PURCHASE AND SALE AGREEMENT

 

 

EXHIBIT 2.1

PURCHASE AND SALE AGREEMENT

(Taylor County, Texas)

 

     This Purchase and Sale Agreement (this “Agreement”) is made and entered into this 30 ^th day of July, 2009, by and between Treaty Energy Corporation (”Treaty”), a Nevada corporation whose address is 310 North Willis, Suite 212, Abilene, Texas 79603,

and HighGround of Texas, LLC (“HighGround”), a Texas Limited Liability Company whose address is 310 North Willis, Suite 212, Abilene, Texas 79603.  HighGround and Treaty may be referred to individually as a “Party” or collectively as the “Parties.”

 

RECITALS

 

     A. HighGround wishes to sell certain of its Assets, as defined in Section 1.2 below.

 

     B. Treaty (i) has conducted an independent investigation of the nature and extent of the Assets, (ii) will conduct further due diligence on the Assets after execution of this Agreement, and (iii) wishes to purchase the Assets.

 

     C. Treaty and HighGround wish to accomplish the foregoing under the terms of this Agreement.

 

AGREEMENT

 

     In consideration of the mutual promises contained herein, Treaty and HighGround agree as follows:

 

ARTICLE I

 

PURCHASE AND SALE OF THE ASSETS

 

     1.1 Purchase and Sale. HighGround agrees to sell and Treaty agrees to purchase the Assets pursuant to the terms of this Agreement.  The Effective Time of this agreement is Thursday, July 30, 2009 at 12:00 PM CST.

 

     1.2 The Assets. As used herein, the term “Assets” means the entire right, title and interest of HighGround in and to the following:

 

     (a) The leasehold estates created by the oil and gas leases described in Schedule 1.2(a) (collectively, the “Leases”), together with all contract rights and privileges; surface, reversionary or remainder interests; and all other interests associated with the Leases.

 

     (b) The oil and gas wells specifically described in Schedule 1.2(b) (collectively, the “Wells”), together with all equipment, fixtures, improvements, permits, rights-of-way and easements used or held for use in connection with the dewatering, production, gathering, treatment, processing, compression, storing, sale or disposal of hydrocarbons or water produced from the properties and interests described in Section 1.2(a).

 

 

 

 

     (c) The unitization, pooling and communitization agreements, declarations and orders, and the units created thereby (including all units formed under orders, regulations, rules or other acts of any federal, state or other governmental agency having jurisdiction) and all other such agreements relating to the properties and interests described in Sections 1.2(a) and (b) and to the production of hydrocarbons, if any, attributable to said properties and interests.

 

     (d) All sales, purchase, exchange, gathering, transportation and processing contracts, joint operating agreements, balancing agreements, farmout agreements, service agreements, participation agreements and other contracts, agreements and instruments (collectively, the “Contracts”), insofar as they relate to the properties and interests described in Sections 1.2(a) through (c), including without limitation, the material agreements shown on Schedule 1.2(d).

 

     (e) The files, records and data relating to the items described in Sections 1.2(a) through (d) maintained by HighGround and relating to the interests described in Sections 1.2(a) through (d) (including without limitation all lease files, land files, well files, drilling reports, contact files, division order files, abstracts and title opinions, seismic data, geophysical data and other geologic information and data), although only to the extent not subject to unaffiliated third party contractual restrictions on disclosure or transfer and only to the extent related to the Assets, and in all events excluding all of HighGround’s tax and financial records and all economic evaluations (collectively, after giving effect to the limitations and exclusions set forth participation above, the “Records”).

 

     1.3 Purchase Price. The purchase price for the Assets (the “Purchase Price”) shall be $175,000, to be paid by issuing 7 million shares of common stock of the Company.

 

The Parties have allocated the Purchase Price among the Leases and Wells in the manner shown in Schedule 1.3. The value so allocated to a particular Lease or Well is referred to as the “Allocated Value” of such Lease or Well.

 

     1.4 Adjustments to Purchase Price. All adjustments to the Purchase Price shall be made (i) according to the factors described in this Section 1.4, (ii) in accordance with generally accepted accounting principles as consistently applied in the oil and gas industry, and (iii) without duplication.

 

     (a) Settlement Statements. The Purchase Price shall be adjusted at Closing pursuant to a “Preliminary Settlement Statement” prepared by HighGround and submitted to Treaty three days prior to Closing for Treaty’s comment and review. The Preliminary Settlement Statement shall set forth the Closing Amount and all adjustments to the Purchase Price and associated calculations. The term “Closing Amount” means the Purchase Price, adjusted as provided in this Section using reasonable estimates if actual numbers are not available. After Closing, the Purchase Price shall be adjusted pursuant to the Final Settlement Statement delivered pursuant to Section 12.1.

 

 

 

 

     (b) Property Expenses. The term “Property Expenses” shall mean all capital expenses, joint interest billings, lease operating expenses, lease rental and maintenance costs, royalties, Taxes (as defined Section 8.1(a)), drilling expenses, dewatering expenses, completion expenses, geological, geophysical and any other exploration, development or maintenance expenditures chargeable under applicable operating agreements or other agreements consistent with the standards established by the Council of Petroleum Accountant Societies of North America that are attributable to the Assets.

 

     (c) Upward Adjustments. The Purchase Price shall be adjusted upward by:

 

     (1) An amount equal to all proceeds (net of royalty and Taxes not otherwise accounted for hereunder) that are received by Treaty from the sale of Hydrocarbons produced from or credited to the Assets prior to the Effective Time (excluding “tank bottoms,” if any, as that term is used in the oil and gas industry), provided, however, that this adjustment shall be made only on the Final Settlement Statement, and shall not be included on the Preliminary Settlement Statement or considered in determining the Closing Amount;

 

     (2) An amount equal to all direct and actual expenses attributable to the Assets, including, without limitation, the Property Expenses, paid by or on behalf of HighGround that are attributable to the period after the Effective Time;

 

     (3) To the extent not covered in the preceding paragraph, an amount equal to all prepaid expenses attributable to the Assets after the Effective Time that were paid by or on behalf of HighGround, including without limitation, prepaid drilling and completion costs, prepaid compressor rental charges, and prepaid utility charges;

 

     (4) Any other amount as may be agreed to in writing by Treaty and HighGround.

 

     (d) Downward Adjustments. The Purchase Price shall be adjusted downward by:

 

     (1) The amount of all direct and actual expenses attributable to the Assets, including, without limitation, the Property Expenses that Treaty agrees to pay, or that have been paid by Treaty, that are attributable to the period prior to the Effective Time;

 

     (2) An amount equal to any Title Defect Adjustments (as defined in Section 3.2);

 

     (3) An amount equal to any Environmental Defect Adjustments (as defined in Section 4.4); and

 

     (4) Any other amount as may be agreed to in writing by Treaty and HighGround.

 

 

 

 

ARTICLE II

TREATY’S INSPECTION

 

     2.1 Access to Records. Subject to Sections 7.3(a) and (b), HighGround will continue to make the Records available to Treaty and its representatives for inspection and review at the offices of HighGround during normal business hours to permit Treaty to perform, at its sole expense, its due diligence review. Subject to the consent and cooperation of third parties, HighGround will assist Treaty in Treaty’s efforts to obtain, at Treaty’s expense, such additional information from third parties as Treaty may reasonably request, for the purposes of Treaty’s due diligence review. Treaty may inspect the Records and such additional information only to the extent such inspection does not violate any contractual commitment of HighGround to an unaffiliated third party. HighGround shall make reasonable efforts to obtain consent from any such third party to disclose the information and Records to Treaty, provided that Treaty agrees to keep same confidential and not disclose it to anyone other than its advisors in this transaction, and provided further that HighGround shall have no obligation to make any payment to obtain such consent.

 

     2.2 Access to the Assets. Immediately after execution of this Agreement, HighGround will grant Treaty access to the Assets during reasonable business hours to permit Treaty to conduct, at its sole risk and expense, on-site inspections and environmental assessments of the Assets. If Treaty or its agent prepares an environmental assessment of any Asset, Treaty agrees to keep such assessment confidential and to furnish copies thereof to HighGround. In connection with any on-site inspections, Treaty (i) agrees not to interfere with the normal operation of the Assets, (ii) agrees to comply with all requirements of the operators of the Assets and (iii) represents that it is adequately insured. Treaty waives, releases and agrees to indemnify HighGround, and its respective directors, officers, shareholders, members, employees, agents and representatives against all liabilities and obligations, including without limitation, personal injury, death and/or property damage, arising from Treaty’s activities on the Assets except to the extent such liability or damages are caused by HighGround’s willful misconduct. The provisions of this Section shall survive termination of this Agreement.

 

ARTICLE III

TITLE MATTERS

     3.1 Definitions.

 

     (a) Defensible Title. “Defensible Title” means such record title to the Leases that (i) would lead a reasonable prudent operator to distribute to HighGround not less than the net revenue interest set forth on Schedule 1.2(a) for each Lease (“NRI”); (ii) would lead a reasonable prudent operator to bill HighGround for costs and expenses relating to the maintenance, development, and operation of wells located on the Leases in an amount not greater than the working interest set forth in Schedule 1.2(a) (“WI”); and (iii) is free and clear of encumbrances, liens and defects, other than Permitted Encumbrances.

 

     (b) Permitted Encumbrances. “Permitted Encumbrances” means:

 

 

 

 

     (1) lessors’ royalties, overriding royalties, net profits interests, production payments, reversionary interests and similar burdens (payable or in suspense) if the net cumulative effect of such burdens does not operate to reduce the NRI;

 

     (2) liens for Taxes [as defined in Section 8.1(a)], or assessments not yet due and delinquent or, if delinquent, that are being contested in good faith in the normal course of business and if so required by statute for which bond has been posted;

 

     (3) all required notices, consents, actions, or filings with any governmental agency related to conveyance of the applicable Lease, if the same are customarily obtained after Closing;

 

     (4) rights of reassignment upon the surrender or expiration of any Lease;

 

     (5) easements, rights-of-way, servitudes, permits, surface leases and other surface rights on or over the Leases or any restrictions on access thereto that do not materially interfere with the operation of the affected Lease as they have been conducted in the past;

 

     (6) materialmen’s, mechanics’, operators’ or other similar liens arising in the ordinary course of business incidental to operation of the Leases (i) if such liens and charges have not been filed pursuant to law and the time for filing such liens and charges has expired, (ii) if filed, such liens and charges have not yet become due and payable or payment is being withheld as provided by law, or (iii) if their validity is being contested in good faith by appropriate action; and

 

     (7) depth limitations on HighGround’s ownership of leasehold interests.

 

     (c) Title Defect. “Title Defect” means any lien, encumbrance, claim, defect in or objection to real property title, other than Permitted Encumbrances, that alone or in combination with other defects (i) renders HighGround’s title to the Lease less than Defensible Title and that (ii) reduces the Allocated Value of the affected Lease by more than $5,000.

 

     (d) Title Defect Value. “Title Defect Value” means the amount by which the Allocated Value of a Lease is reduced by a Title Defect, although the Title Defect Value may never exceed the Allocated Value of the Lease. The Title Defect Value shall be determined by the Parties as follows:

 

     (1) If the Title Defect is an indebtedness secured by a lien or encumbrance on a Lease that may be discharged in full by the satisfaction of such indebtedness, the Title Defect Value shall be the total amount to discharge such indebtedness so that such lien or encumbrance no longer burdens the Lease.

 

 

 

 

     (2) If the Title Defect is an actual reduction in NRI with no change in WI, the Title Defect Value shall be the Allocated Value for the particular Lease, proportionately reduced by the ratio of the actual NRI to the NRI as set forth on Schedule 1.2(a).

 

     (3) If the Title Defect does not fall into Section (1) or (2), then the Title Defect Value shall be determined by the Parties in good faith, taking into account all relevant factors, including without limitation, the following:

 

(i)The Allocated Value of the affected Lease;

 

     (ii) If the Title Defect represents only a possibility of title failure, the probability that such failure will occur; and

 

     (iii) The legal effect of the Title Defect.

 

     (e) Title Disputes. Any dispute between HighGround and Treaty concerning the existence, nature or extent of a Title Defect, the Title Defect Value, or the adequacy of curative work performed in respect of such Title Defect shall be resolved as provided in Section 14.8, below.

 

     3.2 Purchase Price Adjustments for Title Defects.

 

     (a) Notice of Title Defects. Treaty may give HighGround written “Title Defect Notice” as soon as reasonably possible but no later than Friday August 7, 2009 at 5:00 p.m. Central Time (“Title Defect Notice Date”). The Title Defect Notice must be in writing, name the affected Lease, describe each Title Defect and its basis in reasonable detail, state Treaty’s good faith estimate of the Title Defect Value, and, if applicable, contain the information required by Section 3.2(b).

 

     (b) Defect Adjustments. No adjustments to the Purchase Price shall be made unless and until the aggregate Title Defect Value exceeds $30,000. In its Title Defect Notice, Treaty shall identify Leases of its choice (the “Included Leases”) that suffer Title Defects in an amount equal to the lesser of (i) the aggregate Title Defect Value of all uncured Title Defects or (ii) $30,000. HighGround shall be under no obligation to cure Title Defects in the Included Leases; instead, HighGround’s entire interest in all of the Included Leases shall be assigned to Treaty at Closing, without any reduction in the Purchase Price and without any continuing liability or responsibility on the part of HighGround in respect of such Title Defects. If, however, the aggregate value of all uncured Title Defects exceeds $30,000, then, only as to Leases suffering from Title Defects that are not Included Leases, each such Lease will not be assigned to Treaty at Closing and the Purchase Price will be reduced at Closing by the Title Defect Value, unless (i) HighGround elects to cure the Title Defect prior to Closing, (ii) Treaty agrees to waive the relevant Title Defect, (iii) HighGround elects on or before Closing to cure such Title Defect no later than 90 days after Closing, or (iv) HighGround, with Treaty’s consent, elects on or before Closing to indemnify Treaty against any loss attributable to the relevant Title Defect.

 

 

 

 

     (c) Post-Closing Cure.

 

     (1) If HighGround elects to cure the applicable Title Defect post-Closing, then Treaty shall, pending such post Closing period, withhold and retain from the Purchase Price payable at Closing an amount equal to the Title Defect Value attributable to the affected Lease and HighGround shall not assign the affected Lease to Treaty at Closing.

 

     (2) If HighGround elects to cure the applicable Title Defect post-Closing, but does not cure the applicable Title Defect to Treaty’s reasonable satisfaction within the 90 day time period (or such longer period as may be agreed to by the Parties), Treaty may waive the applicable Title Defect, or if Treaty does not waive the Title Defect, then, the Purchase Price shall be adjusted for the Title Defect Value of the affected Lease in accordance with the terms of this Agreement. If HighGround cures the applicable Title Defect to Treaty’s reasonable satisfaction within the 90-day time period (or such longer period as may be agreed to by the Parties), Treaty shall pay to HighGround the Title Defect Value attributable to the affected Lease and HighGround shall assign such Lease to Treaty.

 

     3.3 Casualty Loss. Prior to Closing, if a portion of the Assets is destroyed by fire or other casualty (“Casualty Loss”), Treaty shall purchase the Asset at Closing for the Allocated Value of the Asset reduced by the estimated cost to Treaty for repair of such Asset (with equipment of similar utility) up to the Allocated Value thereof net of any payments as may be received from HighGround’s insurers and paid to Treaty attributable to any applicable insurance claims made on such Casualty Loss (the net reduction being the “Net Casualty Loss”). HighGround, at its sole option, may elect to cure such Casualty Loss by replacing any personal property that is the subject of a Casualty Loss with equipment of equal (or better if HighGround elects in its sole discretion) grade and utility and, if HighGround elects to so cure the Casualty Loss, Treaty shall purchase the affected Asset at Closing for the Allocated Value thereof.

 

     3.4 Preferential Rights and Consents.

 

     Schedule 3.4 identifies preferential purchase rights and Required Consents. “Required Consents” are consents that, if not obtained by Closing, would invalidate the conveyance of an Asset; provided, however, that consents and approvals customarily obtained after Closing (such as federal and state approvals of assignments), and consents that do not specifically invalidate the conveyance if not obtained are not Required Consents. HighGround shall use reasonable efforts to obtain all Required Consents and to give notices required in connection with preferential purchase rights prior to Closing. If, before Closing, Treaty discovers other Required Consents or preferential purchase rights, Treaty shall notify HighGround immediately and HighGround shall use reasonable efforts to obtain such consents and to give the notices required in connection with the preferential rights prior to Closing.

 

 

 

 

 

(a) Consents. If a Required Consent has not been obtained by Closing, then (i) the portion of the Assets for which such consent has not been obtained shall not be conveyed at the Closing, (ii) the Allocated Value for that Asset shall not be paid to HighGround, and (iii) HighGround shall use reasonable efforts to obtain such consent as promptly as possible after Closing. If such consent has been obtained as of the Final Settlement Date, HighGround shall convey the affected Asset to Treaty effective as of the Effective Time and Treaty shall pay HighGround the Allocated Value of the affected Asset, together with any proceeds from the affected Asset attributable to the period of time after the Effective Time. If such consent has not been obtained as of the Final Settlement Date, HighGround shall retain such Asset. Treaty shall reasonably cooperate with HighGround in obtaining any Required Consent, including providing assurance of financial condition, but Treaty shall not be required to expend funds or make any other type of financial commitment as a condition of obtaining such consent.

     (b) Preferential Purchase Rights.

     (1) If any preferential right to purchase any portion of the Assets is exercised prior to the Closing Date, or if the time for exercise of such preferential purchase rights has not expired and HighGround has not received notice of an intent not to exercise or otherwise to waive the preferential purchase right, that portion of the Assets affected by the preferential purchase right shall be excluded from the Assets and the Purchase Price shall be adjusted downward by an amount equal to the Allocated Value of such affected Assets.

     (2) If a third party exercises its preferential right to purchase, but fails to consummate the transaction prior to the Closing, HighGround shall retain the affected Asset and the Purchase Price shall be adjusted downward by an amount equal to the Allocated Value of such affected Assets.

     (3) If a third party exercises its preferential right to purchase, but does not consummate the transaction within the time specified in the preferential purchase right, provided that the reason therefore is not HighGround’s fault, HighGround shall convey the affected Asset to Treaty as soon as possible after the expiration of the time for consummation of the transaction, effective as of the Effective Time, and Treaty shall pay HighGround the Allocated Value of the affected Asset.

     (4) If a preferential purchase right is not discovered before Closing and the affected Asset is conveyed to Treaty at Closing, and if the preferential purchase right is later exercised, then Treaty agrees to convey the affected Asset to the party exercising such right on the same terms and conditions under which HighGround conveyed such Asset to Treaty (with the purchase price being the Allocated Value for the affected Asset) and retain all amounts paid by the party exercising such preferential right to purchase. In the event of such exercise, Treaty shall prepare, execute and deliver an appropriate form of conveyance of such Asset to the exercising party, and HighGround agrees to hold harmless and indemnify Treaty from any and all Losses, liabilities and obligations associated with such conveyed Asset, including, without limitation, any deficiency in the amount paid by such third party below the Allocated Value, if any, of the Asset.

 

 

 

     (c) Remedies. The remedies set forth in this Section 3.4 are the exclusive remedies for the preferential purchase rights and Required Consents as listed on Schedule 3.4.

 

ARTICLE IV

ENVIRONMENTAL MATTERS

 

     4.1 Definitions. For the purposes of the Agreement, the following terms shall have the following meanings:

     “Environmental Consultant” means a third party environmental consultant with experience in the geologic basin where the Assets are located, selected by Treaty, and approved by HighGround, which approval shall not be unreasonably withheld.

     “Environmental Defect” means a condition in, on or under the Asset (including, without limitation, air, land, soil, surface and subsurface strata, surface water and ground water) that (i) causes an Asset to be in material violation of an Environmental Law or (ii) would give rise to a claim for damages by a third party.

     “Environmental Defect Notice” means a written notice of an Environmental Defect, as more specifically described in Section 4.3, made by Treaty to HighGround, on or before the Environmental Defect Notice Date.

     “Environmental Defect Notice Date” means Friday, August 7, 2009 at 5:00 p.m. Central Time.

     “Environmental Law” means any statute, law, ordinance, rule, regulation, code, order, judicial writ, injunction, or decree issued by any federal, state, or local governmental authority including common law, in effect on or before the Effective Time relating to the control of any pollutant or protection of the air, water, land, or environment or the release or disposal of hazardous materials, hazardous substances or waste materials.

     “Remediation” means actions taken to correct an Environmental Defect as recommended by an Environmental Consultant.

     “Remediation Costs” means the costs or estimates thereof, to remediate a particular Environmental Defect, as estimated in writing by an Environmental Consultant.

     4.2 Environmental Liabilities and Obligations.

     (a) Retained Environmental Liabilities. If HighGround receives a valid Environmental Defect Notice for a particular Environmental Defect and such Environmental Defect Notice is not contested under the provisions of Section 4.5, then, subject to the provisions of Section 4.4 and Article XIII, HighGround agrees to retain all claims, cost, expenses, liabilities and obligations accruing or relating to the Environmental Defect that was the subject of the valid and complete Environmental Defect Notice (“Retained Environmental Liabilities”). Timely receipt of a valid and complete Environmental Defect Notice is a condition precedent to HighGround’s obligations under this Section.

 

 

 

 

     (b) Assumed Environmental Liabilities. Except for Retained Environmental Liabilities and subject to the provisions of Section 4.4 and Article XIII, upon Closing, Treaty agrees to assume and pay, perform, fulfill and discharge and release HighGround from all Losses relating to environmental conditions in, on or under the Assets attributable to the period of time before and after the Effective Time, including without limitation any and all liability for naturally occurring radioactive materials and man-made material fibers, and the obligation to plug and abandon all of the Wells and reclamation of existing Well sites (collectively, “Assumed Environmental Liabilities”). Assumed Environmental Liabilities shall include any and all claims, costs, expenses, liabilities, and obligations attributable to the environmental condition of the Assets that were not the subject of a valid Environmental Defect Notice.

 

  4.3 Environmental Defect Notice. An Environmental Defect Notice must be in writing and received on or before the Environmental Defect Notice Date, name the affected Asset and identify the condition in, on or under the Asset that causes the Environmental Defect, and contain a written statement of the estimated Remediation Costs by an Environmental Consultant.

 

     4.4 Remedies for Environmental Defects. If Treaty delivers a valid and complete Environmental Defect Notice to HighGround, HighGround may elect one of the following options: (i) HighGround remediate the Environmental Defect, such remediation to be consistent with Environmental Laws; or (ii) HighGround contests the existence of the Environmental Defect or the Remediation Costs in accordance with Section 4.5; or (iii) HighGround pays Treaty’s estimate of the Remediation Cost (“Environmental Defect Adjustment”). If HighGround elects one of the foregoing three alternatives in respect of a particular Environmental Defect, HighGround shall have no Retained Environmental Liability as to that Environmental Defect.

 

     4.5 Contested Environmental Defects. If HighGround contests the existence of an Environmental Defect or the Remediation Costs, HighGround shall notify Treaty in writing on or before ten days after receipt of the Environmental Defect Notice (“Rejection Notice”). The Rejection Notice shall state with reasonable specificity the basis of the rejection of the Environmental Defect or the Remediation Costs. Within 5 days of receipt of the Rejection Notice, representatives of Treaty and HighGround knowledgeable in environmental matters, shall meet and either (i) mutually agree to reject the particular Environmental Defect or (ii) agree on the validity of such Environmental Defect and the Remediation Costs. If the Parties cannot agree on either option (i) or (ii) in the preceding sentence, the Environmental Defect and/or the Remediation Costs subject to the Rejection Notice shall be resolved as provided in Section 14.8, below. If HighGround fails timely to deliver a Rejection Notice, HighGround shall be deemed to have accepted the validity of the Environmental Defect and Treaty’s estimate of the Remediation Costs, and shall be deemed to have waived its own option to contest the Environmental Defect pursuant to this Section.

 

 

 

 

 

     4.6 Exclusive Remedies. The rights and remedies granted each Party in this Article, together with the indemnifications set forth in Article XIII, are the exclusive rights and remedies against the other Party related to any Environmental matter, including, without limitation, Environmental Defects.

 

ARTICLE V

HIGHGROUND’S REPRESENTATIONS AND WARRANTIES

 

     5.1 Corporate/Limited Liability Company Representations. HighGround makes the following representations and warranties:

 

     (a) Incorporation/Qualification. HighGround is a Nevada corporation, duly organized, validly existing and in good standing under the laws of the State of Nevada and is qualified to conduct business in Montana.

 

     (b) Power and Authority. HighGround has all requisite power and authority to own its proportionate share of the Assets and to carry on its businesses as presently conducted and to execute and deliver this Agreement and perform its respective obligations under this Agreement.

 

     (c) No Lien, No Violation. The execution and delivery of this Agreement does not, and the fulfillment of and compliance with the terms and conditions hereof will not, as of Closing, (i) create a lien or encumbrance on the Assets or trigger an outstanding security interest in the Assets that will remain in existence after Closing, (ii) violate, or be in conflict with, any material provision of any statute, rule or regulation applicable to HighGround or any agreement or instrument to which HighGround is a party or by which it is bound, or, (iii) to its knowledge, violate, or be in conflict with any statute, rule, regulation, judgment, decree or order applicable to HighGround.

 

     (d) Authorization and Enforceability. This Agreement is duly and validly authorized and constitutes the legal, valid and binding obligation of HighGround, enforceable in accordance with its terms, subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium and other laws for the protection of creditors, as well as to general principles of equity, regardless whether such enforceability is considered in a proceeding in equity or at law.

 

     (e) Liability for Brokers’ Fees. HighGround has not incurred any liability, contingent or otherwise, for brokers’ or finders’ fees relating to the transactions contemplated by this Agreement for which Treaty shall have any responsibility whatsoever.

 

     (f) No Bankruptcy. There are no bankruptcy proceedings pending, being contemplated by or, to its knowledge, threatened against HighGround.

 

     (g) Litigation. HighGround has not received any written claim or written demand notice that has not been resolved that would materially adversely affect the Assets. There are no actions, suits, ongoing governmental investigations, written governmental

 

 

 

inquiries or proceedings pending or, to its kno