EXHIBIT 10.1
ASSIGNMENT OF OVERRIDING ROYALTY INTEREST
STATE OF WYOMING )
KNOW ALL PERSONS BY THESE PRESENTS:
COUNTY OF _____________ )
That Infinity Oil & Gas of Wyoming, Inc., whose address is 950 17th Street,
Suite 800, Denver, CO 80202 ("Assignor") for and in consideration of the sum
of ONE HUNDRED AND NO/100 DOLLARS ($l00.00), cash in hand paid to Assignor by
Drawbridge Special Opportunities Fund LP, whose address is 1251 Avenue of the
Americas, Suite 1600, New York, NY 10020 ("Assignee"), the receipt of which is
hereby acknowledged, does hereby TRANSFER, GRANT, ASSIGN and CONVEY unto
Assignee a 2% of 8/8ths overriding royalty interest in, to and under the Oil
and Gas Leases described on Exhibit A attached hereto (the "Leases") as to all
lands and depths described in such leases and the hydrocarbons in and under
and that may be produced and saved from the Lease (the "Overriding Royalty
Interest") subject to the terms and provisions set forth herein.
The Overriding Royalty Interest is subject to all applicable laws, rules,
regulations and orders of governmental authorities.
The Overriding Royalty Interest conveyed hereby is a non-operating,
non-expensebearing overriding royalty interest in the nature of an interest
in real property, free of all cost, risk and expense of production and
operations and delivery including all drilling, developing, and operating
costs and expenses, provided that the valuation of the oil, gas and associated
hydrocarbons attributable to the Overriding Royalty Interest shall be made in
the same manner as the valuation of oil and gas attributable to the royalty
reserved to the federal government under a federal oil and gas lease. In
addition, Assignee shall bear and pay all production and ad valorem taxes that
may now or hereafter be applicable to the Overriding Royalty Interest or the
production attributable thereto. In no event shall Assignee ever be liable or
responsible in any way for the payment of any costs, expenses, or liabilities
attributable to the Leases (or any part thereof) or incurred in connection
with the production, saving or delivery of hydrocarbons produced related
thereto. Assignor agrees to tender payment of the Overriding Royalty Interest
to Assignee at the same time and in the same manner as royalty payments are
made to the lessor under the Lease. This Conveyance is an absolute conveyance
of an interest in real property.
The overriding royalty interest herein transferred shall not, in any
event, be paid or accrued upon any oil, gas, casinghead gas or other
hydrocarbon substances used for operating, development or production purposes
upon the lands covered by the Leases or unavoidably lost; and no overriding
royalty shall be paid upon gas used in re pressuring or recycling operations
or pressure maintenance operations benefiting the lands covered by the Leases.
If Assignor owns less than 100% of the leasehold interest under the
Lease, or in the event the Lease covers less than the full fee mineral estate,
then the Overriding Royalty Interest shall be reduced proportionately with
respect to Assignor's interest in such Lease or the partial fee mineral
interest covered by the Lease.
Subject to prior calls on production or other such commitments as of the
date hereof, Assignee may elect to receive the Overriding Royalty Interest in
kind if it so elects by giving Assignor at least 30 days advanced written
notice. If Assignee elects to take its gas in kind then as between Assignor
and Assignee, Assignor shall be in exclusive control and possession of the
hydrocarbons produced related to the Overriding Royalty Interest delivered
hereunder and responsible for any loss, damage or injury caused thereby until
the same shall have been delivered to Assignee at the agreed delivery point
for such hydrocarbons, after which delivery Assignee shall be deemed to be in
exclusive control and possession thereof and responsible for any loss, injury,
or damage caused thereby. To the extent it has the right to do so, Assignor
hereby grants to Assignee easements and rights-of-way over and across the
Leases and lands pooled, communitized and/or unitized therewith, together with
rights of ingress and egress, for the purposes of receiving, accepting, and
taking the Overriding Royalty Interest, and to the extent necessary, the
construction, maintenance, operation, and repair, of pipelines, metering
stations, and any and all other facilities and appurtenances necessary or
useful related to the receipt, transportation, measurement, treatment, and
marketing of the Overriding Royalty Interest.
The Overriding Royalty Interest shall be free of (and without deduction
therefrom of) any and all royalties and other burdens on production and shall
bear no part of the same. Assignor's retained leasehold shall be burdened
with, and Assignor shall be responsible for the timely payment of all such
royalties, overriding royalties, and other burdens on production, and Assignor
shall defend, indemnify, and hold Assignee harmless from and against any loss
or claim with respect to any such royalties, overriding royalties, or other
burdens on production or any claim by the owners or holders of such royalties,
overriding royalties, or other burdens on production.
Assignor warrants and represents that the Leases are valid and subsisting
oil and gas leases covering the lands or waterbottoms described therein;
Assignor's ownership of the subject interests as set forth on Exhibit A
entitles Assignor to a share of all hydrocarbons produced from or attributable
to each Lease, and of the proceeds of such production, after giving effect to
and/or deducting all applicable royalties, overriding royalties, and other
burdens or payments out of production (except the Overriding Royalty
Interest), which is not less than the Net Revenue Interest applicable to the
relevant Lease, and obligates Assignor to pay a share of all costs of
operation and development of each Lease which is not greater than the Gross
Working Interest applicable to the relevant Lease, unless there is a
corresponding and proportionate increase in the Net Revenue Interest as set
forth in Exhibit A associated therewith. Assignor hereby binds Assignor and
Assignor's legal representatives, successors, and assigns to warrant and
forever defend all and singular title to the Overriding Royalty Interest and
the Overriding Royalty Hydrocarbons unto Assignee, its successors and assigns,
against every person whomsoever lawfully claiming or to claim the same or any
part thereof.
Assignor shall not assign, sell, convey or otherwise transfer Assignor's
interests in the Leases or any part thereof unless such sale, transfer, or
assignment is made and accepted expressly subject and subordinate to this
Conveyance and the Overriding Royalty Interest.
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The Overriding Royalty Interest shall be applicable to any renewal,
extension, or new lease taken or acquired by Assignor, or its successors or
assigns, within one year after the date of termination of the Leases covering
the same property, horizons and minerals.
IN WITNESS WHEREOF, this Assignment of Overriding Royalty Interest
is executed this 2nd day of July, 2003.
ASSIGNOR:
INFINITY OIL & GAS OF WYOMING, INC.
By:
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Name: Stanton E. Ross
Title: President
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State of Colorado )
)
County of Denver )
COLORADO
The foregoing instrument was acknowledged before me by Stanton E. Ross as
President of Infinity Oil & Gas of Wyoming, Inc., this 2nd day of July, 2003.
Witness my hand and official seal:
Notary Public
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Terri D. Thomas
My commission expires: November 5, 2006
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