller due to casualty loss or any pending or threatened taking related to the Property

 

(r)           Seller has exercised reasonable efforts in safeguarding and maintaining all engineering, geological and geophysical data, reports and maps, contract rights and like information relating to the Property.

 

(s)   Prior to the Closing Date, Seller has used reasonable efforts to maintain its relationships with all suppliers, customers and others having business relationships with Seller with respect to the Property so that such relationships will be preserved for Buyer on and after the Closing Date.

 

(t)           All Wells, whether producing or not, located on the Lands, other than Wells which have been previously plugged and abandoned in compliance with applicable rules and regulations, are set forth in Exhibit "A" hereto.

 

(u)           To the best of Seller’s knowledge, there are no underground storage tanks located on any of Lands.

 

 

  

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8.           Representations and Warranties of Buyer.  Buyer represents and warrants that:

 

(a)           It is a corporation duly organized, validly existing and in good standing under the laws of the state of Wyoming  and will be duly qualified to do business in Kentucky where the property is located by closing date.

 

(b)           It has all authority necessary to enter into this Agreement and to purchase the Property on the terms provided herein and to perform all its obligations hereunder;

 

(c)           This transaction will not:  (1) violate or conflict with any provision of its Articles of Incorporation, Bylaws, or other governing documents; (2) result in the breach of any term or condition of, or constitute a default or cause the acceleration of any obligation under, any agreement or instrument to which it is a party or is otherwise bound; or (3) violate or conflict with any applicable judgment, decree, order, permit, law, rule or regulation; and

 

(d)           This Agreement is duly executed and delivered on its behalf and at Closing all documents and instruments required hereunder will be duly executed and delivered.  This Agreement does, and such documents and instruments shall, constitute legal, valid and binding obligations enforceable in accordance with their terms, except to the extent enforceability may be affected by bankruptcy, reorganization, insolvency or similar laws affecting creditors' rights generally.

 

9.           Environmental Representations and Warranties

 

(a)           With respect to the Property, the Seller represents and warrants to the best of its knowledge that:

 

(b)           All operations with respect to the Property are in compliance with all Environmental Laws. Seller has received no notification from any Governmental agency regarding violation of any Environmental Law or Regulation and believes properties are in compliance on an ongoing basis.

 

(c)           No known facts or circumstances exist which could reasonably be expected to result in any Environmental Liabilities to Seller or the Buyer as of the Closing date with respect to the Property

 

(d)           Seller does not now own, lease or otherwise operate any disposal sites on the Property.

 

10.           Environmental Covenant.

 

(a)           Availability of Data to Buyer.  Prior to the date of Closing, Seller will make available to Buyer information which is in the possession or control of the Seller or to which Seller has access (other than publicly available information to which Buyer has equal access) which relates to the environmental condition of the Property, such information includes, without limitation, information regarding crude oil and produced water that may have been spilled or disposed of on-site and the locations thereof; onsite pits and pit closures; on-site burial; land farming; land spreading; underground injection; and on-site solid waste disposal
sites.

 

  

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(b)           Environmental Assessment.  Buyer has inspected the property to make an environmental assessment of the Property during the due diligence period. Buyer agrees to hold Seller harmless from any environmental liability or the abatement thereof whether known or unknown to Buyer or Seller regarding the Exhibit “A” properties.

 

11.           Access to Seller’s Information.  Seller has made available to Buyer during normal business hours at Seller’s offices all material files, records, documents and data in Seller’s possession relating to the Property, including but not limited to, lease, land title and division order files (including any available abstracts of title, title opinions and title curative documents), contracts, correspondence, permitting files, engineering, production and well files and well logs.  Seller shall not be obligated to perform any additional title work and Seller shall not be obligated to make any existing abstracts
and title opinions current.

 

12.           Access to Seller’s Property.  Seller has given Buyer or Buyer's authorized representatives, physical access to the Property without limitation for purpose of inspecting and for conducting such studies, investigation and other due diligence as Buyer, in its sole discretion, deems appropriate or desirable.

 

13.           Waiver.  Any of the terms, provisions, covenants, representations, warranties or conditions hereof may be waived only by written instrument executed by the Party waiving the compliance. The failure of either Party at any time or times to require performance of any provisions hereof shall in no manner affect such Party's right to enforce the same. No waiver by either Party of any condition or of the breach of any term, provision, covenant, representation or warranty contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be construed as a further or continuing waiver of any
such condition or breach, or a waiver of any other condition or of the breach of any other term, provision, covenant, representation or warranty.

 

14.           Operator of the Property.  At the Closing, Seller shall execute and deliver to Buyer appropriate documents concerning transfer of operations.

 

15.           Disclaimer of Representations and Warranties.  Except as expressly set forth in this Agreement and documents delivered pursuant to Closing, the Parties hereto make no, and disclaim any, representation or warranty whatsoever, whether express or implied. Each Party hereto disclaims all liability and responsibility for any other representation, warranty, statement, or communication (orally or in writing) to the other Party (including, but not limited to, any information contained in any opinion, information, or advice that may have been provided to any such Party by any officer, stockholder, director, partner, member, manager,
employee, agent, consultant, representative, or contractor of such disclaiming Party or any engineer or engineering firm, or other agent, consultant, or representative) wherever and however made. Without limiting the generality of the foregoing, Seller makes no representation or warranty as to (a) the amount, value, quality, or deliverability of petroleum, natural gas, or other reserves attributable to the Property or any portion thereof, or (b) any geological, engineering, or other interpretations or economic evaluations.

 

  

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16.           Severability.  Any term or provision of this Agreement that is invalid or unenforceable in any situation and in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

 

17.           No Third Party Beneficiaries.  This Agreement shall not confer any rights or remedies upon any person other than the Parties and their respective successors and permitted assigns, and other persons given rights of indemnification hereunder.

 

18.           Construction.  The Parties have participated jointly in the negotiating and drafting of this Agreement. In the event ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring either Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute or law should be deemed also to refer to all rules and regulations promulgated there under, unless the contexts requires otherwise. The word "including" shall mean
including, without limitation. If the date specified in this Agreement for giving any notice or taking any action is not a business day (or if the period during which any notices required to be given or any action taken expires on a date which is not a business day) then the date for giving such notice or taking such action (and the expiration date for such period during which notice is required to be given or action taken) shall be the next day which is a business day.

 

19.           Notice of Sale.  Immediately after the Closing, Buyer shall notify oil and gas purchasers, government agencies and royalty owners that it has purchased the Property and shall cause to be filed as required by the applicable state regulatory body all necessary change of operator forms.

 

20.           Cooperation and Notification.  Seller and Buyer each agree to execute and deliver such instruments or documents or take such further action as may reasonably be required to carry out the intent of this Agreement.

 

21.           Survival of Provisions.  All representations, warranties, indemnifications, covenants, obligations and promises of the Parties set forth in this Agreement shall survive Closing.  All documents conveying the Property shall incorporate by reference the terms and conditions of this Agreement.

 

22.           Costs and Expenses.  Except as otherwise expressly provided herein, each Party shall bear and pay their own costs and expenses, including but not limited to court costs, attorney’s fees, accountants, and other advisors, incurred at any time in connection with pursuing or consummating this transaction and all activities related to this transaction.

 

23.           Joint Venture, Partnership and Agency.  Nothing contained in this Agreement shall be deemed to create a joint venture, partnership, tax partnership or agency relationship between the Parties.

 

24.           Recording and Filing.  This Agreement shall not be recorded or filed by either Party, or their successors or assigns, in or with any public or government office, officer, agency or records repository without the prior written consent of the other Party

 

  

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25.           Notices.  All notices and consents required or authorized hereunder shall be in writing and shall be deemed to have been duly given by one Party if delivered personally, telexed with receipt acknowledged, mailed by certified mail with return receipt requested, delivered by a recognized commercial courier or otherwise actually received by the other Party at the address set forth below, or such other address as one Party shall have designated by ten (10) days prior written notice to the other Party:

 

Buyer's Mailing Address:

 

 

Barclay Road, Inc.

 

 

Seller’s Address:

 

 

Mission Energy, LLC

 

POB 1750

 

Barbourville, KY 40906

 

 

26.           Time of Performance.  Time is of the essence in the performance of all covenants and obligations under this Agreement.

 

27.           Entire Agreement.  This Agreement constitutes the entire agreement between the Parties with respect to this transaction and supersedes all prior negotiations, statements, representations, discussions, correspondence, offers, agreements and understandings relating to this transaction.  This Agreement may be modified, amended of supplemented only upon the prior written agreement of the Parties.

 

  

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28.           Assignment.  Neither Party may sell, assign, transfer, convey, option, mortgage, pledge or hypothecate their rights and obligations hereunder to any third-party without the prior written consent of the other Party.  Any attempted assignment or delegation in violation of these terms will be void.  Upon any authorized or approved sale, assignment, transfer, conveyance, option, mortgage, pledge or hypothecation hereunder, all of the terms, covenants and conditions of this Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the Parties.

 

29.           Applicable Law.  THIS AGREEMENT, OTHER DOCUMENTS EXECUTED AND DELIVERED PURSUANT HERETO, AND THE LEGAL RELATIONS BETWEEN THE PARTIES WITH RESPECT TO THIS AGREEMENT, SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF KENTUCKY, AND THE PARTIES AGREE THAT THE ONLY PROPER JURISDICTION AND VENUE SHALL BE IN THE CIRCUIT COURT OF KNOX COUNTY, KENTUCKY.

 

30.           Headings.  The headings used in this Agreement are inserted for convenience only and shall be disregarded in construing it.

 

31.           No  Assumption of Liabilities.  Buyer is not assuming any debt, liability or obligation of Seller, whether known or unknown, fixed or contingent save and except as provided for by any other term and/or provision of this agreement.

 

32.           Termination.  This Agreement may be terminated at any time before the Closing:

 

(a)           By written consent of Buyer and Seller.

 

(b)           by Buyer, upon notice of termination of their obligation to consummate the transaction delivered to Seller, if (i) there has been any material breach of any covenant of any of the Seller or Seller has materially breached any of its representations or warranties, stating in particularity the default or defaults on which the notice is based; or (ii) if the results of Buyer's Due Diligence, or any other event or circumstance, reveals a material change in value of the Property as previously represented to Buyer by Seller; or

 

(c)           by Seller, upon notice of termination of its obligation to consummate the transaction delivered to Buyer, if there has been any material breach of any covenant of Buyer or Buyer has materially breached any of its representations or warranties, stating in particularity the default or defaults on which the notice is based;

 

  

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the 20th day of  September, 2011.

 

 

Seller:

 

MISSION ENERGY LLC

 

By: /s/ Walter Powell                     

Title:

 

 

Buyer:

 

BARCLAY ROAD, INC.

 

By: /s/ Eduardo Valero Erano       

Title: President and Chief Executive Officer

 

 

 Exhibit A

 

Assignment and Bill of Sale, Lands, Leases and Wells

 

Wherein all leases listed have a 100% Working Interest and “Oil WI” shall then have the meaning of 87.5% Net Revenue Interest

 

 

  

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