EX-10 8 aforms1may2804exh10-3.htm SUMMIT AGREEMENT OIL AND GAS PROPERTY ACQUISITION, EXPLORATION AND DEVELOPMENT AGREEMENT THIS AGREEMENT is by and between GulfWest Energy, Inc., a Texas corporation ("GulfWest"), whose address is 480 North Sam Houston...
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aforms1may2804exh10-3.htm
SUMMIT AGREEMENT
OIL AND GAS PROPERTY ACQUISITION,
EXPLORATION AND DEVELOPMENT AGREEMENT
THIS AGREEMENT is by and between GulfWest Energy, Inc., a Texas corporation
("GulfWest"), whose address is 000 Xxxxx Xxx Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000, and Summit Investment Group Texas L.L.C., a Texas limited
liability company ("Summit"), whose address is 000 Xxxxx Xxx Xxxxxxx Xxxxxxx
Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000.
W I T N E S S E T H:
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WHEREAS, GulfWest intends to acquire oil and gas properties which it
believes to be potentially productive of oil or gas within separate prospects
which it has identified in the Iola Field in Xxxxxx County, Texas, the Village
Xxxxx Field in Xxxxxx County, Texas, and the Cold Springs Field in San Jacinto
County, Texas, and to conduct oil and gas exploration, development and
production operations on such prospects;
WHEREAS, Summit desires to participate with GulfWest in the aforesaid
endeavor to the extent set forth hereinbelow;
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth hereinafter, GulfWest and Summit agree as follows:
ARTICLE I.
Definitions
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As used hereinafter in this Agreement, the following terms shall have the
following meanings:
1.1 "Advanced Funds" means $1,200,000 to be contributed by Summit pursuant
to this Agreement.
1.2 "Cold Springs Field Prospect" is considered for purposes of this
Agreement to part of the Xxxxxx (East Texas) Prospect, and is more fully
described on Exhibit "B" attached hereto and made a part hereof
1.3 "Iola Field Prospects" means the eight separate prospects identified,
respectively, as the Xxxxxxx Prospect, the Xxxx Prospect, the Xxxxxxx Prospect,
the Xxxxxx Prospect, the Xxxxxx-XxXxxxxxx Prospect, the Xxxxxxxx Prospect, the
Xxxxxxx Prospect and the Best Prospect on Exhibit "A" attached hereto and made a
part hereof.
1.4 "Joint Operating Agreement" means the Joint Operating Agreement set
forth as Exhibit "G" attached hereto and made a Part hereof.
1.5 "Lease Bank Program" means a program pursuant to which a third party
provides or makes available to GulfWest funds for its use in the acquisition of
oil and gas leases and other mineral and royalty interests in order that it may
conduct specified oil and gas exploration and production activities.
1.6 "Sourcing Fee" means $100,000 to be paid to Xxxx Xxxxxxxx pursuant to
this Agreement.
1.7 "Xxxxxx-XxXxxxxxx Prospect" is considered for purposes of this
Agreement to be part of the Xxxx Field Prospects, and is more fully described in
Exhibit "A" attached hereto and made a part hereof.
1.8 "Net Profits Interest" shall mean twenty five percent (25%) of the
monthly net sale proceeds of all oil and gas production allocable to GulfWest's
interest in certain oil and gas properties, as more fully defined in Exhibit "D"
attached hereto Aand made a part hereof.
1.9 "Oil or Gas" means oil, gas, casinghead gas, gas condensate, sulphur
and all other liquid or gaseous hydrocarbons and other marketable substances
produced in association therewith.
1.10 "Oil and Gas Properties" means any leasehold interest in Oil or Gas,
and any farm-out and farm-in agreements, licenses, options and other contractual
rights relating to the acquisition of leasehold interests in Oil and Gas and/or
the development, exploration or production of Oil or Gas pursuant to such
leasehold interests .
1.11 "Subject Area" means the Iola Field Prospects and the Xxxxxx (East
Texas) Field Prospects.
1.12 "Summit Expense Amount" means $100,000 to be paid to Summit pursuant
to this Agreement.
1.13 "Summit ORI" means, with respect to the properties covered by a
pertinent assignment document under this Agreement, an overriding royalty in the
amount of two and one-half percent (21/2%) and upon the terms of the overriding
royalty interest set forth in Exhibit "C" attached hereto and made a part
hereof.
1.14 "Xxxxxx (East Texas) Prospects" means those two separate prospects
identified as the Village Xxxxx Prospect, and the Cold Springs Prospect, as
more fully described on Exhibit "B" attached hereto and made a part hereof.
All other defined terms used in this Agreement and not defined above shall
have the meanings ascribed thereto elsewhere in this Agreement.
ARTICLE II.
Designation of Prospects
------------------------
GulfWest and Summit hereby designate the fourteen (14) separate prospects
within the Subject Area as separate prospects for purposes of this Agreement.
The Prospect designations and descriptions are provided in Exhibits "A" and "B."
ARTICLE III.
Acquisition and Exploration Activities to be Conducted by GulfWest;
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Drilling of Obligation Xxxxx
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3.1 GulfWest agrees to use its best efforts, consistent with the terms of
this Agreement, to acquire Oil and Gas Properties that it believes to be
potentially productive of Oil or Gas within the Subject Area. The nature of such
Oil and Gas Properties, and the terms upon which such properties may be acquired
by GulfWest, shall be determined by GulfWest in its sole and absolute
discretion. GulfWest shall have exclusive control of the acquisition of Oil and
Gas Properties within the Subject Area and the administration and maintenance
thereof, and the drilling, completing, equipping and reworking, or plugging and
abandoning, of xxxxx within the Subject Area until such time as the Joint
Operating Agreement becomes effective as provided in Section 8.2 below, at which
time the Joint Operating Agreement shall control and govern the activities
mentioned in this Article III to the extent there is any conflict between the
Joint Operating Agreement and this Agreement.
3.2 GulfWest agrees to drill four (4) xxxxx located on Oil and Gas
Properties acquired under this Agreement (as opposed to rework operations on
xxxxx or well bores in existence at the time of the acquisition by GulfWest of
the Oil and Gas Properties on which such existing xxxxx or well bores are
located). GulfWest agrees to spud such four (4) xxxxx prior to the expiration of
two (2) years from the Effective Date of this Agreement (such four (4) xxxxx are
herein collectively referred to as the "Obligation Xxxxx", and individually
referred to in this Agreement as an "Obligation Well"). GulfWest further agrees
to conduct well workover operations on certain existing xxxxx acquired by
GulfWest which are located on lands described in Exhibits "A" and B", all such
well workover operations to be completed within nine (9) months of the Effective
Date of this Agreement.
3.3 Until such time as the Joint Operating Agreement becomes effective, as
provided in Section 8.2 below, GulfWest may drill other new xxxxx in addition to
the Obligation Xxxxx, and rework other xxxxx or well bores in existence at the
time of the acquisition by GulfWest of Oil and Gas Properties on which such
existing xxxxx or well bores are located, as GulfWest shall determine in its
sole and absolute discretion.
ARTICLE IV.
Sourcing Fee; Summit Expense Account
------------------------------------
4.1 The Sourcing Fee shall be paid to Xxxx Xxxxxxxx as compensation for his
services rendered and to be rendered for and on behalf of Summit in connection
with its entering into, and performance of, this Agreement. The Sourcing Fee
shall be paid by GulfWest from the Advanced Funds pursuant to Section 5.3
hereof, and shall be paid to Xxxx Xxxxxxxx within five business days of GulfWest
receiving verification that the full amount of the Advanced Funds have been
deposited in a mutually agreed Federal Deposit Insurance Corporation (FDIC)
member banking institution and that such funds are available for withdrawal as
provided by this Agreement.
4.2 The Summit Expense Amount shall be paid to Summit to cover costs and
expenses incurred by Summit in connection with its entering into, and
performance of, this Agreement, and any other costs and expenses incurred by
Summit in connection with this Agreement. The Summit Expense Amount shall be
paid from the Advanced Funds as provided in Section 5.3 below, and shall be paid
within five (5) business days of GulfWest's receipt of a monthly expense invoice
submitted by Summit
ARTICLE V.
Advanced Funds
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5.1 Promptly after execution of this Agreement, Summit shall establish one
or more accounts with one or more banks that are members of the FDIC and shall
deposit the Advanced Funds therein. In the event more than one account is
established, the Advanced Funds may be allocated between such accounts in such
proportions as determined by Summit in its sole and absolute discretion. No
other funds shall be commingled with the Advanced Funds in such account or
accounts. The account or accounts established hereunder shall be maintained at
all times until the earlier to occur of (i) two (2) years from the Effective
Date, or (ii) the point in time when Summit has recouped the Advanced Funds
pursuant to this Agreement.
5.2 All checks drawn on, or withdrawals made from, the account or accounts
referenced above shall require the signatures of both Summit and GulfWest. In
connection with payments to be made from such account or accounts, GulfWest will
furnish Summit sufficient information prior to making such payments for Summit
to determine that such payments should be made out of the Advanced Funds.
However, Summit's concurrence with GulfWest's withdrawal of funds from the
applicable accounts shall not be unreasonably withheld.
5.3 The following costs and expenses, and none other, shall be paid from
the Advanced Funds:
(a) The costs and expenses incurred by GulfWest in the acquisition and
maintenance of Oil and Gas Properties within the Subject Area, which shall
be deemed to include all lease bonuses and rentals, brokerage expenses,
title searches and opinions (as required), recording fees, seismic and
other geological expenses (including, when necessary or desirable, the
retaining of independent geologists or geophysicists) and any other
expenses incurred directly or indirectly attributable to the acquisition
and maintenance of Oil and Gas Properties within the Subject Area, other
than drilling or any other costs and expenses directly in connection with a
well (except as provided in (b) below).
(b) The costs and expenses incurred by GulfWest in reworking,
recompleting and operating xxxxx or well bores on Oil and Gas Properties
acquired by GulfWest pursuant to this Agreement, which xxxxx or well bores
were in existence at the time of such acquisition by GulfWest.
(c) The Sourcing Fee.
(d) The Summit Expense Amount.
5.4 If all of the Advanced Funds have not been paid from the account or
accounts referenced above at the expiration of two (2) years from the Effective
Date, then upon such expiration the remaining portion of the Advanced Funds in
such account or accounts shall be promptly paid to Summit.
5.5 Notwithstanding anything in this Agreement to the contrary, costs and
expenses incurred by GulfWest in connection with a well operations shall not be
paid from the Advanced Funds, except as provided in Section 5.3(b) above. Also,
no salaries for GulfWest employees nor other corporate overhead expenses of
GulfWest shall be paid from the Advanced Funds, and GulfWest shall individually
bear and pay all such salaries and expenses until such time as the Joint
Operating Agreement becomes effective, at which time the Joint Operating
Agreement shall govern such matters.
5.6 If GulfWest incurs costs and expenses in reworking, recompleting and
operating xxxxx or well bores referenced in Section 5.3(b) above after all of
the Advanced Funds have expended and prior to the effective date of the Joint
Operating Agreement, such costs and expenses shall be borne and paid by GulfWest
until the Joint Operating Agreement becomes effective.
ARTICLE VI.
Title to Oil and Gas Properties; Summit ORI; Summit Net Profits Interest
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6.1 Record title to Oil and Gas Properties acquired by GulfWest pursuant to
this Agreement within the Xxxx Field Prospects (except for the Xxxxxx-XxXxxxxxx
Prospect) and the Cold Springs Prospect [referenced herein as part of the Xxxxxx
(East Texas) Prospects], shall be taken in the name of Summit. At such time as
GulfWest pays Summit the $175,000 payment provided for in Section 7.1(b) below
with respect to an Obligation Well, Summit shall assign the applicable Oil and
Gas Properties held in its name and attributable to the production unit for such
well. The assignment from Summit to GulfWest shall be in the form of the
"Assignment of Oil and Gas Properties" attached as Exhibit "C" hereto and made a
part hereof, and shall reserve therein the Summit ORI as set forth in said
Exhibit "C"."
6.2 Record title to Oil and Gas Properties acquired by GulfWest pursuant to
this Agreement that are part of the Xxxxxx (East Texas) Prospects (except the
Cold Springs Prospect) or the Xxxxxx-XxXxxxxxx Prospect, shall be taken in the
name of GulfWest, and promptly after such acquisition, GulfWest shall assign a
Net Profits Interest in such Oil and Gas Properties to Summit (the "Summit Net
Profits Interest"). The assignment from GulfWest to Summit shall be in the form
of the "Assignment of Net Profits Interest" " attached hereto as Exhibit "D"
which is made a part hereof.
ARTICLE VII.
Recoupment of Advanced Funds ----------------------------
7.1 The Advanced Funds shall be recouped by Summit in the following manner:
(a) After Year One $500,000.00 shall be repaid out of an undivided 40%
of the Summit Net Profits Interest (the remaining undivided 60% of the
Summit Net Profits Interest shall be deemed to be revenue to Summit and
shall not be credited against this $500,000.00 obligation).
(b) GulfWest shall pay $175,000 in cash to Summit on the date GulfWest
spuds each Obligation Well, or
(c) by virtue of a lump sum production payment by GulfWest.
7.2 If, at the expiration of two (2) years from the Effective Date, Summit
has not completely recouped the Advanced Funds from the payments referred to in
(a), (b) and (c) above, then Summit, at its sole election, may require that
GulfWest shall issue to it a quantity of GulfWest Class A Common Stock
equivalent to the quotient of the outstanding unrepaid Advanced Funds
(numerator) and $2.00 per share (denominator). Upon issuance of such stock to
Summit, Summit shall assign to GulfWest all remaining Oil and Gas Properties
within the Subject Area held of the record in the name of Summit. The assignment
from Summit to GulfWest shall be in the form of the "Assignment of Oil and Gas
Properties" attached as Exhibit "C" hereto and made a part hereof, and shall
reserve therein the Summit ORI to Summit as set forth in said Exhibit "C."
7.3 The Summit ORI shall be deemed to be revenue to Summit, and shall not
be credited against repayment of the Advanced Funds.
7.4 At such time as the Advanced Funds have been completely recouped by
Summit in the manner provided in this Article VII, the Summit Net Profits
Interests shall thereupon terminate and Summit shall release same by an
appropriate instrument in recordable form and deliver such release instrument to
GulfWest, and GulfWest shall simultaneously execute and deliver to Summit an
"Assignment of Oil and Gas Properties" in the form attached as Exhibit "E"
hereto and made a part hereof, assigning to Summit an ----------- undivided 8.5%
working interest in the Oil and Gas Properties subject to the Summit Net Profits
Interest.
ARTICLE VIII.
Well Costs and Expenses
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8.1 All costs and expenses in connection with the drilling, completing,
equipping and operating, or plugging and abandonment, of new xxxxx on Oil and
Gas Properties acquired under this Agreement within the Subject Area, including,
without limitation, the Obligation Xxxxx, shall be borne and paid solely by
GulfWest until such time as Summit has recouped the Advanced Funds in accordance
with the provisions of Article VII above. At such time as Summit has recouped
the Advanced Funds, all costs and expenses in connection with the Oil and Gas
Properties acquired within the Subject Area under this Agreement shall
thereafter be borne by the parties hereto as follows: (a) as to such Oil and Gas
Properties located within the Iola Field Prospect (except for the
Xxxxxx-XxXxxxxxx Prospect) and the Xxxxxx (East Texas) Cold Springs Prospect,
all such costs and expenses shall be borne and paid solely by GulfWest, with
Summit being entitled to the Summit ORI in such Oil and Gas Properties, and (b)
as to such Oil and Gas Properties located within the Xxxxxx (East Texas) Village
Xxxxx Prospect or the Xxxxxx-XxXxxxxxx Prospect, all such costs and expenses
shall be borne and paid by such parties in proportion to their undivided working
interests therein (i.e., 91.5% held by GulfWest, and 8.5% held by Summit. 8.2 At
such time as Summit has recouped the Advanced Funds, the Joint Operating
Agreement shall automatically become effective between the parties hereto with
respect to all of the Oil and Gas Properties acquired hereunder in the Xxxxxx
(East Texas) Village Xxxxx Prospect and the Xxxxxx-XxXxxxxxx Prospect, with
GulfWest designated as the operator, without further action by the parties
hereto.
ARTICLE IX.
Insurance; Records; Access; Duties; Standards
---------------------------------------------
9.1 In connection with its performance of this Agreement, GulfWest will
procure and maintain insurance with responsible companies in such amounts and
covering (i) all operations on any well drilled or reworked hereunder, and (ii)
such other risks as are appropriate in its judgment, provided, however, that
such insurance coverage shall at least meet the coverage requirements set forth
in the Joint Operating Agreement. Such insurance coverage shall name the parties
hereto as coinsureds, and GulfWest shall furnish Summit with a certificate
evidencing insurance coverage meeting at least the above minimum requirements.
9.2 In acquiring Oil and Gas Properties under this Agreement, GulfWest
shall cause to be done such title checks or title examinations by landmen or
attorneys acceptable to GulfWest, and such title curative work as GulfWest deems
necessary. No well shall be drilled or reworked until title to the drillsite
shall have been examined and approved by attorneys acceptable to GulfWest, and
any unsatisfied title requirements waived by GulfWest. GulfWest shall furnish
Summit with copies of all title opinions and title curative materials.
9.3 GulfWest agrees to devote the necessary time, and at all times have a
staff adequate in number, experience and competence, to perform its duties and
obligations under this Agreement.
9.4 GulfWest shall maintain complete and accurate records of all Oil and
Gas Properties acquired under this Agreement, of the acquisition and disposition
of all equipment and other personal property under this Agreement, and of all
correspondence, statements, bills and other written materials relating to
operations conducted on xxxxx under this Agreement. Such records, together with
receipts, vouchers and other supporting evidence thereof in GulfWest's
possession and control, will be available for inspection and audit by Summit or
its duly authorized representatives during regular business hours at GulfWest's
offices. GulfWest will also make available for such inspection insurance
policies (or copies or certificates thereof) in effect, and copies of drilling
logs, drillstem tests, core analyses and electrical surveys, and reports of
geologists or other consultants furnished to GulfWest in the course of
conducting its duties and obligations under this Agreement.
9.5 GulfWest shall maintain adequate records and accounts of all operations
and expenditures under this Agreement on a cash basis and in accordance with
accounting practices followed for Federal income tax reporting purposes. Such
records will be available for inspection and audit by Summit or its duly
authorized representatives during regular business hours at GulfWest's offices.
9.6 Summit and its duly authorized representatives shall have access at all
reasonable times, at their sole expense and risk, to any well drilled or
reworked under this Agreement, and they shall have the right to inspect all
materials on hand and to observe any well operations conducted under this
Agreement. GulfWest will provide Summit with notice of all logging, coring,
testing and other evaluation work performed in sufficient time for Summit to
have a representative present to observe such operations.
9.7 GulfWest shall exercise all reasonable care to pay currently as they
accrue all costs and expenses it incurs under this Agreement, and to prevent
liens and encumbrances in connection therewith from attaching to Oil and Gas
Properties acquired under this Agreement.
9.8 GulfWest shall perform all of its duties and obligations under this
Agreement in good faith and in a good and workmanlike manner
ARTICLE X.
Area of Mutual Interest
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10.1 An area of mutual interest ("AMI") is hereby established as to the
lands identified on the plat attached as Exhibit "F" hereto and made a part
hereof. In the event a party hereto acquires Oil and Gas Properties within such
area of mutual interest --- during the time this area of mutual interest
provision is in force, the party acquiring such interest shall give written
notice of such acquisition to the other party hereto, identifying the interest
acquired and specifying the cost and terms of such acquisition. The party
receiving such notice shall have the right, by giving written notice to the
acquiring party within thirty (30) calendar days after receipt of notice of its
election as to whether or not it will purchase its undivided interest in the
acquired interest (as such undivided interest is set forth below). If the party
receiving the first notice elects to participate in such acquisition, such party
shall pay its proportionate share of the acquisition costs of the acquired
interest (as such proportionate part is set forth in Section 10.2 below). If
both parties hereto participate in an acquisition, the acquired interest and the
entire AMI shall automatically become subject to a joint operating agreement in
the form attached as Exhibit "G" hereto and made a part hereof. Such joint
operating agreement shall be a separate and distinct joint operating agreement
from the Joint Operating Agreement covering any portion of the AMI. Failure of
the party receiving the first notice to notify the party acquiring an interest
within said time period will be deemed an election not to participate in such
acquisition. If the party receiving the first notice elects, or is deemed to
have elected, not to participate in the acquisition of such interest, then the
party who acquired such interest shall have no further obligation to such party
with respect to such interest and such interest shall thereafter not be subject
to this Agreement. If the party receiving the first notice participates in the
acquisition of an acquired interest, such party, upon payment of its
proportionate share of the acquisition costs, shall be given an assignment in
recordable form of its undivided interest therein.
10.2 With respect to Oil and Gas Properties acquired by a party hereto
within the AMI , the other party hereto may elect to acquire its undivided
interest in such acquired interest in accordance with the provisions of Section
10.1 above and, in such case, such parties will be obligated to pay their
proportionate share of the acquisition costs in return for their respective
undivided interests therein, such proportionate parts and undivided interests
being as follows: GulfWest 90%; Summit 10% of the ownership interest actually
acquired by the acquiring party.
10.3 Any proceeds received by Summit with respect to any interest which it
acquires within the AMI pursuant to this Article X shall be deemed to be revenue
to Summit, and shall not be credited against repayment of the Advanced Funds.
10.4 This Article X shall continue in full force and effect until June 1,
2008; when the AMI shall terminate and no longer be in force in effect; unless
Summit and GulfWest mutually agree in writing to an extension of the term of the
AMI provisions of this Agreement.
10.5 Notwithstanding anything herein to the contrary, the AMI established
hereunder shall not be applicable to any lands, leaseholds, mineral or royalty
interests covered by or included within production units established for
existing xxxxx owned, wholly or in part, by GulfWest.
ARTICLE XI
Right of Summit to Participate In
Additional Lease Bank Programs with GulfWest
Commencing on the Effective Date of this Agreement and continuing through
December 1, 2008, Summit shall have a Preferential Right of First Refusal with
respect to its sole participation in any Lease Bank Program in which GulfWest is
a participant. In the event GulfWest desires to participate in a Lease Bank
Program during the period this provision is in effect, it shall notify Summit of
such intent and Summit shall have fifteen (15) business days, from the date of
receipt of notice from GulfWest, to notify GulfWest of its election to
participate in the specified Lease Bank Program. Failure of Summit to notify
GulfWest of its election to participate within such period shall be deemed an
affirmative election by Summit not to participate in the specified Lease Bank
Program. In the event Summit elects to participate, then the parties shall then
enter into a written agreement in substantially the same form as this Agreement
setting forth the terms of the new Lease Bank Program.
ARTICLE XII
Third Party Agreements
----------------------
12.1 Notwithstanding anything to the contrary in this Agreement, GulfWest
shall have the right to enter into agreements from time to time with other
persons and entities ("Other Persons"), pursuant to which agreements the Other
Persons shall acquire, along with GulfWest, Oil and Gas Properties within the
Subject Area by agreeing to pay their portion of the acquisition costs for such
Oil and Gas Properties. In any such case, the pertinent interest of Summit in
such Oil and Gas Properties, as determined by the provisions of this Agreement,
shall be carved from the interest of GulfWest in such Oil and Gas Properties.
12.2 In addition to the agreements referred to Section 12.1 above, GulfWest
shall have the right to enter into farm-out agreements or similar agreements
with a third party or parties ("Farmee"), pursuant to which GulfWest agrees to
transfer to the Farmee all or any undivided or segregated part of Oil and Gas
Properties acquired under this Agreement, all or substantially all of the
consideration for which is the Farmee's agreement to drill (as opposed to
rework) a well or xxxxx on such Oil and Gas Properties. Any such agreement shall
provide that the Farmee shall bear and pay not less than the proportionate part
of all costs and expenses of the well or xxxxx attributable to the interest to
be transferred to the Farmee, and the interest in the Oil and Gas Properties
transferred to or earned by the Farmee shall reduce the prospective interest of
the parties hereto proportionately. Any promotion received by GulfWest under
such agreement, and any overriding royalty interest, production payment,
leasehold or working interest, or any other interest which is reserved by or
acquired by GulfWest under such agreement shall be shared by the parties hereto
in accordance with their respective proportionate interests under this
Agreement.
12.3 In addition to the agreements referred to in Sections 12.1 and 12.2
above, GulfWest shall have the right to enter into dry hole, bottom hole,
acreage contribution or other similar agreements providing for the payment of
cash or the contribution of acreage in connection with the drilling or reworking
of a well within the Subject Area, and any such cash or acreage contribution
shall be owned and shared by the parties hereto in the following proportions:
90% GulfWest and 10% Summit.
ARTICLE XIII
Indemnities
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13.1 Except to the extent of the gross negligence or willful misconduct of
Summit, its employees, agents, representatives, successors or assigns, GulfWest
shall protect, indemnify and defend and save Summit, its employees, agents,
representatives, successors or assigns, harmless from and against all claims,
actions, liabilities, losses, demands, causes of action, judgments, and costs
and expenses of any kind and character (including, without limitation, courts
costs and reasonable attorneys' fees) arising in favor of or asserted by third
parties on account of personal injury, death or damage to property of such third
parties, which injury, death or damage is the result of a negligent act or
omission or willful misconduct of GulfWest, its employees, agents,
representatives, successors or assigns.
13.2 Except to the extent of the gross negligence or willful misconduct of
GulfWest, its employees, agents, representatives, successors or assigns, Summit
shall protect, indemnify and defend and save GulfWest, its employees, agents,
representatives, successor or assigns, harmless from and against all claims,
actions, liabilities, losses, demands, causes of action, judgments, and costs
and expenses of any kind and character (including, without limitation, courts
costs and reasonable attorneys' fees) arising in favor of or asserted by third
parties on account of personal injury, death or damage to property of such third
parties, which injury, death or damage is the result of a negligent act or
omission or willful misconduct of Summit, its employees, agents,
representatives, successors or assigns.
ARTICLE XIV
Dispute Resolution
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14.1 Summit and GulfWest shall attempt in good faith to resolve any
controversy or claim arising out of or relating to this Agreement. If any such
controversy or claim should arise, the parties shall meet and attempt to resolve
the matter in good faith negotiation. Such negotiation shall be held between the
officers of both parties who have authority to settle the dispute. If such
controversy or claim is not resolved by negotiation, the dispute shall be
settled by arbitration in Houston, Texas. Such arbitration proceeding shall
utilize a single arbitrator in accordance with the Commercial Rules of the
American Arbitration Association. The decision of the arbitrator shall be final,
binding and enforceable in any court of competent jurisdiction and Summit and
GulfWest agree there shall be no appeal from the arbitrator's decision. The
parties agree the Federal Arbitration Act, 9 U.S.C.ss.1 et seq. shall control
and apply to all arbitrations conducted hereunder, notwithstanding any state law
provisions to the contrary.
ARTICLE XV
Relationship of Parties
-----------------------
15.1 The liabilities, covenants and undertakings of the parties hereto are
several, not joint or collective. Under no circumstances shall any party be
considered a fiduciary to the other party, nor shall there otherwise be a
confidential, special or other relationship of trust created between the parties
hereto under or by virtue of this Agreement.
15.2 It is not the intention of the parties hereto to create, nor shall
this Agreement be deemed as creating, a joint venture or a mining, tax or other
partnership or association or to otherwise render the parties liable as
co-venturers or partners. However, if for federal income tax purposes, this
Agreement and the operations hereunder are regarded as a partnership, each party
hereto elects to be excluded from the application of all of the provisions of
Subchapter "K," Chapter 1, Subtitle "A." of the Internal Revenue Code of 1986,
as amended (hereinafter referred to as the "Code"), as permitted and authorized
by Section 761 of the Code and the regulations promulgated thereunder. Should
there be any requirement that each party hereto give further evidence of this
election, each such party shall execute such documents and furnish such other
evidence as may be required by the federal Internal Revenue Service or as may be
necessary to evidence this election. Neither party hereto shall give any notice
or take any other action inconsistent with the election made hereby. In making
the foregoing election, each party states that the income derived by such party
from operations hereunder can be adequately determined without the computation
of partnership taxable income.
ARTICLE XVI
General Provisions
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16.1 All notices hereunder shall be in writing, dated and signed by the
party giving the same. Each notice shall be either (i) delivered in person to
the address of the party for whom it is intended at the address of such party as
shown below, or (ii) delivered to the United States Postal Service in a secure
and sealed envelope or other suitable wrapper addressed to the party for whom it
is intended at the address of such party as provided below, with sufficient
postage affixed, certified or registered mail, return receipt requested, or
(iii) sent by telecopy with a confirmation copy sent by expedited delivery
service. If such notice is mailed, the effective date of such notice shall be
the date of delivery or attempted delivery if the same is not delivered and is
returned to the party attempting to give notice. The address at which any party
hereto is to receive notice may be changed from time to time by such party by
giving written notice of the new address to the other party hereto.
All notices to Summit shall be delivered to:
Summit Investment Group L.L.C.
000 Xxxxx Xxx Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxxxx
All notices to GulfWest shall be delivered to:
GulfWest Energy, Inc.
000 Xxxxx Xxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
16.2 This Agreement may not be amended nor any rights hereunder waived
except by an instrument in writing signed by the party to be charged with such
amendment or waiver and delivered by such party to the party claiming the
benefit of such amendment or waiver.
16.3 The headings of the Articles of this Agreement are for guidance and
convenience of reference only and shall not limit or otherwise affect any of the
terms or provision of this Agreement.
16.4 This Agreement may be executed by the parties hereto in any number of
counterparts, each of which shall be deemed an original instrument, but all of
which together shall constitute but one and the same instrument.
16.5 This Agreement shall be construed in accordance with, and governed by,
the laws of the State of Texas.
16.6 This Agreement (including the Exhibits hereto) constitutes the entire
understanding among the parties with respect to the subject matter hereof,
superseding all negotiations, prior discussions and prior agreements and
understandings relating to such subject matter.
16.7 Listing of Exhibits
Exhibit "A" - Description of the Xxxx Field Prospects
Exhibit "B" - Description of the Xxxxxx (East Texas) Prospects
Exhibit "C" - Assignment of Oil and Gas Properties from Summit to GulfWest
Exhibit "D" - Assignment of Net Profits Agreement
Exhibit "D-1" - Properties Subject to Net Profits Interests Agreement
Exhibit "D-2" - Release of Net Profits Interest Agreement
Exhibit "E" - Assignment of Oil and Gas Properties from GulfWest to Summit
Exhibit "F" - Area of Mutual Interest
Exhibit "G" - Joint Operating Agreement
16.8 If a court of competent jurisdiction determines that any clause or
provision of this Agreement is void, illegal or unenforceable, the other clauses
and provisions of this Agreement shall remain in full force and effect and the
clauses and provisions that are determined to be void, illegal or unenforceable
shall be limited so that they shall remain in effect to the extent permissible
by law.
16.9 This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns, provided,
however, neither party to this Agreement may assign its rights and obligations
hereunder, in whole or in part, to a third party without the prior written
consent of the non-assigning party. Nothing contained in this Agreement, or
implied herefrom, is intended to confer upon any other person or entity any
benefits, rights or remedies.
THIS AGREEMENT has been executed this ____ day of December 2001, but is to
be effective December 1, 2001 ("Effective Date").
SUMMIT INVESTMENT GROUP TEXAS L.L.C.
\s\ Xxxx X. Xxxxxxxx
--------------------------
Xxxx X. Xxxxxxxx
Title: General Managing Partner
GULFWEST ENERGY INC.
\s\ Xxxxxx X. Xxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxx
Title: President
Acknowledgments
State of Texas xx.xx.
xx.xx.
County of Harris xx.xx.
BEFORE ME, the undersigned authority, on this 1st day of December 2001,
personally appeared Xxxx X. Xxxxxxxx, Managing General Partner of Summit
Investment Group Texas L.L.C., known to me to be the person whose name is
subscribed to the foregoing, and acknowledged tome that he executed the same for
the purposes and consideration therein expressed, in the capacity therein
stated, and as the act and deed of said Limited Liability Company.
[Personal Seal] \s\ Xxxxx Revia
Notary Public in and for the State of Texas
State of Texas xx.xx.
xx.xx.
County of Harris xx.xx.
BEFORE ME, the undersigned authority, on this 1st day of December 2001,
personally appeared XXXXXX X. XXXXXXX, President of GulfWest Energy, Inc., known
to me to be the person whose name is subscribed to the foregoing, and
acknowledged tome that he executed the same for the purposes and consideration
therein expressed, in the capacity therein stated, and as the act and deed of
said company.
[Personal Seal] \s\ Xxxxx Revia
Notary Public in and for the State of Texas
