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PURCHASE AND SALE AGREEMENT
This Purchase And Sale Agreement ("Agreement") is entered into this
14th day of June, 2013, but effective June 4, 2013 at 12:01 a.m., MST
("Effective Date"), by and between S & L Energy, Inc., a Montana corporation,
with mailing address of 65 West Rosebud Road, Fishtail, Montana 59028-8000
("S&L"), and Hinto Energy, Inc., a Wyoming corporation, with mailing address of
7609 Ralston Road, Arvada, Colorado 80002 ("HEN").
FOR VALUABLE CONSIDERATION, THE PARTIES AGREE AS FOLLOWS:
1. Description of Property. S&L hereby agrees to sell and assign to HEN, and HEN
agrees to purchase from S&L, subject to the terms and conditions stated in this
Agreement, all of S&L's right, title and interest in and to the following oil
and gas leases ("Leases"):
Lease Number Legal Description Acres W.I. N.R.I.
------------ ----------------- ----- ---- ------
MTM-0063166 Township 8N, Range 24E: *See Section *See Section 7
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Section 2: Lots 1, 2, 7 and 8 120.15 7 herein herein
MTM-086432 Township 8N, Range 24E:
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Section 2: Lots 3, 4, 5 and 6
Section 4: Lots 13, 14, SW, S2SE
Township 9N, Range 24E: *See Section *See Section
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Section 28: SESW, N2SE, SWSE 602.05 7 herein 7 Herein
In addition, S&L hereby grants HEN an option to purchase all of S&L's
other oil and gas leases covering lands in Township 8N, Range 24E and Township
9N, Range 24E MPM, ("Option Lands") held by S&L, as of the Effective Date in
accordance with Section 3.
2. Purchase Price; Consideration. In exchange for the assignment set forth in
Section 1, HEN agrees to pay the following consideration on or before Closing:
(a) Purchase Price of $101,100, to be paid as follows:
i. $65,000.00 in cash;
ii. $36,100.00 ($50 per acre for 722 acres), payable either in cash
or HEN restricted common stock at the option of HEN. In the event
HEN elects to pay with restricted common stock, the stock shall
be valued at $0.58 per share (2/3 of the June 4, 2013 closing
price of $0.87) for a total of 62,242 shares (Symbol - HENI); and
(b) Replacement of all Bureau of Land Management ("BLM") bonds applicable
to the Leases.
3. Option. The option granted to HEN in Section 1 shall continue for a term of
30 days beginning on the Closing Date. In order to exercise said option, during
the option term HEN must (1) provide written notice to S&L in accordance with
Section 11 herein; (2) send to S&L an amount equal to $60.00 cash per acre and
(3) send a copy of a title report evidencing the acreage wherein S&L owns an
interest. Both parties acknowledge that they are relying upon the title report
ordered by HEN to determine the acreage in which S&L holds leasehold interests.
This option must be exercised as to all of S&L's oil and gas lease interests in
the Option Lands and shall not be exercisable only as to a portion thereof. Upon
exercise of the option by HEN, S&L agrees to quit claim all of its oil and gas
interests, if any, in and to the oil and gas leases identified in the
aforementioned title report, reserving only those oil and gas royalties, whether
they be non-participating royalties, landowner royalties or overriding
royalties, previously reserved or conveyed of record in the same manner as
royalties are reserved ins Section 7 herein..
4. Closing. The closing ("Closing") shall occur on or before June 21, 2013 at
the office of S&L, located at 65 West Rosebud Road, Fishtail, Montana 59028, or
at such other time and place as may be agreed to in writing by the parties (the
date of Closing is referred to herein as the "Closing Date"). Any Closing fees,
which do not include attorney fees, shall be shared equally by the Buyer and the
Seller.
5. Conveyance Instruments. On the Closing Date, S&L shall execute and deliver to
HEN:
(a) An Assignment of Leases transferring all of S&L's right, title and
interest in and to the Leases which shall be in the form attached as
Exhibit A hereto (the "Assignment");
(b) A counterpart of the Assignment executed on the standard BLM
assignment form for purposes of filing with the BLM (the "BLM
Counterpart").
6. BLM Approval. HEN shall submit the BLM Counterpart for approval within 10
days of Closing. HEN shall not record any conveyance instruments or other
evidence of this transaction in the County Clerk and Recorders Office prior to
BLM approval.
7. Seller's Title. S&L agrees to convey Defensible Title of the Leases to HEN.
Defensible Title as used in this Agreement means, subject to Permitted
Encumbrances:
(a) An NRI of not less than 80% (currently 100% working interest), with
respect to Lease No. MTM-086432 as it pertains to all lands except Lot
13, W2SW, and the SESW of Section 4, Township 8N, Range 24E,
containing 160.00 acres more or less ("Excepted Lands"); All of S&L's
right, title and interest in and to the Excepted Lands (it appears
that S&L owns 75% of the operating rights in the Excepted Lands and
Northern Drilling Company, Inc. owns the remaining 25%); and an NRI of
not less than 75% with respect to Lease No. MTM-0063166 (currently
100% working interest as to all formations other than the 1st Cat
Creek Formation); and
(b) Title free and clear of liens and encumbrances by, through and under
S&L, subject however to Permitted Encumbrances. Permitted Encumbrances
include the following:
(i) Overriding royalty suspension by virtue of clause contained in
the original assignment of record title from Guy Wiggs to S&L
dated March 30, 1973, recorded in the records of Musselshell
County, Montana, at Book 253, page 189, as Document No. 186722.
(ii) Production payment agreement in favor of the Bank of Denver
recorded in the Records of Musselshell County, Montana, in Book
321, page 228 as Document No. 244289.
(iii)Purchase and Sale Agreement dated March 19, 1996, and subsequent
transfer documents, between S&L Energy, Nielco, Inc. and Black
Hawk Resources, LLC; this assignment was subsequently transferred
to Jake Oil, LLC.
(iv) Any and all overriding royalty interests including but not
limited to, overriding royalty interests and landowner royalty
interests previously excepted, reserved, conveyed and/or assigned
from the Leases. Assignor has never intended for any of
Assignor's overriding royalty interest to have merged with the
interest conveyed herein. To the extent that any overriding
royalty interests owned by Assignor may have merged, Assignor
hereby reserves the same.
8. Representations and Warranties of HEN. HEN represents and warrants to S&L as
follows:
(a) Organization of HEN: HEN is a duly organized, validly existing
corporation in good standing under the laws of the State of
Wyoming and has all requisite power and authority to enter into
the transactions contemplated hereby. The execution, delivery and
performance by HEN of the conveyance instruments and the
consummation of the transactions contemplated hereby shall be
duly authorized by all necessary corporate action on the part of
HEN.
(b) No Violation; Consents and Approvals. The execution of the
transactions contemplated hereby and compliance with the terms
hereof will not conflict with, or result in any violation of or
default (or an event which, with notice or lapse of time or both,
would constitute a default) under, (a) the terms and conditions
or provisions of the certificate of incorporation or by-laws of
HEN (b) or any law applicable to HEN or property or assets of
HEN.
(c) Litigation; Compliance with Laws. There are no claims, actions,
suits, investigations or proceedings pending or threatened, to
the knowledge of HEN, that could prevent or enjoin, or delay in
any respect, consummation of the transactions contemplated
hereby.
9. Representations and Warranties of S&L. S&L represents and warrants to HEN as
follows:
(a) Organization of S&L: S&L is a duly organized, validly existing
corporation in good standing under the laws of the State of
Montana and has all requisite power and authority to enter into
the transactions contemplated hereby. The execution, delivery and
performance by S&L of the conveyance instruments and the
consummation of the transactions contemplated hereby shall have
been duly authorized by all necessary corporate action on the
part of S&L.
(b) No Violation; Consents and Approvals. The execution of the
transactions contemplated hereby and compliance with the terms
hereof will not conflict with, or result in any violation or
default (or an event which, with notice or lapse of time or both,
would constitute a default) under, (a) the terms and conditions
or provisions of the certificate of incorporation or by-laws of
S&L, or (b) and law applicable to S&L or property or assets of
S&L.
(c) Litigation; Compliance with Laws. There are (i) no claims,
actions, suits, investigations or proceedings pending or
threatened, to the knowledge of S&L, relating to or affecting the
Leases; and (ii) no orders of any government entity or arbitrator
are outstanding against S&L, its business, its assets, or any
employee, officer, director, stockholder, or independent
contractor of S&L in S&L capacities as such, or that could
prevent or enjoin, or delay in any respect, consummation of the
transactions contemplated hereby. S&L has complied and is in
compliance with all material respects with all laws applicable to
S&L, its business or its assets.
10. Survival of Representations and Warranties. The rights, covenants, promises,
representations, indemnities and obligations contained or discussed in this
Agreement shall survive Closing.
11. Notice. Any notice to be given hereunder shall be in writing and shall
either be served upon a party personally, sent by overnight courier, sent by
facsimile transmission, or served by registered or certified mail, return
receipt requested, directed to the Party to be served at the following
addresses:
if to HEN: Hinto Energy, Inc.
7609 Ralston Road
Arvada, CO 80002
if to S&L: S & L Energy, Inc.
Care of: Brett Lawrence
65 West Rosebud Road
Fishtail, Montana 59028-8000
A party wishing to change its designated address shall do so by notice
in writing to the other party. Notice shall be effective upon receipt.
12. Indemnification. HEN hereby agrees to indemnify and hold S&L harmless from
and against any and all claims, losses, liabilities, or obligations accruing
under the Leases or otherwise relating thereto, whether such claims arise before
or after the Effective Date.
13. Further Assurances. S&L and HEN agree to execute and deliver such further
assurances, instruments and documents, to make such further actions as S&L or
HEN may reasonably request and as may be reasonably necessary in order to
fulfill the intent of this Agreement and the transactions contemplated hereby.
14. Assignment. This Agreement and any right hereunder shall not be assigned
without the prior written consent of the other party.
15. Binding Effect. This Agreement shall inure to the benefit of, and shall be
binding upon, the successors and assigns of the parties.
16. Governing Law. This Agreement shall be governed by and interpreted under the
laws of the State of Montana, irrespective of where the parties execute this
Agreement.
17. Entire Agreement. This Agreement embodies the entire agreement between the
parties and supersedes all prior negotiations, understandings and agreements, if
any, between the parties which relate to the Leases. This Agreement may be
amended, modified or supplemented only by an instrument in writing duly executed
by both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written, but effective as of the Effective Date.
S & L Energy, Inc.
By:/s/ John Brett Lawrence
--------------------------
Name: John Brett Lawrence
Its: President
Hinto Energy, Inc.
By: /s/ George E. Harris
----------------------------
Name:George E. Harris
Its: CEO
ADDENDUM TO PURCHASE AND SALE AGREEMENT
This Addendum dated this 14 day of June, 2013, amends that certain
Purchase And Sale Agreement ("Agreement") dated June 14, 2013, but effective
June 4, 2014 at 12:01 a.m., MST ("Effective Date"), by and between S&L Energy,
Inc., a Montana corporation, with a mailing address of 65 West Rosebud Road,
Fishtail, Montana 59028-8000 ("S&L"), and Hinto Energy, Inc., a Wyoming
corporation, with a mailing address of 7609 Ralston Road, Arvada, Colorado 80002
("HEN"). To the extent that this Addendum of any terms herein conflict with the
terms of the Purchase and Sale Agreement, the terms of this Addendum shall
prevail. All other terms of the Agreement are hereby ratified to the extent they
do not conflict with this Addendum.
The parties hereby agree as follows:
1. The replacement of all BLM bonds applicable to the Leases,
discussed in Sections 2 and 6 of the Agreement, shall be paid by
HEN to the BLM, in the amount required by the BLM, as soon as
practicable after the Closing Date, but in no event shall payment
occur more than 10 days after Closing.
2. All other consideration required in Section 2 shall be paid to S&L
on or before the Closing Date, with the exception of the 62,242
shares of common stock, if HEN chooses to pay in stock, which must
be delivered to S&L I accordance with Section 11 within 10 days of
the Closing Date.
S & L Energy, Inc.
By:/s/ John Brett Lawrence
--------------------------
Name: John Brett Lawrence
Its: President
Hinto Energy, Inc.
By: /s/ George E. Harris
----------------------------
Name:George E. Harris
Its: CEO
EXHIBIT A
ASSIGNMENT OF OIL AND GAS LEASES
