EXHIBIT 10.41
OPTION AGREEMENT
(Parcel A)
THIS OPTION AGREEMENT (the "Agreement") is made and entered into effective
this 21st day of November, 1994, by and between Pangolin Corporation, a
California corporation ("Buyer"), and U.S. Energy Corp./Crested Corp.
("Seller").
WITNESSETH:
WHEREAS, Seller is the owner of certain real property located in the City of
Gunnison, Gunnison County, Colorado (the "Property") more particularly described
on Exhibit A attached hereto, subject to verification by survey and title
inspection;
WHEREAS, Buyer desires to obtain an option to purchase the Property from Seller;
and
WHEREAS, upon the terms, covenants and conditions contained in this Agreement,
Seller is willing to grant such option to Buyer.
NOW, THEREFORE, in consideration of the mutual promises set forth herein and for
other good and valuable consideration, the receipt, sufficiency and legal
adequacy of which are hereby acknowledged, Buyer and Seller agree as follows:
1. Grant. Seller hereby grants to Buyer an option to purchase fee title
to the Property and all rights appurtenant thereto (including without
limitation, water rights or shares, mineral rights, governmental approvals,
utility hook-ups, licenses, leases, easements and rights of way) upon the terms,
covenants and conditions set forth in this Agreement (the "Option").
2. Term. The Option hereby granted is for a term commencing on the date
of this Agreement and expiring at midnight (Mountain) 60 days from the date
hereof (the "Option Period").
3. Purchase Price. Buyer tenders herewith the nonrefundable, full option
purchase price of Ten Thousand Dollars ($10,000). Upon exercise of this Option,
the total purchase price for the Property shall be One Million Dollars
($1,000,000), or $17,337 per acre subject to adjustment to reflect the exact
acreage which shall be determined in accordance with the survey described in
paragraph 4(i) below (the "Purchase Price"). Any funds paid for this Option
shall be applied to the Purchase Price paid at Closing. The Purchase Price shall
be paid as follows:
(i) $10,000 as the option purchase price delivered upon the
execution of this Agreement by Seller; plus
(ii) $490,000 payable in cash at the "Closing" (as hereafter
defined). Upon such payment, Seller shall deed the first 19.25 acres of the
Property to Buyer, free and clear of
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any liens or encumbrances, these acres to be valued at the rate of 150% of
the $17,337 per acre (subject to adjustment in accordance with the survey
of the Property) purchase price (or $26,000 per acre). The Buyer shall
designate the specific property to be deeded on a 90/10 non-commercial to
commercial acreage ratio. "Commercial acreage" for purposes of this
Agreement shall mean that 10.44 acres fronting on Highway 135 presently
zoned commercial. The remainder of the Property shall be considered for
purposes of this Agreement non-commercial; plus
(iii) $500,000 evidenced by a purchase money promissory note and
trust deed encumbering that portion of the Property not conveyed to Buyer
free and clear pursuant to subparagraph 3 (ii) above, in favor of Seller to
be delivered at the Closing containing the following specific terms in
addition to other standard or statutory terms (including Seller's rights as
a secured party to foreclose thereon under applicable law in the event of
default):
(a) Interest only payments at the rate of seven and one-half
percent (7.5%) per annum payable annually on the anniversary of the
Closing, with any accrued but unpaid interest due and payable in full
upon final payment of the principal balance of the Note.
(b) Partial Lien Release provision requiring Seller to release
or make request to the public trustee for reconveyance of whole or
fractional acreage upon payment of principal under the Note at the
rate of $50,000 per acre for commercial acreage and $19,200 per acre
for non-commercial acreage. Buyer shall designate the property to be
released at the time of payment of the principal.
(c) Payment of the entire principal balance and all accrued but
unpaid interest on the third (3rd) anniversary of the date of Closing,
without prepayment penalty.
(d) Seller shall promptly consent in writing to any plat maps,
subdivisions or other instruments necessary for rezoning, subdivision,
annexation, recordation, or other development requirements, and to
release without prepayment any acreage that is needed for public
improvements; i.e. roads, sidewalks, utility easements, parks or
trails. Such consent may not be unreasonably withheld or delayed.
(e) Nonrecourse provision.
The trust deed and promissory note to be executed, delivered and recorded in
connection with the foregoing purchase money financing shall be on State of
Colorado approved forms, as modified for the provisions contained herein.
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4. Survey, Property and Title Inspection.
(i) Within 20 calendar days of the execution of this Agreement
by both parties, Seller, at its expense, shall obtain and deliver to Buyer
a certified survey which shall identify any encroachments or property
boundary discrepancies and shall determine the actual legal description of
the Property which legal description shall be consistent with the
description attached to this Agreement as Exhibit "A" and the understanding
of the parties (the "Survey"). By the Closing, Seller shall provide Buyer
with a certified survey of all lots platted on the Property. Buyer shall
prior to the termination of the Option Period give Seller written
objections and proposed modifications to the Survey. If Buyer has not given
Seller written notice of its objections within the Option Period, the
Survey shall be deemed to have been accepted by Buyer as the legal
description for the Property. If the Survey and the resulting legal
description of the Property do not vary materially from the description of
the Property represented in Exhibit "A", Buyer may not object to the Survey
except for reasonable objections based upon reasonable development
requirements for the remainder of the Property or upon requirements of
Buyer's lender or applicable regulatory or governmental authorities.
(ii) Seller hereby grants to Buyer and persons designated by
Buyer the right and permission at any time to enter upon the Property to
inspect, appraise and verify surveys thereof. Seller shall also make
available to Buyer for inspection all records of operations on the
Property, including all records and documents concerning water and mineral
rights, governmental permits, surveys, engineering studies, water surveys
or data, seismic studies, environmental studies, designs, plats, maps,
licenses and allotments. Buyer agrees that it will not interfere, in any
material respect, with Seller's use of the Property in conducting such
inspections.
(iii) Within 20 calendar days of the execution of this Agreement
by both parties, Seller, at its expense, shall obtain and deliver to Buyer
a commitment for the issuance of a policy of title insurance with extended
coverage on the Property, with copies of all documents identified as
exceptions therein. Buyer shall prior to the termination of the Option
Period give Seller written objections to the status of title. If Buyer has
not given Seller written notice of its objections within the Option Period,
the commitment for title insurance shall be deemed to have been accepted by
Buyer and Buyer shall accept such a title policy in compliance therewith as
satisfaction of Seller's commitment in that respect hereunder. If Buyer
reasonably objects to any item or exception in the commitment, Seller shall
remove or cure such objection or exception prior to Closing. To the extent
that such objectionable items can be removed by the payment of the amount
of any such lien or encumbrance, Seller agrees to have
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the proceeds paid by Buyer at Closing applied to such liens in order to
obtain their removal. In the event Seller fails to cure any such objections
or exceptions, Buyer may refuse to Close and the Closing date shall be
extended until such objection or exception is cured or Buyer terminates
this Agreement, at its discretion, whereupon Seller shall reimburse the
Option purchase price to Buyer. In the event that this Option is not
exercised by Buyer, all such evidences of title shall be immediately
returned to Seller.
5. Exercise of Option. Buyer may exercise the Option at any time from
and after the date hereof and prior to the expiration of the Option Period by
giving to Seller notice of exercise in writing by certified mail, postage
prepaid thereon at the address indicated in paragraph 14(ix) of this Agreement,
which notice must be postmarked on or before the expiration of the Option
Period, or by hand-delivery or courier service. Within 10 calendar days of the
date of this Agreement, Buyer shall designate a Gunnison County, Colorado escrow
agent (the "Escrow Agent") and identify a closing date to be not later than 60
calendar days after the date Seller executes this Agreement.
6. Title. At Closing, Seller shall execute and deliver to Buyer a good
and sufficient warranty deed conveying fee simple title to the Property to
Buyer, subject only to those easements, rights of way, reservations,
restrictions, encumbrances and other matters accepted or not objected to or
waived by Buyer. The parties shall agree upon mutually acceptable escrow
instructions for the Escrow Agent to protect the Buyer and Seller.
7. Title Insurance. At Closing, Seller shall furnish to Buyer, at
Seller's expense, an owner's policy of title insurance, in extended coverage
form, in the amount of the Purchase Price, insuring title in Buyer subject to
standard printed exceptions and those easements, rights of way, reservations,
restrictions, encumbrances and other matters accepted or not objected to or
waived by Seller.
8. Closing. In the event of exercise of this Option, the closing
contemplated herein (the "Closing") shall occur at the offices of the Escrow
Agent or at such other location agreed upon by Buyer and Seller on the date
designated by the Buyer under paragraph 5 above. Buyer and Seller agree to each
pay one half of the standard reasonable recording, documentation and closing
fees of the Escrow Agent, other than the cost of the title insurance policy
which shall be paid by Seller. Real property taxes, utility and other charges or
assessments for the current year, rents and profits shall be prorated as of the
date of Closing. Any greenbelt rollback taxes for periods prior to Closing shall
be allocated to and paid by Seller at Closing. All other taxes, including
documentary taxes, if any, and all assessments, mortgage liens, encumbrances or
charges against the Property of any nature, shall be paid by Seller at Closing,
unless waived or assumed by Buyer.
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9. Risk of Loss. All risk of loss and destruction of the Property and
expenses and insurance shall be born by Seller until the date of Closing.
10. Possession. Seller shall deliver possession of the Property to Buyer
on the date of Closing, unless otherwise agreed to by Buyer and Seller.
11. Representations. Warranties Covenants and Conditions.
(i) As of the date hereof and as of the date of Closing, Seller
hereby represents and warrants to Buyer that (a) Seller has all requisite
power and authority to enter into this Agreement and all documents
contemplated hereby (collectively, the "Purchase and Sale Documents"); (b)
there are no claims, actions, suits or other proceedings pending with
respect to the Property or against Seller which would affect the Property
or Seller's ability to convey the same as required hereunder, (c) the
Property complies with all applicable laws and regulations and will pass
all applicable governmental inspections; (d) Seller owns marketable fee
simple title to the Property not encumbered by any interest in a third
party which is not of record; (e) Seller is not in default of any
obligations secured by the Property or under any leases with respect to the
Property; (f) Seller has received no demands from any governmental agency
that the Property contains any hazardous or toxic substance or that any
such substance has been discharge from or onto the Property, and the
Property has not been used as a processing, storage or handling facility
for any "hazardous substance", as defined in any government statute, code
or regulation, and there are no hazardous substances existing anywhere on
or running onto or off of the Property, except as disclosed by Seller to
Buyer in writing within 20 days of the date of this Agreement (Seller
agrees to fully indemnify, defend and save Buyer harmless from any loss or
injury suffered by Buyer in the event such hazardous substances are
discovered to have existed on the Property as of Closing which have not
been disclosed by Seller in accordance herewith, which obligation of Seller
shall survive Closing), (g) the Property is in full compliance with, and
Seller has received no notice from any federal, state, county, municipal or
other governmental body or agency of any violation of any law, ordinance,
rule or regulation applicable to the Property, or of any proposed, pending
or outstanding changes or violations of existing zoning or use regulations,
and (h) the Property and all improvements and fixtures thereon are in good
working order, without material defects.
(ii) Buyer hereby represents and warrants to Seller that Buyer
has all requisite power and authority to enter into the Purchase and Sale
Documents.
(iii) All covenants, warranties and representations contained in
this Agreement shall survive Closing and the delivery of the consideration
and deed and shall not be merged
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therein; provided, however that as to representations made herein, said
survival shall be applicable only as to the truth thereof at the time of
Closing, but not as to any time subsequent to Closing. (iv) At Closing,
Seller shall provide to Buyer an Affidavit to satisfy Internal Revenue
requirements, stating that the Seller is not a foreign person (as that term
is defined in Section 1445 of the Internal Revenue Code) and providing
Seller's employer identification number. In the event that Seller does not
provide such an Affidavit, Buyer shall withhold from the Purchase Price
such amount as may be required by the Internal Revenue Service and pay such
amount to the Internal Revenue Service as required by applicable law.
(v) Seller shall provide such information and shall be
responsible for filing such reports as shall be required under the
reporting requirements of the Tax Reform Act of 1986, and shall indemnify
and hold harmless Buyer should it fail to comply.
(vi) Buyer's obligation to close under this Agreement shall be
subject to its receipt of a general warranty deed in recordable form, and
the full performance by Seller of all covenants imposed on it hereunder,
and full satisfaction of all other conditions to closing set forth herein.
(vii) Seller's obligation to close under this Agreement shall be
subject to its receipt of the Purchase Price as required hereunder, and the
full performance by Seller of all covenants imposed on it hereunder, and
full satisfaction of all other conditions to closing set forth herein.
12. Brokerage. Seller and Buyer represent and warrant to each other
that they have not agreed to pay any brokerage or finder's fee or commissions
with respect to the sale of the Property, except as disclosed herein, and agree
to hold each other harmless from any claim by a third person to any brokerage
commission or finder's fee. Seller has agreed to pay V. L. Olsen & Company a
finder's fee of three percent (3%) of the principal portion of the Purchase
Price, and hereby directs and authorizes Buyer to deduct 3 % of each payment of
the Purchase Price from the payments to be made to Seller and pay such deducted
amount to or for the benefit of V. L. Olsen & Company.
13. Termination of Option. If this Option has not been exercised on or
before the expiration of the Option Period, the Option shall expire. In such
event, or if Buyer has exercised the Option but chooses to terminate under the
provisions of paragraph 4 or otherwise fails to close, this Agreement shall
terminate in which event Seller, if not in default hereunder, shall retain the
Option purchase price previously received from Buyer as full consideration for
the granting of this Option. Further, since the ascertainment of damages from a
failure to close would be difficult
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and burdensome for the parties, the Seller shall retain the Option purchase
price as full and complete liquidated damages for failure to close if this
Option is exercised. Seller shall not be entitled to make any further claim
against Buyer.
14. General Provisions.
(i) Binding Agreement. This Agreement shall be binding upon and
shall inure to the benefit of the heirs, legal representatives, successors
and assigns, as applicable, of the respective parties hereto, and any
entities resulting from the reorganization, consolidation or merger of any
party hereto.
(ii) Headings. The headings used in this Agreement are inserted for
reference purposes only and shall not be deemed to limit or affect in any
way the meaning or interpretation of any of the terms or provisions of this
Agreement.
(iii) Time of the Essence. Time is of the essence of this Agreement.
Any deadline hereunder which falls on a weekend day or holiday shall
instead fall on the next following business day.
(iv) Severability. The provisions of this Agreement are severable,
and should any provision hereof be found to be void, voidable or
unenforceable, such void, voidable or unenforceable provision shall not
affect any other portion or provision of this Agreement.
(v) Waiver. Any waiver by any party hereto of any breach of any
kind or character whatsoever by any other party, whether such waiver be
direct or implied, shall not be construed as a continuing waiver or consent
to any subsequent breach of this Agreement on the part of the other party.
(vi) Modification. This Agreement may not be modified except by an
instrument in writing signed by the parties hereto.
(vii) Governing Law. This Agreement shall be interpreted, construed
and enforced according to the laws of the State of Colorado.
(viii) Attorney's Fees. In the event any action or proceeding is
brought by either party against the other under this Agreement, the
prevailing party shall be entitled to recover attorney's fees and costs in
such amount as the court may adjudge reasonable, whether incurred before,
during or after such proceeding is commenced and conducted.
(ix) Notice. Any notice, consent, request, objection or communication
to be given by either party to this Agreement shall be in writing and shall
be either delivered personally, by certified mail or by Airborne, Federal
Express or other commercial overnight delivery service addressed as
follows:
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If to Buyer, to: Pangolin Corporation
Suite 218
Deer Valley Plaza
1351 Deer Valley Road South
Park City, Utah 84060
With a copy to: Steven W. Dougherty, Esq.
Anderson & Karrenberg
700 Bank One Tower
50 West Broadway
Salt Lake City, Utah 84101-2006
If to Seller, to: U.S. Energy Corp./Crested Corp.
877 N. 8th West
Riverton, Wyoming 82501
(x) Recording. This Agreement shall not be recorded in the county
land records. However, the Buyer may record notice of this Agreement in
such records.
(xi) Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be deemed
an original, but all of which shall together constitute one and the same
instrument.
15. Assignment. Buyer may, at its option and with written notice to
Seller, assign its rights hereunder to any person or entity who shall assume all
obligations hereunder. Upon such assignment, Buyer shall no longer be obligated
hereunder, whereupon all references herein to Buyer shall be deemed to refer to
said assignee only. Seller shall thereafter attorn to such assignee as buyer
under this Agreement.
16. No Partnership or Agency. Seller and Buyer acknowledge that, by
virtue of this Agreement and the transactions contemplated hereby, Seller and
Buyer are not the agents or partners of each other, and that the transactions
contemplated hereby do not constitute any joint venture or partnership between
Seller and Buyer.
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IN WITNESS WHEREOF, Buyer and Seller have executed this Option Agreement on
the date first above written.
BUYER:
Pangolin Corporation
By ___s/Kitty Bennion__________
Its __Vice President___________
SELLER:
U.S. Energy Corp./Crested Corp.
By ___s/Michael E. Sweeney_____
Its __Vice President___________
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EXHIBIT "A"
MOUNTAIN MEADOWS BUSINESS PARK
(PARCEL A)
The East one half of the Northwest one quarter (E1/2 NW1/4), Section 36,
Township 50 North, Range 1 West, of the New Mexico Principal Meridian, Gunnison
County, Colorado, shown on the attached Zoning and Land Use Plat--Mountain
Meadows Business Park as the commercial, industrial, business and
office/medical/multi-family tracts containing in total 57.68 acres, more or
less, together with that area embraced within the proposed right-of-way for
Colorado Street and the undedicated portion of Spencer Avenue, which alignments
are also shown ont he attached plat.
EXCEPTING THEREFROM:
1. That portion of the subject property conveyed to the County of Gunnison in
right of way deed recorded May 29, 1948 in Book 278 at Page 196 more
particularly described as follows:
Beginning at a point on the south boundary of the NW1/4 of said Section 36,
from which point the east quarter corner of said Section 36 bears North 89
degrees 58' East a distance of 3961.7 feet, more or less; thence South 89
degrees 56' West a distance of 0.8 feet to the Southwest corner E1/2 NW1/4
of said Section 36; thence North 0 degrees 10' West a distance of 2646.0
feet along the west boundary of said W1/2 NW1/4; thence south 89 degrees
46' East along the north boundary of the NW1/4 of Section 36 a distance of
5.2 feet; thence south 0 degrees 04' East a distance of 2646.0 feet, more
or less to the point of beginning.
2. That portion of the subject property conveyed to the State Department of
Highways in deed recorded May 14, 1974 in Book 469 at Page 190 more
particularly described as follows:
Beginning at a point on the south line of the SE1/4 NW1/4 of Section 36,
from which the W1/4 corner of Section 36 bears S 89 degrees 53'30" West a
distance of 1,322.1 feet; thence North 0 degrees 04' West a distance of
309.2 feet; thence North 1 degrees 22' East a distance of 200.1 feet;
thence North 0 degrees 04' West a distance of 800.4 feet; thence North 0
degrees 54' West a distance of 687.6 feet to the east right of way line of
SH 135 (May 1973); thence South 0 degrees 04' East along said right of way
line, a distance of 1,997.2 feet to the south line of the SE1/4 NW1/4 of
Section 36; thence North 89 degrees 59'30" East along said line, a distance
of 5.0 feet, more or less to the point of beginning.
3. That portion of the subject property conveyed to NDC Colorado, a Nebraska
General Partnership, in the warranty deed recorded August 27, 1985 in Book
621 at Page 19 more particularly described as follows:
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Commencing at the center of said Section 36, thence N89 degrees 38'33" W
1315.71 feet along the south line of the E1/2 of the NW1/4 of said Section
36 to a point on the east line of a parcel of land conveyed to the State
Department of Highways in a deed recorded May 14, 1974 in Book 469 at Page
190 in the records of the Clerk and Recorder of Gunnison County, Colorado,
said point also being the southwest corner of the Meadows Subdivision--
Phase I and the POINT OF BEGINNING; thence along the east line of said
tract of land the following three (3) courses:
1. Thence N00 degrees 16'01"E 309.20 feet;
2. Thence N01 degrees 42'01"E 200.10 feet;
3. Thence N00 degrees 16'01"E 687.18 feet to a point of curve; thence
78.62 feet along the arc of a curve to the right having a Delta of 90
degrees 05'26" and a radius of 50.00 feet to a point of tangency;
thence S89 degrees 38'33"E 436.22 feet along the north boundary of the
tract to the northeast corner of the tract;
Thence S00 degrees 12'24"W 446.55 feet;
Thence S89 degrees 38'33"E 35.00 feet;
Thence S00 degrees 12'24"W 390.00 feet;
Thence N89 degrees 38'33"W 163.00 feet;
Thence S00 degrees 12'24"W 410.00 feet to the southeast corner of the
tract, said tract corner being on the south line of the E1/2 NW1/4 of
said Section 36; thence N89 degrees 38'33"W 364.62 feet to the POINT
OF BEGINNING, containing 13.08 acres.
4. That portion of the subject property conveyed to the County of
Gunnison in the deed recorded January 8, 1985 in Book 613 at Page 868
more particularly described as follows:
A tract of land within the City of Gunnison, State of Colorado and
also within the SE1/4 NW1/4 of Section 36, Township 50 North, Range 1
West, New Mexico Principal Meridian, more particularly described as
follows:
Beginning at a Point which is the intersection of the eastwest center
line of said Section 36 and the westerly boundary of Block 51 of the
FIRST ADDITION TO GUNNISON, thence the following courses around the
herein described tract:
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1. NORTH 410.00 feet;
2. Easterly on a line parallel to the east-west center line of said
Section 36 a distance of 424.98 feet;
3. SOUTH 410.00 feet to the said east-west center line of Section
36;
4. Westerly along said east-west center line 424.98 feet to the
Point of Beginning.
This tract contains 4.00 acres more or less. Bearings used herein are
relative to the center line of Iowa street as defined by city of
Gunnison monuments on Main Street assumed to run NORTH.
5. That portion of the subject property conveyed to the City of Gunnison,
a Colorado municipal corporation in the warranty deed and grant of
easement recorded September 11, 1985 in Book 621 at Page 477 more
particularly described as follows:
A part of E1/2, NW1/4, Sec. 36, T50N, R1W, N.M.P.M., located in the
City of Gunnison, County of Gunnison, State of Colorado, more
particularly described as follows:
Commencing at the Center of said Section 36; thence N89 degrees
28'27"W 823.10 feet along the north line of said NW1/4 to the POINT OF
BEGINNING; thence S00 degrees 12'24"W 403.89 feet parallel with the
east line of said NW1/4; thence N89 degrees 28'27"W 495.26 feet
parallel with the north line of said NW1/4 to a point on the east line
of a parcel of land conveyed to the County of Gunnison in right of way
deed recorded May 29, 1948, in Book 278 at Page 196; thence N00
degrees 16'01"E 403.89 feet along said east line to a point on the
north line of said NW1/4; thence S89 degrees 28'27"E 494.83 feet along
the north line of said NW1/4; to the POINT OF BEGINNING, containing
4.59 acres, hereby dedicates the above described parcel of land to the
City of Gunnison to satisfy the public land dedication requirement for
the Meadows Subdivision--Phase I. The portion of this parcel in excess
of the amount required to satisfy the land dedication requirement of
the Meadows Subdivision--Phase I shall be a credit against any land
dedication for public purposes required by the City of Gunnison for
future subdivisions within the 75.96 acres.
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